When you have a sales tax audit and you can't agree on the audit, the very first step in the process is that you have an exit conference with the auditor and the manager, and if that doesn't bear fruit, the auditor is going to submit the sales tax audit report. It's going to go up through technical review. They have a review department review the audit report to make sure it's technically correct and then it goes to a final billing. Once it goes to a final billing and I notice the determination is issued, that is your ticket to file your petition of redetermination to go into Appeals. So you file your petition and redetermination, the case moves from Sacramento, it goes back down to the district level and then the district level will try one more time to get it resolved before going through Appeals. What this usually means is as follows. Number one you get a chance to do a 10-day conference with the district principal auditor so CDTFA will schedule you to talk with the head of the audit unit for the particular district that you're working in and the manager and the auditor will both be there and then you can kind of negotiate. If there's an opportunity to get the case settled with the person who is making the final decision on the issue (for the district number two, this is just your principal auditor) and you don't agree for whatever reason and the case can't be resolved in the district, then you go through the formal CDTFA appeals process. The way it usually works out is you'll get a hearing officer at CDTFA, you'll go in for an appeals conference which is much like a mediation, so you'll sit there, the auditor sits there, the manager sits there and the Appeals officer sits there. Usually the appeals officer is either an attorney or their former auditor, and then there's a discussion between the parties on what the issues are and how to resolve. So what usually happens is there's a conference and then there's a follow-up document submission for the petitioner, usually the taxpayer, to prove their point and so on and so forth. What ends up happening after that is an exchange of information back and forth between you and the auditor and the manager of "here's our documents that prove our point," "here's our counter response" and you kind of go back and forth. Eventually you read through to the point where you can't submit any more documents, you can't make any more arguments and the parties just kind of wear themselves out and at that point

the appeals officer will come in. They'll look at all the evidence that's been presented and they'll give you a written decision, usually within about 60 to 90 days. So that's the process. That's CDTFA. There's some tactical considerations that you have to take into consideration. When doing a CDTFA audit it takes a really long time to get through the appeals process. It takes a long time to get into Appeals number one. It could take a year or more to get into Appeals, and then in going through the appeals process it's usually anywhere between a two to five month process between all the back-and-forth and the requests for documents and the extensions that are granted and people to party. It's more time, it's just a long process and it's fairly back and forth. It's fairly time consuming so if you've got an audit that you disagree with, appeals is certainly an option but you want an attorney who understands sales and use tax to really be able to guide you through this process. Because again, this isn't about winning or preparing an appeal. This is about getting out of the audit as cleanly, quickly and cost-effectively as possible so appeals is one avenue for that, working with the district is another avenue and you always have the opportunity to go to settlement as well so just keep that in mind when evaluating whether or not you're going to go through the CDTFA process.