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Florida Sales Tax – Hope Scholarship Credit

The Hope Scholarship provides bullied or physically assaulted students with a scholarship to another school. However, car dealers are in for a significant amount of additional rules and regulations associated with their involvement of collecting the tax credit for the scholarship program. All car dealers must pay close attention to the requirements for when the program kicks off on October 1, 2018.

An emergency rule for the Hope Scholarship Credit has been implemented and is effective immediately. This rule provides numerous requirements for all car dealers on their role in the administration and collection process for the scholarship credit.

According to the rule, a motor vehicle purchaser may designate the lesser of $105 or the amount of tax due on the transaction. The dealer must ensure the contribution is accompanied by Form DR-HS1, Hope Scholarship Program – Contribution Election. Failure to do so could lead to penalties being imposed against the dealer.

Car dealers also must provide every purchaser with a chance to contribute to the scholarship fund. Dealers also must provide Form DR-HS1 to their customers. A purchaser is not required to make a contribution. If a purchaser chooses not to contribute, then dealers need not keep Form DR-HS1. From a practical standpoint, it may be difficult for dealers to prove the Form was provided to the customer if the customer declines to make the contribution and the dealer does not keep the form. Therefore, dealers may want to keep with the deal jacket the blank form or have something showing the customer rejected making the contribution.

Although the invoice does not need to separately state the contribution amount, it may be advisable to do so anyway. Contributions may not be made on any tax other than state sales tax imposed under Section 212.05, F.S.; sales tax on warranties or other items sold in conjunction with the motor vehicle; or on the lease or rental of a motor vehicle.

Dealers must remit the contribution to the organization and report the remittance to the organization and the Department on Form DR-HS2, Hope Scholarship Program – Dealer Contribution Collection Report. Form DR-HS2 is due at the same time the sales tax return is due. If a dealer fails to file Form DR-HS2 timely or at all, the dealer is subject to a PENALTY OF $1,000 PER MONTH for each month, or part thereof, the report is not provided, up to a maximum penalty of $10,000. The Department may also impose penalties against a dealer if contributions were received, paid to the organization, but not reported.

Sales tax returns will have a separate line for the contributions to be reported. The total amount of sales tax that would otherwise be due must be included in the amount of tax reported on the tax return. The contributions must be reported both on the deductions line and itemized on the Hope Scholarship Credits line. The contributions may not be netted against the tax due with the return.

undefinedAbout the author: David Brennan is an associate attorney with Moffa, Sutton, & Donnini, P.A. His primary practice area is multistate tax controversy. David received a B.S. in Accounting and Finance, with a minor in Computer Science, from Florida State University. He worked as an accountant for a CPA firm before attending law school at Regent University. He received his Juris Doctorate in 2013 and was licensed to practice law in Florida in the same year. In 2015, David earned his Masters of Laws in Taxation from Boston University. As a former senior attorney for the Florida Department of Revenue, he handled informal protest appeals, among other things. You may learning more about David in his BIO HERE.

AUTHORITY

Rule 12AER18-07

FORM DR-HS1, Hope Scholarship Program – Contribution Election

FORM DR-HS2, Hope Scholarship Program – Dealer Contribution Collection Report

Section 212.1832, F.S.

ADDITIONAL ARTICLES TO READ

2018 CAR DEALER FL SALES TAX RATES NONRESIDENT PURCHASERS, published January 16, 2018, by David J. Brennan, Jr., Esq.

FL AUTO DEALERS: DOR CHERRY-PICKS STATUTES TO OVER-ASSESS AUTO DEALERS, published April 27, 2017, by Jeanette Moffa, Esq.

FLORIDA SALES TAX AUDITS OF CAR DEALERS ON THE RISE, published November 14, 2014, by James Sutton, CPA, Esq.

FL SALES TAX - RESALE TO OUT OF STATE CAR DEALERS, published September 19, 2014, by James Sutton, CPA, Esq.

FL SALES TAX AUDITS ON USED CAR DEALERS - WHAT IS TAXABLE?, published July 22, 2014, by Matthew Parker, Esq.

FL CAR DEALER: WHEN IS A SALE TAX EXEMPT?, published March 17, 2013, by James Sutton, CPA, Esq.
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