Florida Regulations 12A-15.008: Construction Contractors Who Repair, Alter, Improve, and Construct Real Property; Refund of Surtax
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(1) LUMP SUM, COST PLUS, FIXED FEE, OR GUARANTEED PRICE CONTRACTS.
(a) Contractors or subcontractors purchasing tangible personal property from a dealer for use in a lump sum, cost plus, fixed fee, guaranteed price, or similar type of contract must pay the surtax to the selling dealer, when the property is delivered to a location within a county imposing the surtax. The surtax to be paid to the selling dealer is based on the rate imposed in the county where delivery of the tangible personal property is made. When the tangible personal property is delivered to a location within a county not imposing the surtax, no surtax is due.
(b) A contractor or subcontractor who is not required to be a registered dealer and who owes use tax on taxable items of tangible personal property purchased out-of-state, in another country, or through a remote sale for use in a lump sum, cost plus, fixed fee, guaranteed price, or similar type of contract is not required to pay surtax when paying the applicable use tax to the Department.
(c)1. Contractors and subcontractors are required to pay use tax on the fabricated cost of items of tangible personal property they manufacture, produce, compound, process, or fabricate for their own use in performing contracts. When the contractor or subcontractor owes use tax on the fabricated cost of items manufactured, produced, compounded, processed, or fabricated for use at a manufacturing plant site located within a surtax county, the contractor or subcontractor is required to pay surtax on such fabrication cost. Labor incurred at the job site where the item will be incorporated into a real property improvement or transportation from the plant where an item was fabricated to the job site is not subject to tax or surtax. See Fl. Admin. Code R. 12A-1.043, for determining fabrication cost.
2. Contractors who pay sales tax to vendors for direct materials that are incorporated into fabricated items of tangible personal property are not required to pay use tax on the cost of those materials. Contractors who are registered as dealers may elect either to pay sales tax to their vendors on direct materials or to extend a copy of their Annual Resale Certificate and accrue use tax when the materials are used for fabrication. If sales tax is paid on the purchase of direct materials at the time of purchase, the county of delivery determines whether surtax is due. If use tax is accrued at the time of fabrication of the items, the surtax must also be accrued when the fabrication occurs within a county imposing a surtax.
3. Contractors and subcontractors who are located within a county imposing a surtax, and who have elected and have been authorized by the Department to use an alternate tax calculation method, must compute the surtax on the appropriate percentage of the contract price at the same time and in the same manner in which use tax is computed.
4. The $5,000 limitation is applicable to the fabricated cost when the written contract or agreement specifies the particular project for which the fabricated item of tangible personal property is to be used.
5. Example: A contractor operates a roofing tile manufacturing plant in a surtax county. The contractor sells roofing tiles, as well as uses roofing tiles in performing real property contracts. The contractor is a registered dealer and purchases raw materials tax exempt by extending a copy of the dealer’s Annual Resale Certificate. The contractor enters a contract to furnish materials and install a tile roof for $15,000. The direct materials cost is $5,000 and the other taxable fabrication costs are $3,000, for a total of $8,000 on which use tax must be accrued. The contractor must accrue sales tax and surtax, because the fabrication occurs at the plant located within a surtax county. If roofing contractors were permitted to accrue use tax on 40 percent of the contract price, use tax would be due on $6,000, because the fabrication occurred at the plant located within a surtax county. Whether the contractor computes use tax on $8,000 actual cost or on $6,000 on a percent of contract price basis, surtax only needs to be accrued on $5,000, because the fabricated tangible personal property is identified to the specific contract.
(2) RETAIL SALE PLUS INSTALLATION CONTRACTS. Contractors or subcontractors performing contracts where the contractor or subcontractor agrees to sell specifically described and itemized materials and supplies at an agreed price or at the regular retail price and to complete the work either for an additional agreed price or on the basis of time consumed, are required to register as dealers. They must collect surtax from customers on the sales price of the materials when the materials are delivered to a county imposing the surtax at the rate imposed by that county.
(3) The application of surtax to sales, fabrication, use, consumption, distribution, or storage of tangible personal property to or by contractors or subcontractors shall be determined on the basis of the date of each invoice for such sales, the date such fabrication occurred, or the date of importation for use, consumption, distribution, or storage. The date the written contract was entered into, the date of the oral contract, or the date of the purchase order does not determine the application of the surtax.
(4)(a) In the case of written contracts executed (signed) prior to the effective date of any surtax, for the repair, alteration, improvement, remodeling, or construction of real property, the surtax shall be paid by the contractor responsible for the performance of the contract. However, the contractor responsible for the performance of the written contract signed prior to the effective date of any such surtax may apply for one refund per contract of any such surtax paid by the contractor responsible for the performance of the contract on materials necessary for the completion of the contract.
