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A free publication, distributed monthly in Florida is subject to use tax on the “cost price” of production because the publication is not comprised primarily of advertising. Florida law, Section 212.08(7)(w), F.S. provides an exemption for free, circulated publications whose content is mainly advertising. Because the publication in question contains both an address book and gift certificate section it does not fulfill the advertising qualification and therefore is not exempt from tax. (TAA No. 04A-046, Department of Revenue, August 6, 2004)


In a new release, the State of Florida discussed the guidelines for sales tax levied on housing accommodations for victims of Hurricane Charley. Housing that is rented for a period of six months or more is exempt from tax. If a resident is renting on a month-by-month basis, the first six months are taxable and every month following the first six consecutive months is exempt. If a nonprofit organization rents a room or block of rooms on behalf of hurricane victims, the rental is exempt. If the rental is intended to be a permanent residence for the occupant, it is exempt from tax. (Release, Florida Department of Revenue, September 2, 2004)


A Florida technical assistance advisement was recently published explaining the exemption of a manufacturer’s pollution control equipment. Typically a part of the manufacturing process, the brownstock washing and the oxygen delignification system are used as integral parts of the pulp and paper production process. However, the purpose of their replacement and/or installation was to meet a law implemented by, or a condition of a permit issued by, the Florida Department of Environmental Protection. Therefore, the purchases and installation services pertaining to these systems are exempt as pollution control equipment. (Florida Department of Revenue, Technical Assistance Advisement 04A-036, June 9, 2004.)


An S corporation was owned 100% by a husband and wife; the husband purchased real property in his name to expedite the purchase, intending to transfer the property to the corporation. Since the purchase, the property has been included among the corporation’s assets and the mortgage has been included in its liabilities, with deductions claimed by the corporation for depreciation, mortgage interest payments, and property taxes. The husband did not treat the property as his personal asset, nor did he claim any deductions for it. However, the title was not transferred until seven years after the purchase. The husband and the corporation were two separate legal entities and the husband did not prove that he was acting as an agent of the corporation in purchasing the real property. Therefore, the payments made by the corporation for seven years on behalf of the husband were consideration. When separate legal entities are created to achieve advantages, sales tax is imposed in the transactions between those legal entities. (Technical Assistance Advisement 04-034, May 26, 2004)


A Florida LLC company requested a Technical Assistance Advisement on the taxability of profits being given to a parent LLC by an LLC subsidiary when the subsidiary is located in a building owned by the parent. In Florida, rent payments are subject to sales tax. In this case, the company was claiming that no rent was being paid by the subsidiary to the parent. Under specific conditions, the Florida Department of Revenue found that profits could be given to the parent without creating a tax transaction in the situation described. The department indicated that the transaction would be exempt if the distributions do not coincide with property expense obligations by the owner of the property, the distributions do not match financial obligations for the property, and that the profits distributed are actual profits not linked to the financial responsibility of the property. (Florida Department of Revenue, TAA 04A-032, May 18, 2004.)



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