by Fresh Start Tax | Sep 9, 2013 | Sales Tax
Florida Sales Tax Audit – Hire Former Sales Tax Agent
Has your company has been issued a Notice of Intent to Audit Books and Records from the State of Florida?
Hire Former Florida Sales and Use Tax Auditors completely resolve your case.
We are a local South Florida tax firm since 1982.
We are comprised of tax attorneys, certified public accountants, former sales tax agents, and former IRS agents. We have a combined 76 years of direct government experience in the local, district, and regional tax offices of the local South Florida offices.
We can have the auditor come to our professional offices thus avoiding a State of Florida Auditor from taking up your space, your employee’s time, snooping around your business and asking questions to your employees.
Have Former State Tax auditors who know the systems, know the protocol and know settlement protocols resolve your sales and use tax matter.
We have practiced in South Florida since 1982 and we are A+ rated by the Better Business Bureau.
Florida Sales Tax Audit Misconceptions
Being former Florida sales and use tax auditors there are many misconceptions that the public has about sales and use tax audits.
You should know that the auditor does not know the extent of your liability if any until the Florida state auditor examines your records.
The auditor simply will only know information about your company from State of Florida internal records. The State of Florida has limited information unlike the IRS.
The books and records that you provide the auditor will be the basis for any audit findings.
We can help with your defense in an audit by controlling the records that are released to the auditor.
If the Florida Department of revenue contacted your company about a pending Florida sales use tax audit or you have already received the Florida form DR 840 – Notice of Intent to Audit Books and Records we can be your defense to a large assessment for sales tax, interest and penalty.
You can call us today to review or consultation of your tax audit papers so we can let you know the scope of the audit and a way to conduct the audit that is most beneficial to your business.
The Audit Process used by Florida Sales and Use Tax
The auditor will conduct a preliminary preparation for the audit prior to the actual start of the audit.
The auditor will obtain information from:
• examination of sales tax records on file with the Department of revenue
• business structure and activities from websites
• profile the Florida Secretary of State corporate website
• review of prior audits and results
• review of possible issues from the Florida tax law library
• standard industrial guides
• research information available on the Internet
• review any information in the audit found which includes the reasons the audit was selected.
The auditor will also conduct an analysis your company which will include:
• taxable sales compared to exempt sales
• taxable sales percentage
• amount of assets owned by a business
• results of prior audits
• Florida sales per federal tax returns versus Florida sales tax returns
• method of business operation
• business industry
• credits and exemptions taken
• change in volume of Florida activity
• tax rates
• use tax accrued on past sales tax returns
As a Former Florida Sales and Use Tax Auditor – Insider Tips
As a former sales tax auditor this research and analysis provided the basis to prepare an industry-specific audit plan and pre-audit interview questions.
The “audit plan” or should I say the auditor’s plan of attack will be the auditor’s guide for picking low hanging fruit.
Depending on the industry the Florida Department of revenue has a specific audit plan for auditors to follow in order to capture any sales tax not paid or remitted.
In order to limit the tax exposure, our former auditor will conduct the entrance interview with the Florida state tax auditor.
The auditor will conduct the audit entrance interview with the sole purpose of learning about the business’s operation and establish a rapport with the contact person of the business.
In order to learn more about the business operations during this interview, the auditor may want to ask some typical questions such as:
• what is the main business activity.
• where are your customers located – any out-of-state customers, if so how do you account for the sales
• are there any other sources of income
• who completes the sales and use tax returns
• what control documents are available, such as chart of accounts, general ledger, sales journals, payables Journal, etc.
• are there federal returns and depreciation schedules available
• do you own or lease the business property
• if leased who’s the landlord
If you feel confident about your books and records there is nothing wrong with self representation. However if you have questionable items and questionable records it is in your best interest to hire it professional tax firm to defend your best interest with Florida sales tax.
You can contact us today for a free initial tax consultation or come by and visit our offices can speak directly to a true tax professional.
Florida Sales Tax Audit – Hire Former Sales Tax Agent – Miami, Ft.Lauderdale, Boca, Palm Beaches
by Fresh Start Tax | Sep 9, 2013 | Florida Sales Tax, Sales Tax
Florida – Sales and Use Tax Audit Defense – With Former Agents Since 1982 + Affordable Sales Tax Experts + Free Consults with the Experts
Use former Agents to defend your Sales Tax Audits, since 1982.
We know the system.
Florida sales tax audit insider tips.
Being former Florida sales and use tax auditors there are many misconceptions that the public has about sales and use tax audits.
You should know that the auditor does not know the extent of your liability if any until the Florida state auditor examines your records.
The auditor simply will only know information about your company from State of Florida internal records.
Florida – Sales and Use Tax Audit – Insider Tips from Former Agents
The books and records that you provide the auditor will be the basis for any audit findings.
We can help with your defense in an audit by controlling the records that are released to the auditor.
If the Florida Department of revenue contacted your company about a pending Florida sales use tax audit or you have already received the Florida form DR 840 – Notice of Intent to Audit Books and Records.
We can be your defense to a large assessment for sales tax, interest and penalty.
ou can call us today to review your tax audit papers so we can let you know the scope of the audit and a way to conduct the audit that is most beneficial to your business.
The Audit Process used by Florida Sales and Use Tax
The auditor will conduct a preliminary preparation for the audit prior to the actual start of the audit.
The auditor will obtain information from:
• examination of sales tax records on file with the Department of revenue
• business structure and activities from websites
• profile the Florida Secretary of State corporate website
• review of prior audits and results
• review of possible issues from the Florida tax law library
• standard industrial guides
• research information available on the Internet
• review any information in the audit found which includes the reasons the audit was selected.
The auditor will also conduct an analysis your company which will include:
• taxable sales compared to exempt sales
• taxable sales percentage
• amount of assets owned by a business
• results of prior audits
• Florida sales per federal tax returns versus Florida sales tax returns
• method of business operation
• business industry
• credits and exemptions taken
• change in volume of Florida activity
• tax rates
• use tax accrued on past sales tax returns
As a Former Florida Sales and Use Tax Auditor
As a former sales tax auditor this research and analysis provided the basis to prepare an industry-specific audit plan and pre-audit interview questions.
The “audit plan” or should I say the auditor’s plan of attack will be the auditor’s guide for picking low hanging fruit.
Depending on the industry the Florida Department of revenue has a specific audit plan for auditors to follow in order to capture any sales tax not paid or remitted.
in order to limit the tax exposure, our former auditor will conduct the entrance interview with the Florida state tax auditor.
The auditor will conduct the audit entrance interview with the sole purpose of learning about the business’s operation and establish a rapport with the contact person of the business.
in order to learn more about the business operations during this interview, the auditor may want to ask some typical questions such as:
• what is the main business activity.
• where are your customers located – any out-of-state customers, if so how do you account for the sales
• are there any other sources of income
• who completes the sales and use tax returns
• what control documents are available, such as chart of accounts, general ledger, sales journals, payables Journal, etc.
• are there federal returns and depreciation schedules available
• do you own or lease the business property
• if leased who’s the landlord
Analyzing financial data
The auditor will want to begin the audit with an analysis of your financial data. The analysis may begin with a review of your chart accounts and your general ledger.
This enables the auditor to gain knowledge of your accounting system in your methodology for collecting and reporting tax.
Before any financial records are released to the auditor we will examine these records prior to releasing to the auditor to ensure a minimal tax exposure.
Auditing Techniques used by Florida Sales Tax, Department of Revenue
The auditor will select an audit technique which will enable the audit to be conducted amount of time.
The technique selected will be most representative of the business for the entire audit period. More than one technique may be required during the audit depending on the business activities and it may be appropriate to use different techniques on each activity.
The Detail Sales Tax audit
A detail audit is the basic audit technique used for sales and use tax. This type of audit requires an examination of all the records for the area sales and use tax being examined.
Sampling Audit Technique
Before sampling issues, the auditor must determine if the taxpayers records are adequate, but voluminous. Rule 12-3.0012(3), F.A.C., defines adequate the voluminous records. Adequate records are defined as, “books, accounts, and other records sufficient to permit a reliable determination of the tax deficiency or overpayment. Incomplete records can be determined to be adequate”.
