Your rights during
an audit

What to expect
from an audit

Requesting advice

How to pay your audit

Sampling and your audit

Non-statistical
sampling booklet

Auditing in an electronic environment
(e-Auditing)

e-Auditing booklet

What to Expect from a Florida Tax Audit

A tax audit should be an educational experience to provide an understanding of your responsibilities and rights under Florida tax laws. It should not be a frustrating, time-consuming experience. Although an audit is an enforcement tool to ensure tax compliance, it can help businesses identify and correct bookkeeping problems that could cause additional tax liabilities. The Department of Revenue (DOR) wants to help you avoid penalties and interest that result when you do not pay your taxes correctly or on time.

Why Are Taxpayers Audited?

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

Nearly one-fourth of all audited taxpayers do not have to pay additional tax. Some audits even result in a tax refund. Others, however, can result in more taxes, penalty, and interest. After your audit is complete, you can review the audit findings and proposed changes to your tax liability. You have the right to protest the proposed changes if you disagree with them.

How Was I Selected?

• Internal Revenue Service information.
• Information sharing programs with other states or other state agencies.
• Computer-based random selection.
• Department of Revenue database information.
• Business publications, periodicals, journals, and directories.

What Happens During the Audit?

We conduct two types of audits: those done in our offices (desk audits), and those done at your place of business (field audits). We use paper or electronic records to complete an audit (see "What is e-Auditing?"). Generally, we will audit a major tax, such as sales and use or corporate income, along with related taxes, such as local option or emergency excise.

The auditor begins by mailing you a Notification of Intent to Audit Books and Records (Form DR-840 or CA-I). This notice identifies the audit period and taxes to be examined. The auditor will also inform you of the records you will need to provide. The types of records needed may include, but are not limited to: federal income tax returns, Florida tax returns, depreciation schedules, general ledgers and journals, property records, cash receipt and disbursement journals, purchase and sales journals, sales tax exemption or resale certificates, and documentation to verify amounts entered on tax returns.You may receive a questionnaire to assess the potential for an electronic audit.

You must keep your records for 3 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. If you fail to produce records, we will estimate your tax liability based upon available information.

In the case of a field audit, the auditor will call you to arrange a date for the review. The auditor will interview you or your representative. Whether a field or desk audit, you must complete a Power of Attorney (Form DR-835) if you want the auditor to discuss the audit with your representative.

The auditor will ask about your type of business, organizational structure, accounting methods, and systems. To minimize disrupting the workplace, you may want to assign certain employees to help the auditor during a field review. Whether a field or desk audit, we will complete an audit with minimal effort and disruption of daily business activities if your records are easily available. Well-organized records and proper documentation can save you time, save you money, and help to speed the completion of an audit.

Throughout the audit, you have a right to know the basic findings and proposed changes. Feel free to ask questions. Auditors are encouraged to assist you in complying with Florida tax laws.

What is E-Auditing?

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 maintain this data electronically, you are a candidate for an electronic audit. During an electronic audit, you provide electronic (machine-sensible) records and we use computer software programs to analyze the data. We prefer to examine electronic records whenever possible, because it is the most accurate and efficient method of conducting an audit.

If you have questions about e-Auditing or would like to receive a booklet with additional information, contact your local service center.

Can I Request Technical Assistance During the Audit?

When there are transactions or issues for which the tax consequences are questionable, you may request a written statement of our position at any time during the audit. A Technical Assistance Advisement (TAA) is binding on the Department. To obtain a TAA, submit a written request containing an accurate, detailed explanation of the transaction(s) or issue(s) to:

Provide a copy of your request to the auditor. Your request will receive priority treatment; however, the auditor is under no obligation to suspend the audit pending a response.

The auditor may request guidance on the taxability of certain transactions or issues. If this occurs, you will receive a copy of the request and will have 10 working days from the date of the request to provide any information you want considered. When a decision is made, the auditor will provide you with a copy of our Internal Technical Advisement (ITA).

If a decision is made after we submit the audit for review, billing, or assessment, we will make any necessary adjustments to the audit findings.

What Happens After the Audit?

The auditor will notify you of the findings and the legal basis for any adjustments. In the case of a field audit, the auditor will conduct an exit interview. Make sure you understand the reasons for any proposed changes and ask for an explanation of unclear items. The auditor will explain your rights, including deadlines for filing protests. You will receive a Notice of Intent to Make Audit Changes (Form DR-1215), which summarizes the audit results and includes a written statement of your protest and appeal rights. If additional tax is not due, we will send a letter stating the audit resulted in no changes to the tax returns you filed for the audit period.

Once you have received and reviewed the audit findings, you will either agree or disagree with them. It is important you notify the auditor of any agreement or disagreement before the expiration of the 30-day period specified on the Notice of Intent to Make Audit Changes.

If you agree with the audit findings, sign the notice and pay the amount due. If you cannot pay the amount in full, contact the auditor to discuss possible ways to pay the liability.

If you disagree with the audit findings, you have 30 days after we issue a notice to request a conference with the auditor and/or the auditor’s supervisor. The conference must occur within 90 days after we issue the notice unless otherwise authorized by the Department. Most differences can be resolved through these discussions. Disputes that cannot be resolved at this level may receive further consideration after we issue a Notice of Proposed Assessment (NOPA).

After the audit is complete, you will receive a Notice of Proposed Assessment (NOPA) which provides official notice of the amount due. This document serves as a request for payment of any unpaid amounts, and provides instructions for filing a formal or informal protest in the event you disagree with the proposed changes. We will not take any enforcement action, such as filing a tax warrant, until you receive the assessment and have a chance to voluntarily pay or protest the audit findings.

We will mail Taxpayer Audit Satisfaction Surveys to randomly selected taxpayers. If you receive a survey, please use it to rate your satisfaction with certain audit actions or services. We use the results to improve the audit process.

What Can I Do If I Encounter Problems During The Audit?

You have the right to fair treatment by the Department. If you believe treatment has not been fair or if you have any other problems during the audit, you should first attempt to resolve the problem locally by meeting with the auditor’s supervisor, service center manager and/or regional manager, as appropriate. If the problem cannot be resolved at the local level, you may call the Taxpayer Rights Advocate at 850-488-2321 or write:

Reference Material

Tax laws - Our Internet site contains statutes, administrative rules, and legislative changes. You can search the Florida Tax Law Library via www.myflorida.com/dor/law/.

For Information and Forms

Persons with hearing or speech impairments may call the TDD at 800-367-8331 or 850-922-1115.

• Order multiple copies of forms from our Internet site, or
• Mail form requests to:
  Distribution Center
  Florida Department of Revenue
  168A Blountstown Hwy
  Tallahassee FL 32304-3761