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California BOE Advises Sellers to Keep Good Records

  • May 30, 2014 | Gail Cole

 One of the California BOE's tax tips: don't use tax zappers.

The California State Board of Equalization has updated its publication on sales and use tax records. Publication 116 explains record requirements, types of records required, the degree of detail required, required period of retention, and so forth. It’s an invaluable read for anyone required to collect and remit California sales tax.

The advice boils down to this:

  • Keep detailed records of all sales transactions (including names and addresses of clients, where applicable);
  • Keep detailed records of amount of sales tax collected;
  • Keep detailed records of exempt transactions; and
  • Keep proof that exempt transactions are lawfully exempt (such as exemption certificates and resale certificates).

When the auditor comes knocking, a business’ records must show the following information:

  • Gross receipts from all business income, including sales, leases, service charges, and labor income;
  • All deductions claimed on sales and use tax returns, along with supporting documentation; and
  • The total purchase price, including receipts, for all items purchased for resale, lease, or your own use.

Records must be maintained for at least four years, and perhaps longer.

Don’t suppress sales

It may seem obvious but in case it isn’t, the BOE reminds that it “is a crime for anyone to knowingly sell, purchase, install, transfer or possess software programs or devices that are used to hide or remove sales and to falsify records.” In other words, pay the sales tax you owe, don't pocket it.

Auditors employed by the BOE may at any time audit a business to “verify the accuracy” of sales and use tax returns and to determine if proper taxes have been paid on a business’ sales and purchases.

Want to greet the auditor with a smile? Learn about sales tax automation.

photo credit: *Amanda Richards via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.