Governor Ron DeSantis signed House Bill 7123 on May 15, 2019, which reduces the state sales tax rate on commercial real property leases from 5.7 percent to 5.5 percent effective January 1, 2020. Prior legislation reduced the general 6 percent state sales tax rate for commercial real property leases to 5.8 percent for 2018 and to 5.7 percent for 2019. There is no reduction to the local option surtax, which is imposed in 0.5 percent increments by many Florida counties. So, for example, effective January 1, 2020, the applicable rate for commercial real property leases in Sarasota County would be 6.5 percent (5.5 percent level sales tax plus Sarasota County’s 1 percent local option surtax).
We previously blogged that the Florida Legislature enacted a reduction to the state sales tax rate on commercial real property leases from 6% to 5.8% effective January 1, 2018. The language of the new statute is unclear as to whether the rate decrease would apply to current leases. However, we have confirmed with a representative of the Florida Department of Revenue that they interpret the rate reduction as applying to current leases for periods after December 31, 2017.
Governor Rick Scott signed House Bill 7109 on May 25, 2017, which reduces the state sales tax rate on commercial real property leases from 6% to 5.8% effective January 1, 2018. However, this rate decrease will not apply to current leases, because the bill provides that the tax rate in effect at the time the tenant occupies or uses the property is applicable, regardless of when a rent payment is due or paid. The bill does not change the local option sales tax, which is imposed in 0.5% increments. So, for example, the applicable rate in Sarasota County for leases commencing on or after January 1, 2018, would be 6.8% (instead of the current 7%). Florida is the only state that charges sales tax on the lease of commercial real property.
The Florida Department of Revenue recently issued a Technical Assistance Advisement (“TAA”) clarifying the applicability of sales tax to certain equestrian supplies. The TAA explains that the sale of veterinary drugs, substances, or preparations that are required by federal or state law to be dispensed only by prescription are exempt from sales tax under the general prescription medicine exemption. Non-prescription substances or preparations are taxable. Feed for livestock, which includes all animals of the equine class (including racehorses), is also exempt from sales tax. Exempt feed includes equine joint supplements. Sales of equine insect and fly repellant are exempt as sales of pesticides used directly on livestock. Finally, sales of insect or fly masks and fly sheets are taxable.
A link to the ruling is here: https://revenuelaw.state.fl.us/LawLibraryDocuments/2015/09/TAA-120175_15A-011%20redacted%20_%20summay%20RLL.pdf Michael J. Wilson firstname.lastname@example.org 941-536-2043
Yesterday, in American Business USA Corp. v. Department of Revenue, the Fourth District Court of Appeal for Florida ruled that the Florida Department of Revenue could not impose sales tax on sales of flowers and other tangible personal property made by a Florida corporation over the internet to out-of-state customers for out-of-state delivery. The taxpayer would use “local florists” to fill the out-of-state orders, and so the flowers and other inventory items were never stored in or brought into Florida. The court concluded that the sales did not have “substantial nexus” with Florida, and therefore imposing tax on the sales violated the dormant commerce clause of the US Constitution.
A link to the case is below: