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Effective July 1, 2012, a new law requires Florida dealers to file their Florida sales tax returns ("DR-15") electronically in order to earn their collection allowance. Specifically, pursuant to TIP #12A01-03, the collection allowance may only be deducted if a dealer 1) files sales and use tax electronically, 2) pays tax electronically, and 3) electronically pays and files tax timely. The change will affect taxpayers who file monthly, quarterly and semi-annually alike.

For those of you not familiar with the collection allowance, the allowance is an incentive for dealer's to collect tax and remit it timely to the state. In short, the dealer is allowed to keep 2.5% of the first $1,200 of tax collected by its business. This sets a ceiling of $30 per month that each taxpayer may keep if it accurately reports, timely files, and timely pays the sales tax it collected on behalf of the state. Prior to this law, the dealer had the option to file electronically, using the Department of Revenue's ("DOR") website, or file by hand, using a coupon booklet and submitting a check. This change incentivizes the use of the e-filing system by only allowing dealers who file electronically to take the 2.5%, or up to $30 of the collection allowance.

According to the DOR, the incentive to file electronically will result in fewer mistakes because the software can check the math of the taxpayer and the form cannot be submitted if there are obvious errors. The DOR also cites immediate confirmation, due date reminders, and security and privacy as other benefits of the e-filing requirement. The Department of Revenue claims this change is convenient because the taxpayer can complete the return early and set the fund withdrawal date to the date in which the return is due. From a more practical perspective, the returns filed electronically also require less man power to administer.

Overall, this change does not seem to be significant because many taxpayers already have been filing their returns electronically. However, it is noteworthy because some dealers, even large businesses in our experience, may still file using the coupon system and mistakenly and incorrectly take the collection allowance due to the statutory change. This simple mistake will cause the company to be flagged by the DOR for underpayment and we all know having a tax return flagged by a taxing authority is never a good thing. It is also worth pointing out that for taxpayers switching from the coupon system to the e-file system are required to file before 5:00 p.m. on the last business day before the 20th (the 17th of August, and the 19th for all other months).

Our firm does not do a significant amount of compliance work, but I personally use the e-filing system for the few returns I prepare and it is actually a user friendly system. If anyone is having trouble switching over to the E-Filing systems please give us a call or shoot us an email.

Moffa Gainor & Sutton PA

About the author: Mr. Donnini is a Florida Attorney and an associate in the law firm the Law Offices of Moffa, Sutton, & Donnini, P.A., in Fort Lauderdale, Florida. Mr. Donnini's primary practice is Florida tax controversy. Mr. Donnini worked as an accountant for a public REIT prior going to law school and is currently pursuing his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact the firm by phone or email via the links at the top of the page.