Florida Tax Audit Attorney | Florida Tax Audit Defense | Florida State and Local Tax Audit Representation

Understanding the Florida Tax Audit Process

The Florida Department of Revenue initiates tax audits for various reasons, including random selection, discrepancies in tax filings, or industry-wide enforcement initiatives. Once an audit is initiated, businesses are required to provide records and documentation that support their tax filings. The audit process generally involves the following stages:

1. Audit Notification – The FDOR sends an official notice informing the business of the audit and specifying the tax periods under review.
2. Records Request & Examination – The auditor requests tax returns, financial statements, invoices, and other business records to assess tax compliance.
3. Preliminary Findings – After reviewing the records, the FDOR provides an initial assessment, identifying any alleged underpayments or errors.
4. Notice of Proposed Assessment (NOPA) – If discrepancies are found, the FDOR issues a NOPA, detailing the proposed tax liability, penalties, and interest.
5. Appeal or Settlement Negotiation – Businesses have the right to challenge audit findings through administrative appeals, protests, and litigation if necessary.

Navigating this process without legal guidance can lead to errors, overpayments, or severe financial consequences. Our firm works with businesses to manage every stage of the audit, ensuring that all legal options are explored and leveraged to achieve the best possible outcome.

Florida Sales Tax Audits

Sales and use tax audits are among the most common tax audits conducted by the FDOR. Florida businesses are required to properly collect, report, and remit sales tax on taxable transactions. Errors in sales tax compliance—such as failing to collect tax, incorrect exemption claims, or improper reporting—can result in substantial tax assessments. The FDOR aggressively enforces sales tax compliance, often issuing high penalties for even unintentional mistakes.

Our firm provides businesses with strong legal defense in Florida sales tax audits, helping them:

• Properly respond to audit notices and records requests.
• Identify and correct potential compliance errors before they escalate.
• Challenge incorrect audit findings and overreaching assessments.
• Negotiate favorable settlements or appeal tax assessments when necessary.

Florida Corporate Income Tax Audits

Corporate income tax audits target businesses operating in Florida to ensure proper tax filings and compliance with state tax laws. The FDOR scrutinizes income reporting, deductions, apportionment methods, and tax credits. Businesses found to have underreported income or improperly claimed deductions may face significant tax liabilities, penalties, and interest.

Our firm represents businesses in corporate income tax audits, ensuring that:

• The FDOR follows proper audit procedures and does not overstep its authority.
• Taxable income, deductions, and apportionment methods are accurately calculated and legally defended.
• Businesses do not overpay taxes due to misinterpretations or aggressive enforcement tactics.
• Administrative appeals and litigation strategies are pursued when necessary to challenge unfavorable audit results.

Audit Defense for Multi-State Businesses

Florida businesses with operations in multiple states may face complex tax audits that involve nexus determinations, apportionment disputes, and multi-state tax liabilities. The FDOR actively audits companies with out-of-state operations to ensure that Florida receives its share of tax revenue. Businesses with significant sales, employees, or property in Florida may be subject to state taxation, even if they are based elsewhere.

We help multi-state businesses defend against aggressive tax audits by:

• Analyzing tax nexus issues and determining whether the FDOR has proper jurisdiction to assess taxes.
• Ensuring that income and sales are properly apportioned to minimize unnecessary tax exposure.
• Challenging unfair tax assessments through administrative protests, appeals, and litigation.

Heavily Targeted Industries in Florida Tax Audits

Certain industries in Florida face a higher risk of tax audits due to the nature of their business operations, cash transactions, and common compliance challenges. The Florida Department of Revenue frequently audits businesses in these industries to ensure compliance with sales tax, corporate income tax, and other state tax obligations.

Convenience Store Audits

Convenience stores (C-stores) are a primary target for Florida sales tax audits due to their frequent cash transactions, high sales volume, and complex taxability of items sold. Many convenience store owners struggle with accurately reporting taxable and non-taxable sales, including:

• Proper classification of food and beverage sales (taxable vs. non-taxable items).
• Compliance with tobacco and alcohol excise taxes.
• Managing lottery ticket commissions and associated tax obligations.
• Proper record-keeping to substantiate exempt sales.

The FDOR aggressively enforces sales tax compliance in this industry, often issuing substantial penalties for even minor record-keeping errors. Our firm assists convenience store owners in navigating audits, challenging unfair assessments, and implementing proactive tax strategies to minimize risks.

Automobile Dealership Audits

Auto dealerships in Florida frequently face tax audits due to the complexity of motor vehicle sales tax, trade-in credits, and lease transactions. The FDOR often scrutinizes:

• Sales tax collection on vehicle sales, including trade-in credits.
• Proper handling of out-of-state vehicle sales and documentation compliance.
• Dealer fees and how they are taxed.
• Service and repair labor vs. parts taxability.

Errors in any of these areas can result in significant tax assessments. Our firm helps auto dealers defend against tax audits, ensuring that sales tax is properly applied and exemptions are well-documented to avoid unnecessary liabilities.

