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Florida Options for Resolving DOR Taxes and the Impact of Overdue Taxes
Although Florida does not have a personal income tax, the Department of Revenue (DOR) is responsible for collecting corporate income tax, sales and use tax, and various other forms of taxes. The DOR will begin the collection procedure on your account if you fail to submit a return, don’t pay your taxes, pay only a portion of your taxes, or if an audit reveals that you owe more money to the state.
This tutorial outlines Florida’s choices for back taxes resolution so you know what to anticipate. Here, you will get to know the consequences of failing to file your Florida taxes.
Florida Tax Resolution Options
The FL DOR is responsible for collecting business taxes, and the state takes its responsibility to collect these taxes seriously. In essence, the state holds that you may pay your taxes if you can afford to operate a business.
Nonetheless, the state might occasionally be open to working with taxpayers who are unable to pay their tax obligations in full. These are the principal choices.
Florida Back Taxes Payment Plans
Taxpayers in Florida are occasionally permitted to make contributions against their outstanding debts. You must demonstrate to the state that you are unable to pay your tax liability in full in order to be eligible. After that, a 25% down payment is required, and the remaining amount must be paid off in a year.
Florida Offer to Accept Reduction on Back Taxes
For distressed taxpayers, the Florida Department of Revenue does offer an official offer in compromise program. State legislation, however, stipulates that the department may reduce tax obligations in the event of uncertainty regarding responsibility or collectability.
Situations where the taxpayer does not genuinely owe the tax are referred to as doubt as to responsibility. When the state has doubts about its capacity to collect taxes, it allows you to settle your tax bill for less than what you owe. This is known as doubt as to collectability.
Relief for Innocent Spouses
There is no program for innocent spouse relief in Florida because business taxes make up the majority of the state’s tax revenue. On the other hand, you can be eligible for
innocent spouse relief from the Internal Revenue Service (IRS) if you reside in Florida and your spouse’s or ex-spouse’s activities are the only reason you owe federal taxes.
Status of Hardship
When a taxpayer experiences extreme financial hardship, their tax bill is designated as currently non-collectible, a situation known as hardship status. On its website, the FL DOR does not promote a hardship status. Nonetheless, in cases where a taxpayer has suffered or will suffer an irreversible loss as a result of DOR measures, advocates for taxpayers’ rights are authorized by state law to halt collection efforts.
Reduction of Penalties
If a taxpayer’s noncompliance is the result of legitimate cause rather than deliberate carelessness or fraud, they may be eligible for penalty waivers. Reasonable cause usually refers to filing taxes after death, major sickness, natural disasters, or other significant setbacks. Financial hardship is typically not accepted as a valid excuse for submitting after the deadline.
In the following circumstances, the FL DOR may waive interest
:
• If the interest resulted from faulty written advice that the FL DOR issued in response to the taxpayer’s written request; or
• If the FL DOR caused a delay in determining the amount payable.
Working with a tax professional may increase your chances of having your interest and penalties waived.
Procedure for Appeals
In Florida, audit assessments are appealable, but tax liabilities resulting from submitted returns or reports cannot be challenged.
If the state is auditing you, they will issue you DR-1215/1216 (Notice of Intent to Make Audit Changes), which will include a detailed breakdown of the taxes you owe. If you don’t agree, you can contact the auditor to contest the assessment. If that doesn’t work out, you can ask for a Technical Assistance Advisement (TAA) to have an expert examine your account.
The FL DOR will issue a Notice of Proposed Assessment (NOPA) and you will have sixty days to object if you do not request a TAA. If you disagree, you can ask for a petition of reconsideration. If you object, the DOR will typically respond to your request within nine to twelve months.
Additionally, you might be able to submit a formal protest with the Division of Administrative Hearings or contest the assessment in Civil Court. If you wish to successfully appeal a tax assessment, you should engage with a tax specialist as it can be quite difficult.
Florida’s Tax Amnesty Program
As of this writing, tax amnesty is not being offered in Florida. A sales tax amnesty program was provided by the state; it expired in September 2021.
Florida does, however, have a voluntary disclosure program that functions much like an amnesty program.
