The Florida Bar

Florida Bar Journal

Florida Tax Procedure: A Primer


Nothing creates anxiety in a taxpayer like getting the notice of a tax audit. The taxpayer begins envisioning the worst, and soon, the lawyer’s telephone rings. This scenario, or some variation of it, illustrates how many Florida tax attorneys begin their experience with the Florida Department of Revenue. Unfortunately, as the attorney scans the office shelves for references, he or she will find a noticeable lack of information that elucidates the process.

Although entire courses and manuals are devoted to relating federal tax procedure, few resources exist to help the attorney navigate Florida’s tax agency. This article provides attorneys with a basic outline of the general audit process, alternatives for requesting technical assistance during an audit, and the informal and formal protest procedures.1

Introduction to the Florida Department of Revenue

The department is one of Florida’s five largest administrative agencies,2 and it almost equally divides its resources between tax administration and child support enforcement. The department is organized into several programs and processes, but the average tax attorney will usually be involved with only three separate offices: Auditing, the Office of Technical Assistance and Dispute Resolution (TADR), and the Office of the General Counsel. As the name implies, the department’s auditing section conducts audits. If the client consults an attorney early in the audit process, the attorney may interact with the auditor on audit issues.

Second, the attorney may interact with TADR during the informal protest process. This office is comprised mostly of employees (tax conferees) that issue decisions on disputed assessments and provide auditors and taxpayers with technical assistance relating to Florida tax law.

The final office the tax attorney is likely to interact with is the department’s Office of the General Counsel, which is comprised mostly of attorneys that guide and supervise the department’s litigation efforts.3 Tax attorneys will generally be in contact with this office during formal protest or litigation proceedings.

The Audit Process

Florida law requires that the department actively conduct audits of taxpayer books and records.4 While the department has general authority to conduct audits of all taxes it administers,5 many other statutes provide specific audit authority as well.6

A taxpayer’s first direct contact with the department may occur when the department initiates the audit process by issuing a Form DR-840, Notice of Intent to Audit Books and Records (audit notice). This serves as formal notice the department will conduct an audit and identifies the time frame to be audited. Generally, the department must commence actions to collect taxes within three years from the later of the date the tax was due, the date the return was due, or the date the return was filed.7 Thus, the audit period identified in the audit notice will generally identify the three-year period immediately preceding the date of the audit notice. Once the department issues the audit notice, the statute of limitations on the department’s right to take action to collect taxes and the statute of nonclaim on a taxpayer’s right to claim a refund are tolled for one year, as long as other procedural requirements are met.8 Generally, the department must begin the audit within 120 days after issuing the audit notice, unless the taxpayer agrees to an extension of time. If the auditor has not started the audit within that period, the tolling period terminates.9 Note that not commencing the audit within 120 days does not technically prevent the department from conducting the audit, but acts to potentially limit the period for which a valid assessment can be issued.

The auditor must inspect the taxpayer’s books and records at reasonable times and places,10 and, at least with regard to audits of sales tax, the taxpayer is generally granted 60 days in which to prepare its books and records for inspection.11 During the interim period, the auditor will request general business information and perform industry research, ensuring that the actual audit process goes smoothly.12

The actual audit can range from a matter of days to over a year, depending on the sufficiency of records and scheduling issues. However, the tolling period is only for one year.13 If it appears that the audit will last beyond the one-year tolling period, by consent, the parties can extend the time to file an assessment or claim a refund.14 The parties must complete and sign Form DR-872, Consent to Extend the Time to Issue an Assessment or to File a Claim for Refund.

During the audit, although the taxpayer and auditor may discuss issues the auditor has identified, conflicts in interpretation and tax consequences do occur. If there is a dispute, the taxpayer or the auditor may decide to seek technical assistance immediately, rather than wait until the protest or litigation phase. The department is authorized to provide technical assistance regarding Florida’s tax laws15 and can provide requested advice during an ongoing audit. Therefore, if the taxpayer desires to know the department’s position on the tax consequences of a stated transaction or event under applicable law, the taxpayer may request a technical assistance advisement (TAA).16 Because the department’s authority to issue a TAA is discretionary,17 if the specific circumstances warrant it, the department may decline to provide the requested advice.

