Sales and Use Tax Records (Publication 116)

If you hold a California seller’s permit, you are required to maintain business records to verify that you have properly paid tax. This publication describes the general sales and use tax recordkeeping requirements for most businesses. Please note that recordkeeping requirements for other state, local, and federal taxes and fees may differ from those described here.

Why do I have to keep records?

In general, you are required to maintain business records so that California Department of Tax and Fee Administration (CDTFA) representatives may:

  • Verify the accuracy of your sales and use tax returns; and
  • Determine if you have correctly paid the tax due on your sales and purchases.

If the CDTFA audits your account and finds that your records are not adequate, we will use standard accounting methods to determine how much tax you should have paid. In addition, a lack of complete, accurate records may be considered negligence or intent to evade the tax on your part, and you may have to pay penalties as a result.

Sales Suppression Software Programs and Devices

It is a crime for anyone to knowingly sell, purchase, install, transfer, or possess software programs or devices that are used to hide or remove sales and to falsify records.

Using these devices gives an unfair competitive advantage over business owners who comply with the law and pay their fair share of taxes and fees. Violators could face up to three years in county jail, fines of up to $10,000, and will be required to pay all illegally withheld taxes, plus penalties including applicable interest and fees.

Note: This publication summarizes the law and applicable regulations in effect when the publication was written, as noted above. However, changes in the law or in regulations may have occurred since that time. If there is a conflict between the text in this publication and the law, decisions will be based on the law and not this publication.

Revision September 2018