Our Florida Predominant Use Study will maximize the tiered exemption allowed for the electricity and natural gas meters. If our study determines 50-75% of the electricity and/or natural gas is used in qualified processes, then a 50% exemption from State, City, and County sales taxes is allowed. If our predominant use study proves more than 75% is used in qualified processes, then a 100% utility sales tax exemption is allowed. In addition to the utility sales tax exemption, we can also recover sales taxes limited to the statute of limitations (36 months in Florida). The refund will be limited to either 50% or 100% of the sales taxes paid in error during that 36 month period as determined by the predominant use study.
All of our Florida predominant use studies will account for all power draw including the exempt and non-exempt usage to ensure we can defend the studies with the State agencies when needed. Our studies are certified by our PE (professional engineer) to ensure accuracy while maximizing the exempt percentage. National Utility Solutions will also handle the defense of the predominant use study at no additional cost to ensure our clients retain their exemptions and refunds.
For a no-obligation consultation, contact us at 346-241-0100 ext. 3 or Toll Free 844-767-0037 ext. 3.
Tiered exemption system used for electricity exemptions.
Under 50% used in manufacturing does not qualify for exemption, 50% through 75% used in manufacturing allows a 50% exemption, 76% and above used in manufacturing allows a 100% exemption.
Only specific industries qualify. Check SIC code in classification manual.
Tax Advantages for Businesses
Sales and Use Tax Administered in Part by the Fla. Dept. of Revenue
Machinery & Equipment Incentives
Machinery and Equipment Used by a New or Expanding Business to Increase Productive Output (exemption)
- Machinery for a new business must be ordered before the start of productive operations andreceived within 12 months of the date the business begins its productive operations.
- “Industrial machinery and equipment” means tangible personal property or other propertythat has a depreciable life of 3 years or more and is used as an integral part in the manufacturing, processing, compounding, or production of tangible personal property for sale or is exclusively used in spaceport activities. Section 212.08(5)(b), Florida Statutes (F.S.), also specifies the machinery and equipment that do not qualify for this exemption.
- Expanding businesses must show a minimum 5% increase in productive output. References: Section 212.08(5)(b), F.S., Rule Chapter 12A-1.096, Florida Administrative Code (F.A.C.)Machinery and Equipment Used to Produce Electricity or Steam (exemption)
- This exemption is available to facilities that burn boiler fuels, other than residual oil.
- The electrical or steam energy must be primarily used for manufacturing, processing,compounding, or producing for sale, items of tangible personal property in Florida.
- If a facility burns both residual and nonresidual fuels, the exemption is prorated.
- If 15% or less of all electrical or steam energy produced is from using residual oil, the fullexemption applies.
References: Section 212.08(5)(c), F.S.Industrial Machinery and Equipment Purchases for Eligible Manufacturing Businesses (exemption)
- Effective April 30, 2014, purchases of industrial machinery and equipment used at a fixedlocation in Florida by eligible businesses that manufacture, process, compound, or producefor sale items of tangible personal property are exempt from sales and use tax.
- An “eligible business” is any business whose primary business activity at the location wherethe machinery and equipment are located is within an industry classified under NAICS(North American Industry Classification System) codes 31, 32, or 33 (manufacturing).
- The exemption also includes parts and accessories for the industrial machinery andequipment if they are purchased before the date the machinery and equipment are placed inservice.
- This exemption is set for repeal on April 30, 2017.
References: Section 212.08(7)(kkk), F.S., Tax Information Publication (TIP) 13A01-06
Florida Department of Revenue, Sales Tax Advantages for Businesses, 10/1/13, Page 1
Machinery and Equipment and Other Materials for Pollution Control (exemption)
- Purchases of machinery and equipment must be used primarily to control or abate pollutants resulting from manufacturing, processing, compounding, or producing for sale items of tangible personal property at a fixed location.
- Manufacturing facilities. Exemption applies to:
o Specialty chemicals (as defined by statute)
o Bioaugmentation products (as defined by statute)
- Privately owned or operated landfills. Exemption applies to equipment, machinery, and materials.
- Construction and demolition debris disposal facilities. Exemption applies to equipment, machinery, and materials.
- Qualifying purchases must be used, installed, or constructed to meet a law enforced by, or a condition of a permit issued by, the Department of Environmental Protection.References: Section 212.051, F.S., TIP 00A01-17
Machinery and Equipment Used in Semiconductor, Defense, or Space TechnologyProduction (exemption)
Certification is obtained under an application process conducted jointly by the Department of Economic Opportunity and Enterprise Florida, Inc.
References: Section 212.08(5)(j), F.S.
