video-blog

What Do I Do If There Is a Really Serious Error on My Tax Returns and I Get Audited?

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Unlike other forms of audits, serious errors on sales tax audits are usually pretty easily discoverable. One of the biggest mistakes that people make is they underreport their sales tax returns but their federal income tax returns show the true amount of sales. The auditors take what I call here big five data points: sales tax returns, your federal income tax returns, your internal accounting, your bank statements and your 1099Ks. They line up all that data together, that’s a pretty good indicator out the gate of whether or not there’s a discrepancy or whether or not your reported taxable sales are accurate. So anyway, this is a big problem because it’s very easy to see serious errors out of the gate. So the first thing you need to do is understand how serious

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How Much Is it Going to Cost Me for Brotman Law to Defend Me?

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In a sales tax audit, as I’ve mentioned before, sales tax audits are very cumbersome processes. They involve a lot of documents, they involve a lot of data and they take a while to get through and our firm efficiency is one of our key factors in the work that we do. We want to make sure that the work and the value that we’re providing for clients are in a line with their cost expectations. With that said, sales tax audits are a lot of work. There’s a lot of organization and presentation and the materials. There’s a lot of tendency for disagreements in sales tax audits, particularly when they’re using statistical samples. Oftentimes those statistical samples come out wrong on the CDTFA side and we have to correct them and it gets tough when you have an auditor and you get into a conflict with that auditor and the auditor won’t back down. So with that said, sales tax law does have the ability to drive cost. One of the things that we do to mitigate cost is by sticking and trying to minimize cost in three key areas.

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Is it Possible to Settle With the Auditor?

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Unfortunately playing let’s make a deal with the Auditor is not really possible. It’s not possible to just throw out a number, let’s say $25,000, to make the auditor go away. However in the context of any sales tax audit, there’s a certain amount of horse trading that happens in order to get to a result from the CDTFA’s perspective. CDTFA would rather close the audit as agreed than have an audit going into appeals. The more cases they close out at the audit level,

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What Happens After the Audit? What Happens If I Disagree With the Result?

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There are a couple possible outcomes. Number one is that the auditor’s report is sufficient and that you agree with it. If you agree with it, there will be a short exit conference between you, the auditor and the manager so the auditor can explain what they did in the report. If you don’t agree with the audit then this conference happens anyway but at least that will give you the opportunity to express your disagreements in front of the manager and have the auditor potentially make changes. Now the problem with this is is the auditor at this point has usually already run the audit report by the manager and anticipated any disagreements that you might have with it so the manager is less likely to stand up for you than you would think but there are opportunities there to present any additional documentation or any other fact-finding before the close of the audit. If you’re not successful with resolving things with the manager, then the auditor will issue you a bill. They will turn in the audit and a bill will be generated about two to three months later and then when you receive that bill, you can file a petition for redetermination. Upon filing your petition for redetermination, you will proceed to a 10-day conference. We will have the opportunity to speak with the head of the audit unit for that particular.

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What Does the CDTFA Appeals Process Look Like?

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After you get a bill from the Auditor based on a disagreement, you file a petition for redetermination. Unfortunately CDTFA is often backed up with Appeals so petitions for redetermination can take a while to go through the system before you actually get to an appeals conference. Prior to the Appeals conference you have the option of going to CDTFA settlement. CDTFA settlement is a group of settlement officers that are designed to resolve cases before they reach CDTFA appeals. If there’s an opportunity for settlement it’s suggested that you go to see CDTFA settlement to try and resolve the case. CDTFA settlement process is much less time-consuming, much less expensive and particularly if you’re not looking for them to resolve

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