Liquor stores and convenience stores are familiar CDTFA targets. The state often uses a markup method (cost vs. selling price) to estimate revenue — a calculation that's easy to get wrong and tends to inflate the assessment. We use your real purchase and sales numbers and statistical modeling to push back.
CDTFA often takes the cost of goods you purchased, applies a fixed markup percentage, then infers the revenue they claim you should have had. But real markup varies widely — promotions, shrinkage, spoilage, theft, wholesale sales — so the estimate usually runs higher than true revenue.
When the state ignores inventory shrinkage and markup variation, the figure can be off by hundreds of thousands of dollars. That's where we push back with real data.
Markup method — The state applies a fixed profit percentage to cost — ignoring your store's real promotions and price variation.
Inventory shrinkage & spoilage — Damaged, stolen, or expired goods, if unaccounted for, push the estimated revenue above reality.
Cash revenue — The state assumes hidden cash sales and estimates higher — real data is needed to rebut it.
Wholesale vs. retail — Wholesale goods (low markup) taxed as retail (high markup) inflate the revenue figure.
We build statistical models from your purchase invoices, statements, and real sales data to show the markup and revenue CDTFA assumes don't match your store. This is the technical defense most firms can't run.
Read: Anatomy of a CDTFA restaurant audit →We use real purchase invoices, promotion data, and shrinkage records to build a markup that fits your actual business, then rebut the state's figure.
They should be — and it's often what the state overlooks. We factor inventory shrinkage into the argument to lower the estimated revenue.
It may not be too late. In many cases we can help you recover part or all of what you paid by re-appealing.
If CDTFA has contacted you — even informally — call us. The first 30 days of an audit shape its trajectory. Free consultation, no obligation. We speak English and Vietnamese.
(408) 287-1888
We respond within 1 business day.