FL DOR REQUIRES TAX PAYMENT TO PROTEST AN ASSESSMENT

Our comrades in Tallahassee have crossed the line yet again. In a newly revised pamphlet given to taxpayers at the end of an audit, the Florida Department of Revenue is demanding taxpayers pay the proposed audit assessment (uncontested portion), with penalties and interest, before the matter can be protested. That's right – the audit assessment is not even final yet, but the DOR expects taxpayers to give in to extortion techniques before the taxpayer can exercise their statutory right to challenge the assessment in an informal protest. This is a huge change in policy and we don't believe the DOR has the statutory authority to create the new procedure without going through the full rule making process (which includes a public comment period).

The form is a GT-800004 revised April 2013 entitled "How to Pay Your Audit Assessment and Notice of Taxpayer Rights" which is an attempt to meet the requirements in the taxpayer bill of rights to provide taxpayers with clear and accurate information about their rights. After a couple of sentences encouraging the taxpayer to pay the Notice of Proposed Assessment in full, the specific offensive language in the second paragraph is provided below:

"If you protest the assessment, Department policy requires that you pay the agreed upon portion of tax, interest, and penalty at the time you file your protest."

There is a statutory requirement to pay uncontested portions of the assessment before you can file a legal challenge in the Division of Administrative Hearings or Circuit Court, but there has never been any such requirement for a protest. The amount of tax due has not been settled because the assessment is not final until protest rights have passed. For the Florida Department of Revenue to simply invent a policy that a taxpayer has to pay the assessment before it is even final to exercise their rights to protest the audit is offensive.

We have already pushed this issue up the chain of command in the DOR and hope the offending sentence will be removed from the Form GT-800004 very quickly, but there have likely been hundreds of these forms issued with what I can only hope is simply wrong information. If you do not agree with this policy, then I suggest you reach out to your most trusted politicians and contacts in the DOR to fix this blatant overreaching of authority. I'd love to hear the explanation of how the DOR believes they have this authority?

To make matters worse, if this change was fully approved and intentional, then it falls on the heels of the audit level's change in policy to only allow one revision to the DR-1215: Notice of Intent to Make Audit Changes. That means if a taxpayer (or their advisors) submit something that they believe will satisfy the auditor but it fails to meet the auditor's approval, then the audit is over. The next step is a protest, which has apparently turned into a "pay to play" legal right. This audit level change is going to greatly increase the number of protests on matters that should be handled at the audit level.

UPDATED 8-9-13 - 5:00 PM: Just received word from a very reliable source that it is in fact NOT the Department of Revenue's policy to require payment of uncontested amounts prior to filing a protest. The Department will revise the lanaguage to make it clearer that the Department merely encourages taxpayers to pay the amount on the NOPA to lower the interest charges for uncontested amounts. I encourage you to read the language in either of the versions of the taxpayer rights notices below and tell me whether you think it was misleading...

UPDATED 8-28-13 - 8:00 AM: I just reviewed the latest GT-800004 as re-revised 8/13 and it removed the offensive, false statement that the Department of Revenue has a policy that requires payment of tax, interest, and penalty to protest the assessment. Score one for the good guys.

You can view a full copy of the Form GT-800004 as revised on 04/13 here.

You can view a full copy of the Form GT-800004 as revised on 08/13 here.

You can view a full copy of the Form GT-800004 as re-revised on 08/13 here.

ABOUT THE AUTHOR: MR. SUTTON IS A FLORIDA LICENSED CPA AND ATTORNEY AND A SHAREHOLDER IN THE LAW FIRM the Law Offices of Moffa, Sutton, & Donnini, P.A. MR. SUTTON IS IN CHARGE OF THE TAMPA OFFICE FOR THE FIRM AND HIS PRIMARY PRACTICE IS FLORIDA SALES AND USE TAX CONTROVERSY. MR. SUTTON WORKED FOR THE STATE AND LOCAL TAX DEPARTMENT OF A BIG FIVE ACCOUNTING FIRM FOR A NUMBER OF YEARS AND HAS BEEN AN ADJUNCT PROFESSOR OF LAW AT STETSON UNIVERSITY COLLEGE OF LAW SINCE 2002 TEACHING STATE AND LOCAL TAX, ACCOUNTING FOR LAWYERS, AND FEDERAL INCOME TAX I. YOU CAN READ MORE ABOUT MR. SUTTON IN HIS FIRM BIO.