Common Mistakes

While all taxpayers and tax professionals act in good faith, very few are intimately familiar with the laws, regulations, reporting requirements, and internal administrative workings of the California State Board of Equalization. Most taxpayers and their representatives provide the auditor with more documentation and verbal explanations than is required by law. There are other common mistakes made that may increase your sales tax assessment; some of the more common mistakes are as follows:

  1. Not maintaining completed resale certificates as required by regulation
  2. Not requesting information from the Board in writing to rely upon
  3. Not requesting a tax clearance from the Board prior to acquiring a business
  4. Passing title to property which creates a tax liability
  5. Creating corporate officer or personal liability by your actions
  6. Failing to reinstate a permit that has been revoked
  7. Improper use of exemption certificates
  8. Failing to keep adequate documentation supporting tax exemptions
  9. Improper sales made in interstate commerce
  10. Not understanding the various types of service or fabrication labor which may be taxable or exempt
  11. Not understanding the specific types of businesses which are required to hold a resale certificate
  12. Improper use of a resale certificate
  13. Misunderstanding of the taxability of transportation charges
  14. Failure to understand the taxability of returns, defects, and replacements of tangible personal property
  15. Failure to take out a required sellers permit with the Board of Equalization
  16. Failure to claim tax paid purchases resold credits
  17. How a purchaser can incur a liability of the in the acquisition of a business or stock of goods (inventory)
  18. Not knowing how or when to file an application for a sales and use tax permit
  19. Failure to treat barter, exchange, trade-ins, assumption of debt and foreign transactions as taxable sales
  20. Failing to file and adequately complete a sales and/or use tax return
  21. Failing to comply with the dates and deadlines set forth by the Board
  22. Failure of the retailer to collect use tax from the purchaser when the transaction is exempt of the sales tax
  23. Failing to exercise your administrative appeals rights
  24. Failure to file a proper "Petition for Re-determination" requesting an “Oral Hearing” Before the Board

Client Testimonials

"You were extremely valuable to our organization as we battled what we considered to be an unfair tax assessment. Mr. Micallef proved to be a wealth of information which, we believe, helped to tip the scales in our favor. I heartily recommend any organization to give Mr. Micallef a call. It is well worth it."
– R.O
RPH, President

"I could not be more pleased than I am now with the outcome of the sales tax audit appeal you handled for us. As you recall, when I first came to you, I was extremely upset with the State Board of Equalization's findings, feeling that we had been operating and reporting correctly. With your professional representation, we not only reversed the audit, but also identified a sales tax refund where we had, indeed, over reported. We feel we received full value from our agreement to have you represent us. We would be pleased to recommend you to any other advertising agency faced with an SBE audit, and, should we ever require your services again, we’ll not hesitate to call. Thanks again, to you, for an extremely fine job."
– Michael W. Rose
Exec. Vice President
Warr Foote & Rose