TIP # 06A01-06
DATE ISSUED: June 23, 2006
Changes to Specified Sales Tax Exemptions on
Purchases of Machinery and Equipment
The closing of the 2006 Florida Legislative Session resulted in a change in the law on several tax exemptions relating to purchases or leases of machinery and equipment. The tax exemptions that were affected are discussed below.
Machinery and Equipment Purchased by Expanding Manufacturers
Effective July 1, 2006, expanding manufacturing businesses are no longer required to meet a $50,000 tax threshold. Purchase transactions completed, or lease payments required to be made, prior to July 1, 2006, remain subject to the $50,000 tax threshold.
To qualify for the exemption, expanding manufacturing businesses:
- Must be registered for sales and use tax purposes with the Department of Revenue;
- Must file Form DR-1214, an Application for Temporary Tax Exemption Permit, with the Department of Revenue;
- Must purchase or lease qualifying machinery and equipment to manufacture, process, compound, or produce tangible personal property for sale at a fixed location; and
- Must show an increase in productive output of not less than 10 percent to qualify for the exemption. The increase is generally measured by comparing the number of physical units produced for 12 continuous months immediately following the completion of installation of qualifying machinery and equipment to the number of physical units produced over the 12 continuous months immediately preceding such installation.
In response to a properly filed Form DR-1214, the Department will issue a temporary tax exemption permit to qualified expanding businesses or provide instructions on how to apply for a refund of previously paid taxes on qualifying machinery and equipment.
Machinery and Equipment Purchased Under Federal Procurement
Effective July 1, 2006, expanding manufacturing businesses that purchase or lease qualifying machinery and equipment for use under a federal procurement contract are no longer required to meet a $100,000 tax threshold. Purchase transactions completed, or lease payments required to be made, prior to July 1, 2006, remain subject to the $100,000 tax threshold. |