The purpose of the proposed changes to Rule Chapter 12-13, F.A.C. (Compromise and Settlement), is to: (1) update provisions for administering the Department’s authority to compromise or settle outstanding liabilities for tax, penalty, interest, and ...

 

DEPARTMENT OF REVENUE

RULE NOS.:RULE TITLES:

12-13.001Scope of Rules

12-13.003Request for Settlement or Compromise

12-13.004Delegation of Authority to Determine Settlements or Compromises

12-13.0063Grounds for Finding Department Delay in the Determination of an Amount Due

12-13.0064Relief for Inadvertent Sales and Use Tax Registration Errors

12-13.007Grounds for Reasonable Cause for Compromise of Penalties

12-13.0075Guidelines for Determining Amount of Compromise

12-13.008Procedures for Compromise and Settlement of Taxes, Interest, and Penalties

12-13.009Closing Agreements

12-13.010Special Provisions Applicable to Compromise of Estate Taxes

PURPOSE AND EFFECT: The purpose of the proposed changes to Rule Chapter 12-13, F.A.C. (Compromise and Settlement), is to: (1) update provisions for administering the Department’s authority to compromise or settle outstanding liabilities for tax, penalty, interest, and service fees granted in Sections 212.07(9), 212.12(14), 213.21, 213.24(3), and 215.34(2), F.S.; (2) remove the requirement that a taxpayer’s written request be required for the Department to settle or compromise such outstanding liabilities; and (3) remove unnecessary or redundant provisions.

SUMMARY: The proposed amendments to Rule 12-13.001, F.A.C. (Scope of Rules), provide that the rule chapter, as amended, includes provisions for the settlement or compromise of outstanding liabilities for tax, penalty, interest, and service fees, as provided in Sections 212.07(9), 212.12(14), 213.21, 213.24(3), and 215.34(2), F.S.

The proposed repeal of Rule 12-13.003, F.A.C. (Request for Settlement or Compromise), remove provisions regarding a taxpayer’s request for settlement or compromise that are redundant of Rule 12-13.008, F.A.C. (Procedures for Compromise and Settlement of Taxes, Interest, and Penalties), as amended, and remove unnecessary provisions regarding requests for settlement or compromise that are not submitted to the Department in writing.

The proposed amendments to Rule 12-13.004, F.A.C. (Delegation of Authority to Determine Settlements or Compromises), provide that delegations of authority authorized pursuant to Section 213.21, F.S., by the Executive Director of the Department to settle or compromise a taxpayer’s assessment will be in writing, signed by the Executive Director, and maintained by the agency clerk in the Office of the General Counsel.

The creation of Rule 12-13.0063 (Grounds for Finding Department Delay in the Determination of an Amount Due), includes the provisions of Section 213.21(3)(a), F.S., and provide when the Department will compromise interest to the extent that the delay in determining an amout due is attributable to the action or inaction of the Department.

The creation of Rule 12-13.0064 (Relief for Inadvertent Sales and Use Tax Registration Errors), provides, consistent with the provisions of Section 212.07(9), F.S., when a vendor or purchaser qualifies to pay a mandatory penalty instead of the taxes, penalties, and interest that would otherwise be due on transactions for which the purchaser did not pay tax to the vendor. The failure to pay the tax to the vendor must be based on a good faith belief that the transaction was a tax-exempt purchase for resale or was a tax-exempt purchase by a tax-exempt organization.

The proposed amendments to Rule 12-13.007, F.A.C. (Grounds for Reasonable Cause for Compromise of Penalties), remove: (1) a reference rendered obsolete by the proposed amendments to Rule 12-13.004, F.A.C.; and (2) requirements for taxpayers to submit the facts and circumstances of the exercise of ordinary care and prudence to the Department in writing, allowing the Department to document the facts and circumstances of the exercise of ordinary care and prudence by the taxpayer in the Department’s records.

The proposed amendments to Rule 12-13.0075, F.A.C. (Guidelines for Determining Amount of Compromise): (1) provide when the Department is authorized under Section 213.21(10), F.S., to compromise sales tax penalties for failure to file a complete and accurate return, or for failure to timely pay the tax due on a return, when the taxpayer has one noncompliant filing event in the preceding 12-month period; (2) provide when the Department is authorized under Section 213.21(9), F.S., to settle or compromise any penalty imposed under Section 212.12, F.S., for failure to collect based on a good faith belief that the tax, surtax, or surcharge was not due; (3) provide when a dealer will not be held liable for tax, penalty, or interest under Section 212.12(14), F.S., when the dealer failed to apply the appropriate tax bracket system when collecting sales tax; (4) provide when the administrative collection processing fee imposed under Section 213.24(3), F.S., may be waived due to extraordinary circumstances; (5) provide when the service fee for returned payments imposed by Section 215.34(2), F.S., will be compromised for unintentional errors by the taxpayer, the financial institution, or the Department; (7) clarify that the Department will compromise all penalties when payment of delinquent tax and interest results from voluntary, written self-disclosure; and (8) remove provisions redundant of Rule 12-13.007(9), F.A.C.

