One of the most common questions about Florida sales tax is whether labor is subject to Florida sales tax? Far too many customers have seen “labor” listed on an invoice and Googled whether taxing labor is legal in Florida. If this is your question, then you've come to the right place. In a nutshell, below is a list of services that are specifically subject to Florida's sales tax use tax. However, if you are a customer questioning whether a company can charge you sales tax on labor, then I suggest reading the whole article as Florida sales tax still subjects a LOT of other services to sales tax IF the customer gets anything tangible in the transaction.
Florida specifically taxable services are as follows:
- Nonresidential Cleaning Services
- Commercial Pest Control Services
- Commercial/Residential Burglary and Security Services
- Detective Services
If your company (or your client's company) provides one of the above-listed taxable services, then the company MUST file a Form DR-1 to register with the Florida Department of Revenue to collect and remit sales tax. Invoices for specifically taxable services are required to have 'FLORIDA SALES TAX' as a separate line item on each customer invoice. The state of Florida imposes a tax rate of 6% plus any local discretionary sales tax rate (up to an additional 2.5%).
Just because your company does not provide one of the services above, it does not mean that your company can take a sigh of relief just yet. Companies that sell, rent, or repair tangible personal property, will have their labor charges subject to sales tax if any tangible person property is provided to the customer in the transaction.
EXAMPLE - If an auto mechanic installs a new alternator in a car and provides an invoice that breaks out $150 for the alternator and $150 for the labor, then the entire $300 is subject to sales tax.
In this example, the tax is imposed on the sale of the alternator for all the charges associated with the sale. So, the labor is subject to sales tax because the customer also received tangible personal property. If this wasn’t the law, then the auto mechanic could simply charge $1 for the part and $299 for the labor. The customer would still be paying $300, but be paying less sales tax on top of the $300. To avoid that kind of easy tax avoidance, the Florida legislature passed laws making the whole transaction taxable. Before the creative reader asks, you can’t put the labor on a separate invoice to avoid the tax. However, if the customer provides ALL the parts, then a labor only transaction will avoid sales tax. That being said, the business owner should make sure the records reflect that the transaction was labor only and no parts were provided to the customer.
Another aspect of this tax on labor charges that surprises people is that if any tangible personal property whatsoever is going to the customer will make the entire transaction subject to tax. So, if that auto mechanic did $100,000 worth of labor on a large truck with the customer providing all the parts, but the mechanic had to put even one drop of oil in the truck, then the whole $100,000 transaction is taxable as the sale of tangible personal property. This is the classic example is the "one drop of oil" rule. This is because the FL DOR takes the position that even a single drop of oil placed on the customer's vehicle can make the entire repair service not a repair, but the sale of tangible personal property.
Another industry affected by the one drop of oil rule is the car wash industry. A simple soap and rinse car wash is not subject to sales tax. But if the car wash includes something that stays on the car, e.g. wax or tire shine, then the entire charge is subject to sales tax. Too many car washes learn of this the hard way on audit. It is an expensive oversight.
Contemplate whether your company's "non-taxable service" provides even the slightest amount of tangible personal property to the client (e.g. a flash drive). Furthermore, use tax is due on any TPP used when performing the service. Both sales tax and use tax can be very serious matters and incorrectly interpreting the tax laws, even unintentionally, can mean sales and use tax obligations for many years of transactions. Is this something your business could survive financially?
There are some professional services that are not subject to the one drop of oil rule. For example, accountants providing a hard copy of a federal tax return to a client is not subject to sales tax because the tax return is considered an inconsequential element to the professional service. Architects providing hard copies of architectural plans are not taxable. Lawyers providing legal documents to clients are not taxable as well. The line between a service subject to the one drop of oil rule and a “professional service” not subject to the rule is not exactly well defined except a few specifically mentioned industries in the rules. If you are the business owner, then I would be very careful trying to consider yourself a non-taxable professional service outside one of these specific industries without consulting a knowledgeable tax professional.
