Greenberg Traurig Alert

Sales Exemption Expanded to All Charities

December 2000
By Harry J. Friedman and Robert J. Robes

  View or download the PDF version of this Alert here.

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 consumer’s 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

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