The proposed amendments to Rule 12-13.008, F.A.C. (Procedures for Compromise and Settlement of Taxes, Interest, and Penalties), provide that a taxpayer will only be required to submit a written request for compromise or settlement of outstanding liabilities for tax, penalty, interest, or service fees when: (1) the request to settle or compromise is for an amount greater than $30,000; (2) the complexity of the issues involved requires that the taxpayer submit a written request to explain the issues; or, (3) the taxpayer asks to submit the request in writing. Department employees authorized to settle or compromise such outstanding liabilities continue to be required to document the facts and circumstances of the settlement or compromise in the Department’s records.

The proposed amendments to Rule 12-13.009, F.A.C. (Closing Agreements): (1) remove provisions regarding the delegation of authority by the Executive Director of the Department that are unnecessary; and (2) remove the incorporation, by reference, of Form DR-812, Closing Agreement, which does not meet the definition of a “rule,” as provided in Section 120.52(16), F.S., and is not required to be adopted as a rule.

The proposed amendments to Rule 12-13.010, F.A.C. (Special Provisions Applicable to Compromise of Estate Taxes), remove provisions regarding the delegation of authority by the Executive Director of the Department that are unnecessary.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: 1) no requirement for the Statement of Economic Regulatory Costs (SERC) was triggered under Section 120.541(1), F.S.; and 2) based on past experiences the updates to procedural rules regarding the compromise or settlement of outstanding liabilities for tax, penalty, interest, or service fees, and rules of this nature, the adverse impact or regulatory cost, if any, do not exceed nor would exceed any one of the economic analysis criteria in a SERC, as set forth in Section 120.541(2)(a), F.S.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 212.07(9)(c), 213.06(1), 213.21(5), (9) FS.

LAW IMPLEMENTED: 212.07(9), 212.12(14), 213.05, 213.015(18), (20), 213.21, 213.24(3), 215.34(2) FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW(IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):

DATE AND TIME: July 31, 2013, 10:00 a.m.

PLACE: 2450 Shumard Oak Boulevard, Building One, Room 1220, Tallahassee, Florida

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Tammy Miller at [phone]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Janet Young, Tax Law Specialist, Technical Assistance and Dispute Resolution, Department of Revenue, P. O. Box 7443, Tallahassee, Florida 32314-7443, telephone [phone]

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

12-13.001 Scope of Rules.

The rules set forth in this chapter shall be used by the Executive Director or the Executive Director’s designee, as set forth hereinafter, in the exercise of the authority to settle and compromise liability for tax, interest, and penalty, and service fees granted by Sections 212.07(9), 212.12(14), Section 213.21, 213.24(3), and 215.34(2), F.S. However, special provisions applicable to settlement and compromise of estate taxes, interest, and penalty imposed pursuant to Chapter 198, F.S., are set forth in Rule 12-13.010, F.A.C.

Rulemaking Authority 212.07(9)(c), 213.06(1), 213.21(5), (9) FS. Law Implemented 212.07(9), 212.12(14), 213.05, 213.21, 213.24(3), 215.34(2) FS. History–New 5-23-89, Amended 8-10-92, 10-2-01,_________ .

 

12-13.003 Request for Settlement or Compromise.

Rulemaking Authority 20.05(5), 213.06(1), 213.21(5) FS. Law Implemented 213.05, 213.21(2)(a), (3), (5) FS. History–New 5-23-89, Amended 8-10-92, 11-15-94, 10-2-01, Repealed________ .

 

12-13.004 Delegation of Authority to Determine Settlements or Compromises.

(1)(a) Authority to settle and compromise tax, interest, and penalty liabilities, and requests for refunds has, in addition to the statutory authorization in Section 213.21, F.S., been delegated to the Executive Director of the Department by the Governor and Cabinet as the head of the Department, pursuant to Rule 12-3.007, F.A.C.

(b) The Executive Director is authorized to settle and compromise tax, interest, and penalty, and refund requests in all matters in litigation, including litigation pursuant to Section 72.011, F.S.

(c) In all other instances, the Executive Director is authorized to settle and compromise tax, interest, and penalty, and refund requests where the amount of tax compromised is $250,000 or less. Any tax compromise of more than $250,000, excepting only those cases in litigation or those cases in which a taxpayer has reasonably relied on a written determination issued by the Department, must be approved by the Governor and Cabinet, as the head of the Department.

