Florida is the only state that imposes sales tax on the lease of commercial real property. Over the last several years, this tax rate has been reduced in increments from 6.0% to 5.5%. Under recently enacted legislation, this rate will be further reduced to 2.0%. However, this rate reduction will not go into effect until two months after Florida’s Unemployment Compensation Trust Fund is replenished to pre-pandemic levels. Depending upon future unemployment claims, Florida economists estimate this may occur in 2024 or 2025. The 3.5% reduction is estimated to save commercial tenants approximately $1.2 billion annually. The local sales tax portion of the commercial rent tax is not changed by the new legislation.
On April 19, 2021, Florida Senate Bill 50 was enacted into law. The legislation modernizes Florida’s sales and use tax system and imposes tax collection obligations on remote sellers and marketplace providers. Among the many reforms in the new legislation is the imposition of sales tax on “remote sales” and requiring tax collection by sellers lacking a physical presence in Florida. Remote sellers (seller with no physical presence in Florida) are required to collect Florida tax if they have in excess of $100,000 of retail sales for delivery into Florida in the previous calendar year. The new legislation also extends these sales tax collection obligations to marketplace providers that facilitate and collect payment for sales made by remote sellers utilizing their platform. In such instances, the marketplace provider, rather than the remote seller, would collect and remit Florida sales tax. These remote seller and marketplace provider obligations become effective July 1, 2021.
The new legislation also provides a “safe harbor” from potential past Florida tax liability. A remote seller required to collect and remit Florida tax under the new legislation will be relieved from liability for tax, penalty, and interest due on remote sales made before July 1, 2021, if they register with the Florida Department of Revenue before October 1, 2021. A similar safe harbor is provided for marketplace providers.
Florida House Bill 33, which was enacted just a few weeks ago, provides a number of tax cuts and incentives. The bill’s key provisions include:
1. A $60,000 cap on the amount of sales tax paid on repairs of a vessel, which would apply to a repair costing in excess of $1 million;
2. An expansion of the number of sales tax exemptions for agricultural equipment, including aquacultural products and feed for aquacultural products, storage, equipment, irrigation equipment, trailers, and plant stakes;
3. Changed the corporate income tax credit program from a first-come first-served basis to a prorated credit and limited the target industries allowed to claim the credit;
4. An additional $14 million for the corporate income tax research and development tax credit program in 2016;
5. A sales tax exemption on admissions for gun club memberships;
6. An extension of the community contribution tax credit programs to June 30, 2018, and a $3 million increase in the tax credit cap for housing projects;
7. An additional $16.6 million to be spent in fiscal year 2015-2016 on the brownfields tax credit program;
8. A 1.73% Communications Services Tax reduction, which went into effect July 1; and
9. A 10-day back-to-school sales tax holiday from August 7 through August 16.