Other High-Risk Industries for Florida Tax Audits

• Restaurants & Bars – Due to high cash sales, employee tip reporting, and complex food taxability rules.
• Construction & Contractors – Frequent issues with material vs. labor taxation and subcontractor compliance.
• E-Commerce & Online Retailers – Ensuring compliance with economic nexus rules and remote seller obligations.
• Medical & Healthcare Providers – Taxability of medical devices and professional services under Florida law.
• Hospitality & Vacation Rentals – Compliance with transient rental taxes and short-term lease tax requirements.

The FDOR’s focus on these industries means businesses must be prepared for heightened scrutiny. Our firm provides tailored audit defense strategies, ensuring compliance while aggressively challenging unjust assessments.

Understanding Key Florida Tax Audit Documents

Florida tax audits involve various official documents that play a critical role in the audit process. Understanding these documents and responding appropriately is essential for protecting your business from excessive tax liabilities.

DR-840 – Notice of Intent to Audit Books and Records

The Florida Department of Revenue initiates tax audits by issuing Form DR-840, also known as the Notice of Intent to Audit Books and Records. This document notifies the taxpayer that the FDOR will be reviewing financial records, tax returns, and supporting documentation for a specified period. Receiving a DR-840 is a clear indication that the state is scrutinizing your tax compliance, and businesses should take immediate action.

Once a DR-840 is issued, businesses must comply with FDOR record requests while also ensuring they do not provide unnecessary or overly broad documentation that could expand the scope of the audit. Our firm assists clients in responding strategically to DR-840 notices, ensuring that they comply with state requirements while protecting their legal rights.

DR-1215 – Notice of Intent to Make Audit Changes

During the audit, the Florida Department of Revenue may issue Form DR-1215, the Notice of Intent to Make Audit Changes. This document outlines preliminary findings, including adjustments to reported tax liabilities and any discrepancies identified by the auditor. The DR-1215 is a crucial stage in the audit process, as it provides businesses with an opportunity to respond to the auditor’s proposed changes before a formal assessment is issued.

Our firm works closely with businesses to analyze the DR-1215, challenge incorrect audit findings, and present additional documentation or arguments to refute improper adjustments. Responding effectively to the DR-1215 can help mitigate tax liabilities before the state finalizes its assessment.

NOPA – Notice of Proposed Assessment

If the auditor believes a business owes additional tax after reviewing the records, the FDOR will issue a Notice of Proposed Assessment (NOPA). The NOPA serves as an official notice that the state intends to assess additional tax, penalties, and interest against the business. The business has a limited time to respond to the NOPA before the assessment becomes final.

At this stage, it is crucial to act quickly. Our firm helps businesses file formal protests to dispute the proposed assessment, providing legal arguments, financial analysis, and supporting documentation to challenge the FDOR’s findings. If necessary, we escalate disputes through administrative hearings and litigation to ensure our clients receive a fair review of their case.

Defending Against Florida Tax Audit Penalties and Interest

Florida tax audits often result in not only additional tax liabilities but also substantial penalties and interest charges. Businesses that are found to be non-compliant may face:

• Negligence Penalties – Applied when tax underpayments are due to carelessness, oversight, or errors in reporting. These penalties can add up quickly and significantly increase the overall liability.
• Fraud Penalties – Severe penalties imposed when the FDOR determines that tax was intentionally underreported or manipulated to avoid payment. Fraud penalties can be as high as 50% of the unpaid tax liability and may lead to further legal consequences.
• Failure to File or Pay Penalties – Assessed when businesses fail to timely file tax returns or remit taxes owed. These penalties often accrue over time, compounding the financial impact on a business.
• Substantial Understatement Penalties – Imposed when the FDOR determines that the underreported tax amount exceeds a certain percentage of the total tax liability.

Interest on Tax Deficiencies

In addition to penalties, businesses facing a Florida tax audit may also be responsible for significant interest charges. Interest begins to accrue from the original due date of the tax and continues to accumulate until the liability is fully paid. The FDOR adjusts interest rates periodically, which means that delayed payments can lead to higher costs over time.

Our firm aggressively defends businesses against excessive or unfair penalties and interest, working to reduce or eliminate additional financial burdens imposed by the FDOR. We utilize legal challenges, settlement negotiations, and penalty abatement requests to help businesses minimize financial exposure associated with tax audits. In many cases, we are able to demonstrate reasonable cause for tax discrepancies, which may lead to reduced penalties or interest waivers.

Why Hire a Florida Tax Audit Attorney?

Navigating a Florida tax audit without skilled legal representation can lead to significant financial losses and legal risks. The FDOR is aggressive in its audit practices, and businesses without proper defense may be forced to pay excessive tax assessments or face prolonged disputes. Hiring an experienced Florida tax audit attorney ensures that your business:

• Has strong legal representation throughout the audit process.
• Can effectively challenge incorrect tax assessments and avoid unnecessary tax liabilities.
• Receives guidance on compliance strategies to prevent future audits.
• Is protected from aggressive enforcement actions and excessive penalties.

At Moffa Tax Law, we focus exclusively on Florida state and local tax matters, providing businesses with the dedicated legal support needed to successfully navigate tax audits. Whether you are currently under audit or want to prepare for potential tax enforcement actions, our firm is here to protect your rights and financial interests.