Owe the IRS or California? We've Saved Clients Over $1.4M in Tax Liabilities.

CDTFA generally audits the most recent three years for a business that has filed its sales-tax returns. If returns were never filed — or CDTFA alleges fraud — the department can reach back eight years or more. Because auditors take a short sample and extrapolate it across the entire period, the length of the audit window dramatically changes the assessment. Challenging that extrapolation methodology is the core of a sales-tax audit defense.

Common triggers are industry-wide sweep audits (restaurants, liquor stores, nail salons, markets), a sales-tax-to-reported-income ratio that looks off, large refund claims, mismatches between your returns and third-party data, anonymous tips, or simple rotation through CDTFA's audit pool. Being selected does not mean you did anything wrong — it means the state will test its assumptions against your records, and those assumptions can be challenged.

Yes. A proposed assessment is not final. CDTFA auditors are bound by the department's own Audit Manual, and when they skip required steps — the reasonableness check (§0802.70), a proper mark-up model, or bank-deposit analysis — the assessment is vulnerable on appeal. You can pursue the Petition Section, the Settlement Program, or the California Office of Tax Appeals. In one documented case our firm challenged a $5.7M single-day extrapolation, obtaining a reaudit on a proper basis and getting a $50,740 negligence penalty struck entirely.

A CPA can handle routine bookkeeping questions, but CDTFA sampling audits turn on statistics, not just accounting. Defeating an extrapolation requires building alternative statistical models from your real POS and bank data and arguing Audit Manual violations at appeal — work most general practitioners are not equipped to do. Firms often bring us in mid-audit once the methodology challenge exceeds ordinary bookkeeping. A tax attorney also preserves attorney-client privilege that a CPA cannot.

Sometimes — through an Offer in Compromise (OIC). The IRS settles for your Reasonable Collection Potential, roughly your asset equity plus future disposable income, not an arbitrary discount. The IRS rejects about two-thirds of OICs, usually because Forms 433-A/433-B (OIC) and Form 656 were structured incorrectly. We calculate your RCP before filing so the offer matches what the IRS will actually accept, and we tell you honestly if an installment agreement or currently-not-collectible status is a better fit.

Act before the deadline on the notice. IRS Letter 1058 or LT11 gives you 30 days to request a Collection Due Process (CDP) hearing, which generally halts collection while it is pending. We file the CDP appeal, negotiate a levy or garnishment release, and where appropriate place the account in currently-not-collectible status so the IRS stops taking your wages or bank funds while a long-term resolution is arranged. If you have already received one of these letters, call (408) 287-1888 immediately — the clock is running.

Do not ignore it and do not simply pay it. A CP2000 is a proposed adjustment based on third-party data — it is often wrong or incomplete, and it has a response deadline. Note the deadline, gather the documents that support your original return, and do not send more than what is requested. What you submit shapes the entire audit, so have a tax professional review the notice before you respond.

Worker-classification audits (usually by California's EDD, sometimes alongside the IRS or CDTFA) test whether people you pay as 1099 contractors should be W-2 employees under California's ABC test. If reclassified, you can face back payroll taxes, penalties, and interest across the audit period. The defense is documenting the actual working relationship and challenging the auditor's assumptions and sampling. We defend nail salons and other cash-intensive businesses in both the classification and the resulting sales-tax exposure.

It depends on the complexity and stage of your matter — a single audit response costs far less than a multi-year CDTFA appeal or a US Tax Court petition. Tax Resolution Center offers a free 30-minute consultation to review your notice, assess your exposure, and quote engagement terms before you commit to anything. Call (408) 287-1888 or (408) 393-6142.

Yes. Tax Resolution Center LLC (Trung Tâm Thuế Vụ LLC) serves clients in both English and Vietnamese and has a strong Vietnamese-American small-business client base in the San Jose and Bay Area community. We handle IRS and CDTFA matters for restaurants, nail salons, liquor stores, and markets. Our Vietnamese-language site is trungtamthuevu.com. The office is at 621 Tully Road, Suite 106, San Jose, CA 95111.

The firm is based in San Jose and represents clients throughout Santa Clara County and the greater San Francisco Bay Area. Because IRS and US Tax Court representation is federal and CDTFA/FTB/EDD matters are statewide, the firm can also represent California taxpayers beyond the immediate Bay Area. Consultations are offered by phone and in person at the San Jose office.