Florida Tax Audit Lawyer & Florida Department of Revenue Power of Attorney

Tax audits are a source of anxiety for many taxpayers. The mere receipt of a tax audit notice can evoke images of assessments, penalties, and lengthy proceedings. As a result, Florida tax audit attorneys often find themselves fielding panicked calls from clients who need immediate Florida tax help. In many cases, clients believe they can handle the Florida Department of Revenue and do not need a Florida tax audit lawyer from the start of the audit. However, any state and local tax attorney worth their “SALT” will know the traps and processes for success. Having a Florida tax lawyer as your Department of Revenue power of attorney from the beginning can be a lifesaver. This article provides an overview of the process that a tax audit lawyer will guide clients through, whether they are experiencing a Florida sales tax audit, corporate income tax audit, or any other kind of Florida tax audit. 

Understanding the Florida Department of Revenue

The Florida DOR is one of the state’s largest administrative agencies, managing both tax administration and child support enforcement. Tax attorneys typically engage with three key offices within the DOR:

1. Auditing Office: Responsible for conducting audits. Attorneys often work with auditors when representing clients early in the audit process.

2. Office of Technical Assistance and Dispute Resolution (TADR): This office resolves disputes, provides technical assistance, and reviews assessments during informal protest proceedings.

3. Office of the General Counsel: Handles formal protests and litigation. Attorneys primarily engage with this office during advanced stages of a dispute.

The Audit Process

1. Initiating the Audit

The audit process begins when the DOR issues Form DR-840, Notice of Intent to Audit Books and Records. This notice specifies the audit period, typically the three years preceding the notice date. Once the notice is issued, the DOR has 120 days to commence the audit unless the taxpayer agrees to an extension. The statute of limitations for the DOR to collect taxes or issue refunds is tolled for one year after the notice is issued.

2. Preparing for the Audit

Taxpayers are generally given 60 days to prepare their records. During this time, auditors conduct industry research and request relevant business information to streamline the audit.

3. Conducting the Audit

The actual audit’s duration varies based on record sufficiency and scheduling, ranging from a few days to over a year. If the audit extends beyond the one-year tolling period, the taxpayer and DOR may agree to an extension by signing Form DR-872, Consent to Extend the Time to Issue an Assessment or to File a Claim for Refund.

4. Resolving Disputes During the Audit

Disputes may arise during the audit over the interpretation of tax laws. In such cases, either party may request technical assistance through:

• Technical Assistance Advisements (TAA): Taxpayers can request the DOR’s formal position on specific transactions. TAAs apply only to the requesting taxpayer and the addressed transaction.

• Internal Technical Advisements (ITA): Requested by auditors, ITAs provide the DOR’s position on complex tax issues. Taxpayers have 10 days to submit additional information or arguments related to ITAs.

Post-Audit Actions

1. Notice of Intent to Make Audit Changes (NOI)

Upon completing the audit, the auditor issues Form DR-1215, identifying any errors. Taxpayers have 30 days to request an informal conference to discuss proposed changes.

2. Notice of Proposed Assessment (Assessment)

If disputes remain unresolved, the DOR issues a formal assessment. This notice is not a final order and triggers the taxpayer’s right to protest the findings.

Protest Options

Taxpayers can challenge assessments through informal protests, formal administrative hearings, or circuit court actions.

1. Informal Protests

Informal protests are less expensive and time-consuming than formal proceedings. To initiate an informal protest, taxpayers must:

• File a protest within 60 days of the assessment.

• Include required documentation and arguments.

The protest is reviewed by a compliance specialist and then forwarded to TADR, where a tax conferee issues a Notice of Decision. If unresolved, taxpayers may file a petition for reconsideration within 30 days to provide additional evidence.

2. Formal Protests

Formal protests involve either administrative hearings under the Administrative Procedures Act or litigation in circuit court:

• Administrative Hearings: Taxpayers can contest assessments without prepaying disputed amounts but must pay uncontested portions. An administrative law judge issues a recommended order, followed by a final DOR order.

• Circuit Court Actions: Taxpayers must prepay uncontested portions and secure bonds for disputed amounts unless waived. Failure to meet these requirements can result in case dismissal and penalties.

3. Informal Administrative Petitions

For cases without factual disputes, taxpayers may request informal administrative hearings. These hearings rely solely on written submissions or oral arguments and are resolved within 90 days.

Key Takeaways for Attorneys

Navigating Florida’s tax procedures requires careful attention to deadlines, documentation, and procedural nuances:

1. Understand the DOR’s Structure: Familiarity with the roles of the Auditing Office, TADR, and General Counsel is crucial.

2. Be Proactive During Audits: Engage early with auditors and utilize technical assistance options to address disputes promptly.

3. Adhere to Deadlines: Florida’s protest deadlines are strict and jurisdictional. Missing a deadline can forfeit a client’s right to challenge assessments.

By staying vigilant and well-informed, attorneys can effectively guide their clients through the complexities of Florida tax audits and disputes.