(b) To receive the refund, the contractor responsible for the performance of the contract must file an Application for Refund-Sales and Use Tax (form DR-26S), incorporated by reference in Fl. Admin. Code R. 12-26.008 Such application for refund shall be made no later than 15 months following the initial imposition of the surtax in the county in which the transaction subject to the initial imposition of the surtax occurred.
(c) The contractor must submit the information as provided in subparagraphs 1. through 5., with the Application for Refund-Sales and Use Tax (form DR-26S). Upon approval of a completed application, the Department shall, within 30 days, certify to the county or counties information necessary for issuance of a refund directly to the applicant of said taxes. Counties are authorized to issue refunds for this purpose and shall set aside from the proceeds of the surtax a sum sufficient to pay any refund lawfully due.
1. A copy of the bidding instructions, a signed copy of the original contract, and a copy of the general and specific provisions of the contract.
2. A summary schedule of material invoices related to the contract in which the tax was paid to a vendor or accrued by the contractor. The summary schedule shall reflect the county where the selling dealer is located, invoice date, invoice number, vendor’s name, amount of refund claimed on taxes paid to vendor, amount of refund claimed on taxes accrued by the contractor, and total amount of the refund claimed.
3. Contractors who operate manufacturing plants which make items of tangible personal property for their own consumption and use in performance of contracts for the construction or improvement of real property must supply, in addition to the contract documents enumerated in sub-subparagraph a. above, a summary schedule by county identifying the manufactured cost on which tax has been accrued and remitted to this state. The summary schedule shall reflect by month and year the amount of raw materials, as well as an itemization by type and amount of other manufactured costs, such as labor, power, transportation-in, and other related plant expenses, on which tax was accrued and remitted to this state.
4. In those instances where a contractor operates in the manner outlined in subparagraph 3. above, but pays tax to its vendors on part of the raw materials and purchases the remainder of the raw materials tax exempt, the contractor shall furnish, in addition to the contract documents enumerated in subparagraph 1. above, a summary schedule by county of material invoices that is required in subparagraph 2. above, on materials for which tax was paid to vendors and a summary schedule by county identifying the manufactured cost on which tax has been accrued and remitted to this state in the form required in subparagraph 3. above.
5. Any other information that is required by the Department of Revenue in order to verify the authenticity of the refund application.
(d) Any person who fraudulently obtains or attempts to obtain a refund not permitted by law, in addition to being liable for payment of any refund fraudulently obtained plus a mandatory penalty of 100% of the refund, is guilty of a felony of the third degree, punishable as provided in Section 775.082, 775.083, or 775.084, F.S.
Rulemaking Authority Florida Statutes § 212.18(2), 213.06(1) FS. Law Implemented 212.054, 212.055, 212.06(1), 212.14(5) FS. History-New 12-11-89, Amended 5-12-92, 8-10-92, 11-16-93, 3-20-96, 4-17-03, 6-14-22.
Terms Used In Florida Regulations 12A-15.008
- Contract: A legal written agreement that becomes binding when signed.
- 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.
- Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
(b) A contractor or subcontractor who is not required to be a registered dealer and who owes use tax on taxable items of tangible personal property purchased out-of-state, in another country, or through a remote sale for use in a lump sum, cost plus, fixed fee, guaranteed price, or similar type of contract is not required to pay surtax when paying the applicable use tax to the Department.
(c)1. Contractors and subcontractors are required to pay use tax on the fabricated cost of items of tangible personal property they manufacture, produce, compound, process, or fabricate for their own use in performing contracts. When the contractor or subcontractor owes use tax on the fabricated cost of items manufactured, produced, compounded, processed, or fabricated for use at a manufacturing plant site located within a surtax county, the contractor or subcontractor is required to pay surtax on such fabrication cost. Labor incurred at the job site where the item will be incorporated into a real property improvement or transportation from the plant where an item was fabricated to the job site is not subject to tax or surtax. See Fl. Admin. Code R. 12A-1.043, for determining fabrication cost.
2. Contractors who pay sales tax to vendors for direct materials that are incorporated into fabricated items of tangible personal property are not required to pay use tax on the cost of those materials. Contractors who are registered as dealers may elect either to pay sales tax to their vendors on direct materials or to extend a copy of their Annual Resale Certificate and accrue use tax when the materials are used for fabrication. If sales tax is paid on the purchase of direct materials at the time of purchase, the county of delivery determines whether surtax is due. If use tax is accrued at the time of fabrication of the items, the surtax must also be accrued when the fabrication occurs within a county imposing a surtax.
3. Contractors and subcontractors who are located within a county imposing a surtax, and who have elected and have been authorized by the Department to use an alternate tax calculation method, must compute the surtax on the appropriate percentage of the contract price at the same time and in the same manner in which use tax is computed.
4. The $5,000 limitation is applicable to the fabricated cost when the written contract or agreement specifies the particular project for which the fabricated item of tangible personal property is to be used.
