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Gas station operators face an array of tax reporting and collection regulations. Chief among those is the collection, remittance, and reporting of sales taxes. In California, the CDTFA has increasingly audited gas station operators due to the cash-intensive nature of the industry. In essence, gas stations have a lot of cash sales. The IRS and the State of California are naturally suspicious of industries that operate in cash transactions, especially when those industries have onerous tax obligations. (For instance, the CDTFA targets cannabis dispensaries for audit, just like bars and restaurants). Unfortunately for gas stations, their tax reporting and collection regulations are among the most burdensome in America for independently owned small businesses. Even well-meaning operators can find themselves in violation with consequent tax debt, interest, and penalties.
California tax attorney Jin Kim represents gas station owners under audit by the CDTFA and IRS. She also helps gas stations resolve federal and state tax debt. To learn more about how she can help your gas station achieve tax relief, call her office at (916) 299-9913 for a free consultation.
CDTFA Sales Tax Audit Can Lead To Criminal Investigation
As referenced above, The California Department of Tax and Fee Administration is naturally suspicious of cash-intensive businesses such as gas stations. Accordingly, certain businesses such as liquor stores and gas stations frequently find themselves subject to sales tax audits. The consequences of these audits can range from the typical assessment of additional tax liability for failure to report or remit sales taxes on time with interest and penalties to the most severe: the identification of unreported cash sales leading to a criminal tax investigation. Take, for example, the case of a 35-year old gas station operator who was sentenced to 21 months in federal prison and ordered to pay $1,500,000 for underreporting sales on federal corporate and state sales tax returns.
In truth, gas station operators under audit who have engaged in unreported cash sales or fabricated tax returns find themselves in a precarious position. To avoid further enhancing their liability, they don’t want to lie or obstruct the investigation. However, they also don’t want to furnish evidence that can point the agency to the unreported cash sales or crimes. The best course of action is to retain a tax attorney early in the sales tax audit to mitigate civil and criminal liability.
Sales Tax Resources For Gas Station Owners
The CDTFA provides many resources and tax guides for gas station operators, which should tell you exactly how burdensome and complex California and Federal tax requirements are for gas stations. Chief among these resources is the CDTFA website for gas station operators. The website contains links to tax guides for tobacco sales, underground storage tank maintenance fees, fuel taxes, and most importantly, publications on prepaid sales taxes and sales of fuel. Of course, if you’ve received notice of a CDTFA or IRS audit, these resources may be helpful in the future, but for now, consider a free consultation with our tax attorney.
Experience in Audits of Cash-Based Businesses
Gas station retailers operate on a mixture of electronic and cash transactions. Naturally, the IRS and CDTFA are suspicious of cash-based retailers, and when cash-based transactions are combined with minor tax violations, field audits are a potential consequence. California tax attorney Jin Kim represents gas station operators in IRS and California tax controversies and audits. In addition to gas station retailers, she also represents other cash-based businesses such as landscapers in income tax audits and marijuana dispensaries in CDTFA sales tax audits. Furthermore, she represents assisted living facilities in payroll tax audits and installment plan agreements. To learn more about navigating your gas station audit or negotiating an installment plan with the IRS or CDTFA, call the Law Office of Jin Kim at (916) 299-9913 for a free consultation.
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