Florida: New Law Provides for Temporary Expansion of Manufacturing Exemption

Florida: New Law Provides for Temporary Expansion of Manufacturing Exemption

Governor signed HB into law on May 17, 2013. The new law, Fla. Stat. § 212.08(7)(kkk) which expands Florida’s sales/use tax exemption for manufacturers is effective April 30, 2014. Under current law, only new or expanding businesses are eligible for this manufacturing exemption.

Under this new exemption, industrial machinery and equipment is exempt from state sales/use tax when purchased by eligible manufacturing businesses for use at a fixed location within Florida for the manufacture, processing, compounding, or production of items of tangible personal property for sale.

An eligible manufacturing business under these new provisions is defined as a business whose primary business activity (activity representing greater than 50% of all activities) at the location where the industrial machinery and equipment is located is within the industries classified under 2007 NAICS codes 31, 32, and 33. This new temporary sales/use tax manufacturing exemption is part of a broad economic development accountability bill and is set to expire April 30, 2017.

Please contact me if you have any questions on expanded exemption or if you are interested in learning about economic development accountability bill. My telephone number is 305.960.1202 and my email address is klake@bpbcpa.com.

U.S. Senate Approves Legislation Authorizing States to Collect Sales and Use Taxes From Out-of-State Sellers

U.S. Senate Approves Legislation Authorizing States to Collect Sales and Use Taxes From Out-of-State Sellers

The U.S. Senate on May 6 approved legislation that generally would make it easier for a state to collect sales and use taxes from sales made by out-of-state or "remote" sellers (such as catalogue or online retailers) that do not have an in-state physical presence. The Marketplace Fairness Act of 2013 (S.743) cleared the chamber by a vote of 69-27 and now heads to the House of Representatives for consideration.

Marketplace Fairness Act

The Marketplace Fairness Act generally provides a state that is a member of the Streamlined Sales and Use Tax Agreement with the authority to enact laws requiring remote sellers to collect and remit sales and use taxes to the state with respect to "remote sales" sourced to that state. 　If a state is not a member of the Streamlined Sales and Use Tax Agreement, the state may exercise such authority if the state adopts certain "minimum simplification requirements" relating to the administration of the tax, including a single audit for all state and local taxing jurisdictions within the state, a single sales and use tax return, and uniformity of the tax base. A non-member state must also provide remote sellers with free software for the purposes of calculating sales and use taxes due on each transaction at the time the transaction is completed and for purposes of filing state sales and use tax returns. Small businesses are exempt under the Act if their annual gross receipts from remote sales in the U.S. do not exceed $1 million.

Next Steps

The measure now heads to the House of Representatives, where it most likely will be routed to the Judiciary Committee. House leaders have not indicated whether or when they intend to move the Senate-passed bill or a similar measure (H.R. 684) introduced in February by Reps. Steve Womack, R-Ark., and Jackie Speier, D-Calif. For its part, the White House on April 22 released a statement of Administration Policy ("SAP") supporting the provisions in the Senate bill. The SAP notes the legislation "would eliminate the unfair advantage currently enjoyed by big out-of-state online companies over local neighborhood-based small businesses."

 

In the meantime remote sellers and buyers alike may want to consider whether their billing systems, purchasing systems, sales tax policies, and compliance procedures are current and adaptable in the event of a possible federal law that requires remote sellers to collect tax. Such considerations may include review of the taxability of their revenue streams and purchases, potential for automation of sales tax billed or use tax calculated, and potential for outsourcing of sales tax compliance.

The problem is that more than 15,000 taxing jurisdictions across the nation are in a constant state of flux. In one month alone last year, taxing authorities in 26 states made 257 changes to their sales tax rates and rules. All this has grown to make sales tax compliance which is a tough job, even harder.

BPB helps clients manage these challenges.