Filing a Sales Tax Protest
Florida business owners are required to collect sales tax for specific items or services and then remit those taxes to the state. A failure to turn over the appropriate amount can lead to serious criminal charges resulting in jail time and hefty fines. Fortunately, it is possible to protest an audit or assessment of taxes owed, so if you have collected sales tax, but failed to remit it to the state on time, or do not agree with the state’s assessment, it is important to contact an experienced tax attorney who can evaluate your case and advise you on your next steps.
Taxable Items and Services
In Florida, certain services or transactions are regularly taxed, including:
- The sale or rental of goods;
- The sale of specific services, such as nonresidential cleaning, pest control, and security services;
- The lease or rental of commercial property;
- The rental of transient accommodations;
- Personal property repair;
- The sale of admissions; and
- The sale of service warranties.
Services not included in this list, as well as real property sales, labor-only transactions, and the sale of property committed to export are not taxable in Florida.
Certain transactions are exempt from sales tax. For instance, there are exemptions based on the type of item sold or the manner in which it will be used. Some exemptions are also based on the purchaser’s identity. For instance, sales between dealers or sales made to tax-exempt organizations are not taxed.
Because sales tax applies to so many different types of transactions, business owners are encouraged to:
- Carefully document exempt sales;
- Separately indicate the state tax amount on invoices and receipts;
- Calculate discretionary sales surtaxes;
- Collect the proper amount of sales tax; and
- Document the payment of sales tax on equipment used in the business.
Keeping sales tax accounts current and paying all taxes on time is also crucial for Florida business owners. How often a taxpayer must remit sales taxes depends on each business’s amount of sales tax collections. For instance, companies that collect more than $1,000 per year in sales tax must file monthly, while companies that collect between $501 and $1,000 are only required to submit payment on a quarterly basis.
Filing a Protest
When a business is audited and the Department of Revenue issues an assessment requesting additional payment of sales tax, a business owner can challenge the decision by either:
- Filing an informal protest; or
- Filing a formal protest with the Office of the General Counsel.
Protests must be filed within 60 days from the date that the assessment was issued. The only exception to this deadline is if the taxpayer first requested and obtained a written deadline extension. The protest can be filed via mail or fax and must contain specific information, including:
- The taxpayer’s contact information, audit number, and taxpayer identifying number;
- The tax type, the amount of tax, interest, or penalty protested;
- A list of the items with which the taxpayer disagrees;
- A statement of facts and additional information that supports the list of disputed items;
- A legal statement explaining the taxpayer’s position; and
- A copy of the assessment.
After review, a Notice of Decision will be filed containing a final assessment. Taxpayers are given an additional 30 days to file a petition for reconsideration.
Those who do not pay sales tax as required and who do not submit a protest before the deadline could be charged with a third degree felony, which is punishable by up to five years in prison. If the amount in question exceeds $20,000, the taxpayer could even face first or second degree felony charges.
Call Today to Consult With an Experienced Florida Tax Attorney
To speak with a tax attorney about your sales tax-related questions or concerns, please contact the law firm of Ronald Cutler, P.A. by calling 386-490-9949 to schedule a free one-on-one consultation. Our Florida legal team is eager to help you today.