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Ely
Ely, Counselor at Law
Category: Legal
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Experience:  Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
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A sales tax warrant has been issued to a corporation that has

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A sales tax warrant has been issued to a corporation that has had no operations since its formation in FL. The owners/officers do not live in the States and the company has no bank accounts or other assets. The warrant is based on a sales tax report they claim was not filed for 12/12. Sales reports, however, had always been made online for zero sales, except for the 12/12 report which was mailed. Letters were sent to the Fl Dept of Revenue in Tallahassee and the local service center, explaining why the tax shoule not be applicable, but no response except for a collection agency notice and later the warrant. What are the problems that may arise from this situation and what can be done?
Hello friend. My name is XXXXX XXXXX welcome to JustAnswer. Please note: (1) this is general information only, not legal advice, and, (2) there may be a slight delay between your follow ups and my reply.

I am very sorry for your situation.

The Florida's Department of Revenue (DOR) can issue a tax warrant, which acts as a lien. This would allow:

1) Your wages can be garnished and accounts levied; and/or
2) Assets and property seized, both

...for the purposes of satisfying the debt.

The issue is that the DOR is more interested in collection than anything else. They will likely not listen to reason by informal letters.

what can be done?
The first thing that one in your situation may wish to do is to call the Taxpayer Rights Advocate at(NNN) NNN-NNNNor write to:

Taxpayer Rights Advocate
Department of Revenue
P.O. Box 5906
Tallahassee FLNNN-NN-NNNN

The Taxpayer Rights Advocate helps resolve taxpayer problems and complaints not solved through normal channels.

If this does not work and there is no more administrative appeal process, then one may have no choice but to file a Writ of Mandamus in Court, and have the Court weigh in, possibly voiding the DOR's claims. Hopefully, it will not have to come to this step.

Good luck.

Please note: I aim to give you genuine information and not necessarily to tell you only what you wish to hear. Please, rate me on the quality of my information and do not punish me for my honesty. I understand that hearing things less than optimal is not easy, and I empathize.

I hope this helps and clarifies. Gentle Reminder: Use the reply button to keep chatting, or please rate and submit your rating when we are finished. You may always ask follow ups at no charge after rating. Kindly rate my answer as one of the top three faces and then submit, as this is how I get credit for my time with you. Rating my answer the bottom two faces does not give me credit and reflects poorly on me, even if my answer is correctt. I work very hard to formulate an informative and honest answer for you; please reciprocate my good faith.
Customer: replied 3 years ago.

I mentioned at the beginning of my note that it was a sales tax warrant on a corporation, not on a person or dba, and the corporation had no bank accounts or other assets because it never had operations, therefore the "salary garnishment" or assets seized etc do not apply. In this case, what can be done?


 


 

Lily,

My apologies. However, you have to understand that in many cases, a corporation may not protect the individual.

A corporation's veil may be pierced. This happens if the party filing suit can prove that the corporation was not regularly keeping finances and/or was a shell. This is subjective - see here. IF SO, then the individuals behind the corporation can be liable. An aggressive DOR attorney can attempt and likely succeed to pierce the veil by claiming that certain finances were not filed. In fact, it is the number one way that state tax entities attack corporations that are no longer in business - they go after the people behind them.

I am not stating that they will be successful. Their attack on the veil may be defended by showing that this was NOT a shell and/or everything was proper. If so, only the corporate accounts and assets are liable' nothing more. If there is nothing to collect, then the DOR is simply out of luck.

However, it is risky to take the chance that they will not attack the individuals behind the corporation by attempting to pierce the corporate veil.

In this case, what can be done?

If one believes they will not succeed to pierce the veil, then, technically, one is safe from the liability, although it may be a bit of a headache if they try. If one believes that they may pierce the corporation, then the original answer applies.

Apologies again for the not-so-good news.

Gentle Reminder: Please use the reply button to keep chatting, or rate and submit your rating when we are finished. You may always ask follow ups at no charge after rating.
Customer: replied 3 years ago.

The fact is that the corporation has not done any business since its formation....zero sales....done nothing but paid the corporate tax at the beginning of the year and reporting zero sales, in addition to filing the federal income tax with zero income.


 


The tax penalty -some $3,000 plus- is an assumption by the Fl Dept of Revenue, based on nothing, because the company -I repeat- was not doing any kind of business.


 


The owners, who live abroad, wanted to keep the company "active" for a while to see if they could start to generate some business, but it is most probable that it will be closed definitely.

Lily,

The fact is that the corporation has not done any business since its formation....zero sales....done nothing but paid the corporate tax at the beginning of the year and reporting zero sales, in addition to filing the federal income tax with zero income.

I know; and I agree with you. I really do understand where you are coming from. However, if DOR is not willing to work with you and is refusing to hear that you do not have to pay any taxes (or rather, the corporation), then the following are natural steps of escalation:

1) Informal letter
2) Taxpayer Rights Advocate
3) Timely administrative appeal (may intercede with step 2)
4) Writ of Mandamus to Circuit Court for decision.

Very likely, this will get solved on step 2/3.

You asked me "what can be done" and I hope I have explained above as to what may be done to resolve the issue.

You asked "What are the problems that may arise from this situation," and I have explained the possibly consequences in store for people whose names are XXXXX XXXXX corporation if the matter is not resolved.

You are also (without formally stating it) asking "what can I do to convince them?" Well, unfortunately, there is no silver bullet. One explains the situation at every step, and likely at step 2/3, DOR will let go and cease their demands. If not, and if it escalates, then we know what may happen.

I hope this clarifies. Please let me know if you need anything else, of course. Thank you in advance for not 'shooting the messenger.'
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