May 2025 Industry Targets for FDOR Sales Tax Audits

In May 2025, the Florida Department of Revenue (FDOR) has intensified its audit efforts, focusing on industries with high cash volume, inconsistent reporting practices, and common sales tax misconceptions. If your business operates in one of the following five sectors, it’s likely on the Department’s radar for sales and use tax enforcement.

1. Aircraft Sales and Use Tax

Florida remains a hub for private and luxury aircraft transactions. As a result, the FDOR actively audits aircraft sales involving out-of-state buyers, leaseback arrangements, or casual use exemptions.

Auditors frequently identify tax issues related to:

• Misapplication of the six-month exemption for out-of-state buyers
• Failure to self-assess use tax on out-of-state purchases
• Improper handling of aircraft held for resale or charter

State auditors use FAA registration data and Department of Transportation filings to identify aircraft associated with Florida-based owners and operators.

2. Nail Salons, Hair Salons, and Barbershops

Salons and barbershops are a top enforcement focus in 2025 due to widespread confusion about which transactions are taxable. While services such as haircuts and nail treatments are generally exempt from sales tax, many businesses fail to correctly tax retail sales or manage use tax obligations.

Common issues in this sector include:

• Retail product sales: Items like shampoos, conditioners, styling products, nail polishes, and beauty accessories are taxable. Businesses must collect sales tax and report it properly.
• Use tax on supplies: Products consumed in performing services (e.g., nail polish, extensions, artificial nails) are often purchased tax-free but subject to use tax if not resold.
• Booth rental tax: If salon owners rent chairs or space to independent stylists or nail techs, they may be liable for sales tax on commercial rent.
• Documentation gaps: Lack of clear records for service vs. product revenue, booth rental income, and supply purchases often results in estimated assessments.

FDOR auditors often compare 1099-K totals to reported taxable sales, and salons that mix services with product sales without accurate record-keeping are particularly vulnerable.

3. Restaurants and Food Service Establishments

Restaurants continue to be one of the most heavily audited industries in Florida. The FDOR compares data from various sources, including 1099-Ks, alcohol purchase volumes, Z-tape summaries, and third-party delivery platforms.

Audit issues include:

• Underreporting of taxable sales due to unrecorded cash receipts
• Double-counting or misclassification of tips, delivery fees, or discounts
• Missing tax remittance on app-based orders like Uber Eats and DoorDash
• Improper handling of dine-in vs. takeout exemptions

Restaurants with bars, high credit card volumes, or large discrepancies between gross receipts and reported sales are especially likely to be audited.

4. Automotive Dealers

Car dealerships—particularly used vehicle dealers—are seeing an uptick in sales tax enforcement in 2025. The FDOR pulls title data from the Department of Highway Safety and Motor Vehicles (DHSMV) and compares it to dealer sales tax filings.

Audit triggers include:

• Titled vehicles not reflected on DR-15 returns
• Suspiciously low reported sale prices
• Unsupported resale or wholesale exemption claims
• Missing documentation for related-party or repo transactions

Dealers that do not maintain organized deal jackets or fail to reconcile DHSMV data with tax returns face the risk of estimated assessments and significant penalties.

5. Adult Entertainment Clubs

Adult clubs are drawing increased audit attention due to the combination of cash transactions, entertainment service charges, and mixed taxable and non-taxable revenue streams. The FDOR is particularly focused on:

• Cover charges, VIP fees, and in-room entertainment
• Alcohol and food sales without proper segregation
• Misreported or unreported sales of merchandise
• Tip reporting and classification issues

Auditors frequently examine whether sales tax was collected and remitted on entry fees and whether club owners correctly distinguish between employee wages, tips, and taxable services.

What to Do If You’re in a Targeted Industry

If your business is in one of the top five industries listed above, now is the time to act. Proactive review and documentation are your best defense against audit exposure. Steps to take include:

• Reconciling your sales records with 1099-Ks, DHSMV data, and supplier invoices
• Ensuring that exemption certificates are valid and up to date
• Reviewing whether booth rental, merchandise, or cover charges are properly taxed
• Preparing for the possibility of estimated assessments or sample-based audits

Defending Sales Tax Audits with Moffa Tax Law

At Moffa Tax Law, we help businesses in aircraft, auto sales, restaurants, salons, and adult entertainment navigate Florida sales tax audits. We handle everything from audit defense and protest filings to litigation and settlement negotiations.

Our team has extensive experience with:

• Identifying taxable vs. exempt sales
• Fighting inflated or estimated assessments
• Contesting sampling errors and procedural missteps
• Managing penalty and interest abatement
  
  

If you’ve received a DR-840 or DR-1215—or simply want to get ahead of a potential audit—contact us today for a consultation.

Stay Ahead of the FDOR

Visit MoffaTaxLaw.com or subscribe to The SALTy Orange for insights on Florida sales tax audit defense, property tax updates, and more.