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Most sales or uses occurring in Florida are taxed at the full Florida state sales and use tax rate plus any applicable local surtax rate. However, there are certain exceptions to this rule. One general exception is for those engaged in the business of transporting people or property across state lines for hire. These businesses are engaged in what is called interstate or foreign commerce. The most common examples of businesses engaged in interstate commerce are those involved in transportation, such as motor vehicles, railroads, vessels, and aircraft. Such businesses falling into this category may be able to pro-rate (or “apportion”) their activities to pay an amount less than the full rate of Florida sales and use tax on purchases or uses in Florida.

  1. Motor Vehicles

Owners of motor vehicles engaged in interstate commerce as common carriers may be able to prorate the sales and use tax on their purchase of the vehicle and any parts. The most important element of the exemption is its requirement that people or property be transported in interstate or foreign commerce. Additionally, if the carrier is not a common carrier, then the apportionment is normally not allowed.

Determining that your business qualifies for the exemption allowing a proration of tax is just the first step. The next step is calculating what that proration of tax will be. Common carriers will need to compute the ratio of their intrastate mileage to interstate/foreign miles traveled by the carrier’s motor vehicles. In other words, what percentage of the total mileage occurs inside Florida? In order have an apportionment ratio, the math only works if the motor vehicles used in interstate commerce have some Florida mileage during the carrier’s previous fiscal year.

Next, Taxpayers must apply their ratio to the correct period. Ratios are computed at the end of the carrier’s fiscal year and apply to purchases during the following fiscal year. During the initial year of operations in Florida, the carrier’s ratio will be an estimate of the anticipated miles in Florida for the current year. The common carrier is then required to “true-up” its estimate with the actual mileage at the end of the year. The carrier will be required to pay any additional tax due at that time. If the actual amount of tax due is less than the estimate, the common carrier may take a credit or apply for a refund. Any motor vehicles or parts used exclusively outside of Florida do not qualify for the proration. Keep in mind, if the use occurs exclusively outside of Florida, it is likely that use tax is owed in that other state.

The theory behind apportionment is not that you, as a taxpayer, save money on taxes (although this can, in practice, occur). The goal of apportionment is for the proper state to receive taxes for the sales and uses occurring within its boundaries. Consider a vehicle that is used in Florida 50% of the time and Georgia 50% of the time. The vehicle and its driver take advantage of the roads, the security of law enforcement, even the restrooms on the side of the highway. Each state needs funding for those items, which it gets from taxpayers who benefit from those services. Is it fair for one state to receive 100% of the tax when the vehicle and its driver use services in both states equally? Perhaps not. As such, both the sale and use of a product are relevant for tax purposes.

Apportionment can be a difficult thing to calculate, and a burden on multistate businesses located in Florida but primarily engaged in business outside of Florida. Fortunately, Florida has specific exemptions that are excluded from its apportionment rule. The first such exclusion is for common carrier motor vehicles purchased outside of Florida and put into service outside of Florida before entering Florida. In such cases, the purchase is not subject to Florida sales or use tax. To qualify, the motor vehicle must be used as a common carrier and registered in another state.

The second exception to Florida’s apportionment rules is regarding repairs and installation of parts on motor vehicles. If the repairs and installation are performed outside of Florida, then Florida sales and use tax is not owed on the transaction. However, should the repair or installation occur in Florida, then the transaction may be apportioned. In short, if a common carrier vehicle transaction starts in Florida, Florida wants a portion of the tax from it. However, if a transaction starts out-of-state, Florida is less likely to ask for a piece of the pie.

In addition to the sale of the vehicle itself, diesel fuel used in motor vehicles for off-road purposes may be apportioned as well. The calculation discussed above applies to diesel fuel if the diesel fuel is: (1) placed into a separate tank not connected to the motor vehicle’s fuel supply system and is used to operate a refrigeration unit or other equipment located on the motor vehicle; or (2) used during idle time for purposes of running climate control systems and maintaining electrical systems in motor coaches. If either of these two elements is met, then the cost of diesel fuel may be apportioned in the same manner the purchase price of a motor vehicle is apportioned.

