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, since the purchaser could be liable for any tax, penalty, and interest owed by the seller. The purchaser can then withhold enough of the purchase money to cover the liability until the seller pays the amount due. While the sale is pending, the purchaser should have the seller hold an amount in escrow equal to any potential liability.
A taxpayer can ask the Department for a certificate of compliance as proof that the Department has not issued a Notice of Intent to Audit Books and Records and there are no outstanding liabilities on the taxpayer's account. The taxpayer can provide this certificate to the purchaser as proof of good standing when selling a business or business interest.
A taxpayer can also request a clearance letter (status of account) to be used when applying for certain federal grants or loans. While this letter provides the status of an account, it does not exempt the business from future audits that may cover periods before the business was sold.
Both documents represent a snapshot in time and show that the taxpayer does not currently have outstanding audit assessment notices, tax delinquencies and/or bills. If a significant amount of time lapses between issuance of the certificate and the sale, you may wish to request a new certificate. You can apply online for a certificate of compliance or clearance letter. The requester's name must be listed on www.sunbiz.org showing association with the company or they must have a Power of Attorney (Form DR-835) on file with the Department.
The request must include all of the following information:
If you prefer, you may fax your request to 850-922-5254 or mail it to:
REMINDER: When possible, the Department responds to inquiries by either email or telephone call. Any secure information included in an email response (e.g., tax number(s), SSN's, etc.) will be sent using our secure email software, Microsoft Office Message Encryption (OME). Microsoft OME will require you to establish a Microsoft Live account for your email address and create a password. It may be necessary for you to turn off spam blocking tools and/or change security options to allow emails from the Florida Department of Revenue.
The standard time frame for processing is 7 to 10 business days from the date we receive your request. Please allow additional processing time for mailed requests.
For more information about certificates of compliance or clearance letters, contact your local service center or call Taxpayer Services at 800-352-3671.
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 certificate of compliance or conducts a transferee liability audit.
Either the buyer or the seller can ask for 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:
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 CPA practitioners 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 notify the current owner of the business of tax, penalty and interest due (if any). If there is a delay in the sale of the business, you may want to request a certificate of compliance for the periods not covered by the audit.
Note: Sales tax is the only tax for which a Certified Audit may be completed.
If you have general questions about transferee liability audits, contact the Department's Case Processing Section at 850-617-8565 or RevProcs@dor.state.fl.us.
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.