Florida DOR Tax Resolution Options and Consequences of Owing Taxes
There is no personal income tax in Florida, but the Florida Department of Revenue (DOR) collects sales and use tax, corporate income tax, and several other types of taxes. If you fail to file a return, don't pay your taxes, only pay part of your taxes, or if the state discovers that you owe additional money in an audit, the DOR will start the collection process on your account.
So that you know what to expect, this guide explains the back tax resolution options in Florida. Then, it details what can happen if you don't pay your taxes in Florida.
Tax Resolution Options in Florida
The taxes collected by the FL DOR are business taxes, and the state is serious about collecting these taxes. Essentially, the state believes that if you can afford to be in business, you can pay your taxes.
However, in some cases, the state may be willing to work with taxpayers who cannot afford to pay their tax liabilities in full. Here are the main options.
Florida occasionally allows taxpayers to make payments on their tax liabilities. To qualify, you must prove to the state that you can't afford to pay your tax bill in full. Then, you must make a 25% downpayment and pay off the balance within 12 months.
Florida Offer in Compromise on Back Taxes
The Florida Department of Revenue does have an official offer in compromise program that it makes available to troubled taxpayers. However, state law specifies that the department has the right to compromise tax liabilities based on doubt as to liability or doubt as to collectability.
Doubt as to liability refers to situations where the taxpayer doesn't actually owe the tax. Doubt as to collectability is when the state doubts that it will be able to collect the tax, and it lets you resolve your tax balance for less than you owe.
Innocent Spouse Relief
Because most of Florida's taxes are business taxes, the state does not have an innocent spouse relief program. However, if you live in Florida and owe federal taxes due exclusively to the actions of your spouse or ex-spouse, you may qualify for innocent spouse relief from the Internal Revenue Service (IRS).
Hardship status is when a tax bill is marked as currently non-collectible because the taxpayer is suffering severe economic hardship. The FL DOR does not advertise a hardship status on its website. Still, state law allows taxpayers' rights advocates to stop collection actions if a taxpayer has suffered or is going to suffer an irreparable loss due to actions taken by the DOR.
Taxpayers may qualify for penalty waivers if their noncompliance is due to reasonable cause and not due to willful negligence or fraud. Typically, reasonable cause refers to paying your tax late due to severe illnesses, death, natural disasters, or other serious obstacles. Lack of money is generally not considered a reasonable cause for filing late.
The FL DOR may waive interest in the following situations:
- The interest is due to inaccurate written advice provided by the FL DOR in response to the taxpayer's written request.
- If the FL DOR created a delay in the determination of the amount due.
To improve the chances of getting your interest or penalties waived, you may want to work with a tax professional.
You cannot appeal tax liabilities due to your filed returns or reports, but you can appeal audit assessments in Florida.
The state will send you DR-1215/1216 (Notice of Intent to Make Audit Changes) detailing the tax you owe if the state is auditing you. If you disagree, you can reach out to the auditor to challenge the assessment, and if you cannot change their mind, you can request to have a specialist review your account through a Technical Assistance Advisement (TAA).
If you don't request a TAA, the FL DOR will issue a Notice of Proposed Assessment (NOPA), and you have 60 days to protest. If you protest, the DOR usually takes nine to 12 months to issue a decision, and you can request a petition of reconsideration if you disagree.
You may also be able to challenge the assessment in Civil Court or file a formal protest with the Division of Administrative Hearings. Appealing a tax assessment can be very challenging, and you should work with a tax professional if you want to be successful.
Tax Amnesty Programs in Florida
At the time of writing, Florida does not have an active tax amnesty program. The state offered a sales tax amnesty program that ended in September 2021.
However, Florida does offer a voluntary disclosure program that works similarly to an amnesty program.
You can pay off the tax and interest you owe without worrying about penalties if you voluntarily disclose tax liabilities. In exchange for your disclosure, the state will not look back further than three years.
This program is only available to people who the state has not contacted about their tax liability. If you have collected but not remitted taxes, the state will impose a 5% penalty unless you show a reasonable cause for not reporting.
How to Pay Florida Taxes Owed
If you can pay your delinquent taxes in full, it is best to pay them as soon as possible to prevent further collection actions as well as additional penalties and interest. The quickest way to pay is to use Florida's DOR online payment platform. When enrolled, you can file and pay taxes electronically as well as submit missing tax returns. If you are not enrolled to file and pay, you can enroll by using the eServices Enrollment application on the Flordia Department of Revenue's website.
Florida DOR Enforcement Actions & Collection Actions
Florida uses a variety of enforcement actions on taxpayers who have delinquent taxes, or they believe a mistake was made on the taxpayer's returns. If you owe taxes to the FL DOR, the state may file liens, freeze your bank account, charge tax penalties and revoke your sales tax registration or professional licenses. The Florida DOR also has the right to audit your tax returns to ensure the information reported on your return was accurate.
