Florida Sales Tax Exemptions
The state of Florida levies a 6% state sales tax rate on the retail sale, lease or rental of most goods. Counties impose their own additional surtaxes. The range of sales tax rates charged within the state of Florida is between 6% and 7.5%. Florida’s county surtax rates are capped on purchases over $5,000, which is different from other states. For example, if you purchased a motor vehicle with the purchase price of $20,000 in a county with a 1% surtax rate, 7% tax would be due on the first $5,000 of the purchase price and 6% tax would be due on the remaining $15,000 of the purchase price.
Use tax is due on all purchases brought into the state of Florida, unless specifically exempted. Use tax is due at the same rates as sales tax. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of July should be reported to the state of Florida on or before August 20th.
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What is Exempt From Sales Tax in Florida?
Florida Sales Tax Exemptions for Healthcare
Florida sales tax law divides hospitals in to two distinct categories. Facilities that are registered as 501(c)(3) nonprofit, educational or charitable entities are free to purchase materials, supplies and most services without paying Florida sales tax. In order to qualify for this Florida sales tax exemption, a DR-5 Application for a Consumer’s Certificate of Exemption must be filed with the Florida Department of Revenue. If the entity meets the requirements, the Florida Department of Revenue will issue a DR-14 Consumer’s Certificate of Exemption which can be distributed to vendors and suppliers in lieu of paying Florida sales tax. For Florida for profit hospitals, a number of items may be purchased tax free based upon the characteristics or use of the item in question. For example, major categories of tax exempt items for Florida for profit hospitals include: hypodermic needles & syringes, medical gases and prescription drugs, chemical compounds and test kits, prosthetic and orthopedic appliances used to replace, substitute or alleviate the malfunction of any body part, items temporarily or permanently incorporated into a patient, and prescription-required single-use medical products.
The most challenging Florida sales tax exemption for hospitals to administer is the prescription-required single-use medical products exemption because the exemption is driven off of information not always readily available to the purchaser at the time the order is submitted. For more information about this Florida sales tax exemption, please see the Research Bulletin written by our sales tax consultants about Florida’s Prescription-Required Single-Use Medical Products Exemption.
Florida Sales Tax Exemptions for Manufacturing
Florida offers generous exemptions to manufacturers. New machinery and equipment are not subject to Florida sales tax. Repair parts and labor to that machinery and equipment are also exempt. Utilities including electricity and natural gas consumed in production are exempt from Florida sales tax. Utility usage may be apportioned based upon taxable and non-taxable usage. Material handling equipment including forklift and cranes may qualify for an exemption if they’re used in the production process. Similar to utility usage, charges for the material handling equipment may be apportioned. Labor is exempt from Florida sales tax provided that no tangible personal property is transferred during the transaction. While the sales tax exemptions offered by Florida are many, gathering supporting documentation is often the challenge particularly when usage must be apportioned. Agile Consulting Group’s sales tax consultants have worked hundreds of sales tax audits for Florida manufacturers and are able to leverage that experience to maximize potential sales tax savings for our clients.
Florida Sales Tax Exemptions for Software
Florida provides a sales tax exemption for software that is either custom or electronically transferred. Florida’s definition of what qualifies as custom software is broader than many other states because it considers a software program to be exempt if a salesperson or technician surveys a buyer’s needs and makes recommendations. Electronically transferred or web-based software is not considered to be tangible personal property by the Florida Department of Revenue and is therefore not subject to Florida sales and use tax. The challenge with claiming either of these Florida sales tax exemptions for software relates to having documentation to support the purchase being tax exempt. Agile Consulting Group’s sales tax consultants know from experience the type of documentation that the Florida Department of Revenue finds compelling evidence supporting an exemption for software purchases.
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For more information on Florida sales tax exemptions please visit the sites below.
Florida Sales & Use Tax Exemptions Information
Florida Sales Tax Research Bulletins
Sales Tax Compliance FAQs
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Florida Sales Tax Compliance Details
Here is useful Florida sales tax compliance information our Agile team members felt could be helpful:
Tax Rates & Collection Allowance
- State-level sales tax rate: 6%
- Commercial rentals taxed at 5.5%
- Amusement machines taxed at 4%
- Electricity taxed at 6.95%
- Timely filers receive a collection allowance of 2.5% of sales tax liability, capped at $30.
Estimated Tax Payments
- Taxpayers paying $200,000 or more in sales tax liability over the previous year must pay estimated tax.
- Three ways to calculate estimated tax: 60% of same month's liability, 60% of monthly average liability, or 60% of sales tax due for next month's return.
Discretionary Sales Surtax
- Unique version of local county taxes in Florida.
- Five rate variations ranging from 0.5% to 2.5% depending on the county.
- Transactions over $5,000 subject to state and discretionary sales surtax up to $5,000, with remaining taxed at the state rate of 6%.
How to Calculate Florida Sales Tax?
Utilize the following sales tax formula to obtain the necessary sales tax:
Sales tax = total amount of sale x sales tax rate
If you are looking for more information, check out our Sales Tax Consulting page or talk to one of our Experts:
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