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San Jose, CA 95128

How to Prepare for Your California Sales Tax Audit

 Posted on August 09, 2017 in Tax Audits

sales tax audit, tax audit, San Jose sales tax audit attorney, California tax attorney, tax audit preparationWhen you learn that your business’ sales tax records are being audited, there are certain steps you can take to make the process go smoothly and to handle the tax audit properly. There will be many times during the sales tax audit process that you have questions, and it is best to seek assistance of a sales tax lawyer who can advise you of your obligations under the law as well as what options are most strategic for you and your business.

Understanding Audit Purposes

The California State Board of Equalization administers the sales tax audit. The audit’s purpose is to determine if you have paid the proper amount of sales tax.

The auditor will review a number of documents to determine:

  • If all gross receipts from sales of tangible personal property and taxable labor and services have been reported;
  • If deductions were correctly made;
  • If local tax allocations were correctly made;
  • If tax rates for sales in special tax districts were used;
  • If use taxes were properly applied for business equipment and supplies; and
  • If correct taxes were applied to sales and uses of tangible personal property.

What Documentation is Reviewed?

The business documentation required by the BOE varies from case to case based on the type of business and the types of taxes you may be required to pay. An auditor may request to look at sales records, income tax returns, balance sheets, and general ledgers.

Generally, you should keep all business records for at least four years, unless you are told by a state agency to destroy such records sooner.

You will be required to provide any documentation that is needed for the audit, even if it is confidential. If you do not have documents that the auditor requires, the auditor may be able to gather information in other ways or you may be required to reconstruct the documents.

Challenging Audit Conclusions

When the auditor has finished, there is an exit interview in which the results of the audit will be presented. The auditor will explain any proposed refunds or additional taxes or fees that may be due. It is also possible that your returns have been accepted as filed.

You may bring a lawyer or tax professional to this meeting, and it can be an important time to ask questions or refute any conclusions of the auditor.

Call a California Sales Tax Audit Lawyer

An experienced tax attorney can be a great resource during the time of an audit where extra scrutiny is given to your business and tax records. It is important to remember that the auditors you are dealing with are sophisticated tax professionals at the BOE.

Contact the efficient San Jose sales tax audit attorney at John D. Teter Law Offices to learn more about what an attorney can do for your business. Our firm can be reached at 408-866-1810.


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