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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 585
Experience:  10 years experience
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I am a business owner: I opened up a retail Spa store in

Customer Question

I am a business owner: I opened up a retail Spa store in 2005 and got a California State Tax Sales permit. When the economy turned south in 2008, I closed my retail store and just started doing Spa Service.
I incorporated in 2010, but still kept the resale certificate because I was still a wholesale purchaser of 2 or 3 of my vendors: providing warranty service for them, but able to purchase at wholesale their parts. Every quarter I would file and pay the sales tax on the products I purchased from them.
This past spring I was visited by a Sales Tax auditor and was asked if I "marked up" my products from wholesale and then added my labor. I said yes, and have provided my 2012, 2013 and 2014 cost of goods sold XL spreadsheets.
I had been charging my clients TOTAL INSTALLED prices, but many of them wanted to know how much the parts were costing and how much the labor cost. So when I was asked by the auditor if I marked up my purchases, I said yes.
I received an estimated bill with what they say I owe and it comes to over $17,000.
I spoke to my CPA and she advised that I call the auditor up and state that it was an accounting error on her part and that I was unaware of the billing and how she had done it, so it looked like it was her accounting error.
A couple more facts: since I closed my stores, I have had to file personal 13 for past debts that I could not work out an acceptable settlement with certain vendors. The dates of the Sales Tax Audit (12 to 14)are about the same time of my filing which was Sept 2014.
Please advise what I should do.
Thank you
Submitted: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.

Hi from just answer. I'm PDtax. I can assist with your tax bankruptcy questions.

What you need will take some time and more information to address. I propose an offer of 1.5 hour of my professional time to review your audit, consider speak or revision, and outline settlement options of the tax and your other debts. Will require discussion of your chapter 13 plan, personal tax returns, and more. Accept, and we can work on this tomorrow after noon EST, as I am in NY state.