CDTFA Rate Changes & Compliance Alerts

As the government returns to full operational status, California businesses are once again squarely on the radar of the California Department of Tax and Fee Administration (CDTFA). With new sales-and-use tax rate changes taking effect, heightened enforcement activity, and several compliance updates quietly released through CDTFA bulletins, now is the time for businesses to get ahead of the changes rather than react to them during an audit. See our firm’s August 6, 2025 blog post on what to do if CDTFA issues an audit and sends a notice.

Whether you are a retailer, e-commerce seller, contractor, professional services provider, or out of state business delivering goods into California, these updates may impact your tax obligations for the remainder of 2025 and into 2026.

CDTFA issued multiple Tax Information Bulletins announcing new district sales-and-use tax rates taking effect July 1, 2025 and again on October 1, 2025. Because California allows cities, counties, and special districts to add their own taxes, the total rate in some jurisdictions is changing.

Now that normal government operations have resumed, CDTFA is signaling a renewed focus on audits, nexus enforcement, and sales-tax compliance reviews. Recent CDTFA announcements also show increased auditor hiring and expanded enforcement resources, two clear indicators that more businesses might be contacted in the coming months.

Who is most at risk

Cash-heavy businesses, e-commerce retailers, out-of-state businesses shipping into California, construction contractors, businesses reporting exempt sales, and entities with inconsistent district taxes on returns. Minor errors, such as using outdated district rates, can be treated as negligence, resulting in penalties, interest, and back-tax assessments.

Why this matters for your business

Even a small rate change can trigger under-collection or over-collection of sales tax. Refer to the CDTFA’s Publication on Collection Procedures for more information. Businesses are responsible for charging the correct district rate based on the location of the sale or delivery, not just the state base rate. Out of state businesses with California customers (including online retailers) must also update their tax-collection systems to avoid CDTFA penalties.

Next steps

Be sure to update your POS systems, accounting software, and invoice templates before the effective dates, if not already. Verify rates based on customer delivery address, not billing address, as these might differ. For businesses with multiple locations, confirm each location’s correct district tax rate.

What businesses can do to plan for 2026

With multiple rate changes, rising enforcement levels, and expanded nexus obligations, businesses operating in California need to be more proactive than ever. The CDTFA has made it clear: errors in tax rate application and recordkeeping will be penalized, whether or not they were intentional.

Now is the ideal time to conduct a sales tax health check or internal audit, review nexus exposure (especially for e-commerce and multi-state businesses, correct outdated systems, and ensure staff are trained on the new rules and sourcing requirements.

At Wilson Tax Law Group, APLC, we help businesses with sales and use tax audits, CDTFA appeals, nexus analysis and multi-state exposure, tax-rate reviews and compliance planning, voluntary disclosure programs, and more. If you’re unsure whether your business is prepared for California’s new tax environment, we can help you review your systems, reduce risk, and avoids costly penalties before CDTFA comes calling.

If you have any questions regarding your individual or businesses’ state and/or federal tax return(s)/tax liabilities or received a notice from the IRS, FTB, EDD, CDTFA or any other regulatory agency, please call or email Wilson Tax Law Group, APLC, to setup a consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group, APLC, is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified attorney, accountant or financial advisor for specific guidance related to your circumstances.

How SB 711 Impacts Your California Taxes

When it comes to California taxes, “conformity” to the federal Internal Revenue Code (IRC) does not always mean alignment. This can create big surprises for taxpayers. With the passage of Senate Bill 711, California has officially updated its conformity date to January 1, 2025. This means the state will now recognize most federal tax provisions that were in effect as of that date but not all of them.

At Wilson Tax Law Group, APLC, we are closely monitoring these changes because the gap between state and federal law is one of the most common causes of confusion, compliance errors, and unexpected tax bills for our clients.

What’s Changing

Previously, California’s conformity date lagged years behind federal law, meaning many federal updates never flowed through to California tax returns. Senate Bill 711 moves that benchmark forward, aligning California with a much more current version of the IRC. This is good news for California taxpayers, particularly those who claimed recent federal deductions or credits that were disallowed at the state level.

