Like many states, Florida offers unique and specific manufacturing exemptions that can provide great savings to those educated on them. Sometimes these exemptions come about by the state alone, which is interested in luring big businesses into their state to provide jobs to its residents. Other times, businesses already located within the state may lobby for an exemption to provide tax relief to their industry or to mirror exemptions in other states which are putting them at a disadvantage locally. Manufacturing businesses require expensive equipment to operate, so there is a great interest in passing these exemptions depending on what types of manufacturing is most prominent within the state.
Florida is not known as a large manufacturing state. Perhaps because of this, Florida legislatures have been liberal with the exemptions offered to the industry. Businesses operating outside of Florida often imitate their out-of-state tax policies here in Florida when in fact there are great savings to be had.
The largest exemptions for manufacturing in Florida are known as the “new or expanding business” exemption. In short, if industrial machinery or equipment is purchased for the exclusive use by a new business, or an expanding business, that manufactures, processes, compounds, or produces for sale items of tangible personal property at fixed locations in the state, then the purchase of that machinery is exempt from tax.
Between the new or expanding business exemption, virtually all equipment being purchased by manufacturers of tangible personal property should be exempt. However, the exemptions don’t stop there. Florida also has narrow exemptions specific to particular industries to capture other equipment and materials used by manufacturers in the state. For example, Florida offers broad exemptions for aquaculture, defense of space technology, and electrical or steam energy production.
The purchase of equipment is not all that manufacturers are concerned with, however. As a result, Florida offers exemptions for boiler fuels used in manufacturing, manufactured advertising materials, research and development, and even repair and maintenance of production machinery and equipment.
Those in the business of manufacturing tangible personal property are offered so many sales and use tax exemptions not just in Florida, but across the country, that is it vital for them to carefully review the sales and use tax laws in each state in which they are doing business. Once money has been paid to a state, especially large sums which are typical in manufacturing, states are hesitant to refund that money from their own pockets even when they know they are not entitled to it. As a result, it may be a complicated and tedious process to retrieve money already paid.
A competent state and local tax attorney can review your purchases to identify the maximum potential refund available. Their experience working with state agencies makes them knowledgeable on the practices and procedures to give your business the best chance at obtaining that refund from the state as efficiently as possible. Unfortunately, like most refunds, there is usually only a short window during which you can apply for a refund before that money is lost forever. The sooner you get the process started, the more likely you will be able to get a refund of the money you are entitled to.
About the Author: Jeanette Moffa is an attorney who concentrates on state and local taxes at Moffa, Sutton, & Donnini, P.A. She is an executive council member of the American Bar Association Tax Section State and Local Tax Committee and the Florida Bar Tax Section. Ms. Moffa is an author of both the CCH’s Expert Treatise Library: Sales and Use Tax as well the ABA’s Sales and Use Tax Deskbook. In addition, her regular columns on state and local tax issues can be found in State Tax Notes and Actionline, a publication from the Florida Bar’s Real Property, Probate, and Trust Law Section. She also serves as assistant editor to the Sales and Use Tax Deskbook and Actionline. Ms. Moffa is a regular speaker at the American Bar Association Tax Section conferences, the Institute of Professionals in Taxation, the Florida Bar Tax Section, the Florida Bar Real Property, Probate, and Trust Law Section, and the FICPA. In her free time, she teaches as an adjunct professor at Broward College.
At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is Florida taxes, with a very heavy emphasis in Florida sales and use tax. We have defended Florida businesses against the Florida Department of Revenue since 1991 and have over 100 years of cumulative sales tax experience within our firm. Our partners are both CPAs/Accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. We represent taxpayers and business owners from the entire state of Florida. Call our offices today for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
ADDITIONAL RESOURCES
2014 FL SALES TAX EXEMPTION ON MANUFACTURING EQUIPMENT, published July 31, 2014, by James Sutton, CPA, Esq & Jerry Donnini, Esq.
FL SALES & USE TAX MACHINERY & EQUIPMENT EXEMPTION SIGNED INTO LAW FINALLY!, published May 21, 2013, by James Sutton, CPA, Esq.
FLORIDA TAX INCENTIVES FOR BUSINESS, published November 10, 2013, by Jerry Donnini, Esq.
MANUFACTURING - AN OVERLOOKED SALES AND USE TAX EXEMPTION, published August 20, 2019, by Jeanette Moffa, Esq.