Percentage of Error Audit Technique
As a former auditor the percentage of error method of projecting the sampling results has been proven to give the most reliable results and the most used by The Florida Department of Revenue.
The percentage of error method calculates tax based on the tax due in the sample period (not taxable amount).
It is well suited to projecting additional tax due on transactions in multiple counties that are entered into a single exhibit.
This is due to the fact that Florida is counties have many tax rates (when accounting surtax is added to the state sales tax rate) and most dealers transactions are affected by these sales tax rates.
It is not practical to stratify a dealer’s transaction by the many different rates and sample and project tax due by every rate.
Error Ratio Tax Audit Technique
The Error Ratio method is only used when the transactions entered into it are from a single County and that single County experienced a rate change during the audit period.
The Error ratio technique produces an approximation of the amount of tax not paid by the business.
This technique is based upon the assumption that the business makes errors at about the same frequency throughout the audit period.
Rate and Ratio Sales Tax Audit Technique
The rate and ratio technique is applicable in determining the amount of tax that has not been reported on sales.
This procedure is appropriate for use when auditing businesses with a high-volume and relatively low to moderately priced taxable or exempt sales (grocery/convenience stores, bars and restaurants) that do not have dependable sales records.
Rate (effective tax rate)
The bracket system, prescribed by Sections 212.12(9) and (10), F.S., used for computing the tax due on amounts less than one dollar, results in some cases in an effective tax rate in the process of or less than the basic rate.
One extreme is a taxable sale of $.10 with the tax of one cent the results in an effective tax rate of 10%. On the other hand, a sale of $1.09 results in an effective tax rate that is less than the basic rate. During the 6% tax.
A sale of $1.09 produces an effective rate of 5.5%. When the total taxable sales and told tax collections (the amounts that should have been collected) are considered, these extremes modify the basic tax collection rate.
The resulting tax rates are unique to that business because they are based on the businesses price structure and sales.
Ratio (taxable sales to total sales)
The ratio of taxable sales to total sales is usually easier to obtain than a tax collection rate. In the ideal situation for complete records are available, the taxable sales ratio can be obtained at the same time the tax collection rate is obtained.
After transactions are analyzed and recorded, the total taxable sales are divided by the total sales to obtain the taxable sales ratio.
In the absence of detailed records, the most popular technique in use is the extrapolation (create a new information from known information) of sales from the purchase records. This technique does not produce irrefutable figures and if used by the auditor can be subject to scrutiny.
Sales Tax audit Method – “Averaging”
This method is an audit technique that works well in an audit period where there is absence of sufficient records. When the averaging technique is used, a period is selected in which all the necessary records are available.
The records for the period are then examined in detail.
This detailed information is reviewed for errors. The total errors or tax collected on the heirs is that averaged.
The averaged amount is then scheduled over the period in which there were insufficient records.
Sales Tax Audit Methodist – Stratified Statistical Sampling
Stratified statistical sampling has been used by the Florida Department of revenue since July 2001, four businesses with adequate electronic records.
Items in the population are classified into separate subgroups or strata based on one or more important characteristics, such as a dollar value.
A sample is randomly selected and audited.
The sample results are then projected over the applicable period with precision calculated.
Non-Statistical Sampling Audit Technique
Historically, The Florida Department of Revenue has used judge mental block sampling was stratified statistical sampling could not be performed.
Non-statistical sampling utilizes random sampling to remove the auditor and the business bias from the sampling selection process.
The sample selection process is determined by the form of the taxpayer records and how those records are physically stored.
Florida – Sales and Use Tax Audit – Insider Tips from Former Agents
by Fresh Start Tax | Sep 6, 2013 | IRS Tax Audit
If you need to hire professional tax help to appeal in IRS tax audit please feel free to contact our office for initial tax consultation and you can speak to a former IRS South Florida appeals agent who has over 25 years of direct IRS experience in the local IRS appeals office.
Being former IRS agents, managers and IRS Appeals Agents, we know all the systems, all the protocols and all the hazards of litigation there were involved to settle your case.
You can contact us for a free initial consultation.
