Written by Sam Brotman, J.D., LL.M. (Taxation), MBA — Managing Attorney, Brotman Law · Updated May 2026
On This Page
Tax Matters Sam Handles for San Bernardino Clients
A tax attorney handles IRS and California tax disputes as legal matters, not accounting problems. That distinction matters when an IRS revenue agent is questioning your payroll records, when the CDTFA is auditing your sales tax returns, or when a trust fund recovery penalty assessment is about to become personal liability. These are disputes with legal consequences that require someone who can represent you in the proceedings and know when a civil issue has crossed into criminal exposure.
For San Bernardino and Inland Empire clients, the matters I handle most often are IRS field audits of construction and logistics businesses, CDTFA sales and use tax audits, payroll tax disputes and trust fund recovery penalties, and EDD worker classification audits. I also handle tax debt resolution — Offers in Compromise, installment agreements, and levy releases — for business owners and individuals in the region.
Federal criminal tax cases involving Inland Empire businesses are prosecuted in the Central District of California, Eastern Division, which sits in Riverside. I handle IRS Criminal Investigation defense from the preliminary inquiry stage through DOJ Tax Division review.
Inland Empire Industries and Their Tax Audit Patterns
The Inland Empire — San Bernardino and Riverside counties combined — is one of the largest logistics and distribution corridors in the United States. Amazon, UPS, FedEx, and hundreds of third-party logistics operators have major facilities throughout the region. Construction and trucking are the other anchors of the IE economy. Each of these industries generates specific, predictable audit patterns.
Construction Industry Tax Issues
Construction contractors in the Inland Empire face three audit risks that come up repeatedly. The first is worker classification — whether individuals working on a project are employees or independent contractors. California's AB 5 and the EDD's own audit standards make the bar for 1099 treatment more demanding than most contractors realize. If the IRS or EDD reclassifies your subcontractors as employees, the payroll tax liability — plus penalties and interest — attaches to the wages already paid.
The second is unreported cash income. Construction businesses that handle significant cash transactions are a recurring IRS audit target. The IRS uses indirect methods — bank deposit analysis, net worth analysis — to reconstruct income when it believes reported gross receipts are understated. If those indirect method results show a discrepancy, the audit becomes a dispute about the source of cash deposits, not just a review of reported income.
The third is prevailing wage disputes. Public works contractors in the IE are subject to California's prevailing wage laws (Labor Code § 1720 et seq.), and the Division of Labor Standards Enforcement conducts audits independently of any tax matter. A prevailing wage underpayment finding can cascade into IRS and EDD exposure if the underlying payroll records are inconsistent with what was reported on Form 941 or Form W-2.
Logistics and Distribution Tax Issues
The logistics and distribution industry in the Inland Empire — warehouses, fulfillment centers, trucking fleets — generates a specific set of state tax audit exposures.
Sales and use tax on equipment and property transfers is the most common. CDTFA has broad authority to audit transactions involving warehouse equipment, forklifts, trailers, and other tangible personal property used in operations. Sales between related entities — a parent company and a subsidiary, for example — are examined for whether the transfer price reflected fair market value and whether use tax was properly assessed on the receiving party.
Interstate commerce nexus questions arise for carriers and logistics providers that operate across state lines. California imposes sales tax based on where delivery occurs, and the rules for apportioning tax on multistate transactions are not simple. A carrier that collects California sales tax on transactions where it should not — or fails to collect where it should — has audit exposure in either direction.
CDTFA Sales Tax in the Inland Empire
CDTFA — the California Department of Tax and Fee Administration — administers California's sales and use tax, and it is especially active in the Inland Empire because of the high volume of B2B transactions. A CDTFA audit can cover multiple years of sales records, purchase invoices, and tax returns. If the auditor finds unreported taxable sales or disallows claimed exemptions, the resulting assessment carries interest from the date the tax was due and can include substantial penalties.
Common CDTFA audit issues for IE businesses:
- Equipment purchases subject to use tax — businesses that buy equipment from out-of-state vendors without paying California sales tax owe use tax on those purchases under Revenue and Taxation Code § 6201. CDTFA auditors cross-reference purchase invoices against filed use tax returns.
- Labor charges on construction contracts — whether labor charges in a mixed contract (materials plus installation) are taxable depends on whether the contract is treated as a "construction contract" or a "sale of tangible personal property." The distinction controls the taxability of the entire transaction.
- Resale certificate documentation — businesses that sell to other businesses in tax-exempt transactions (for resale) must maintain valid resale certificates from their customers. CDTFA auditors routinely disallow deductions for resale transactions where the certificates are missing, incomplete, or held by customers who were not actually resellers.
Appeals from a CDTFA audit go to the Office of Tax Appeals (OTA). I handle CDTFA audits, OTA appeals, and CDTFA collections — including settlement and installment agreement negotiations — for San Bernardino and Riverside County businesses. See our full practice page on California CDTFA sales tax defense.
Payroll Tax and Trust Fund Recovery Penalties
Payroll tax delinquencies are one of the most serious tax problems a business owner can face, because the liability does not stay with the company. Under IRC § 6672, the IRS can assess a Trust Fund Recovery Penalty (TFRP) personally against any individual who was responsible for collecting and paying over payroll taxes and willfully failed to do so. "Responsible person" is interpreted broadly — it can include officers, directors, shareholders, and sometimes accountants or bookkeepers who had signature authority over payroll accounts.
