California's Office of Tax Appeals Says an Appellant Cited Opinions of the Tribunal That Do Not Exist

On May 15, 2026 California's Office of Tax Appeals issued an opinion in a sales and use tax appeal by a company that had run a restaurant, and marked it precedential. Two certified public accountants represented the company, one of them also an attorney. The issue the opinion decides is "Whether any adjustments to the measures of unreported taxable sales are warranted." Its last paragraph before the holding is about the opinions the company cited. Parts of the opinion follow, not the whole.

The Appeal and Its Records

The California Department of Tax and Fee Administration issued a notice of determination for tax on unreported taxable sales, denied the company's petition for redetermination, and the company appealed. The tribunal sets out who must prove what. "It is the retailer's responsibility to maintain complete and accurate records to support reported amounts and to make them available for examination," the opinion says. Once the department has met its "minimal, initial burden" of showing that its determination was "reasonable and rational," the burden of proof shifts to the taxpayer, and "Unsupported assertions are not sufficient to satisfy a taxpayer's burden of proof."

The company asserted that it had provided sufficient records for audit. The tribunal found that it "has not provided any source documentation to verify the monthly sales log or POS monthly sales reports," and so its assertion that its records were sufficient and reliable "is not persuasive nor does it provide a basis for adjustment." The opinion holds that no adjustments to the measures of unreported taxable sales are warranted, and sustains the department's denial of the petition.

Opinions That Do Not Exist

The tribunal also notes that the company "cites to several Opinions allegedly issued by OTA; however, the purported Opinions cited do not exist." It calls the submission of "hallucinated or fictitious citations" "concerning and inappropriate."

No filing to the tribunal "should contain any citations or statements of law which are false or fabricated," the opinion says. Nor should a filing contain citations, whether "provided by generative artificial intelligence (AI) or any other source," that "the individual responsible for submitting the filing has not personally read and verified."

The opinion does not say how the citations were made. "Parties and representatives appearing before OTA are expected to know about the risk of AI hallucination," it says. "Therefore, OTA does not address appellant's arguments regarding the nonexistent legal authority."

The opinion names no fine or other sanction for the citations.

What in a firm's file would show that the individual responsible for submitting a filing personally read and verified each citation in it?