Saturday, June 4, 2011

Florida Sales Tax

What is the Florida sales tax rate? If you said 7% you would be wrong and you're probably from Miami Dade County. The sales tax rate in Florida is actually 6%. In Miami Dade we pay an extra "Sales Surtax" of .5% to fund Jackson Memorial Hospital and then another .5% to fund the transit system. So..... that's why we pay 7%  on purchases. So why is this important to know? If you're a business owner that sells widgets from your warehouse in Miami Dade County and you received an order for your widgets to be delivered to a customer in Palm Beach County and charged 7% sales tax, you would be overcharging the customer on sales tax. Worse yet you would be violating a sales tax provision. Why? The sales tax you should charge for a taxable widget to be delivered to Palm Beach should be 6%, That's because Palm Beach does not have a "Sales Surtax". Likewise many counties in Florida only have a 6.25% or 6.5% sales tax. The impact is large if you receive a sales tax audit. Not only did you not charge the correct sales tax rate, but the sales tax return and the commission you took is also wrong for all the periods filed.  This is a situation that I have come a cross a few times. It occurs because, (1) the order taker may not be aware of the differences in tax rates, (2) because the people that set up the accounting system never provided for a different sales tax, or (3) simply the company is just venturing outside of the city limits and has not considered all the issues of dealing out side of home base.  Yet another reason having an outside CPA that knows your business, can be a very valuable part of your business resources.

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