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Office (954) 761-3700

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Tampa, FL 33637

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Sales Tax Refund for Florida Citrus Growers

Florida citrus growers just ended the worst season in years, as a result of the greening disease and hurricane Irma. Greening disease causes trees to become stunted and produce green fruit that is too sour to sell. Since 2005, when the disease first plagued citrus trees across Florida, citrus production has more than halved. Fortunately, many farmers have found new growing techniques to still produce healthy citrus groves. Citrus growers were expecting an increase in production this year, but then Hurricane Irma hit. As a result, many farmers have chosen to leave their farms abandoned as opposed to replant and start over again. Both the federal and state government have been working hard to provide incentives for citrus growers to replant and rebound from their long fight with the greening disease.

On the Federal level, the Emergency Citrus Disease Response Act, which was included in the recently signed tax cut bill, provides immediate relief for citrus growers. The law allows citrus farmers to immediately deduct the costs of planting a new grove as opposed to waiting to write off the expenses and depreciate them over several years. The bill also allows for growers to receive a tax deduction for replanting costs even if they sell a portion of their business. However, growers must still maintain a 50 percent share of the business.

The Florida legislature has also provided relief for citrus farmers through a temporary tax incentive plan. The bill was passed during the 2018 legislative session to assist the state’s farmers and ranchers in recovery efforts from the damage caused by Hurricane Irma in September of 2017. The plan provides relief for citrus farmers in the form of sales tax exemptions and refunds in agricultural materials as well as a reduction in property tax. The sales tax exemption is on nonresidential farm building materials and agricultural fencing. The property tax relief is a reduction of property taxes on citrus processing and packing plants as well as on processing equipment slowed due to citrus greening or Hurricane Irma. Below is a full summary of all of the provisions of the law as well as a break down of appropriations.

Summary and Appropriations:

  • A refund of sales taxes paid on select fencing materials used to repair agricultural fencing between Sept. 10, 2017, and May 31, 2018 ($8.8 million).
  • A refund of sales taxes paid on select building materials used to repair non-residential farm buildings between Sept. 10, 2017, and May 31, 2018 ($2.7 million).
  • A refund for state and local fuel taxes imposed on motor fuel and diesel used for the transportation of agricultural products from the farm to a processing or packaging facility between Sept. 10, 2017, and June 30, 2018 ($3.7 million).
  • An assessment at salvage value on tangible personal property owned and operated by a citrus fruit packing or processing facility sitting idle due to lower production as a result of Hurricane Irma ($13.1 million).
  • Agricultural land not in production due to hurricane damage will retain its Greenbelt classification for up to five years as long as the land is not used for a non-agricultural use ($1.3 million).
  • Greenbelt classification refers to lands receiving an agricultural classification by the property appraiser’s office as defined under 193.461, F.S. The classification typically results in a significant tax reduction for the property owner, due to a lower value assessment.

Some of these provisions went into effect the day the bill was signed into law, March 27, 2018. Other provisions will go into effect on July 1, 2018. The Department of Revenue has already passed several emergency rules and forms in relation to the tax incentive. However, the Department is still working to pass rules on portions of the tax incentive plan. Additionally, the Department will have to promulgate rules in the near future as the only rules currently passed are emergency rules.

The Florida legislature has provided yet another incentive for citrus farmers in a law passed in the 2017 special session. This law provided for the Department of Health (“DOH”) to issue 10 new Medical Marijuana Treatment Centers (MMTCs). This law also required the DOH to give “preference to applicants that demonstrate in their applications that they own one or more facilities that are, or were, used for the canning, concentrating, or otherwise processing of citrus fruit or citrus molasses and will use or convert the facility or facilities for the processing of marijuana.” 381.986(8)(a)3, F.S.

This provision giving preferential treatment to Florida citrus growers has caused several lawsuits. With Florida expected to have one of the largest medical marijuana markets in the country, the fight for MMTC licenses has been extremely competitive. One of the lawsuits challenged the constitutionality of the provision giving preference to citrus growers. However, the case was recently voluntarily dismissed with prejudiced. Another lawsuit has to do with the provision not being properly applied and carried out. The DOH has currently issued 13 licenses, none of which have been issued to citrus growers. The filing of these and other lawsuits appear to have created a chilling effect on the Department out of fear a portion of the statutes or rules may be found invalid. However, the DOH is currently gearing up to finalize its proposed rules for the next round of licensing Medical Marijuana Treatment Centers. As the laws currently stand, there are up to two licenses available for citrus growers.If you are a citrus farmer, you should be taking advantage of the many laws passed to help rebuild the industry.

It will be interesting to follow how the DOH and the legislature handle the effects of these rulings. As the legalization of medical marijuana is fairly new to Florida it has been a trial and error process. If the past is telling of the future, the fight for Florida medical marijuana licenses is far from over when both sides are trying to tackle this new area of state law. As procedures are created, modified, and replaced, it is vital for those in the marijuana industry to stay informed and proceed through the licensing process with competent counsel. If you are a citrus farmer, you should be taking advantage of the many laws passed to help rebuild the industry.

Florida Sales Tax Attorney; Florida Sales Tax Audit; Florida sales tax voluntary disclosure; Florida Amazon FBA; Miami Sales Tax attorney; Tampa Sales Tax AttorneyAbout the Author: Paula Savchenko is an associate attorney at the Law Offices of Moffa, Sutton, & Donnini, P.A, based in Fort Lauderdale, Florida. Ms. Savchenko joined the firm in 2013 and practices primarily in the areas of Taxation and Administrative Law matters, as she counsels and represents businesses and individuals in their dealings with government agencies. More specifically, most of her work involves tax and regulatory matters, with an emphasis on state and local taxation.

AUTHORITY

H.R.112 – Emergency Citrus Disease Response Act of 2017

Tax Cuts and Jobs Act, Section 13207 (2017)

HB 7087: Taxation (2018)

381.986(8)(a)3, F.S.

193.461, F.S.

Emergency Rule 12AER18-01

Emergency Rule 12AER18-02

Emergency Rule 12BER18-03

TIP 18A01-08

TIP 18B05-02

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