HOW IS A TAXPAYER CHOSEN FOR A CALIFORNIA SALES AND USE TAX AUDIT?
This is a question that we often receive from taxpayers and representatives both. There are many reasons why a particular taxpayer is chosen to undergo a sales and use tax audit and the following list identifies a few of these reasons: • The Board of Equalization performs a significant number of routine audits that are selected from the total population of holders of California Sellers Permits. This selection process may consider, among many factors, things such as: • Type of business. • Size of business. • Location of business. • Types of exempt sales claimed on the sales and use tax returns. • History of prior audits. • History of problems noted in audits of similar types of businesses. • The Board of Equalization may receive information from an outside source, such as a disgruntled employee or competitor, requiring an audit investigation to ascertain the validity of the informant’s claim. • Information obtained during an audit of a customer or supplier of a taxpayer may provide evid
