Greenberg Traurig Alert
Sales Exemption Expanded to All Charities
By Harry J. Friedman
View or download the PDF version of this Alert
The Florida sales and use tax is applicable to purchases of tangible
personal property and leases of non-residential real estate. Nonprofit organizations
are required to pay the tax on purchases and leases unless the organization
is specifically exempted from the imposition of the tax and is eligible
to receive a consumerís certificate of exemption from sales tax. Currently,
these narrow exceptions apply to organizations that supply goods and services
that are beneficial to the public or promote a socially desirable goal such
as public charities organized for educational, scientific or religious purposes
and churches. Under present law, qualifying as a tax-exempt organization
under section 501(c)(3) of the Internal Revenue Code alone does not entitle
a nonprofit organization to an exemption from the sales tax.
Due to the complexity of the current rules in determining whether an
organization is exempt from the sales and use tax, the Florida Legislature
decided to simplify the rules relating to these exemptions. Effective January
1, 2001, any nonprofit organization exempt from federal income taxation
under section 501(c)(3) of the Internal Revenue Code will be exempt from
the Florida sales and use tax in connection with purchases and leases used
in carrying on the customary activities of the nonprofit organization. A
nonprofit organization, except churches in the case of tangible personal
property, will continue to be required to collect sales and use tax when
the organization is acting as a retailer or lessor.
Under the new legislation, a nonprofit organization is required to demonstrate
that it has section 501(c)(3) status by submitting its determination letter
from the Internal Revenue Service with the Form DR-5 to the Florida Department
of Revenue. Upon approval of the application, the organization will receive
a tax exemption number. A Form DR-5 is available from the Florida Department
of Revenue website at http://sun6.dms.state.fl.us/dor/.
We have confirmed with the Florida Department of Revenue that it is currently
accepting applications for exemptions for organizations that are not eligible
for the exemption until January 1, 2001. Generally, exemptions are granted
4-6 weeks after the receipt of the application by the Florida Department
of Revenue and are effective as of the date of filing.
© 2000 Greenberg Traurig
For more information, please review our Tax or Trusts & Estates Practice
descriptions, or feel free to contact one of our attorneys.
This GT ALERT is issued for informational purposes only and is not intended
to be construed or used as general legal advice. Greenberg Traurig attorneys provide
practical, result-oriented strategies and solutions tailored to meet our clientsí
individual legal needs.