by Fresh Start Tax | Aug 19, 2013 | Florida Sales Tax, Tax Help
Sales Tax Audit Defense – Former Florida Sales Tax Auditor, Tax Tips
These are Questions the Florida Sales Tax Auditor will probably ask and procedures the auditor will use to conduct the sales and use tax audit.
In addition to knowing why your company was selected for audit, it is also helpful to know in advance what type of questions the auditor will ask, how the auditor will conduct the audit, what the auditor will focus on and what types of documentation will be examined.
The Florida Sales Tax Auditors job
Remember that the auditor’s job is to find unreported or under reported revenue and use tax from purchases that did not have the proper sales tax paid and therefore the questions will be focused in the areas of high dollar recovery.
On the sales tax side expect the auditor to perform a high-level review of items such as:
• sales on the books as compared to sales per state sales tax return
• sales per federal income tax returns compared to sales per state sales tax returns
• deposits per bank statements compared to sales per sales tax returns
• an analysis of the sales tax payable account to the sales tax actually remitted
• verify that tax being collected is at the correct rate for location(s)
• verify that discretionary taxes are being properly calculated and remitted
• review internal controls for a recorded/undocumented sales
• review a representative test of each revenue account
On the use tax side, look for the auditor to focus on such items as:
• purchases from out-of-state vendors of items that were not resold to consumers
• Review depreciation schedules and/or check register for assets purchased during the audit.
• Review County tangible personal property tax returns for asset acquisitions
• purchases of fixed assets and fixed asset additions
• Internet purchases
• verify and trace accruals from source documents to general ledgers and sales tax reports
• analyze consumables pulled from inventory
• analyze leases of tangible personal property for compliance
For commercial rent expect the auditor to focus on:
• rental income – ensure tax was collected on all components of rent
• rental expense – ensure tax was paid on all components of rent
• on rent paid – ensure that the landlord is properly registered with the state of Florida
Expect the auditor to perform detailed tests
Expect the auditor to perform detailed tests such as tracing individual transactions involving sales and use taxes to the company’s accounting system, validating that tax rates billed on transactions are correct at the time of the billing, and verifying that current resale certificates are on hand for the customers claiming exempt status.
Electronic auditing, or e-Auditing,
Electronic auditing, or e-Auditing, is computer-assisted auditing using electronic records to complete all or part of the audit. If you use a computer to record your business activity and keep this data electronically, you are a candidate for an electronic audit.
Electronic records are preferred because it is the most accurate and efficient method of conducting an audit.
Documentation to conduct the audit
From the documentation standpoint, the auditor will likely start with a questionnaire to obtain general information about the business, ownership structure, and the market it serves.
The auditor is likely to request access to and inspect documents such as:
• the companies federal income tax returns for the period under audit
• chart of accounts
• trial balances and general ledgers
• sales journals
• invoices, receipts and credit memos supporting sales transactions
• exemption certificates for customers
• purchase journals and records
• cash disbursement journals
• bank statements
• fixed asset registers and depreciation schedules
How a Florida Department of Revenue may conduct a Sales and Use Tax Audit
Whereas when the company being audited and the Florida Department of revenue agree that the records are so voluminous in nature and substance that sampling is an effective, expedient, and adequate method to facilitate the audit.
The process of Selecting the Sample:
The first step in selecting the sample is to identify the sampling frame. The sampling frame is a group of items from which the sample is drawn or a listing of sampling units. In a homogeneous sampling frame, any item in the frame is representative of any other item; therefore, a random selection of all items in the frame will be representative.
The auditor determines how the accounting records are physically stored and available in order to identify the sampling frame.
Typically, accounting records have numbered sampling frames or non-numbered sampling frames, or they may have a combination of both. Both numbered and non-numbered sampling frames can be randomly sampled using WinSample.
WinSample is a software program developed by the Department of Revenue’s General Tax Administration’s Statistics Team and Applied Technology.
WinSample randomly selects sample points from many possible sampling frames using a seed number.
