Taxation

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California’s tax system can be confusing, especially for business owners navigating sales tax, use tax, and excise tax obligations. The California Department of Tax and Fee Administration (CDTFA) enforces these rules, and when discrepancies arise, they audit.
For many businesses, a CDTFA audit starts with something as simple as an exemption error, a missing resale certificate, or a purchase from…

California restaurants operate under some of the most complex tax and reporting rules in the country. Between sales tax, use tax, cash handling, tip reporting, and new gratuity regulations on the horizon, even well-run businesses can find themselves facing a CDTFA sales tax audit.
In this video, John highlights three of the most common triggers of a California sales tax…

California businesses are seeing a sharp rise in Employment Development Department (EDD) audits, and one of the most significant changes is the expansion of audit lookback periods. While a standard audit typically covers three years, EDD now has the authority to reach back eight years when independent contractor issues are involved. For companies that work with 1099 workers, this shift…

Most business owners are caught off guard when they receive a letter from the California Department of Tax and Fee Administration (CDTFA) notifying them of a sales tax audit. The first question is always the same: Why me?
The reality is that there are clear patterns in how businesses are selected for review.
Reason #1: Reported Revenue Looks Inconsistent
One…

The Reality of Extended IRS Audits
Many business owners believe the IRS can only look back three years. Some prepare more carefully and keep records for seven years. Both assumptions can leave you exposed. When tax attributes like net operating losses (NOLs) are involved, the IRS has authority to extend its review far beyond the typical three-year window.
John Milikowsky,…

If you are selling your business in California and you have a sales tax account with the CDTFA, there’s a critical step you need to know about: requesting a tax clearance certificate.
While this step is often seen as routine in a mergers and acquisitions (M&A) process, it carries a hidden risk. Requesting a clearance can sometimes trigger an audit,…

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California’s $8.55 Million Boost to Local Wage-and-Hour Enforcement
California has injected $8.55 million into 16 local prosecutor offices through its Labor Code Enforcement Grant Program, marking a significant escalation in the state’s efforts to hold employers accountable for wage-and-hour violations.
This funding shifts enforcement power from

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The Emerging Legal Threat
Most business owners understand that tax evasion is illegal. But few realize that it could soon carry even steeper consequences, including charges for money laundering.
This isn’t speculation. A growing number of international frameworks and academic studies, including guidance from the Financial Action Task Force (FATF), are pointing to a future where tax evasion could be…

…And Why It May Trigger Increased Audit Exposure
As we approach the end of 2025, CPAs across the country are preparing for another round of tax complexity, this time surrounding the scheduled expiration of key provisions in the Tax Cuts and Jobs Act (TCJA).
But just as planning ramps up, Congress has added a new variable: the recently passed One…