So, before we enter into the topic, let us make it clear about what a sales audit is.
It an audit of the performance and activities of the sales staff in a company. It is reviewed by some external or even an internal auditor. This depends on the goals of the audit. If an internal auditor does the audit, it will help you get to know about the places to improve in a process. This will help you so that you can produce more sales. Moving back to the main point, the Los Angeles tax is handled by the California Board of Equalization. It is a government agency whose duty is to make sure all the taxes are paid as per the rules of the government. They collect the Los Angeles sales tax from the business and is a Los Angeles County tax collector agency for the government.
There are a lot of companies out there that feel that they are at a very low profile to be audited by the agency or even noticed by them. But that is where the reality comes in, all the business in Los Angeles would get an audit at some point. Moreover, a lot of them would also meet the Los Angeles tax collector and auditor making audits on a routine due to their tax practices and the sales. It is common for all the businesses like the convenience stores, salons, liquor stores, bars, restaurants, and any of the other consumer-oriented companies or businesses. And it gets bad for those who are not prepared to meet any of the severe consequences by protecting themselves.
To begin with, an audit that is poorly handled or the audit that would reveal the flaws and errors can cause a notable assessment that would have a lot of additional fines, tax owed and penalties. The agency also shared all the reports and the information with the other government agencies. Hence, the board would even report all the flaws to IRS that would make things harder on the business owner. So, the government Los Angeles tax collector and I mean all of them would know what is going on where you would not be able to hide from anyone of them.
Another thing that should be noted is that the businesses like the restaurants, bars that need licenses and for any professionals that are licensed can be in trouble as well. This is because the agency would be reporting them to the licensing board. Moreover, those business professionals that run only with the business activities along with the license, there would be a chain of events with the sales tax audit by the Los Angeles tax and would just be explained as a big nightmare.
The Summary of a Los Angeles sales tax Audit & Its Intentions Conducted by the Board of Equalization
A yearly audit publication is set every year that has some rules and procedures for the Los Angeles sales tax audit that is done by the California Board of Equalization. If you want to know about the review guidelines along with the changes that were in the use tax audits and sales, you can visit the main website to see it. Moreover, the Los Angeles County tax assessor audit has a validity of about three years period.
The agency sends a Los Angeles County tax assessor to conduct the Los Angeles sales tax audits. The duty of the person is to figure out the company’s docility along with their tax responsibilities. The Los Angeles County tax collector would also find out if there is any overpayments or underpayments of fees and taxes of the business he is auditing. Most of the task is done typically by referring to the business owner’s business records that should be there according to the Regulation 1698 Records with the firm owner. Just so that you know what a business should keep in their records that would be needed by the Los Angeles tax collector at some point, the list has been shared below:
- The business’ traditional accounts and books, which are things that an average professional businessman would keep with them anyways.
- Proof or the original entry documents that would confirm or corroborates with the records that are kept with you. This includes:
- Cash Register tapes
- All the documents that would proof the actual amount of the use tax debt and the sales for the business.
- The schedule used by the owner and their accountant for preparing the tax returns.
Moreover, the company should have the records of a minimum of four years for the Los Angeles County tax assessor to review. They could also ask for the files by other businesses or other third-party government agencies.
There are some rare expectations where the agency would offer the business a notification before the audit is conducted by the Los Angeles tax collector. This would allow you to prepare with all the documents that are needed along with the ones mentioned above, but remember, this is very rare. But if this happens there is an initial contact that is made by the auditor that could be harmful to you as well. The Los Angeles County tax assessor would have an in-person notification or a telephonic conversation where the person would ask about the kind of company, the range of functions, and the kind of files you need to have for the auditing process.
Another thing is that, if you wish to have an accountant, an authorized person or a lawyer to handle the Los Angeles tax audit for your business, you would need to let the agent know about it. Along with this, you would need to give them the contact information about the person and answer the questions that would come after it.
If the Files are Inadequate or the Auditor Notes Errors?
The problems that you may encounter while the Los Angeles tax auditors check on everything to create reports have been explained below.
Fail to register your Business Properly – Many states in the US also need the corporate office registration for the sales tax. And the bad news is that California takes the step further where they require a registration done with all the government agencies. Moreover, the drivers’ license and the social security number of these people should be with you in case there is any inquiry.
Fail to have a discussion about the audit procedures and policies with the Los Angeles tax auditor – If the audits go poorly, the obligation is shared between the business and the auditor for the missteps of the source of the process. You have to handle the audits on a daily basis instead of leaving it for the Los Angeles, tax auditor. Since this would just get outcomes that would not be good. Moreover, you would have to get others to agree to the method of sampling for the audits.
Fail to prepay the required Los Angeles sales tax – The agency needs the business owners to prepay the Los Angeles sales tax debts on time. This is mostly for those who have the monthly average tax debt of $17,000 or higher need to pay it before the audit.
Fail to price the Los Angeles sales tax to the customers so that you do not have to pay the tax to the vendors – Some businessmen feel that after the sales tax has been paid to the vendors, they are free of it. But in real, the company would require to provide the exception documentation. This would cause the businessmen issues due to the uncollected payments.
Some businesses might not have all the records, while for some the agency would find flaws there like the self-consumed issues, use tax noncompliance, and automatic gratuities. Moreover, if there is anything that is found fishy by the Los Angeles County tax collector, they would do a thorough review of the things. And this just means that you would have to meet an estimation of the sales tax on the exact basis. They would review all the transactions made to check the liable sales tax of your business.
So, to avoid all these problems you need to be prepared. Hence, hire a Los Angeles tax lawyer to help you with it from the Tax Law Los Angeles. Visit TaxLawLosAngeles.Com to know more about it today!