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What to Expect from a Florida Tax Audit

The Department of Revenue routinely audits businesses to find out whether state taxes were collected, reported, and paid correctly.  Although an audit is an enforcement tool to ensure tax compliance, it can also be educational.  During an audit, we can help businesses identify and correct bookkeeping problems that could cause additional tax liabilities.

This page provides a brief review of the audit process.  For more information, read the "What to Expect from a Florida Tax Audit" brochure. 

Why Are Taxpayers Audited?

We audit taxpayers to:

  • Enforce Florida tax laws uniformly.
  • Deter tax evasion.
  • Promote voluntary compliance.
  • Educate taxpayers.

While we accept most tax returns as filed, we audit some returns to verify accuracy and evaluate compliance. Audits do not always result in the taxpayer owing additional tax, penalty or interest. The auditor may adjust a credit carryover or correct distribution without assessing additional tax.  The auditor may even determine that a refund is due.

How Are Taxpayers Selected for Audit?

The methods for selecting a business or individual to audit vary from tax to tax. Here are some examples of sources we use to identify a potential audit candidate:

  • Internal Revenue Service information.
  • Information sharing programs with other states and state agencies.
  • Computer-based random selection.
  • Analysis of Florida tax return information.
  • Business publications, periodicals, journals, and directories.

What Types of Records Will I Need to Provide?

When we notify you of our intent to audit, we will also tell you what records you will need to provide.  The types of records may include, but are not limited to:

  • General ledgers and journals
  • Cash receipt and disbursement journals
  • Purchase and sales journals
  • Sales tax exemption or resale certificates
  • Florida tax returns
  • Federal tax returns
  • Depreciation schedules
  • Property records
  • Other documentation to verify amounts entered on tax returns

You must keep your records for three years since an audit can extend back that far.  The Department may audit for periods longer than three years if you did not file, or filed a substantially incorrect return or payment.

What Are My Rights During an Audit?

The Florida Taxpayer's Bill of Rights provides protection for taxpayers' privacy and assets during their interactions with Revenue employees. Your rights include:

  • The right to fair treatment.
  • The right to get available information and prompt, accurate responses to your questions.
  • The right to have the Department begin and complete its audit in a timely manner after we notify you of our intent to audit.
  • The right to get simple, nontechnical statements which explain the reason for audit selection and the procedures, remedies, and rights available during audit, appeals, and collection proceedings.

Communicating and Meeting Deadlines

Throughout the audit process, communication is vital. After we send you a Notice of Intent to Audit Books and Records, the auditor will work with you to set a date to begin the audit.  The auditor will give you deadlines for providing information or documentation. If you need additional time to prepare, or need to request a delay for other reasons, contact the auditor. The auditor will make every effort to accommodate your requests. If you fail to respond or provide the requested information, we may issue an assessment and file a warrant based on the best available information.

Can I Request Technical Assistance During the Audit?

When there are transactions or issues for which the tax consequences are questionable, you may ask for a written statement of our position any time during the audit. Our office of Technical Assistance and Dispute Resolution will issue a Technical Assistance Advisement (TAA), which is binding on the Department. For more information, read "Requesting Advice During an Audit."  We encourage you to use our Tax Law Library to research the issue before requesting technical assistance.

What Happens When the Audit is Complete?

After your audit is complete, you can review the audit findings and proposed changes to your tax liability.  The auditor will give you a copy of the work papers and explain your rights, including deadlines for filing protests.  If you agree with the audit findings, we expect you to pay the amount due in full.  You have the right to protest the proposed changes if you disagree with them.  "How to Pay Your Audit Assessment" has more details.

Self-Audit/Self-Analysis

The Department uses self-audit or self-analysis projects to educate taxpayers on issues related to a particular compliance problem or industry.  We send selected taxpayers information about a specific tax or issue, user-friendly instructions, and simple worksheets.  We ask them to review the materials, complete the worksheets, calculate any additional tax due, and return the paperwork to us with payment.  The auditor has limited contact with the taxpayer and does not visit the taxpayer's location. The Department usually accepts the taxpayer’s responses.  However, participation in a self-audit/self-analysis does not exempt the taxpayer from further audit review of the same time period.

Other Audit-Related Information

Electronic auditing, or e-Auditing, is computer-assisted auditing using electronic records to complete all or part of the audit. If you use a computer to record your business activity and keep this data electronically, you are a candidate for an electronic audit. We prefer to examine electronic records because it is the most accurate and efficient method of conducting an audit.

The Certified Audit Program is a cooperative effort between the Florida Department of Revenue and the Florida Institute of Certified Public Accountants (FICPA). Taxpayers who have not received a Notice of Intent to Audit from the Department are eligible.  The program gives taxpayers the opportunity to hire qualified CPA firms to review their sales and use and local option tax compliance.  As an incentive, Revenue waives penalties and reduces interest if tax is owed as a result of the audit.

The Voluntary Disclosure Program allows you to report previously unpaid or underpaid tax liabilities for any tax administered by the Florida Department of Revenue.  Once you have paid the tax and interest, Revenue will waive the penalties.  If you think you might owe back taxes and Revenue has not contacted you about the liability, you may be eligible for the Voluntary Disclosure Program.

Standard Industry Guides provide tax information for specific types of businesses.  Taxpayers may use them to help understand sales tax issues likely to surface relating to the industry; and relevant laws, court cases, and other technical documents.

Tax clearance letters and transferee liability certificates: When buying a Florida business, the purchaser should ask the seller for documentation of any tax, penalty, or interest due to the Department of Revenue. A business owner can use a clearance letter as proof of good standing with the Department.