Voluntary Disclosure of Tax Liability in Florida
Voluntary disclosure is the process of reporting previously unpaid or underpaid tax liabilities for any tax administered by the Florida Department of Revenue. It’s the taxpayer’s opportunity to voluntarily pay these taxes without being penalized.
Running business in FloridaRunning a business is tough. And the IRS demands to be paid. But being busy building their American Dream, many entrepreneurs forget about the state tax issues. Then, one day, when it's the least convenient, you receive a notice of assessment, or a letter of inquiry, or an audit notice. At this point, your business is at risk of heavy penalties, which threaten to end your American Dream.
As you probably know, Florida does not have individual income tax. But the state must collect revenues somehow. Therefore, Florida collects two major taxes: sales tax and corporate income tax, as well as several minor taxes: intangible tax, communication services tax, documentary stamp tax, fuel tax, gross receipts tax on utility services, estate tax, severance tax, insurance premium tax and fees, reemployment tax, and more.
In recent years, faced with falling revenues and increasing expenses, both federal and state governments are stepping up enforcement of the tax collection. State and local auditors are significantly more active and aggressive now than a decade ago, and the enforcement agents are unforgiving when they catch a business owner who forgot (or didn't know) about his or her state tax obligations. Moreover, if you charged and collected the sales tax from your customers but didn't remit it to the state, the Florida Department of Revenue may allege that you committed theft of state funds, and the state can charge you with a felony. See Florida Statutes Sec. 212.15(2).
What should the taxpayer do?The good news is that these serious consequences can be avoided through voluntary disclosure - a process that gives noncompliant taxpayers the opportunity to report previously unpaid or under-reported state tax liabilities. The Florida Department of Revenue has a Voluntary Disclosure Program which covers any state tax administered by the agency, such as:
o Sales and use tax (including discretionary sales surtaxes)
o Corporate income tax
o Insurance premium taxes, surcharges, and fees
o Reemployment assistance (formerly Unemployment Compensation)
o Gross receipts tax
Voluntary Disclosure Program is available to any taxpayer with a state tax liability, unless a taxpayer has been contacted already by the Florida Department of Revenue regarding the debt.
Who is the Program beneficial to?Voluntary Disclosure Program may be beneficial to any business owner and individual taxpayer wishing to avoid the costly penalties and criminal consequences associated with tax evasion. The Department of Revenue will look for tax discrepancies as far back as three years before the date of the voluntary request. Once you pay your tax and interest liabilities, the Department of Revenue is likely to waive all penalties, except when a tax was collected and not remitted.
How do I apply?Voluntary Disclosure Program is the taxpayer's opportunity to voluntarily pay taxes without being penalized. Applications for the Voluntary Disclosure Program must be submitted via written request, and it's important to have an experienced Florida attorney communicate with the Department of Revenue on your behalf and to review the information requested by the Department of Revenue. Settlement negations with the Florida Department of Revenue are not intuitive, and strategies you think would be advantageous to a settlement may actually hurt your position. Do not try to negotiate with the state without an experienced Florida attorney on your side.