No one wants a tax audit, but it’s especially burdensome if you’re a small business owner.
Small businesses usually don’t have teams of accountants or tax lawyers on staff to handle these things. Usually, the person tasked with gathering up the receipts and justifying each and every deduction is the same person who works the cash register and empties the trash – the owner of the business.
Tens of thousands of Florida small business owners are audited every year. There’s never a convenient time for a small business to get audited. Time spent collecting paperwork to satisfy the auditor’s demand for documentation is time the owner can’t focus on running the business, and in this era of labor shortages and supply chain disruptions, that’s time the owner can’t afford to lose.
That’s why Florida’s small business owners are concerned by a pair of bills snaking their way through the state legislature.
Senate Bill 1382 and House Bill 1041 would disable small business owners’ rights to challenge tax audits and double the potential fines.
Specifically, a taxpayer would not be able to present in court any additional tax records or evidence that they discover after the initial audit. On top of that, the bills would create the presumption that a small business owner deliberately withheld tax records if their filings are incomplete, triggering a 50% fine on top of any tax debt the Florida Department of Revenue had already estimated.
Basically, under these bills, if you make an honest mistake and overlook even a single document, the state will automatically assume you were trying to cheat the system and punish you by making you pay more.
That’s outrageous. It assumes you’re guilty without giving you a chance to prove your innocence. That’s patently unfair.
There are often valid disputes between legitimate small business owners and the Department of Revenue. They need to have the same kind of defenses available to them we would all expect in court.
Small business is the heart and soul of Florida’s economy. According to federal estimates, 99.8 percent of all businesses in the state are small businesses, and they employ 41 percent of Florida’s workforce. That’s why small business owners are urging their legislators to reject these bills.
Bill Herrle is the Florida executive director of the National Federation of Independent Business.
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