The Top 5 Mistakes Small Businesses Make After Receiving a DR-840 Notice

Opening the mail to find a Form DR-840 from the Florida Department of Revenue is a stressful moment for any business owner. This form is the state's official Notice of Intent to Audit. It is important to realize that the Florida Department of Revenue has already reviewed your filing history, identified potential discrepancies, and predetermined the scope of your audit before you even receive this notification.

Whether you run a growing healthcare clinic, a specialized fintech platform, or a mid-sized retail operation, how you handle the first few weeks after this notice dictates the entire trajectory of the audit.

Unfortunately, many business owners accidentally sabotage their own defense before the auditor even begins their fieldwork. Here are the most common unforced errors to avoid.

1. Calling the Auditor to "Explain"

Your instinct might be to pick up the phone immediately, believing you can simply clarify a misunderstanding. This is one of the most damaging missteps you can make. The auditor takes notes on everything. Any offhand comments about your record keeping, cash handling, or exemption practices become part of the official audit file. These informal comments can be used later by the state to justify expanding the scope of the audit.

2. Handing Over Too Much (or Too Little) Information

Some businesses panic and send over years of raw bank statements, internal emails, and unreviewed spreadsheets. Others respond too narrowly and provide far too little, omitting key documents. Both approaches are dangerous. Sending too much exposes unrelated issues and creates confusion. Sending too little forces the auditor to make adverse assumptions and estimate your liabilities, which frequently results in inflated assessments.

3. Waiving the 60-Day Waiting Period

By law, after sending the DR-840 notice, the Department must wait 60 days before they can actually review your records or discuss the audit with you, unless you explicitly waive this waiting period. Auditors may push for a waiver to get the audit moving quickly. Waiving this window robs you of the critical time needed to assess your exposure, identify gaps in your records, and build a solid defense strategy.

4. Relying on Verbal Explanations Instead of Documentation

In a sales tax audit, if an explanation isn't backed by paper or a PDF, it essentially didn't happen. Auditors are required to base their findings on records, not conversations. For example, simply telling an auditor that certain transactions were exempt sales will not be sufficient if you do not have valid resale certificates. In fact, missing or invalid exemption and resale certificates are among the most common sources of audit exposure.

5. Waiting Too Long to Seek Professional Help

Waiting to get professional help until the auditor has already issued findings is incredibly common and highly damaging. Once an auditor has formed an opinion, reversing it is a difficult uphill battle. Furthermore, business owners should not assume the auditor's calculations are always correct; auditors can make mistakes, rely on flawed sampling periods, or misapply complex exemption rules. Bringing in a tax professional early allows you to control disclosures, shape the narrative, and challenge incorrect assumptions before they become finalized.

Take Action Immediately

A DR-840 notice is a serious legal and financial matter, not routine administrative correspondence. It requires strategic, highly structured management from day one.

Call your tax advisor or legal counsel as soon as you receive the notice. Engaging experienced counsel before you provide a single document or make a single phone call is the most effective way to limit your exposure, protect your business, and ensure the audit is resolved fairly.