Written by Sam Brotman, J.D., LL.M. (Taxation), MBA — Managing Attorney, Brotman Law · Updated May 2026
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What Sam Does for Sacramento Clients
Sacramento is California's state capital, which gives it a distinctive tax environment. More than any other California city, Sacramento has a significant concentration of government employees, state contractors, and businesses whose primary client is a California or federal agency. That reality shapes the kinds of tax problems that come up here — CDTFA is headquartered in Sacramento, the FTB is nearby, and contractors doing business with state and federal agencies face a compliance environment that differs from private-sector businesses elsewhere in the state.
I represent Sacramento and Central Valley clients across the full range of federal and California tax matters: IRS audits and collections, FTB residency disputes, CDTFA sales and use tax audits, EDD worker classification examinations, and False Claims Act defense for government contractors. The agricultural and cannabis industries that characterize much of the Central Valley produce their own set of tax issues — from § 199A deductions for farm operators to CDTFA cannabis excise tax enforcement — that I handle routinely.
Sacramento Tax Issues Sam Handles
CDTFA Sales Tax Audits — The Sacramento Advantage (for the State)
The California Department of Tax and Fee Administration is headquartered in Sacramento, and its proximity to the region's business community makes CDTFA audits a particularly common issue for Sacramento-area businesses.
CDTFA sales tax audits typically cover a three-year period and examine whether a business correctly identified taxable sales, applied the correct tax rate, and substantiated claimed exemptions. The most common problems: treating taxable sales as exempt (or vice versa), failing to collect tax on out-of-state sales that were delivered to California, and inadequate documentation for resale certificates or agricultural exemptions.
For Sacramento-area retailers, contractors, and food service businesses, CDTFA audits can result in substantial assessments when the auditor identifies a systemic gap — a category of sales the business consistently failed to tax, or an exemption the business claimed without proper documentation. I handle CDTFA audits, administrative appeals, and petitions for redetermination. See our full page on California CDTFA defense.
FTB Residency Audits — The Sacramento Connection
The Franchise Tax Board's headquarters in the Sacramento area means FTB residency audit staff and their institutional knowledge are concentrated near the capital — and the FTB is active in auditing taxpayers who claim to have left California while retaining Sacramento-area connections.
California taxes residents on worldwide income. A business owner who sells a Sacramento-area company, moves to Nevada, and continues receiving royalties or consulting income with California connections can face an FTB residency audit asserting they never truly departed the state. The FTB examines domicile indicators: primary residence, family ties, business relationships, real estate retained in California, club memberships, vehicle registration, and the number of days spent in California versus the claimed new state.
Residency audits can span multiple tax years, and the FTB's assessment includes California income tax on worldwide income for each year the taxpayer is found to be a California resident. I handle FTB residency audits, related appeals before the Office of Tax Appeals (OTA), and multi-state domicile disputes. See our practice page on FTB audit defense.
IRS Collections — Levies, Liens, and Offers in Compromise
IRS collection enforcement — federal tax liens, bank levies, and wage garnishments — follows the same federal rules regardless of where in California a taxpayer is located. Sacramento-area taxpayers dealing with IRS collections face the same statutory framework as taxpayers in San Diego or Los Angeles, with one practical difference: the Eastern District of California federal courts (Sacramento Division) handle tax refund suits and federal tax litigation for the region.
I represent Sacramento clients in the full range of IRS collection resolution options: installment agreements, Offers in Compromise (OIC), currently-not-collectible determinations, Collection Due Process (CDP) hearings, and innocent spouse claims. The OIC process requires demonstrating that your Reasonable Collection Potential (RCP) — calculated using Form 433-A or 433-B — supports the offered amount. For Sacramento clients with real estate assets and business interests, the RCP analysis often involves contested asset valuations that affect whether an offer makes sense to file at all.
Government Contractors — False Claims Act and Federal Tax Exposure
Sacramento has a large concentration of businesses that contract with California state agencies and the federal government — and those relationships create tax risks that private-sector businesses do not face in the same way.
On the federal side, the False Claims Act (31 U.S.C. §§ 3729–3733) imposes civil liability — treble damages plus civil penalties of $13,946 to $27,894 per false claim — on businesses that submit false certifications or false billing records to obtain federal contract payments. Qui tam relators, including former employees and subcontractors, can file suit on the government's behalf. Sacramento-area contractors with federal work are within that enforcement environment.
On the tax side, cost-reimbursable federal contracts require allocating costs between direct and indirect (overhead and G&A) expenses under government cost accounting standards. The IRS examines these allocations in contractor audits, and disputes over what counts as a reimbursable business expense versus a disallowed cost can result in both tax assessments and contract compliance issues. I handle both the FCA defense component and the federal tax audit issues that arise in contractor matters. See our False Claims Act defense page for more detail.