Exemption of tax on machinery and equipment purchased by a certified semiconductor facility (including expansion of clean rooms in semiconductor-manufacturing facilities), or by a certified defense or space technology facility for use in the manufacture of their respective products for sale as defined by statute.
A business certified to receive this exemption may elect to designate one or more state universities or community colleges as recipients of up to 100 % of the amount of the exemption.
Machinery and Equipment Used for Research and Development (exemption)
equipment, test beds, computers, and software, whether purchased or self-fabricated, and, if
self-fabricated, includes materials and labor for design, fabrication, and assembly.
products used for quality control, market research, efficiency surveys, consumer surveys, advertising and promotions, management studies, or research in connection with literary, historical, social science, psychological, or other similar nontechnical activities.
References: Section 212.08(18), F.S., Rule Chapter 12A-1.043, F.A.C.
Florida Department of Revenue, Sales Tax Advantages for Businesses, 10/1/13, Page 2
Machinery, Equipment, and Other Materials for Renewable Energy Technologies (refund)
The purchaser is eligible for a one-time, per item refund of previously paid tax if:
- Machinery, equipment, and other materials for renewable technologies were certified aseligible for a refund by the Florida Department of Agriculture and Consumer Services.
- The statewide total refund authorized for all taxpayers is $1 million per state fiscal year.
- Examples of eligible items: Materials used in the distribution of biodiesel, ethanol, and otherrenewable fuels, including fueling infrastructure, transportation, storage for fuels, andgasoline fueling station pump retrofits.
- This refund program expires July 1, 2016. References: Section 212.08(7)(hhh), F.S., TIP 12A01-09Energy IncentivesElectricity or Steam Used to Operate Certain Equipment and Machinery (exemption)
- Exemption is available only to businesses classified under certain SIC Industry Major Groups for mining, construction and manufacturing (that use 50% or more of the electricity or steam to operate qualifying machinery and equipment).
- 100% exemption if 75% or more of the electricity or steam is used to operate qualifying machinery and equipment.
- 50% exemption if less than 75%, but 50% or more of the electricity or steam is used to operate qualifying machinery and equipment.
- No exemption if less than 50% of the electricity or steam is used to operate qualifying machinery and equipment.References: Section 212.08(7)(ff), F.S., TIP 00A01-14Boiler Fuels Used for Certain Industrial Manufacturing Processes (exemption)
- Exempts boiler fuels when purchased for use as a combustible fuel (purchases of natural gas, residual oil, recycled oil, waste oil, solid waste material, coal, sulfur, wood, wood residue or wood bark), in the manufacturing, processing, compounding, or production of tangible personal property for sale in Florida.
- This exemption does not apply to boiler fuels used by a firm regulated by the Department of Business and Professional Regulation, Division of Hotels and Restaurants.References: Section 212.08(7)(b), F.S., Rule Chapter 12A-1.059,F.A.C.Solar Energy Systems (exemption)
- Exemption is available to individuals and companies.
- Eligible systems must convert sunlight into energy for use as a power source for anothersystem.
- Applies to equipment and any component currently certified by Florida Solar Energy Centeras a qualifying solar energy component: solar collectors, pumps and controls, photovoltaic power conditioning equipment, energy storage units, and accessories integral to a qualifying system.
- Exemption is not available when the cost of the solar equipment cannot be separated from the total cost of the product (i.e., patio lights, calculators, novelty items).References: Section 212.08(7)(hh), F.S., TIP 05A01-05
Florida Department of Revenue, Sales Tax Advantages for Businesses, 10/1/13, Page 3
Electricity Used for Agricultural Purposes (exemption)
- Electricity used for the production and processing of agricultural farm products on a farm is exempt from sales and use tax if the electricity is separately metered.
- Also exempt from sales and use tax is electricity used for the packing of agricultural products on a farm, or electricity used in a packinghouse production, packing or processing of agricultural products; including packinghouses that are not located on a farm.
- Exemption does not apply to electricity used in buildings or structures where agricultural products are sold at retail.References: Sections 212.02(28), (32); 212.08(5)(e), and 212.085, F.S., TIP 07A01-05, TIP12A01-07Natural Gas Used to Generate Electricity in a Non-Combustion Fuel Cell Used in Stationary Equipment (exemption)
Natural gas used to generate electricity in a non-combustion fuel cell in stationary equipment
is exempt from sales and use tax.
References: Section 212.08(4)(a), F.S., TIP 13A01-08
Electrical Energy Used in an Enterprise Zone (exemption)
- Exemption from municipal utility taxes for up to 5 years.