What is the Florida Voluntary Disclosure of Tax Liabilities?
Taxpayers in Florida have the option to voluntarily reveal to the Florida Department of Revenue and make voluntary payments for taxes that they may have underpaid or overpaid through the voluntary disclosure program. By means of this scheme, taxpayers can acknowledge their mistakes and lower their overall tax, interest, and penalty exposure. Voluntary disclosure is not a tax amnesty program, even if it operates similarly to other amnesty program.
If the taxpayer agrees to pay the tax and interest for those three years, the Florida DOR will typically limit the look-back period to three years. Unless the tax has been collected but not remitted, there will be no penalty for this period. If the issue persists after the three years, this can, depending on the circumstances, result in a sizable savings. If this program isn’t used, there’s a chance the DOR will look back farther than the three years for the taxes.
Which Taxes May Be Disclosed voluntarily?
Through Florida’s voluntary disclosure program, taxpayers can self-disclose any unpaid taxes or underpaid taxes for any tax that the Florida Department of Revenue administers and make the necessary payments. Penalties are usually remitted. Section 213.21(7) of the Florida Statutes and Rule 12-13.0075(8) of the Florida Administrative Code provide Voluntary disclosure is available for all taxes under the administration of the Florida Department of Revenue. Here are a few of the most typical taxes.
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- Reemployment Tax
- Communications Services Tax
- Sales and Use Tax
- Discretionary Sales Surtax
- Documentary Stamp Tax
- Corporate Income Tax
- Local Option Tourist Development Taxes
- Fuel Taxes
- Solid Waste and Surcharge Fees
- Pollutants Tax
Who is eligible for the initiative?
To be eligible for the program, the liability must be for taxes that are managed by the Florida Department of Revenue. The taxpayer cannot have been notified by the DOR regarding their tax liability earlier.
How should one apply?
To apply for Florida’s Voluntary Disclosure Program, you must submit a written request. The three-year lookback period begins on the date your written request was postmarked. Please include the following with your written request:
• You have to declare that the FL DOR has not previously gotten in touch with you about the liability you are revealing.
• The kind of tax being revealed. • The time frame being revealed.
• The taxpayer’s or their representative’s contact details.
Once the Voluntary Disclosure program accepts your request, they will then ask you to provide additional information.
Submit Requests Here
Fax: 850-245-5998
Attention: Voluntary Disclosure
Email: VoluntaryDisclosure@floridarevenue.com
By Mail:
Voluntary Disclosure Program
Florida Department of Revenue
PO Box 5139
Tallahassee, FL, 32399-5139
Overnight Delivery Address:
Florida Department of Revenue
Voluntary Disclosure Program
Mail Stop 1-4653
5050 W Tennessee Street
Tallahassee, FL, 32399-0151
The taxpayer does not have to know the whole amount owed at the beginning of the process. The documentation needed to calculate this amount will be requested by the FL DOR. The taxpayer will have to register if they are not already registered with the department for the tax.
If you willingly report your tax liabilities, you can pay off the tax and interest you owe without worrying about penalties. Your disclosure will be exchanged for the state looking back no more than three years.
Only those who have not received communication from the state on their tax liability are eligible for this program. Unless you can provide a valid basis for your non-reporting, the state will charge you a 5% penalty if you have collected taxes but not submitted them.
How to Pay Overdue Florida Taxes
In order to avoid future collection efforts, fines, and interest, it is preferable to pay your overdue taxes as soon as you are able to do so. Florida’s DOR online payment platform is the fastest way to make a payment. Enrolled individuals are able to electronically file, pay, and submit their taxes, including any overdue returns. You can enroll by completing the eServices Enrollment application on the Florida Department of Revenue’s website if you are not currently enrolled to file and pay.
Enforcement and Collection Actions Taken by the Florida DOR
When a taxpayer is believed to have made a mistake on their returns or has outstanding taxes, Florida takes a range of enforcement methods against them. The state may file liens, freeze your bank account, impose tax fines, and cancel your professional license or sales tax registration if you owe the Florida Department of Revenue (DOR) on your taxes. To make sure the data you provided on your tax return was correct, the Florida Department of Revenue also has the authority to audit your returns.