The IRS Appeals Process
Before you prepare a request for a IRS Tax Audit Appeals, you will need to prepare a request for Appeals and mail it to the office that sent you the decision letter.Your appeals request must be filled out accurately.
Small Case Request for a IRS Tax Audit Appeals
You prepare a small case request instead of a written protest if the total amount for any one tax period is $25,000 or less.
1. Send a letter requesting Appeals consideration.
2. Indicate the changes you do not agree with and the reason you don’t agree. Be as specific as you can.
For specific guidance in preparing a small case request/protest, refer to Form 12203, Request for Appeals Review or call our office.
Formal Written Protest for a IRS Audit Appeal
Prepare a formal written protest for all of the following situations:
- If the total amount for any one tax period is greater than $25,000..
- Employee plan and exempt organization cases without regard to the dollar amount at issue.
- Partnership and S corporation cases without regard to the dollar amount at issue.
To prepare a formal written request for Appeals you must:
- Include your name, address, social security number, and daytime telephone number.
- Include a statement that you want to appeal the IRS findings to the Appeals office.
- Include a copy of the letter showing the proposed changes and findings you don’t agree with (or the date and symbols from the letter).
- Indicate the tax periods or years involved.
- List all the changes you do not agree with and why you don’t agree.
- State the facts supporting your position on any issue that you do not agree with.
- Cite the law or authority, if any, on which you are relying.
- Sign the written protest under the penalties of perjury.You must sign this form or your appeals will be rejected.
On staff at Fresh Start Tax LLC Francis A. Andreacchi, Former IRS Revenue Agent, Appeal Agent
Former IRS Revenue Agent, Appeals Officer, Federal Tax Mediator, Gallatin Award form the U.S. Department of the Treasury.
With 35 years of employment with the Internal Revenue Service, Mr. Andreacchi has a vast amount of knowledge and experience. In 1974, he started as an Office Auditor in the Office Audit Division where he examined individual tax returns.
In 1977, he was promoted to Revenue Agent in the Field Audit Division. As a Revenue Agent, he examined high income individuals, large corporations, partnerships and trusts. In the Tax Shelter Audit Program, he specialized in the examination of complex financial transactions.
In 1982, Francis was promoted to Appeals Officer in the Appeals Division where he spent the last 35 years of his career with the IRS. As an Appeals Officer, he conducted conferences to settle cases in which taxpayers have appealed Internal Revenue Service determinations on their tax case or filed a petition in U.S. Tax Court.
Frank had the authority to recommend the final disposition of the case from the government’s perspective and to prepare the final settlement.
As an Appeals Officer, he was assigned various income tax cases involving individuals, trusts, partnerships and corporations from the Examination Division.
These tax cases involved omitted income, disallowed expenses and various penalties as substantial understatement of tax, fraud, failure to file and failure to pay. In conjunction with these cases, he had to consider innocent spouse issues raised by one of the spouses.
Another type of collection case assigned was the application of the Trust Fund Recovery Penalty on individuals in which the corporation did not pay the payroll taxes.
In these cases, Francis was required to make a determination whether the taxpayer was the responsible person who willfully failed to pay the employment taxes and the relative litigating hazards of the taxpayer and the Internal Revenue Service.
His span of case assignment from the Collection Division included Collection Due Process for lien and levy actions.
In these cases, he had to consider whether these enforcement actions were proper within the facts and circumstances of the case.
Francis had to consider all other issues raised by the taxpayer on his unpaid tax liability, such as whether the liability was correct and whether any penalties should be abatement.
Francis also had to consider various collection alternatives raised by the taxpayer such as installment agreements, offers in compromise and currently not collectible status.
Francis is also an IRS federal trained mediator.
As an IRS mediator, his responsibility was to attempt to bring the Internal Revenue Service and the taxpayer to an agreement on their dispute through a conference. He was one of the first mediators to successfully mediate an offer in compromise between the IRS and the taxpayer.
Upon his retirement from the IRS, the United States Department of the Treasury awarded Francis the Albert Gallatin Award for his contribution to the public service.
Contact us for free initial tax consultation and you can speak directly to tax attorneys, certified public accountants, or former IRS appeals agents.
We have been practicing in South Florida since 1982 and we have over 60 years of combined IRS experience in the local, district, and regional tax offices of the IRS.
