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S.A.L.T. Select Developments: Florida

Baker Donelson's S.A.L.T. Select Developments will identify important state and local tax developments from Florida.

Overview

State and local taxes impact almost every taxpayer. S.A.L.T developments in any one jurisdiction can be frequent and sometimes confusing. Where multiple jurisdictions are involved, staying current with state and local tax developments can be overwhelming for any taxpayer.

To assist you with staying current on a periodic basis, Baker Donelson's S.A.L.T. Select Developments will identify one or more recent state and local tax developments from Florida.

October 2020

Updates Reported – On September 23, 2020, the Florida Department of Revenue issued Tax Information Publication No. 20C01-02 addressing the corporate income tax rate for the taxable years beginning on or after January 1, 2020 but before January 1, 2022. Pursuant to that TIP, the corporate income tax rate for taxable years beginning during that period will remain at 4.458 percent. That TIP also states that taxpayers that have a 52-53 week taxable period beginning on or about January 1 and ending on or about December 31 have the same tax rates as a calendar year-end taxpayer. Unless subsequently adjusted, the tax rate for taxable years beginning on or after January 1, 2022 will revert to 5.5 percent. More information can be found here.

September 2020

Coronavirus Tax Payment and Return Filing Responsibilities (September 30) - Updates Reported: On September 18, 2020, Governor DeSantis signed House Bill 7095 which adopts the Internal Revenue Code for purposes of the Florida corporate income tax, adopting the Code in effect on January 1, 2020. Pursuant to House Bill 7095, references to the "Internal Revenue Code" mean the United State Internal Revenue Code of 1986, as amended and in effect on January 1, 2020, with certain exceptions. The law was effective September 18 and operates retroactively to January 1, 2020. More information can be found here.

July 2020

Coronavirus Tax Payment and Return Filing Responsibilities (July 27) - Updates Reported: The Florida Department of Revenue has placed on its website a publication entitled "Property Tax Oversight COVID-19 Frequently Asked Questions" with the current version being dated July 15, 2020. These FAQs address several questions relating to the payment of property taxes as well as the dispute of such taxes. Just by way of example, in response to the question of whether COVID-19 pandemic affected the assessed value of property, the FAQs state that the county property appraiser assesses the value of each property on January 1 of each tax year, and that "the COVID-19 pandemic has no effect on the assessed value placed on the property as of January 1, 2020." In addition, with respect to those situations where the taxpayer believes the property taxes are too high "due to the onset of COVID-19", the FAQs state that the taxpayer should contact the county property appraiser regarding the Truth in Millage (TRIM) hearings for 2020 property taxes. Virtual TRIM hearings are also addressed in the FAQs. More information can be found here.

June 2020

Coronavirus Tax Payment and Return Filing Responsibilities (June 25) - Updates Reported: Florida has not followed the lead of the 38 other states that, consistent with the U.S. Supreme Court's mid-2018 decision in South Dakota v. Wayfair, have given a green light to the collection of tax from online sellers. In-state retailers have decried this refusal as unfair to them. Sales taxes collections in Florida have declined precipitously in recent months, falling almost $600 million. All the while, more and more packages have been flowing untaxed into the state as a result of households increasing the amount of their purchases made online. Of course, online customers are supposed to voluntarily pay the tax themselves, yet few do. Imposition of the use tax has long been in effect, but before Wayfair states had no practical means to ensure its collection.

State Senator Joe Gruters estimates are that by not collecting sales tax on online sales, Florida has been foregoing at least $700 million a year in revenue. Gruters predicts that "as a result of the crisis and the move to more online purchases being made, that could turn into a billion dollars or more." Until new revenue reports come out in late June and July, however, showing how deep a hole the state is really in, it is unlikely there will be any action, particularly since the legislative session is over for this year. Every state is certain to be looking for any opportunities for revenue enhancement to partially counterbalance the inevitable shortfalls. Florida has an obvious partial fix, bringing it in line with other states. The Governor and more legislators may come around to Gruters' view and see that collection of sales tax from all online sellers is imperative for Florida's future fiscal health. More information not available at present.

Coronavirus Tax Payment and Return Filing Responsibilities (June 2) - Updates Reported: By Tax Information Publication No.: 20B07-02, issued May 21, 2020, the Florida Department of Revenue published the tax rates for production of gas and sulfur effective July 1, 2020. According to this Publication, the adjusted rates must be used when completing the Declaration of Estimated Gas and Sulfur Production Form beginning with the July 2020 estimated payment. Also according to that Publication, that Form will be mailed by the Department to all active accounts during the last week of July. More information can be found here.

