Florida Sales and Use Tax Guide: Everything You Need to Know
In the vibrant business landscape of Florida, understanding the intricacies of sales and use tax is essential for businesses and consumers alike. Let’s dive into the fundamentals of Florida’s sales and use tax system to gain insights into its impact and compliance requirements.
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What is Sales and Use Tax?
Sales and use tax in Florida applies to various transactions involving tangible personal property, certain services, and rentals. This tax is typically collected by businesses from customers at the time of sale and remitted to the Florida Department of Revenue.
Key Components of Florida’s Sales Tax:
State Sales Tax Rate: The general state sales tax rate in Florida is 6%, but specific rates apply to certain transactions, such as mobile home sales (3%), vending machine receipts (4%), and commercial real estate rentals (4.5% or 2% from June 1, 2024).
Taxable Transactions: Most retail sales, admissions, rentals, and storage services are subject to sales tax unless specifically exempted.
Exemptions: Certain items like groceries, prescription drugs, and medical supplies are exempt from sales tax. Additionally, purchases for resale are generally exempt from sales tax if accompanied by a valid resale certificate.
Understanding Use Tax:
Use tax is due on the use or consumption of taxable goods or services when sales tax was not collected at the time of purchase. Examples include:
- Purchasing a taxable item in Florida without paying sales tax requires payment of use tax.
- Using a tax-exempt item for personal use or consumption triggers use tax liability.
- Bringing a taxable item purchased outside Florida into the state without paying sales tax also requires payment of use tax.
Who Needs to Pay Taxes in Florida?
Before starting a business in Florida, it’s important to determine if your business activities or products are subject to sales and use tax. If they are, you’ll need to register to collect sales tax or pay use tax. Here’s a partial list of business activities that require registration with the Florida Department of Revenue:
Retail Sales of Taxable Items: If you sell taxable goods directly to consumers, whether in-store or online, you’re required to collect and remit sales tax.
Repairs or Alterations of Tangible Personal Property:Businesses that provide repair or alteration services on tangible goods must collect sales tax on these services.
Rentals, Leases, or Licenses of Real Property: If you rent or lease commercial real estate spaces or mini-warehouses, you’re required to collect sales tax on these transactions.
Short-Term Accommodation Rentals: Rentals of short-term accommodations like hotel rooms, beach houses, vacation homes, or timeshare resorts are subject to sales tax.
Rentals or Leases of Tangible Personal Property: Renting out vehicles, machinery, equipment, or other tangible goods requires collecting sales tax on these rentals.
Admission Charges to Entertainment Venues: If your business charges admission to entertainment, sporting, or recreational venues, you must collect and remit sales tax on these admissions.
Manufacturing Goods for Retail Sale: Businesses that manufacture or produce goods for retail sale are subject to sales tax on these products.
Sale of Service Warranty Contracts: Selling service warranty contracts is considered a taxable service in Florida.
Operating Vending or Amusement Machines: Businesses operating vending machines or amusement machines must collect sales tax on the receipts from these machines.
Providing Taxable Services: Certain services such as crime investigation and protection services, non-residential cleaning services, or non-residential pest control services are subject to sales tax.
Out-of-State Businesses Selling in Florida: Out-of-state businesses making sales into Florida, with total sales exceeding $100,000 in the previous calendar year, must register and collect Florida sales tax.
Marketplace Providers Facilitating Remote Sales: Marketplace providers facilitating remote sales into Florida are required to collect and remit sales tax on behalf of third-party sellers.
Remote Sales Tax Compliance in Florida
Since July 1, 2021, Florida has implemented new regulations requiring businesses engaged in remote sales within the state to collect and remit sales and use tax electronically. This includes any applicable discretionary surtax on transactions exceeding $100,000 in the previous calendar year.
What Constitutes Remote Sales?
Remote sales encompass a variety of transactions, including:
- Online purchases
- Catalog mail-order transactions
- Cross-border purchases
- Out-of-state purchases from distributors or providers
Businesses, especially major online retailers, were already complying with these regulations prior to the enactment of Chapter 2021-2, Florida Laws.
Marketplace Providers and Facilitators
Effective July 1, 2021, marketplace providers are now required to electronically register and collect sales and use tax on taxable sales facilitated for marketplace sellers delivering goods in Florida. Each business location within Florida must submit a separate electronic registration application, while out-of-state businesses can submit one application for all their locations.
For detailed guidance on remote sales tax requirements, consult Tax Information Publication (TIP) No. 21A01-03, “New Registration Requirement for Remote Sellers and Marketplace Providers and Facilitators.”
Managing Business Registration and Account Changes in Florida
In Florida, businesses are required to register each location to collect, report, and pay sales tax. Registration can be completed online through the registration system or by submitting a paper Florida Business Tax Application (DR-1 form).
Remote Sales Tax Compliance
Effective July 1, 2021, Florida law mandates that businesses engaged in remote sales exceeding $100,000 in the previous calendar year must electronically collect and remit sales and use tax, including any discretionary surtax applicable to these transactions. Additionally, marketplace providers must register to electronically collect and remit sales and use tax on taxable sales facilitated for marketplace sellers delivering goods in Florida.
Account Changes and Notifications
If you have an active registration certificate or reemployment tax account issued by the Department due to a previously filed Florida Business Tax Application (DR-1 form), use the Registered Business Add Location form (DR-1A) to add a new location in Florida. You would use this form to register:
- An additional business location or rental property in Florida
- A registered location that has moved from one Florida county to another
- For more information on submitting applications, refer to the Registering Your Business (DR-1N form).
Once registered, you will receive a Certificate of Registration (DR-11 form), an Annual Resale Certificate for Sales Tax (DR-13 form), and tax return forms. If registered for use tax only, you won’t receive a resale certificate. Display the Certificate of Registration prominently at your business location.
Notifying the Department
You must notify the Florida Department of Revenue if:
- Your business changes its legal entity or name
- Your postal address changes
- The address of your location changes within the same county
- You close or sell your business
- Your business becomes active and will sell or rent taxable properties or services
The quickest way to notify the Department of these changes is by updating your account online.
When to Submit a New Tax Application
Submit a new registration using the online registration system or by completing a paper Florida Business Tax Application (DR-1 form) if:
- Your business undergoes a change in legal entity
- Ownership of your business changes
Ensuring timely updates and compliance with registration and account changes is essential for businesses operating in Florida. For detailed instructions and assistance, refer to the Florida Department of Revenue’s resources or consult with a tax professional.
Filing Frequency Limits
The filing frequency is determined based on your annual sales tax collections:
- More than $1,000: Monthly filing requirement
- $501 – $1,000: Quarterly filing requirement
- $101 – $500: Semi-annual filing requirement
- $100 or less: Annual filing requirement
Changing Your Filing Frequency
If you qualify for a different filing frequency based on your annual tax collections and wish to change your filing frequency, you can contact the Florida Department of Revenue’s Taxpayer Assistance at 850-488-6800, Monday through Friday, excluding holidays.
Ensuring that you file and pay sales and use tax according to the appropriate frequency is essential for compliance with Florida’s tax regulations. If you have questions about your specific filing requirements or need assistance, don’t hesitate to reach out to the Department of Revenue for guidance.
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