Sales Tax Audits and
Florida Department of Revenue’s Certified Audit program
Speaker: Jose
Valiente, CPA, Principal at Larson/Allen LLP
“In a challenging economic
environment, state auditors are cracking down on sales and use tax compliance
to increase tax revenue. With the increased scrutiny, you can no longer afford
to ignore this critical area of your business. Find out what top companies are
doing to reduce risk and operating costs related to sales and use tax
management.” IMA 10/27/10 Webinar description
Jose Valiente will share strategies on how to manage sales and use
taxes in Florida.
He will also explain the Florida Department of Revenue’s Certified Audit
program. Participation in the Certified Audit Program can save your
company thousands of dollars in sales taxes and penalties which may be assessed
by a state sales tax auditor.
FLORIDA CERTIFIED AUDIT PROGRAM
RATIONALE FOR THE PROGRAM
- ·
Need
for the program in Florida
– conditions right to establish a special program
o
Large
business community
o
Complicated
tax structure
o
Need
to audit for compliance with tax law
o
Dwindling
public resources
HISTORY
- ·
The
program was created as DOR’s attempt to use the CPA profession to assist the
agency in its tax administration efforts
- ·
Approved
by the Florida
Legislature in 1998
o
Chapter
12-25.0305, FAC
o
Started
originally as the “contract audit program”
o
The
Certified Audit Program is an evolution of the Contract Audit Program
o Limited to sales and use tax with
capability to expand to other taxes
- ·
Legislation
passed in 2003 to permanently establish the program
o
Section
213.285, FS
PARTNERSHIP
- ·
The
Certified Audit Program is a unique partnership between the Florida Department
of Revenue (DOR) and the FICPA
o
Both
groups worked together to develop the concept and create a certification
program
o
Joint
effort on development and piloting of a training and testing program
- ·
Win-win
for both organizations
o
Provides
a means for DOR to expand audit capabilities
o
Provides
new professional opportunities for participating CPAs
o
Provides
“found money” to Florida
state government ultimately benefiting consumers
- ·
Roles
of each organization
o
FICPA
– administers the training, testing, and general program administration
o
DOR
– provides technical expertise, issues CFST designation
WHAT IS A CERTIFIED AUDIT?
- ·
Though
based on sales and use tax, it is more than a “tax” service
- ·
Certified
audits must be performed as “agreed-upon procedures” subject to Standards on
Statements for Attestation Engagements established by the American Institute of
CPAs
- ·
DOR
is the specified user of the work and must approve the specific review
procedures prior to the initiation of fieldwork
(See Rule 12-25.047 FAC)
WHAT IS THE CERTIFIED AUDIT
PROGRAM?
- ·
Allows
taxpayers to hire, at their own expense, a qualified CPA to review their
financial records for compliance with sales and use tax and local option tax
rules
- ·
Created
to increase voluntary compliance by taxpayers
o
Educates
taxpayers on tax issues going forward
o
Offers
unique financial incentives to participate
BENEFITS
FOR TAXPAYERS
- ·
Especially
attractive for businesses with tax liability concerns
- ·
Unique
financial incentives to participate
o
The
first $25,000 of any interest owed will be waived, as will an additional 25
percent of any interest above the initial $25,000.\
o
The
taxpayer is guaranteed a waiver of any penalties resulting from the certified
audit
o
The
taxpayer is removed from the audit pool for further audits by DOR for the
period and the tax that was audited (except in the case of misrepresentation or
fraud)
- ·
The
incentives listed above do not apply in cases where the tax was collected but
not remitted
- ·
Additional
benefits for taxpayers include:
o
The
cost of hiring the CPA is deductible as an ordinary and necessary business
expense
o
The
business has the ability to schedule a certified audit at its convenience
o
The
business can benefit from efficiencies created by using CPAs already familiar
with their client’s books and records
ELIGIBILITY TO PARTICIPATE
THE CERTIFIED AUDIT PROCESS
- ·
Request
to participate
- ·
DOR
approval
- ·
Submit
Agree Upon Procedures
| 