The taxpayer must deliver a copy of the TAA request to the auditor, and the auditor has an opportunity to provide additional information or arguments.18 Note that a TAA is not an order pursuant to F.S. §§120.565 or 120.569, nor is it a rule or policy of general applicability pursuant to F.S. §120.54. Therefore, a TAA has no precedential value except to the taxpayer who requests the advisement and then only for the specific transaction addressed in the TAA.19

The internal technical advisement (ITA) is another vehicle for receiving advice on technical or difficult issues during an audit. Like the TAA, an ITA is a written statement of the department’s position on the tax consequences of a specific transaction or event under the applicable statutes and rules.20 Unlike a TAA, however, ITAs are requested by the auditor. Just as the taxpayer must provide the auditor with copies of TAA requests, the auditor must provide the taxpayer with copies of the auditor’s ITA requests. Note that the taxpayer has only 10 working days either to provide the department with additional information, documents, or arguments the taxpayer wants considered or to request additional time to submit information regarding the ITA.21

When the audit is complete, the auditor must present the taxpayer with Form DR-1215, Notice of Intent to Make Audit Changes (NOI).22 The NOI identifies any errors23 the auditor found during the audit. The taxpayer may send or fax a request for an informal conference to discuss the audit changes directly to the office designated on the NOI. To be considered timely, the taxpayer must mail or fax a request for such a conference within 30 days from the date of issuance of the NOI.24

If the taxpayer does not seek an informal conference, or if no agreement is reached after the conference, the department will issue a notice of proposed assessment (assessment). The assessment is neither a final order as that term is used in Ch. 120,25 nor a final assessment for Ch. 72 purposes.26

Protests — Generally

Once the department issues the assessment, the taxpayer has several legal avenues to dispute it — the taxpayer can file 1) an informal (administrative) appeal to the department;27 2) a protest under the Administrative Procedures Act (either formal or informal);28 or 3) an action in circuit court.29 In any case, the taxpayer must take protest action within 60 or 120 days, depending on the protest method chosen. If the taxpayer does not file an informal protest within 60 days, the assessment becomes final, and the taxpayer will be limited to filing a formal protest. Importantly, interest accrues on any unpaid amounts during protest proceedings and will be due, along with the tax, in the event the department prevails in such proceedings.30

Informal Protests

The department’s informal protest process ensures that an employee in an office separate from the auditor will review assessments and correct any misapplication of law by the auditor. This informal protest process can be extremely useful in that it generally requires less expense and time than a formal appeal to the Division of Administrative Hearings or circuit court. However, to secure this review, the taxpayer must file an informal protest of the assessment within 60 consecutive calendar days after the date it is issued.31 The taxpayer can file a request for a 30-day extension to file the informal protest, but such request for extension must be filed within the time frame allotted for filing informal protests.32

If the taxpayer timely requests and is granted an extension of time to file an informal protest, the taxpayer must either file the informal protest or another request for an extension within 30 days. If the taxpayer does not exercise his or her informal petition rights, the opportunity for an informal protest is lost and the assessment becomes final at the expiration of the extended filing period.33

Informal protest petitions must be mailed or faxed to the address or fax number indicated on the assessment.34 Florida law specifies certain information the petition must contain.35 The petition will initially be reviewed by a specialist in the department’s compliance support process, where the assessment is reviewed for obvious errors and the protest is reviewed for adequate documentation.36 If the specialist is unable to identify any errors, the petition is forwarded to TADR for assignment to a tax conferee.37

The tax conferee responds to informal protests by issuing a notice of decision.38 Before the tax conferee issues the notice of decision, the taxpayer is entitled to an informal oral conference to discuss the issues involved.39 Although the department’s goal is to resolve the dispute or to issue a notice of decision within 90 days, protests can take longer if they involve new or complex issues, or if evaluation of the petition or audit file is hampered by limited documentation.