Once an apportionable purchase is identified, the apportioned rate is calculated, it is applied to the correct period, and any and all exemptions are properly accounted for, Taxpayers may still not be able to move forward smoothly if they cannot make their initial purchases without paying sales tax. How does a common carrier not pay Florida sales tax at the time of purchase? The common carrier must be registered for Florida sales and use tax and have a Florida sales tax direct pay permit. A direct pay permit allows for a taxpayer to pay tax directly to the state rather than pay tax to the seller at the time of purchase. The common carrier issues its direct pay permit to the vendor at the time of the purchase/lease instead of paying Florida sales tax. A resale certificate may NOT be provided for this purpose. The amount of tax to be paid on the transaction must then be calculated by the common carrier and remitted directly to the Florida Department of Revenue.

There may be instances where the common carrier pays the full amount of tax to the vendor at the time of purchase. For instance, tax might be paid if the carrier does not have a direct pay permit. In such cases, the common carrier might be able to claim a refund of the tax paid. The amount of the refund that might be obtained by the common carrier from the Department would be the amount of tax paid minus the pro-rated usage amount. To attempt to claim the refund, the common carrier must obtain from the vendor a “Certificate – Tax Paid to the Department of Revenue.” Refund claims must be filed within three years of when the tax is paid, or the refund claim will not be allowed.

  1. Railroads

Similar to motor vehicles, railroads, which are licensed as common carriers by the Surface Transportation Board, and parts thereof may have Florida sales or use tax prorated. Many of the rules for railroads are the same as motor vehicles, with a few minor exceptions. The mileage calculation, in the initial and subsequent fiscal year, is identical to that of common carrier motor vehicles. Even diesel fuel used in locomotives for interstate and foreign commerce purposes should qualify for proration the same way it does for motor vehicles.

Like with motor vehicles, Florida also has certain specific rules for railroads as well. First, the railroad must be licensed by the Surface Transportation Board to qualify for apportionment. In addition, the lease of railroad cars by a railroad company for use on its track should be exempt if the charges are subject to the jurisdiction of the Surface Transportation Board. The charges must be based on hourly, daily, or mileage for the presence of a railroad car on the tracks of the railroad company paying the charge. Finally, charges incurred due to a railroad car service agreement should be exempt from Florida sales and use tax.

To not pay tax at the time of the transaction, the railroad’s requirements are the same as those for motor vehicles. In other words, the railroad must present its Florida direct pay permit. Additionally, the railroad may not provide its resale certificate for transactions in which the railroad plans to prorate the tax due. If a railroad does end up paying Florida sales tax at the time of purchase, the railroad will have to follow the same steps as those for motor vehicle common carriers to obtain a refund.

  1. Vessels

Vessels used to transport people or property for hire in interstate or foreign commerce are similarly allowed the ability to prorate the amount of Florida sales and use tax owed. Commercial fishing vessels may prorate as well. To clarify, a commercial fishing vessel is one in which the vessel is designed, constructed, and used exclusively for taking aquatic animals from the water to sell. Boats used for sport or pleasure fishing are not commercial fishing vessels.

The amount of Florida sales and use tax owed is based on the Florida mileage divided by the total mileage worldwide. This methodology of calculation is ultimately the same as motor vehicle common carriers. Similarly, the vessel must have at least some Florida mileage. A wrinkle in the Florida mileage calculation involves instances in which the vessel travels from the territorial limit to the dock and returns. If the vessel does this in a continuous manner to move people of property, then the mileage is not considered to be “Florida mileage.”

The Department specifically notes vessels used solely within Florida waters do not qualify. Mathematically, this makes sense. For instance, if a vessel has traveled 1,000 miles and all 1,000 miles were traveled in Florida, then the ratio will be 1,000/1,000 or 100%. Thus, one is unable to prorate the Florida sales and use tax owed because all of the use occurred in Florida.

If the estimated ratio for the initial year results in a tax under/over payment, then the vessel owner may take the same steps as a motor vehicle common carrier to pay or obtain a credit/refund. In short, a vessel owner will be required to make up the difference from their estimated first year apportionment at the conclusion of the year. Alternatively, if tax was overpaid, they may take a credit on a future tax payment or apply for a refund with the Department of Revenue. If a refund is applied for, it must be done within three years of the overpayment of tax.

