The following is a summary of the tax legislation as signed into law thus far by Governor Rick Scott. Unless otherwise provided in the bill, these changes take effect July 1, 2012.
Corporate Income Tax
Estimated Payments (HB 5701)—the bill establishes that the payment due on Sunday, June 30, 2013 is required to be paid on or before Friday, June 28, 2013 and not the next succeeding business day.
Internal Revenue Code (HB 5701)—the bill adopts the Internal Revenue Code as in effect on January 1, 2012.
Income Tax Exemption (HB 7087)—the bill increases the corporate income tax exemption from net income of $25,000 to $50,000.
Single Sales Factor Apportionment (HB 7099)—the bill revises the definition of “qualified capital expenditures” as it relates to the single sales factor apportionment option.
Dealer’s Collection Allowance (HB 5701)—the bill revises the statute to provide that only dealers who file by electronic means shall be allowed the 2.5 percent collection allowance.
Electricity exemption expanded (HB 7087)—the bill amends the statute to add an exemption for electricity used directly or indirectly in a packinghouse. Packinghouse is defined to include any building or structure where fruits, vegetables, or meat from cattle or hogs are packed or otherwise prepared for market or shipment in fresh form for wholesale distribution. The exemption does not apply to electricity used in buildings or structures where agricultural products are sold at retail.
Industrial machinery and equipment used by expanding businesses (HB 7087)—the bill reduces the percentage of increased productive output from 10 percent to 5 percent.
Repair and maintenance parts and labor for aircraft (HB 7087)—the bill revises the statute to reduce the takeoff weight of certain aircraft from 15,000 pounds to 2,000 pounds in order to qualify for the exemptions of repair/maintenance parts and labor for such aircraft.
Certain chemicals, machinery, parts and other items used and consumed in the manufacture of aircraft engines and gas turbine engines (HB 7087)—the bill exempts certain chemicals, machinery, parts and other items used and consumed in the manufacture of aircraft engines and gas turbine engines from sales tax.
Taxicabs equipped with a device designed to enable the transportation of physical disabled persons (HB 7087)—the bill exempts from sales tax the sale or lease of taxicabs equipped with a device designed to enable the transportation of physical disabled persons.
Sales Tax Holiday (HB 7087)—the bill establishes that August 3, 2012 through August 5, 2012 is a sales tax holiday, where clothing and shoes that cost $75 or less, and school supplies that cost $15 or less are exempt from state and local sales taxes. This holiday does not apply to sales within a theme park, a public lodging establishment or an airport.
Penalties for Willful Non-collection after Notice (HB 7099)—the bill amends the statute to provide a list of penalties for dealers who willfully fail to collect a tax, including a 100 percent penalty.
Penalties for False or Fraudulent Returns (HB 7099)—the bill amends the statute to provide a list of penalties for dealers who make false or fraudulent returns with a willful intent to evade payment of taxes or fees, including a 100 percent penalty.
Absolute Defense (HB 7099)—the bill amends the statute to provide an absolute defense for retailers, dealers, or vendors that collected tax on delivery charges and resolved any tax liability on that issue in accordance with an agreement entered into with the Department of Revenue.
Transfer of Tax Liability
HB 103 repealed two specific statutes (sales and communications) and amended the statute (213.758) relating to all taxes owed to the state when a business is transferred to new ownership. Unless an exception applies, a person who buys a business assumes the tax liabilities of the seller. The bill clarifies the exceptions, which include:
- The seller obtains a certificate of compliance from the Department that all tax returns have been filed, all taxes have been paid and that no notice of audit has been received (also no insiders were common between the seller and purchaser); or
- The Department finds the seller is not liable for taxes, interest or penalty after an audit is completed.
The bill defines several terms including “tax” (does not include corporate income tax), “transfer” (clarified to include the sale of more than 50% of the business, assets of the business, or stock of goods of the business), “insider”, and “business”.
The bill also clarifies how the maximum liability of a purchaser is calculated relating to the fair market value or the total purchase price, whichever is greater.
Communications Services Tax
HB 809 modifies the definition of “sales price” to allow for the exclusion of certain nontaxable goods or services that are not separately itemized on a customer’s bill, but that can be reasonably identified from the selling dealer’s books and records.
The bill replaces the term “cable service” and defines it as “video service.” The bill also defines “internet access service” to mean the same as the term “Internet access” per the Internet Tax Freedom Act.
The bill also revises the statute relating to the liability of a communications services tax dealer in cases of incorrect assignment of customers to local taxing jurisdictions. The liability resulting from an incorrect assignment is limited to only those situations where the dealer did not use an approved assignment method and the Department has determined the amount underpaid among all jurisdictions served by that dealer. Further, the bill provides that if a dealer uses an approved method, the Department cannot deny the dealer’s collection allowance based on incorrect assignments.
Exclusively Used Educational Property (HB 7097)—the bill exempts certain property used exclusively for educational purposes from property tax.
Arms-length Transactions (HB 7097)—the bill amends the statute to provide that a property appraiser may change an initial decision as to qualifying or disqualifying a transfer of property as an arms-length transaction. The property appraiser must document the reason for the change.
HB 7027 revises the statute to rebrand the unemployment compensation system as the “Reemployment Assistance Program”. The bill reduces the taxable wage base for employer unemployment compensation to $8,000 (down from $8,500) through 2014. The bill also extends the positive adjustment factor recoupment period from three years to five years (through 2017).
Intangible Personal Property Tax
HB 7087 amends the statute to provide an exemption from the intangible personal property tax on governmental leaseholds when the lessee serves or performs a governmental, municipal or public purpose or function.
If you would like to discuss these tax law changes or how McDonald Hopkins can help assist you with resolving in Florida tax issues, please contact:
John R. Trippier 614.458.0042
Thomas M. Zaino
or any of our Multistate Tax Group by clicking on the link below:
Businesses must be vigilant and careful in managing their state and local tax liabilities and exposures. This can be a daunting task. We provide a broad range of state and local tax services including tax planning, tax controversy, real estate tax abatement and exemption, and tax policy advocacy. With professionals who have worked both inside and outside government agencies, the multistate tax team leverages its knowledge and experience to help clients control their complex multistate taxes.