I am generally a big proponent of self-help legal solutions, and thus have provided books and articles like this one for people to use as guides intended for just that purpose. However, I am also cognizant of the situations that require the assistance of an experienced sales tax attorney.
One of the areas where I feel sales tax attorney representation is not just an option, is in the areas of sales tax collection matters. My experience with CDTFA collections officers has been that their reputation for being inflexible and aggressive when it comes to taking action against a past-due account is accurate.
CDTFA collection officers often demand large, unrealistic payment amounts from businesses (under the threat of levy) in order to get as much money as possible toward the payment of the balance due. This is not to suggest that this is standard practice, but it has been my experience that the CDTFA is the most difficult state revenue organization to deal with.
I have encountered wounded and bleeding taxpayers – especially business owners – who tried to handle their own California Department of Tax and Fee Administration collection matters. The rigidity and aggressiveness of the CDTFA is such that they will kill the goose that lays the golden eggs – your business being said goose.
In addition, individuals involved with a corporation – specifically those who supervised filing of sales tax returns and payments – can be held personally liable for the amount of sales tax owed.
CDTFA Audit Processes
Most individuals and business owners do not understand the problems and the risks involved when they are scheduled for a CDTFA audit. This entity is responsible for collecting taxes and fees that account for more than 30 percent of the annual revenue of the California state government. As such, its agents are motivated in the service of the government and may use the situation to take as much cash as possible.
The CDTFA can retrieve third party records, contact your employer, show up at your home or work, and seize a variety of assets. However, an attorney can act as your representative and keep you from being bullied. Tax attorneys provide expertise in tax-related law and how it is implemented; helping you put together an effective defense.
Recall that sales tax is imposed on individuals and businesses in exchange for the privilege of selling goods in California. The sales and use tax rate in most California locations have three parts: the state tax rate, the local tax rate, and any district tax rate that may be in effect. Each of the three parts have associated forms, regulated by the products or services that are associated with the sales and usage tax.
While the forms may seem standard upon first glance, it would better serve you to leave them to a tax professional. Depending on the type of business you have, they can be complicated and you can easily make a mistake that could have damaging consequences. An attorney can help make sure the information is completed in a manner that the CDTFA should not find fault with.
If you are notified that you will be undergoing a state sales tax audit, a tax attorney can fully represent you, monitor the auditor, and efficiently file all necessary paperwork. A knowledgeable tax lawyer can neutralize the advantage CDTFA auditors have from their superior knowledge of tax procedures compared to the average taxpayer.
Tax liabilities can be stiff and if you can’t pay it in entire, an attorney can help you develop an Offer in Compromise that will allow you to pay less than the current balance owed. An attorney can also make sure of your eligibility for an Offer in Compromise and protect it from rejection.
Have you gone through the mill already and still owe taxes? Once they are overdue, the tax agency adds penalties and interest, making a bad situation worse. An attorney can request abatement of penalties and interest as well as determine if the agency has miscalculated or gone past the allowable time to assess the liability.
If the CDTFA has started a tax lien process, don’t think that you’re past help – the lien can be released all or in part, and this is an excellent time to get legal advice. For starters, immediately after the lien is recorded, your credit rating will be negatively affected. This will in turn decrease your ability to get a loan, get approval for a new credit card or even sign a lease. It will also remain in your credit history for seven years after it is released.
If you have not paid or made arrangements to pay your tax debt, the CDTFA can also levy any type of real or personal property that you own or have an interest in. Levies differ from liens in that a lien is a claim used as security for the tax or fee debt, whereas a levy takes the property to satisfy the tax or fee debt. The CDTFA will use a levy if you have ignored a Demand for Payment.
If you’ve received a Demand for Payment, I urge you to contact me immediately. Why take the chance losing not only your real estate holdings, but any funds and licences that are in your name? The CDTFA can put a claim on your wages, stock dividends, bank accounts, rental income or the cash value of your life insurance policy. They can also seize and sell your alcoholic beverage license or any vehicles that you own such as a car or boat.
Because of the size and power of the CDTFA, many taxpayers feel helpless to advocate for their rights or are confused about the intricacies of California sales tax law. A qualified tax attorney is a powerful ally in any dispute with the CDTFA. Their familiarity with the law and with CDTFA rules and regulations can help you smooth the way to a determination, and remove some of the stress from a difficult situation.
As with all tax matters, the most important thing you can do is to face the situation straight on with the best information and advice available. Engaging our firm to resolve your tax debt shows the CDTFA that you are making an effort to find a resolution. At Brotman Law, we want to help you find the best outcome for your financial situation and provide you a safe harbor from the barrage of demands from CDTFA until a settlement is concluded.