- Percentage of exemption may be increased from 50% to 100% based on the percentage offull-time employees who are residents of a Florida enterprise zone. References: Section 212.08(15), F.S., Enterprise Florida (www.eflorida.com)Entertainment Industry IncentivesMotion Picture or Video Equipment Used in Motion Picture or Television Production Activities and Sound Recording Equipment Used in the Production of Master Tapes and Master Records (exemption)
- Exemption on the purchase or lease of certain motion picture or video equipment and soundrecording equipment used only as an integral part of the production activities in Florida.
- Equipment must have a depreciable life of 3 years or more.
- Production companies with a certificate of exemption issued under s. 288.1258, F. S., areeligible.
References: Section 212.08(5)(f), F.S., TIP 00A01-41, The Department of Economic Opportunity – Florida Office of Film and Entertainment (www.filminflorida.com)Entertainment Industry Financial Incentive Program (credit)
- Credit must be approved by the Department of Economic Opportunity, Florida Office of Film and Entertainment under the guidelines in s. 288.1254, F.S.
- The credit can be carried forward for 5 years.
References: Sections 212.08(5)(q) and 288.1254, F.S., The Department of Economic Opportunity – Florida Office of Film and Entertainment (www.filminflorida.com)
Florida Department of Revenue, Sales Tax Advantages for Businesses, 10/1/13, Page 4
Enterprise Zone Incentives
Enterprise Zone Jobs Credit (credit)
- Businesses located in an enterprise zone that increased the number of full-time employees in the previous 12 months, or added at least 5 new full-time employees, may be eligible for the credit.
- The new employees may be leased employees.
- Credit is allowed for up to 24 consecutive months.
- Credit is limited to the amount due on each return. No refund or carry-forward is allowed.
- Amount of credit depends on employee category and the percentage of full-time employeeswho are residents of a Florida enterprise zone.
- A business cannot claim the credit against sales and use tax if it has already claimed it forcorporate income tax or insurance premium tax.
References: Section 212.096, F.S., TIP 01A01-06, TIP 06ADM-02, Enterprise Florida (www.eflorida.com)Building Materials Used to Rehabilitate Real Property Located in an Enterprise Zone (refund)
- Eligible materials used in the rehabilitation of real property located in an enterprise zone areeligible for a refund of previously paid sales and use tax. The refund amount is subject tominimum and maximum dollar amounts.
- Eligible recipients may be: owner, lessee, lessor, nonprofit community-based organization,city, county, or other government organization.
- Maximum refund amount may be increased based on the percentage of permanent, full-timeemployees who are residents of a Florida enterprise zone.
- Only one refund is allowed for each parcel of real property unless there is a change inownership, a new lessor, or a new lessee of the real property.
References: Section 212.08(5)(g), F.S., TIP 01A01-06, TIP 10A01-26, TIP 06ADM-02, Enterprise Florida (www.eflorida.com)Business Property Used in an Enterprise Zone (refund)
- Eligible property includes office and warehouse equipment, and some industrial machinery and equipment used by businesses in an enterprise zone.
- Property must be used only in an enterprise zone for at least 3 years.
- Refund is subject to a minimum and maximum dollar amount.
- Maximum refund amount may be increased based on the percentage of permanent, full-timeemployees who are residents of a Florida enterprise zone.
References: Section 212.08(5)(h), F.S., Enterprise Florida (www.eflorida.com)
Florida Department of Revenue, Sales Tax Advantages for Businesses, 10/1/13, Page 5
Building Materials in Brownfield Redevelopment Projects (refund)
- The owner of a redevelopment project located within an urban high-crime area, an enterprise zone, an empowerment zone, a Front Porch Community, a designated brownfield area, or certain urban infill areas may apply for a refund of sales tax paid on building materials used in the project.
- Each “brownfield area” in which housing projects or mixed-use projects are constructed must be a brownfield site for which a rehabilitation agreement with the Department of Environmental Protection has been executed, and any abutting real property parcel within a brownfield area.
- An application for refund must be submitted within 6 months after the date the project is deemed to be substantially complete.References: Section 212.08(5)(o), F.S., Section 288.107, F.S., TIP 13A01-10Research, Development, and Labor IncentivesResearch or Development Costs (exemption)
- Exemption is available to a company or an individual.
- Exemption applies only to the cost price of tangible personal property incorporated orfabricated into the end product.
- Excludes ordinary testing, quality control inspections, market research, surveys, and researchin nontechnical areas such as literary, historical, or social sciences.
- Results of research and development must be commercially exploitable but the sale of aresulting product is not required.
