Florida businesses can reduce audit surprises by reviewing five areas: untaxed purchases, online and marketplace sales, construction transactions, restaurant sales, and exemption records. Each can create a gap between what a business reported and what its invoices, accounting records, or sales systems show. These are practical audit-readiness priorities, not a published FDOR list of industries or transactions currently targeted for audit. FDOR says its selection methods vary by tax and that some compliance projects address particular problems or industries.
1. Use Tax on Purchases
A business may carefully collect tax from customers while overlooking tax on its own purchases. Florida use tax generally applies when a taxable item is brought or delivered into the state and the appropriate Florida sales tax was not paid. An online order or an invoice from an out-of-state supplier is not automatically tax-free simply because the seller did not charge tax.
Equipment purchases deserve attention. Suppose a restaurant buys a refrigerator from an out-of-state supplier, or a contractor orders tools online. The bookkeeper records the invoice as a fixed asset or expense and pays the supplier. If no one checks the tax treatment, any use tax due may go unreported.
Review the purchase invoice before drawing a conclusion. Confirm what was bought, where it was delivered or used, whether the seller charged tax, and whether an exemption applies. A business can then compare its findings with the use tax reported on its Florida returns.
The useful control is straightforward: flag purchases without Florida sales tax during monthly bookkeeping. Review those invoices while the details are readily available, especially large equipment and fixed asset additions. Waiting until an audit means reconstructing years of transactions from vendor invoices and accounting entries.
2. Remote Sales and Marketplace Transactions
Selling through a website and selling through a marketplace can involve different collection responsibilities. Florida requires certain businesses making taxable remote sales into the state to collect and remit sales and use tax when their taxable remote sales exceeded $100,000 in the previous calendar year. Marketplace providers also have collection and remittance duties for taxable sales they facilitate. A marketplace seller may still have duties for taxable Florida sales it makes outside the marketplace.
The accounting problem often starts when sales from several channels enter the same books. A seller may have its own website, one or more marketplaces, and direct invoices. If all Florida revenue is combined into a single account, it becomes harder to tell which sales were taxable, who collected the tax, and how the amounts on the return were calculated.
A seller should be able to separate marketplace sales from direct sales and retain reports showing tax collected by each channel. It should also compare those reports with its accounting records and Florida returns. This helps identify both omitted tax and the opposite problem: treating a sale as if the marketplace collected tax when it did not.
Businesses should review their actual sales channels and registration obligations rather than assume that using a marketplace resolves every Florida sales tax issue.
3. Construction Materials and Contracts
Construction tax rules are easy to misapply because the answer depends on what is being supplied and how the transaction is structured. For real property contracts, FDOR explains that contractors generally act as the final consumers of materials and supplies under common contract arrangements. That makes tax paid on purchases of materials a central issue. A contractor should not assume that a customer’s exempt status automatically allows the contractor to buy construction materials tax-free.
Consider a contractor purchasing materials for several jobs. Some suppliers charge tax, while others do not. Invoices flow into job costs, but no one reviews the untaxed purchases. The resulting exposure may sit on the purchase side even if the contractor’s customer invoices appear consistent.
General contractors and subcontractors should keep contracts, purchase invoices, supplier tax documentation, and job records together. They should review how materials are purchased and used before deciding whether tax is due. A contract label alone does not settle the tax treatment; the underlying transaction matters.
Construction is a worthwhile area for an internal review because contracts, material purchases, and billing practices must tell a consistent story. That is a compliance observation, not a claim that FDOR has announced a current campaign against contractors.
4. Restaurants, Bars, and Digital Offerings
Restaurants and bars process a high volume of transactions, often across dining rooms, online ordering systems, delivery channels, and catering operations. That makes reconciliation important. Sales reports, register records, delivery platform statements, bank deposits, and tax returns should fit together, with differences explained.
For example, a restaurant might record the net deposit received from an ordering platform while the platform report shows a higher gross sale before fees. If the business uses deposits as its starting point without reconciling platform reports, it may have trouble explaining the amounts reported on its sales tax return. FDOR publishes specific sales and use tax guidance for restaurants and catering, which businesses can consult when reviewing their transactions.
Digital products and subscriptions require a separate caution. A digital delivery method does not, by itself, establish that a charge is subject to Florida sales tax. The nature of what is sold and any applicable tax law matter. FDOR guidance has addressed electronically delivered software and other digital offerings according to their particular facts. Businesses selling subscriptions, software, access, or bundled offerings should review the actual product and contract terms before assigning a tax treatment.
The practical step is to map each revenue stream. Identify what the customer receives, how the transaction is recorded, whether tax is collected, and what documentation supports that treatment. Businesses with both physical products and digital offerings should avoid applying one tax setting to every item simply because their sales platform makes that convenient.
5. Resale and Exemption Documentation
A sale treated as exempt needs support. If a seller accepts a Florida Annual Resale Certificate, it should verify and retain the information needed to substantiate that treatment. Florida provides a certificate verification process, and its guidance explains that annual resale certificates must be used for qualifying resale purchases.
One correction to advice businesses sometimes receive: a missing signature is not, by itself, a defect in a Florida Annual Resale Certificate for Sales Tax. FDOR says the signature requirement was discontinued. Treating every unsigned certificate as invalid would send a business looking for the wrong problem. The relevant questions include whether the certificate is valid for the applicable period and whether the purchase qualifies for resale treatment.
Other exemptions may require different documentation. Keep those records organized by customer and transaction so they can be retrieved without searching through years of emails. When a certificate expires or a customer’s purchasing pattern changes, review the account instead of carrying the prior treatment forward automatically.
A Three Step Review Before an Audit Notice
- Reconcile the records. Compare Florida sales tax returns with sales reports and the general ledger. Identify marketplace and direct sales separately, and explain differences between gross sales and deposits.
- Examine purchases. Review significant fixed assets, equipment, materials, and other purchases where the vendor did not charge Florida sales tax. Determine whether use tax was due and whether it was reported.
- Check the support. Confirm that resale and other exempt sales have appropriate documentation. Keep contracts, invoices, marketplace reports, and tax calculations in a form that another person can follow.
An internal review cannot guarantee that FDOR will agree with every tax position. It can show where a business needs a closer look while the people and records behind the transactions are still available. If an FDOR audit notice arrives, the same organized records will help the business understand what it reported and respond to the issues actually under examination. FDOR describes an audit as a review of whether state taxes were collected, reported, and paid correctly.
About the Author
Orlando Monteagudo is the founder of Monte Tax Advisory. He has more than 30 years of accounting, auditing, and tax compliance experience, including approximately eight years auditing Florida businesses for the Florida Department of Revenue. His prior experience includes service as an Internal Revenue Agent with the IRS and work with Deloitte & Touche. Monte Tax Advisory assists Florida businesses and their accounting and legal professionals with Florida DOR audit matters.
This article is for general informational purposes, is based on publicly available information, and does not constitute legal, tax, or accounting advice.
SEO keywords: Florida sales tax audit, Florida use tax, FDOR audit, Florida marketplace sales tax, Florida construction sales tax, Florida resale certificate, restaurant sales tax Florida, sales tax audit preparation