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If you have been contacted by the state of Florida that you are going to undergo a tax audit the best advice that we can give you is to be thoroughly prepared and understand the scope of your Florida sales and use tax audit.
The last thing you want to do is to be caught off guard.
With the state of Florida needing revenue the easiest and fastest way to collect dollars from a struggling Florida economy is to conduct sales and use tax audits. The state is well aware that many businesses have cash practices and do not report all their sales as they should. Companies and businesses are easy targets for Florida sales and use tax auditors.
As a general rule, a tax auditor is worth six times their salary in additional money to the State, so only makes sense for the Florida Department of revenue to conduct more and more tax audits.
Florida Department of revenue tax audit guides are available to all taxpayers

Many people are bit surprised to find out that the Florida Department of revenue actually puts out tax audit guides so taxpayers, businesses and corporations can understand how the Department of revenue conducts their tax audits.
Taxpayers may use audit guides to help to understand sales tax issues likely to surface relating to the industry, and relevant laws, court cases, and other technical documents. Even for taxpayers not going through tax audits it will benefit them tremendously just to understand how the Florida Department of revenue audit procedures work.
Before you ever walk in for a sales and  use tax audit you want to make sure you are completely well-versed in what will be taking place during the audit and these guides will be very helpful.
You can call us today to learn more about a Florida Department of revenue sales tax audit guide.
These tax audit guides are not available for all industries and businesses please find below a list of the applicable industries the guides are related to.
 

Available tax audit guides for given Florida Industries

 
1. Aircraft Dealer,
2. Boat Dealer,
3. Commercial Rental Guide
4. Construction / Real Property Contractor,
5. Convenience Store
6. Grocery Store
7. Hotel / Transient Rental Manufacturers
8. Motor Vehicle Dealer
9. Repair of Tangible Personal Property
10. Restaurants and Bars
11. Retailer / Wholesaler
12. Transportation.

How a Florida Sales and Use may  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.
 

Why were you Audited by the Florida Department of Revenue

 
There are a variety of reasons why the Florida Department of revenue is pulling your tax return for a tax audit. You may ask the Florida Department of revenue auditor the reason for your tax audit.
But there is no reason for them not to explain why the State of Florida  has pulled your return  for a Florida revenue audit.
 
As a general rule the reasons are the following:

• Enforce Florida tax laws uniformly across all industries,

• Deter tax evasion  o businesses and corporations in the state of Florida,

• Promote voluntary compliance  among all taxpayers. Sometimes they pull your tax return just because they think you’re cheating.

Other Reason for Tax Audits

 
You should also know that many times they have received tips from disgruntled employees or customers. Many times these can lead to criminal enforcement.
Be careful who knows your business.
You would also be surprised the number of spouses that turn the other spouse in to both the Internal Revenue Service answer the Florida Department of revenue simply for a revenge factor.
Only one percent of all tax returns are audited by the Florida Department of revenue and much of that is due to a limited manpower.
The Florida Department of revenue tries to take the biggest and the largest offenders and make examples of those businesses or companies by making sure much press is written to ensure compliance from other taxpayers in the state of Florida.
It is very commonplace to see an article at lease once a month in the local newspaper about a  criminal prosecution  that has taken place within the state of Florida to promote fear within taxpayers and the industry.
The state of Florida audits some returns to verify accuracy and evaluate compliance. Audits do not always result in the taxpayer owing additional tax, penalty or interest.
The auditor may adjust a credit carryover or correct distribution without assessing additional tax. The auditor may even determine that a refund is due.
 

Selecting Methods for a Sales or Use Tax Audit

 
The methods for selecting a business or individual to audit vary from tax to tax.
Here are some examples of sources the state of Florida use to identify a potential audit candidate:
1. Internal Revenue Service has provided various information that it feels a state of Florida should look at.
Many times when the Internal Revenue Service picks up an audit for federal reasons and they find flagrant violations of tax laws they will notify the state of Florida. These are common practices among government agencies
2. Information sharing programs with other states and state agencies.
3. Computer-based random selection.
4. Analysis of Florida tax return information. There are certain standards used by the state of Florida in which taxpayers fall within the normal median ranges. Once taxpayers fallout of these ranges it notifies the computer will be reviewed by an agent were decision is made to conduct a tax audit.
5. Business publications, periodicals, journals, and directories. From time to time the state wants to make sure certain industries are within tax compliance of the Florida Department of revenue tax guides and will take a certain industries and widespread sales tax audits to find out trends. Many these audits come up no change.
 

What types of records will need to be provided?

 
When the state of Florida lets you know of their tax audit intent, they will also tell you what records you will need to provide. They will always send out a document request so you know exactly the records that will be expected during your tax audit. There is no set procedure and every auditor uses their own judgment to make these determinations.
The types of records may include, but are not limited to:

• General ledgers and journals

• Cash receipt and disbursement journals

• purchase and sales journals

• Sales tax exemption or resale certificates

• Florida tax returns

• Federal tax returns

• Depreciation schedules

• Property records

Record keeping for the State of Florida

 
You must keep your records for three years since an audit can extend back that far. This is also the same advice given to you by the Internal Revenue Service.
The Department may audit for periods longer than three years if you did not file, or filed a substantially incorrect return or payment.
These are usually omissions of tax of over 25%. There are  no statutes for criminal violations.
 

Criminal Violations

Florida sales and use tax  uses their criminal investigators to collect back sales tax.
Many times taxpayers are businesses will receive a letter letting them know they’re under criminal investigation. Many times Florida sales and use taxes looking to collect back dollars and using the fear of criminal prosecution to get taxpayers to pay. If you have been notified that you are under a criminal investigation by Florida sales and use tax you absolutely should contact a criminal attorney. Contact us today to learn more to keep your conversation with us under attorney-client privilege.
Appointment Dates for Tax Audits
After the State of Florida Department of revenue sends you a Notice of Intent to Audit Books and Records, the auditor will work with you to set a date to begin the audit.
It is in your best interest not to miss any of the dates as many times the auditors gets evaluated on meeting deadlines.
The auditor will give you deadlines for providing information or documentation.
If you need additional time to prepare, or need to request a delay for other reasons, contact the auditor.
The auditor will usually make every effort to accommodate your requests.
If you fail to respond or provide the requested information, we may issue an assessment and file a warrant based on the best available information.
 

After your State Sales Tax Audit is finished

After your audit is complete, you can review the audit findings and proposed changes to your tax liability. The auditor will give you a copy of the work papers and explain your rights, including deadlines for filing protests.
If you are planning to file a protest you must make sure you do so within the given dates or you will lose your appellate rights.
 

What if I do not agree with the audit results?

 
If you do not agree with the audit assessment, you can:

• File a written informal protest with the Department of Revenue; or

• File a written formal protest by petitioning for review by the Division of Administrative Hearings or file an action in circuit. If you are thinking about doing this you would be wise to hire a seasoned and experienced professional tax firm to appeal and work out a tax settlement on your case.

Other Audit-Related Information by the Sales and Use Tax Division

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.
The Florida  Department of revenue prefers to examine electronic records because it is the most accurate and efficient method of conducting an audit.
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: 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. before you do this it is wise to call a seasoned tax professional experienced and experts in this matter. We recommend you call us and speak to us confidentially on these issues.
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.
Call us today to receive a free initial tax consultation regarding Florida sales and use tax audit help.
We are Florida sales and use tax help experts. We are comprised of tax attorneys, certified public accountants and former IRS agents, managers , and tax instructors.
 

Florida Sales & Use Tax Audit Help – Affordable Audit Defense