One of the Florida Department of Revenue's ("FL DOR") weapons against business owners (and licensed professionals) in Florida is that if you do not agree to pay whatever tax the FL DOR claims you owe, then the FL DOR may attempt to have your Florida sales and use tax business registration certificate suspended or revoked. Without a certificate of registration, most businesses must shut their doors, which equates into a very heavy hand means of strong-arming taxpayers into submission. (The FL DOR may similarly go after an individual or business professional license, which will be discussed in another article). Our firm has been receiving an increased number of calls recently regarding the revocation of a company's sales certificate of registration. Often times, a company or a client's company has an outstanding sales tax liability that has been put on the back burner or ignored altogether. Out of the blue, a notice is received that the company's Certificate of Registration is being revoked. Panic sets in because the taxpayer fears that the Department of Revenue ("DOR" or "Department") is initiating a proceeding to put a company out of business. While a company cannot act as a dealer or sell tangible personal property in Florida without a valid Certificate, there are still many actions that can be taken with an experienced Florida sales tax attorney on your side.
Under section 212.18, Florida Statutes ("F.S."), the Department of Revenue does have the authority to revoke a taxpayer's Certificate of Registration who fails to comply with Chapter 212, F.S. However, the Department must comply with ALL the requirements of section 212.18, F.S. Specifically, the Department must provide written notice to the offending dealer of the time, place, and date of a conference in which the dealer can be heard. Further, section 212.18, F.S., requires the department to schedule an informal conference at which the dealer may show that its sales tax registration should not be revoked or enter into an agreement with the Department. If the Department does not comply with these requirements, then the dealer's due process rights have been offended and the dealer has a significant chance of defending the revocation.
Assuming the DOR complies with the statute, the DOR must next issue an administrative complaint if the dealer fails to attend the formal conference or enter into a compliance agreement with the DOR to resolve the noncompliance. The administrative complaint names the offending company and is often titled "Administrative Complaint for Revocation of Certificate of Registration" and states the DOR intends to revoke your certificate of registration. From there, the offending party has 21 days from the receipt of the complaint to request an administrative hearing. If no such challenge is made, then the DOR will enter a final order to revoke the sales tax certificate of registration. Without a sales tax certificate of registration, a business is no longer authorized to sell or provide any services that are subject to Florida sales and use tax. This effectively means that the Florida DOR has for all practical purposes just nailed the doors shut, or this is what the state would like you to think. However, the "final order" issued by the DOR to revoke the businesses certificate is not actually final.
First of all, although the DOR can revoke the certificate within 21 days, it usually does not do so for about a month after the agency complaint is filed. The final order, on its face, informs the taxpayer that its Certificate of Registration is revoked and prevents the dealer from selling tangible personal property within the State of Florida. This is usually around the time in which our firm receives a phone call for help.
So is there anything that can be done if a court has order the revocation of a taxpayer's Certificate of Registration?The answer is most likely yes, if you act timely. Fortunately, section 120.68, F.S., allows the taxpayer to appeal the Certificate of Revocation by filing an appeal in the First District Court of Appeal (a "DCA") or in the DCA in which the taxpayer resides. This appeal must be filed within 30 days of the date on the Final Agency Order.
Of utmost importance to most business owners, filing a judicious appeal in a DCA allows the taxpayer to stay in business after its Certificate has been revoked at least during the appeals process. If the taxpayer wishes to stay in business, then appealing the DOR's revocation proceeding is critical because selling tangible personal property or acting as a dealer is a crime in Florida subject to large penalties and potentially jail time. While it is advisable to challenge the revocation at its earlier stages, challenging the DOR at the appellate level is an alternative to keep a business alive. This often provides more time to reach an agreement with the DOR and thwart the revocation. Of course, if there is a misstep by the DOR or some challenge to the merits of the revocation, then it is easier to resolve at the more infant stages, however, a challenge at the appellate level is not impossible.
As is readily apparent by the basic concepts outlined in this article, a challenge to a revocation proceeding is somewhat complex and highly technical process. If you or your client has received a notice regarding a Certificate revocation at any stage, it makes sense to get an experienced Florida sales tax attorney involved as quickly as possible. It is also worth noting that the DOR is often lackadaisical in its procedures to revoke a taxpayer's Certificate of Registration and the taxpayer's due process rights are often violated. We believe in the right factual circumstance a taxpayer's revocation presents a meritorious challenge under the constitutional protection of due process.
It takes years of blood, sweat, and tears to build a viable business and it is our job to help defend Florida businesses from the Florida Department of Revenue, whether the dealing with a simple accounting mistake or intentional misuse of state funds. If your company or your client's company is facing has past due Florida sales and use tax obligations and a certificate of registration is being threatened at any stage of the administrative or legal proceedings, then please contact one of the attorneys from our office today for a FREE INITIAL CONSULTATION.
About the author: Mr. Donnini is a Florida Attorney and an associate in the law firm the Law Offices of Moffa, Sutton, & Donnini, P.A., in Fort Lauderdale, Florida. Mr. Donnini's primary practice is Florida tax controversy. Mr. Donnini worked as an accountant for a public REIT prior going to law school and is currently pursuing his LL.M. in Taxation at NYU.
AUTHORITY
Section 212.18, F.S.
Section 120.58, F.S.
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