References: Section 212.052, F.S., Rule Chapter 12A-1.043, F.A.C.Certain Repair and Labor Charges (exemption)
- This sales and use tax exemption is available to businesses classified under specified Standard Industry Code (SIC) Major Groups for mining, construction, and manufacturing.
- Exempts labor charges for the repair of, and parts and materials used in the repair of and incorporated into industrial machinery and equipment which is used for the manufacture, processing, compounding, production, or preparation for shipping of items of tangible personal property at a fixed location within Florida.References: Section 212.08(7)(xx), F.S. , TIP 00A01-15
Florida Department of Revenue, Sales Tax Advantages for Businesses, 10/1/13, Page 6
NOTICE OF RULE DEVELOPMENT DEPARTMENT OF REVENUE
SALES AND USE TAX
RULE NO: RULE TITLE:
12A-1.087 Exemption for Power Farm Equipment; Electricity Used for Certain Agricultural
Purposes; Suggested Exemption Certificate for Items Used for Agricultural
PURPOSE AND EFFECT: The purpose of the proposed amendments to Rule 12A-1.087, F.A.C., is to incorporate legislative changes in Section 12, Chapter 2016-220, Laws of Florida. The new exemption created in that section allows for the exempt sale of certain postharvest machinery and equipment. The rule change provides guidance on when the exemption applies and a suggested certificate to document an exempt sale.
SUBJECT AREA TO BE ADDRESSED: The subject of the rule workshop is the new exemption for certain postharvest machinery and equipment.
Rulemaking Authority 212.17(6), 212.18(2), 213.06(1) FS.
Law Implemented 212.02(14)(c), (30), (31), (32), 212.05(1), 212.0501, 212.06(1), 212.08(3), (5)(a), (e), (7)(kkk), 212.085 FS.
IF REQUESTED IN WRITING AND NOT DEEMED UNNECESSARY BY THE AGENCY HEAD, A RULE DEVELOPMENT WORKSHOP WILL BE HELD AT THE DATE, TIME, AND PLACE SHOWN BELOW.
DATE AND TIME: September 21, 2016, 1:00 p.m.
PLACE: 2450 Shumard Oak Boulevard, Building One, Room 1220, Tallahassee, Florida.
NOTICE UNDER THE AMERICANS WITH DISABILITIES ACT: Any person requiring special accommodations to participate in any rulemaking proceeding before Technical Assistance and Dispute Resolution is asked to advise the Department at least 48 hours before such proceeding by contacting Becky Nall at (850)717-6799. Persons with hearing or speech impairments may contact the Department by using the Florida Relay Service, which can be reached at (800) 955-8770 (Voice) and (800) 955-8771 (TTY).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE DEVELOPMENT IS: Kimberly Berg, Technical Assistance and Dispute Resolution, Department of Revenue, P.O. Box 7443, Tallahassee, Florida 32314-7443, telephone (850) 717-7082.
THE PRELIMINARY TEXT OF THE PROPOSED RULE DEVELOPMENT IS: Published on the Department’s Internet site at www.myflorida.com/dor/rules.
STATE OF FLORIDA
DEPARTMENT OF REVENUE
CHAPTER 12A-1, FLORIDA ADMINISTRATIVE CODE SALES AND USE TAX
AMENDING RULE 12A-1.087
12A-1.087 Exemption for Power Farm Equipment; Electricity Used for Certain Agricultural Purposes; Suggested Exemption Certificate for Items Used for Agricultural Purposes.
(1) through (10) No change.
(11) Postharvest Machinery and Equipment.
(a)1. The sale and repair, including charges for labor, parts and materials, of postharvest
machinery and equipment is exempt. Businesses who qualify for the exemption are those classified under code 115114 of the NAICS (2007) whose primary postharvest activities include crop cleaning, sundrying, shelling fumigating, curing, sorting, grading, packing, and cooling. The exemption applies to the qualifying equipment at the business location where the postharvest activity occurs.
2. Examples of qualifying postharvest activities include but are not limited to: Banana ripening, bean cleaning, corn drying and shelling, delinting cotton seed (not including cotton ginning), grain cleaning and drying, grain grinding (not including custom grinding for animal feed), nut drying, hulling and shelling, seed cleaning and processing for postharvest propagation, sorting, grading, cleaning and packing fruits and vegetables, sun drying fruits and vegetables, tobacco grading (not including stemming and redrying), and waxing fruits and vegetables.
(b) For purposes of this rule, the following definitions will apply:
1. “Postharvest machinery and equipment” means tangible personal property or other property with a depreciable life of 3 years or more which is used primarily for postharvest activities.
2. “Primary business activity” means an activity representing more than 50 percent of the activities conducted at the location where the industrial machinery and equipment or postharvest machinery and equipment is located.