(2) Cases in Litigation.

(a) Authority is delegated to the Deputy Executive Directors, the General Counsel, and the Deputy General Counsel of the Department to settle and compromise tax, interest, or penalty in cases where a tax matter is in litigation pursuant to Section 72.011, F.S.

(b) Authority is delegated to any Assistant General Counsel to settle and compromise tax or interest of $62,500 or less and penalty of $125,000 or less.

(3) Cases in Protest. In cases involving a tax matter in protest, authority to settle and compromise is delegated as follows:

(a) For compromise of amounts of tax of $250,000 or less, and compromise of interest and penalty in any amount, to the Deputy Executive Directors, the General Counsel, and the Deputy General Counsel.

(b) For compromise of amounts of tax or interest of $62,500 each or less and of penalty of $250,000 or less to any Assistant General Counsel.

(c) For compromise of the following amounts of tax, interest, or penalty to the Office of Technical Assistance and Dispute Resolution and the General Tax Administration Program:

Positions	Tax	Interest	Penalty
Technical Assistance and Dispute Resolution
Director	$125,000	$125,000	Any Amount
Deputy Director	$125,000	$125,000	Any Amount
Revenue Program Administrators I and II	$ 62,500	$ 62,500	$250,000
Senior Attorneys	$ 12,500	$ 12,500	$ 75,000
Attorneys	$ 12,500	$ 12,500	$ 75,000
Tax Law Specialists	$ 12,500	$ 12,500	$ 75,000
Senior Tax Specialists	$ 12,500	$ 12,500	$ 75,000
General Tax Administration Program
Program Director	$125,000	$125,000	Any Amount
Deputy Program Director	$125,000	$125,000	Any Amount
Regional Managers	$ 62,500	$ 62,500	$250,000
Service Center Managers	$ 1,250	$ 1,250	$ 75,000
Tax Audit Supervisors	-0-	-0-	$ 37,500
Tax Specialists	-0-	-0-	$ 3,750
Revenue Specialist	-0-	-0-	$ 3,750
Taxpayer Services Process
Process Manager	$ 62,500	$ 62,500	$250,000
Revenue Program Administrators	$ 2,500	$ 2,500	$ 75,000
Tax Specialist Administrators	$ 2,500	$ 2,500	$ 75,000
Revenue Administrators	$ 2,500	$ 2,500	$ 75,000
Revenue Managers	$ 1,250	$ 1,250	$ 12,500
Compliance Support Process
Process Manager	$ 62,500	$ 62,500	$250,000
Revenue Program Administrators	$ 12,500	$ 12,500	$ 75,000
Tax Law Specialists	$ 12,500	$ 12,500	$ 75,000
Senior Tax Specialists	$ 12,500	$ 12,500	$ 75,000
Government Analysts II	$ 12,500	$ 12,500	$ 75,000

(4) Collection Cases. In cases involving a tax matter related to billings or assessments that have been referred for collection, authority to settle and compromise is delegated as follows:

(a) For compromise of amounts of tax of $250,000 or less, and compromise of interest and penalty in any amount, to the Deputy Executive Directors, the General Counsel, and the Deputy General Counsel.

(b) For compromise of amounts of tax or interest of $25,000 each or less and penalty of $62,500 or less, to any Assistant General Counsel.

(c) For compromise of the following amounts of tax, interest, or penalty to the General Tax Administration Program:

Positions	Tax	Interest	Penalty
General Tax Administration Program
Program Director	$125,000	$125,000	Any Amount
Deputy Program Director	$125,000	$125,000	Any Amount
Regional Managers	$ 62,500	$ 62,500	$250,000
Service Center Managers	$ 1,250	$ 1,250	$ 75,000
Revenue Administrators	$ 1,250	$ 1,250	$ 12,500
Tax Specialists	$ 1,250	$ 1,250	$ 12,500
Tax Audit Supervisors	-0-	-0-	$ 37,500
Revenue Specialists	-0-	-0-	$ 3,750
Taxpayer Services Process
Process Manager	$ 62,500	$ 62,500	$250,000
Revenue Program Administrators	$ 2,500	$ 2,500	$ 75,000
Revenue Administrators	$ 2,500	$ 2,500	$ 75,000
Tax Specialist Administrators	$ 2,500	$ 2,500	$ 75,000
Revenue Managers	$ 1,250	$ 1,250	$ 12,500
Tax Specialists	-0-	-0-	$ 12,500
Revenue Specialists	-0-	-0-	$ 3,750
Compliance Support Process
Process Manager	$ 62,500	$ 62,500	$250,000
Revenue Program Administrators	$ 12,500	$ 12,500	$ 75,000
Returns and Revenue Process
Process Manager	$ 62,500	$ 62,500	$250,000
Tax Specialist Administrators	$ 2,500	$ 2,500	$ 75,000
Revenue Manager	$ 1,250	$ 1,250	$ 12,500
Revenue Specialists	-0-	-0-	$ 3,750

(5) Audit Cases. In cases involving an audit of the taxpayer, or an audit conducted pursuant to a refund request, prior to initiation of litigation pursuant to Section 72.011, F.S., or expiration of the period for initiating same, or upon initial receipt of a protest involving penalty issues only, authority to settle and compromise is delegated as follows:

(a) For compromise of amounts of tax of $250,000 or less, and compromise of interest or penalty in any amount, to the Deputy Executive Directors, the General Counsel, and the Deputy General Counsel.

