California State Tax Lawyer (FTB, EDD, and SBE)Regardless of where you live, Mendes Weed, LLP tax attorneys can assist you with all California tax-related matters, including matters related to moving out of state and conducting business in California.
That includes income tax matters with the Franchise Tax Board (FTB), employment-related matters with the Employment Development Department (EDD), or sales and use tax matters with the State Board of Equalization (SBE). In addition, we have successfully argued cases in front of the California Office of Tax Appeals.
Similar to the IRS’s innocent spouse relief program, the FTB has an innocent joint filer program that may provide relief to some taxpayers. There are some nuances to this area of law by virtue of the fact that California is a community property state. Because of this, a request for innocent joint filer relief may not always be the best solution. A taxpayer who is contemplating filing for innocent joint filer relief should meet with a tax attorney to be informed of all the risks and benefits.
Are you dealing with the Franchise Tax Board, Employment Development Department, or the State Board of Equalization? We are experienced with California state tax laws and are determined to find the solution that best fits each client.
If you fail to respond quickly to a notice you have received, you could be subject to a tax lien, which will affect your credit or a levy on your wages.
Take a proactive approach. Call us today.
State Tax Litigation
California state tax inquiries can happen for different reasons than IRS inquiries, and they can place a major burden on your livelihood. Some California state tax laws and procedures vary from those of the IRS, and it is crucial that you comply correctly. Our deep understanding of California state tax laws informs every step of the litigation process.
California State Tax Audits
A California state tax audit can be daunting; they differ from IRS audits and being prepared means knowing exactly what laws apply to a given situation. It is crucial to file the correct documents, comply with the state’s requests, and to have reliable representation. When you are audited, we are ready to craft a tailored approach that will seek the most effective results. Have a State tax lawyer on your side.
We help you navigate your audit carefully and move the process along as quickly and painlessly as possible. We can review your tax return, identify potential errors, and handle the audit with only your best interests in mind.
Read the California Taxpayer’s Bill of Rights for detailed information on your rights and audit procedures.
California Franchise Tax Board (FTB)
The California Franchise Tax Board (FTB) collects personal income taxes and corporate taxes due to the state. When you pay your state taxes, you pay them through the FTB. With strict adherence to deadlines and aggressive collection tactics, the state’s Franchise Tax Board has a reputation of being more difficult than the IRS to deal with.
A variety of factors can cause a taxpayer to be selected for an audit but most often the reason is that you still owe money to the IRS. Common triggers include filing your tax returns late; if you calculated an error on your return; you underpaid your taxes, or a personal assessment for business tax if you own your own company. Even if you have paid your taxes, the Franchise Tax Board also collects fees and fines from other agencies such as vehicle registration, court fees, or back child support.
If the FTB has chosen you or your business for an audit, you will first receive an initial contact letter that identifies the issues under examination. Throughout the course of the audit, the FTB auditor will issue Information Document Requests that serve to gather facts and documents necessary to understand and verify items that the taxpayer reported on the tax return.
At the end of the audit, the FTB auditor will provide the results in writing. A notice of proposed assessment shows the additional tax that the FTB believes the taxpayer owes. If a taxpayer does not agree with the proposed adjustments, the taxpayer may be able to file a written protest. At that point, an FTB hearing officer will be assigned to the case, and he or she will determine the correct amount of tax based on the evidence that the taxpayer submits and the law.
The FTB takes collections very seriously and is aggressive in pursuing state taxes, interest, and penalties. If you are facing an audit, tax investigation, collection matter or court action, take action immediately to protect your rights and business interests. Our tax attorneys have extensive experience representing both individual and corporate clients in state tax disputes, including California income tax audits.
California State Board of Equalization (SBE)
Revenues from states and use taxes are based on two different concepts. When a company has a business transaction that is subject to sales tax within a state, it is responsible for collecting the sales tax from the consumer of the taxable good or service. When a consumer within a state purchases a taxable good or service outside of the state they reside in, they are responsible for paying a use tax.
Revenues from states and use taxes are based on two different concepts. When a company has a business transaction that is subject to sales tax within a state, it is responsible for collecting the sales tax from the consumer of the taxable good or service. When a consumer within a state purchases a taxable good or service outside of state they reside in, they are responsible for paying a use tax.
Sales Tax Audits are done primarily to make sure that an organization is collecting and paying the sales tax owed to the state when a taxable transaction occurs. A sales tax auditor will look at several different factors in determining if an organization is compliant in both the collections and paying of any sales tax that may be due, including:
- Comparing total sales revenue with sales that resulted in the collection of sales tax
- Sales per income tax versus sales per sales tax returns
- Reviewing sales tax payable against the sales tax that was actually paid
Use Tax Audits are a review of transactions that may occur that result in a use tax liability. Use taxes are collected when a business uses, stores, or consumes inventory or goods that have been previously considered exempt from sales tax. This includes any goods that may have been purchased out of state.
California Employment Development Department (EDD)
The State of California’s Employment Development Department is responsible for collecting employment payroll taxes to fund and administer unemployment and disability insurance, paid family leave, and other state programs. Beyond tax collection, the EDD also has the authority to issue audits to anyone operating a business within California. The main reason the EDD performs these audits is to detect and deter fraud regarding employment taxes.
If your company has been notified of an impending audit, it is important to determine which type of audit is being performed.
There are two different types of audits, Verification EDD audit or a Request EDD audit.
- Verification EDD audits are randomly selected.
- Request Audits are the more serious where your business has been specifically selected as a result of information from EDD investigators or through information provided from an individual (most likely an employee or former employee).
If your company has been selected for an audit, it is essential to compile well-organized records and documentation. Having written agreements with any independent contractors is very important. There are key provisions that should be included or omitted from such agreements in order to confirm the intention of both parties that the working relationship is not one of employer-employee. Other priorities during an audit would be to file your quarterly taxes on time, deliver 1099 forms on time, and keep good records of any cash payments.
California State Tax Resources
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California Tax Law Specialist
Partner Christina Weed has years of experience helping businesses and individuals with their complex California tax litigation issues. She is a licensed attorney with an LL.M. in Taxation from the University of San Diego and a Bachelor’s Degree in Accountancy. She serves as Chair of the Tax Section of the Contra Costa County Bar Association and is also a member of the Estate Planning Council Diablo Valley and the Tri-Valley Estate Planning Council.
In 2018, Christina became one of the first lawyers to argue a case in front of California’s Office of Tax Appeals.
Christina has been designated a Certified Specialist in Taxation by the State Bar of California.
Walnut Creek Main Office
1990 N. California BLVd.
Walnut Creek, CA 94596
San Jose Office
3031 TISCH WAY
110 PLAZA WEST
SAN JOSE, CA 94607
66 Franklin Street
Oakland, CA 94607
San Francisco Office
95 Third Street
San Francisco, CA 94103
12242 Business Park Drive
Truckee, CA 96161