Positioned as a gateway of commerce and tourism in the Southeast, Florida is not only renowned for its sun-kissed beaches and attractions but also for its thriving business environment. However, navigating the intricacies of sales tax in Florida requires an understanding of its particular rules and regulations.
This guide breaks down everything you need to know about the Sunshine state’s sales tax, from determining the right sales tax rates to understanding exemptions and filing processes. By the end of this comprehensive guide, you’ll be equipped to handle Florida’s sales tax with confidence and ease.
Sales Tax Nexus in Florida
When a business creates either a physical or economic nexus, it is required to collect sales tax in Florida.Physical Nexus
A physical nexus means having a significant physical presence or engaging in enough activities within a state to require the collection and payment of sales tax. The factors that determine a physical nexus in Florida include:- Physical Location: This includes having an office, a place for distribution, sales, or showcasing products, a warehouse or storage facility, or any other place where you conduct business.
- Inventory in the State: This covers situations where you store your products within the state, even if it’s done through a third-party fulfillment center or 3PL (like Amazon FBA) or an online marketplace.
- Employees, independent contractors, agents, or other representatives operating on your behalf.
- Presence at Trade Show: You must collect sales tax at Florida trade shows if you are present and/or making any sales.
- Tangible Personal Property: This includes vehicles, machinery, equipment, or other goods.
Economic Nexus
States have established regulations to collect sales tax from out-of-state sellers who meet certain revenue and/or transaction thresholds. This rule is known as economic nexus. Beginning July 1, 2021, the threshold for economic nexus in Florida is $100,000 in gross revenue in the previous calendar year’s sales. While the nexus criteria mentioned above generally apply to most businesses, additional methods exist for establishing sales tax nexus. To access a comprehensive list of these rules, please refer to the governing laws for economic sales tax nexus requirements in Florida.
Florida Sales Tax on Goods and Services
One of the first things you need to know is whether the goods you’re selling or services you’re offering are taxable in Florida.Tangible Products
Almost all goods are taxable in Florida, including:- Cosmetics
- Electronics
- Clothing
- Furniture
- Jewelry
- Automobiles
- Home Goods
- Textbooks
- Groceries – Generally, food products meant for human consumption are not subject to sales tax. However, sales tax is applicable to food products prepared and sold for immediate food consumption (i.e. food products provided by restaurants, lunch counters, cafeterias, caterers, hotels, taverns, and other like places).
- Oral Hygiene Products – Effective July 1, 2023, oral hygiene products (i.e. toothbrushes, toothpaste, dental floss, dental picks, oral irrigators, mouthwash) are exempt from sales and use tax
- Feminine Hygiene Products (i.e. pads, tampons, and menstrual cups)
- Prescription Medications
- Common Household Remedies (i.e. lip balms, allergy relief products
- Chemical Compounds and Test Kits
- Prosthetic Appliances or Orthopedic Appliances
- Prescription Optical Goods (i.e. prescription eyeglasses, lenses, and contact lenses)
- Certain baby essentials, such as baby food, infant formula, and teething remedies.
- Agricultural Supplies: Seeds, fertilizers, and machinery used directly in farming are exempt.
Services
In Florida, the majority of service-based transactions, such as professional services, advertising, and salon services, are not subject to sales tax. However, there are specific situations where certain services are taxable. For instance, taxable services are:- Detective and other protection services
- Fingerprinting services
- Non-residential cleaning and pest control services
- Charges for admission to any place of amusement, sport, or recreation
Software-As-A-Service (SaaS)/Digital Products
SaaS is not taxable in the state of Florida. Digital products (i.e., ebooks, downloadable video content, mobile apps) are also not taxable.Shipping/Handling
Shipping and handling charges in the state of Florida are taxable when imposed with the sale of a taxable item. These charges are exempt from sales tax if they are distinctly listed on a bill or invoice and if the buyer has the option to avoid these charges through their sole decision or action (for example, by choosing to pick up the item themselves or organizing their own third-party transport services).Sales Tax Permits and Licenses in Florida
Now that you’ve got a handle on when sales tax nexus applies and which products are taxable in Florida, the next important step is getting your Florida Seller’s Permit, also known as a sales tax permit.Seller’s Permit
You can register for a Florida sales tax permit online at the Florida Department of Revenue or by completing and submitting a paper Florida Business Tax Application (Form DR-1). Ensure you have specific information on hand when registering for a seller’s permit, including, but not limited to:- Business Identification Information (name, address, phone number, email address)
- Business Entity Structure (sole proprietorship, partnership, corporation, LLC, etc.)