(c)1. A building and its structural components are not postharvest industrial machinery and equipment unless the building or structural component is so closely related to the postharvest machinery and equipment that it houses or supports that the building or structural component can be expected to be replaced when the postharvest machinery and equipment is replaced.
2. Example: Heating and air conditioning systems are not postharvest machinery and equipment unless the sole justification for their installation is to meet the requirements of the postharvest activities process, even though the system may provide incidental comfort to employees or serve, to an insubstantial degree, nonpostharvest activities.
(d) Suggested Exemption Certificate for Postharvest Machinery and Equipment.
1. Any person who purchases items that qualify for the postharvest machinery and equipment exemption must issue an exemption certificate to the selling dealer to purchase such machinery or equipment tax-exempt. The exemption certificate must contain the purchaser’s name and address, the reason for the exemption, and the signature of the purchaser or an authorized representative of the purchaser.
2. The selling dealer is only required to obtain one certificate for sales made for the purposes indicated on the certificate and is not required to obtain an exemption certificate for subsequent sales made to the same purchaser for the exempt purpose indicated on the exemption
certificate. The selling dealer must maintain the required exemption certificates in its books and records until tax imposed by Chapter 212, F.S., may no longer be determined and assessed under Section 95.091(3), F.S.
3. Dealers who accept in good faith the required certificate from the purchaser or lessee will not be assessed sales tax on sales of postharvest machinery and equipment. In such instances, the Department will look solely to the purchaser or lessee for any additional sales or use tax due.
4. Selling dealers may contact the Department at 1(800)352-3671 to verify the specific exemption specified by the purchaser or lessee. Persons with hearing or speech impairments may call the Florida Relay Service at 1(800)955-8770 (Voice) and 1(800)955-8771 (TTY).
5. The following is a suggested format of an exemption certificate to be issued by any person purchasing or leasing postharvest machinery or equipment qualifying for exemption under Section 212.08(7)(kkk), F.S. The Department does not furnish the printed exemption certificate to be executed by purchasers or lessees when purchasing tax-exempt machinery or equipment.
SUGGESTED PURCHASER’S EXEMPTION CERTIFICATE FOR POSTHARVEST MACHINERY OR EQUIPMENT
This is to certify that the items identified below, purchased on or after ___________ (date) from ______________________ (Selling Dealer’s Business Name) are purchased, leased, licensed, or rented for the following category of use:
( ) Postharvest machinery or equipment.
( ) Repairs to, or parts and accessories for, postharvest machinery or equipment.
I further certify that I qualify for an exemption from sales tax under s. 212.08(7)(kkk), F.S., for all eligible purchases made from this day forward and that:
- ( ) I am an eligible postharvest activity business.**
- ( ) The postharvest machinery and equipment being purchased will be used at a fixed location in Florida to perform postharvest activities, which are services performed on crops, after their harvest, with the intent of preparing them for market or further processing. Examples include crop cleaning, sun drying, shelling, fumigating, curing, sorting, grading, packing, and cooling.
( ) Any parts and materials being purchased will be used to repair, and will be incorporated into, the machinery and equipment.
** “Postharvest activity business” means a business whose primary business activity, at the location where the postharvest machinery and equipment is located, is within an industry classified under NAICS code 115114 (Post harvest crop activities).
I understand that if I use the item for any purpose other than the one I stated, I must pay tax on the purchase or lease price of the taxable item directly to the Department of Revenue.
I understand that if I fraudulently issue this certificate to evade the payment of sales tax I will be liable for payment of the sales tax plus a penalty of 200% of the tax and may be subject to conviction of a third degree felony.
Under penalties of perjury, I declare that I have read the foregoing document and that the facts stated in it are true.
Purchaser’s Name _____________________________________________________________ Purchaser’s Address ___________________________________________________________
Name and Title of Purchaser’s Authorized Representative ______________________________ Sales and Use Tax Certificate No. (if applicable) ______________________________________ By ___________________________________________________________________________
(Signature of Purchaser or Authorized Representative)
(Title – only if purchased by an authorized representative of a business entity)
Rulemaking Authority 212.17(6), 212.18(2), 213.06(1) FS. Law Implemented 212.02(14)(c), (30), (31), (32), 212.05(1), 212.0501, 212.06(1), 212.08(3), (5)(a), (e), (7)(kkk), 212.085 FS. History– New 10-7-68, Amended 1-7-70, 6-16-72, 10-18-78, 7-20-82, 4-12-84, Formerly 12A-1.87, Amended 12-13-88, 3-1-00, 6-19-01, 9-15-08, 1-17-13, 1-11-16, _____.