What to Expect from a Florida Tax Audit: A Business Owner’s Guide

Why Does the Florida Department of Revenue Audit Businesses?

First, let’s clear up a common misconception: not all audits are triggered by suspicion of wrongdoing. In fact, most are routine. 

How Are Businesses Selected for Audit?

Selection for a Florida tax audit can happen in several ways:

·         Information sharing with the IRS or other states

·         Random computer selection

·         Analysis of your Florida tax returns

·         Industry publications and directories

So, if you’re selected, it doesn’t necessarily mean you’ve done anything wrong.

How to Prepare for a Florida Tax Audit

·         Keep your records organized and up to date.

·         Respond promptly to DOR requests.

·        Communicate openly with the auditor and ask questions.

·        Consult a tax professional, preferably an experienced tax attorney, if you’re unsure about anything.

The Audit Process: Step by Step

1. Notification

You’ll receive a “Notice of Intent to Audit Books and Records” (Form DR-840). This document tells you which taxes and periods are under review. You’ll also get a list of records you’ll need to provide.

2. Desk vs. Field Audit

·         Desk Audit: Conducted at the DOR office; you mail or upload your records.

·         Field Audit: Conducted at your business location; the auditor comes to you.

3. What Records Will You Need?

Be prepared to provide:

·         Federal and Florida tax returns

·         General ledgers and journals

·         Depreciation schedules

·         Cash receipt and disbursement journals

·         Purchase and sales journals

·         Sales tax exemption or resale certificates

Tip: Florida law requires you to keep records for at least three years. If you can’t provide records, the DOR will estimate your tax liability based on whatever information is available.

4. The Audit Itself

The auditor may interview you or your representative (if you want someone else to handle it, file a Power of Attorney form). They’ll ask about your business structure, accounting systems, and day-to-day operations.

Pro Tip: Assign a knowledgeable employee to assist the auditor and help gather records. Well-organized documentation can make the process much easier and faster.

5. Your Rights During the Audit

You have the right to:

·         Be informed about the audit’s findings and any proposed changes

·         Ask questions and get clear explanations

·         Have your representative, preferably an experienced tax attorney, present .

After the Audit: What Happens Next?

Once the audit is complete, you’ll receive a summary of the findings. If you owe additional taxes, you’ll get a Notice of Proposed Assessment. You’ll have 30 days to review and respond before any payment is due.

But remember: not all audits result in extra taxes. Sometimes, the auditor will find that everything is in order or even that you’re due a refund.

What to Do If You Disagree with the Audit Findings

If you disagree with the results of a tax audit, you have the right to challenge the findings. Here’s how:

1. Request a Reconsideration: Provide additional evidence or clarification to the FDOR to address the discrepancies.

2. File an Appeal: If the reconsideration doesn’t resolve the issue, you can file an appeal with the Florida Division of Administrative Hearings.

3. Seek Legal Counsel: Engage a tax attorney to represent you in disputes and ensure your rights are protected.

Conclusion

A Florida tax audit can feel overwhelming, but with proper preparation and a proactive approach, you can navigate the process with confidence. Understanding why audits occur, knowing what to expect, and taking the necessary steps to prepare, including hiring an experienced Tax Attorney, is critical to ensuring a favorable outcome.

By cooperating with auditors and seeking professional guidance when needed, you can emerge from the audit process with minimal disruption to your personal or business finances.

Are You Being Audited by the
Florida Department of Revenue (FDOR)?

Contact the Tax Lawyers at 

Marini & Associates, P.A.

 

for a FREE Tax Consultation

at www.TaxAid.us or www.TaxLaw.ms

or Toll Free at 888-8TaxAid (888 882-9243)