Skip menu navigation
Home » Taxes

Buying or Selling a Florida Business – What You Should Know About Tax Liabilities

Before buying an existing business, the purchaser should ask the seller for documentation of any tax, penalty, or interest due to the Department of Revenue. The purchaser can then withhold enough of the purchase money to cover the liability until the seller pays the amount due.

How to Get a Tax Clearance Letter

A taxpayer can ask the Department for a clearance letter (also called a certificate of clearance) as proof there are no outstanding delinquencies on the taxpayer's account. The taxpayer can show the letter as proof of good standing when selling a business or business interest. It can also be used to apply for certain federal grants.

The letter represents a snapshot in time and shows that the taxpayer does not currently have outstanding tax delinquencies and/or bills. A clearance letter may be issued to accounts with bills under protest, in litigation, or protected by bankruptcy filings. In these cases, if the liability is a final assessment, it remains assessed against the seller. While the sale is pending, the purchaser should have the seller hold an amount equal to the contested liability in escrow.

A clearance letter does not exempt the business from future audits that may cover periods before the business was sold. To identify potential tax liabilities, you may ask for a transferee liability certificate, which requires an audit of the business. Once the certificate is issued, the Department will not audit the business again for the period covered by the certificate.

To get a clearance letter, you can submit a request online. The requester's name must be listed on www.sunbiz.org showing association with the company or they must have a Power of Attorney on file with the Department.

The request must include all of the following information:

  • The business name, name of the requester (including signature), business address, telephone number, fax number and email address.
  • An identification number (such as Business Partner Number, Federal Employer Identification Number, or Certificate of Registration Number, etc.,) and
  • A copy of the driver's license for the authorized agent registered with the Department of State. The picture ID must be readable or processing will be delayed.

If you prefer, you may fax your request to 850-922-5254 or mail it to:

Florida Dept. of Revenue
Collection Agency Unit
P.O. Box 8045
Tallahassee, Florida 32314-8045

The standard time frame for processing is 7 to 10 business days. Please allow additional processing time for mailed requests.

For more information about clearance letters, contact your local service center or call Taxpayer Services at 800-352-3671.

How to Get a Transferee Liability Certificate

When a business or stock of goods is sold, the unpaid sales tax liability (if any) of the former owner may transfer to the purchaser, unless the Department of Revenue issues a transferee liability certificate. The certificate is proof that no tax is due or all taxes, penalties, and interest have been paid.

The Department requires an audit of the business before issuing a transferee liability certificate. Either the buyer or the seller can ask for the audit.

  • The seller can submit Form DR-842, Seller's Application for Transferee Liability Certificate.
  • The purchaser can submit Form DR-843, Purchaser's Application for Transferee Liability Certificate. Attach a signed sales agreement to the request. Because tax information is confidential, the Department will issue a transferee liability certificate only to the seller.

Who Conducts the Audit?

Generally, the Department of Revenue conducts the audit. However, for sales tax, you can hire a Certified Public Accountant (CPA) who is qualified to conduct sales and use tax audits for the Department.

Department of Revenue Audit: If you want Revenue to conduct the audit, send the completed DR-842 or DR-843 and signed sales agreement to:

Florida Department of Revenue
PO Box 5139
Tallahassee FL 32314-5139

Hiring a CPA: For sales tax audits, you can hire a qualified CPA to conduct your transferee liability audit. Qualified CPA practitioners are certified in sales and use tax through the Certified Audit Program.

The Florida Institute of Certified Public Accountants has a list of auditors who are certified to conduct sales and use tax audits for the Department of Revenue. When you select a CPA, he or she will tell you what information is needed to conduct the audit. You are responsible for negotiating and paying the fee to the auditor you select.

When the audit is complete, the Department will issue a transferee liability certificate to the current owner of the business, certifying the tax, penalty and interest due (if any).

Note: Sales tax is the only tax for which a Certified Audit may be completed.

For More Information

If you have general questions about transferee liability certificates or clearance letters, call the Department's Case Processing Section at 850-617-8565.

If you have questions about the Certified Audit Program, call the Department's Certified Audit Section at 850-617-8578 or the Florida Institute of Certified Public Accountants at 850-224-2727, ext. 419. Visit the Institute's website for more information on the Certified Audit Program and the list of qualified CPA Practitioners.