Typically, the state must give you a 30-day warning before using enforcement actions. Here is an overview of enforcement actions and penalties associated with unfiled or unpaid Florida taxes.
Tax Liens in Florida
A tax lien is a legal claim to your assets. If you have unpaid taxes, interest, or penalties, the state may issue a warrant or lien. The warrant directs the sheriff in your county to levy and sell your property to cover your tax liability as well as the cost of executing the warrant and conducting the sale.
Florida Tax Levy
The state must provide you with at least a 30-day notice before levying your assets. The state can levy your non-exempt assets to cover your tax liability, but it can also reach out to anyone who owes you money or property and tell them to transfer the funds to the FL DOR.
For example, if you have a client who owes you money from an invoice, the FL DOR can require them to pay your tax bill. If the amount of their payment exceeds your tax liability, you will receive the difference.
If someone receives a levy notice from the state on your behalf, they cannot transfer or dispose of the property they owe you for at least 60 days. This rule does not apply to wages.
Tax Penalties in Florida
If you file your return late or pay your taxes late, you will face a penalty of 10% of the balance every month, up to a total of 50%. If you don't owe any tax, the late filing penalty is $50 per month, up to a total of $300.
If you have an unpaid tax bill for 90 days, the FL DOR will add an administrative collection processing fee of 10% of the balance. For example, if you are 100 days late on a $2,000 sales tax bill, the administration collection processing fee will be $200. These fees are on top of any other penalties you have incurred.
If your tax liability includes reemployment tax and the state outsources collections to a third-party collection agency, the agency can add an additional fee to your balance.
If you're a business owner in Florida, it's important to be aware of the state's sales tax penalties and how to avoid them. The best way to avoid penalties is to file a complete and accurate return on time. However, if you do find yourself owing money, you can apply for penalty relief. Read our complete guide on who must file and pay sales taxes in Florida as well as penalties associated with not filing or paying.
Penalties on Late Corporate Income Tax
If you pay your Florida corporate income tax late, you will face a penalty, even if you request an extension. When you request an extension, the state requires you to make a tentative payment.
If your tentative payment is less than you owe, you will typically face a penalty of 12% of the unpaid amount. However, if you underpay your tentative tax by the greater of $2,000 or 30% of the tax bill, your extension will be considered invalid, and the state will assess a late filing penalty.
The late filing penalty is 10% of your tax due every month, up to 50%. For example, if you owe $3,000, the late filing penalty is $300 for the first month, and it can get up to $1,500.
You will also incur interest on your account. The interest rate adjusts twice a year, and it is 7% through December 31, 2021.
Florida DOR Tax Audits
The FL Dor can audit your sales tax, option tax, corporate income tax, and other state tax returns. The Florida DOR administers 36 different types of taxes and has the right to audit the information on any of these taxes. The most common type of audit is a sales tax audit. This Florida tax audit guide goes over how to handle an audit from the FL DOR. The state seems to pay particular attention to restaurant sales tax audits.
Other Back Tax Enforcement Activities
Florida is one of a few states that still publishes the names of people with unresolved tax liabilities. If you owe $100,000 or more, your name will be published. In counties where no one owes more than this threshold, the state will publish the names of the two taxpayers with the highest tax liens.
The state will also revoke your sales tax registration and professional licenses issued by the department if you have a warrant, lien, or judgment lien against you. Before taking away your license, the state must schedule an informal conference with you. There, you can present evidence or enter into a compliance agreement.
Common Tax Collection Notices in Florida
If your return is not filed, the FL DOR will issue a Notice of Delinquency. If you owe additional tax due to an assessment or if you owe penalties due to filing late, the DOR will send a Notice of Amount Due.
Statute of Limitations on Tax Liabilities in Florida
The statute of limitations on Florida tax liabilities is five years from the latter of the date the tax is assessed or becomes delinquent. For example, if the FL DOR assesses a tax in 2021, the statute of limitations should expire in 2026. However, if you set up a payment plan and you default on it in 2022, the statute doesn't expire until five years from that date.
If a tax lien is imposed, it expires the latter of 20 years after the tax was assessed, the tax became delinquent, or a tax warrant was filed.
Get Help With Florida Back Taxes
Dealing with the FL DOR can be confusing and frustrating, and if you don't make arrangements with the agency, you risk losing your business license and being forced to shut your doors. Don't let Florida impede your ability to pay your taxes, and don't let the state tarnish your name through publication.
Instead, get help with your Florida back taxes today. At Tax Cure, we have a curated directory of tax professionals who have experience working with the FL DOR. To get help, reach out to a Florida tax pro today. Be sure to filter on the left by your unique tax problem and other factors that are important to you to find the best professional to help with your problem.
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Disclaimer: The content on this website is for educational purposes only. It does not serve as legal or tax advice. For specific help regarding your tax situation, contact a licensed tax professional or tax attorney.