Sales Tax Audit
If your business is selected for a sales tax audit, you have the right to a fair and impartial examination. Board of Equalization auditors are not evaluated based on sales tax revenue quotas or goals. During the course of the audit, you have the right to a clear explanation of the audit process and the reason for any information requested.
Generally, a sales tax audit covers your the sales tax returns filed over the past three years. In cases where no returns were filed, the law allows the Board to audit up to eight years. On occasion, an auditor may request that you sign a ?Waiver of Limitation.? The Waiver of Limitation is a legal document that provides an extension of the statute of limitations for periods that would otherwise expire. This extension may result in a sales tax assessment for the period in question. However, the Waiver of Limitation will also extend the period of time in which you may file a claim for refund and will allow any credit arising from that period to be offset against a tax liability. At any point in the audit or appeal process you have the right to bring in your accountant, attorney, or other representative to assist you.
You should ask for a professional assistance under the following circumstances :
- Your records and books are not available or incomplete.
- You don't have the time or were not involved in the day to day operation.
- You did not prepare the sales tax return personally.
When the audit is completed, the sales tax auditor will meet with you or your representative to discuss the audit findings. You have the right to a clear and concise explanation of any adjustments. You also have the right to a complete copy of your audit, including the auditor?s working papers, schedules, and narrative comments. If you do not understand or agree with the sales tax audit, you will have an opportunity to resolve the issues informally by meeting with the auditor?s supervisor and, if necessary, the audit supervisor?s superior. Following this meeting, Board staff will make every effort to resolve any disagreements at the local level. The sales tax audit will then be forwarded to Board headquarters for a review, and you will be issued a tax bill called a ?Notice of Determination.? Interest will be calculated on the outstanding tax liability and continues to accrue until the tax is paid in full.
If you agree with the liability stated in the Notice of Determination, you should make full payment immediately or contact the collection staff at your local Board office to make arrangements for payment.
If you are unable to pay the liability within 30 days from the date of the notice, an additional 10% finality penalty will be applied. However, under certain circumstances, the Board may waive the 10% finality penalty, subject to completing a mutually agreed upon installment payment agreement.
If the Notice of Determination indicates that you are entitled to a refund, the Board will forward the information to the State Controller?s Office for issuance of a refund check. In some instances, your refund could be reduced by the amount of any debts you owe the Board or another state agency.
You have the right to appeal the audit.
You have the right to be reimbursed for appeal expenses.
During the Collection Process, if sales taxes is not paid in full, you should expect any of the following:
- A tax lien could be filed and attached to your property and your rights to property.
- A levy against your property.
- Revocation of Sales tax permit or license.
he Board of Equalization has the discretion to enter into a written payment agreement with you to enable you to pay delinquent taxes, interest and penalty in installments.
EMIL ESTAFANOUS CPA team of experienced accounting and tax professionals experienced in sales tax audit representation will provide clear and relevant advice in a timely and professional manner. Our approach is to deliver an integrated solution by tapping into our years of experience and expertise to deal with your sales tax audit challenges.
The result of our representation of your sales tax audit is best achieved when you contact us in a timely manner. We provide a free no obligation initial consultation