WinSample may be used when taxpayer records are not available in an electronic format suitable for stratified statistical sampling or e-Auditing. Numbered sampling frames include source documents that are consecutively numbered.
Some examples are:
• Invoice numbers
• Voucher numbers
• Check numbers Non-numbered sampling frames include source documents that have no natural numbering system.
Although not consecutively numbered, a random sample of the transactions may still be identified.
Some examples of non-numbered sampling frames supported in WinSample are:
• Time periods (days, weeks, months, quarters)
• Journals (with page numbers and multiple lines on each page)
• Imaged documents
• Microfiche
After the sampling frame is identified, data integrity tests for each sampling frame will be performed.
Data integrity tests will be performed on both numbered and non-numbered populations.
We are a full-service tax firm that specializes in federal state 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 in a former sales tax agent 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 how to fully resolve your sales tax audit case.
We are a full-service tax firm that specializes in federal state 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 in a former sales tax agent with over 16 years of direct work experience with the Florida Department of revenue.
Florida Sales Tax Audits – Questions you will be Asked by the Auditor – Insider Tips
by Fresh Start Tax | Aug 15, 2013 | Tax Returns
We can get you back in the IRS system worry free.
As former IRS agents and managers with over 60 combined years in the local South Florida Internal Revenue Service we can get your back tax returns filed and your case settled and you will never have to speak to the Internal Revenue Service.
Stop the worry today.
A tax myth
Being a former IRS agent and teaching instructor I found that once taxpayers did not file multiple back tax returns fear set in and they would just stop filing. This fear will literally cripple you.
However, that is all a myth! You can file these back tax returns without fear of IRS pouncing all over you.
The truth is, the IRS is just happy to have your back tax returns filed and most of the time they could care less whether they received 1 or 10 back tax returns.
IRS is just happy to have you back in the system. There are approximately 25,000,000 tax returns and IRS has not received and there is no way they can go after everyone but as time marches on IRS will find you. The golden rule here is to find IRS before they find you. If you file your tax returns before IRS contacts you there is little fear ever of a criminal investigation.
You may have lost a refund
Believe it or not many of these taxpayers who haven’t filed back tax returns have lost large amounts of tax refunds unless they were self-employed for all the years.
If you have had withholding taken out of your check for any of these years there’s an excellent chance you have missed out on back refunds.
The Snowball Effect
IRS knows that fear and anxiety cause taxpayers not to file back tax returns.
Once a taxpayer does not file the first tax return as a general rule the snowball effect continues. Taxpayers stay in that mode and every time April 15 comes along they start to shutter but then that April 15 passes and they pause a sigh of relief. But with every year the snowball gets larger and larger.
At some point you MUST decide to File Back Multiple Tax Returns
At some point in time there is a triggering mechanism that causes that taxpayer to realize they have to file their back tax returns.
Sometimes you may need him to qualify for a mortgage or loan or maybe guilt starts eating away. For many taxpayers a him read something in the newspaper or the media and they just know it’s time to get current and right with the Internal Revenue Service.
For some fear the element of going to jail and the possibility of a large criminal investigation drives taxpayers to file.
Whatever the reason at some point you must decide to file back multiple tax returns.
Advice from a Former IRS Agent
As a former IRS agent and teaching instructor I can tell you have no fear whatsoever to file your back tax returns. After they are prepared you can send them in all at one time. It is normal for IRS to save multiple tax returns because there are so many tax returns being filed each and every day. IRS does not take the time out to worry about every single individual taxpayer.
Chances of a tax audit for back tax returns
Believe it or not, the IRS will not pull the returns for audit unless you way are out of line for the normal tax filing norms. Your chances for a tax audit will be less than 1% because those are the national averages
Of all the back tax returns at our firm has filed I can only remember in one case in which a taxpayer was ever audited and that’s after 38 years private and public practice.
So do not be afraid to file back income tax returns.
