For many years, the Florida Department of Revenue has issued notices to taxpayers for “limited scope audits” or “self-audits.” Generally, these notices indicate a lead number which references some type of transaction the DOR is questioning. In the past, these notices were generally used for “limited” purposes.
Many times, the lead number references instances where a taxpayer brings property into the state, such as artwork, furniture or other large ticket items and the DOR wants to make sure that appropriate sales tax has been paid.
Other lead numbers may reference a business location that is owned by one person, however, another business operates at that location. Here the DOR is looking to see if the property is being rented and wants to make sure that sales tax was on the rent.
Recently we have seen a great increase in the use of the limited scope audit. It appears that the DOR is trying to use them in as much more expansive way and, in many cases, in place of normal audits. These audits are generally handled by an auditor out of Tallahassee and they want you to send them all your records and information. The problem with this approach is that the DOR really does not have the authority to do an audit this way.
Florida statute 212.13 provides the DOR with the power to inspect books and records of a business. Specifically, the statute requires that generally, a taxpayer “shall be open for inspection by the department at all reasonable hours at such dealer’s store, sales office, general office, warehouse, or place of business must make records available for inspection by the department where the general records are kept.”
In response, I believe that Elton John says it best:
It's sad, so sad (so sad)
It's a sad, sad situation
And it's getting more and more absurd
We believe that the DOR is trying this new use of limited scope audits because they have a major auditor retention problem in the larger cities and they want to expand their audit reach. We believe that the DOR is clearly overreaching with these limited scope audits and many taxpayers should only respond by saying that the information is available at their business location.
Joe Moffa is the founder and managing shareholder of the firm. Joe Moffa concentrates in the area of state taxation and has been a licensed Certified Public Accountant since 1982 and a licensed member of the Florida Bar since 1984. Prior to practicing law, Mr. Moffa worked with Deloitte and Touche for over 10 years, the last 4 years of which he led the firm's Florida State And Local Tax (SALT) practice. Since opening a law firm in 1991, Mr. Moffa has defended clients in almost every industry in Florida and has been a frequent lecturer and author on state tax topics for various professional groups and organizations.
At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is Florida taxes, with a very heavy emphasis in Florida sales and use tax. We have defended Florida businesses against the Florida Department of Revenue since 1991 and have over 100 years of cumulative sales tax experience within our firm. Our partners are both CPAs/Accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. We represent taxpayers and business owners from the entire state of Florida. Call our offices today for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
AUTHORITY
Section 212.13, F.S. Records required to be kept; power to inspect; audit procedure
ADDITIONAL RESOURCES
FL Sales Tax - Taxable Commercial Storage or Bailment Published November 10, 2015, by Matthew Parker, Esq.
FL TAX ALERT – USED CAR DEALERS TARGETED!!!! Published January 29, 2013, by James Sutton, CPA, Esq.
Choice of Forum in Defending Against a Florida Tax Assessment - Part I, Published on January 13, 2019, by James McAuley, Esq.