California OTA Partially Grants Taxpayer’s Appeal, Dismisses Negligence Penalty

The California Office of Tax Appeals (OTA) partially granted the taxpayer’s appeal. The dispute involved a Notice of Determination issued by the California Department of Tax and Fee Administration (CDTFA) for unreported taxable sales and a negligence penalty for the relevant tax period. The taxpayer operated a cannabis dispensary selling medical cannabis and related products in San Francisco. CDTFA determined that the taxpayer’s books and records were inadequate and used an indirect audit method based on point-of-sale data from a test period to estimate unreported taxable sales. After two reaudits reducing the taxable measure, the CDTFA calculated unreported taxable sales. ...