How to Appeal IRS Tax Audit – Hire Former Appeals Agents – Miami, Ft.Lauderdale, Boca, Palm Beaches
by Fresh Start Tax | Sep 5, 2013 | IRS Tax Audit
IRS Mail Tax Audits – Get IRS Audit Help from Former IRS Agents
If you have received a IRS mail tax correspondence audit contact us today to help manage the IRS tax audit.
The IRS relies heavily on the correspondence tax audit process to address individuals suspected of under reporting their income tax liabilities.
Correspondence audits result in significant additional tax assessments and are more economical than other types of audits.
IRS statistics show that in Fiscal Year 2012, the IRS conducted 1.1 million correspondence audits and recommended approximately $9.2 billion in additional taxes.
With this much money on the table it will behoove virus to continue to ramp up more mail tax correspondence audits.
The treasury Inspector General conducted an audit of this tax correspondence system and found out that the IRS is leaving a lot of money on the table. As a result you can expect IRS to start ramping up their IRS mail tax audit process.
If you are undergoing an IRS audit of any type contact us today and have former IRS agents, managers, and tax instructors represent you for IRS mail tax audit.
Why IRS is going to Audit more back years.
This audit was initiated to determine the effectiveness of filing checks made during the correspondence audit process in the Small Business/Self-Employed Division.
Filing checks are used, in part, to determine whether the same pattern of noncompliance identified on an audited tax return is present on the prior and/or subsequent year tax returns, and if those tax returns warrant an audit.
When properly completed, filing checks leverage IRS audit resources by increasing the overall compliance coverage of every audit.
WHAT TIGTA FOUND
TIGTA evaluated a statistical sample of 102 of 7,470 single-year correspondence audits in which the taxpayers involved agreed that they understated their tax liabilities by at least $4,000.
Similar tax issues also existed on the prior and/or subsequent year tax returns for 43 of the 102 taxpayers. TIGTA found that 32 of the 43 individuals did not have those tax returns audited and, as a consequence, may have avoided additional assessments ranging from $2,343 to $18,874.
A factor that contributed to the limited number of prior and/or subsequent year tax audits in our sample is the emphasis the IRS places on keeping its audit inventories free of older tax years so there is sufficient time to complete audits and assess any resulting taxes within the three-year assessment statute of limitations.
Control issues also exist over how current year audit results are used in deciding whether to audit the prior and/or subsequent year returns.
Contact us today to hear the truth about your case.
IRS Mail Tax Audit – Get IRS Audit Help from Former IRS Agents
by Fresh Start Tax | Sep 5, 2013 | Tax Levy and Wage Garnishments
Stop IRS Wage Garnishments by Knowing the System
It is much easier than you think to stop an IRS wage garnishment.
The reality is, you just need to know the system. As former IRS agents and managers we know the system of how to immediately stop an IRS wage garnishment.
IRS is looking to close your case
The Internal Revenue Service manages billions of dollars in taxpayer debt each and every year.
Every billing case goes into the CADE 2 computer system and a systemically processed into bills and notices that are sent out to taxpayers. If you do not respond to their last and final notice the Internal Revenue Service must issue a IRS wage levy garnishment notice.
How to Stop the IRS Wage Levy Garnishment
To stop the IRS wage levy garnishment you need to contact the Internal Revenue Service and give them a fully documented IRS financial statement. That form is the 433-F.
You can find that form on our website.
By contacting the Internal Revenue Service with fully completed and document financial statement, the IRS will make a determination on how to best deal with you.
As a general rule, the Internal Revenue Service after a careful review of your financial statement will either place you into a tax hardship, insist on a monthly installment agreement or let you know that you could be eligible for an offer in compromise or tax debt settlement.
You can contact us today for a free tax evaluation and we can tell you how to stop your IRS wage garnishment levy immediately.
Remember, the key to stopping your IRS wage Levy garnishment is by immediately contacting the Internal Revenue Service and providing them with a current financial statement and have an exit strategy.
You must also know that you must have all your tax returns filed current with the Internal Revenue Service and they must be on the system.
