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In a Tax Information Publication, the Florida Department of Revenue stated that the semiannual and annual returns had been sent to their appropriate filers. Also, they stated that a penalty rate of 10% of the tax due or $50, whichever is greater, was implemented and applies to all late-filed sales tax returns even if it is a “zero tax due” return. This penalty was effective as of July 1, 2003. The 2005 annual resale certificates were also distributed with the Publication. (Tax Information Publication, No. 04A01-03, Florida Department of Revenue, December 7, 2004)

(01/21/2005)

In a Technical Assistance Advisement, the State of Florida qualified a taxpayer’s leaseback transaction as a financing arrangement rather than a true lease. The taxpayer was involved in a leaseback transaction of real property. The State of Florida provided the following indicators as guidance in determining whether or not the transaction was a financing agreement or lease:
1. the language of the documents should be clear, while understanding the importance of substance over form
2. recognizing that a debt must be secured in order for there to be a mortgage
3. the rent involved in the transaction should be fixed to debt service in contrast to the rental market value of the property
4. the buyer/lessee involved in the transaction needs to be a single purpose financing corporation created prior to the transaction in order to facilitate the loan process
5. the “so-called buyer” was passed the short-term and long-term risks; and
6. in order for “debt” to be properly recorded, title must be transferred shortly after the end of the “lease” term.
The Florida Department of Revenue further stated that the lease portion of the transaction was subject to the document stamp tax and that the agreement was also subject to nonrecurring intangible tax. (Technical Assistance Advisement, No. 04M-002, Florida Department of Revenue, November 16, 2004)

(01/21/2005)

In a technical assistance advisement, the Florida Department of Revenue determined that a Florida utility was required to collect sales and use tax from nonresidential customers and gross receipts tax from residential customers for optional facilities that were available for an extra charge. The facilities were not required for the utility service, but were available to customers who wanted more service. The Department of Revenue found that facility charges were taxable along with electricity provision. (Technical Assistance Advisement, No. 04A-059, Florida Department of Revenue, October 26, 2004)

(01/21/2005)

In a Technical Assistance Advisement, the Florida Department of Revenue issued guidance to a contractor who was installing both permanent and removable storm shutters on the same contract. The Department of Revenue stated that this type of contract would classify as a mixed contract. According to the Technical Assistance Advisement, the taxability of a mixed contract can be determined three ways. The first means would be if the predominant nature of the contract is real property, then the contractor would pay tax on the purchase of the materials. The second situation would be if the predominant nature of the contract involves tangible personal property, then the contractor would issue a resale certificate to its vendor and collect sales tax from the customer. The third situation would be if the contract clearly allocates the total price among the various parts of the contract. In this case, the contractor would be responsible for collecting tax from the customer on the portion that relates to tangible personal property. (Technical Assistance Advisement, No. 04A-066, Florida Department of Revenue, December 3, 2004)

(01/21/2005)

In order to qualify for tax exempt status in Florida, medical devices and tools must meet two qualifications. First, the supplies must be intended for one-time use. Second, they must be required by federal law to contain a prescription legend reading either “RX” or “Caution.” This label indicates that the device or tool must be sold either to a licensed physician or according to the order of a licensed physician. If the device or tool does not meet both criteria, it does not qualify for the exemption. (Florida Department of Revenue, TAA No. 04A-041, July 19, 2004)

(10/22/2004)

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