(b) For compromise of amounts of tax or interest of $125,000 each or less and penalty in any amount, to the Program Director and Deputy Program Director in the General Tax Administration Program.

(c) For compromise of the following amounts of tax, interest, or penalty to the General Tax Administration Program:

Positions	Tax	Interest	Penalty
General Tax Administration Program
Program Director	$125,000	$125,000	Any Amount
Deputy Program Director	$125,000	$125,000	Any Amount
Regional Managers	$ 62,500	$ 62,500	$250,000
Service Center Managers	$ 1,250	$ 1,250	$ 75,000
Senior Tax Audit Administrators	$ 1,250	$ 1,250	$ 75,000
Revenue Administrators	$ 1,250	$ 1,250	$ 12,500
Tax Audit Supervisors	-0-	-0-	$ 37,500
Tax Specialists	-0-	-0-	$ 3,750
Revenue Specialist	-0-	-0-	$ 3,750
Taxpayer Services Process
Process Manager	$ 62,500	$ 62,500	$250,000
Compliance Support Process
Process Manager	$ 62,500	$ 62,500	$250,000
Revenue Program Administrators	$ 12,500	$ 12,500	$ 75,000
Tax Law Specialists	$ 1,250	$ 1,250	$ 37,500
Senior Tax Specialists	$ 1,250	$ 1,250	$ 37,500
Government Analysts II	$ 1,250	$ 1,250	$ 37,500

(6) Refund Cases. In cases involving refund requests that have not been referred for audit, prior to initiation of litigation pursuant to Section 72.011, F.S., or prior to expiration of the period for initiating same, authority to settle and compromise is delegated as follows to the Office of General Counsel and to the General Tax Administration Program:

Positions	Tax	Interest	Penalty
Office of General Counsel
General Counsel	$250,000	Any Amount	Any Amount
Deputy General Counsel	$250,000	Any Amount	Any Amount
General Tax Administration Program
Program Director	-0-	-0-	Any Amount
Deputy Program Director	-0-	-0-	Any Amount
Refunds and Revenue Distribution Process
Process Manager	-0-	-0-	$100,000
Senior Tax Audit Administrator	-0-	-0-	$ 30,000
Tax Audit Supervisors	-0-	-0-	$ 5,000

 

(7) In all other circumstances not previously described in this rule, authority to settle and compromise tax in amounts of $250,000 or less and interest and penalty in any amount is delegated to the Deputy Executive Directors, the General Counsel, and the Deputy General Counsel.

(2)(8)(a) When the Executive Director delegates authority to settle and compromise to specific employees or positions, as authorized by Section 213.21, F.S., that are not provided in this rule, the delegation will be in writing, signed by the Executive executive Director., and will be on a temporary basis pursuant to the following circumstances:

1. The issue assigned to the employee exceeds the monetary amount the employee is currently authorized to settle or compromise pursuant to this rule; or

2. The employee has assumed the duties of another employee who has authority, or a higher authority, to settle or compromise tax, interest, and penalty, and refund requests.

(b) A temporary delegation of authority to any employee or position will be for a specified time period of no more than 2 years.

(c) Such delegations cannot grant authority to compromise tax in excess of $250,000.

(d) Copies of written delegations of authority are maintained on file with the agency clerk in the Office of General Counsel.

Rulemaking Authority 213.06(1), 213.21(5) FS. Law Implemented 213.05, 213.21 FS. History–New 5-23-89, Amended 8-10-92, 10-24-96, 10-2-01, 10-4-04, 9-13-10,________ .

 

12-13.0063 Grounds for Finding Department Delay in the Determination of an Amount Due.

(1)(a) A taxpayer’s liability for interest associated in any of the chapters specified in Section 72.011 (1), F.S., will be settled or compromised, in whole or in part, to the extent that the Department finds that the delay in the determination of an amount due is attributable to the action or inaction of the Department.

(b) Only the portion of interest due that is attributable to the Department’s delay will be compromised. The compromises of interest will be made by the Executive Director or the Executive Director’s designee, in accordance with Rule 12-13.004, F.A.C., upon a determination that sufficient grounds exist to support a compromise or settlement.

