The California Department of Tax and Fee Administration (CDTFA) administers the tax program for both business and property taxes for the State of California. Business taxes include:
- Sales and use tax
- Fuel tax
- Cigarette tax
- Alcoholic beverage tax
Business taxpayers may take up their concerns directly with the main office of the CDTFA while property tax concerns are addressed by the local county office.
When you deal with the tax agencies of California, you may feel like you do not have any rights. These agencies can be aggressive and overwhelming to most individuals not used to dealing with them.
However, you do have rights, an important detail to remember any time the CDFA contacts you. Below is an overview of your rights as a taxpayer engaging with the California Department of Tax and Fee Administration.
Your Rights During a Sales Tax Audit
Sales and use tax audits are stressful, and some agents do not go out of their way to help you feel calmer. Remembering and exercising your rights during a tax audit can reduce the tension.
During an audit, you have a right to:
- An impartial and fair examination
- A clear explanation of the audit process and the reason for any information requested
- Bring in an accountant, attorney, or other representative to assist you at any point during the audit or an appeal
- Appeal audit findings
- Reimbursement for reasonable appeal fees and expenses if the CDFA staff action was unreasonable
A business tax audit covers the tax returns you have filed in the past three years. If for some reason, you have not filed returns for that period, the law allows the CDFA auditor to back eight years.
Your Rights During the Appeal of a Sales Tax Audit
If you decide to appeal the audit findings, you have 30 days from the date of the Notice of Determination, which is the document you receive with the audit findings. During that time, interest on your tax liability will continue to accrue.
The CDTFA recommends paying the tax portion in full as soon as possible to stop the accrual of interest. Any amounts not due will be refunded with interest at the conclusion of the appeal.
If you miss the deadline to appeal, you will be required to pay your tax liability in full and file a Petition for Redetermination, a claim for refund in order to dispute the amount you owe.
To be awarded full appeal rights, the petition must:
- Be made in writing
- State why you disagree
- Include any facts to support your claim
- Request a hearing
You must respond to all correspondence during the appeal or risk denial of your claim.
The formal appeals process includes an independent review of your case by the CDTFA’s legal department. Several courses of action will be evaluated as a viable resolution.
You have some rights you may exercise regarding the appeals conference:
- Right to a conference held at the CDTFA office most convenient to you
- Right to receive prior notice if the conference will be recorded
- Right to receive a copy of the recording
If your appeal is denied, you are required to pay the liability in full before you can pursue an appeal in a court of law.