If you are going to owe money as a results of filing Back Tax Returns
If you owe money as a result of filing back tax returns IRS will simply take a financial statement and determine the place you in one of three categories. This is a common procedure any time taxpayers or businesses own money.
Your current financial statement will either play shoe into a current tax hardship, have you eligible for an installment monthly payment plan or the filing of an offer in compromise to settle your tax debt as a result of the money you owe on your back tax returns
How many back years worth of tax return should I file of back tax returns
That is a question I am asked quite frequently by taxpayers who have not filed for the last 6 to 20 years and some have never filed.
As a general rule I tell taxpayers to file the last six tax returns.
Once those tax returns are processed on the system the Internal Revenue Service will let you know whether they want back tax returns are not. For the general taxpayer, filing 6 back tax returns will satisfy the thirst of the Internal Revenue Service
So if you have to file back tax returns don’t be afraid just go for it. Hiring a professional company can make this process much easier because they know the exact system of how to get the tax returns process and accepted by the Internal Revenue Service.
Contact us today to learn more about the filing of back tax returns and settling your tax debt with the Internal Revenue Service.
We are comprised of tax attorneys, tax lawyers, certified public accountants, and former IRS agents, managers and tax instructors.
We are nationwide tax experts for the filing of back tax returns. You will never have to speak to the Internal Revenue Service.
BACK TAX RETURNS – Get back in the system without Worry – Ft.Lauderdale, Miami, Palm Beaches, Boca
by Fresh Start Tax | Aug 15, 2013 | Tax Help
As former IRS agents, managers and tax instructors we know the exact way to get you back into the system safely without worry or anxiety.
Stop the worry today.
Being a former IRS agent I found that once taxpayers did not file multiple back tax returns fear set in and they would just stop filing.
However, that is all a myth!
The truth is, IRS is just happy to have your back tax returns filed and most of the time they could care less whether they received one or 20 back tax returns.
IRS is just happy to have you back in the system. Believe it or not many of these taxpayers who haven’t filed multiple back tax returns have lost large amounts of tax refunds unless they were self-employed for all the years.
IRS knows that fear and anxiety cause taxpayers not to file back tax returns.
Once a taxpayer does not file the first tax return as a general rule the snowball effect continues. Taxpayers stay in that mode and every time April 15 comes along they start to shutter but then that April 15 passes and they pause a sigh of relief.
At some point you MUST decide to File Back Multiple Tax Returns
At some point in time there is a triggering mechanism that causes that taxpayer to realize they have to file their back tax returns.
Sometimes they need him to qualify for a mortgage or loan or maybe guilt starts eating away.
For some fear the element of going to jail and the possibility of a large criminal investigation drives taxpayers to file.
Whatever the reason at some point you must decide to file back multiple tax returns.
Advice from a Former IRS Agent
As a former IRS agent and teaching instructor I can tell you have no fear whatsoever to file your back tax returns. After they are prepared you can send them in all at one time.
Believe it or not, the IRS will not pull the returns for audit unless you way are out of line for the normal tax filing norms.
Of all the back tax returns at our firm has filed I can only remember in one case in which a taxpayer was ever audited and that’s after 38 years private and public practice.
So do not be afraid to file back income tax returns.
If you are going to owe money as a results of filing Multiple Back Tax Returns
If you owe money as a result of filing back multiple tax returns IRS will simply take a financial statement and determine the place you in one of three categories.
Your current financial statement will either play shoe into a current tax hardship, have you eligible for an installment monthly payment plan or the filing of an offer in compromise to settle your tax debt as a result of the money you owe on your back tax returns
How many back years worth of tax return should I file.
That is a question I am asked quite frequently by taxpayers who have not filed for the last 6 to 20 years and some have never filed.
As a general rule I tell taxpayers to file the last six tax returns.
Once those tax returns are processed on the system the Internal Revenue Service will let you know whether they want back tax returns are not. For the general taxpayer, filing 6 back tax returns will will satisfy the thirst of the Internal Revenue Service
However if there are large dollars involved and possible criminal intent or criminal fraud it is always best to seek the advice of a tax attorney, CPA or former IRS agent to help you make decisions on the best course of action to take.
