Buying an Existing Business

It is not uncommon for new business owners to be blind-sided by tax liabilities they did not realize the entity had before purchase. That is why purchasers should ask sellers for documentation of any tax, penalty, or interest due to the Florida Department of Revenue before the purchase of the business. Overlooking this step can result in the purchaser being liable for what is owed. The purchaser can 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.

The seller can ask the Department for a Certificate of Compliance as proof the Department has not issued a Notice of Intent to Audit Books and Records and there are no outstanding liabilities on their account. The seller can provide this certificate to the purchaser as proof of good standing when selling a business or business interest.

Applying for Federal Grants or Loans

A taxpayer can also request a Tax 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.

Important Notice

Both the Certificate of Compliance and the Tax Clearance Letter represent a point 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, a new certificate may be requested.

Pursuant to Section 213.053, Florida Statutes, information received by the Florida Department of Revenue is confidential and can only be released with proper written authorization. You can apply online for a Request for Tax Clearance Letter or Certificate of Compliance. The requester’s name must be listed on the Florida Department of State – Division of Corporations showing their association with the company or they must have a Power of Attorney and Declaration of Representative (Form DR-835 ) on file with the Department.

If you prefer to file a hardcopy request, the request must include all of the following information to prevent denial:

• Requester name (including signature), telephone number, fax number, email address, and a copy of the requester’s driver’s license or identification card. 
• Business name and address, and an identification number such as Business Partner Number, Federal Employer Identification Number, etc.
• A properly executed Power of Attorney and Declaration of Representative (Form DR-835 ), if you want a qualified party to represent you.
  
  

You may fax your request to 850-922-5254 or mail it to:

Florida Department of Revenue
PO Box 8045
Tallahassee, Florida 32314-8045

The standard time frame for processing is 7-10 business days from the date the Department receives your request.

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 Florida Department of Revenue issues a Certificate of Compliance or conducts a transferee liability audit. Either the buyer or the seller can request the audit:

• The seller can submit the Seller’s Application for Transferee Liability Certificate (Form DR-842 );
• The purchaser can submit the Purchaser’s Application for Transferee Liability Certificate (Form DR-843 ), along with a signed sales agreement included with the request.

Because tax information is confidential, the Department will provide only the seller with the audit results and transferee liability certificate.