Generally, the state cannot use enforcement proceedings against you until it has given you a 30-day notice. This is a summary of the fines and enforcement actions related to unpaid or unfiled Florida taxes.
Florida Tax Liens
A legal claim on your property is a tax lien. The state may issue a warrant or lien if you owe money for unpaid taxes, interest, or penalties. The warrant instructs the sheriff in your county to seize and sell your property in order to pay the amount owed on your taxes plus the expenses associated with serving the warrant and carrying out the sale.
Tax Levy for Florida
Before taking possession of your assets, the state is required to provide you at least thirty days’ notice. In addition to contacting everyone who owes you money or property and instructing them to send the money to the FL DOR, the state has the authority to seize your non-exempt assets in order to satisfy your tax obligation.
For instance, the FL DOR has the authority to demand payment for your taxes from a client who owes you money from an invoice. You will get the difference if their payment exceeds your tax obligation.
Someone cannot transfer or get rid of the property they owe you for at least 60 days after receiving a levy notice from the state on your behalf. Wages are exempt from this rule.
Florida Tax Penalties
You will be penalized 10% of the outstanding amount each month, up to a maximum of 50%, if you file your return or pay your taxes after the deadline. The late filing penalty is $50 each month, up to a maximum of $300, if you have no outstanding taxes.
The FL DOR will tack on an administrative collection processing fee equal to 10% of the outstanding total if your tax bill remains unpaid for ninety days. For instance, there will be a $200 administrative collection processing fee if your $2,000 sales tax debt is 100 days overdue. These costs are in addition to any other fines you may have received.
If the state assigns a third-party collection agency to handle your unpaid taxes and your tax due includes reemployment tax, the agency may charge you more.
Late Corporate Income Tax Penalties
Even if you ask for an extension, you will still be penalized for filing your Florida business income tax beyond the due date. The state requires you to submit a preliminary payment request when you ask for an extension.
You will normally be subject to a penalty equal to 12% of the outstanding balance if your tentative payment is less than what you owe. However, your extension will be deemed void and the state may impose a late filing penalty if you underpay your preliminary tax by a sum equal to or greater than $2,000 or 30% of the tax bill.
A 10% monthly late filing penalty, up to 50% of your total tax liability, is assessed. For instance, the late filing penalty on a $3,000 debt is $300 for the first month and might reach $1,500.
Additionally, interest will be charged to your account. The interest rate is 7% until December 31, 2021, and it changes twice a year.
Florida DOR Tax Examinations
Your sales tax, option tax, corporate income tax, and other state tax returns are auditable by the FL Dor. 36 distinct tax kinds are administered by the Florida Department of Revenue (DOR), which is authorized to audit any tax’s data. A sales tax audit is the most prevalent kind of audit.
Additional Activities for the Enforcement of Back Taxes
Only a few states still publish the names of people with outstanding tax debts, including Florida. If your debt is $100,000 or more, your identity will be made public. The state will make public the identities of the two taxpayers with the biggest tax liens in counties where no one owes more than this amount.
If you have a warrant, lien, or judgement lien against you, the state will also cancel your professional license from the department and your sales tax registration. The state has to arrange a casual meeting with you before suspending your license. You can sign a compliance agreement or show evidence there.
Typical Florida Tax Collection Notifications
A Notice of Delinquency will be sent by the FL DOR if your return is not filed. The DOR will send a Notice of Amount Due if you owe penalties for filing after the deadline or if you owe extra tax as a result of an assessment.
Florida Statute of Limitations on Tax Liabilities
Five years from the later of the day the tax is levied or becomes delinquent, is the statute of limitations for Florida tax liabilities. For instance, the statute of limitations ought to run out in 2026 if the FL DOR imposes a tax in 2021. In the event that a payment plan is established and abandoned in 2022, the statute will not run out for another five years.
In the event that a tax lien is placed, it expires 20 years from the date when the tax was assessed, the tax became past due, or a tax warrant was submitted.