Unsure where you owe sales or use tax
Run Your Nexus Risk CheckA California sales tax audit is conducted by the California Department of Tax and Fee Administration to verify whether a business has properly reported and remitted sales and use tax.
An audit may include:
If discrepancies are found, the CDTFA may assess additional tax, penalties, and interest.
Run Your Nexus Risk CheckCommon audit triggers include:
California uses data matching and third-party reporting to identify potential exposure.
California Economic Nexus Threshold | What Triggers a Sales Tax Audit in California
An audit typically begins with:
The notice may specify:
Businesses are generally required to provide books and records for examination.
The CDTFA may review:
Purchase invoices are frequently examined for unpaid use tax.
California Resale Certificate Requirements | California Use Tax for Businesses
If discrepancies are identified, the CDTFA may:
Audit assessments may significantly increase total liability.
California Sales Tax Penalties and Interest | California Back Sales Tax Liability
If the audit determines that nexus existed in prior years but no returns were filed, the CDTFA may review multiple prior periods.
In such cases, exposure may include:
Businesses that address exposure before audit notice may preserve additional options.
Preparation may include:
Understanding potential exposure before responding to audit notice is critical.
If your business has been contacted by the CDTFA or believes nexus may exist, evaluate exposure before responding.
Run Your Nexus Risk Check