Quick Answers to Popular Questions

Do I have to file and pay intangible personal property tax in 2007?

Beginning January 1, 2007, individuals, married couples, personal representatives of estates, and businesses are no longer required to file an annual intangible personal property tax return reporting their stocks, bonds, mutual funds, money market funds, shares of business trusts, and unsecured notes. The Legislature has repealed the annual tax on these properties.

The last annual intangible tax return that these taxpayers were required to file was the 2006 return that was due by June 30, 2006. Any intangible taxes owed to the State for that return or prior years are still due.

Not all intangible taxes have been repealed. The intangible tax on leases of government-owned real property and the one-time intangible tax on notes secured by a mortgage on Florida real property are still in effect.

Are shipping and handling or delivery charges subject to sales tax?

Florida sales tax is imposed on the total sales price of taxable tangible personal property. "Sales price" is defined as the total amount paid for tangible personal property, including any services that are a part of the sale. Transportation is a service typically sold in conjunction with the sale of tangible personal property.

Rule 12A 1.045, Florida Administrative Code, states:
"(1)"Transportation charges" include carrying, delivery, freight, handling, pickup, shipping, and other similar charges or fees.
"(2) Transportation charges which are not separately stated on an invoice or bill of sale, but are included in the sales price of taxable tangible personal property, are subject to tax.
"(3)(a) Where the seller agrees to deliver tangible personal property to some designated place and the purchaser cannot elect to avoid the charge for transportation services, the charge for the transportation service is subject to tax, even if separately stated on an invoice or bill of sale."

Transportation service is not subject to tax when the charge is separately stated on an invoice or bill of sale and the charge can be avoided by a decision or action solely on the part of the purchaser.

If the charge can be avoided when the purchaser arranges for pick up and delivery of the goods themselves, the charge is exempt. If a dealer does not allow the customer to pick up the merchandise, the transportation charge becomes a part of the selling price, and is subject to tax.

Are parts and labor taxable?

Repairs or improvements to real property

As provided in Rule 12A 1.051, Florida Administrative Code, transactions that involve elements that are permanently installed into a structure, where they cannot be removed without destroying them in the process, are generally classified as real property contracts and are not subject to sales tax. For example, a central air conditioning unit would be considered a real property improvement, therefore repairs or service to the unit would not be subject to sales tax.

When performing repairs or improvements to real property, the contractor generally offers the customer a lump sum, cost plus or fixed fee, or guaranteed price contract. In these types of contracts, the contractor or subcontractor is considered the ultimate consumer of the materials and supplies used in performing the service. The contractor or subcontractor pays the sales tax to the supplier at the time the materials and supplies are purchased and recovers the cost of the material within the contract price quoted his customer. The labor is not subject to sales tax.

Repairs to tangible personal property - Parts

Materials which are actually incorporated into and become a part of the tangible personal property repaired, such as fabric, are not taxable when purchased by the repairer. Materials and supplies used by the repairer in making such repairs, but which do not become a part of the property repaired are taxable to the repairer as overhead items. For example: Tools, sandpaper, and the like are not incorporated into the repair and are taxable. A repair person who is registered as a sales and use tax dealer may purchase materials and parts tax exempt if they are incorporated into and become part of the tangible personal property being repaired.

Repairs to tangible personal property – Labor

Rule 12A 1.006, Florida Administrative Code, states "where parts are furnished by the repairer, the entire charge the repairer makes to a customer for adjusting, applying, installing, maintaining, remodeling, or repairing tangible personal property is taxable" The Code also states that "charges for repairs of tangible personal property which require labor or service only are taxable unless the repairer (dealer) can establish by evidence in the dealer's records that the dealer furnished no tangible personal property which was incorporated into or attached to the repaired item. It is immaterial that the cost of the material furnished is insignificant when compared to the cost of the labor involved."

Additional information concerning repairs to real property and tangible personal property can be found in the rules referenced above by visiting our Tax Law Library at http://taxlaw.state.fl.us/sut1.aspx.

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