Hot Tips for Florida Sales and Use Tax Audits in the Food & Beverage Industry
By Mary Jo Dolson, Partner, Tax & Business Services
As states continue to be aggressive when it comes to sales and use tax audits, Marcum wanted to share some issues and concerns we have experienced on some recent sales tax audits that we were involved with for clients. Marcum is definitely seeing an uptick in the number of sales and use tax audits that we have been managing for clients across all industries, not just the food and beverage industry.
A couple of the items we would like to share are the following:
- Grub Hub, Doordash, or other similar third-party vendors are required to remit the sales tax they have collected from these transactions directly to the different states, Florida included. When these online services directly remit sales tax collected from your food, beverage, or lodging customers to the Florida DOR, the funds are not credited to your sales and use tax account and do not appear in the database used by auditors. This means that the DOR may not recognize the sales and tax amounts remitted by these online services during the audit process.
As a result, Florida may attempt to issue an assessment for sales tax on the sales made through third parties to the restaurant. If Florida does not take into account this sales tax, businesses could be assessed sales tax that is not due. Marcum has encountered this issue with audits we have assisted clients with and was able to fight the assessment by reconciling the amount of proper sales tax owed and reported by the client.
- We have also had several audits where the state of Florida is comparing sales reported by credit card processors on a 1099K (amount of credit card sales processed by the company) to a business and questioning why the amounts do not tie. Marcum again was able to reconcile sales reported on the sales tax return to the client POS system and provide support for why the sales tax returns do not tie to the 1099Ks the client received.
It is essential to keep in mind that it is not only Florida that is aggressively approaching sales tax audits to determine if there is any unreported sales tax that is due to the state. When faced with a state sale and use tax audit, it is important to reach out to a state and local tax professional for assistance in dealing with the state auditor.