If this is going to be a criminal case you should only seek a qualified tax attorney for help.
So if you have to file back tax returns don’t be afraid just go for it.
Contact us today to learn more about the filing of back tax returns and settling your tax debt with the Internal Revenue Service.
We are comprised of tax attorneys, tax lawyers, certified public accountants, and former IRS agents, managers and tax instructors.
We are nationwide tax experts for the filing of back or multiple tax returns. You will never have to speak to the Internal Revenue Service.
Tax Returns – Safest way to file MULTIPLE BACK TAX RETURNS
by Fresh Start Tax | Aug 14, 2013 | Sales Tax
Sales Tax Audit, Florida Defense Help
We are a full-service tax firm that specializes in federal and state tax representation.
Our staff consists of tax attorneys, certified public accountants, former IRS agents and a former sales tax agent with over 16 years of direct work experience with the Florida Department of Revenue.
Factors that could have caused your Florida business to become a target of a sales tax audit
- Do you purchase supplies for your business from out-of-state vendors or through the Internet?
- Did you sell goods at retail, or wholesale products which you manufacture,
- Did you sell services in Florida, can you be sure you are collecting the appropriate amount of sales tax on the sale of your goods or services?
- If the answer is “yes” to any of these questions you might be targeted by the State of Florida for a sales and use tax audit.
The state of Florida Sales Tax Audits targets different businesses, different industries and different geographical boundaries to make sure they have a very balanced approach to the sales tax audits in the state of Florida. They must ensure total coverage for the entire state therefore all industries and businesses are included in sales tax audits.
No industries are excluded. When the state of Florida sales tax division finds widespread industry abuse they will put a lot of their time and resources into correction.
As a general rule that could mean convictions, heavy penalties, fines and certainly media and newspaper publicity. They do this to get the attention of the public and mainly to help control industry abuses.
As a general rule when the state or federal agency puts out a number of press releases it is attempting to let the public know there plan a future attack.
It also should be noted that the state of Florida sales and use tax division conducts random audits as well as targeted audits.
Other factors that have to be considered for Sales Tax Audits:
• industries presently selected as targets
• prior audit history
• amount of exempt sales being claimed
• Amount of total sales being reported
• ratio of exempt sales to total sales
• location of the business
• adverse information from customers or employees
Most of these factors are obvious but the state of Florida sales tax audit division is always coming up with more programming targeting the industries where revenue success is obvious.
Companies with a history of prior audits where there was significant recovery will definitely get audited again.
Larger companies with high amounts of sales and those reporting high amounts of exempt sales are also targeted.
Recent Developments for Sales and Use Tax Audits, State of Florida
Recently, the Florida Department of revenue has targeted industries such as convenience stores new and used vehicle dealerships, hotels and any other business that sold alcoholic beverages such as restaurants and bars.
Also bars, restaurants and liquor stores can be cash based businesses and cash reporting could be a real red flag.
Increased Activity
Florida has increased its activity of audits to the point that state tax audits outnumber internal revenue service audits by a significant number.
Companies that seem to be at greatest risk for a sales tax audit are manufactures, retailers, and service businesses that make a large amount of purchases of supplies for their company.
Red Flags for Sales Tax Audits – Florida
Red flags such as out-of-state sales or large amount of exempt sales by retailers can trigger a sales tax audit and can cost the retailer a significant amount in tax dollars.
Florida imposes use taxes on purchases of tangible goods and certain services therefore businesses that do not collect sales tax on their product or service because they are not taxable are also flagged by the Florida Department of revenue for sales tax audits.
Received the Florida form DR 840
If the Florida Department of revenue, Sales Tax contacted your company about a pending Florida sales and use tax audit or you have already received the Florida form DR 840 – notice of intent to audit books and records your company could already have been selected as a target and you could be subject to a large assessment for tax, interest and penalty.