Agricultural Tax — Central Valley Farm Operations
The Central Valley is California's agricultural heartland, and farm operations face tax issues that differ in meaningful ways from urban business clients.
The three issues I see most often with Central Valley agricultural clients:
- IRC § 199A qualified business income deduction: Farm operations structured as pass-throughs (sole proprietorships, partnerships, S corporations) can take a 20% deduction on qualified business income. The rules for specified agricultural cooperatives have specific interaction effects with the § 199A deduction that require careful analysis. The deduction is available through 2025 under current law; any extension is subject to Congressional action.
- EDD worker classification: Farms that use seasonal harvest labor as independent contractors are regular EDD audit targets. California's ABC test, applied under the Unemployment Insurance Code, creates a strong presumption of employee status for workers performing the farm's core agricultural work. An EDD audit resulting in reclassification can produce substantial back payroll tax liability for multiple years.
- CDTFA agricultural sales tax issues: California exempts certain agricultural items from sales tax — seeds, young plants, fuel used in farming, and some farm equipment — but the exemptions have specific conditions that are not always clearly communicated. A CDTFA audit that finds a farm claimed exemptions without proper documentation, or missed taxable categories like certain supply purchases, can result in three years of back tax assessments.
EDD Payroll Tax Disputes — Hospitality and Agricultural Employers
Sacramento-area employers in hospitality, food service, and agriculture face regular EDD audit activity targeting worker classification and unreported wages.
The EDD's ABC test is the controlling framework. In addition to the standard classification audit, the EDD also examines: whether cash wages were properly reported, whether seasonal workers' compensation was correctly characterized, and whether employer contributions to union benefit funds were handled correctly. I represent Sacramento employers in EDD audits, assessments, and appeals.
CDTFA Cannabis Tax Enforcement
Sacramento-area cannabis dispensaries and cultivators operate in a regulatory environment where CDTFA has active enforcement authority over cannabis excise tax, cultivation tax, and sales tax compliance.
California imposes a 15% excise tax on cannabis retail sales in addition to state and local sales tax. Cultivators paid a weight-based cultivation tax through 2022. IRC § 280E compounds the problem for federal income tax: cannabis businesses cannot deduct ordinary and necessary business expenses (other than cost of goods sold) because cannabis remains a Schedule I controlled substance under federal law. The interaction between California's cannabis tax obligations and the § 280E limitation makes cannabis operators particularly vulnerable on both federal and state tax fronts. I handle CDTFA cannabis audits and IRS examinations of cannabis businesses.
Why Sacramento Clients Work with Sam
Tax representation is not a local service the way a plumber is a local service. The IRS uses the same procedures in Sacramento that it uses in San Diego. The CDTFA appeals process is the same regardless of which district office issued the assessment. The FTB's residency audit framework applies statewide. What matters is whether your attorney knows those procedures and can work through them effectively — and that is not a function of which California city they are based in.
I am a California-licensed attorney with an LL.M. in Taxation. I am admitted to practice before the U.S. Tax Court and the Eastern District of California, Sacramento Division. Since 2013, Brotman Law has represented over 400 clients in audits and recovered or saved $1B+ in taxes and penalties. That track record comes from Sacramento clients as well as San Diego, Los Angeles, and clients throughout California and nationwide.
A practical note on cost: because we practice from San Diego rather than Sacramento, our billing rates tend to be lower than Sacramento-area firms with equivalent credentials and focus. Tax representation is one of those areas where the rate difference between markets is real and the quality difference is not always proportionate to it.
How Sacramento Clients Work with Sam
Most tax matters are conducted through correspondence, document production, and formal proceedings — none of which require attorney and client to be in the same city. Sacramento clients work with me by phone and video. The initial call is free and runs about 15 minutes. If we move forward, I get a signed engagement agreement and a Form 2848 Power of Attorney, and then I communicate directly with the IRS or California agency on your behalf.
For IRS proceedings in Sacramento or Tax Court sessions in the Eastern District, I travel. For CDTFA appeals, OTA hearings, and most FTB matters, those are typically handled through written submissions and scheduled hearings that I appear at or handle through written presentation. The practical answer is that most of what happens in a Sacramento tax matter does not require me to drive up I-5 — but when it does, that is what we do.
Representative Matters
Each matter is unique. Past results do not guarantee any particular outcome. The following examples are representative of the types of Sacramento-area cases we handle.