(2) The compromise authority under this rule only arises if the Department has initiated an audit or inquiry documented in writing, and only to the interest that accrues if there is undue delay by the Department in pursuing the audit or inquiry. The taxpayer is not entitled to a compromise of interest based on the fact that the Department did not initiate an audit or inquiry at an earlier date.

(3) This provision does not apply when the delay is attributable to action or inaction on the part of the taxpayer such as:

(a) Failure to produce adequate records;

(b) Requests for extensions of time for the convenience of the taxpayer; or

(c) Failure to timely respond to the Department’s requests for information.

Rulemaking Authority 213.06(1), 213.21(5) FS. Law Implemented 213.05, 213.015(18), 213.21(3)(a) F.S. History–New________.

 

12-13.0064 Relief for Inadvertent Sales and Use Tax Registration Errors.

(1) A vendor or purchaser will not be held liable for the tax, interest, or penalty that would otherwise be due when:

(a) The purchaser did not pay to the vendor tax due on a taxable transaction based on a good faith belief that the transaction was a nontaxable purchase for resale or the transaction was exempt as a purchase by a tax-exempt organization; and,

(b) Instead of the taxes, penalties, and interest that would otherwise be due, the purchaser pays the mandatory penalties.

(2) To qualify, the purchaser must meet all of the following conditions:

(a) At the time of purchase, the purchaser was not registered as a dealer or did not hold a valid Florida Consumer’s Certificate of Exemption issued by the Department;

(b) At the time of purchase, the purchaser was qualified to be registered with the Department as a dealer or was entitled to obtain a Florida Consumer’s Certificate of Exemption;

(c) Before requesting application of the provisions of this subsection, the purchaser has registered as a dealer or has obtained a valid Florida Consumer’s Certificate of Exemption;

(d) The transaction would otherwise qualify as a tax-exempt sale to the purchaser for resale or as a tax-exempt sale to an organization holding a valid Florida Consumer’s Certificate of Exemption, except that the purchaser was not registered as a dealer or did not hold a valid Florida Consumer’s Certificate of Exemption at the time of purchase; and

(e) The purchaser establishes justifiable cause for failure to register as a dealer or to obtain a Florida Consumer’s Certificate of Exemption before making the purchase.

(3) The establishment of justifiable cause is demonstrated by such factors as:

(a) The complexity of the transaction;

(b) The purchaser’s business experience and history;

(c) Whether the purchaser sought advice on its tax obligations, and whether the advice was followed; or,

(d) Any remedial action taken by the purchaser.

(4) The purchaser or vendor must apply for relief:

1. Before the Department has initiated an audit or other action or inquiry; or

2. If any audit or other action or inquiry has been initiated, within seven days after being informed in writing by the Department that the purchaser was required to be registered with the Department or to obtain a Florida Consumer’s Certificate of Exemption.

(5) Instead of tax, penalties, and interest that would otherwise have been due on transactions, one of the following penalties must be paid by either the vendor or the purchaser when the purchaser or vendor:

(a) Applies for relief before an audit or other action or inquiry has been initiated by the Department, a mandatory penalty in the amount of the lesser of $1,000 or 10 percent of the total tax due on qualifying transactions; or,

(b) Applies for relief after an audit or other action or inquiry has been initiated by the Department, a mandatory penalty in the amount of the lesser of $5,000 or 20 percent of the total tax due on qualifying transactions.

(6) When tax, penalty, or interest have been waived under the provisions of this rule, any subsequent retail sale of any taxable item or service is subject to tax, plus any applicable penalties, interest, or service fees.

Rulemaking Authority 213.06(1), 212.07(9)(c) FS. Law Implemented 212.07(9), 213.015(20) F.S. History–New_________.

 

12-13.007 Grounds for Reasonable Cause for Compromise of Penalties.

(1)(a) The Executive Director or the Executive Director’s designee, as enumerated in Rule 12-13.004, F.A.C., will make a determination of whether the taxpayer’s noncompliance was due to reasonable cause and not to willful negligence, willful neglect, or fraud based on the facts and circumstances of the specific case. The standard used in this determination is shall be whether the taxpayer exercised ordinary care and prudence and was nevertheless unable to comply.

(b) The exercise of ordinary care and prudence may be demonstrated by facts and circumstances as stated in writing by the taxpayer. Additionally, in those cases when a Department employee has information or knowledge supporting the taxpayer’s assertion of ordinary care and prudence, a finding of reasonable cause may be based upon such additional information or knowledge, provided the finding of reasonable cause is documented to reflect such information or knowledge.

(c) through (d) renumbered (b) through (c) No change.

