FL DOR CONTINUES C-STORE ONSLAUGHT FOR FLORIDA SALES TAX

FL DOR CONTINUES C-STORE ONSLAUGHT FOR FLORIDA SALES TAX

Since 2011, our firm has been writing and warning any business that sells beer, liquor, and/or cigarettes, that the Florida sales and use tax audits were coming. Back in 2011, with little support, a new law went into effect in Florida. The new law required all wholesalers, manufacturers, and distributors of alcohol and tobacco to provide annual sales information the Florida Department of Revenue ("FL DOR") for sales to retailers of alcohol or tobacco in the state of Florida. To the surprise of many, some retailers were purchasing multiples of gross sales of alcohol and tobacco alone. We alerted c-stores, liquor stores, restaurants, and bars that the audits were coming. In fact, we were told that approximately 200 audit notices were going out every three months (DR-846 – "desk audits" & DR-840 – "full audit notices") and each of the state's some 500 auditors was assigned at least 1 ABT case. That was exactly what happened.

Since then, our office has been inundated with calls from the alcohol and tobacco retail industries. Using a flawed formula, the FL DOR completed hundreds of sales and use tax audits assessing sales tax, penalties and interest greatly in excess of what the businesses owed. Our firm has been defending these alcohol and tobacco retailers. Despite what officials at the FL DOR will tell you, these audits are defendable. While the FL DOR bases its audit on industry averages, each store has its unique story. Put in the FL DOR's words, each store has its own sales mix, mark-up, and exemption ratio. In addition, the purchase information relied upon by the Department may not be accurate.

We recently were apprised as to how "profitable" the FL DOR's program has been. As of March 2014, the FL DOR has assessed tax penalty and interest about $102,124,022. Of that, approximately $73,983,061 constituted tax. Put another way the FL DOR has assessed Florida sales tax on what it believes to be a staggering $1.1 billion of unreported sales - that's right - billion with B. It would be an understatement to say the FL DOR has hit the jackpot with this program.

These colossal numbers should serve as a serious wake-up call to the industry as a whole. Based on the FL DOR's projections, there was an extreme amount of under reporting taking place, not even to mention the potential criminal implications. However, we have found that the FL DOR's estimated assessments are anywhere from 20-70% too high. In addition, if handled properly, the penalties can be eliminated in many cases. It is also imperative to know that if you or your client's company receives a large assessment, it is worthwhile to fight in an attempt to bring the numbers down. Moreover, payment plans are often available to pay off the tax due.

It is rarely advisable to take on these types of cases without the help of an expert Florida sales tax attorney or other professional to navigate the process. I have personally handled over a hundred of these types of cases over the last few years and know what the FL DOR will and will not accept to reduce the assessment. Our lawyers also have strong backgrounds in accounting and are capable of handling criminal sales tax cases should the need arise. It is also worth pointing out that there is no accountant-client privilege, should the case turn criminal. If you or a client of yours is has been contacted (or you fear being contacted) by the Florida Department of Revenue, then please call or email our offices today for a free initial (and confidential) consultation about your matter.

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 with a heavy emphasis on the convenience store and petroleum industry. Mr. Donnini also does extensive work in the area of Florida wholesaler beverage and tobacco tax. Mr. Donnini worked as an accountant for a public REIT prior going to law school and has since earned an LL.M. in Taxation from NYU. If you have any questions please do not hesitate to contact the firm by phone or email via the links at the top of the page.

ADDITIONAL RESOURCES

FL TAX ALERT – CONVENIENCE STORE OWNERS TARGETED!!!!, published August 16, 2012, by James Sutton, CPA, Esq., and Jerry Donnini, Esq.

FL TAX – VOLUNTARY DISCLOSURE CAN BE THE PERFECT SOLUTION, published October 5, 2012, by Jerry Donnini, Esq.

FT. MYERS BUSINESS OWNER ARRESTED FOR FAILING TO REMIT ONLY $8,000 IN SALES TAX COLLECTED, published August 11, 2012, by James Sutton, CPA, Esq.

FL TAX ALERT – ALCOHOL & TOBACCO RETAILERS BEWARE!, published February 10, 2012, by James Sutton, CPA, Esq.