CDTFA Sales and Use Tax Examinations: High-Risk S&U Tax Issues, California S&U Tax Audits, Preparing for CDTFA Scrutiny

This webinar will provide businesses and their tax advisers with a practical framework for preparing clients for California Department of Tax and Fee Administration (CDTFA) examinations and defending positions taken on California sales and use (S&U) tax returns. Our panel of knowledgeable tax attorneys will outline current areas of focus and recent legislative and administrative developments in California related to S&U tax.

S&U tax examinations conducted by the CDTFA present unique risks for California businesses due to the state's complex sourcing rules, expansive district tax regime, aggressive use tax enforcement, and data-driven audit selection methodologies. In recent years, CDTFA has intensified audit scrutiny across industries, with particular emphasis on exempt sales documentation, resale certificates, marketplace transactions, economic nexus, and use tax compliance. As a result, businesses operating in—or selling into—California face heightened exposure during S&U tax audits.

California has the highest sales tax rate, 7.25%. When combined with local taxes, Los Angeles businesses remit 9.75% on California sales. With local incentive taxes for city services, businesses in Palmdale and Santa Fe Springs suffer rates of 11.25% and 11%, respectively. The CDTFA imposes a 6% penalty on late payments, increasing to 10% if due to "negligence or disregard," and, for certain suppliers or wholesalers who knowingly fail to comply, the penalty rate is 25%. 

Tax professionals and businesses with S&U obligations in California need to understand current sales and use tax requirements, manage sales tax compliance, and prepare for potential CDFTA scrutiny. 

Listen as our panel of astute California tax attorneys divulges high-risk issues for California S&U examinations, outlines the CDTFA audit process, and offers advice for managing California S&U tax compliance.