If the tax conferee finds that the auditor correctly applied the law, the conferee’s notice will sustain the assessment. If the tax conferee finds that the auditor incorrectly applied the law, the notice of decision may either reduce or withdraw the corresponding amount of tax, penalty, and interest from the assessment. These reductions or withdrawals are unlimited by dollar amount; the full amount of any incorrectly assessed amounts may be withdrawn.

If, however, the conferee determines that the correct application of the law is unclear, the department is authorized to exercise limited compromise authority. The executive director of the department is authorized to compromise certain amounts of tax, penalty, and interest based upon doubt as to liability or “collectibility.”40 rule, the executive director has delegated varying levels of compromise authority to certain positions within the department.41 During any informal protest, the department is limited to compromises of tax equal to $250,000 or less.42 However, once a case is in litigation, the department’s compromise authority is generally unlimited.43

Once the notice of decision is issued, the taxpayer can either a) dispute the decision by formally appealing the decision, or b) request the department conduct an additional informal review. If the taxpayer provides the department with additional documentation or arguments, the taxpayer may file a petition for reconsideration within 30 days of the date of the notice of decision, requesting that the department address the new facts or arguments.44 If the petition for reconsideration is untimely or does not contain new facts or arguments, the department will not accept the petition, and the taxpayer’s remedy will be limited to the formal litgation process.45

The Formal Protest Process
As in most states, Florida law also provides methods to formally protest assessments.46 A taxpayer may contest the legality of an assessment by filing an action in circuit court,47 or by petitioning for a hearing pursuant to the Administrative Procedures Act.48 In addition, appellate courts have granted at least two direct appeals after the department had issued notices of reconsideration.49 However, note that one appellate judge in dissent has taken the view that because the department’s assessment did not result from any specified Ch. 120 proceedings, it was not a final order, and thus, not subject to appeal under §120.68.50

Regardless of the path chosen, protests must be brought within 60 days after the assessment becomes final. Unlike other filing deadlines contained in F.S. Ch. 120, which can be extended under certain circumstances,51 the 60-day timeframe contained in F.S. Ch. 72 is jurisdictional.52 This statute is considered a statute of “nonclaim,”53 and the timeframes cannot be waived or enlarged. The attorney must pay close attention to the deadlines to ensure that any petition is received by the department’s Office of the General Counsel no later than the 60th day. If the 60th day falls on a Saturday, Sunday, or legal holiday, the petition will be accepted the first work day following those days. Facsimile transmissions are acceptable, so long as they are timely received. A facsimile can be extremely useful because the law does not grant additional days to account for mail delays.

If the taxpayer chooses to file an action in circuit court, the taxpayer is required to pay the uncontested portions of the assessment to the department.54 Furthermore, with regard to the contested portions of the assessment, the taxpayer’s complaint must be accompanied by either a) payment of the contested amounts, or b) a bond or other court-approved security arrangement.55 However, these requirements can be waived in writing by the executive director of the department or by the county official designated by ordinance. A taxpayer’s failure to pay the uncontested amount will result in the court dismissing the action and imposing an additional 25 percent penalty of the tax assessed.56

Alternatively, the taxpayer can petition the department for a formal hearing with the Division of Administrative Hearings. Similar to the prerequisites needed to file an action in circuit court, the taxpayer must pay the amount of uncontested tax, penalty, and accrued interest assessed.57 Unlike the procedures applicable for circuit court, however, the taxpayer need not pay any amounts in dispute. Failure to pay the uncontested amount will result in dismissal of the action and imposition of an additional penalty equal to 25 percent of the amount taxed.58

In protesting an assessment in an administrative proceeding, the department need only prove that it has levied an assessment on the taxpayer and show the factual and legal grounds upon which the assessment is made.59 Then, the burden shifts to the taxpayer to show the assessment is wrong.60 Once the proceedings are concluded, the administrative law judge will issue a recommended order, and after conclusion of the time for exceptions and objections, the department has 90 days to issue a final order.61

