Florida State Law on Refunds and Over-collection

A Florida judge determined that Oracle America, a software company, was ineligible for a tax refund filed with the state after the tax was over-collected.

Oracle, who had been selling electronic software to their customer Nielsen Co. since 2006, had collected sales tax on the entire product between February and May of 2015. However, this was not the correct tax treatment due to the manner of which the software was delivered and Florida’s surtax regulations.

Oracle charged Nielson tangible personal property taxes on sales that were electronically delivered and therefore would not have been subject to the tax. The tax that was collected was remitted to the Florida Department of Revenue. As opposed to a physically delivered product, electronically delivered products such as Oracle’s software are not subject to sales tax under Florida Ruling No. 09A-049.

Additionally, Oracle did not properly apply Florida Statue section. 212.054(2)(2)1 which would have only charged the surtax to the first $5,000 of the purchase price. Oracle charged the surtax to the full purchase price. Again, the collected tax was remitted to the Department of Revenue.

When Nielson discovered the excess tax paid, they requested a refund from Oracle, who denied the refund to Nielson before they were able to retrieve the excess tax from the department. While they were able to prove to the Department that excess tax was collected and paid in, they couldn’t receive the refund from the state as they failed to refund the taxes to the customer who actually paid the taxes.

This case highlights a couple of different areas that taxpayers should take into consideration when both requesting refunds for overpaid tax, as well as correctly taxing sales to customers. Firstly, keeping up with local statues is a necessity. As of July 1, 2021, Florida requires dealers doing business in Florida to collect and electronically remit sales tax. For a company like Oracle, who electronically delivers software, they are still required to collect sales tax on their products.

Finally, clear communication and detailed records can lead to greater success in securing refunds. Taking action in the correct order can not only save time but ensure a successful negotiation with the state Department of Revenue. Had Oracle refunded the excess tax before submitting a claim, they could have received their refund from the state department. A win for the company in this case, however, was their record keeping ability in such that they were able to provide that the taxes were collected, reported, and remitted. Ensure that your company is also keeping accurate records.

(Jardine, Christopher. “Florida ALJ Denies Oracle’s Sales Tax Refund Claim.” Tax Notes, January 19, 2023.Oracle Am. Inc. v. Dep’t of Revenue; Case No. 22-1053. Technical Assistance Advisement, No. 09A-049, Florida Department of Revenue, September 23, 2009, ¶205-406.)

Posted on February 10, 2023