A Sacramento-area defense contractor received a Civil Investigative Demand from the DOJ in connection with a qui tam complaint alleging that overhead cost allocations in several federal contracts were inflated. We conducted a complete review of the contractor's cost accounting practices, identified that the allocation methodology was consistent with applicable cost accounting standards, and presented a detailed factual submission to the DOJ demonstrating that the certifications were accurate. The government declined to intervene in the qui tam matter and the relator's case was subsequently settled for a small fraction of the claimed exposure.
A Central Valley farming operation received an EDD audit covering three years of seasonal harvest labor it had classified as independent contractor work. The EDD's initial assessment reclassified the workers as employees and assessed back payroll taxes, penalties, and interest. We challenged the classification under both the ABC test and the agricultural employee exemptions under the California Unemployment Insurance Code, documented the workers' independent business operations, and negotiated the final assessment to a fraction of the original amount.
A Sacramento-area cannabis retailer received a CDTFA audit covering two years of excise tax and sales tax compliance. The auditor's initial assessment included penalties for alleged underreported excise tax based on discrepancies between the CDTFA's track-and-trace data and the retailer's point-of-sale records. We identified timing differences in how METRC transfer records were reconciled to the retailer's sales records, produced documentation showing the discrepancies were accounting entries rather than unreported sales, and reduced the final assessment by approximately 70% through the CDTFA appeals process.
Sam's Credentials
Samuel C. Brotman, Esq., is the managing attorney of Brotman Law, a California tax law firm founded in San Diego in 2013.
- California State Bar — licensed attorney, admitted to practice before all California courts and before federal courts in the state, including the Eastern District of California
- J.D., LL.M. (Taxation), MBA — the LL.M. in taxation is the postgraduate law degree specific to federal tax practice; Sam holds all three credentials
- U.S. Tax Court — admitted to practice; Tax Court is the primary forum for contesting IRS deficiency determinations before paying the disputed tax
- IRS Representation — authorized to represent clients before all IRS divisions under Form 2848, including Examination, Appeals, and Collection
- Practice since 2013 — Brotman Law has focused on tax representation since its founding; this is a tax firm, not a general practice that also handles tax matters
You can reach our office at (619) 378-3138. For an initial conversation about your Sacramento matter, book a free 15-minute call and we can figure out what you are dealing with and what the options look like.
Frequently Asked Questions
Can a San Diego attorney represent Sacramento clients in IRS and California tax matters?
Yes. Federal tax matters — IRS audits, Tax Court, and criminal investigations — have no geographic restriction for California-licensed attorneys. Form 2848 authorizes Sam to represent you before all IRS divisions regardless of where you are located. For California state tax matters, Sam is licensed statewide and appears before the FTB, CDTFA, and EDD, including their Sacramento headquarters offices, without geographic limitation.
What federal court handles tax cases in Sacramento?
The U.S. District Court for the Eastern District of California, Sacramento Division, handles federal tax refund suits and other federal tax litigation for Central Valley and Northern California taxpayers. The U.S. Tax Court also schedules sessions in Sacramento. IRS administrative appeals for Sacramento-area taxpayers go through the IRS Appeals office serving the Eastern California territory before any Tax Court petition is filed.
Why are CDTFA audits especially common in Sacramento?
The CDTFA is headquartered in Sacramento, and its audit staff and program focus are concentrated in the region. Sacramento-area businesses — particularly retailers, restaurants, and contractors — are visible to CDTFA audit selection programs in ways that can reflect proximity as much as substantive compliance risk. CDTFA audits typically cover three years and can result in substantial assessments when the auditor identifies a systemic gap in how sales tax was collected or exemptions were documented.
Do government contractors in Sacramento face special tax and legal risks?
Yes. Sacramento-area businesses with federal or state contracts face False Claims Act exposure — treble damages and per-claim civil penalties — for false certifications or billing errors in contract submissions. They also face IRS audit exposure for cost allocations on cost-reimbursable contracts. Sam handles both the FCA civil defense component and the IRS tax audit issues that arise in contractor matters. See the False Claims Act page for more detail.
What tax issues do California agricultural businesses in the Central Valley face?
The three most common issues: (1) IRC § 199A deduction for farm pass-through income — the cooperative interaction rules require careful analysis; (2) EDD classification audits for seasonal harvest workers classified as independent contractors, which the ABC test makes difficult to sustain; and (3) CDTFA agricultural sales tax exemptions — the exemptions for seeds, fuel, and certain equipment are real but require proper documentation to survive audit.
How does FTB residency audit exposure work for people who leave Sacramento?
The FTB taxes California residents on worldwide income and scrutinizes taxpayers who claim to have changed domicile while retaining California connections. Sacramento-area real estate, business relationships with California clients, and regular time spent in California are common factors the FTB uses to challenge departure claims. The FTB has four years from the return filing date to open a residency audit and can assess California tax on worldwide income for each year it finds the taxpayer to be a California resident.