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  • Daniel Rodriguez

What California Tax Agencies Can Audit a Taxpayer and Their Business?

Most taxpayers are highly aware that an audit launched by the IRS can begin a painful process where your finances and tax compliance are placed under the microscope. Even if your audit is launched “randomly” or if you simply fall within the top percentage of annual income, huge mistakes and noncompliance can be uncovered during the audit. These errors can result in significant liability for unpaid taxes, penalties, and interest. If the non-compliance appears intentional or voluntary, the IRS agent may decide to refer the case for criminal tax proceedings.

While taxpayers generally fear the IRS, individuals in California seem to be less familiar with the state tax agencies. Unfortunately for taxpayers in this state, any one of four different tax agencies can contact you for mistakes or outstanding tax liabilities. Understanding which California agencies administer taxes, and the tax obligations they are in charge of, is the first step toward achieving or maintaining tax compliance. Speak with an experienced Roseville tax attorney of NewPoint Law Group, LLP today.

California Franchise Tax Board (FTB) Handles State Income Tax Obligations

Most Californians have an obligation to report and pay income taxes. This is due to the fact that one can earn only a very modest amount of money before the obligation to file taxes is triggered. While the personal income tax is probably most familiar to most taxpayers, the FTB also handles corporate and business income taxes.

If you have failed to file taxes or have failed to pay taxes, you may receive a notice in the mail from the FTB. The notice may advise you of the deficiency and the resulting liability you face. If you owe taxes to the FTB, there are a number of relief options. For instance, some taxpayers may qualify for an installment payment plan. If you fail to satisfy income tax obligations, the FTB may levy your property or garnish your wages. A Roseville tax audit lawyer can help you stand up to the FTB and address any subsequent IRS tax problems that may arise from the FTB sharing tax information.

California Board of Equalization Handles Sales and Use Tax

While this tax obligation is more likely to apply to certain businesses, there are both sales tax and use tax obligations in California. California businesses must generally register with the Board of Equalization and remit sales and use tax payments. For certain businesses, selling tobacco products, alcohol, gasoline, or other products result in an obligation to register with the California BOE and pay what are called “excise taxes.” Businesses that fail to satisfy these obligations may be barred from selling alcohol or tobacco products or may face a significant tax bill.

California Employment Development Department Handles Employment and Payroll Taxes

The California Employment Development Department is the California agency responsible for administering and enforcing state payroll tax obligations. The California EDD will check to ensure that employers account for, withhold, and turn over the proper amount of payroll taxes. The EDD is known to proceed extremely aggressively against businesses when it suspects that employment tax fraud has occurred. In fact, many impacted business owners have likened the process to being “guilty until proven innocent.” All the while, the proceedings can threaten to completely derail your organization’s or business’s finances. Simply put, employment tax problems can be fatal to a business.

What Should You Do When Facing a California Tax Audit and Need a Roseville, California Tax Attorney?

If you have been contacted by the FTB, BOE, or EDD for a tax audit or due to errors in your taxes, it is wise to work with an experienced tax attorney who can establish ground rules for your audit. He or she can also engage in steps to ensure that your audit proceeds professionally, and does not delve into additional or unrelated areas that may result in further complications.

The tax lawyers at NewPoint Law Group, LLP can work with individual taxpayers and businesses to meet the challenge of an audit. To schedule a confidential consultation at our Roseville or Folsom law offices, please call 800-358-0305 or contact our tax law firm online.

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