When selling a motor vehicle to individuals who are not Florida residents, car dealers must ensure the sale is properly documented. If not, then the Florida Department of Revenue may come after the car dealer for each sale incorrectly done. This can translate to large tax assessments, plus penalties and interest on top of any tax assessed. Read on to learn one way you can protect your business.
As most car dealers are aware, Form DR-123, Affidavit for Partial Exemption of Motor Vehicle Sold to a Resident of Another State, must be completed at the time of the sale transaction. However, car dealers must charge the home state tax that the customer would have paid if purchasing the motor vehicle in his/her home state. How can a car dealer keep up with the tax laws in all the other states? The Florida sales and use tax laws are difficult enough to decipher and remember!
The Florida Department of Revenue will publish a Tax Information Publication (called “TIP”) at least once a year, but sometimes more often, concerning the sales tax rates for each state. The most recent TIP is TIP 20A01-15, published December 16, 2020. A link to TIP 20A01-15 is included at the end of this article.
TIP 20A01-15 discusses the sales tax rates for each state so car dealers will have a one-stop resource for finding the needed sales tax rates to charge in Florida. It is imperative car dealers update their old copies for the latest TIP copy, as using an older copy could lead to the car dealer charging the wrong amount. If that occurs, the car dealer could be held liable by the Florida Department of Revenue for undercharging Florida sales tax on the transaction. Staying up-to-date is critical to mitigating your sales tax liability with the Florida Department of Revenue.
About the author: David Brennan is an associate attorney with Moffa, Sutton, & Donnini, P.A. His primary practice area is multistate tax controversy. David received a B.S. in Accounting and Finance, with a minor in Computer Science, from Florida State University. He worked as an accountant for a CPA firm before attending law school at Regent University. He received his Juris Doctorate in 2013 and was licensed to practice law in Florida in the same year. In 2015, David earned his Masters of Laws in Taxation from Boston University. As a former senior attorney for the Florida Department of Revenue, he handled informal protest appeals, among other things. You can read his BIO HERE.
ADDITIONAL AUTHORITY
TIP 20A01-15 - Motor Vehicle Rates by State for Nonresident Purchasers
ADDITIONAL ARTICLES TO READ
FLORIDA SALES TAX FOR NONRESIDENT CAR PURCHASES (2020), published August 28, 2020, by David J. Brennan, Jr., Esq.
FLORIDA SALES TAX - HOPE SCHOLARSHIP CREDIT, published October 10, 2018, by David J. Brennan, Jr., Esq.
2018 CAR DEALER FL SALES TAX RATES NONRESIDENT PURCHASERS, published January 16, 2018, by David J. Brennan, Jr., Esq.
FL AUTO DEALERS: DOR CHERRY-PICKS STATUTES TO OVER-ASSESS AUTO DEALERS, published April 27, 2017, by Jeanette Moffa, Esq.
FLORIDA SALES TAX AUDITS OF CAR DEALERS ON THE RISE, published November 14, 2014, by James Sutton, CPA, Esq.
FL SALES TAX - RESALE TO OUT OF STATE CAR DEALERS, published September 19, 2014, by James Sutton, CPA, Esq.
FL SALES TAX AUDITS ON USED CAR DEALERS - WHAT IS TAXABLE?, published July 22, 2014, by Matthew Parker, Esq.
FL CAR DEALER: WHEN IS A SALE TAX EXEMPT?, published March 17, 2013, by James Sutton, CPA, Esq.