Sales and Use Taxes in Florida

April 13, 2006

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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

Sales and use tax rate. The Florida 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.) Some of the other various tax rates are as follows:

2.5 percent tax. Self-propelled or power-drawn farm equipment is taxed at 2.5 percent.
4 percent tax. The use of coin-operated amusement machines is taxed at 4 percent.
7 percent tax. Charges for telecommunication service and electrical power or energy are taxed at 7 percent.

Tax-exempt items. Florida has many specific items that are exempt from sales tax — for example, food and drink for human consumption and certain prescription medications are exempt from Florida sales tax. You'll want to check and see if you are exempt from the sales tax.

Responsibility for paying sales tax. In Florida the sales and use tax are collected from all sellers. Although sellers are liable for the tax, they are required to collect it from the purchaser or consumer.

Use tax. 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.

Responsibility for collecting use tax. 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.

Obtaining tax permits in Florida. 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.

Leases. 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.

The following discussions address additional sales and use tax issues that many small business owners face: