Like years prior, the Florida Legislature came together once again to pass updates to Florida sales and use tax laws as well as other taxing statutes. This bill is called the “tax package.” As expected, the changes contain some temporary provisions while other parts are “permanent.” If you do not keep updated on these changes, you could be staring at a large tax bill, a lawsuit by customers for charging too much Florida sales tax, or loss of revenue due to being at a competitive disadvantage compared to your competitors who do keep up with the changes. This is part one of three for Florida’s 2024 tax package with updates to various Florida sales and use tax laws that all sellers must know or potentially face dire consequences.
For nonresident purchasers of vessels and aircraft, there is a new requirement. The affidavit to be signed by the nonresident purchase no longer needs to say the purchaser has simply read the provisions of the exemption. Rather, the affidavit must state the nonresident purchaser qualifies for the sales tax exemption. Moreover, the nonresident purchaser must also state (s)he will provide the required documentation to prove entitlement to the exemption. An examples of this is information required to be provided to the Florida Department of Revenue within a certain amount of time.
As it relates to motor vehicle leases, the general rule is the lease of a motor vehicle is subject to Florida sales or use tax. There is a statutory provision providing the lease or rental of a commercial motor vehicle (having a gross vehicle weight of greater than 10,000 pounds) to a single lessee for 12 months or more is not taxable if the tax was paid by the lessor on the purchase price. However, the bill adds a new provision. In lieu of solely a motor vehicle having a gross vehicle weight of greater than 10,000 pounds, it adds a motor vehicle, as defined, primarily used in the trade or established business of the lessee will not be taxable if the lease is to a single lessee for a period of 12 months or more and tax was paid by the lessor on the purchase price. The new defined expansion of “motor vehicle” includes a self-propelled vehicle not operated upon rails or guideway, but not including any bicycle, electric bicycle, motorized scooter, electric personal assistive mobility device, mobile carrier, personal delivery device, swamp buggy, or moped.
The sale of a boat and trailer must be taxed as a single item when sold as a single item to the same purchaser at the same time on the same invoice for purposes of the county surtax. For purposes of calculating the county surtax, the county where the purchaser resides, as identified on the registration or title document, will control.
As it further relates to county surtaxes, the bill makes a provision for instances when a court ultimately decides, without an appeal or if no appeal can be made, a county surtax is unconstitutional. If the county surtax has been collected but not expended, the county must transfer the county surtax, plus interest, to the Florida Department of Revenue within sixty days from the date of the final court order. The Florida Department of Revenue will hold the funds to be disposed of contingent upon certain instances. One instance is if there is no valid county surtax in the same county that had its county surtax found unconstitutional, then all of the funds must be held for appropriation into the general appropriations act to take place July 1 immediately following the transfer of the funds to the Florida Department of Revenue. Another instance is if there is a valid county surtax being collected in the same county having its county surtax found unconstitutional. In that instance (a) seventy-five percent of the funds will be held for appropriation into the general appropriations act to take place July 1 preceding the county surtax suspension; and (b) twenty-five percent of the funds and all interest earned on all funds held in reserve must be held in reserve for the appropriation in the general appropriations acts. The bill then goes on to say how the funds must be disbursed. Despite another refund limiting statute, the bill allows for those otherwise entitled to a refund of the invalidated county surtax may file a claim for refund; however, the refund claim must be filed between July 1 and December 31 of the state fiscal year for such general appropriations act. A huge limiting factor to this new provision is its expiration on June 30, 2030.
The next part of the bill is a huge win for those filing sales and use tax returns in Florida. In particular, if there is an emergency declaration for a county where a business id located (technically, having a certificate of registration) in said county, there is an automatic ten calendar day extension to file the sales and use tax return. However, all of the following conditions must be met. First, the Governor has ordered or proclaimed a declaration of a state of emergency pursuant to a statute. Second, the declaration is the first declaration for the event giving rise to the state of emergency or expands the counties covered by the initial state of emergency without extending or renewing the period of time covered by the first declaration of a state of emergency. Third, and finally, the first day of the period covered by the first declaration for the event giving rise to the state of emergency is within 5 business days before the 20th day of the month. It is this last provision that will likely knock out a lot of the extensions for businesses. Those businesses filing a consolidated sales and use tax return will be considered to be in a county (i.e., having a certificate of registration in a county) to which an emergency declaration applies when the central or main office of the consolidated account is in the county to which the emergency declaration applies. Estimated tax payments are handled the same way.
