Florida relies heavily on its sales and use tax revenue since it doesn’t have an individual income tax. Notwithstanding, the general state sales tax rate is quite reasonable at 6%. Local rates are similarly reasonable ranging from .5% to 1.5% - although not all local jurisdictions impose a sales or use tax.
Like most states, Florida sales and use tax applies primarily to sales of tangible personal property and certain services. Unique to Florida is the taxability of real property leases (i.e. office space and short and long term residential).
Registration for a sales and use tax account is done online via the Florida Department of Revenue’s web site. The registration form is quite lengthy and something important to note: At the end of the registration form the state requests the name of the person attesting to the accuracy of the information submitted on the application. This name must be one of the corporate officers listed within the application. A name other than a corporate officer listed within the application will result in the rejection of the application. The frustrating aspect of this is that the state does not notify you that the application has been rejected. You must proactively monitor your application online or by contacting the state to make sure the application has not been rejected for any reason.
Accounts are created for each business location and typically a separate sales and use tax return is required for each location. A consolidated return showing the amounts collected in each county may be filed by a dealer who operates two or more places of business and keeps records in a central office.
Estimated sales tax payments are required of some taxpayers in Florida.
Business owners who paid $200,000 or more state sales and use tax during the previous fiscal year (July 1- June 30) must file and pay estimated tax monthly. Using Form DR-15, you are required to make monthly estimated payments, January through December. Estimated tax is due in the current month for the following month. Newly obligated taxpayers must submit their first estimated payment on their December return (due in January).
Three methods may be used for computing estimated tax as follows:
- Average Tax Liability Method – 60% of monthly average sales tax liability for prior year.
- Current Month/Previous Year Tax Liability Method – 60% of your state sales use tax due for the same month of the previous calendar year.
- Current Month Method - 60% of the state sales tax due for the next month's DR-15 return.
When using Method 3, you are estimating your current month's tax liability. Your estimated tax liability on Line 9 of your December return is 60 percent (60%) of the state sales tax that you will report on your January return.
An estimated tax calculator is available online when filling out a Sales and Use Tax Return (DR-15). This calculator will help you determine estimated tax liability using each of the three methods and allow you to choose which method you prefer to use.
Note that if you are filing separate returns by location, the estimated payment requirement is determined based on the legal entity liability rather than each location. You must account for the total from all locations in calculating the estimated payment – then allocate the estimated payment to each location return.
If you underpay your estimated tax, you will owe a penalty of 10 percent of the underpaid amount. I guess the state figures that once you are remitting $200K per year in sales tax, you can afford to hire two accountants and three attorneys to figure out your estimated payment
Resale certificates expire annually. The certificates are preprinted and issued by the state. Recently, access to the preprinted resale certificate was made available by Florida to taxpayers online rather than relying on receipt of the certificate via the mail.
Stay tuned for more of Jeff's EYE ON series as he blogs about sales and use tax State by State.