(2) through (14) No change.

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

 

12-13.0075 Guidelines for Determining Amount of Compromise.

(1) through (2) No change.

(3) Penalties Specific to Sales and Use Tax and Transient Rental Taxes.

(a) For purposes of this subsection:

1. “Sales tax or transient rental tax liability” means sales and use taxes, discretionary sales surtaxes, convention development taxes, tourist development taxes, and tourist impact taxes reported on a sales and use tax return and remitted to the Department.

2. “Noncompliant filing event” means the failure to timely file a complete and accurate sales and use tax return or failure to timely pay the amount of the tax reported on a sales and use tax return. Noncompliant filing events include:

a. Sales and use tax returns that are not timely filed;

b. Sales and use tax payments that are not timely remitted in full;

c. Incomplete or inaccurate sales and use tax returns; or,

d. Any sales tax or transient rental tax liability or delinquency that remains outstanding after 30 days from the date the Department issues notification to the taxpayer.

(b) The Department will settle or compromise penalty imposed under Section 212.12(1)(a) or (2)(a), F.S., for a noncompliant filing event without an oral or written request from the taxpayer under the following conditions:

1. For taxpayers who file sales and use tax returns and remit sales tax or transient rental tax liabilities monthly, or an alternative-period basis as provided in Rule 12A-1.056(1)(d), F.A.C., such penalties will be settled or compromised when the taxpayer has:

a. No noncompliant filing event in the immediately preceding 12-month period and no unresolved sales tax or transient rental tax liability resulting from a noncompliant filing event; or

b. One noncompliant filing event in the immediately preceding 12-month period that was resolved through payment of tax and interest and the filing of a sales and use tax return within 30 days after notification by the Department, and no unresolved sales tax or transient rental tax liability resulting from a noncompliant filing event.

2. For taxpayers who file sales and use tax returns and remit sales tax or transient rental taxes quarterly, such penalties will be settled or compromised if the taxpayer has no noncompliant filing event in the immediately preceding 12-month period and no unresolved sales tax or transient rental tax liability resulting from a noncompliant filing event.

(c)1. The penalties under Section 212.12(1)(a) or (2)(a), F.S., imposed on any taxpayer who has had two or more noncompliant filing events in the immediately preceding 12-month period will be settled or compromised by the Department when the taxpayer demonstrates that the noncompliant filing event was due to extraordinary circumstances.

2. For purposes of this subsection, “extraordinary circumstances” means the occurrence of events beyond the control of the taxpayer, such as the death of the taxpayer, acts of war or terrorism, natural disasters, fire, or other casualty, or the nonfeasance or misfeasance of the taxpayer’s employees or representatives responsible for compliance with the taxpayer’s sales tax or transient rental tax liability. To demonstrate the nonfeasance or misfeasance of an employee or representative, the taxpayer must show that the principals of the business lacked actual knowledge of the noncompliance and that the noncompliance was resolved within 30 days after actual knowledge.

(4) Penalties Specific to Failure to Collect Certain Taxes.

(a) Any penalty imposed under Section 212.12, F.S., for failure to collect sales tax, discretionary sales surtax, convention development tax, or rental car surcharge will be settled or compromised when:

1. The taxpayer’s failure to collect the tax, surtax, or surcharge was based on a good faith belief that the tax, surtax, or surcharge was not due on a transaction; and

2. Because of the good faith belief that the transaction was not taxable, the taxpayer is now unable to charge and collect the tax, surtax, or surcharge from the purchaser.

(b) To request a compromise of penalties, the taxpayer must substantiate:

1. Why the taxpayer failed to collect the tax, surtax, or surcharge; and

2. Why the taxpayer is unable to collect the tax, surtax, or surcharge due on the transaction from the purchaser.

(5) Failure to Collect Sales Tax Based on the Tax Bracket System.

(a) When the Department determines that a dealer collected and remitted sales tax by rounding the tax due to the nearest whole cent and failed to apply the appropriate tax bracket system provided in Section 212.12, F.S., the dealer will not be held liable for additional tax, penalty, and interest when the dealer:

1. Acted in a good faith belief that rounding to the nearest whole cent was the proper method of determining tax;

2. Timely reported and remitted all sales taxes collected on each transaction, as required by Section 212.12, F.S.; and,

3. Executes a written agreement with the Department agreeing to future compliance with the laws and rules concerning brackets and the proper application of the tax bracket system to the dealer’s transactions.

(6) Administrative Collection Processing Fee.

(a) The Department will waive or reduce the administrative collection processing fee imposed under Section 213.24(3), F.S., when the taxpayer demonstrates that the failure to pay the full amount due on the initial notification of the collection event within 90 days was due to extraordinary circumstances.

