1. When Does a Business Need Tax Attorney Review?
A business tax attorney in California can review tax notices, questions about filing returns, and planned business purchases. The first step is to identify the problem. It may involve an incorrect amount, a missing return, or taxes that could become the buyer’s responsibility.
Read the Notice before Responding
A request for records differs from a notice proposing more tax or demanding payment. Each may require a different response.
An attorney can check:
- Which business and tax years the notice covers.
- Why the agency believes more tax may be owed.
- Which records support the business’s position.
- When and how the business must respond.
Missing returns need a separate review. Before filing, check whether the business had to submit a return and whether a correction affects other tax years.
Review Changes before Signing
Buying a business, changing its structure, or expanding operations may create tax duties. Review those duties before signing a binding agreement.
The broader business tax services overview covers business structure and ongoing planning. This page focuses on tax notices and decisions before a purchase.
2. Identify the Agency and Gather the Right Records
Different agencies handle different taxes. A business tax attorney in California can match the notice to the right returns and records. Resolving a problem with one agency does not automatically resolve a related problem with another.
Match State Tax Questions to Business Records
Start with the agency named on the notice. Then gather records that explain the figures or business arrangements it questions.
| Agency | Taxes It Handles | Records to Review |
|---|---|---|
| Franchise Tax Board, or FTB | Business income and franchise taxes | Tax returns, ownership papers, and sales by location |
| Department of Tax and Fee Administration, or CDTFA | Sales and use taxes | Sales receipts, purchase invoices, resale certificates, and checkout-system records |
| Employment Development Department, or EDD | State payroll taxes | Payroll reports, worker agreements, payment records, and details about the work |
Franchise Tax Board, or FTB
- Taxes It HandlesBusiness income and franchise taxes
- Records to ReviewTax returns, ownership papers, and sales by location
Department of Tax and Fee Administration, or CDTFA
- Taxes It HandlesSales and use taxes
- Records to ReviewSales receipts, purchase invoices, resale certificates, and checkout-system records
Employment Development Department, or EDD
- Taxes It HandlesState payroll taxes
- Records to ReviewPayroll reports, worker agreements, payment records, and details about the work
Forming a company outside the state does not settle whether it must file returns with the FTB. Where it operates, makes sales, owns property, or pays workers may matter.
For CDTFA questions, separate sales from loans, refunds, and transfers between accounts. Money entering a bank account does not always represent a taxable sale.
For EDD questions, calling someone an independent contractor in a contract does not settle their status. The agency also examines the work and the rules that apply.
Keep Federal Tax Matters Separate
The IRS handles federal taxes. Its notices, appeal steps, and court procedures differ from state procedures.
If both levels of government review the same issue, compare the tax years involved. Also check whether an IRS change must be reported to a state agency.
The tax audits and adjustments page explains what happens when the IRS examines a return.
3. Choose the Right Response before Time Runs Out
Challenging a tax amount and asking for more time to pay are different steps. An attorney can review which action fits the notice and whether a separate response is needed to address collection.
Challenge an Amount or Arrange Payment
An FTB Notice of Proposed Assessment says the agency believes additional tax is owed. It generally allows 60 days to file a formal objection, called a protest. Check the “Protest By” date. Interest continues during the protest.
A CDTFA notice determining sales or use tax generally allows 30 days to request another review. Special notices may have different deadlines.
EDD payroll tax disputes follow a separate process involving the California Unemployment Insurance Appeals Board. Check the notice type and its filing rules.
A written challenge should explain:
- Which amounts the business disputes.
- Why the business disagrees.
- Which records support its explanation.
Asking for a payment plan does not replace a required objection or appeal. If the business agrees with the balance but cannot pay, review payment options and collection notices separately.
Check Unpaid Taxes before Buying a Business
Certain unpaid taxes may become the buyer’s responsibility. The buyer may still owe them even if the contract says the seller must pay.
Before closing, check:
- Whether a tax clearance is needed to address the seller’s unpaid taxes.
- Whether part of the purchase price must be held back.
- Whether audits, missing returns, or unpaid balances remain.
- Whether the buyer can obtain needed records after the sale.
A business tax attorney in California can review these points alongside the purchase terms. Related contract questions belong in the asset purchase transaction review.
4. Keep Original Records and Explain Missing Information
Missing documents and unclear figures can make a tax response harder to support. Keep original records, check totals against individual transactions, and explain how you calculated any amounts when records were missing.
Check Totals before Sending Them
A spreadsheet may count the same payment twice or leave out a sale. Compare its totals with invoices, bank statements, and payment reports.
If records are missing, identify what is unavailable. Explain how the remaining documents support your figures. Do not change original records to make them match a return.
Do Not Rely on a Single Seven-Year Rule
There is no single rule allowing a business to discard every tax record after seven years. How long records must be kept depends on the tax, document, and any open review.
CDTFA generally requires relevant records for at least four years. An audit or dispute may require longer storage. Save checkout-system data before automatic deletion. Keep asset records needed to show the cost used to calculate tax.
5. Frequently Asked Questions
Before hiring a professional, clarify the fees and who will handle each task. This helps the business understand what the agreement covers.
Fees depend on the tax years involved, the number of records, the issues, and how far the matter has progressed. Ask for written terms explaining the work included, how fees are calculated, and what could cost extra.
Yes. A certified public accountant, or CPA, can continue accounting and tax-return work while an attorney handles legal questions. CPAs may also represent taxpayers before the IRS. Agree on who will answer agency requests and prepare corrected returns.
6. Request a Business Tax Review
Bring the notice, relevant returns, payment records, and purchase documents to a review with a business tax attorney in California. Include any response or closing dates. These materials help the attorney identify the problem, missing records, and the legal work to consider.
09 Nov, 2026
