San Francisco Tax Preparation / CPA: CA – Taxpayer’s claim for redetermination denied due to failure to satisfy burden of proof
A used car dealership operator’s (taxpayer’s) protest against California sales and use tax assessment was denied because the taxpayer failed to establish that adjustments should be made to the unreported taxable sales during the audit period.
In this matter, the Department of Tax and Fee Administration (department) discovered that the sale of 23 vehicles was recorded in the sales journal but not found in the report of sales data. The department satisfied the burden of proof by using information from the Department of Motor Vehicles and taxpayer’s records to estimate taxpayer’s tax liability, these records were the best available records during the audit of the business. The taxpayer explained that in the data, 23 of the vehicles were duplicate sales and that nine of the vehicles at issue were never sold and the taxpayer retained title to those vehicles. However, the taxpayer did not provide any records to substantiate its claims and unsupported assertions are not sufficient to satisfy a taxpayer’s burden of proof.
Therefore, it was reasonable and rational for the department to disallow the claim, and the taxpayer failed to satisfy its burden of establishing that the audit was incorrect. Accordingly, adjustments were not warranted to the audited understatements of reported taxable sales. Corona Auto Mix, Inc., California Office of Tax Appeals, No. 20066267, July 6, 2021, released September 2021