How to Respond to a CDTFA Notice of Determination
Your 30-Day Window to Fight a California Sales Tax Assessment
If you’ve received a Notice of Determination from the California Department of Tax and Fee Administration (CDTFA), the clock is already ticking.
This formal letter means the CDTFA has finished its audit or review — and they believe you owe back sales tax, plus penalties and interest.
You now have 30 days to respond. If you don’t, the assessment becomes final, and collections can begin — including liens, levies, and wage garnishments.
In this guide, we’ll explain exactly:
- What the notice means
- How to respond or appeal
- What happens if you ignore it
- And how to protect yourself from further damage
If you’re already in this position, start by reviewing your options for sales tax audit defense in California.
What Is a CDTFA Notice of Determination?
This notice is an official assessment of unpaid sales tax. It’s often issued after:
- A CDTFA audit
- An incomplete response to record requests
- A sales tax return showing underpayment
- Failure to file altogether
It includes:
- The total amount the CDTFA claims you owe
- Interest and penalties
- Appeal rights and deadlines
- A final warning before enforcement begins
Why You Received the Notice
You may receive a Notice of Determination for:
- Underreported sales based on POS or bank data
- Estimated sales from incomplete records
- Failure to respond during a CDTFA audit
- Suppression concerns (e.g., zappers, cash skimming)
- Sales into California without registration or proper reporting
If the CDTFA estimates your sales — and you don’t push back — the number will almost always be inflated.
If you're also being pursued for underreported income by the Franchise Tax Board, the two issues may be linked.
How to Respond Within 30 Days
Step 1: Review the Notice in Detail
Confirm:
- The audit period
- The amount assessed
- Whether the figure is based on actual records or estimates
- Your deadline to appeal
Step 2: File a Petition for Redetermination
This is your formal appeal. It must be submitted within 30 days of the notice date. It should include:
- A written statement explaining why you disagree
- Supporting documentation (POS data, bank statements, tax returns)
- Any explanation for prior discrepancies or estimated figures
Once the petition is filed, CDTFA must pause collections while your case is reviewed.
What Happens If You Do Nothing
If no response is received within 30 days:
- The debt becomes final
- CDTFA will record a state tax lien
- They may levy your business bank account
- Your Seller’s Permit may be suspended
- They can garnish your wages or file with the FTB for income tax enforcement
Once collections begin, your options become limited — and far more expensive.
Can You Still Fight the Determination After 30 Days?
Sometimes — but your chances go down significantly.
Options may include:
- A late petition (with cause)
- Settlement request (in rare hardship cases)
- Filing a claim for refund after paying the full balance
- Appeal through the Office of Tax Appeals (OTA)
To avoid this, always file your petition on time — even if incomplete. You can supplement it later with supporting documents.
How We Help California Businesses Respond
At Boulanger CPA and Consulting PC, we represent clients at every stage of CDTFA enforcement. If you’ve received a Notice of Determination, we can:
- File your Petition for Redetermination
- Analyze your audit report
- Reconstruct and present missing records
- Negotiate adjustments or settlements
- Represent you in hearings or OTA appeals
We also coordinate defense when Franchise Tax Board enforcement or EDD audits are triggered by CDTFA findings.
Schedule Your Free Strategy Call
You have 30 days to act. We can help you:
- Avoid liens and levies
- Dispute inflated audit results
- Create a realistic payment or appeal strategy
Orange County-based. Serving all of California. Virtual consultations available statewide.
Frequently Asked Questions
Why are online sellers audited by the CDTFA?
The CDTFA targets online sellers who may have nexus in California but failed to collect and remit sales tax. Audits are common when sellers have warehouse inventory in-state, use fulfillment services, or sell through platforms like Amazon or Shopify.
What is economic nexus and how does it affect online sellers?
Economic nexus refers to a threshold of sales activity that creates tax obligations in California, even without a physical presence. Online sellers with more than $500,000 in annual sales to California customers are generally required to register and collect sales tax.
Does using Amazon FBA increase my audit risk?
Yes. If Amazon stores your inventory in California, you have physical nexus—even if you’re out of state. This makes you subject to California sales tax collection and enforcement, which often triggers audits from CDTFA.
Can CDTFA audit sellers based outside of California?
Yes. The CDTFA audits out-of-state sellers with California nexus under Wayfair-era rules. If your business meets nexus thresholds, you're obligated to comply regardless of where you're located.
What can online sellers do to avoid CDTFA audit issues?
Stay compliant with registration, collect tax on California sales, file timely returns, and maintain detailed records by platform. Work with a CPA who understands multi-channel ecommerce and California sales tax law.
📣 About the Author
Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.
He is the author of Defend What’s Yours: A California Taxpayer’s Guide to Beating the IRS and FTB at Their Own Game, available now on Amazon. The book offers a step-by-step plan for resolving IRS and FTB tax debt without losing your business, your home, or your peace of mind.
With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.
Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.
Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.
📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.
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