Florida Regulations 12A-1.0161: Sales and Use Tax on Services; Sale for Resale
Current as of: 2024 | Check for updates
|
Other versions
(1)(a) A tax is imposed on the sale at retail or use in this state of nonresidential pest control services described in Fl. Admin. Code R. 12A-1.009, nonresidential cleaning services described in Fl. Admin. Code R. 12A-1.0091, and detective burglar protection, and other protection services described in Fl. Admin. Code R. 12A-1.0092 The tax is imposed at the rate of 6 percent of the total sales price or cost price of such service. The tax shall be computed on each taxable sale or use of a service for the purpose of remitting the amount of tax due the state, and shall include each and every such retail sale or use of a service. The charge for services performed within this state but used or consumed outside this state by the purchaser is exempt from tax.
(b) For the purposes of this rule, a service shall mean those services enumerated in paragraph (a) above.
(2)(a) The use tax on services shall apply to the use of a taxable service purchased within or outside this state when the primary benefit of the service is used or consumed in this state and at the time of purchase the sales tax could not be or was not imposed. The primary benefit of the service is presumed to be used or consumed in Florida and subject to use tax when:
1. The real property is located in Florida, if the service is applied to or otherwise directly relates to the real property; or
2. The situs or permanent location of tangible personal property is in Florida, if the service is applied to or otherwise directly relates to the tangible personal property; or
3. The direct result of the service applies to activities of the purchaser in Florida, if the service is unrelated to real property or tangible personal property; or
4. The service is performed for or primarily benefits the estate of a decedent whose last established residency was in Florida.
(b) For the purposes of subparagraph (a)3. above, a purchaser shall be considered a purchaser in Florida if the purchaser is an individual acting in a nonbusiness capacity and resides in this state, on a permanent or temporary basis, at the time the purchase is made; or if the purchaser is a business with Florida nexus.
(c) For the purposes of paragraph (a) above, if the purchaser can demonstrate to the satisfaction of the Department that the benefit of the service was used or consumed outside this state, the service shall be deemed to be used or consumed outside this state. In determining whether the benefit of a service is used or consumed in this state the Department shall consider: all of the facts and circumstances surrounding the transaction; and whether the result of the service could give rise to a cause of action in Florida under Florida Statutes § 48.193 The seller of services subject to tax shall maintain a monthly log for each transaction involving the charge for services performed in this state but used or consumed outside this state. The log must identify the purchaser’s:
1. Name, location, and mailing address;
2. Federal employer identification number, if a business, or social security number, if an individual;
3. Identify the service sold, the price of that service, and the date of sale;
4. The reason for the exemption; and,
5. The sales invoice number.
(3) Services by employees to their employers are exempt.
(a) In determining whether a person is an employee, the Department will consider the following indicia:
1. Whether the person is paid a wage or salary;
2. Whether the “”employer”” is required to withhold income tax from the person’s wage or salary;
3. Whether F.I.C.A. is required to be paid by the “”employer””; or
4. Whether the “”employer”” is required to make unemployment insurance contributions on behalf of the person.
(b)1. However, if all of the indicia mentioned above are present, the person is nevertheless not an employee if he is acting in the capacity of an independent contractor. A person may be an employee even if one or more of the indicia are not present and he is not acting as an independent contractor.
2. Example: D is a detective who works for Agency A. Agency A pays him $30.00 per hour. Agency A withholds income tax from the money paid to D. Agency A treats D as an employee and controls the details of his work. D is covered by Agency A’s workers’ compensation insurance. D is an employee working for wage or salary. His service rendered to Agency A are not subject to sales tax.
(c)1. A person who provides services for a company on a fee basis is not an employee of the company where the company exercises no direct control over the details of performance of that person’s duties beyond general statements about the scope and nature of that person’s obligations under the contract between that person and the company. In addition, where fees paid to that person are not subject to withholding taxes or social security taxes, that person is not considered an employee of the company. Therefore, that person’s taxable services are subject to sales tax.
2. Example: B and Company X are cleaning service contractors. B provides cleaning services for Company X’s customers, all of which are located in Florida. Company X does not control the details of B’s work, pays B a fee, and is not required by applicable law to make unemployment insurance contributions on behalf of B. B is not an employee. B is an independent contractor in business for himself. B’s cleaning services are subject to tax. B would be required to register as a dealer, to collect the tax from Company X, and to remit the same to the state, unless Company X is purchasing B’s services for resale. See subsection (5) below.
(d) Advisory services provided by corporate directors and board members to their respective corporation(s) are exempt.
