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FL Tax Audits - Taxpayer Bill of Rights Protects No Rights

FL Tax Audits – Taxpayer Bill of Rights Protects No Rights

I have seen a lot of information and discussions about the IRS mistreating taxpayers. Being in Florida, this made me think of protections closer to home. The first thing that came to mind was the Florida Taxpayer Bill of Rights contained in section 213.015, Florida Statutes. Hearing "bill of rights" will likely lead one to think of the first of its name: the first ten amendments to the U.S. Constitution. If you have those thoughts and then look to the Florida Taxpayer Bill of Rights previously cited, you will be sadly disappointed (but you can't blame the founding fathers as the country's oldest city of St. Augustine predated them).

The introductory paragraph indicates it is providing "brief but comprehensive statements which explain, in simple, nontechnical terms, the rights and obligations of the Department of Revenue and taxpayers." Following this paragraph are twenty-one numbered paragraphs that apparently serve to outline the obligations of the "preamble" and meet the goals provided therein. The "brief and comprehensive" provision are arguable at least and there are a couple that jump out at me.

Section nineteen of the Florida Taxpayer Bill of Rights provides "[t]he right to participate in free educational activities that help the taxpayer successfully comply with the revenue laws of this state." The technical wording of this "right" appears beneficial enough. The problem comes with the practical application of this. I really can't tell you how this "right" is fulfilled. I know the DOR previously provided seminars which offered presentations by Department personnel that addressed state tax returns and filing issues. I honestly can't remember anyone saying a negative thing about this program. It was stopped some years back under rumors that it was "too costly" to be conducted. Now, according to the DOR, providing on-line brochure satisfies the statutory requirement to provide "interactive" free education to taxpayers. Since when is a brochure interactive?

Outside of the seminars, I am not sure how section nineteen of the FL Taxpayer Bill of Rights is provided. There is a website and there are phone numbers you can call. But, I have tried both and though they are free, I am not sure I would classify them as participatory and I am not sure how much they successfully help the average Florida taxpayer comply with the revenue laws of this state. The mere presence of information on a website does not elevate to the definition of participating in education activities. I am not aware of any general dissemination of the existence or organization of the website content. In fact, I happened to learn of the updated DOR website by going to the website and noticing the new format and structure. There were no disclaimers, guiding statements, or explanations to indicate how this change was benefitting Florida taxpayers. The only thing I could notice was an apparent attempt by the DOR to "re-brand" itself. Apparently its image is in need of repair (various statements indicate this could include the standing Governor's opinion of the DOR, but that could be another article in and of itself).

The other statement that brought a smile to my face was section one which provides "[t]he right to available information and prompt, accurate responses to questions and requests for tax assistance." I smile because this is a reasonable and seemingly obvious first right to provide to Florida taxpayers. But, I smile because I think of many instances where this is violated and then I think of other statutes which disclaim this right by requiring written statements or other requirements which chip away from an apparently obvious stated right. The ironic and humorous part of this is my firm's experience with statements by and from DOR employees to taxpayers as well as firm members that are at least misleading, to blatantly wrong. In fact, I have questioned DOR employees about the accuracy and have told them the correct information only to be adamantly rebuffed that I am wrong and that what I stated was completely untrue.

The violations of "accurate responses" to questions and requests for assistance have come from essentially every "branch" of the DOR from audit, to collections, to dispute resolution. I haven't thought much about these occurrences because I am aware of the discrepancies. The more unfortunate thing is when an employee from the DOR has told a taxpayer something incorrect that the taxpayer relied upon to their disadvantage. I have seen these examples far too often. Most typically, this has occurred during a prior audit when the auditor told the taxpayer that what they were doing was correct. The problem with this scenario is that is has a similar but blurrier permutation when the auditor might say that a taxpayer's activities or tax treatment are correct but not indicate such confirmation in writing in the audit report. Sadly, despite having a "right" to accurate answer, the taxpayer can only rely on the DOR's answer if it is provide for in a prior audit report or a very formal Technical Assistance Advisement. So when a taxpayer fully relies on an auditor or other DOR employee's verbal statements of how to tax a particular transaction, the all too often misguided advice will cost the innocent taxpayer thousands of dollars when the next DOR auditor discovers the mistake. Unfortunately, in Florida, the taxpayer "right" to accurate information from the DOR is worthless.

