Florida has many tax exemptions for farmers. These exemptions help farmers to continue to provide a vital contribution to Florida’s economy and food supply. In 2018, the Florida Legislature expanded exemptions to allow those in aquaculture the opportunity to contribute to the Florida economy and food supply as well.
One new exemption for those in aquaculture is gas or electricity used in a tractor, vehicle, or other farm equipment used to produce, package, or process aquacultural products. An aquacultural product, by way of background, is an aquatic organism (or a product acquired from them) that is grown or produced under controlled conditions. The electricity portion of the exemption also applies to electricity used for a packinghouse. A packinghouse is a building where fish are packed or prepared for market or shipment for wholesale distribution. The statute specifically states aquaculture products cannot be sold at retail in a packinghouse for the electricity exemption to apply.
Another exemption from sales and use tax involves the purchase or use of industrial machinery and equipment in aquaculture activities at a fixed location in Florida. For purposes of sales and use tax, industrial machinery and equipment means items which have a depreciation life of at least three years and are integral to the making of products for sale. Unlike other similar exemptions, this exemption can include the building and its structural components. Aquacultural activities include the business of cultivating aquatic organisms to produce an aquaculture product but do not include those harvested from the wild.
Finally, a new NAICS code was added to the exemption for industrial machinery and equipment purchased by manufacturers. The NAICS code is 112511, which is for businesses involved in finfish farming and fish hatcheries. The requirements are similar to those in the prior paragraph. However, manufacturers must have more than 50% of its activities engaged in the qualifying line of business at the location of the machinery and equipment.
In support of the statutory changes, the Florida Department of Revenue (“Department”) has recently incorporated the above-mentioned exemptions into a Rule. Specifically, the Department added Rule 12A-1.087(12), F.A.C. While the Rule echoes many of the statutory provisions, the Department provides a suggested exemption certificate for those in the aquaculture industry to use when making exempt purchases. Purchasers are only required to provide the exemption certificate once, as subsequent sales from the same vendor do not need to have additional certificates provided. The Department states if a vendor accepts the exemption certificate in good faith, the vendor will not be liable for sales tax on the transaction.
In conclusion, there are new sales tax exemptions available for those in the aquaculture industry. Knowing which exemptions apply to your business you save on the sales tax aspects of the purchases, which allows for more money to be invested in the business. It is vital for taxpayers to take advantage of the exemptions available if applicable. Should tax have been paid in error on these purchases, businesses may be able to recoup the overpaid taxes by applying for a refund with the Florida Department of Revenue. A tax professional can help though the application process and with any necessary challenge should the refund be improperly denied.
About 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 Doctor 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. While working for the Florida Department of Revenue as a Senior Attorney, David focused on various sales and use tax issues. You can read his BIO HERE.
At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is Florida taxes, with a very heavy emphasis in Florida sales and use tax. We have defended Florida businesses against the Florida Department of Revenue since 1991 and have over 100 years of cumulative sales tax experience within our firm. Our partners are both CPAs/Accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. We represent taxpayers and business owners from the entire state of Florida. Call our offices today for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
AUTHORITY
ADDITIONAL RESOURCES
FLORIDA NOTICE OF FINAL ASSESSMENT (NOFA) | FL DEPT. OF REVENUE, published December 2, 2018, by Matthew Parker, Esq.
FLORIDA SALES TAX INFORMAL WRITTEN PROTEST, published November 17, 2018, by James Sutton, CPA, Esq.
FLORIDA USE TAX AUDIT LETTER?, published June 14, 2015, by James Sutton, CPA, Esq. and Jerry Donnini, Esq.