Florida Provides Guidance on Application of Discretionary Sales Surtax

The Florida Department of Revenue has issued guidance on the application of the $5,000 discretionary sales surtax. Florida tax law authorizes the counties of Florida to levy various types of local option taxes, including a discretionary sales surtax, provided that the sales amount above $5,000 on any item of tangible personal property is not subject to the surtax. If two or more taxable items of tangible personal property are sold to a purchaser at the same time, then the items may qualify as a single sale of an item for purposes of the $5,000 limitation. In order for the exception to apply, two tests must be satisfied:

  • Per the first test, there must be a single sale in which one purchaser buys all the items at the same time.
  • Per the second test, the multiple items will be aggregated for purposes of applying the $5,000 limitation only if they fall into one of two categories: items that are normally sold in bulk, or items that will be assembled into a working unit or a part of one.

The invoice in question constitutes the sale of three single items sold in bulk (listed as three separate line items on the invoice), with the total invoice amount exceeding $5,000. The three line items are for three different types of trees. The single sale test was satisfied since documentation confirms that delivery of all of the items on the invoice occurred at the same time. In order to meet the bulk sale/working unit test, the single sale of multiple items must meet one of a number of conditions. One of the conditions is that the items are multiple quantities of a single item that the dealer normally sells in multiple quantities or that the purchaser normally buys in multiple quantities. In this case, the seller sold multiple quantities of three separate types of items. The invoice constitutes the sales of three single items sold in bulk. The $5,000 surtax limitation should be applied to each line item, as each type of tree constitutes the sale of a single item. In this case, the surtax limitation applied to the first line item since it exceeded $5,000 but did not applies to the other two line items since the total sale amount for each of those line items was less than $5,000. (Technical Assistance Advisement 18A-018, Florida Department of Revenue)

Posted on August 19, 2019