- Federal Employer Identification Number (EIN or FEIN)
- Owner/Partner/Officer Information
- Business Activity Details (description of products or services sold, sales volume, date of the first sale, or the expected date to start dates)
Resale Certificate
A resale certificate is a document that allows businesses to buy products without paying sales tax on them as long as they plan to resell those items to customers, who will then pay the tax. As a seller, you can also accept resale certificates from others looking to buy for resale. In Florida, sellers use resale certificates to buy goods from their suppliers they intend to resell. The issuance of the certificates is always done in good faith that the seller would report tax on the final sale of the items. You can download the Florida Annual Resale Certificate for Sales Tax (Form DR-13) provided by Florida in your [portal]. If you don’t want the hassle of registering, sign up for our all-inclusive service, including sales tax registration.Streamlined Sales Tax (SST)
The Streamlined Sales Tax (SST) is an initiative to simplify and standardize sales tax regulations across multiple states. However, Florida is not a party to this program, meaning it does not follow the uniform rules and definitions established by SST but has its own sales tax regulations. Check with the Florida Department of Revenue for the most current information on Florida’s participation in the Streamlined Sales Tax initiative.Calculating and Collecting Sales Tax in Florida
Sales Tax Computation
In Florida, sales tax isn’t just one simple rate; it’s a combination of state and local taxes. To figure out the total sales tax for your calculation, you’ll need to add up the rates for the state, county, and city (if applicable) where your transaction occurs. Here’s an example. Suppose an out-of-state seller satisfies the economic nexus criteria in Florida and sells to a customer in Miami, FL, with a ZIP code of 33101. In that case, the seller has to charge the customer a total sales tax, which can be broken down as follows:
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Origin-based vs. Destination-based
When making in-state sales, it is important to determine if you are located in an origin-based or destination-based state to figure out what rate to charge for sales tax. Florida is a destination-based state, meaning sales tax is determined based on the buyer’s seller’s location. That means for a Florida-based seller, sales tax is generally based on the location of the buyer when selling within the state. For out-of-state or remote sellers, the sales tax rate is always determined by the buyer’s location. For instance, if you’re selling a product from Texas to a customer in Miami, Florida, where you have nexus, you’d apply Miami’s sales tax rate to that sale. To make life easier, consider using sales tax software or consulting a tax professional, like TaxHero, to ensure accurate tax calculations and collections. Understanding these tax rules helps you stay compliant, whether you’re in-state or out-of-state.Filing and Remitting Sales Tax Returns in Florida
The next step after collection is filing and remitting your Florida sales tax returns. Filing and remittance can vary in frequency, typically monthly, quarterly, semi-annually, or annually. It’s crucial to keep accurate records of your sales and tax collections and adhere to the filing schedule set by the state to remain compliant with Florida’s sales tax regulations.- Monthly Filing: Required if annual sales tax collections are more than $1,000.
- Quarterly filing: Needed when collections are between $501 and $1,000 annually.
- Semiannual filing: Applies for collections between $101 and $500 per year.
- Annual filing: Mandatory if collections are $100 or less per year.
Due Dates
In Florida, the due date falls on the 20th day of the following month for all filing periods. For Florida, you’re required to have your return and payment recorded in your sales tax account by the 20th. So, to be cautious, it’s best to file and send your sales tax return by the 19th of the following month, allowing time for processing and preventing any penalties. However, if this day is a holiday, weekend, or in the rare occurrence of a natural disaster, the deadline is typically extended to the next business day. For instance, if you’re a monthly filer and filing sales tax for the month of April, and the May 20th deadline falls on a holiday or weekend, you’ll have until May 21, the following business day, to submit. However, to play it safe in Florida, you should aim to submit and pay this before May 21.Filing Sales Tax Returns
To file your sales tax return for Florida, a few options are available:- File online through the Florida’s website portal.
- File by mail – You can use Form DR-15 and file and pay through the mail.
- File with TaxHero – Let TaxHero take care of it so you don’t have to worry about missing a payment or return.
Timely Filing Discount
Some states offer a discount to businesses for collecting, filing, and remitting sales tax on time as an incentive to process sales taxes promptly. In Florida, if you file your sales and use tax return online and also pay on time, you can claim a collection discount. This discount is 2.5% of the initial $1,200 in tax owed, but it won’t be more than $30.Sales Tax Holiday
Currently, for 2023 – 2024, the planned sales tax holidays in Florida are:
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Florida Sales Tax Penalties
Like in most states, sales tax is a big part of how Florida generates revenue. Thus, maintaining compliance with sales tax regulations is of utmost importance. Failure to do so can lead to consequences and sales tax penalties. Therefore, it is crucial always to ensure you are up-to-date in filing, collecting, and remitting sales tax to the state. Here are the specific penalties for non-compliance with sales tax regulations in Florida:- Civil penalties amounting to 10% of the total sales tax due (minimum of $50);
- On the criminal side, offenses can be classified as either misdemeanors or felonies, depending on the severity and specific circumstances.
| Questions? Connect with TaxHero today for a free sales tax consultation about your business in Florida or any state! |