Informal Petitions

In cases where the taxpayer does not dispute the facts, the taxpayer may request an informal, rather than a formal hearing. Informal hearings are initiated pursuant to Rule 28-106.301 of the Florida Administrative Code. Because the facts contained in the department’s last pronouncement62 are deemed admitted, the taxpayer cannot use this avenue to dispute issues of material fact.63

If a petition is determined to be timely filed and legally sufficient, the department will assign a qualified employee to act as the presiding officer. The taxpayer can choose to waive a hearing;64 in which case, the presiding officer may act solely on the basis of written submissions. The presiding officer must give the taxpayer a minimum of 14 days notice to provide any documents, memorandum of law, or other legal argument supporting the taxpayer’s position.65 If the department does not do so, it risks reversal of the final order. Likewise, if the department schedules a hearing to take oral evidence or argument, it must give the taxpayer 14 days written notice.

The attorney can provide the department with any documentation or legal arguments to support the taxpayer’s position. The attorney should ensure that the hearing record contains all matters necessary for potential judicial review. The final order has to be in writing and must contain both findings of fact (if any) and conclusions of law separately stated. It must be rendered within 90 days after either a) a hearing conducted by the department is concluded, or b) the department has received the requested written or oral material.66


While Florida tax procedures can be involved, remembering a few general things will be helpful. First, the attorney’s direct contact with the department may occur during three distinct phases: during the DOR audit/technical phase, during informal proceedings, or during formal protests. Second, the attorney must know that as the case moves from one phase to the next, the individual department offices may be unaware of the progress that has previously transpired on the case. Third, the adage “timing is everything” aptly applies. Florida tax procedures are exacting in the dates by which protests must be filed. The attorney who remains vigilant to the applicable timeframes and the information required to be filed in each, will negotiate the process without encountering procedural snags that might otherwise slow or prevent debate on the merits of the issues.

1 This article does not discuss practice before the department relative to revocations of certificates of registration, petitions from assessments that result from required filings, or petitions from refund denials.

2 See Florida Department of Management Services 2005 Annual Workforce Report.

3 Courtroom and procedural matters are handled by Florida’s Office of Attorney General. The department’s attorneys advise on legal interpretations and department positions.

4 Fla. Stat. §20.21(2)(c).

5 Fla. Stat. §213.34(1).

6 See, e.g. , Fla. Stat. §§199.232, 201.11, 202.26, 206.14.

7 Fla. Stat. §95.091(3)(a). As with other tax systems, extended periods are granted when the taxpayer files a substantially incorrect return, a grossly false return, or made a substantial underpayment of tax. Note also that Florida’s limitation on actions to collect tax is five years with respect to taxes due prior to July 1, 1999.

8 Fla. Stat. §213.345.

9 Fla. Stat. §213.345.

10 Fla. Stat. §213.025.

11 Fla. Stat. §212.13(5)(a).

12 For example, see Form GT-800042,

13 Fla. Stat. §213.345.

14 Fla. Stat. §213.23.

15 Fla. Stat. §213.22.

16 Fla. Stat. §213.22(1). It is beyond the scope of this article to address the specific requirements, but see Fla. Admin. Code Rule 12-11.003, for detailed instructions.

17 Fla. Stat. §213.22.

18 Fla. Admin. Code §12-11.003(8).

19 Fla. Stat. §213.22(1).

20 Fla. Admin. Code §12-11.002(2).

21 Fla. Admin. Code §12-11.011(4)(c).

22 Fla. Admin. Code §12-6.002(1)(a).

23 “Error” includes both underpayments and overpayments of tax.

24 Fla. Admin. Code §12-6.002. Note that a taxpayer may also request an extension of time to request a conference by mailing or faxing a written request prior to the expiration of the period within which a conference must be requested.