(b) For purposes of this subsection, “collection event” means when a taxpayer fails to:

1. Timely file a complete return;

2. Timely pay the full amount reported on a return; or

3. Timely pay the full amount due resulting from an audit after all appeal rights have expired or the result has been finally determined.

(c) For purposes of this subsection, “extraordinary circumstances” means the occurrence of events beyond the control of the taxpayer, such as the death of the taxpayer, acts of war or terrorism, natural disasters, fire, or other casualty, or the nonfeasance or misfeasance of the taxpayer’s employees or representatives responsible for complying with the taxes and fees listed in Section 213.05, F.S., and the unemployment compensation tax. To demonstrate the nonfeasance or misfeasance of an employee or representative, the taxpayer must show that the principals of the business lacked actual knowledge of the collection event and any notification of the collection event.

(7) Service Fees for Returned Payments. When an unintentional error committed by the issuing financial institution, the taxpayer, or the Department results in a draft, order, or check being returned to the Department, and the unintentional error is substantiated by the Department, the service fee for returned payments imposed by Section 215.34(2), F.S., will be compromised by the Department. When the unintentional error is attributed to the issuing financial institution, the taxpayer will be required to submit to the Department a written statement from the financial institution, providing details of the error.

(8)(3) Voluntary Self-Disclosure of Liability.

(a) When payment of delinquent tax and interest results from a voluntary, written self-disclosure by the taxpayer, which predates any contact with the taxpayer by the Department, the Department will compromise all penalties.

(b) No change.

(c) The presumption of reasonable cause does not apply when the taxpayer is registered with the Department or has routinely filed returns with the Department and the taxpayer’s self-disclosure relates to a delinquency or deficiency that is obvious and would routinely generate a billing if not otherwise self-disclosed.

(4) through (6) renumbered (9) through (11) No change.

(12)(7) Subsections (2) through (11)(6) are intended to provide examples and guidance to taxpayers and Department employees, but should not be construed to limit the compromise of penalties to only those circumstances described in such subsections. However, no compromise is authorized in situations involving fraud, willful negligence, or willful neglect on the part of the taxpayer.

Rulemaking Authority 212.07(9)(c), 213.06(1), 213.21(5), (9) FS. Law Implemented 212.07(9), 212.12(14), 213.05, 213.21, 213.24(3) FS. History–New 8-10-92, Amended 10-2-01,____________ .

 

12-13.008 Procedures for Compromise and Settlement of Taxes, Interest, and Penalties.

(1)(a) The Department will consider compromise or settlement of the taxpayer’s liability for tax, interest, or penalty, or service fees only upon its receipt of the taxpayer’s written request that the same be settled and compromised under Section 213.21(3), F.S. A However, a written request is not required to be submitted to the Department when: for the compromise or settlement of penalty and returned check service fee amounts of $30,000 or less.

1. The request to settle or compromise is for an amount greater than $30,000;

2. The complexity of the issue(s) involved requires that the taxpayer submit a written request that explains the issue(s); or,

3. The taxpayer asks to submit the request in writing.

(b) The taxpayer’s request must should include:

1.(a) The taxpayer’s name, address, and taxpayer identifying number;

2.(b) The type of tax and, if applicable, the type of penalty and service fees, and the taxable period(s) involved;

3.(c) The amount of tax, interest, or penalty, service fees involved; and

4.(d) A statement of the basis for settlement or compromise, including the facts and circumstances which substantiate the settlement or compromise following:

1. In the case of tax or interest, the taxpayer’s basis for doubt as to liability or collectibility, and the facts and circumstances which support the existence of such doubt; and

2. In the case of penalty, the taxpayer’s basis for reasonable cause, and the facts and circumstances which support the existence of reasonable cause and which indicate the absence of willful negligence, willful neglect, or fraud.

(2) When a Department employee has additional knowledge or information supporting the taxpayer’s request for compromise, the finding in support of a compromise may be based upon such knowledge or information, provided the basis for compromise is documented in writing.

(2)(3) A Department employee is authorized to settle or compromise tax, penalty, interest, or service fees within the employee’s authority when it is determined that sufficient evidence exists to support the settlement or compromise a finding of reasonable cause despite the fact that no written request has been made by the taxpayer. The authorized employee must document person exercising the facts and circumstances of Department’s authority shall prepare full documentation of any request and the settlement or compromise in, including the basis for finding reasonable cause, for the Department’s record.

(4) The taxpayer’s request for compromise shall be filed upon receipt of a billing, notice, proposed assessment, or assessment, and shall be filed with the office issuing such billing, notice, proposed assessment, or assessment. This subsection is intended to expedite requests for compromise and settlement of taxes, interest, and penalties, but it does not alter deadlines specified in Rule Chapter 12-6, F.A.C.

