Fla. Admin. Code Ann. R. 12-3.0012 - Definitions

The following terms apply to the Department's administration of the programs delegated to it by statute. These terms shall have the meaning given to them in this section, except where the context clearly indicates a different meaning.

(1)

(a) The phrase "commence an audit" means when, subsequent to the issuance of a Notification of Intent to Conduct an Audit (DR-840) or similar notification, the Department performs an audit entrance interview.

(b) The phrase "audit entrance interview" means when any one of the following actions first occurs:

1. When the Department contacts the taxpayer to explain and discuss the specific audit plan or to discuss the nature of the taxpayer's business operations; or

2. When the Department requests that specific books, records, documents, or other information be compiled, provided, or made available to the Department, other than the books, records, documents, or other information which were requested in the attachment to the DR-840; or

3. When the Department begins reviewing the accounts, books, or records of the taxpayer.

(2) The term "department" or "agency" means the Florida Department of Revenue, as established by Section 20.21, F.S.

(3) "Adequate records" means books, accounts, and other records sufficient to permit a reliable determination of a tax deficiency or overpayment. Incomplete records can be determined to be adequate.

(a) To be sufficient to make a reliable determination, adequate records, including supporting documentation, must be:

1. Accurate, that is, the records must be free from material error;

2. Inclusive, that is, the records must capture transactions that are needed to determine a tax deficiency or overpayment;

3. Authentic, that is, the records must be worthy of acceptance as based on fact; and,

4. Systematic, that is, the records must organize transactions in an orderly manner.

(b) The nature of the taxpayer's business, the nature of the industry, materiality, third-party confirmations and other corroborating evidence such as related supporting documentation, and the audit methods that are suitable for use in the audit, will be used to establish that the taxpayer has adequate records.

(c) Nothing herein is intended to render any portion of Part II, rule Chapter 12-24, F.A.C., inapplicable but rather this subsection prescribes a standard of adequacy of records for purposes of determining a tax deficiency or overpayment by the Department.

(d) Section 212.12(6)(b), F.S., does not allow the Department to use a sample to project an overpayment when the records are inadequate.

(4) "Voluminous records" means records maintained by the taxpayer that are so numerous and extensive that their provision by the taxpayer and review by the Department would not be practical under the circumstances of the time, space, and other logistical constraints of the taxpayer and the Department.

Notes

Fla. Admin. Code Ann. R. 12-3.0012

Rulemaking Authority 212.12(6), 213.06(1) FS. Law Implemented 212.12(6), 213.345, 213.35 FS.

New 4-2-00, Amended 10-1-03.

New 4-2-00, Amended 10-1-03.