How to Respond to a CDTFA Audit Letter in California
If you’ve received an audit letter from the California Department of Tax and Fee Administration (CDTFA), take a deep breath — then take action.
Sales tax audits in California move fast and can escalate quickly if you don’t respond correctly. Whether you’re a restaurant, retailer, contractor, or service business, the way you handle the first few steps can determine whether your audit is manageable… or devastating.
In this guide, we walk you through what to expect and how to respond professionally and strategically.
What Is a CDTFA Audit Letter?
The audit letter is your formal notice that the CDTFA is reviewing your sales tax reporting. It typically includes:
- The audit period (usually 3+ years)
- A request for records and documents
- An assigned auditor’s name and contact information
The letter may sound routine, but it’s a serious legal notification — and the clock starts ticking the day it arrives.
Step 1: Respond Before the Deadline
Never ignore a CDTFA audit letter. You typically have 14–30 days to reply and begin the process.
DO respond in writing, confirming receipt and willingness to cooperate
DON’T send over all your records without reviewing them first
DO contact a tax professional experienced in CDTFA audits
If you miss your deadline, the auditor may proceed based on estimates — or escalate the case.
Step 2: Get Clear on the Audit Scope
Before handing anything over, clarify:
- The exact years or quarters being audited
- What industries or locations are included
- What methods will be used to sample your data
Many assessments are inflated simply because the scope wasn’t clearly defined — or the business gave the CDTFA too much access.
Step 3: Review & Prepare Your Records
Start gathering:
- Sales tax returns (filed and paid)
- POS reports and Z-tapes
- Bank statements
- General ledger entries
- Purchase and resale records
Warning: CDTFA auditors may assume missing records = underreported sales. Don’t give them that opening.
Step 4: Do NOT Represent Yourself (In Most Cases)
Most CDTFA audits involve:
- Industry markup estimates
- Inventory/purchase reconciliations
- Interviews with your staff
- Assumptions based on limited data
If you try to “just cooperate,” you may agree to things that drastically increase your liability. A CPA or representative who understands CDTFA audits can challenge methods and defend your margins.
Step 5: Don’t Ignore the Next Letters
The audit letter is just the beginning. If you don’t take it seriously, the CDTFA may:
- Assess penalties + interest
- File a tax lien on your business
- Move to levy bank accounts or suspend your permit
Responding early and strategically is your best defense.
Read more: What Triggers a CDTFA Sales Audit in California
Get Help Before You Hand Anything Over
At Boulanger CPA and Consulting PC, we help California business owners respond to CDTFA audits — and protect their livelihoods from aggressive assessments.
📍 Based in Orange County — Serving All of California
Call:
657-218-5700
Email:
marc@boulangercpa.com
Schedule a CDTFA Audit Strategy Call
Already received your audit letter? Visit our CDTFA Audit Defense page to learn how we can take over communication and protect your business.
Frequently Asked Questions
What should I do first if I receive a CDTFA audit letter?
The first step is to review the letter carefully and contact a qualified CPA or tax professional immediately. You should not call the auditor or submit records until your situation has been evaluated by a representative.
How much time do I have to respond to a CDTFA audit notice?
Most CDTFA audit letters request a response within 10 to 30 days. It’s important to act quickly, even if you plan to request an extension or representation. Delays may lead to loss of appeal rights or assumptions against you.
Can I just send the CDTFA the records they’re asking for?
You should not send anything to the CDTFA until your records have been reviewed by a professional. Submitting incomplete or improperly organized documentation can increase your risk and lead to unfavorable audit assumptions.
What happens after I respond to the CDTFA audit notice?
After your response, the auditor will schedule an interview or request a full document set. If you're represented, your CPA will handle this directly and may begin negotiating scope or timeframes to protect your position.
Can I get in trouble if I ignore the CDTFA audit letter?
Yes. Ignoring the notice can result in forced assessments, penalties, liens, or levies. Responding strategically and early gives you the best chance to reduce exposure and protect your business.
📣 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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