What are the California EDD and CDTFA Departments?

*The following article was updated in March 2024*

In the state of California, we have a sales tax department and a payroll tax department, thee EDD and the CDTFA. These agencies are so important to explain to business owners, how serious these audits can be. If you end up owing either one of these agencies money, whether for payroll taxes — whether you paid an independent contractor and it should have been an employee, or you are selling an item and not collecting the appropriate sales tax on it — you as the business owner, as the responsible party, as the person that was involved with the business, could be personally assessed a corporate liability. You can be assessed this liability for not paying these taxes, and the state of California has 20 years to collect from you.

So when you’re up against a sales tax audit or a payroll tax audit, it’s not something you can run from; you can’t shut down your business. You can’t try to give it to somebody else. You can’t say I’m out of it and I’m not going to do it anymore. This is a liability that will not stay with the corporation, the LLC, partnership, whatever the entity is that’s holding the business. The government views these taxes as theft. You should have paid the government this money, and they want to make sure that they are going after every willful and responsible person to collect the taxes that are due to them. So if you get a notice for a sales tax or a payroll tax audit, make sure you take it seriously.

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Allison Soares

Allison Soares, a renowned tax attorney, excels in representing clients before the IRS, FTB, EDD, and CDTFA. With a Bachelor of Arts in Finance from the University of Wisconsin, Milwaukee, and a transformative teaching stint in Brazil, Allison’s diverse background enriches her legal expertise. She pursued law at St. Thomas University School of Law, Miami, complementing it with an MBA in accounting and forensic accounting. Further honing her skills, she obtained a Master of Laws in Taxation from the University of San Diego School of Law. As an adjunct professor at San Diego State University, Allison imparts her knowledge in tax procedures, practice, and ethics. Her accolades include being named Best of the Bar by the San Diego Business Journal and multiple Super Lawyer recognitions. Committed to community service, she volunteers with Forever Balboa Park and Friends of Balboa Park. Allison’s authoritative contributions in tax law are showcased through her publications and speaking engagements.

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