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CA Department of Tax and Fee Administration Audit (CDTFA)

CA Department of Tax and Fee Administration Audit (CDTFA)

Receiving an audit notice is always alarming, particularly when it comes from the CA Department of Tax and Fee Administration (CDTF). This specific audit is targeted towards businesses, many of whom receive an audit notice in complete surprise. If you aren’t sure why you’ve received an audit notice, or how to prepare for an audit notice, then there are a few things you should know.

 

How Do I Prepare for a CDTFA?

Preparing for a CDTFA starts the moment your business launches, with proper bookkeeping. If you keep meticulous records, then you will have less to worry about than the business that doesn’t have clear records of expenses and sales. We’ll talk more about that in a moment.

The next thing to do is to ensure that you have a current resale certificate. Without a current resale certificate in place, you could be facing severe consequences. In fact, your audit could even leave you receiving no relief from tax liability. That’s right. Without a resale certificate, you could be held responsible for your tax debt, and that debt would be due to the IRS immediately. This can be a huge burden for businesses, and the consequences of this circumstance are dire to the overall health of the company.

Keep in mind, if you do not have the required resale documentation available, then you might find that your auditor requires you to complete a large number of forms. These forms take time and experience to complete. If you don’t have the experience, you’ll have to research the correct way to complete the forms. Errors could be hugely problematic, which is why we recommend working with a CDTFA tax pro from the beginning.

What Should I Know About XYZ Letters?

If this is the first time you’ve ever heard of a XYZ Letter, then you’re probably wondering if this is even a real document. We can assure you that it is! The XYZ Letter is to verify claimed sales for resale, and you’ll find that this documentation can make or break the results of your audit.

You’ll be granted four weeks to prepare and file all your XYZ Letter with all of the supporting documentation that’s required. Gathering this information can be a painstaking process, but it’s necessary.

All of your forms MUST be completed correctly without any errors. If you send an erroneous form or don’t send your packet at all and the deadline passes, the CDTFA can calculate your tax liability of the sales and methods in question. This can be disastrous!

Get CDTFA Help Now

Do not try to complete your audit alone. The stakes are simply too high! Our tax team specializes in CDTFA, and we can make this process just a bit less stressful. While audits are never easy, we can walk you through every step of the way. Contact us now to get started.

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