A retailer in California is required to pay to the state a tax on the sale of tangible personal property at retail.  A use tax is imposed on taxpayers in California who buy property out of state for use in California.  The Sales and Use Tax Division of the California State Board of Equalization (BOE) audits businesses to determine whether they have reported and paid the correct amount of sales tax and use tax.  If the BOE finds that the business’s records are inadequate, it has a number of techniques to determine what it believes are the correct amounts of sales tax or use tax owed.  Because the BOE often shares information with the IRS and the Franchise Tax Board, failure to adequately prepare for and defend against a BOE audit can have far more disastrous consequences than just owing sales tax.  In the more egregious cases, the owner of a retail business can be the target of a BOE criminal investigation.

Robert Horwitz has advised taxpayers and their accountants on the adequacy of a business’s records and on the development of other evidence to establish the correct amount of sales.  He has represented businesses in sales and use tax audits and in appeals to the BOE to contest the determination of the BOE auditor and has represented clients in BOE criminal cases.