Florida Corporate Income Tax: Reporting of Federal Audit Adjustments

The Florida Corporate Income Tax (FCIT) uses the Internal Revenue Code to figure out how much tax a company owes. If the IRS looks at a company’s taxes and makes changes, the company has to file an amended FCIT return in Florida. There are time limits for when the Florida Department of Revenue can assess more tax or when a company can ask for a refund. These time limits are different when it comes to changes from an IRS audit. If the IRS makes changes to your federal income tax, you may have to file an amended Florida corporate income tax (FCIT) return within 60 days of the federal changes. If the changes result in higher taxable income, you’ll have to pay more FCIT plus interest. If the changes result in lower taxable income, you may be entitled to a refund. The Florida Department of Revenue (FDOR) may assess additional tax within five years after the amended return is filed, but only for the federal items that were adjusted. If you don’t file an amended return, the FDOR can assess additional tax at any time and may also assess a penalty for filing late. The statute of limitations for the Florida Corporate Income Tax (FCIT) is three years from the due date of the tax return. If an amended return is required, the FDOR can assess additional FCIT within five years of the amended return. However, any proposed assessment can only be for the deficiency resulting from the federal audit adjustments. If the assessment is based on other reasons, it’s unlikely to be upheld. If the IRS makes changes to a Florida taxpayer’s federal tax return, they may be able to get a refund on their Florida taxes. They have two years to file an amended return and claim the refund. For example, if the IRS allows the taxpayer to take more depreciation deductions, they can amend their Florida return and get a refund. However, if the taxpayer made a mistake in how they calculated their Florida taxes, they probably won’t be able to get a refund for that. If you owe taxes in Florida and want to get a refund, you have three years from when the right to the refund started to file a claim with the Florida Department of Revenue. If you have to file an amended tax return because of changes the IRS made, you have two years from when the amended return is due to get a refund for Florida taxes. However, if the IRS changed something like depreciation expenses, you might not get a refund for Florida taxes. In simpler terms, if a Florida company has made a mistake in its taxes, it can voluntarily tell the Florida Department of Revenue about the mistake and try to work out a deal to pay less in taxes. This can be done anonymously at first, and if the agreement is reached, the company then has to give its name. This program can also help the company if it has to make changes to its taxes because of a federal audit. It may be able to get a break on penalties for not filing the correct tax forms. If a Florida taxpayer is audited by the IRS, they may need to file amended tax returns for the state of Florida. They should consider using a program to voluntarily report any changes found in the audit. If they’re owed a refund, they need to make sure to file for it within 60 days. Interest on tax refunds in Florida does not start until 90 days after the refund application is complete. The additional FCIT is calculated by multiplying the amount by the apportionment factor and then by the tax rate. There may be challenges in understanding certain tax laws, and filing an amended FCIT return late can result in penalties. For this example, the Florida sales factor cannot be adjusted to include interest income for a Florida taxpayer that is not a financial organization. Interest income is usually excluded from the Florida sales factor for nonfinancial organizations. However, if the taxpayer was a financial organization, the factor may be adjusted to include the interest. The statute of limitations for assessments in Florida is extended by one year with the issuance of an audit notice by the FDOR. There is some uncertainty about the scope of adjustments for assessments and refunds, and taxpayers can challenge assessments through informal protests or formal actions in court. Payments of estimated tax are deemed to be paid when the return is required to be filed, and voluntary self-disclosure can create a presumption of reasonable cause for compromise of penalties. A Florida taxpayer can’t participate in a tax program if they collected but didn’t give the tax money to the state. The article is from the Tax Law Section of The Florida Bar and doesn’t give specific advice. It’s from Deloitte Development LLC and is copyrighted.

Source: https://www.floridabar.org/the-florida-bar-journal/florida-corporate-income-tax-reporting-of-federal-audit-adjustments/