The California Department of Tax and Fee Administration (CDTFA) recently released its first annual report on the administration and enforcement of the state’s sales and use tax programs. During FY 2017-18, the CDTFA managed nearly 1 million sales and use tax permits and processed over 2.2 million sales and use tax returns, resulting in the collection of more than $70 billion, including over $1 billion in delinquent taxes.
The CDTFA’s audit program reviews about 1 percent of active accounts each year. In FY 2017-18, audits disclosed more than $528 million in underreported or underpaid sales and use taxes, and it identified $800,000 in available refunds to audited taxpayers.
The CDTFA also administered 33 special tax and fee programs in this reporting period, which brought in over $13 billion in revenue to the state of California and represented an increase of 26.9 percent from the previous reporting period. The largest revenue-producing special tax and fee programs in FY 2017-18 were fuel taxes ($6.8 billion) and alcohol/tobacco taxes ($2.5 billion).
A new special tax program became effective January 1, 2018, for the cultivation and retail sale of cannabis and cannabis products. As of June 30, 2018, over 1,500 sellers had registered in this program category and contributed over $56 million in cannabis tax revenue in FY 2017-18.
CDTFA investigators participate in California’s Tax Recovery and Criminal Enforcement (TRaCE) Task Force to combat criminal tax evasion throughout the state. In FY 2017-18, the CDTFA was the primary or secondary component to 20 active investigations into activities suspected of being part of the underground economy.
To read the CDTFA’s Annual Report in full, click here.