May 2020

Coronavirus Tax Payment and Return Filing Responsibilities (May 8) - Further Updates Reported: On April 27, 2020, the executive director of the Florida Department of Revenue issued Order of Emergency Waiver/Deviation #20-52-DOR-003 which extends the due dates for Florida corporate income tax payments and returns as follows: (1) for entities with a fiscal year ending December 31, 2019, the Florida corporate income tax return otherwise due on May 1, 2020 is extended to August 3, 2020, with the May 1 due date for payments associated with that return extended to June 1, and with the due date to submit a request for extension of time to file the return and make tentative payments extended to June 1; (2) for entities with a fiscal year ending January 31, 2020, the June 1 due date for the return is extended to August 3, and the June 1 due date for making payments or submitting a request for extension of time to file remains June 1; and (3) for entities with a fiscal year ending February 29, 2020, the July 1 due date for the return is extended to August 3, and the due date for making payments or submitting a request for extension of time to file remains July 1. The Order also states that Florida corporate income tax payments "should be based on the corporation's best estimate of the amount that would be due with the returns" and that this Order does not change the current due dates of the estimated payments which are due between April 1, 2020 and July 15, 2020. More information can be found here.

March 2020

Coronavirus Tax Payment and Return Filing Responsibilities (March 30) - Further Due Date Changes Reported: On March 26, 2020, the Florida Department of Revenue issued two Emergency Orders, the first dealing with sales taxes and the second dealing with property taxes. As to sales taxes, the Order stated that while sales/use tax and other related tax returns and payments are normally due on the first day of the month and are late after the twentieth day of the month, this Order allows taxpayers who have been adversely affected by COVID-19 to extend the due date to April 30, 2020 for sales/use tax and related taxes collected in March; however, taxpayers not adversely affected by COVID-19 continue to be subject to the April 20 deadline. That Order further stated that taxpayers who were unable to meet the March 20 due date for taxes collected in February will have penalties and interest waived if those taxes are reported and remitted by March 31. The phrase "adversely affected" means the business closed in compliance with a state or local government order and had no taxable sales transactions as a result; the business experienced sales tax collections in March that are less than 75 percent of March 2019 sales tax collections; the business was established after March 2019; or the business is registered with the Department to file quarterly. As to property taxes, that Order applies to all 67 Florida counties, and allows payments for the 2019 year to be considered timely paid if made by April 15, 2020 rather than the normal due date of March 31. More information can be found here.

Coronavirus Tax Payment and Return Filing Responsibilities (March 19) - Possible Changes: As of March 16, 2020, the Governor of the State of Florida reportedly has announced that the Department of Revenue will offer flexibility on deadlines of taxes due, including corporate income taxes and sales taxes, to help businesses adversely affected by the coronavirus. Also, according to that report, the Governor noted that some corporate income tax payments can be deferred until the end of the fiscal year. No other specifics are available at this time. The Florida Department of Revenue has said it is closely monitoring developments pertaining to the novel coronavirus (COVID-19) and has established a dedicated team to address tax-related issues. For tax inquiries pertaining to COVID-19, and Florida tax reporting and payment obligations, the Department has a dedicated email address, COVID19TAXHELP@FloridaRevenue.com, where businesses and individuals can address their questions and concerns. The Department is encouraging all dealings with it be conducted by use of its online services, which include its website at FloridaRevenue.com, eServices applications to file and pay taxes, or its call center at 850.488.6800.

Sales Tax/Wayfair: Since the 2018 U.S. Supreme Court Wayfair decision, which ruled that states can apply reasonable requirements to compel remote vendors having no physical presence in the state to collect taxes on sales to residents, every state except Florida and Missouri has taken steps to subject out-of-state vendors to payment of sales tax. As this year's Florida legislative session nears a close however, resistance from the Florida House will mean the state again still has not addressed this issue. Senate Bill 126, sponsored by Sen. Joe Gruters, was passed by the Senate Commerce and Tourism Committee and the Finance and Tax Committee. The comparable House Bill (HB 159) never even received a committee hearing. As a result, the full Senate has taken no action on its bill, apparently deeming it to be futile. Florida continues to place the responsibility on its residents and businesses located in the state who buy from remote vendors to pay use tax. Compliance is rare, and enforcement of the use tax is impractical. As a result, unlike nearly all other states, remote sales by vendors without a physical presence in Florida still largely escape taxation. Florida Tax Watch has estimated that the state is losing more than $700 million in legally owed revenue from such sales. No change in the law appears likely however within the next year.

Senate Bill 126 can be found here.