5. Example: A contractor operates a roofing tile manufacturing plant in a surtax county. The contractor sells roofing tiles, as well as uses roofing tiles in performing real property contracts. The contractor is a registered dealer and purchases raw materials tax exempt by extending a copy of the dealer’s Annual Resale Certificate. The contractor enters a contract to furnish materials and install a tile roof for $15,000. The direct materials cost is $5,000 and the other taxable fabrication costs are $3,000, for a total of $8,000 on which use tax must be accrued. The contractor must accrue sales tax and surtax, because the fabrication occurs at the plant located within a surtax county. If roofing contractors were permitted to accrue use tax on 40 percent of the contract price, use tax would be due on $6,000, because the fabrication occurred at the plant located within a surtax county. Whether the contractor computes use tax on $8,000 actual cost or on $6,000 on a percent of contract price basis, surtax only needs to be accrued on $5,000, because the fabricated tangible personal property is identified to the specific contract.
(2) RETAIL SALE PLUS INSTALLATION CONTRACTS. Contractors or subcontractors performing contracts where the contractor or subcontractor agrees to sell specifically described and itemized materials and supplies at an agreed price or at the regular retail price and to complete the work either for an additional agreed price or on the basis of time consumed, are required to register as dealers. They must collect surtax from customers on the sales price of the materials when the materials are delivered to a county imposing the surtax at the rate imposed by that county.
(3) The application of surtax to sales, fabrication, use, consumption, distribution, or storage of tangible personal property to or by contractors or subcontractors shall be determined on the basis of the date of each invoice for such sales, the date such fabrication occurred, or the date of importation for use, consumption, distribution, or storage. The date the written contract was entered into, the date of the oral contract, or the date of the purchase order does not determine the application of the surtax.
(4)(a) In the case of written contracts executed (signed) prior to the effective date of any surtax, for the repair, alteration, improvement, remodeling, or construction of real property, the surtax shall be paid by the contractor responsible for the performance of the contract. However, the contractor responsible for the performance of the written contract signed prior to the effective date of any such surtax may apply for one refund per contract of any such surtax paid by the contractor responsible for the performance of the contract on materials necessary for the completion of the contract.
(b) To receive the refund, the contractor responsible for the performance of the contract must file an Application for Refund-Sales and Use Tax (form DR-26S), incorporated by reference in Fl. Admin. Code R. 12-26.008 Such application for refund shall be made no later than 15 months following the initial imposition of the surtax in the county in which the transaction subject to the initial imposition of the surtax occurred.
(c) The contractor must submit the information as provided in subparagraphs 1. through 5., with the Application for Refund-Sales and Use Tax (form DR-26S). Upon approval of a completed application, the Department shall, within 30 days, certify to the county or counties information necessary for issuance of a refund directly to the applicant of said taxes. Counties are authorized to issue refunds for this purpose and shall set aside from the proceeds of the surtax a sum sufficient to pay any refund lawfully due.
1. A copy of the bidding instructions, a signed copy of the original contract, and a copy of the general and specific provisions of the contract.
2. A summary schedule of material invoices related to the contract in which the tax was paid to a vendor or accrued by the contractor. The summary schedule shall reflect the county where the selling dealer is located, invoice date, invoice number, vendor’s name, amount of refund claimed on taxes paid to vendor, amount of refund claimed on taxes accrued by the contractor, and total amount of the refund claimed.
3. Contractors who operate manufacturing plants which make items of tangible personal property for their own consumption and use in performance of contracts for the construction or improvement of real property must supply, in addition to the contract documents enumerated in sub-subparagraph a. above, a summary schedule by county identifying the manufactured cost on which tax has been accrued and remitted to this state. The summary schedule shall reflect by month and year the amount of raw materials, as well as an itemization by type and amount of other manufactured costs, such as labor, power, transportation-in, and other related plant expenses, on which tax was accrued and remitted to this state.
4. In those instances where a contractor operates in the manner outlined in subparagraph 3. above, but pays tax to its vendors on part of the raw materials and purchases the remainder of the raw materials tax exempt, the contractor shall furnish, in addition to the contract documents enumerated in subparagraph 1. above, a summary schedule by county of material invoices that is required in subparagraph 2. above, on materials for which tax was paid to vendors and a summary schedule by county identifying the manufactured cost on which tax has been accrued and remitted to this state in the form required in subparagraph 3. above.
5. Any other information that is required by the Department of Revenue in order to verify the authenticity of the refund application.
(d) Any person who fraudulently obtains or attempts to obtain a refund not permitted by law, in addition to being liable for payment of any refund fraudulently obtained plus a mandatory penalty of 100% of the refund, is guilty of a felony of the third degree, punishable as provided in Section 775.082, 775.083, or 775.084, F.S.
Rulemaking Authority Florida Statutes § 212.18(2), 213.06(1) FS. Law Implemented 212.054, 212.055, 212.06(1), 212.14(5) FS. History-New 12-11-89, Amended 5-12-92, 8-10-92, 11-16-93, 3-20-96, 4-17-03, 6-14-22.