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Sales of Infrastructure as a Service (IaaS), simple storage services, and data transfer fees charged in conjunction with those two services are information services and are not subject to sales and use tax or communications services tax (CST) in Florida. Simple storage service allows a customer to utilize the storage capacity within the seller’s server/computer equipment, but the seller does not actually provide access or license to use that equipment or the real property facilities where the servers are located. As such, this service is not a taxable communications service. Additionally, the customer is not purchasing or being granted a license to use tangible personal property or real property, and, as such, the service is not a sale subject to sales tax. IaaS is properly classified as a nontaxable information service. The IaaS service is an information service whether the customer chooses an open source or a third-party instance. As an information service, it is not subject to CST. IaaS is not subject to sales tax because there is no sale or lease of software, tangible personal property, or real property. For the data transfer fees, while the seller may utilize communications services to move the data from or between data centers, the charge is not for the seller providing the communications service to the customer, because the customer is not being sold the ability to transmit, convey, or route data. The charge is for the seller to make the data or the computing power accessible in the data center or region in which the customer has requested it. Whether this charge is incurred as part of either the simple storage service or the IaaS, the charge is an information service not subject to sales tax or CST. (Technical Assistance Advisement, No. 14A19-001, Florida Department of Revenue, March 13, 2014, released June 13, 2014)


Linen companies that provide rental linens and include in the sales price of the rental an automatic and recurring charge – an "inventory maintenance fee" - for the guarantee that inventory levels for a desired linen item remain constant are required to collect and remit Florida sales tax on the inventory maintenance fee.Regardless of whether the charge is considered an "inventory maintenance fee" or a "maintenance warranty fee," it is considered part of the taxable rental of the linens.(Technical Assistance Advisement, No. 14A-003, Florida Department of Revenue, February 13, 2014)


Representative Lamar Smith (Republican, Texas) has introduced a bill to bar multiple taxes on digital goods and services.  Smith had proposed an earlier bill which failed to pass.  This bill is a revised version of the earlier bill. The proposed bill – called the Digital Goods and Services Tax Fairness Act of 2013 – would only allow a state to tax sales of digital goods and services to customers with a tax address within that state. Additionally, states would be barred from imposing multiple taxes on digital goods. The bill defines digital goods as sounds, images, data and facts maintained in digital form. Internet access service is not included as a digital good in the bill. (H.R. 3724)


The purchase of repair labor to re-glaze and straighten baking pans used by bakeries, as well as the purchase of replacement baking pans with a three-year depreciable life, is exempt from Florida sales and use tax as repairs to an integrated production line.  The exemption for repairs to an integrated production line is available to certain industries under Standard Industrial Classification (SIC) Industry Major Group Numbers.  The business activity of bakers is included in this classification.  Additionally, food and kindred products are specifically listed as eligible for the exemption, making bakers eligible for the exemption.  The exemption on repairs is limited to “labor charges for the repair of, and parts and materials used in the repair of and incorporated into, industrial machinery and equipment.” “Industrial machinery and equipment” is defined as tangible personal property with a depreciable life of three years or more. The baking pans have a three year depreciable life.  Therefore they can be considered industrial machinery and equipment as opposed to consumable supplies.  Straightening and re-glazing the pans are activities that fall within the repair exemption.  The baking pans are considered to be physically and functionally integrated with the ovens during the baking process since the ovens cannot perform their function of making baked products without the baking pans.  (Technical Assistance Advisement, No. 12A-013, Florida Department of Revenue, May 8, 2012)


Florida has issued an amendment to the sales and use tax exemption for machinery and equipment used to increase productive output.  Previously, expanding businesses seeking a sales and use tax exemption on purchases of industrial machinery and equipment had to show an increase in productive output of not less than 10% in order to qualify for the exemption.  Per the amendment, effective January 1, 2013, that required increase is reduced to not less than 5% to qualify for the exemption.  The increase is measured by comparing the number of physical units produced for 12 continuous months immediately after completing the installation of the machinery and equipment to the number or units produced over the 12 continuous months immediately preceding the installation.  (Tax Information Publication, No. 12A01-05, Florida Department of Revenue, June 1, 2012)



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