Whether a vessel will be exclusively used outside of Florida or both in and outside the state will affect the steps taken at the time of purchase. If the vessel will be used exclusively outside of Florida waters for interstate or foreign commerce purposes or for commercial fishing, then the owner must give an affidavit entitled “Affidavit – Vessels Used to Transport Persons or Property for Hire in Interstate or Foreign Commerce or for Commercial Fishing Purposes.” In such instances, the purchaser is not required to be registered with the Department. Following the logic of the above example, if 0 of the 1,000 miles traveled are in Florida, then there is a 0% tax rate anyway.

However, should the vessel be used in both Florida and non-Florida waters, then the purchaser must be registered with the Department for sales and use tax purposes and hold a Florida direct pay permit. Additionally, the purchaser must execute the affidavit named above. Because the vessel is being used in Florida, at least a portion of the tax will need to be paid to Florida and the purchaser must be registered and have the means to apportion the proper amount of tax and pay the state the balance owed.

There are different requirements for purchases of parts for vessels. Parts can include ice, bait, charts, foul weather gear, ropes, fishing tackle, logs, cooking utensils, and paper supplies. But similar rules also apply for repairs and maintenance of vessels engaged in transporting persons or property for hire in interstate or foreign commerce or in commercial fishing. To purchase parts without paying tax, the owner must fill out an affidavit entitled “Affidavit – Vessel Parts & Items Appropriate to Carry Out the Purpose for Which a Vessel is Designed, Equipped, & Used in Interstate or Foreign Commerce or for Commercial Fishing Purposes.”

Fuel used in vessels also can qualify for apportionment. Specifically, it is dyed diesel fuel being used in vessels which is exempt. Dyed diesel fuel placed into the storage tank of a vessel or in equipment used exclusively for commercial fishing and aquacultural purposes is exempt. The purchaser must fill out an exemption certificate entitled “Exemption Certificate – Dyed Diesel Fuel Used Exclusively for Commercial Fishing or Aquacultural Purposes.” Meanwhile, if the dyed diesel fuel is to be used in a vessel that transports people or property for hire in interstate or foreign commerce, then the purchaser must provide to the vendor an affidavit entitled “Affidavit – Dyed Diesel Fuel for Use in a Vessel Operated in Interstate or Foreign Commerce.” However, the purchaser in the later scenario must remit a prorated amount of tax directly to the Department.

In instances where the purchaser paid the full amount of tax to the vendor instead of a prorated amount to the Department, a refund may be warranted. The amount of the refund that might be obtained would be the amount of tax paid minus the prorated usage amount. To claim a refund, the purchaser must obtain a certified statement from the seller making certain declarations. The name of the form to be used is “Certificate – Tax Paid to the Department of Revenue.” In some cases, the purchaser must execute affidavits entitled “Affidavit – Sales Tax Paid to the Selling Dealer for a Vessel Used in Interstate or Foreign Commerce or for Commercial Fishing Purposes” and “Affidavit – Items Appropriate to Carry Out the Purpose for Which a Vessel is Designed, Equipped, and Used in Interstate or Foreign Commerce or for Commercial Fishing Purposes.” Should the refund be relating to a diesel fuel purchase, the following must be executed: “Certificate – Tax Paid to the Department of Revenue” and “Certificate – Tax Paid on Fuel Used in a Vessel Operated in Interstate or Foreign Commerce or for Commercial Fishing Purposes.” The technicalities are substantial, but failure to properly abide by the rules can result in a Refund Denial.

  1. Aircraft

Aircraft apportionment is similar to, yet very different from, the above-mentioned apportionments. Air carriers have their own apportionment standards. To qualify, an air carrier must be using mileage apportionment for Florida corporate income tax purposes. If so, then the air carrier may choose to be subject to sales tax based on the apportionment factor determined for Florida corporate income tax purposes. Therefore, if an air carrier is not filing a Florida corporate income tax return, then the air carrier is ineligible for this provision.

Further, the apportionment factor may apply to real property leases used substantially for aircraft maintenance assuming the air carrier employed an average of 3,000 full-time equivalent maintenance/repair employees at one maintenance base it leases in Florida. Otherwise, the real property leases are fully taxable.

