12-13.005. Grounds for Finding Doubt as to Liability

(1) The Executive Director or the Executive Director’s designee, as enumerated in Rule 12-13.004, F.A.C., shall make a determination whether there is doubt as to liability for tax or interest based on all the facts and circumstances of the specific case. Doubt as to liability is indicated when there is reasonable doubt whether an action is required in view of conflicting rulings, decisions, or ambiguities in the law, and the taxpayer has exercised ordinary care and prudence in attempting to comply with the revenue laws of this state.

(2) Reasonable reliance upon the express terms of a written determination by the Department is one basis for doubt as to liability.

(a) For purposes of establishing doubt as to liability, a “written determination” shall be deemed issued by the Department under the following circumstances:

1. Audit workpapers from a prior audit of the same taxpayer clearly show that the same issue was considered in the course of the audit and that, after such consideration, the Department’s auditor determined that no assessment was appropriate in regard to that issue. Audit workpapers that fail to assess tax based on a particular issue are not a written determination in regard to that issue unless those workpapers clearly demonstrate that the auditor was aware of the issue and determined that no assessment was appropriate in regard to that issue. Failure by an auditor to recognize an issue and assess tax in the audit workpapers is not a basis for doubt as to liability based on a written determination by the Department.

a. Audit workpapers include all correspondence, notices, file memoranda, schedules, exhibits, or other documents an auditor generates, receives from the taxpayer, or reviews in the course of conducting an audit.

b. If an auditor submits a request for technical advice and an internal technical advisement is issued in response to that request, the internal technical advisement is part of the audit workpapers and will be considered a written determination of the Department as to that issue.

c. A written communication from the auditor to the taxpayer in the course of the audit that discusses an issue upon which no assessment is made will demonstrate that the issue was considered by the auditor.

d. If an auditor issues a notice of intent to make audit changes that includes an assessment on an issue and subsequently issues a revised notice of intent to make audit changes that removes the assessment on that issue, that revision and any written explanation the auditor prepares in regard to that revision establishes that the auditor determined that the taxpayer was not subject to assessment as to that issue.

e. Correspondence from the taxpayer to the auditor that discusses an issue upon which no assessment is made will demonstrate that the issue was considered by the auditor if the requirements of this sub-subparagraph are met. There must be documentation of the auditor’s receipt of the correspondence, such as the auditor’s signature on a receipt or a copy of the correspondence, if it is hand delivered, or a return receipt for registered or certified mail. Correspondence from the taxpayer will establish that the auditor considered an issue only if such correspondence is dated sufficiently prior to the auditor’s issuance of a notice of intent to make audit changes or a revised notice of intent to make audit changes to permit the auditor to investigate the issue and make a determination prior to issuing the notice. Correspondence from a taxpayer calling an issue to the auditor’s attention will not have the effect of establishing that the auditor considered the issue if that correspondence is delivered to the auditor after the auditor has substantially completed the auditor’s review of the taxpayer’s books and records, unless the taxpayer agrees to a reasonable extension of the time in which the auditor must complete the audit under the applicable statute of limitations.

2. A final notice of decision or notice of reconsideration withdrawing an assessment on the same issue during an informal protest of a proposed assessment in a prior audit of the same taxpayer was issued by the Department. Correspondence from the Department in which an issue is discussed prior to issuance of a final notice or any offer to compromise the assessment in lieu of or in conjunction with the issuance of a notice of decision or notice of reconsideration is not a written determination on the issue for purposes of establishing doubt as to liability. This subparagraph applies only to a notice of decision or a notice of reconsideration that resolves the issue in favor of the taxpayer based on a determination that the assessment was not supported by the governing legal authorities.

3. A technical assistance advisement was issued to the same taxpayer pursuant to Section 213.22, F.S., in regard to the same issue. For purposes of this paragraph, a technical assistance advisement issued to an industry association as the representative of its members in accordance with rule Chapter 12-11, F.A.C., will be considered a written determination as to any taxpayer that was a member of the association at the time the taxpayer reasonably relied upon the advisement.

(b) Only audit workpapers, notices of decision or reconsideration, and technical assistance advisements described in paragraph (a) are written determinations of the Department for purposes of Section 213.21(3), F.S. Audit workpapers, notices of decision or reconsideration, and technical assistance advisements are written determinations only as to the specific taxpayer or taxpayers to whom they were issued. For this purpose, if a taxpayer has multiple locations, the taxpayer may rely on a written determination issued as to any of the taxpayer’s locations for purposes of the taxpayer’s other locations so long as it is otherwise reasonable to do so under the criteria set forth in paragraph (c).

(c) A taxpayer must demonstrate that reliance on a written determination was reasonable. This requires that the taxpayer fully disclosed all material facts and did not misrepresent any material facts when the Department was considering the issue for purposes of issuing the written determination. Reliance on a written determination is reasonable only so long as the taxpayer continues to operate in accordance with the material facts upon which the written determination was based. Reliance by an industry association member on a technical assistance advisement issued to the association as the representative of its members is reasonable only when that member’s facts and circumstances conform in all material respects with the facts and circumstances upon which the technical assistance advisement to the industry association was based. If specific facts and circumstances change in a material manner, reliance on the written determination is no longer reasonable. Reliance on a written determination is not reasonable if the law applicable to an issue has changed so that the legal analysis on which the written determination was based is no longer valid. This would be the case if governing statutes or regulations have been materially revised or if a court of competent jurisdiction has published a final decision overruling the Department’s determination. Reliance is not reasonable if the Department notifies the taxpayer in writing that the previous written determination is no longer correct and should not be relied upon after the date of such notification.

Rulemaking Authority 213.06(1), 213.21(5) FS. Law Implemented 213.05, 213.21, 213.22 FS. History–New 5-23-89, Amended 8-10-92, 5-18-94, 10-2-01, 3-25-20.