And this leads to an inherent unfairness of the DOR's audit and protest procedures. Under Florida sales tax law, unlike many other states, the DOR is allowed to estimate your liabilities with the statutory presumption of correctness. We call this a "Guilty Until Proven Innocent" statute, which sounds about as un-American as you can get, right? You essentially have to prove the DOR wrong. And this is particularly difficult when the DOR takes a position that it really can't "prove" based on partial or incorrect information or the use of estimates. The burden of proof becomes impossible when the DOR refuses to give the taxpayer information Again, this is another topic that deserves its own focus. While working at the DOR, I received random taxpayer questions seeking assistance for their particular question or situation. I tried to research and provide certain guidance or at least identified the issues that made the question unclear and tried to provide additional avenues to seek additional information. But, I saw other employees who either didn't care of giving correct information or didn't know they were giving incorrect information. I always hoped it was the latter and not the former. Most DOR employees I worked with seemed to try and give correct information. But, the incorrect information, to a taxpayer needing guidance, will be viewed as coming from a "reliable" source and will be trusted. The Florida Taxpayer Bill of Rights provides this "right" to taxpayers, but without any teeth allowing the taxpayer to avoid persecution for following the advice of a trusted state employee.

So what does this mean? For all intents and purposes, it means nothing. As nice as the Florida Taxpayer Bill of Rights is, there is no substantive penalty for the DOR for violating the Florida Taxpayer Bill of Rights. Again citing to the procedural unfairness, the incorrect information has to be proven and then you have to argue to get a waiver or compromise of tax, penalty, or interest. Nothing is guaranteed. The real tragedy is that there is apparently no recourse where the inaccuracy has been so significant that it required professional assistance in a somewhat clear example. A taxpayer incurring legal fees generally has to accept the fees as a cost for getting an accurate result. Legal fees are generally not available without judicial intervention which adds a cost that most taxpayer's can't or don't want to incur. Add to that, the DOR will fight vehemently to avoid having to pay legal fees in just about any situation.

This circumstance unfortunately is not likely to be corrected soon as the legislature just shut down from another session. Legislators took the nice step of giving lip service to protection of taxpayers through a Bill of Rights. The only problem is that they didn't finish the job by providing any substance to those rights. I believe our governor wants to treat businesses and taxpayers fairly. I hope that legislators will want to do that also once they determine that a budget should be passed. But, until there is some protection provided in the Florida Taxpayer Bill of Rights, then the twenty one statements contained therein are really only suggestions since the DOR is not penalized for each and every violation that does and continues to occur.

For your convenience, the entire Florida Taxpayer Bill of Rights is reproduced at this end of this article.

I only hope you are not one of those unfortunate many that have your rights violated. If you think you have had your rights violated, or have even a question about it having happened, do not hesitate to give us a call. Our free initial consultation will allow you to confidentially determine what recourse you have against the Florida Department of Revenue for any taxes allegedly due.

Tampa Sales Tax Attorney; Tampa Sales Tax Audit; St Petersburg Sales Tax Audit; St Petersburg Sales Tax Attorney; Orlando Sales Tax Audit; Orlando Sales Tax Attorney; Florida Sales Tax Audit; Florida Sales Tax Attorney

About the author: Mr. Parker is a sales and use tax attorney and an associate in the law firm the Law Offices of Moffa, Sutton, & Donnini, P.A., based in the firm's Tampa office. Mr. Parker's practice includes state tax audits and controversies involving sales and use tax and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Parker received his law degree and L.L.M. in Taxation from the University of Florida. To learn more about Mr. Parker, please visit his firm bio.

ADDITIONAL RESOURCES

WHEN SALES TAX AUDITORS MAY NOT PICK AND CHOOSE RECORDS TO USE, published April 19, 2015, by Joseph C Moffa, CPA, Esq.

FL DOR Sales Tax Audits – Beware the Electronic Records Requests, published December 12, 2014, by Matthew Parker, Esq.

FL DOR – THE MAGIC BEHIND THE CURTAIN, published November 10, 2014, by James Sutton, CPA, Esq.

TAXPAYER FORCED TO SIGN AWAY RIGHTS TO REMIT TAX?, published September 2, 2013, by James Sutton, CPA, Esq.

JAILED FOR MERE $1,500 FL SALES TAX – ORLANDO SIGN COMPANY OWNER, published July 6, 2014, by Matthew Parker, Esq.

CRIPPLING PENALTIES UNDER FLORIDA SALES AND USE TAX LAW, published July 19, 2012, by James Sutton, CPA, Esq.

FLORIDA TAXPAYER BILL OF RIGHTS

SEC. 213.015, FLORIDA STATUTES

213.015 Taxpayer rights.--There is created a Florida Taxpayer's Bill of Rights to guarantee that the rights, privacy, and property of Florida taxpayers are adequately safeguarded and protected during tax assessment, collection, and enforcement processes administered under the revenue laws of this state. The Taxpayer's Bill of Rights compiles, in one document, brief but comprehensive statements which explain, in simple, nontechnical terms, the rights and obligations of the Department of Revenue and taxpayers. The rights afforded taxpayers to assure that their privacy and property are safeguarded and protected during tax assessment and collection are available only insofar as they are implemented in other parts of the Florida Statutes or rules of the Department of Revenue. The rights so guaranteed Florida taxpayers in the Florida Statutes and the departmental rules are:

(1) The right to available information and prompt, accurate responses to questions and requests for tax assistance.

