Understanding Florida’s tax system is crucial for both businesses and individuals. This guide provides a detailed overview of sales tax, remote sales tax, and other relevant tax information in Florida.
Who Needs to Pay Tax in Florida?
Before starting a business in Florida, it’s essential to determine if your activities or products are subject to sales and use tax. If so, you must register with the Florida Department of Revenue to collect sales tax or pay use tax. Here’s a list of business activities that typically require registration:
- Retail Sales: Selling taxable items at retail.
- Repairs and Alterations: Repairing or altering tangible personal property.
- Real Property Rentals: Renting, leasing, or licensing real property, such as commercial office space or mini-warehouses.
- Short-Term Rentals: Renting short-term living accommodations, including motel/hotel rooms, beach houses, condominiums, timeshare resorts, vacation houses, or travel parks.
- Personal Property Rentals: Renting or leasing personal property like vehicles, machinery, equipment, or other goods.
- Admissions: Charging admission to places of amusement, sport, or recreation.
- Manufacturing: Manufacturing or producing goods for retail sales.
- Service Warranties: Selling service warranty contracts.
- Vending and Amusement Machines: Operating vending or amusement machines.
- Taxable Services: Providing taxable services such as investigative and crime protection services, interior nonresidential cleaning services, or nonresidential pest control services.
- Out-of-State Businesses: Out-of-state businesses selling into Florida with transactions exceeding $100,000 in the prior calendar year.
- Marketplace Providers: Marketplace providers facilitating remote sales into Florida.
How is Sales Tax Calculated in Florida?
Sales tax and discretionary sales surtax are calculated on each taxable transaction.
Since July 1, 2021, Florida has required businesses to use a rounding algorithm when calculating sales tax. The computation must be carried to the third decimal place; if the third decimal place is greater than 4, the tax must be rounded up to the next cent.
Businesses can apply this rounding algorithm to the aggregate tax amount computed on all taxable items on an invoice or to the taxable amount on each individual item. Any person making taxable sales in Florida must separately state Florida sales tax on each customer’s invoice, sales slip, receipt, billing, or other evidence of sale. The sales tax and discretionary sales surtax can be shown as one total or separately.
Effective tax rates and rate divisors may be used by certain industries when it is impractical to separately state Florida sales tax.
Remote Sales Tax in Florida
As of July 1, 2021, Florida law mandates that businesses making remote sales into the state collect and electronically remit sales and use tax, including any applicable discretionary sales surtax, if their taxable remote sales exceeded $100,000 in the previous calendar year.
Examples of remote sales include:
- Internet purchases
- Mail-order catalog purchases
- Purchases made in another country
- Furniture purchased from dealers located in another state
- Computer equipment ordered from out-of-state vendors advertising in magazines
Many out-of-state businesses already collected and remitted sales and use taxes to the Florida Department of Revenue before this law. Marketplace providers are also required to register to collect and remit sales tax on taxable sales they facilitate for marketplace sellers for delivery into Florida.
A separate electronic registration application is required for each place of business located within Florida. Out-of-state businesses can submit one application for all out-of-state locations.
Tips for Filing Your Florida Tax Return
To ensure accurate and timely filing, here are some tips:
- File on time: File for each reporting period, even if no tax is due.
- Sign up for reminders: Subscribe to receive due date reminder emails.
- Enter transactions correctly: Ensure transactions are entered on the correct lines of the Sales and Use Tax Return (Form DR-15) to avoid additional tax.
- Compute sales tax correctly: Calculate the correct sales tax, including any discretionary sales surtax.
- Complete all information: Fill out all information on the return, including front and back, and include your signature and your preparer’s signature.
- Complete the back of your return: If reporting discretionary sales surtax, complete the back of your return.
- Don’t include tax collected in gross sales: Including collected tax in gross sales will increase the amount of tax due.
- Calculate collection allowance correctly: When filing and paying electronically on time, calculate the collection allowance correctly (2.5% of the first $1,200 of tax due, not to exceed $30).
Registration and Account Changes in Florida
Businesses must register each location to collect, report, and pay sales tax. You can register using the online registration system or submit a paper Florida Business Tax Application (Form DR-1).
If you hold an active certificate of registration or reemployment tax account, use the Application for Registered Businesses to Add a New Florida Location (Form DR-1A) to register additional locations or a location that has moved to a different county.
Once registered, you will receive a Certificate of Registration (Form DR-11), a Florida Annual Resale Certificate for Sales Tax (Form DR-13), and tax return forms. The Certificate of Registration must be displayed in a visible place at your business location.
When Should You Notify the Florida Department of Revenue?
Notify the Florida Department of Revenue if you:
- Change your business name
- Change your mailing address
- Change your location address within the same county
- Close or sell your business
- Your business becomes active and you will sell or rent taxable property or services
Update your account online for the quickest notification.
When to Submit a New Tax Application in Florida
Submit a new registration if you:
- Change your legal entity
- Change the ownership of your business
Use the online registration system or complete a paper Florida Business Tax Application (Form DR-1).
Filing and Paying Taxes in Florida
Sales and use tax is generally reported on the Sales and Use Tax Return (Form DR-15). You can file returns and pay tax electronically using the Department’s File and Pay webpage or purchase software from a vendor.
Electronic Filing and Payment Requirements in Florida
Businesses that paid $5,000 or more in sales and use tax during the State of Florida’s prior fiscal year (July 1 – June 30) are required to file and pay sales and use tax electronically during the next calendar year. Failure to comply results in a $10 penalty for each failure.
General Due Dates for Florida Taxes
Sales and use tax returns and payments are due on the 1st and late after the 20th day of the month following each reporting period. A return must be filed for each reporting period, even if no tax is due.
If you electronically pay or electronically file and pay at the same time, initiate your electronic payment and receive a confirmation number no later than 5 p.m. ET on the business day prior to the 20th day of the month.
Filing Frequency in Florida
Most new businesses are set up to file and pay sales and use tax quarterly. The filing frequency depends on the amount of tax you collect:
| Annual Sales Tax Collections | Return and Payment Filing Requirement |
|---|---|
| More than $1,000 | Monthly |
| $501 – $1,000 | Quarterly |
| $101 – $500 | Semiannual |
| $100 or less | Annual |
Address/Jurisdiction Database in Florida
The Florida Department of Revenue’s Address/Jurisdiction Database identifies the county for addresses in Florida. It can be used to find the sales tax and discretionary sales surtax rate for Florida addresses.
Florida Annual Resale Certificate for Sales Tax
Businesses registered to collect sales tax are issued a Florida Annual Resale Certificate for Sales Tax, allowing them to buy or rent property or services tax-free when reselling or re-renting. Certificates expire on December 31 each year.
Florida Certificate of Forwarding Agent Address
Forwarding agents engaged in international export may obtain a Florida Certificate of Forwarding Agent Address by submitting a completed application to the Department. Selling dealers may accept a valid copy of this certificate instead of collecting Florida sales tax.
Florida Farm Tax Exempt Agricultural Materials (TEAM) Card Program
Beginning January 1, 2024, the Florida Department of Revenue will accept applications for TEAM Cards. The TEAM Card allows qualified farmers to claim sales tax exemptions on items purchased for agricultural use.
Conclusion
Understanding Florida’s tax regulations is crucial for businesses operating in the state. This guide provides essential information on sales tax, remote sales, filing requirements, and other relevant tax programs. Staying informed ensures compliance and efficient financial management.
