Business owners facing a California BOE sales tax audit face significant financial and other consequences if the y are found to be out of compliance with California law. The California BOE is notoriously aggressive in its audits and sales tax enforcement actions. Even if you think that you have devised a fool-proof method to avoid reporting and paying sales tax, the BOE can engage in statistical audit methods to determine the amount of the understatement. Furthermore, noncompliance found in a BOE audit is likely to be passed on to the IRS meaning that a second federal audit is a high likelihood.
If you are facing a California BOE audit, the time to find aggressive representation to guide the audit process is now. Do not wait until you have accidentally or unwittingly provided the BOE with evidence that justifies a closer look at your business and its finances. To schedule a confidential no-obligation BOE sales tax audit consultation with a members of the NewPoint Law Group’s legal team call 1-800-358-0305 today or contact us online through our web form.
What Problems Can I face if the Audit of my Business Goes Poorly?
If it turns out that you have insufficient records, implausible finances, or explanations for entries that the auditor finds unconvincing it is highly likely that the or she will conduct a more thorough and intensive overview of your company’s finances. For many business owners this means that they will face the dreaded sample-basis audit. The sample-basis audit is conducted by statistical means so it is important that the basis for the sample is accurate. A non-representative sample that overstates the volume of sales or is not representative can be fatal to a business. After all, it is extremely burdensome to pay taxes on sales that never occurred and thus on revenue that was never collected. Therefore it is important for the business to be represented by an experienced tax lawyer who can negotiate and set ground rules for the audit should a sample-basis audit become necessary.
IF the audit proceeds to a sample basis, and the more intensive audit reveals significant wrongdoing or negligence, an additional 10% penalty can also apply. In the case of criminal wrongdoing, a referral to the IRS’ Criminal Investigations Division is a possibility. Furthermore businesses like bars and restaurants that depend on their liquor license can face a license suspension should the deficiency persist. Likewise, the failure to pay sales tax on cigarettes and other tobacco products can also lead to significant consequences for the business.
California Law Criminalizes Zappers and Similar Point of Sale Devices
Zappers are types of software that can be installed onto many standard point of sale terminals that are commonly used in convenience stores, supermarkets, restaurants, gas stations, and other locations. The zapper software can then make fraudulent changes to the business’ sales records typically in the form of reducing the amount of revenue and sales reported by the company. Reducing sales revenues thereby reduces the amount the company owes on its California state sales tax bill.
However, taking action of this type is illegal under California law and creates circumstances for an extremely dangerous audit that is fraught with anxiety and fear. California law prohibits the mere possession of a zapper device. California AB-781 criminalizes the use of zappers and can lead to a financial penalty of up to $10,000. Furthermore, a prison sentence can apply for conducted associated with the use or sale of a zapper.
Work with California Tax Attorneys when your Business IS Facing a BOE Audit
If your business is identified as potentially owing unpaid sales tax, the BOE will proceed in an aggressive fashion. Many business owners are shocked at the treatment they receive and the tactics the BOE will employ. In many cases, business owners compare the process to being found guilty, being treated as such, and needing to prove their innocence. However, working with a tax lawyer can place a layer of protection between you and the auditor so that things remain professional and so that you do not take actions or make statements that you later regret.
If your business is facing a sales tax audit in California, the time to take action is as soon as you are notified about the audit and before you provide any information. Don’t allow the auditor to “drop by” and take a visual inventory of your business and its operations without first consulting with a tax attorney who understands the audit process. To schedule a confidential, no-obligation consultation with a member of our California tax law team at our Roseville, California office call 1-800-0305 today.