(2) The right to request assistance from a taxpayers' rights advocate of the department, who shall be responsible for facilitating the resolution of taxpayer complaints and problems not resolved through the normal administrative channels within the department, including any taxpayer complaints regarding unsatisfactory treatment by department employees. The taxpayers' rights advocate may issue a stay order if a taxpayer has suffered or is about to suffer irreparable loss as a result of an action by the department (see ss. 20.21(3) and 213.018).

(3) The right to be represented or advised by counsel or other qualified representatives at any time in administrative interactions with the department, the right to procedural safeguards with respect to recording of interviews during tax determination or collection processes conducted by the department, the right to be treated in a professional manner by department personnel, and the right to have audits, inspections of records, and interviews conducted at a reasonable time and place except in criminal and internal investigations (see ss. 198.06, 199.218, 201.11(1), 203.02, 206.14, 211.125(3), 211.33(3), 212.0305(3), 212.12(5)(a), (6)(a), and (13), 212.13(5), 213.05, 213.21(1)(a) and (c), and 213.34).

(4) The right to freedom from penalty attributable to any taxes administered by the Department of Revenue; freedom from payment of uncollected sales, use, motor or diesel fuel, or other transaction-based excise taxes administered by the Department of Revenue; and to abatement of interest attributable to any taxes administered by the Department of Revenue, when the taxpayer reasonably relies upon binding written advice furnished to the taxpayer by the department through authorized representatives in response to the taxpayer's specific written request which provided adequate and accurate information (see ss. 120.565 and 213.22).

(5) The right to obtain simple, nontechnical statements which explain the reason for audit selection and the procedures, remedies, and rights available during audit, appeals, and collection proceedings, including, but not limited to, the rights pursuant to this Taxpayer's Bill of Rights and the right to be provided with a narrative description which explains the basis of audit changes, proposed assessments, assessments, and denials of refunds; identifies any amount of tax, interest, or penalty due; and states the consequences of the taxpayer's failure to comply with the notice.

(6) The right to be informed of impending collection actions which require sale or seizure of property or freezing of assets, except jeopardy assessments, and the right to at least 30 days' notice in which to pay the liability or seek further review (see ss. 198.20, 199.262, 201.16, 206.075, 206.24, 211.125(5), 212.03(5), 212.0305(3)(j), 212.04(7), 212.14(1), 213.73(3), 213.731, and 220.739).

(7) The right to have all other collection actions attempted before a jeopardy assessment unless delay will endanger collection and, after a jeopardy assessment, the right to have an immediate review of the jeopardy assessment (see ss. 212.15, 213.73(3), 213.732, and 220.719(2)).

(8) The right to seek review, through formal or informal proceedings, of any adverse decisions relating to determinations in the audit or collections processes and the right to seek a reasonable administrative stay of enforcement actions while the taxpayer pursues other administrative remedies available under Florida law (see ss. 120.80(14)(b), 213.21(1), 220.717, and 220.719(2)).

(9) The right to have the taxpayer's tax information kept confidential unless otherwise specified by law (see s. 213.053).

(10) The right to procedures for retirement of tax obligations by installment payment agreements which recognize both the taxpayer's financial condition and the best interests of the state, provided that the taxpayer gives accurate, current information and meets all other tax obligations on schedule (see s. 213.21(4)).

(11) The right to procedures for requesting cancellation, release, or modification of liens filed by the department and for requesting that any lien which is filed in error be so noted on the lien cancellation filed by the department, in public notice, and in notice to any credit agency at the taxpayer's request (see ss. 198.22, 199.262, 212.15(4), 213.733, and 220.819).

(12) The right to procedures which assure that the individual employees of the department are not paid, evaluated, or promoted on the basis of the amount of assessments or collections from taxpayers (see s. 213.30(2)).

(13) The right to an action at law within the limitations of s. 768.28, relating to sovereign immunity, to recover damages against the state or the Department of Revenue for injury caused by the wrongful or negligent act or omission of a department officer or employee (see s. 768.28).

(14) The right of the taxpayer or the department, as the prevailing party in a judicial or administrative action brought or maintained without the support of justiciable issues of fact or law, to recover all costs of the administrative or judicial action, including reasonable attorney's fees, and of the department and taxpayer to settle such claims through negotiations (see ss. 57.105 and 57.111).

(15) The right to have the department begin and complete its audits in a timely and expeditious manner after notification of intent to audit (see s. 95.091).

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