Florida Sales Tax Demystified

Florida Sales Tax Demystified

Ok, so, Florida Sales Tax, for the most part is not too complicated.  But, it DOES have its quirks – believe me!  Follow along  🙂

Points of Interest:

  • FL DOR = Florida Department of Revenue
  • County Surtax (also known as Discretionary Tax).  As it turns out, this is quite complicated lol
    • Not all counties have a Surtax
    • The current rates are .5%, 1%, and 1.5%.  If a county has a Surtax it will be one of these 3 rates.
    • Cap:  Currently the Surtax is applied to the first $5000 of the taxable amount of an item (please read the following additional notes).
      • On Parts Sales the taxable amount is the total of each line item.  Example, you are selling 20 of the exact same spark plug at $3ea.  You are also selling 5 sets of spark plug wires at $25ea.  The county the dealership resides in has a 1% County Surtax.  The Surtax calculations would be:  ( $3 x 20 ) x 1% = $.06.  ( $25 x 5 ) x 1 % = $1.25.  $.06 + $1.25 = $1.31 in County Surtax. (notice the Cap does not come into play because neither line item reaches it)
      • On Unit Sales:
        • NOTE: For these we use the County Surtax Rate of the county in which the BUYER resides.  Lets assume the same rate as above for simplicity purposes.
        • When selling just ONE unit things are super simple.  If the Total Taxable Amount is greater than the Cap then the calculation would be $5000 x 1% = $50.  If the Total Taxable Amount is less than the Cap then we simply multiply the Total Taxable Amount x 1%.
        • Multiple Unit Sales:  Any units that have the EXACT same Model Number get their individual Total Taxable Amounts added together and the Surtax is calculated on THAT total.    This is done for each Model Number on the invoice.
          NOTE: PLEASE READ!  There are times when multiple serialized units actually make up one total unit.  Example:  In the AG industry it is very common to sell a tractor and one or more implements that make up one working unit.  Since they are all individual serialized units the County Surtax would get applied to each one.  But, IF the intent of the customer is to put them together to make one unit then you, the dealer, can link those units together in the Serialized Units section of Lizzy.  When this is done Lizzy will apply the County Surtax to the TOTAL of those linked units.
        • Certain backend F&I products are NOT subject to the Surtax Taxable Cap and therefore get ran thru the tax code individually.  Currently they are:
          • Extended Service Contracts
          • Pre-Paid Maintenance Policies
          • Tire & Wheel / Roadside Hazard Protection Policies
          • Theft Protection Policies
          • Battery Protection Policies
          • Key Replacement Policies
  • Tire & Battery Disposal Fees:  By law, the dealership has to pay these when they purchase tires and/or batteries.  The law does NOT however require the dealership to charge their customers these fees.  BUT, they CAN if they want to recoup said fees.  Here’s the little known catch:  Per FL DOR since these fees are OPTIONAL they are taxable!  So, just be aware, that if the dealers charge these fees they WILL get included in the Total Taxable Amount.
  • Labor ALONE is NOT taxable.  But, if there are any taxable items on an invoice with said Labor THEN said Labor becomes taxable.
  • Shipping/Delivery Charges:  IF the customer has the option to come into the dealership and pickup their items themselves then any Shipping and/or Delivery charges are NOT taxable.
  • Shop Materials:  Boy, have I been thru the ringer on this one!  Some people believe (and very strongly I might add lol) that Shop Materials are NOT taxable and then there are the other people who feel just as strongly that they ARE taxable.  I FINALLY got to the bottom of it.  I had a nice long conversation with a gentleman at the FL DOR.  He is a top tier tax expert and has been there for many, many years and he really knows his stuff.  It turns out that any Shop Materials that stay with the unit ARE taxable.  And any Shop Materials that do NOT stay with the unit are NOT taxable.  So, this means, to a certain extent EVERYBODY is right!  🙂  So, since NOBODY tracks Shop Materials in this manner the state rep said to simply tax the entire amount.
  • Insurance Premiums:  Any insurance type of premiums, and this includes GAP Coverage, are NOT taxable.

 

Here I will layout what makes up the Total Taxable Amounts.  I will break these down by invoice TYPE:

  • Internet Sales:  Of course the items themselves are taxable.  But, what is not well known is that the Shipping Charge IS taxable on these types of invoices.  Why? Because the customers do not have the CHOICE to come into the store and pickup the parts themselves therefore the FL DOR says the Shipping Charge IS taxable!
  • Parts: All over-the-counter parts sales are taxed on a per line item basis.  They get both the State Sales Tax (currently 6%) AND the County Surtax (if any) for the county in which the dealership is located.
  • Jobs/Service Tickets:
    • Parts
    • Shop Materials
    • Labor IF either of the two items listed above are on the invoice.
  • Major Unit Sales:
    • Unit Price
    • Freight
    • Setup
    • PDI
    • Any ATTACHED Accessories
    • Installation for said ATTACHED Accessories
    • Any F&I backend type of products that involve attaching something to the unit.  Examples:
      • LoJack Unit
      • An Alarm System
      • A GPS Tracking System
      • A Battery Tender
      • Any Chemicals (Interior Protectant, Paint Protectant, Undercoating)
      • Battery Disposal Fee
      • Tire Disposal Fee
      • Dealer DOC Fees
    • AnyTrade-In Allowance REDUCES the Total Taxable Amount

So for on last attempt on clarification I would like to layout 3 examples of how taxes are calculated on Major Unit Sales.

Example 1:

  • 1 Unit.
  • Total Taxable Amount = $7,995.00.
  • State Tax Rate = 6%.
  • Buyer’s County Surtax Rate = 1.5%
  • State Sales Tax:  $7,995 x 6 % = $479.70
  • County Surtax:   $5,000 (cap) x 1.5% = $75.00
  • Total Tax = $479.70 + $75.00 = $554.70

 

Example 2:

  • 3 Units all of the EXACT same Model Number (say, 3 commercial Zero Turn lawnmowers)  OR 3 Units that are linked together
  • Total Taxable Amount for each unit = $2,999.00
  • Same rates as in Example 1
  • State Sales Tax = ( $2,999 x 3 ) x 6% = $8,997 x 6% = $539.82
  • County Surtax:  $5000 (we use the cap because $8,997, the Total Taxable Amount for all same Models), is greater than $5,000) x 1.5% = $75.00
  • Total Tax = $539.82 + $75.00 = $614.82

 

Example 3:

  • 2 Units of the EXACT same Model Number (say, 2 Personal Watercraft) with a Total Taxable Amount of $8,995 ea
  • 1 Unit of a DIFFERENT Model than the above 2 (say, a trailer to haul the 2 Personal Watercraft) with a Total Taxable Amount of $2,150
  • Same rates as the above 2 examples
  • State Sales Tax:  $8,995 + $8,995 + $2,150 = $20,140 x 6% = $1,208.40
  • County Surtax:
    • 2 Personal Watercraft with the EXACT same Model Number:  $5,000 (we use the cap since $8,995 x 2 = $17,990 is greater than $5,000) x 1.5% = $75.00
    • 1 Trailer:  $2,150 x 1.5% = $32.25
    • Total County Surtax = $75.00 + $32.25 = $107.25
  • Total Tax = $1,208.40 + $107.25 = $1,315.65

 

WOW!  That was a long one! lol   I hope this helps y’all to better understand how Lizzy calculates the Florida Sales Taxes. 🙂