What to Expect from a Florida Tax Audit

When notified of the Department's intent to audit, you will be informed as to what records you will need to provide. The types of records needed 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
• Other documentation to verify amounts entered on tax returns

You must keep your records for three years for auditing purposes. The Department may also audit for periods longer than three years if you did not file a return or payment, or filed a return or payment that was substantially incorrect.

The Florida Taxpayer's Bill of Rights (GT-800039 ) included in Section 213.015, Florida Statutes, explains the rights and obligations of the taxpayer and the Department. Your rights include:

• The right to fair and consistent application of tax laws
• The right to get available information and prompt, accurate responses to your questions
• The right to have the Department begin and complete its audit in a timely manner following notifications of the intent to audit
• The right to receive simple, nontechnical statements which explain the reason for audit selection and the procedures, remedies, and rights available during audit, appeals, and collection proceedings

Throughout the audit process, communication is vital. After the Notice of Intent to Audit Books and Records is issued, the auditor will work with you to set a date to begin the audit. 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 make every effort to accommodate your requests. If you fail to respond or provide the requested information, the Department may issue an assessment and file a warrant based on the best available information.

When an auditor and a taxpayer agree on the facts of an audit case, but disagree on how tax law should be applied to the case, the taxpayer can request an opinion on the application of law to a specific set of facts. The Department's office of Technical Assistance and Dispute Resolution will issue a Technical Assistance Advisement (TAA), which is binding on the Department. For more information, read Requesting Advice During an Audit (GT-800061 ). The Department's Tax Law Library (TLL) can help you research the issue before requesting technical assistance.

After the audit is complete, you may review the audit findings and proposed changes. The auditor will give you a copy of the work papers and explain your rights, including deadlines for filing protests. If you agree with the audit findings, you are expected to pay the amount due in full, if any. You have the right to protest the proposed changes if you disagree with them. Additional details are provided through How to Pay Your Audit Assessment and Notice of Taxpayer Rights (GT-800004 ) and How to Make an Audit Payment Online (DR-1215 Insert ).

Auditing in an Electronic Environment (e-Auditing) (GT-800050 ) contains details regarding a computer-assisted audit 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 eligible for an electronic audit. The Department prefers to examine electronic records because it is the most accurate and efficient method of conducting an audit.

The Certified Audit Program (GT-800065 ) is a cooperative effort between the Florida Department of Revenue and the Florida Institute of Certified Public Accountants (FICPA). If you have not received a Notice of Intent to Audit Books and Records from the Department, you may be eligible to participate. The program gives you the opportunity to hire a qualified CPA firm to review your sales and use and local option tax compliance. As an incentive, the Department waives penalties and reduces interest if tax is due.

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, the Department will waive the penalties. If you believe you might owe back taxes and the Department has not contacted you about the liability, you may be eligible for the Voluntary Disclosure Program.

Tax Clearance Letter, Certificate of Compliance, or Transferee Liability Certificate: When buying a Florida business, the purchaser should ask the seller for documentation of any tax, penalty, or interest due to the Florida Department of Revenue. A business owner can use a Certificate of Compliance as proof of good standing with the Department.

Self-audit or self-analysis projects are used to educate taxpayers on issues related to a particular compliance problem or industry. The Department sends selected taxpayers information about a specific tax or issue, user-friendly instructions, and simple worksheets. The Department asks the taxpayer to review the materials, complete the worksheets, calculate any additional tax due, and return the paperwork with payment, if needed. The auditor has limited contact with the taxpayer and does not visit the taxpayer's location. The Department generally accepts the taxpayer’s responses. However, participation in a self-audit/self-analysis does not exempt the taxpayer from further audit review of the same time period.