Sales Tax & EDD Audits for Restaurants
Restaurants are one of the most frequently audited businesses in California. We specialize in representing restaurant owners in CDTFA sales tax audits and EDD payroll tax audits, from the first letter to the final determination.
Sales Tax Audits
Sales tax auditors often test a restaurant’s reported sales against its purchases, credit card deposits, and point-of-sale records. When the numbers don’t line up, the audit can produce a large estimated assessment.
Common issues we handle
- Differences between POS reports and sales tax returns
- Markup and credit card ratio tests used to estimate cash sales
- Taxable vs. nontaxable food, including to-go and cold food
- Service charges, tips, and alcohol sales
- Missing or incomplete records
Payroll Tax Audits
EDD audits review whether workers are properly classified and whether all wages, including tips and cash pay, were reported for state payroll taxes.
Common issues we handle
- Employee vs. independent contractor classification
- Tip reporting and cash wages
- Family members and owners on payroll
- Unemployment insurance, SDI, and state withholding
- Penalties and interest on assessments
Audit Representation, Start to Finish
Prepare
We organize your sales, purchase, POS, bank, and payroll records before the auditor arrives.
Represent
We work directly with the auditor, so you can focus on running your restaurant.
Challenge
We review the auditor’s testing methods and estimates and respond to findings that don’t fit your business.
Appeal
If the findings are wrong, we help you dispute them through the appeals process.
Resolve
When a balance is owed, we work on payment plans and penalty relief.
Prevent
We help set up your POS reporting, payroll, and records so the next audit goes smoothly.
I just got an audit letter from CDTFA or EDD. What should I do first?
Contact us before you reply or schedule anything. We will review the letter, explain the audit period and scope, and help you gather the right records.
Do I have to meet with the auditor myself?
With your authorization, we can communicate and meet with the auditor on your behalf.
My records are incomplete. Can you still help?
Yes. We work with what is available, such as bank statements, POS data, and supplier invoices, to support your numbers.
Can you help if the audit is already finished?
Yes. Depending on the timing, we can help you dispute the findings, request penalty relief, or set up a payment plan.
Facing a Restaurant Audit?
The earlier we get involved, the more we can do. Reach out today.