Milikowsky Tax Law

06/02/2026

Sales tax and use tax are closely connected, and the way they are reported shapes how your business looks during an audit.

Most issues do not come from one transaction. They come from gaps between what was collected, what was reported, and what the state can already see through third party data.

Understanding how these two taxes work together helps create cleaner records and a more predictable audit process.

Link to read the full blog in the comments section.

06/01/2026

EDD audits are expanding beyond the standard three-year window.

Under certain conditions, the Employment Development Department can extend an audit up to eight years, especially when there are missing payroll filings or concerns around worker classification.

For businesses relying on independent contractors, this creates a much broader level of exposure. What seems manageable over a shorter period can quickly escalate when additional years of taxes, penalties, and interest are brought into review.

This article covers:
• When and why EDD audits expand to eight years
• How AB 5 impacts independent contractor classification
• Common triggers that lead to audits
• What to expect during the audit process
• Steps to review and address risk before an audit begins

Read the full breakdown here:

EDD Audits Are Expanding to Eight Years: What to Expect During an EDD Payroll Tax Audit in the State of California

05/29/2026

Sales tax and use tax operate together as part of the same reporting system, and auditors evaluate them with that full picture in mind.

They are looking for consistency across your filings, your deposits, and the documentation that supports each transaction. When those elements align, the audit process becomes more structured and easier to navigate.

Understand how both taxes function and how to keep your reporting connected before issues surface in an audit.

Link to read the full blog in the comments section.

05/27/2026

This is a conversation we have often with business owners.

Sales tax is part of the day-to-day. Use tax shows up through purchasing and vendor activity. Over time, both flow into your filings and shape how your business is reviewed.

John walks through how these two areas connect and what to keep in place so your reporting stays clear and aligned.

Link to read the full blog in the comments section.

05/26/2026

We represent businesses dealing with IRS, sales tax, payroll tax, and California state agency matters, with a focus on building defensible positions, organizing records, and guiding each step of the process with intention. Since 2009, we have supported California businesses through audits, disputes, and enforcement actions with a clear, structured approach.

If you are under review or want to understand where you stand before issues escalate, you can move forward with a plan in place.

05/25/2026

This Memorial Day, we remember the individuals who gave everything in service to the country. Their sacrifice is the reason freedoms exist today, and it deserves more than a moment of recognition.

At Milikowsky Tax Law, we pause to reflect with gratitude and respect for those who made the ultimate sacrifice.

05/25/2026

Sales tax and use tax tend to get lumped together, but they show up in very different ways inside a business.

One happens when you sell. The other shows up in how you buy, especially across state lines. Both flow into your reporting, and both are reviewed closely in a CDTFA audit.

We broke down how each works, where businesses typically miss it, and how it all ties together during an audit.

Read the full blog here:

Learn the key differences between sales tax and use tax in California, common audit triggers, exemption documentation requirements, and CDTFA compliance tips for business owners.

05/22/2026

In restaurant audits, classification drives tax treatment.

Tips and gratuities may look similar in day-to-day operations, but they are treated differently when the CDTFA reviews your records.

What matters is how those charges are structured, labeled, and reported across your system.

This overview covers:
• The difference between tips and gratuities
• Why mandatory gratuities are taxable
• How POS setup impacts reporting
• Where exposure develops over time

Link to the full blog in the comments section.

05/20/2026

The right guidance should be clear, practical, and accessible when you need it most. This client reached out after discovering Milikowsky Tax Law online and quickly received thoughtful, candid advice along with real next steps. That kind of responsiveness and clarity creates a truly positive experience.

05/19/2026

Tips and gratuities are not treated the same in a California sales tax audit.

A tip is discretionary. A gratuity is structured into the transaction. That difference determines whether it is taxable.

In this video, John Milikowsky walks through:
• Why mandatory gratuities are subject to sales tax
• How restaurants misclassify these charges
• How CDTFA identifies the issue during an audit
• What this means for your bottom line

Link to the full blog in the comments section.