The bill then creates a brand new statute for child care tax credits, which may be applied against sales or use tax, among other tax types. Specifically, a taxpayer who operates an eligible child care facility for the taxpayer’s employees is allowed a credit of fifty percent (50%) of the startup costs of the facility against any tax due for the taxable year the facility begins operation as an eligible child care facility. An “eligible child care facility” is a child care facility that is licensed under a specific statute or is exempt from licensure under another statute. The maximum credit a taxpayer may be granted in a taxable year depends upon the average number of employees employed by a taxpayer during the year. For one to nineteen employees, the maximum credit is $1,000,000. If there are twenty to two hundred fifty employees, the maximum credit is $500,000. In instances where there are more than two hundred fifty employees, the maximum credit is $250,000. Additionally, a taxpayer operating an eligible child care facility for the taxpayer’s employees is allowed a credit of $300 per month for each eligible child enrolled in the facility against any tax due for the taxable year. The maximum credit a taxpayer may be granted in a taxable year is based on the average number of employees employed by the taxpayer during the year. For one to nineteen employees, the maximum credit is $50,000. If there are twenty to two hundred fifty employees, the maximum credit is $500,000. In instances where there are more than two hundred fifty employees, the maximum credit is $1,000,000. Finally, a taxpayer who makes payments to an eligible child care facility in the name and for the benefit of an employee employed by the taxpayer whose eligible child attends such facility is allowed a credit of one hundred percent (100%) of the amount of such payments against any tax due for the taxable year up to a maximum credit of $3,600 per child per taxable year. The maximum credit amount a taxpayer may be granted in a taxable year is based on the average number of employees employed by the taxpayer during the year. For one to nineteen employees, the maximum credit is $50,000. If there are twenty to two hundred fifty employees, the maximum credit is $500,000. In instances where there are more than two hundred fifty employees, the maximum credit is $1,000,000. A taxpayer can qualify for credits under multiple provisions; however, the total credit in a year may not exceed the sum total of the maximum credit granted under each individual provision. Unused credits have the ability to potentially be carried forward for a period of not more than five years. Beginning October 1, 2024, a taxpayer may subject an application to the Florida Department of Revenue to determine qualification for the credit(s). The Florida Department of Revenue must approve the application for the credit before the taxpayer is authorized to claim the credit on a return. There are numerous other nuances to the aforementioned credits.
The next article will continue with additional provisions you must know to maintain a competitive edge. Read on to learn as much as you can.
About the author: David Brennan is partner 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 Doctor 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. While working for the Florida Department of Revenue as a Senior Attorney, David focused on various sales and use tax issues. You can read his BIO HERE.
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. Contact us for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
AUTHORITY
Chapter 2024-158; House Bill 7073
ADDITIONAL RESOURCES
2023 FLORIDA SALES TAX UPDATE PART II, published August 14, 2023, by David J. Brennan, Jr., Esq.
2023 FLORIDA SALES TAX UPDATE PART I, published July 5, 2023, by David J. Brennan, Jr., Esq.
FLORIDA SALES TAX AUDITS PROCESS AND TRAPS, published March 4, 2023, by David J. Brennan, Jr., Esq.
2023 FLORIDA SALES TAX RATE ON COMMERCIAL RENT, published January 23, 2023, by James Sutton, CPA, Esq.
PHONE CALL FROM FLORIDA DEPARTMENT OF REVENUE: SALES TAX, published October 15, 2022, by Jeanette Moffa, Esq.
FLORIDA SALES TAX INFORMAL WRITTEN PROTEST, published November 17, 2018, by James Sutton, C.P.A., Esq.
FLORIDA SALES TAX - VOLUNTARY DISCLOSURE PROGRAM, published April 9, 2018, by Jeanette Moffa, Esq.