If you are a Florida business owner, your tax obligations may be complex. Unfortunately, even simple oversights may lead to stiff penalties by the Department of Revenue, including a felony conviction, sizable fines, payment of interest on taxes owed or even imprisonment.
If you have received a Notice of Intent to Audit Books and Records (form DR-840), know that the law affords you time to prepare your records, explore your options and negotiate or challenge any disputed obligations if needed.
1. State law gives you 60 days to prepare for inspection
Under Florida law, you have 60 days from the receipt of a written audit notice to begin the process of turning over information to the Department of Revenue. While a DOR agent may try to solicit information from you sooner, know that you may waive your right to the 60-day preparation period if you agree to do so.
2. The lookback period could be three years or longer
In general, an auditor will examine your business records from the past three years, including federal and state tax returns, purchase and sales journals and tax exemption certificates. However, if the DOR finds that you have not filed recently or that a recent return was substantially incorrect, the lookback period may be longer.
3. You may challenge audit findings within 30 days
Once an audit is complete, you should receive a Notice of Intent to Make Audit Changes summarizing the results and informing you of your right to appeal or protest the findings. From the date of receipt, you have 30 days to either agree or disagree with audit results.
In some cases, an administrative appeal may be enough to resolve a tax dispute. However, you may need to pursue litigation to clear your business of accusations of fraud or evasion.