If you have been notified by Florida sales tax that you are going to be undergoing a tax audit you want to make sure that you are defended by a reputable Florida tax firm better tax experts and have a specialty for sales and use tax defense.
You can call us today to review your tax audit papers so we can let you know the scope of the investigation and possible solutions or resolutions that can take place.
There are number of ways that the Florida sales tax audit can take place and it varies from audit to audit, region or region and auditor auditor.
There are also several methods that can be used to audit floor sales tax so it is important to understand the different auditing methods that may take place.
Listed below are a few audit options that can be used Florida sales tax.
How a Florida Sales and Use may audit and conduct your tax audit: The use 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 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 should be performed.
Data integrity tests should be performed on both numbered and non-numbered populations.
Audit-Related Information
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.
We prefer to examine electronic records because it is the most accurate and efficient method of conducting an audit.
The Certified Audit Program
The Certified Audit Program is a cooperative effort between the Florida Department of Revenue and the Florida Institute of Certified Public Accountants (FICPA). Taxpayers who have not received a Notice of Intent to Audit from the Department are eligible. The program gives taxpayers the opportunity to hire qualified CPA firms to review their sales and use and local option tax compliance. As an incentive, Revenue waives penalties and reduces interest if tax is owed as a result of the audit.
The Voluntary Disclosure Program
The Voluntary Disclosure Program allows you to report previously unpaid or underpaid tax liabilities for any tax administered by the Florida Department of Revenue.
Once you have paid the tax and interest, Revenue will waive the penalties. If you think you might owe back taxes and Revenue has not contacted you about the liability, you may be eligible for the Voluntary Disclosure Program.
Standard Industry Guides provide tax information for specific types of businesses. Taxpayers may use them to help understand sales tax issues likely to surface relating to the industry; and relevant laws, court cases, and other technical documents.
Tax clearance letters and transferee liability certificates: When buying a Florida business, the purchaser should ask the seller for documentation of any tax, penalty, or interest due to the Department of Revenue.
A business owner can use a clearance letter as proof of good standing with the Department.
Florida Sales Tax
Each sale, admission charge, storage, or rental is taxable unless the transaction is exempt. Sales tax is added to the price of the taxable goods or service and collected from the purchaser at the time of sale. Florida’s general sales tax rate is 6 percent.
Use Tax
Use tax is due on the use or consumption of taxable goods or services when sales tax was not paid at the time of purchase.
For example:
If you buy a taxable item in Florida and didn’t pay sales tax, you owe use tax.
If you buy an item tax-exempt intending to resell it and then use the item in your business or for personal use, you owe use tax.
If you buy a taxable item outside Florida and bring or have it delivered into this state and you didn’t pay sales tax on the item, you owe use tax.
Discretionary Sales Surtax
Most Florida counties have a discretionary sales surtax (county tax) that applies to most transactions subject to the sales or use tax. The county surtax rate applies to a taxable item or service delivered into a county imposing a surtax. The surtax rate that applies to motor vehicles and mobile homes is determined by the home address of the purchaser. Check the rates for each county (Form DR-15DSS) in which you sell or deliver taxable goods or services.
For certain transactions, only the first $5,000 of a taxable sale or purchase is subject to the discretionary sales surtax.
How Tax Is Calculated
Sales tax and discretionary sales surtax are calculated on each taxable transaction. Florida uses a bracket system for calculating sales tax when the transaction falls between two whole dollar amounts.
Multiply the whole dollar amount by the tax rate (6 percent plus the county surtax rate) and use the bracket system to figure the tax on the amount less than a dollar. The Department of Revenue has rate tables (Form DR-2X) to help you.
Who Must Pay Tax?
Before you begin business in Florida, you must first find out if your business activity or products used will be subject to sales or use tax.
If it is, you must register to collect sales tax or pay use tax. Revenue provides a partial list of business activities that are taxable.
Governments and nonprofit organizations may not have to pay sales tax.
If you don’t know if your business must register to collect sales tax, contact your local service center or Taxpayer Services.
Florida Sales Tax Registration
You can register to collect and pay sales and use tax using our secure Internet site.
Once you are registered, we will send you a Certificate of Registration (Form DR-11), an Annual Resale Certificate for Sales Tax (Form DR-13) and tax return forms. Place the Certificate of Registration in a visible area of the business. You can use a signed copy of your current Annual Resale Certificate to buy products tax-exempt that you will resell or re-rent.
Filing and Paying Taxes
You can file and pay sales and use tax using Revenue’s secure web application or you may buy software from an approved vendor. You can access the web application using your certificate number and business partner number or a Revenue-issued user ID and password.
You must enroll in our e-Services program to receive a user ID and password. Enrollment has advantages: you can save your bank account and contact information, view your filing history, and reprint returns.
Please take time to read our detailed electronic filing and payment information. Taxpayers who report and pay tax electronically can download a payment due date calendar.
Helpful hints are available to prevent common mistakes, provide answers to common questions, and help ensure a successful filing.
Businesses whose sales and use tax collections are less than $20,000 per year may pay and report tax using a paper Sales and Use Tax Return (Form DR-15).
Revenue has detailed instructions (Form DR-15N) to help you accurately complete your return. However, we encourage all taxpayers to file and pay electronically.
Florida Sales Tax – Audit Defense Help – Tax Representation – Florida Sales Tax Experts