If you have unfiled tax returns we can prepare those returns, send them to the Internal Revenue Service and finish the final negotiation to not only stop your IRS wage levy garnishment but settle your case.
The Law on IRS Wage Levy Garnishments
An individual’s wages, salary, and other income can be levied. Wages, salary, and other income include payment for personal services in a work relationship.
What happens if an Employer Threatens to Fire Taxpayer Because of a Levy
Sometimes an employer threatens to fire an employee to avoid handling a levy. This might be a violation of 15 USC 1674.
If the employer fires the taxpayer because of this, the employer might be fined not more than $1000 or imprisoned for not more than one year, or both.
You should refer the taxpayer to the Wage and Hour Division of the Department of Labor (DOL). DOL, not IRS, must decide if the employer violated the law.
The Continuous Effect of Levy on Salary and Wages, 668-W – Bad news for a taxpayer
Unlike other levies, a levy on a taxpayer’s wages and salary has a continuous effect. It attaches to future payments, until the levy is released.
Wages and salary include fees, bonuses, commissions, and similar items.
All other levies only attach to property and rights to property that exist when the levy is served.
An IRS Example:
If a bank account is levied, it only reaches money in the account when the levy is served.
It does not reach money deposited later.
When other income is levied, the levy reaches payment the taxpayer has a fixed and determinable right to. If the taxpayer’s right to that payment is not dependent upon the performance of future services, then the levy will reach the future payments as well.
Another IRS Example:
A Form 668-A is issued to levy an author’s royalties. The author has a fixed and determinable right to royalties for books that have already been published.
The levy reaches royalties for sales of those books in the future.
The levy does not reach royalties for books that are written and published later. A new levy must be served to take those royalties.
The point to be made here is if you have continuous income coming in the IRS has a right to send a levy to the third party to collect that income.
IRS Example
A Form 668-W is issued to levy a taxpayer’s retirement income. The taxpayer has a fixed right to the future payments; therefore, the levy remains in effect until it is released.
Also, see IRM 5.11.6.12, Levy on Non-Liable Spouse in a Community Property State for guidance when the wage levy on the non-liable spouse is not continuous.
Exempt Amount of the IRS Wage Levy Garnishments
Part of the individual taxpayer’s wages, salary, (including fees, bonuses, commissions and similar items) and other income, as well as retirement and benefit income, is exempt from levy.
The weekly exempt amount is:
The total of the taxpayer’s standard deduction and the amount deductible for exemptions on an income tax return for the year the levy is served.
Then, this total is divided by 52.
Child Support
Income that is not paid weekly is prorated, so the same amount is exempt.
In addition, the amount the taxpayer needs to pay court ordered child support is exempt.
The taxpayer is not entitled to the support exemption unless the support is being paid.
Consider getting the taxpayer to have the child support payment withheld and sent directly to the person with custody or the taxpayer may make the child support payment through the Service, and the Service will forward the payment.
When there is no open assignment, have the payments sent through Submission Processing. This may happen if the payments are being monitored in the campus.
How to Claim the Exempt Amount of the IRS Wage Levy Garnishment
The Notice of Levy on Wages, Salary, and Other Income (Form 668-W) was developed for use when an individual may be entitled to the minimum exemption from levy in IRC 6334(a)(9) and includes a Statement of Exemptions and Filing Status.
The employer gives the statement to the taxpayer to complete and return within three days. If it is not received by then, the exempt amount is figured as if the taxpayer is married filing separate with one exemption.
The taxpayer can give the statement to the employer later to change the exempt amount.
Please Note:
The employer needs to use this statement rather than the employee’s W–4, Employee’s Withholding Certificate. Taxpayers may claim different exemptions for withholding from those claimed on their return.
Publication 1494, Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income – Forms 668-W(ACS), 668-W(c)(DO) and 668-W(ICS), is sent with the levy to help figure the exempt amount.
The taxpayer can give a new statement to the employer later to have the exempt amount recomputed.
Remember there is a very specific system to stop the IRS wage levy garnishment. You should never call the Internal Revenue Service without a plan or an exit strategy. If you’re going to use or higher any company make sure they have true tax professionals on staff.
Stop IRS Wage Levy Garnishments by Knowing the System