(4) A sale of a service is a sale for resale and is exempt from sales tax when the service is later sold under the following conditions:
(a) The service provides a direct and identifiable benefit to a single client or customer of the purchaser; and,
(b) The purchaser of the service buys the service pursuant to a written contract (or other evidence sufficient for audit purposes) with the seller which specifically designates the client or customer on whose behalf the purchaser is buying the service; and,
(c) The purchaser of the service separately states the value of the service in the charge for the service when it is subsequently sold to the purchaser’s client or customer; and,
(d) The selling dealer complies with the provisions of Fl. Admin. Code R. 12A-1.039, with regard to documenting sales for resale.
(5) Service providers are considered the ultimate consumers of any tangible personal property used in providing their services. As such, the service provider is liable for the sales and use tax on any purchases of tangible personal property used in providing the services.
(6) If a transaction involves both the sale of a taxable service as provided in subsection (1) above, and the sale of a service that is not taxable, or if it involves both the sale of a taxable service and the sale or use of property that is not subject to sales or use tax, the charges shall be separately identified and stated with respect to the taxable and nontaxable portions of the transaction. The tax shall apply to the transaction to the extent that the consideration paid in connection with the transaction is payment for the sale of taxable services. Failure to separately state the charges shall create a presumption that the entire transaction is a taxable service. The burden shall be on the seller of the service or the purchaser of the service, whichever is applicable, to overcome this presumption by providing documentary evidence (i.e., time sheets, schedules, receipts, or other documents which support activities) as to the amount of the transaction that is exempt from tax. If the Department determines that the taxable and exempt portions of a transaction are inaccurately stated, the Department is authorized to adjust such portions with support by substantial competent evidence.
(7) The exemption from tax in Section 212.08(7)(v), F.S., of service transactions that involve sales of tangible personal property as inconsequential elements does not apply to services taxable as provided in this rule, but if the sale of such a service is taxed, it cannot also be taxed as a sale of tangible personal property.
(8) Any person, whether registered or unregistered, who has purchased services either in this state or from out-of-state for use in this state without having paid sales tax on such services if subject to tax, is required to remit use tax on the cost price of such service. If such person is registered, use tax is to be remitted with the dealer’s sales and use tax return. If such person is unregistered, use tax is to be remitted on Form DR-15MO, Out-of-State Purchase Return (incorporated by reference in Fl. Admin. Code R. 12A-1.097).
Rulemaking Authority Florida Statutes § 212.18(2), 213.06(1) FS. Law Implemented 212.05(1)(b), (i), 212.06(1)(a), (2)(k), 212.07(1)(b), 212.08(7)(v) FS. History-New 5-13-93, Amended 1-4-94, 10-17-94, 3-20-96, 4-2-00, 10-2-01, 4-17-03, 1-12-11.
Terms Used In Florida Regulations 12A-1.0161
- Contract: A legal written agreement that becomes binding when signed.
- Decedent: A deceased person.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Personal property: All property that is not real property.
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
(2)(a) The use tax on services shall apply to the use of a taxable service purchased within or outside this state when the primary benefit of the service is used or consumed in this state and at the time of purchase the sales tax could not be or was not imposed. The primary benefit of the service is presumed to be used or consumed in Florida and subject to use tax when:
1. The real property is located in Florida, if the service is applied to or otherwise directly relates to the real property; or
2. The situs or permanent location of tangible personal property is in Florida, if the service is applied to or otherwise directly relates to the tangible personal property; or
3. The direct result of the service applies to activities of the purchaser in Florida, if the service is unrelated to real property or tangible personal property; or
4. The service is performed for or primarily benefits the estate of a decedent whose last established residency was in Florida.
(b) For the purposes of subparagraph (a)3. above, a purchaser shall be considered a purchaser in Florida if the purchaser is an individual acting in a nonbusiness capacity and resides in this state, on a permanent or temporary basis, at the time the purchase is made; or if the purchaser is a business with Florida nexus.
(c) For the purposes of paragraph (a) above, if the purchaser can demonstrate to the satisfaction of the Department that the benefit of the service was used or consumed outside this state, the service shall be deemed to be used or consumed outside this state. In determining whether the benefit of a service is used or consumed in this state the Department shall consider: all of the facts and circumstances surrounding the transaction; and whether the result of the service could give rise to a cause of action in Florida under Florida Statutes § 48.193 The seller of services subject to tax shall maintain a monthly log for each transaction involving the charge for services performed in this state but used or consumed outside this state. The log must identify the purchaser’s:
1. Name, location, and mailing address;
2. Federal employer identification number, if a business, or social security number, if an individual;
3. Identify the service sold, the price of that service, and the date of sale;
4. The reason for the exemption; and,
5. The sales invoice number.
(3) Services by employees to their employers are exempt.
