2007 Sales Tax Holiday - Questions and answers
Common Complaints
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This TIP is being sent to all registered taxpayers with active sales and use tax account(s) (approximately 600,000 accounts) to ensure that all dealers who sell clothing or other exempted items will be informed of the tax relief days. Although you do not sell books, clothing or other exempted items, many dealers whose primary business is something other than selling books, clothing or school supplies may need this information. For example, a small grocery store may sell books, t-shirts, sandals, hats, pens or pencils.
My business is closed. Why am I still getting stuff from DOR? Cancel my account!
Early in June, we pulled a list of the active accounts from our sales and use tax database to mail the TIP. If you received a TIP from us, your account was on an active status at that time. To close your account, you must notify us in writing that you want to cancel the account. We require a note from you indicating that your business is closed with the account number that should be cancelled. Once your account is cancelled you should not receive additional Tax Information Publications from the Department.
Please direct correspondence to:
Taxpayer Services
Florida Department of Revenue
5050 W Tennessee St Bldg L
Tallahassee FL 32399-0112-
No funds were appropriated or provisions made for any extra collection allowance to compensate sales tax dealers for this event.
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Your accounting system should adequately identify all items sold tax-exempt. Exempt sales made during the tax relief days must be documented in the same manner as other exempt sales.
No funds were appropriated or provisions made for any extra collection allowance to compensate sales tax dealers for this event.
Refunds/Exchanges
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The customer should get a full refund/credit, including tax, for the returned item, assuming there is proof that tax was paid). No tax will be due on the new eligible item.
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The Emergency Rule which will be in effect for the tax relief days, requires the customer to provide a receipt or invoice as proof the tax was paid to get a refund/credit of the tax.
Alternatively, if the store has documentation that tax was paid, a refund/credit of tax is appropriate.
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If a customer purchases an item during the exemption period and later exchanges the item for the same item (different size, different color, etc.), no tax will be due, even if the exchange is made after the exemption period.
If a customer purchases an item during the exemption period and later returns the item and gets a different item, even if for the same price, the sales tax will apply to the new item. For example, if a shirt is returned and the customer purchases a pair of pants, or a dress is returned and the customer purchases a different style dress, tax is due on the price of the new pants/dress.
Coupons, Rebates, and Discounts
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Tax is due on the total consideration received by the store for the sale of merchandise. "Consideration" is not limited to money given by the customer, but also includes other valuable items. A manufacturer's coupon is a valuable item and part of the consideration received by the store, because the store will be reimbursed by the manufacturer. Therefore, the coupon does not reduce the selling price of the item. However, a store coupon or discount actually reduces the sales price of the item, because the store does not receive any additional compensation for the store coupon.
For example: A customer buys a purse for $55 and the store is offering a discount of 20%, the selling price of the purse would be $44, and the purse would be exempt.
However, if a customer purchases a purse for $55 with a manufacturer's coupon of $15, the selling price of the purse would be $55 and it would be taxable. The $15 coupon is part of the valuable consideration paid for the purse, which consideration is received by the retailer as payment for the purse; therefore, it does not reduce the selling price of the purse.
Gift Certificates
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No. To be exempt from tax, the purchase of the eligible item must be made during the sales tax holiday.
Rain Checks
Why won't rain checks issued during the sales tax holiday hold the exemption from tax?
To be exempt from tax, the clothing or other eligible item must be purchased during the sales tax holiday. When a rain check is issued, a sale has not occurred. The sale occurs when the rain check is redeemed and an item is purchased. If an item is purchased using a rain check after the exemption period, the item is taxable.
Layaway Sales
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Yes. Items placed on layaway (set aside for future delivery to a customer who makes a deposit, agrees to pay the balance of the purchase price over a period of time, and receives the merchandise at the end of the payment period) during the sales tax holiday are exempt from tax. Also, if final payment on a layaway order of eligible items is made and the merchandise is given to the customer during this time, the items are exempt from tax, regardless of when placed on layaway.
Mail Order or Internet Sales
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Yes. All purchases of qualifying items during the sales tax holidays are exempt from tax, including purchases made by mail order.
How does the exemption apply to sales over the Internet?
Sales over the Internet are treated the same as mail order sales.
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The Emergency Rule provides that to proportionately allocate the shipping charge, the amount of each item should be divided by the total amount of the items ordered to obtain the percentage that each item bears to the total order. Then the total shipping charge should be multiplied by the percentage for each item to determine the amount of the shipping charge applicable to that item. The shipping charge for each item must be separately stated on the invoice to the customer. The shipping charge is part of the selling price when determining if an item meets the $50 threshold.
For example, a customer orders a $50 dress and a $25 shirt, for a total of $75. The shipping charge is $10. $25 / $75 = 33% (25 divided by 75 equals 33 percent). Therefore 33%, or $3.33 of the shipping charge is allocated to the shirt, and included as part of the selling price of the shirt. The other 67%, or $6.70 is included as part of the selling price of the dress, making the price of the dress $56.70, which would not qualify for the exemption.
Records and Reporting
What am I supposed to keep to show the sale was tax-exempt?
There are no additional record-keeping requirements. You must maintain your records and document exempt sales as required under current law.
Gross Receipts Fee
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The 1% merchant's license fee is included in the total sales price of an item, even if separately stated. Therefore, the total sales price, including the 1% merchant's license fee, is the amount which determines the taxability of the item.
Note: Panama City and Panama City Beach are the only municipalities where a 1% merchant's license fee (also referred to as a gross receipts fee) is imposed.
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The 1% merchant's license fee is included in the total sales price of an item, even if separately stated. Therefore, the total sales price, including the 1% merchant's license fee, is the amount which determines the taxability of the item.
Note: Panama City and Panama City Beach are the only municipalities where a 1% merchant's license fee (also referred to as a gross receipts fee) is imposed.
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