Should an air carrier qualify, then it will calculate its Florida mileage divided by the total mileage at the end of its preceding fiscal year. When initial operations are beginning in Florida, the air carrier may estimate its apportionment factor. It will then “true-up” the numbers at the end of the year and will be required to pay any additional tax due or may apply for a refund in cases where tax was overestimated and overpaid to the state.

In all cases, the air carrier must make an affirmative election for this special treatment. Assuming one does not qualify for air carrier treatment, apportionment may still be available. However, it will depend on a few things.

The aircraft likely must be used in interstate or foreign commerce to transport people or property across state lines for hire. Although, there may be some arguments for the lease of an aircraft in multiple states to still qualify despite not being engaged in interstate or foreign commerce. Second, the aircraft owner/operator may have direct pay authority from the Department, which requires the owner/operator to become registered with the Department for sales and use tax purposes. Third, the apportionment should be based upon the amount charged or paid while the property is in Florida.

The third point is where things become interesting. If an aircraft is leased and is to be apportioned, the aircraft lease could be a flat rate, variable rate, or a mix of both. Variable rate leases include leases based on engine hours, flight hours, mileage, etc. It is easy to apportion the charges for an aircraft sitting in Florida when the aircraft is leased at, e.g., $100/day. But if there is a variable component to the lease, then it must be determined first what constitutes Florida use.

Finally, aircraft parts or equipment may not necessarily need to be apportioned for Florida sales and use tax purposes. If an aircraft has a maximum certified takeoff weight greater than 2,000 pounds, the parts or equipment would be exempt from Florida sales and use tax anyway.

  1. Conclusion

Purchasers may obtain the special tax treatment of not paying any or paying only a prorated amount of Florida sales and use tax on the transaction. Knowing if there is any special treatment for the class of property purchased could save the purchaser a substantial amount of money. Careful attention must be paid to not only the requirements for the purchase but also the maintenance of records that could evidence proper compliance years later. While the Department normally can go back three years to audit returns previously filed, it may be prudent to keep records for four years as a safer alternative. If you do not have the records necessary during an audit, you may be in for an unwelcomed assessment.

Florida sales tax attorney, Florida sales tax audit, Florida sales tax audit help, Tampa sales tax audit, Orlando sales tax audit help, Miami sales tax attorneyAbout 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 sales and use tax issues predominately relating to motor vehicles, vessels, and aircraft. 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.


Section 212.0598, F.S. Special provisions; air carriers

Section 212.08, F.S. Sales, rental, use, consumption, distribution, and storage tax; specified exemptions

Section 215.26, F.S. Repayment of funds paid into State Treasury through error

Rule 12A-1.064, F.A.C. Sales to Licensed Common Carriers Operating Motor Vehicles or Railroad Rolling Stock in Interstate and Foreign Commerce

Rule 12A-1.0641, F.A.C. Sales to Licensed Common Carriers Operating Motor Vehicles or Railroad Rolling Stock in Interstate and Foreign Commerce

Rule 12A-1.071, F.A.C. Rentals, Leases, or License to Use Tangible Personal Property

Technical Assistance Advisement 16A-003 Boats/Interstate & Foreign Commerce


FLORIDA SALES TAX INFORMAL WRITTEN PROTEST, published November 17, 2018, by James Sutton, CPA, Esq.

FLORIDA NOTICE OF FINAL ASSESSMENT (NOFA) | FL DEPT. OF REVENUE, published December 2, 2018, by Matthew Parker, Esq.

FLORIDA SALES TAX - VOLUNTARY DISCLOSURE PROGRAM, published April 9, 2018, by Jeanette Moffa, Esq.

SALES TAX ON AIRCRAFT LEASING IN FLORIDA, published March 31, 2017, by David J. Brennan, Jr., Esq.

FLORIDA USE TAX AUDIT LETTER?, published June 14, 2015, by James Sutton, CPA, Esq. and Jerry Donnini, Esq.

GO TO JAIL FOR NOT PAYING FLORIDA SALES TAX?, published November 3, 2013, by James Sutton, CPA, Esq.