Florida Sales Tax Warning

If you own property or assets and rent them to your business, this applies to you.  Florida State Statutes mandate that sales tax MUST BE SEPARATELY STATED AND IDENTIFIED in the contract.  Here is the situation that has popped up:  The business has been paying $1,000 per month for rent forever.  The understanding between the owner’s business who is renting the building and the owner of the building (which is the same person) was that $943.40 was rent and $56.60 was sales tax.  Florida sales tax auditors are taking the position that since the sales tax has not been separately stated, that the rent is $1,000 and the sales tax is $60.  The auditor wants to assess sales tax of $60 and give credit for $56.60 leaving the taxpayer owing $3.40 for each month.  The bad thing is the rent is not just $1,000 per month, it is several thousand dollars per month and the audit period is 60 months.  And then there is the interest and penalties to be dealt with.  I recommend that your rental agreements be in writing and that the rent amount be identified and then by direct reference with the words “Sales Tax” and the amount of the sales tax.  Please contact me if you have any questions.