Florida Senate Bill 1382 is making its way through the legislative channels. Included in its language are provisions that prohibit taxpayers from submitting certain records in an audit protest within the administrative appeals levels as well as with a sales or use tax refund request. In certain situations, the failure of a taxpayer to provide documents will create a presumption that the resulting proposed final agency action by the FL Department of Revenue is correct.
“Basically, it stacks the deck against a small business owner the minute the tax auditor walks in the door.”
An ‘Extraordinary’ Good Cause Exception
Although there is a good cause exception that may apply in certain situations, it is limited and includes circumstances where a taxpayer was unable to originally provide records under “extraordinary circumstances”. Specifically, the bill defines “extraordinary” as “the occurrence of events beyond the control of the taxpayer, such as, but not limited to, the death of the taxpayer, acts of war or terrorism, natural disasters, fire, or other casualty, or the nonfeasance or misfeasance of the taxpayer’s employees or representatives responsible for compliance…” The definition further states that “[w]ith respect to the acts of an employee or representative, the taxpayer must show that the principals of the business lacked actual knowledge of the noncompliance and that the noncompliance was resolved within 30 days after actual knowledge.”
It should be noted that if this bill is passed, it would be an extreme departure from Florida’s well-deserved reputation as a taxpayer friendly state. The new law would significantly limit a taxpayer’s ability to provide documentation which could ultimately and materially alter the actual and correct amount of an audit assessment or sales tax refund claim.
If approved by the Governor, the bill takes effect July 1, 2022.