Does your company provide management services? Generally speaking, management services are NOT subject to Florida sales and use tax. However, management services for use of residential property fall into a unique category of Florida law. This is because residential property rentals are subject to Florida sales tax. A real estate management company that collects rents for residential real estate (for leases six months or less) is obligated to collect and remit tax for the landowner client. If the management company does not collect the tax from the renter on behalf of the client, then the management company will be held liable for the tax not remitted. Because of this, real estate management companies are also required to register with the Florida Department of Revenue.
Whether your company provides or even buys one of the designated taxable services or one of the other indirectly taxable services, you want to make sure you are aware of your obligations from a tax perspective. Proper planning could stave off devastating results when (not if) your company is audited by the Florida Department of Revenue. If your business would like to consult with a Florida CPA / Attorney to determine how to comply with Florida's complicated sales and use tax laws or how to cost effectively start complying if your company has been incorrectly paying or charging sales tax, then we offer a FREE INITIAL CONSULTATION to discuss you Florida tax concerns. Contact our law offices today by phone or email via either of the links on the top of this web page. Is an auditor already knocking and you need an expert to defend you? You should have the right experts on your side. Contact The Law Offices of the Law Offices of Moffa, Sutton, & Donnini, P.A. for a free initial consultation on your Florida tax audit concerns.
About the Author: James Sutton is a Florida licensed CPA and attorney as well as a shareholder in Moffa, Sutton, & Donnini, PA. Mr. Sutton is charge of the Tampa office of the firm and practices almost exclusively in the area of Florida Sales & Use Tax Controversy. Mr. Sutton handles audits, protest, litigation, criminal cases, revocations, collections, and consulting engagements all in the area of sales tax. Mr. Sutton is an active member in the FICPA and Florida Bar Tax Section. Mr. Sutton has been the State and Local Tax Chairman for the AAA-CPA, past president of the Florida AAA-CPA, and past Chairman for the State Tax Committee for the FICPA. Mr. Sutton also taught law school as an adjunct professor over 20 years at Stetson University College of Law. Otherwise, you can learn more about Mr. Sutton in his firm bio HERE and you call him directly at 813-775-2131 or email JamesSutton@FloridaSalesTax.com
About the Firm: 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 150 years of cumulative sales tax experience within our firm. Our shareholders are both CPAs/Accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. We even have former sales tax auditors on staff. We represent taxpayers and business owners throughout Florida. Contact us for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
AUTHORITY
Rule 12A-1.006, Florida Administrative Code ("F.A.C.") (Install, Maintain, Repair Tangible Personal Property.
Rule 12A-1.009, F.A.C. (Pest Control Services)
Rule 12A-1.0091, F.A.C. (Cleaning Services)
Rule 12A-1.0092, F.A.C. (Detective, Burglar Protection, and Other Protection Services)
Rule 12A-1.051, F.A.C. (Contractors Who Repair, Alter, Improve, and Construct Real Property)
ADDITIONAL RESOURCES
2025 FLORIDA SALES TAX – STORAGE AND PARKING, published October 4, 2025, by James Sutton, CPA, Esq.
FLORIDA SALES TAX – SELF-STORAGE AFTER 10-1-25, published July 22, 2025, by James Sutton, CPA, Esq.
FLORIDA SALES TAX – REPEAL OF COMMERCIAL RENT TAX, published July 1, 2025, by James Sutton, CPA, Esq.
FLORIDA SALES TAX - NAIL SALON RENT TAX, published August 16, 2025, by James Sutton, CPA, Esq.
FLORIDA SALES TAX: INTERIOR DESIGN SERVICES, published August 17, 2025, by James Sutton, CPA, Esq.
FL SALES TAX AUDIT – FROM AUDIT NOTICE (DR-840) TO NOPA, published September 17, 2023, by Matthew Parker, Esq.
FLORIDA SALES AND USE TAX FOR TAXABLE SERVICES, published December 1, 2023, by David Brennan, Esq.
FLORIDA SALES TAX AUDIT HELP, published January 8, 2025, by James H. Sutton, CPA, Esq.
FLORIDA SALES TAX AUDITS PROCESS AND TRAPS, published March 4, 2023, by David Brennan, Esq.
DON’T HIRE AN IRS ATTORNEY FOR SALES TAX PROBLEMS!, published July 17, 2024, by James Sutton, CPA, Esq.
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