Rulemaking Authority 212.07(9)(c), 213.06(1), 213.21(5), (9) FS. Law Implemented 212.07(9), 212.12(14), 213.05, 213.21, 215.34(2) FS. History–New 5-23-89, Amended 8-10-92, 5-18-94, 10-24-96, 10-2-01,_________.

 

12-13.009 Closing Agreements.

(1) No change.

(2) When a written closing agreement is necessary, the Department will shall prepare a the agreement on form DR-812, Closing Agreement, and forward it to the taxpayer. The taxpayer must shall sign the agreement and return it to the Department.

(a) through (c) No change.

(d) Any person delegated authority under this rule to compromise amounts of $37,500 or more may sign a closing agreement on behalf of the Department, after determining that the compromise action complies with these rules. The Executive Director shall have discretionary authority to delegate authority to sign closing agreements to specific employees or positions not enumerated in these rules. A delegation of authority to any employee or position which is not enumerated herein shall be in writing, signed by the Executive Director, and shall be for a specified time period of no more than 2 years. Such delegations may be renewed in writing. Copies of any such written delegations of authority shall be maintained on file with the Agency Clerk in the Office of General Counsel.

(3) A closing agreement signed by the taxpayer and the appropriate authority within the Department settles, as set forth herein, shall settle the taxpayer’s liability for tax, interest, or penalty for the tax period specified in the agreement absent any specific provision to the contrary contained in such closing agreement. The closing agreement is shall be binding upon the taxpayer and the Department unless there is a showing of fraud or misrepresentation of material fact, or unless the Department is required to make an adjustment of the taxpayer’s liability under Section 220.23 or 198.16, F.S. The taxpayer is shall not be entitled to protest or institute judicial or administrative procedures to recover any tax, interest, or penalty paid pursuant to a closing agreement absent any specific provision to the contrary contained in such closing agreement.

(4) No change.

(5) Form DR-812, Closing Agreement, dated May 1994, is hereby adopted by reference as the form used by the Department of Revenue for the purposes of this rule. A copy of this form is available, without cost, by one or more of the following methods: 1) writing the Florida Department of Revenue, Taxpayer Services, Mail Stop 3-2000, 5050 West Tennessee Street, Tallahassee, Florida 32399-0112; or, 2) faxing the Distribution Center at [phone]; or, 3) using a fax machine telephone handset to call the Department’s automated Fax on Demand system at [phone]; or, 4) visiting any local Department of Revenue Service Center to personally obtain a copy; or, 5) calling the Forms Request Line during regular office hours at [phone]; or, 6) downloading selected forms from the Department’s Internet site at the address shown inside the parentheses (www.myflorida.com/ dor). Persons with hearing or speech impairments may call the Department’s TDD at [phone].

Rulemaking Authority 212.07(9)(c), 213.06(1), 213.21(5), (9) FS. Law Implemented 212.07(9), 212.12(14) 120.55(1)(a)4., 213.05, 213.21, 213.24(3), 215.34(2) FS. History–New 5-23-89, Amended 8-10-92, 5-18-94, 10-24-96, 10-2-01, 4-26-10,_________.

 

12-13.010 Special Provisions Applicable to Compromise of Estate Taxes.

(1) Pursuant to Section 213.21(2)(b), F.S., the Executive Director is granted authority to compromise and settle the amount of taxes arising as a result of Chapter 198, F.S., Section 213.21(3), F.S., authorizes the Department to compromise or settle tax, penalty, or interest in any amount. If a case involves a billing or assessment issued by or referred to the Taxpayer Services Process, authority to compromise and settle is delegated as set forth in subsection 12-13.004(4), F.A.C., for collection cases. If a case is protested, authority to compromise and settle is delegated as set forth in subsection 12-13.004(3), F.A.C. If a case is in litigation, authority to compromise and settle is delegated as set forth in subsection 12-13.004(2), F.A.C.

(2) through (3) No change.

Rulemaking Authority 213.06(1), 213.21(5) FS. Law Implemented 213.05, 213.21 FS. History–New 8-10-92, Amended 5-18-94, 10-2-01,___________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Janet Young, Tax Law Specialist, Technical Assistance and Dispute Resolution, Department of Revenue, P. O. Box 7443, Tallahassee, Florida 32314-7443, telephone [phone]

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Governor and Cabinet

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: June 25, 2013

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: A Notice of Proposed Rule Development was published in the Florida Administrative Weekly on July 20, 2012 (Vol. 38, No. 29, pp. 2891-2893), to advise the public of the proposed changes to Rule Chapter 12-13, F.A.C. (Compromise and Settlement), and to provide that, if requested in writing, a rule development workshop would be held on August 8, 2012. No request was received by the Department. No written comments were received by the Department.