If you own a business in Palm Beach County and a letter from the Florida Department of Revenue lands on your desk, a Florida sales tax audit in Delray Beach may be about to begin. These reviews can reach back three years, and the state does not have to prove you did anything wrong to open one. The reassuring part is that a sales tax audit is a civil process, and how you prepare changes the result. As a Florida tax attorney in Delray Beach, Levy & Associates helps local owners respond to Florida DOR audit notices, protect their records, and push back on inflated assessments. Here is what every Delray Beach business owner should understand before the auditor arrives.
A sales tax audit is the Florida Department of Revenue’s review of whether your business collected, reported, and paid the right amount of sales tax. Florida charges a 6% state sales tax, plus a local discretionary surtax that varies by county. Businesses act as collection agents for the state. You collect tax from customers, hold it, and send it to the DOR. An audit checks that the money you collected matches the money you paid in. It also checks whether you owed use tax on items you bought without paying tax at purchase. Most Florida sales tax audits are civil matters about dollars and records, not accusations of a crime.
Selection is not always about suspicion. The DOR flags returns for many reasons. Common triggers include a gap between your reported sales and the figures on your federal return, a history of late or amended filings, large exempt or resale sales, and industry patterns the state watches closely. Cash-heavy businesses such as restaurants, bars, salons, and convenience stores draw extra attention. So do businesses that sell both taxable and exempt goods. The Delray Beach and wider Palm Beach County corridor has a dense mix of retail, hospitality, and service businesses, which keeps auditors busy. Sometimes a competitor complaint or another company’s audit pulls you in. You may never learn the exact reason, and you do not need to to defend yourself well.
Most audits start with a phone call to confirm your business is open, followed by Form DR-840, the Notice of Intent to Audit Books and Records. This notice lists the audit period, the taxes under review, and the records the auditor wants. By law, the Department must wait 60 days after issuing the DR-840 before it begins reviewing your records, unless you agree to start sooner. Do not waive that window. Use it. Those 60 days are your best chance to organize records, find gaps, and bring in audit defense before the auditor forms an opinion. A limited review may instead arrive on Form DR-846. Either way, how you handle the first two weeks often shapes the entire audit.
Two different clocks matter here, and they are easy to confuse. For assessment, the DOR generally has three years from the date a return was filed to audit it and issue a bill. For collection, the state generally has five years to collect a liability once it has been assessed. There are important exceptions. If you never filed a return for a period, there is no time limit at all, and the DOR can go back as far as it likes. A substantially false or fraudulent return also removes the three-year protection. Filing a DR-840 pauses, or tolls, the assessment clock for up to one year so the state can finish its work. If an auditor asks you to sign Form DR-872 to extend the deadline, read it carefully before you agree, because you are giving the state more time.
For decades, Florida was the only state that taxed commercial rent. That changed. Under House Bill 7031, the sales tax on commercial real property rentals was fully repealed as of October 1, 2025, including the state rate and county surtaxes. Rent for offices, retail space, and warehouses for periods beginning on or after that date is no longer taxable. This matters for audits in two ways. Going forward, commercial rent is off the table. But periods before October 1, 2025, are still taxable and still auditable, and the three-year lookback means rent-tax questions will keep surfacing in audits for years. Some rentals stay taxable under separate rules, including short-term stays under six months, parking, and self-storage.
Consider a Delray Beach restaurant owner we will call Maria. She receives a DR-840 covering the last three years, and the auditor requests sales records, bank statements, and exemption certificates. Maria’s point-of-sale reports do not match her bank deposits because catering income ran through a second account she forgot to mention. Left unexplained, that gap could let the auditor estimate extra tax straight from bank deposits, which usually inflates the bill. Once the second account is documented and reconciled, the estimate falls away, and the review narrows to a handful of missing resale certificates. Preparation turned a large estimated assessment into a manageable one. This example is illustrative only, and prior results do not guarantee a similar outcome.
When the auditor finishes, you receive a preliminary report, often Form DR-1215, the Notice of Intent to Make Audit Changes. This is your chance to respond before anything becomes final. If issues remain, the Department issues a Notice of Proposed Assessment, or NOPA. You generally have 60 days to protest a NOPA. Options include an informal protest, a request for a Technical Assistance Advisement, an administrative hearing, and, if needed, litigation. Penalties can sometimes be reduced for reasonable cause, even when the underlying tax is not in dispute. Skilled tax audit representation can be the difference between an estimate and a fair number. Miss the 60-day deadline, though, and the assessment can become final, so the calendar matters as much as the argument.
Levy & Associates has represented business owners since the 1960s, with a Delray Beach office on South Federal Highway. Our team includes licensed attorneys, CPAs, Enrolled Agents, and former IRS Revenue Officers who have sat on the government side of these cases. We help you respond to the DR-840, organize and reconstruct records, manage every conversation with the auditor, and challenge estimates that do not reflect reality. We handle civil tax matters only. Levy & Associates does not represent clients in criminal tax matters. If an audit ever showed signs of turning criminal, we would tell you plainly and help you find the right counsel.
If you have received a Florida DOR audit notice, the team at Levy & Associates is ready to help. Our attorneys, CPAs, and former IRS Revenue Officers understand exactly how a sales tax audit works because many of us worked on the government side of these cases. Call us at (248) 557-4048 or contact us online for a free consultation.
Most audits run three to nine months, though complex cases take longer. Timing depends on your business size, the quality of your records, and whether the auditor relies on sampling or estimates. Responding quickly and completely tends to shorten the process.
Yes. The Department can audit a business even after it shuts down, especially if it believes tax was collected but never paid in. The same statute of limitations rules apply, and any period with no return filed carries no time limit at all.
Not in the same form. Florida has no formal Offer in Compromise program like the federal one. The DOR can still compromise tax, penalties, or interest in specific situations, such as genuine doubt about the liability or your ability to pay. A professional can tell you whether your facts fit.
Not before someone reviews it. Auditor estimates are often high, and many assessments shrink once records are organized and errors are corrected. You generally have 60 days to protest a proposed assessment, so get advice before that window closes.
Almost always no. Most Florida sales tax audits are civil disputes about tax, penalties, and interest. They can escalate only if the state finds evidence of intentional fraud. Levy & Associates handles civil matters only and does not represent clients in criminal tax cases.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.