Contact us today and find out just who we are and how we can help you if you are need of a Florida sales tax audit representation.
We are one of Florida’s most experienced firm for Sales Tax Audits Defense Help
We are a full-service tax firm that specializes in federal and state tax representation.
Our staff consists of tax attorneys, certified public accountants former IRS agents and a former sales tax agent with over 16 years of direct work experience with the Florida Department of Revenue.
Sales Tax Audit, Florida Defense Help – Why you were a TARGET
by Fresh Start Tax | Aug 13, 2013 | Tax Help
If you’re dealing with back tax debt from the Internal Revenue Service is always in your best interest to hire local South Florida tax professionals.
We are a local South Florida professional tax firm staffed with tax debt attorneys, certified public accountants, former IRS agents, managers and tax instructors.
We have over 206 years of professional tax experience and over 60 years directly with the Internal Revenue Service.
Free Professional Tax Advice from Tax Debt Attorneys and Professionals
There are different ways to deal with the Internal Revenue Service to settle a tax debt.
One of the critical aspects in settling with the Internal Revenue Service is to make sure that your case is permanently resolved.
Many taxpayers are fooled by thinking because their case is in a non-collectible status or part pay status that their case is primarily result but those cases are only held in all abeyance for a period of 2 to 3 years. All these type cases wind up coming back to the main IRS enforcement computer.
Ways of permanent tax resolution
The ways of permanently resolving your debt are either through a:
1.bankruptcy proceeding,
2. the statute of limitations expiring or
3. the settling of your case through an offer in compromise or a tax debt settlement.
Hiring a local solid tax debt attorney firm can assure that you can resolve your case for the lowest amount of money in the least amount of pain to the client.
This article will only deal with the offer in compromise to relieve yourself of the IRS tax debt.
Tax Debt Settlements
Experienced tax attorneys and tax firms can help assure that you will settle your tax debt with the Internal Revenue Service for the lowest dollar allowed by law. It also should be known that there are specific formulas that dictate the IRS tax settlement policy.
It is in your best interest to be very truthful before submitting a tax debt settlement called and offer in compromise.
IRS will require a detailed financial statement with all supporting documentation including all bank records and verification of all income and expenses for the last year.
The normal IRS investigation of a offer in compromise can take any place between 15 and 40 hours.
The Internal Revenue Service conducts a thorough search which will include searches of Google, credit reports, and all licenses to confirm the thoroughness of your financial statement. IRS has their own internal search engines to conduct asset searches on all taxpayers that owe back taxes debt.
Tax Debt Attorney Facts
1. The Internal Revenue Service receives about 60,000 offers in compromise each year.
2. About 38% of those offers are accepted by the Internal Revenue Service.
3. The average settlement on a dollar is $.14.
4. If you are going to file for tax debt relief with the Internal Revenue Service you need to be patient. The average wait time to settle your case with the IRS is between six months to a year.
The Offer in Compromise, the IRS Settlement process
Within the last two years the Internal Revenue Service has come out with a new program or initiative called the fresh start. And in case you’re thinking it is not named after our tax firm.
It has allowed taxpayers struggling with old tax debt to permanently deal with the Internal Revenue Service and completely eliminate their tax debt for pennies on the dollar.
Before taxpayers goes running off to settle their IRS debt the taxpayer must make sure that they are a suitable and qualified candidate for the offer in compromise program.
Warning to taxpayers
As a warning to taxpayers, searching the Internet for tax companies to do this work I would caution you to make sure you are giving your work to a professional tax company. Most Internet sites that you see do not use qualified tax professionals to deal with your IRS tax debt. As a matter of fact, many sites that you see on the Internet are lead generation sites and literally sell your information to third-party buyers.
They use semi-qualified people were more interested in generating fees in settling your tax debt.
Before hiring a tax that firm check on the qualifications of the professional that we will be working your particular case.
Ask that person many questions.