February 2020

Leasehold Property Tax: For many years, Florida's intangible personal property tax was assessed annually on the market value of intangible property, such as stocks, bonds, and mutual fund shares, owned by Florida residents and businesses. In 2006, the Florida legislature repealed most parts of the tax, but left in place a tax on all leasehold estates, or related possessory interests in Florida property owned by any federal, state, local, or other governmental body. These leases are taxed as intangible personal property if the lessee pays rent to the government. An annual intangible tax return must be filed by any lessee of government owned property, unless the lessee is performing a governmental function on the property, in which case the lease is exempt from taxation. In reporting the intangible tax due, the just value of a lessee's leasehold estate that must be reported on the tax return is determined by the remaining rent payments under the lease using a formula based on the Federal Reserve discount rate – Atlanta – on the last business day of the previous year, plus one percent. Valuation factor tables, determined using this formula, are published annually by the Department of Revenue. On January 8, 2020, the Florida Department of Revenue issued Taxpayer Information Publication No. 20C02-01 providing the most recent valuation factor table which can be found here.

November 2019

Rental Sales Tax Rate: On October 30, 2019, the Florida Department of Revenue issued Tax Information Publication No. 19A01-11, noting that effective January 1, 2020, the State sales tax rate on total rent charged for renting, leasing, letting, or granting a license to use real property will decrease from 5.7 percent to 5.5 percent. As also noted in this Publication, the total rent charged includes all consideration due and payable by the tenant to the landlord for the privilege or right to occupy the real property. Further, rental charges paid on or after January 1, 2020 for rental periods prior to January 1, 2020 continue to be subject to the 5.7 percent State sales tax; and that rental payments made prior to January 1, 2020 that entitle the tenant to occupy the real property on or after January 1, 2020 are subject to the 5.5 percent rate, with both situations including any applicable local option discretionary sales surtax. For more details regarding the foregoing, click here.

October 2019

Corporate Income/Franchise Tax: In mid-September 2019, the Florida Department of Revenue issued Tax Information Publication No. 19C01-04, notifying taxpayers that the corporate income tax rate for years beginning January 1, 2019 through December 31, 2021 is reduced from 5.5 percent to 4.458 percent. Taxpayers with a 52 – 53-week taxable year beginning on or about January 1 and ending on or about December 31 have the same tax rates as calendar year taxpayers. Unless subsequently adjusted, the tax rate for taxable years beginning on or after January 1, 2022 will revert to 5.5 percent. For more details as to this tax rate deduction, click here.

September 2019

Corporate Income Tax: On August 26, 2019, the Florida Department of Revenue issued Tax Information Publication No. 19C01-03. Shortly thereafter, the Department updated that Notice as of September 5, 2019. The purpose of the Notice was to remind those taxpayers that file a Florida corporate income/franchise tax return for any taxable year beginning during the 2018 or 2019 calendar year, to report additional information for each taxable year to the Department. For taxpayers timely filing a return by September 3, 2019, the required additional information was initially considered by the Department to be due if submitted by September 3, 2019; however, the update to that Notice states that the September 3 due date for such additional information is extended to October 27, 2019 because of the substantial impact caused by Hurricane Dorian. Further, additional information which is due after October 27, 2019 may now be submitted under this update within ten days of the extended due date or the date the related return is filed, whichever is earlier.

For more details as to the required additional information and the updated due dates because of Hurricane Dorian, click here.

August 2019

Corporate Income Tax: On July 31, 2019, the Florida Department of Revenue issued two Tax Information Publications (TIP) dealing with the impact of the Federal Tax Cuts and Jobs Act of 2017 (TCJA) on the Florida corporate income tax. TIP No. 19C01-02 advises that the Florida Income Tax Code now adopts the Internal Revenue Code retroactively to January 1, 2019, and also addresses certain adjustments such as bonus depreciation and foreign source income provisions which are required in computing Florida adjusted federal income. TIP No. 19C01-01 reminds that all taxpayers filing a Florida corporate income tax return are required to submit certain information from their federal income tax return on the Department's website concerning the TCJA impacts on their Florida corporate income tax. The Department webpage is to be available on or before September 3, 2019. That TIP also briefly explains how certain sections within the Internal Revenue Code affected by the TCJA flow into the Florida corporate income/franchise tax return. The referenced sections include net operating losses, foreign-source income adjustments, and the limitation on net interest deductions. Refer to TIP Nos. 19C01-01 and 19C01-02 for more details.

July 2019

Interest Rate: For the period from July 1, 2019 through December 31, 2019, the Florida Department of Revenue earlier announced in Tax Information Publication No. 19ADM-01 that the floating interest rate remains at nine percent based on the adjusted prime rate charged by banks. The floating rate of interest applies to deficiencies (underpayments), late payments and overpayments.

Refer to this Tax Information Publication for more details.

June 2019

Fuel Tax: Effective June 4, 2019, the Florida Department of Revenue promulgated an emergency rule addressing the exemption from tax on fuel purchases in Florida between October 10, 2018 and June 30, 2019 where such fuel is used in the State for agricultural shipment or hurricane debris removal. The emergency rule sets forth various definitions and other important information pertaining to the exemption. A copy of the emergency rule can be found here.

For more information about state and local tax developments in Florida, please contact:

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