The California Franchise Board or FTB audits 300,000 returns each year, according to the agency. Allen Barron represents California and out-of-state taxpayers who are facing audits by the FTB. Many taxpayers are surprised to learn that the FTB has agents in Texas, New York and Illinois to help with issues related to non-resident audits.
According to the FTB, some of the top categories for FTB audit risk include questionable tax shelters, changes ordered by an IRS audit, Business or non-business income, and 1031 tax-deferred exchanges. One of the most common audit themes is associated with the under-reporting of income or the misrepresentation of sales receipts.
Small business owners, independent contractors and those who operate their own business often commingle funds, or deposit business revenues into their personal accounts. The attempt is to evade taxes through a strategy of non-reporting valid business income. This is often uncovered when their business partners file 1099’s that do not match up with the income reported on their business or personal tax returns.
FTB audits are risky, and California taxpayers should not face the agency without expert representation. The experienced tax attorneys at Allen Barron can provide the protections of the “attorney-client privilege” while preventing “audit creep” and needless expansion of the scope of the audit in progress. If you are facing a California tax audit, or the FTB we invite you to contact us for a free and substantial consultation at 866-631-3470.