You will get a good solid gut feeling on whether you should hire that person or that firm. You should also check on the BBB rating as well as asking for similar results on a case that is similar to yours.
Pre-Qualifer Tool for Tax Debt
To make sure that you do not fall victim for some of these companies, the Internal Revenue Service has now a pre-qualifier tool that you can use before you submit your offer in compromise to settle your tax debt with the IRS.
You will find that pre-qualifier tool right on our website.
I would urge all taxpayers before paying a dime to any tax firm to walk themselves through this very simple process to make sure they are qualified for an IRS tax debt settlement called the offer in compromise.
What dollar amount is IRS looking for to settle, there is a very specific formula
The Internal Revenue Service is interested in two main things things, your assets in your income.The basic settlement formula is this: IRS wants the sum total of the liquidation value of your assets plus a times 12 value of your monthly income over and above the monthly allowable expenses. By calling us directly we can figure out the amount required to satisfy the Internal Revenue Service.
IRS has specific formulas to deal with the taxpayer’s income and the liquidation of certain assets to come up with a fair settlement amount for the offer in compromise to settle a tax that.
We at Fresh Start Tax llc will pre-qualify your offer in compromise and make sure that you are a quality candidate for the tax debt settlement call the offer of compromise.
Contact us today for free initial tax consultation and we walk you through this program. Yes we will give you free tax advice to make sure you’re qualified for the program.
An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability, or doing so creates a financial hardship.
IRS mainly consider your unique set of facts and circumstances:
1. Ability to pay;
2. Income;
3. Expenses; and
4. Asset equity.
The IRS generally approves an offer in compromise when the amount offered represents the most the IRS can expect to collect within a reasonable period of time.
Explore all other payment options before submitting an offer in compromise.
The Offer in Compromise program is not for everyone.
If you hire a tax professional to help you file an offer, be sure to check his or her qualifications.
Make sure you are eligible for a Tax Debt Reduction
Before the IRS can consider your offer, you must be current with all filing and payment requirements. You are not eligible if you are in an open bankruptcy proceeding. Use the Offer in Compromise Pre-Qualifier on the fresh start tax llc to confirm your eligibility and prepare a preliminary proposal.
Submitting your offer to the IRS
Your completed offer package will include:
1. Form 433-A (OIC) (individuals) or
2. 433-B (OIC) (businesses) and all required documentation as specified on the forms;
Form 656(s) – individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate
3. Form 656;
4. $150 application fee (non-refundable); and
Initial payment (non-refundable) for each Form 656.
Select a payment option for the Tax Debt for the OIC
If you owe the money there are basically two choices.
Your initial payment will vary based on your offer and the payment option you choose:
1. Lump Sum Cash: Submit an initial payment of 20 percent of the total offer amount with your application. Wait for written acceptance, then pay the remaining balance of the offer in five or fewer payments.
2. Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full .
Understanding the Tax Debt process with the IRS
While your offer is being evaluated:
1. Your non-refundable payments and fees will be applied to the tax liability ,y ou may designate payments to a specific tax year and tax debt;
2. A Notice of Federal Tax Lien may be filed; Do everything in your power to make sure the federal tax lien is not filed,
3. Other collection activities such as tax levies and wage levies may be suspended;
4. The legal assessment and collection period is extended from the normal 10 years;
5. Make sure you make all required payments associated with your offer in compromise;
6. You are not required to make payments on an existing installment agreement or payment agreement program; and
7. Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date. If this happens by a lottery ticket.
As a former IRS agent and teaching instructor I cannot tell you how important it is to make sure you get competent tax help in dealing with your back tax debt.
We at Fresh Start Tax are comprised of tax debt attorneys, certified public accountants, former IRS agents, managers and tax instructors.
We have worked out of the local South Florida IRS offices for over 60 years.
We are some of South Florida, Fort Lauderdale, and Miami top experts for tax debt attorney help.
Ft.Lauderdale, Miami – Tax Debt Attorney Help
