Florida Sales Tax Audits Experts – Auto Dealerships
Florida Department of Revenue in their never ending search for more funds have been pursuing more audits and targeting specific industries like retail Auto Dealerships because there is low hanging fruit for a revenue agent to pick. There is always a gold mine to be found.
Frank Lamantia of Fresh Start Tax LLC is one of own seasoned tax professionals that and represent your best interest if you are undergoing a Florida Sales Tax Audit. Frank is a 16 year vet of the Department.
Both New Car and Used Car Sales are both targeted
If you own a used car dealership in Florida you are aware that the Florida Department of Revenue has always given a lot of attention to the industry.
Used car dealerships especially small dealerships are in the business of selling used cars and their records are not always complete due to limited staff.
The Department of Revenue is aware of this issue and consequently targets small used car dealerships.
Here is some facts to be aware.
Exempt Sales – Complete and detailed records are required for all exempt sales:
- a Florida registered motor vehicle dealer buys the vehicle for resale or lease and provides the seller there Current Annual Resale Certificate
- the seller delivers the vehicle outside of Florida
- a Florida registered export/import company buys a vehicle for resale and will immediately export it outside of Florida (documentation required)
- a nonresident dealer who does not have a Florida sales tax number buys a vehicle for resale or lease and extends a completed resale form to the selling dealer
- a nonprofit organization buys a vehicle and presents a current Florida Consumers Certificate of Exemption (DR-14) to the seller
Partially exempt motor vehicle sales:
- if the Veterans Administration pays a portion of the invoice that portion the VA pays directly to the dealer is exempt
- if a Florida dealer sells a motor vehicle to a resident of another state that imposes a sales tax of less than 6% and the buyer takes possession of the vehicle in Florida, the buyer’s home state tax rate may be applied to the sale. Other restrictions may apply
- in order to be eligible was a lower tax rate, the buyer must give the dealer a completed, notarized Affidavit for Partial Exemption Motor Vehicle Sold for Licensing in Another State(DR-123), declaring his or her intent to license the vehicle in his or her home state within 45 days of the date of the sale.
Currently, the states of Arkansas, Mississippi, and West Virginia impose a sales tax on motor vehicles, but they do not allow a credit for taxes paid to Florida.
Residents of these states should be informed that they must pay sales tax to Florida at this rate imposed by their home state when they purchase a vehicle in Florida and must also pay tax to their home state with the vehicle’s license in their home state.
Please Note:
1. all tax collected must be paid to the Florida Department of revenue. The tax must never be sent to the buyer’s home state.
2. if a vehicle is bought by a nonresident corporation or partnership, taxes due if any officer of the Corporation, or any stockholder or partner who owns at least 10% of the corporation or partnership, is a Florida resident.
However, if the vehicle is removed from Florida within 45 days after purchase and remains out of the state for a minimum of 180 days, the purchasing entity may qualify to pay its home state tax rate despite the residency of its owners, stockholders or partners.
Businesses that sell, repair, rent, or provide services are required by the state of Florida law to act as an agent for the state and collect and remit sales taxes due to the state of Florida in a timely manner.
Also Florida sales tax is required to be separately stated in the customers invoice in the taxes collected are the property of the state from the moment is collected from the customer. Business owners must segregate sales tax collected and remitted to the state in a timely manner.
The Florida Department of Revenue has a task force to review the records of every used car dealership in Florida by comparing sales tax returns to Department of Motor Vehicle records.
Beware: It is a crime under Florida law for Unremitting Sales Tax Collected
Take this very seriously!
Some recent prosecutions
(name omitted), the owner of BAS Specialty Cars Inc., a used car dealership that is located in Longwood, Florida has been arrested on charges that she stole more than $67,000 in sales tax she collected from customers, but failed to send in to the state, the Florida Department of Revenue announced today.
know
(name omitted), was arrested by the Seminole County Sheriff’s Office on a felony charge relating to theft of state funds. If convicted, she faces up to 15 years in prison and up to $10,000 in fines, as well as possible repayment of stolen sales tax, along with payment of penalty and investigative costs. BAS Specialty Cars is located at 1580 South Ronald Reagan Blvd. in Orlando.
According to Revenue Department investigators, (name omitted) collected tax from customers at the dealership. However, during various periods beginning in 2009, lasting through periods in 2012, she failed to send in to the state all of the sales taxes that were collected.
The Florida Department of revenue is more likely to arrest a business owner for tax fraud than the Internal Revenue Service.
Both IRS and the Florida Department of revenue will put tax liens on a business property; the Florida Department of revenue will also put the business owner in jail if the taxes, penalties, interest are not remitted.
If you have collected and not remitted Florida sales tax please contact a firm experienced in Florida sales and use tax criminal defense for confidential discussion as to the options. There are ways for individuals to negotiate with the state and enter into a payment plan.
It can be a trying task to come up with the cash flow for a payment plan but is far better than jail. Any admission to the Florida Department of revenue can be used against you in a criminal trial therefore is very wise to have an attorney speak on your behalf.
As a general rule sales tax payments are not mentioned or tracked on the dealerships books and records generally because they are not a dealership expense. Car dealers are the collectors of the taxes that are ultimately remitted to the state on a timely basis.
However, dealership owners can be held liable for mistakes in the way taxes are remitted. The Florida Department of revenue has the ability to compare sales tax records with the Florida Department of motor vehicle records to make sure the company’s sales tax records match the cars that are being registered in Florida and purchased from that specific dealership.
A Florida sales tax audit can be a very expensive educational lesson for compliance with the Florida sales tax laws.
A system has been created by the Florida Department of revenue to download the entire Department of motor vehicle database, and then compare sales tax registration numbers to Department of motor vehicle dealer registration numbers and create a usable database with information that can be used to trigger an audit or criminal investigation or used in an ongoing audit of a specific dealer and the dealer’s sales tax returns.
In the past 18 months there have been several arrests throughout the state of Florida for sales tax theft.
The Florida Department of revenue is targeting used as well as new car dealerships for audits and possible criminal investigation.
Form DR 840 notice to audit books and records could be coming your way this month or within the next six months.
Voluntary Disclosure:
If you have been under reporting or not reporting and you have not received a notice of audit, it is highly recommended that you contact our firm and we will assist your dealership in the process of going through a voluntary disclosure program to come clean now with the Florida Department of revenue, have most of the penalties waived and prevent it from becoming criminal.
We are a full-service tax firm that specializes in federal tax representation and are one of Florida’s most experienced for sales tax audit defense.
Our staff consists of tax attorneys, certified public accountants, former IRS agents and a former sales tax auditor with over 16 years of direct work experience with the Florida Department of revenue.
Feel free to contact us for initial tax consulting for Florida sales tax audit defense.
We will completely review your case and give you a full assessment of your audit status so you can make an informed and confident decision of how to fully resolve your sales tax audit case