Fast-growing Inland Empire businesses — particularly in logistics, construction, and healthcare — are particularly vulnerable. Growth creates cash flow pressure, and payroll taxes are often the first obligation to go unpaid when cash is tight. The problem compounds: the trust fund portion of the unpaid tax (the employee income tax and FICA withheld from wages) carries interest from the date due, and the personal assessment can happen even after the business has closed or gone through bankruptcy.
If the IRS has sent a Letter 1153 (TFRP proposed assessment), the 60-day response window is the right time to engage counsel. We evaluate who qualifies as a responsible person, whether the willfulness standard is met for each individual, and what defenses or mitigating facts are available. We also handle appeals of TFRP assessments and represent clients before the IRS Office of Appeals. See our practice page on payroll tax defense.
Representative Matters
Each matter is different, and past results do not guarantee any particular outcome. The following are representative of the types of cases we handle for Inland Empire clients.
A San Bernardino County logistics and fulfillment company received an IRS notice of examination covering three tax years. The audit focused on officer compensation, related-party transactions, and the timing of inventory write-offs. We documented the compensation structure with market comparability data, provided complete documentation of the intercompany transactions, and resolved the audit with no change to reported income on the contested issues. A minor adjustment on a timing item was agreed to in exchange for closing all other years.
A general contractor working on commercial construction projects in the Inland Empire received a CDTFA audit notice covering four years of sales tax returns. The auditor's initial assessment was based on a sample of contracts that the auditor treated as sales of tangible personal property rather than construction contracts. We documented the nature of each contract type, established that the mixed-contract treatment was incorrect for the largest category of work, and reduced the proposed assessment by approximately 60% before appeal. The remaining balance was settled through an OTA appeal.
The owner of a trucking company operating out of Fontana received a Letter 1153 proposing Trust Fund Recovery Penalty assessments covering six quarters of unpaid payroll taxes. The company had gone through a period of rapid growth during which payroll tax deposits fell behind. We evaluated the responsible person analysis for multiple potential targets — the owner, a bookkeeper who had been delegated payroll responsibilities, and a former operations manager — and documented the delegation of authority and the bookkeeper's control over payroll accounts. The IRS ultimately assessed the full penalty against the bookkeeper and assessed a reduced amount against the owner based on the period during which he had actual knowledge of the delinquency.
How San Bernardino Clients Work with Sam
Most tax representation work happens remotely — document exchange, correspondence with the IRS or CDTFA, and formal proceedings that do not require a physical meeting. For Inland Empire clients, that means we can handle most of the case by phone, video conference, and secure document upload. The San Diego office — at 12636 High Bluff Drive, Suite 300 — is about 70 miles from San Bernardino. For meetings that benefit from being in person, that is a manageable drive, and same-day availability is typically possible.
The typical workflow: an initial phone or video call to go through what you are facing and whether it makes sense to move forward together. If it does, we execute an engagement agreement and a Form 2848 Power of Attorney. From that point, I communicate directly with the IRS, CDTFA, or EDD and keep you informed at decision points. You are not getting a weekly status call that says nothing has happened — you hear from me when something matters.
If you have received an IRS notice, a CDTFA audit opening letter, or an EDD notice of assessment and are not sure what to do next, the free 15-minute call is the right place to start. We can figure out what you are actually dealing with and what the realistic options are.
Frequently Asked Questions
Do I need a local attorney for an IRS audit in San Bernardino?
No. IRS audit representation is governed by federal law — your attorney's California Bar license and a Form 2848 Power of Attorney authorize representation before the IRS regardless of the attorney's city. The IRS territory covering the Inland Empire runs through the Laguna Niguel campus. Brotman Law represents San Bernardino and Inland Empire clients remotely, with same-day in-person consultation available given our San Diego location.
What tax issues are most common for Inland Empire businesses?
The Inland Empire's logistics and construction industries generate the most common audit issues: CDTFA sales and use tax on equipment and property transfers, payroll tax disputes over worker classification (1099 vs. W-2), trust fund recovery penalties for fast-growing companies with payroll tax arrears, and IRS field examinations of cash-intensive or subcontractor-heavy businesses.
Does Sam Brotman handle CDTFA sales tax audits in San Bernardino?
Yes. CDTFA is particularly active in the Inland Empire given the high volume of B2B transactions in logistics and distribution. We handle CDTFA sales tax audits, appeals before the Office of Tax Appeals, and collections for San Bernardino and Riverside County businesses — including nexus disputes for out-of-state sellers operating through IE warehouses and equipment purchase use tax questions.
What is the statute of limitations for an IRS audit?
The standard IRS audit statute of limitations is three years from the later of the return due date or the date filed (IRC § 6501). That period extends to six years if the IRS believes you omitted more than 25% of gross income, and there is no limitations period if the return was fraudulent or never filed. California's FTB has a four-year statute for income tax audits.
Can I get a free consultation with a San Bernardino tax attorney?
Yes. We offer a free 15-minute call to go through what you are facing and whether we can help. Most Inland Empire clients work with us remotely. For meetings that benefit from being in person, our San Diego office is a manageable drive. Book online at sambrotman.com or call (619) 378-3138.