In Parts I and II of this series on sales tax audits, we discussed some sales tax audit triggers, things to do to minimize the chances of a tax audit, what the auditor is looking for, and the audit process itself. In this final post in this series on sales tax audits, we will provide a brief overview of the sales tax appeals process.
After the audit
Upon completion of a sales tax audit, there will be an “exit conference” with the auditor. At the exit conference, the auditor will explain their findings to you. You and your representative are entitled to receive a copy of their working papers and to ask questions.
If you disagree
You will also have an opportunity to express any objections to the results of the audit, which should be taken into account by the auditor who may make adjustments on the spot, arrange for another meeting following further analysis, or arrange for a discussion with their supervisor.
If you disagree with the supervisor as well, you should be given the opportunity to meet with a representative of the BOE. Note that there are very strict time constraints and arrangements must be made within 10 days or the BOE will assume that you agree with the auditor’s findings.
Following the exit conference and any subsequent discussions, you will receive a letter and Report of Field Audit or Report of Investigation.
The notice
You will then receive one of three notices:
- A letter stating that the sales tax returns are being accepted as filed,
- A Notice of Determination which is a bill stating the amount of sales tax due plus interest and penalties, or
- A Notice of Refund
If you disagree with the results of the audit, you have the right to appeal.
Appeals procedures
A taxpayer may challenge any BOE assessment by filing a timely appeal. You may appeal the Notice of Determination by (1) filing a Petition for Re-determination or (2) paying the amount due in full (to avoid any additional interest accruals) and a Claim for Refund with the California Board of Equalization.
It is crucial to timely respond to any notice or letter sent by the BOE or your appeal will be denied.
Note that there are very specific requirements for these documents, evidence that must be provided, and additional benefits (such as Board hearings and appeals conferences) will be deemed waived if not specifically requested. It is always advisable to have your tax representative complete all letters and forms for you.
Skilled tax audit representation
To learn more about appeals procedures, see Publication 17: Appeals Procedures: Sales and Use Taxes and Special Taxes or call the experienced San Francisco tax attorneys at Moskowitz, LLP today.