California State Income Tax, Sales and Use Tax, and Employment Tax Agencies
In California, business and individual taxpayers must contend with an array of state and federal tax obligations. Businesses typically face more complex tax scenarios; however, all taxpayers in California face the potential of dealing with multiple tax agencies to satisfy all tax duties and obligations. Through the same concept, taxpayers who run into issues because of unfulfilled tax issues often receive communications from multiple tax agencies. Needless to say, dealing with one tax enforcement agency can be difficult, trying and anxiety-inducing. Handling allegations and accusations levied by multiple taxes can be extremely daunting. Furthermore, mistakes can be made simply due to a lack of familiarity with the agencies and their processes and requirements. Mistakes made during an audit or an investigation can result in complications that may introduce potential liability and other issues.
The following is a brief synopsis of the types of issues the various tax agencies in California handle. This information is intended to help California taxpayers assess the type of tax issue they may face following a letter or other form of communication from a California tax agency. The tax attorneys and CPAs of NewPoint Law Group, LLP, can help individuals and businesses address potential problems strategically. To schedule a free and confidential consultation, please call 800-358-0305 today.
California Franchise Tax Board Handles Income Tax and Corporate Tax
Whether you are an individual taxpayer, a business owner, or both, you are almost guaranteed to have some dealings with the California Franchise Tax Board (FTB). The FTB is the state agency responsible for administering the personal and corporate income tax. The FTB publishes a list of applicable tax rates annually. It is also the agency through which a taxpayer must submit his or her tax return. Finally, if there are problems with the information a taxpayer supplies on a tax return, he or she will likely be contacted by the FTB for an audit. If the audit or investigation find problems, the taxpayer may find him- or herself on the hook for additional tax, penalties, fees, and interest.
California Board of Equalization Handles Sales and Use Tax Obligations
While individuals are probably familiar with California state sales tax in the context of additional taxes being added to the price of products at a cash register, compliance with sales and use tax obligations are typically more business-focused. However, taxpayers who purchase goods from out of state and do not pay state sales tax technically need to account for their use tax obligation.
In the business context, sales and use tax obligations must be reported and paid to the state Board of Equalization. Similarly, organizations that need to obtain a sellers’ permit or apply to the Qualified Purchasers program should petition the BOE. Mistakes regarding sales and use tax can result in an array of consequences for a taxpayer’s business. Businesses that sell cigarettes, alcohol, and other products requiring a license could even face a suspension of their ability to sell these products. Needless to say, these penalties can make an already fraught financial situation untenable.
Employment Development Department Handles Employment Tax Obligations
In addition to the federal payroll taxes, the state of California also assesses and collects a payroll tax. Sometimes referred to as employment taxes or trust fund taxes, taxes by these names are deducted from the worker’s paycheck and are held by the employer “in trust” before turning over the funds. Because these funds are technically always the property of the government, payroll tax audits are frequently extremely aggressive. Even small missteps during a payroll tax audit can result in major consequences for a business.
In California, all businesses with 10 employees or more are currently obligated to submit electronic filings ONLY to the California BOE. Starting Jan. 1, 2018, this obligation will be extended to cover all businesses.
Work with California Tax Lawyers in Folsom When Facing State Tax Agency Inquiries
If you are an individual living in California and have questions about how to handle certain requests by the California FTB, BOE, or EDD, our tax lawyers can help. Likewise, if you own, manage, or administer a business or other organization we may be able to handle your dealings with California’s tax agencies. To schedule a free and confidential initial consultation, please call 800-358-0305 or contact us online.