Florida Sales Tax Applies To The Sale of Tangible Personal Property – Not Really!

In general, Florida sales tax applies to the sale of tangible personal property (see s. 212.05, FS) and specifically enumerated services. But here's where things get interesting: the Florida Department of Revenue’s "drop of oil" concept! Picture this - if a service transaction involves even the tiniest tangible personal property element (yes, think a drop of oil), the entire service becomes taxable. Crazy, right?

Take a simple tire rotation and balance, for instance:

Most of the work is labor but adding that little lead weight for balance means the entire transaction becomes taxable – all because of that one tiny piece of lead!

Surprising examples of tangible personal property services that become taxable:

Now, let me share some surprising examples of other services that become taxable simply because there is some (however tiny) tangible personal property as part of the service: repairs (to cars, computers, furniture), photography, designer services and seamstress services (yup, even thread counts and tangible personal property!)

Exemptions:

On the flip side, there are services that include tangible personal property that are exempt. For example, the labor for repairs to real property is exempt. (That’s right! One more nuance, labor is exempt when the repairs are to real property! Stay tuned for a Florida Tax Tip that will unravel this concept!) Other services, like legal, accounting, financial planning, surveyors, and salon services may include tangible personal property but manage to dodge the sales tax bullet.  

"Optional":

Then there are “optional” ancillary services, such as transportation and delivery, which may not be included as part of the taxable sale, BUT ONLY IF certain rules are followed. (I promise that this, too, will be covered in another Florida Tax Tip.)

Each of the examples listed above are weighed with fine distinctions and peculiarities, so caution is warranted when reviewing and analyzing such transactions. 

Together, we'll chip away at the confusion, making sure your clients are Florida tax compliant and well-prepared for whatever the tax landscape throws their way!



Cheers,

Nydia - The Florida Tax Girl

P.S. Keep your curiosity high and your tax questions ready; we're on a mission to untangle the Florida sales tax mysteries!