Sales Tax Blog

As a restaurant owner in California you should be aware that the California State Board of Equalization is conducting a large number of sales tax audits on restaurants throughout California. You should also be aware that these audits often utilize an audit technique involving the use of a very small observation test to establish the level of sales an auditor BELIEVES a business had during the entire audit period...To make matters even worse, the results of these flawed audits, as flawed as they are, are generally going to shared by the Board of Equalization with other taxing agencies, such as, but not necessarily limited to, the Franchise Tax Board.

“We pay your tax”. “We pay the tax”. “We will cover the tax for you”. So often, when I see these types of advertisements or statements, I will blurt out something to whoever is with me to the effect of “why are they claiming that they will pay my tax” or “why are they advertising that they pay the tax since that is an obvious point?” I can’t seem to help myself! In complete disregard for my sales tax sanity, I continue to see these claims so often. In order to try to restore some order let’s take a quick look at what is likely really going on here.

In California, some labor may be properly treated as exempt from sales and use tax and some forms of labor are subject to such tax. And, all otherwise exempt labor must be properly documented and supported as exempt labor or such labor can be held as subject to the tax when questioned by the state.

Did you know that it is possible to secure relief from various penalties that you may be hit with related to California Sales and Use Tax. There are limitations to this relief and certain criteria must be satisfied to be eligible for relief.