Generally, sales to anyone of any tangible personal property is subject to Florida sales and use tax. There are various exceptions to the rule called exemptions. Exemptions from sales and use tax come in all shapes and sizes. There are various exemptions available to farmers. However, what was problematic for farmers was how to provide proof to sellers of qualifying for an exemption. This article explains the Florida Farm Team Card and how farmers can use it to their benefit.
Before July 1, 2023, farmers would have to provide various types of Florida sales and use tax exemption certificates to sellers in order to be exempt from Florida sales and use tax. The specific certificate to provide really depended upon which Florida sales and use tax exemption was being claimed. Moreover, whether the Florida sales and use tax exemption certificate had to be provided for every purchase or once in a calendar year depends once again upon the specific Florida sales and use tax exemption being claimed.
In comes the Florida Farm Team Card. There are several requirements for farmers. First, a farmer must have had his or her property classified as agricultural pursuant to section 193.461, Florida Statutes or implemented agricultural best management practices adopted by the Florida Department of Agriculture and Consumer Services pursuant to section 403.067(7)(c)2., Florida Statutes. If either criterion is met, the farmer may apply to the Florida Department of Revenue for a Florida Farm Tax Exempt Agricultural (also known as a “Team”) Card. The Florida Farm Team Card may be used for any exemption found within section 212.08, Florida Statutes. Moreover, the Florida Farm Team Card may be presented by the farmer to the vendor in lieu of a certificate or affidavit otherwise required by chapter 212, Florida Statutes (that is, the Florida sales and use tax laws).
An important note for farmers is the Florida Farm Team Card is subject to review and expiration. The Florida Department of Revenue must adopt regulations (called rules) to administer this new law. The Florida Department of Agriculture and Consumer Services may take all actions that are necessary to administer, issue, and distribute the Florida Farm Team Cards to farmers registered with the Florida Department of Revenue.
The Florida Department of Revenue has adopted a regulation on this exemption that goes into significant detail. For instance, the regulation states a qualified farmer can complete the “Application for Florida Farm Tax Exempt Agricultural Materials (TEAM) Card (Form DR-1 TEAM)” to attempt to get the Florida Farm Team Card. The Florida Department of Agriculture and Consumer Services will issue a Florida Farm Team Card to those applicants approved by the Department of Revenue. From their own rule, it sounds like the Florida Department of Revenue may have a lot of discretion on who does or does not receive a Florida Farm Team Card. The Florida Department of Revenue’s rule goes on to say the Florida Farm Team Card is valid for five years from the date of issuance. Per the Florida Department of Revenue’s rule, the seller is only required to obtain one copy of the farmer’s Florida Farm Team Card during the effective period indicated on the Team Card.
It is important to examine things also from the selling vendor’s standpoint. For purchases of items exempt from Florida sales and use tax under section 212.08, Florida Statutes, and if the vendor provides proof of acceptance of the Florida Farm Team Card from a purchaser, then the vendor is relieved of responsibility for collecting Florida sales tax on the transaction. The Florida Department of Revenue will look solely to the farmer to get the Florida sales or use tax owed on the transaction if the Florida Department of Revenue determines the farmer is not entitled to the exemption. The vendor must accept the Florida Farm Team Card in good faith. In lieu of accepting the Florida Farm Team Card, the seller can obtain a transaction authorization number from the Department of Revenue to exempt that specific transaction only. The transaction authorization number must be obtained by the seller prior to or at the time of the sale and documented on the sales invoice, purchase order, or other document. If the seller would like, the seller may obtain a Vendor Authorization Number for the farmer such that the seller may sell the products exempt from Florida sales and use tax to the farmer during the calendar year.
It may be difficult to believe but in some cases, the Florida Department of Revenue has disputed a farmer is actually a farmer! It is this type of a dispute that the Florida Department of Revenue knows can lead to nullifying the claimed Florida sales and use tax exemption. Farmers must be absolutely certain they qualify for the exemption. Even then, farmers still run the risk of an auditor from the Florida Department of Revenue coming in and disallowing the exemption. It can also lead to a large assessment for farmers who otherwise qualify for the exemption.
As ridiculous as it may sound, farmers have to be prepared for more than just weather patterns. Farmers claiming a Florida sales or use tax exemption must be prepared to demonstrate perfectly they qualify for an exemption. If you fail to do so, the Florida Department of Revenue might try to take the farm. How can you, as a farmer, mitigate your exposure? You need to make it crystal clear what you are doing constitutes farming. You also need to unequivocally demonstrate qualification for the sales and use tax exemption being claimed. You might need to have filed certain applications or keep specific documents. Knowing what to do and how to do it could end up saving you large sums of money.
In conclusion, there is a simplified method for farmers not to have to pay Florida sales tax to vendors on purchasers. Farmers will need to fill out the appropriate application with the Florida Department of Revenue to obtain the Florida Farm Team Card. Once in possession of the Team Card, the farmer may purchase qualifying items exempt from Florida sales tax so long as a valid and appropriate Florida sales and use tax exemption. Farmers must be weary of the Florida Department of Revenue’s aggressive tactics in making assessments against farmers.
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, including that of motor vehicles and boats. 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
Rule 12A-1.116, F.A.C., - Florida Farm Tax Exempt Agricultural Materials Card.
Technical Assistance Advisement 23A-023
ADDITIONAL RESOURCES
FLORIDA SALES TAX AUDITS PROCESS AND TRAPS, published March 4, 2023, by David J. Brennan, Jr., Esq.
FL SALES TAX EXEMPTIONS: AQUACULTURE, published March 29, 2019, by David J. Brennan, Jr., Esq.
FLORIDA SALES TAX INFORMAL WRITTEN PROTEST, published November 17, 2018, by James Sutton, C.P.A., Esq.
SALES TAX REFUNDS FOR FLORIDA CITRUS GROWERS, published July 1, 2018, by David J. Brennan, Jr., Esq.
FLORIDA TAX INCENTIVES FOR BUSINESS, published November 10, 2013, by Gerald J. Donnini, II, Esq.