25 Fla. Stat. §120.80(14)(a).

26 Fla. Stat. §72.011(2).

27 Fla. Stat. §213.21(1).

28 Fla. Stat. §§72.011, 120.80(14).

29 Fla. Stat. §72.011; See Figure 1.

30 Fla. Stat. §212.12(3).

31 Fla. Admin. Code §12-6.003(1)(b).

32 Fla. Admin. Code §12-6.003(1)(d).

33 Fla. Admin. Code §12-6.003(1).

34 Fla. Admin. Code §12-6.003(2)(a).

35 Fla. Admin. Code §12-6.003(2)(a).

36 Fla. Admin. Code §12-6.003(3)(a)1.

37 Fla. Admin. Code §12-6.003(3)(a)2.

38 Fla. Admin. Code §12-6.003(3)(b).

39 Fla. Admin. Code §12-6.003(3)(a)2.

40 Fla. Stat. §213.21(3)(a).

41 Fla. Admin. Code §12-13.004.

42 See generally Fla. Admin. Code §12-13.004(3).

43 Fla. Admin. Code §12-13.004(2).

44 Fla. Admin. Code §12-6.003(4).

45 Fla. Admin. Code §12-6.003(4)(a)2.

46 See generally Fla. Stat. §213.21 (maybe a good reference is also to Ch. 120).

47 Fla. Stat. §72.011(1).

48 Fla. Stat. §120.569.

49 Yes Dear, Inc. v. Dep’t of Revenue, 523 So. 2d 1235 (Fla. 1st D.C.A. 1988); United Engines, Inc. v. Dep’t of Revenue, 508 So. 2d 459 (Fla. 1st D.C.A. 1987).

50 Latin Express Serv. v. State, Dep’t of Revenue, 687 So. 2d 1342, 1345 (Fla. 1st D.C.A. 1997).

51 For example, see Fla. Stat. §120.569.

52 See also Dep’t of Revenue v. Rudd, 545 So. 2d 369, 371 (Fla. 1st D.C.A. 1989); Mirabal v. State, Dep’t of Revenue, 553 So. 2d 1297, 1298 (Fla. 3d D.C.A. 1989); Dep’t of Revenue v. Nu-life Health and Fitness Center, 623 So. 2d 747, 752 (Fla. 1st D.C.A. 1992); Fla. Stat. §§72.011(2)(a) and 120.80(14)(b)3.b.

53 See, e.g., Canac Kitchens of Tampa Bay, Inc. v. Florida Dep’t of Revenue, 768 So. 2d 454 (Fla. 2d D.C.A. 2000).

54 Fla. Stat. §72.011(3)(a).

55 Fla. Stat. §72.011(3)(a) and (b).

56 Fla. Stat. §72.011(3).

57 Fla. Stat. §120.80(14)(b)3.a.

58 Fla. Stat. §120.80(14)(b)3.a.

59 Fla. Stat. §120.80(14)(b)2.

60 IPC Sports, Inc. v. State, Dep’t of Revenue, 829 So. 2d 330, 332 (Fla. 3d D.C.A. 2002).

61 Fla. Stat. §120.569.

62 The “final pronouncement” generally refers to either the assessment or the final notice issued during informal protest proceedings.

63 Autoworld of America Corp. v. Dep’t of Highway Safety, 754 So. 2d 76, 77 (Fla. 3d D.C.A. 2000).

64 Fla. Stat. §120.569(2)(b).

65 Fla. Admin. Code §28-106.303.

66 Fla. Stat. §120.569(2)(l).

Robert Babin is the deputy director for corporate income, documentary stamp, and miscellaneous taxes in the Department of Revenue’s Office of Technical Assistance & Dispute Resolution. He received his J.D. and LL.M. in taxation from the University of Florida Levin College of Law.
Yvonne Gsteiger is an assistant general counsel in the Department of Revenue’s Office of the General Counsel, where her focus is primarily on sales and use tax and administrative law. She received her M.S. and J.D. from the Florida State University.
The statements made in this article do not reflect the official position or opinions of the Florida Department of Revenue.

This column is submitted on behalf of the Tax Section, Mark E. Holcomb, chair, and Michael D. Miller and Benjamin A. Jablow, editors.