However, full conformity does not occur automatically. California is considered a “fixed-date” conformity state and generally has decoupled from many significant federal tax provisions enacted after its specified conformity date (this was recently updated to January 1, 2025 for tax years beginning on or after January 1, 2025). Some of those provisions include bonus depreciation and Section 179 expensing limits, qualified business income (QBI) deductions under IRC § 199A, certain opportunity-zone and clean energy provisions, etc.

Suggested year-end preparations

Review your 2024 and 2025 filing side-by-side. Make sure any carryovers, depreciation schedules, or credit calculations align with California’s updated rules.

Confirm withholdings and estimated payments. If your federal taxable income changes under the new conformity date, your state liability may shift too.

Evaluate business and investment structures. The new conformity date could affect pass-through entities, deferred compensation, and opportunity-zone timing decisions.

Why a Tax Attorney Can Help

California’s partial conformity system often leads to complex reconciliations and audit exposure. A seasoned tax attorney can interpret which provisions truly apply to your situation, amend prior returns if needed, and communicate directly with the Franchise Tax Board or IRS if questions arise. At Wilson Tax Law Group, APLC, we help individuals, professionals, and business owners navigate these nuanced updates, so your year-end planning is proactive, not reactive. Do not let new rules catch you off guard. Turn tax uncertainty into opportunity with trusted legal insight.

If you have any questions regarding your individual or businesses’ state and/or federal tax return(s)/tax liabilities or received a notice from the IRS, FTB, EDD, CDTFA or any other regulatory agency, please call or email Wilson Tax Law Group, APLC, to setup a consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group, APLC, is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified attorney, accountant or financial advisor for specific guidance related to your circumstances.

Coverage, Credits, and Chaos: How Policy Shifts Could Raise your 2025 Tax Bill

As the 2025 open enrollment period beings, California residents are facing an important financial question that extends far beyond health insurance – what happens if federal premium tax credits expire?

At Wilson Tax Law Group, APLC, we are closely monitoring this issue because it carries significant implications for tax planning, cash flow management, and compliance for both individuals and business owners across the state.

The premium tax credit, originally expanded under the American Rescue Plan and later extended by the Inflation Reduction Act, has helped approximately more than 1.7 million Californians with seeking access to health coverage through the Covered California marketplace. These credits effectively reduce monthly premiums by applying an advance payment of a federal tax credit.

However, unless Congress acts to renew these provisions, those credits could expire soon, meaning that many Californians could see their premiums nearly double in the coming year. While this change originates in health policy, it directly affects taxpayers adjusted gross income (AGI), itemized deductions, and estimated payments. These are key components of taxpayers’ overall tax strategy.

From a legal and planning standpoint, this is a reminder that tax law and public policy are deeply interconnected. The loss of these credits would not only make coverage less affordable but also complicate tax reporting and reconciliation. This could place a huge financial burden on those taxpayers who received advanced premium payments in prior tax years.

Under the guidance of a trusted tax attorney, we recommend the following action items:

• Reviewing your 2025 income projections and determine if any adjustments to withholding or estimated payments are required.


• Schedule time with your tax attorney and advisor early to evaluate adjusted gross income changes and deductions.


• Stay updated on both IRS (Federal) and Covered California (State) guidance and announcements, as policy developments could unfold quickly.

At Wilson Tax Law Group, APLC, we help clients anticipate and adapt to these kinds of changes so you can make proactive decisions before they affect your bottom line. For assistance navigating the tax implications of health insurance changes, please contact our office to schedule a consultation with our firm. We cannot stop Congress from debating your health credits, but we can make sure your tax plan does not get burned in the process. When it comes to taxes, there is no such thing as a “we’ll see what happens” strategy.

If you have any questions regarding your individual or businesses’ state and/or federal tax return(s)/tax liabilities or received a notice from the IRS, FTB, EDD, CDTFA or any other regulatory agency, please call or email Wilson Tax Law Group, APLC, to setup a consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group, APLC, is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified attorney, accountant or financial advisor for specific guidance related to your circumstances.