Receiving notice of an impending Florida sales tax audit can be daunting, but understanding the process and taking
the right steps can help you navigate it successfully.
Surviving a Florida sales tax audit requires careful preparation and professional assistance. Here's a comprehensive
guide to help you navigate the process:
Understanding the Audit Process
A Florida sales tax audit is typically triggered when a business's exempt sales ratio is out of line with industry
norms, or through random selection. The Florida Department of Revenue (DOR) will investigate potential violations of
Florida tax law, focusing on whether your business failed to remit all collected sales tax.
Notification and Preparation
The DOR initiates the audit process by issuing form DR-840, a Notice of Intent to Audit Books and Records. This
notice will indicate that the audit will commence 0 days from the issue date, although it cannot begin earlier than
60 days after the notice date.
Key steps upon receiving the notice:
- Hire an experienced tax professional immediately.
- Use the 60-day "homework" period to prepare for the audit.
- Organize all relevant documentation to present a clear picture of your business's tax compliance.
Types of Audits
The DOR conducts two types of sales tax audits:
- Desk Audit: Conducted at a DOR office.
- Field Audit: Performed at your place of business.
What to Expect During the Audit
The auditor will compare your annual federal tax return to sales and use tax returns to identify any discrepancies.
They will examine:
- Fixed assets and commercial rent (subject to sales tax)
- Sample months to test exempt sales
- Federal income tax returns
- Florida tax returns
- General ledgers and journals
- Depreciation schedules
- Property records
- Cash receipt and disbursement journals
- Purchase and sales journals
- Sales tax exemption or resale certificates
- Documentation to verify amounts entered on tax returns
Post-Audit Process
After reviewing all records, the auditor will issue a DR-5 (Notice of Intent to Make Audit Changes). You have 0 days
to request a review of the results.
Tips for Surviving the Audit
- Hire a professional: An experienced tax professional can help navigate the complex audit process and
minimize potential assessments. - Be prepared: Organize all relevant documentation before the audit begins.
- Understand your rights: The DOR cannot force you to begin the process or turn over information in less
than 60 days. - Be cautious: While auditors may seem helpful, remember they are not your friends. Avoid inviting them to
your workplace unnecessarily or giving them access to electronic records beyond the scope of the audit. - Know the timeline: The DOR can typically audit a business for a three-year period, or longer if you
didn't file returns or filed substantially incorrect returns.
Remember, a Florida sales tax audit can range from a minor inconvenience to a serious issue with potentially grave
consequences. With proper preparation and professional guidance, you can navigate this process successfully and
minimize any potential negative outcomes.
Have a Florida Sales Tax Problem?
Sales Tax Problems Require
an Experienced Sales Tax Attorney
Contact the Tax Lawyers at
Marini & Associates, P.A.
for a FREE Tax Consultation Contact US at
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888-8TaxAid (888 882-9243)
James P. Sweeney Esq - State and Local tax counsel
Mr. Sweeney is a Tax Attorney with 40 years of experience in the areas of Tax Law, both Federal & State,
including Representation before the IRS and various State Taxing Agencies.
Mr. Sweeney is an accomplished attorney with a distinguished career that includes a rich background in tax law and a
remarkable tenure at Arthur Andersen's State and Local Tax Practice, including serving as the Northeast Region
Practice Leader and a National Office subject matter expert, where he shared a wealth of experience and expertise in
State and Local Tax law.
Read more at: Tax Times blog
