Business Sales and Use Tax Audit
California's sales and use tax rules impose significant obligations on businesses that sell goods or purchase taxable items for business use. NewPoint Law Group's tax attorneys help Roseville-area businesses understand their collection and remittance obligations, take advantage of available exemptions, and defend against CDTFA audits and assessments.
Business Sales and Use Tax | Tax Attorneys in Roseville, CA
California Sales and Use Tax for Businesses
California's sales and use tax is administered by the California Department of Tax and Fee Administration (CDTFA). Businesses that sell tangible personal property at retail are required to collect sales tax from their customers and remit it to the CDTFA. The combined state and local sales tax rate varies by location — in Roseville and Placer County, the applicable rate reflects the statewide base plus local district taxes.
Use tax applies to taxable goods purchased from out-of-state or online sellers who did not collect California sales tax, when those goods are brought into California for use. Businesses frequently underestimate their use tax exposure on purchases made through national vendors.
Sales Tax Exemptions for Businesses
California law provides several important sales and use tax exemptions relevant to businesses, including the manufacturing equipment partial exemption (Revenue and Taxation Code § 6377.1), exemptions for certain food products, resale exemptions for inventory purchased for resale, and exemptions for certain agricultural equipment. Correctly applying these exemptions — and maintaining proper documentation — is essential to avoiding assessments on audit.
CDTFA Audits of Business Sales Tax
The CDTFA audits businesses to verify that sales tax has been correctly collected, reported, and remitted. Common audit techniques include comparing reported sales to bank deposits, reviewing sales journals and invoices, testing whether exempt sales were properly documented, and using statistical sampling to project findings across unreviewd periods.
Errors in the sample or methodology can result in significantly overstated assessments. Our tax attorneys review CDTFA audit methodology, challenge statistical sampling errors, document valid exemptions, and negotiate accurate assessments.
Online and Multi-Channel Sales
Following the U.S. Supreme Court's decision in South Dakota v. Wayfair, California requires out-of-state sellers with sufficient economic nexus to collect and remit California sales tax. Businesses selling through multiple channels — including e-commerce platforms, marketplaces, and direct sales — must carefully track their California sales to determine when collection obligations arise.