Understanding Florida Sales and Use Taxes
Understanding and complying with the sales tax requirements in the states in which you do business is absolutely essential. More states are taxing services, as well as retail sales, so no business owner can afford to be in the dark. In addition, you may find that you are liable for use taxes for products purchased out of state. This article answers some of the basic questions regarding sales tax in Florida.
The Florida state sales and use tax rate is generally 6 percent. In addition, make sure you contact your local governments in Florida because they are allowed to assess a local sales and use tax. In Florida the sales and use tax are collected from all sellers. Dealers, operators of places of amusement and lessors of living quarters must obtain a permit for each place of business. The permit is obtained from the Department of Revenue. You must pay a fee based on revenue and number of locations.
Absorbing the tax — using a "no sales tax" advertising strategy to drum up business. In Florida, although sellers are liable for the tax, they are required to collect it from the purchaser or consumer. It is against the law to refund or offer to refund all or any part of the amount collected, or to absorb the amount of sales tax required to be added to the sales price and collected from the purchaser. As a seller, it is also against the law for you to advertise directly or indirectly that you will absorb the sales tax that is required to be added to the sales price.
In Florida, a tax is imposed on:
- retail sales, rentals, use, consumption, distribution or storage for use or consumption in Florida of tangible personal property and the rental or furnishing of taxable things or services
- renting or granting of a license to use living quarters, sleeping or housekeeping accommodations for six months or less
- leasing or renting motor vehicle parking, boat docking, or storage spaces for either
- renting or leasing real property unless the property is used for agricultural purposes or used exclusively as dwelling units
- admissions, including membership fees and dues
- any facility or device used primarily for the control of pollution or contaminants from manufacturing or industrial plants
- charges for telegraph, long distance telephone calls, telecommunications service, television system program service, installation of telecommunication and telegraphic equipment, and charges for electrical power or energy
- detective, burglar protection and other protection services
- nonresidential cleaning and pest control services
Florida Taxes Leases of Tangible Personal Property
In Florida, any rental or lease of tangible personal property as part of a business is taxable. All transactions in which there is a possession transfer of tangible personal property for a consideration without a title transfer are taxable lease transactions. Under an operating lease, tax applies to the gross proceeds from the lease of tangible personal property for the entire lease term. When a lease transfers substantially all of the benefits and risks of ownership of tangible personal property to the lessee and ownership of the property transfers (or a nominal purchase option) at the end of the lease term, the contract will be considered a sale.
Certain Items Are Exempt from Tax
Florida has many specific items that are exempt from sales tax. For example, food and drink for human consumption, farm equipment, and certain prescription medications are exempt from Florida sales tax. Other items, such as receipts from coin-operated amusement devices, are taxed under rules set forth by the Florida Department of Revenue.
Florida Exempts Certain Sales from Tax
An exemption certificate may be issued by a purchaser of a nontaxable item. The exemption certificate may be based on the type of transaction (such as a resale exemption) or on the item itself. Resale exemptions and blanket exemptions are two of the most important exceptions to sale tax liability. In additon, it is important to understand if you have enough "presence" within a state to be taxed by it.
Florida Exempts Provides for Resale Exemption
In Florida, a sale will be considered a taxable retail sale unless the seller obtains a resale certificate stating that the property or service was purchased for resale. The Florida Department of Revenue issues resale certificates of exemption to various entities. A seller may refuse to accept a resale certificate if the buyer has not obtained a dealer's certificate of registration from the state. The resale certificate must include:
- the name and address of the purchaser;
- the effective date and the number of the purchaser's certificate of registration
- the purchaser's signature
Florida Allows Blanket Resale Certificates
When all purchases from a particular seller are for resale the seller is authorized to take a blanket certificate for resale from you stating that all of the purchases are for resale. Each subsequent order must contain the certificate of registration number of the purchaser.
Florida Requires Physical Presence for Tax Liability
Florida has a statute that specifically taxes out-of-state mail order and catalogue sellers. However, you will be responsible for paying this tax only if you have physical presence within Florida. To determine if you have physical presence, ask yourself the following:
- Do I have retail facilities, a warehouse, or any office space in Florida? Maintaining retail or warehouse facilities will give you physical presence. Also, having an office for employees, even for business activities unrelated to mail order sales, will give you physical presence.
- Do my employees or I enter Florida for purposes of taking and transmitting orders from Florida? If your employee or independent contractor goes into Florida to take or transmit orders, your business may have physical presence in Florida. However, contracting with a common carrier to deliver mail order goods does not constitute physical presence.
- Do my delivery vehicles frequently enter Florida for purposes of delivering property? Frequent deliveries in Florida by your trucks will give you physical presence in Florida.
Florida Provides a Sales Tax "Bracket System."
The bracket system may be followed by sellers in computing the sales tax. The 6 percent tax is computed on each dollar and/or fraction of a dollar according to the following table:
|Amount of Sale ||Tax |
|Less than $0.10 ||no tax |
|0.10 to 0.16 ||$0.01 |
|0.17 to 0.33 ||0.02 |
|0.34 to 0.50 ||0.03 |
|0.51 to 0.66 ||0.04 |
|0.67 to 0.83 ||0.05 |
|0.84 to 1.00 ||0.06 |
There are also sales tax rate tables to help determine the amount of tax.
Refund Can Be Claimed for Excess Tax Payments
Sellers are entitled to reimbursements for tax collected or charged on goods that are returned. If the tax has not been remitted by you, you may deduct the amount on your sales tax statement. If you have remitted the tax, you may apply for a refund within 36 months from the date the tax was paid to the state.
An application for refund must be filed within three years after the date on which the tax was paid.
Florida Imposes Use Tax on Out-of-State Purchases
In Florida the use tax includes the use, consumption, distribution, and storage, and is levied on the exercise of any right of ownership over tangible personal property. The use tax does not apply to a sale at retail in the regular course of business. Also, property brought into Florida on which a sales or use tax has been paid in another state equal to or in excess of the Florida tax is not subject to tax in Florida.
The use tax is collected from all dealers on the sale at retail, the use, the consumption, the distribution, or the storage for use or consumption in the state of tangible personal property or taxable services. Although dealers are liable for the tax, they are required to collect it from the purchaser or consumer.