The California Department of Tax and Fee Administration (CDTFA) conducts audits to evaluate compliance with California sales and use tax laws. These examinations often intersect with broader California sales tax consulting matters, particularly where transaction classification and exemption documentation require careful review. Audit determinations frequently hinge on documentation integrity, transaction analysis, and sampling methodology.
Sales Tax Solutions provides structured representation during CDTFA audit proceedings, focusing on documentation review, defensible classification positions, and exposure mitigation.
Understanding the Audit Process
A CDTFA audit typically progresses through multiple phases, including:
- Initial contact and information request
- Fieldwork and document review
- Sampling and projection analysis
- Proposed assessment issuance
- Administrative protest, where appropriate
Preparation and strategic response at each stage may significantly impact outcomes.
Common Areas of Adjustment
Audit findings frequently arise from:
- Inadequate resale certificate documentation
- Disallowed sales claimed as interstate commerce
- Misclassification of taxable transactions
- Use tax accrual deficiencies
- Projection methodology disputes
- Unreported taxable sales based on a markup computation
Independent review of supporting documentation and for transaction treatment helps reduce exposure risk.
Sampling & Projection Review
When auditors apply statistical sampling methods, resulting projections can materially increase assessed liability. Evaluation of sample selection, stratification, and classification decisions is essential to ensure accurate extrapolation.
Protest & Administrative Review
Where audit conclusions warrant further review, structured preparation of written protest and supporting documentation may be appropriate. Administrative proceedings require disciplined presentation of factual and regulatory analysis.
Initiating Representation
Businesses facing audit inquiry or proposed assessment may request a confidential consultation to evaluate audit posture and strategic response options.