CDTFA Sales Suppression Audits Explained – What California Business Owners Need to Know
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Frequently Asked Questions
What is sales suppression?
Sales suppression is the underreporting of taxable sales, often using software or techniques to delete or hide cash transactions from sales records.
Why does CDTFA target sales suppression?
The CDTFA considers sales suppression a form of tax fraud. Businesses that underreport sales may face severe penalties, interest, and even criminal charges.
How does CDTFA detect sales suppression?
Auditors use credit card-to-cash ratio analysis, industry benchmarks, and POS system reviews to identify discrepancies suggesting hidden sales.
What industries are most at risk?
Cash-heavy industries such as restaurants, liquor stores, vape shops, and convenience stores are frequent CDTFA audit targets for sales suppression.
What are the penalties for sales suppression?
Penalties may include back taxes, civil fines, interest, and criminal prosecution in extreme cases. Suppression cases often carry higher consequences than standard audits.
Can CDTFA audits trigger IRS audits?
Yes. Sales suppression findings are often shared with the IRS and the California Franchise Tax Board, creating additional audit exposure.
Should I hire a CPA for sales suppression defense?
Yes. Professional representation is critical when facing suppression allegations, as penalties are severe and defense requires careful strategy.
Marc Boulanger, CPA — California Sales Tax & CDTFA Audit Specialist
Marc is a CPA with many years of experience helping California business owners resolve complex sales tax and CDTFA audit matters. With formal training in accounting and a Master’s degree in Accounting, Marc combines technical precision with practical experience across industries such as restaurants, auto repair, retail, and multi-location franchises.
Outside of work, Marc enjoys traveling the country with his wife of 30 years and their five children. His approach to audit defense is built on clear communication, thorough analysis, and treating every client’s business as if it were his own.
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