What Is Brotman Law's Strategy in a Sales Tax Audit?

Sales tax audits are notoriously tricky they consume a lot of resources both in time and energy, and money so the goal with us and with our clients is to get out of the process as quickly as possible for the least amount of damage. When we look at a CDTFA audit, we're looking at the cost-benefit of the situation. What's the cost to the client, what's the benefit of a certain action and how best can we get out of the audit with minimizing our expenditure and being as efficient as possible with our resources? One of the best ways that we do this is prior to creating the audit plan will try and pre-audit.

Pre-auditing the client is very important because it gives us a roadmap for how the sales tax audit's going to go and what the areas of risk are for the client. Once we've had the benefit of pre-auditing the client, we can develop a plan for the audit with the auditor. We can navigate the client through the least amount of risk possible with our agreed-upon plan. This is the best way to approach a sales tax audit while we're going through the audit process. An eye needs to be kept on the appeals process too in case the audit goes south. Disagreements with the auditor can and do happen quite frequently. Even the best well-made plan sometimes will fall apart; therefore, it's important for our firm to stuff the record as much as possible with things that are going to be beneficial to the client to the extent that we have control over the preliminary audit report. That gives us a better avenue going into Appeals in advancing the ultimate resolution. In the case ideally we want to try and avoid the appeals process if possible or use it as a means to get the liability down further after a successful audit, but depending on the auditor, depending on the methods of testing used, and depending on the size of the fight that we have to engage in, sometimes that's not always possible. However whenever possible, we try to minimize expenditure, conserve resources and fight for the best outcome for the client.


Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law