WHO DO YOU CALL WITH A SALES TAX QUESTION WHEN YOUR PUBLIC ACCOUNTING FIRM IS ALSO THE STATE SALES TAX AUDITOR?
I recently sat down with the CFO of a major, privately held company in Florida to discuss a property tax audit the CFO had concerns about. After we spent 30 minutes discussing the issues and solutions for the property tax matter, the CFO asked if we minded answering a sales tax question or two. He first confirmed that anything he said was subject to attorney client privilege, then he began discussing issue after issue that he had been concerned about for years. It was quickly revealed that the company's CPA firm had been performing a Certified Sales Tax Audit for many years. The CFO didn't have anyone to ask Florida sales and use tax questions because, in his mind, the CPA was a vital resource for all company matters EXCEPT Florida sales and use tax. Over the years, the CFO has developed what you might consider "sales tax skeletons" that he just hoped the CPA Firm / State Auditor would not inquire about. While not all the answers were positive, you could see the sighs of relief coming from the CFO at just having these simple questions addressed. In this one subject, the CFO felt the CPA firm was in effect the state auditor.
I truly think the Florida Certified Sales Tax Audit Program is one of the nation's most innovative programs. The joint effort by the FICPA and the Florida Department of Revenue, a Certified Sales Tax Audit allows a company with complicated Florida sales and use tax issues to have relief from crippling penalties (waiver of all penalties) and interest (abatement of the first $25,000 in interest plus 25% of any excess interest) imposed for simple mistakes in collecting and remitting sales and use taxes in Florida. Furthermore, the Certified Audit Program allows for the simple, yet very key benefit in that your "state auditor" will also look for possible refund opportunities during the audit – something a true state auditor will rarely, if ever, do. Engaging a Certified Sales Tax Auditor is not cheap and may not suit every company, but for many companies there is a real benefit to using a Certified Sales Tax Auditor. However, there is one key element of the program that is an issue – to whom do you ask gray area sales tax questions? This one simple question and a proposed solution are the focus of this article.
As a tax director, CFO, or owner of a business, you should be able to turn to your CPA firm to ask about gray areas of the law. If you want to know whether a new loan will affect your current debt to equity, then turn to your CPA firm. If you want to know whether there are federal tax advantages to buying a new piece of equipment before the end of the year, then you pick up the phone and ask the tax partner at your CPA firm. But what happens when you are not sure whether you should have been collecting sales tax on a new type of product or service your company has been selling over the last year? Normally this would be a question for your CPA firm as well. But what if that CPA firm is also your state certified sales tax auditor? Does the answer change? For a savvy tax director, the answer most likely does change and for good reason. Asking a question to your state certified sales tax auditor about potential mistakes in how sales taxes are collected likely obligates the auditor to include that potential mistake in the next audit review.
At least for Florida Sales and Use Tax purposes, if your CPA firm is also a bound representative of the Florida Department of Revenue, then the sales tax auditor may not be able to approve a "gray" position that they know the state does not agree with. Any question you might not feel comfortable asking a FL DOR auditor is a question that you might not feel comfortable asking your CPA firm's Certified Sales Tax Auditor. There are a lot of advantages to being part of the certified sales tax audit program, so what is a tax director to do? The answer is simple – hire separate counsel to address your Florida sales and use tax concerns. Through separate counsel, you can address and plan around Florida sale and use tax issues that the company would not feel comfortable asking their Florida Certified Auditor and, like the state, the auditor never needs to know about the consultation.
There are several law firms and CPA firms in the state of Florida that have strong specialization in Florida tax matters. At the Law Offices of Moffa, Sutton, & Donnini, P.A., our firm's primary focus is Florida Sales and Use Tax controversy. About 90% of our time is devoted to clients with sales tax concerns from the initial audit notice through controversy and at any point in between. In essence, we know Florida sales and use tax law as well, if not better than any other CPA or law firm in Florida. We can be a cost effective choice to a company whose tax director, CFO, or owner who needs to have their Florida sales and use tax questions addressed. Use one of the links at the top of this web page to contact a knowledgeable attorney from Moffa, Gainor, & Sutton, PA today for a FREE INITIAL CONSULTATION to learn how much we can help your company minimize your Florida Sales and Use Tax exposure.
ABOUT THE AUTHOR: MR. SUTTON IS A FLORIDA LICENSED CPA AND ATTORNEY AND A SHAREHOLDER IN THE LAW FIRM the Law Offices of Moffa, Sutton, & Donnini, P.A. MR. SUTTON IS IN CHARGE OF THE TAMPA OFFICE FOR THE FIRM AND HIS PRIMARY PRACTICE IS FLORIDA TAX CONTROVERSY. MR. SUTTON WORKED FOR THE STATE AND LOCAL TAX DEPARTMENT OF A BIG FIVE ACCOUNTING FIRM FOR A NUMBER OF YEARS AND HAS BEEN AN ADJUNCT PROFESSOR OF LAW AT STETSON UNIVERSITY COLLEGE OF LAW SINCE 2002 TEACHING STATE AND LOCAL TAX, ACCOUNTING FOR LAWYERS, AND FEDERAL INCOME TAX I. YOU CAN READ MORE ABOUT MR. SUTTON IN HIS FIRM BIO.
RESOURCES
FICPA WEB SITE FOR LIST OF CPA FIRMS AUTHORIZED TO PERFORM CERTIFIED SALES TAX AUDITS.
© 2012 All rights reserved - James H Sutton Jr