(a) In determining whether a person is an employee, the Department will consider the following indicia:
1. Whether the person is paid a wage or salary;
2. Whether the “”employer”” is required to withhold income tax from the person’s wage or salary;
3. Whether F.I.C.A. is required to be paid by the “”employer””; or
4. Whether the “”employer”” is required to make unemployment insurance contributions on behalf of the person.
(b)1. However, if all of the indicia mentioned above are present, the person is nevertheless not an employee if he is acting in the capacity of an independent contractor. A person may be an employee even if one or more of the indicia are not present and he is not acting as an independent contractor.
2. Example: D is a detective who works for Agency A. Agency A pays him $30.00 per hour. Agency A withholds income tax from the money paid to D. Agency A treats D as an employee and controls the details of his work. D is covered by Agency A’s workers’ compensation insurance. D is an employee working for wage or salary. His service rendered to Agency A are not subject to sales tax.
(c)1. A person who provides services for a company on a fee basis is not an employee of the company where the company exercises no direct control over the details of performance of that person’s duties beyond general statements about the scope and nature of that person’s obligations under the contract between that person and the company. In addition, where fees paid to that person are not subject to withholding taxes or social security taxes, that person is not considered an employee of the company. Therefore, that person’s taxable services are subject to sales tax.
2. Example: B and Company X are cleaning service contractors. B provides cleaning services for Company X’s customers, all of which are located in Florida. Company X does not control the details of B’s work, pays B a fee, and is not required by applicable law to make unemployment insurance contributions on behalf of B. B is not an employee. B is an independent contractor in business for himself. B’s cleaning services are subject to tax. B would be required to register as a dealer, to collect the tax from Company X, and to remit the same to the state, unless Company X is purchasing B’s services for resale. See subsection (5) below.
(d) Advisory services provided by corporate directors and board members to their respective corporation(s) are exempt.
(4) A sale of a service is a sale for resale and is exempt from sales tax when the service is later sold under the following conditions:
(a) The service provides a direct and identifiable benefit to a single client or customer of the purchaser; and,
(b) The purchaser of the service buys the service pursuant to a written contract (or other evidence sufficient for audit purposes) with the seller which specifically designates the client or customer on whose behalf the purchaser is buying the service; and,
(c) The purchaser of the service separately states the value of the service in the charge for the service when it is subsequently sold to the purchaser’s client or customer; and,
(d) The selling dealer complies with the provisions of Fl. Admin. Code R. 12A-1.039, with regard to documenting sales for resale.
(5) Service providers are considered the ultimate consumers of any tangible personal property used in providing their services. As such, the service provider is liable for the sales and use tax on any purchases of tangible personal property used in providing the services.
(6) If a transaction involves both the sale of a taxable service as provided in subsection (1) above, and the sale of a service that is not taxable, or if it involves both the sale of a taxable service and the sale or use of property that is not subject to sales or use tax, the charges shall be separately identified and stated with respect to the taxable and nontaxable portions of the transaction. The tax shall apply to the transaction to the extent that the consideration paid in connection with the transaction is payment for the sale of taxable services. Failure to separately state the charges shall create a presumption that the entire transaction is a taxable service. The burden shall be on the seller of the service or the purchaser of the service, whichever is applicable, to overcome this presumption by providing documentary evidence (i.e., time sheets, schedules, receipts, or other documents which support activities) as to the amount of the transaction that is exempt from tax. If the Department determines that the taxable and exempt portions of a transaction are inaccurately stated, the Department is authorized to adjust such portions with support by substantial competent evidence.
(7) The exemption from tax in Section 212.08(7)(v), F.S., of service transactions that involve sales of tangible personal property as inconsequential elements does not apply to services taxable as provided in this rule, but if the sale of such a service is taxed, it cannot also be taxed as a sale of tangible personal property.
(8) Any person, whether registered or unregistered, who has purchased services either in this state or from out-of-state for use in this state without having paid sales tax on such services if subject to tax, is required to remit use tax on the cost price of such service. If such person is registered, use tax is to be remitted with the dealer’s sales and use tax return. If such person is unregistered, use tax is to be remitted on Form DR-15MO, Out-of-State Purchase Return (incorporated by reference in Fl. Admin. Code R. 12A-1.097).
Rulemaking Authority Florida Statutes § 212.18(2), 213.06(1) FS. Law Implemented 212.05(1)(b), (i), 212.06(1)(a), (2)(k), 212.07(1)(b), 212.08(7)(v) FS. History-New 5-13-93, Amended 1-4-94, 10-17-94, 3-20-96, 4-2-00, 10-2-01, 4-17-03, 1-12-11.