February 1, 2012
December 17, 2018
Attentive Matters in Sales Tax Audit
(RETAIL SALES)
Generally, a business engaging in retail sales will likely face sales tax audit by California Department of Tax and Fee Administration every three years. To prevent unfavorable results, please keep the following in mind:
1) Sales amount reported on sales tax return must equal the amount from daily sales ring tape, sales figure stored in Point-of-Sales system, or daily sales journal.
2) Monthly bank deposit in excess of sales amount must be substantiated with reasonable documents. (Credits from check cashing, money order and lottery are excluded when defining monthly bank deposit).
3) When purchasing both taxable and nontaxable items together, please specify amount spent for nontaxable items on the check stubs when paying by checks, and in the bank statement when paying by credit/debit cards.
4) Retain all purchase invoices including cash paid invoices for up to four years and check if the sales tax has been paid with the purchase.
5) Statewide Compliance and Outreach Program (SCOP) a.k.a Zip Code Audit :
SCOP teams located throughout the state will conduct door-to-door visits to all non-residential businesses based on zip code. They will verify whether businesses hold proper tax and fee permits (i.e., business tax certificate/license, seller's permit, tobacco, weight, alcoholic beverage, etc.) or not. More importantly, they will determine if the business is reporting its sales and use taxes properly. If the SCOP specialists find that a business is reporting its taxes incorrectly, they will advise the business to file amended returns. In some instances, the business may be referred for an audit. Please contact our office prior to answering any question to the SCOP specialists.
6) Please contact our office prior to making internet sales. Different rates of sales tax should be collected based on shipping address.
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