TAX NEWS - January 2010
Florida: Communications Services Tax
What is Taxable?
Communications services include telecommunications, cable, direct-to-home satellite, and related services. This definition includes voice, data, audio, video, or any other information or signals, including cable services, transmitted by any medium.
What is Exempt?
Dealers should not collect taxes on exempt sales of communications services. Exempt sales include:
- Sales for resale.
- Sales to Federal agencies, the state, any county or municipality, or other political subdivision.
- Sales to religious and educational organizations with 501(c)(3), I.R.C. status.
- Sales to homes for the aged with 501(c)(3), I.R.C. status and that meet certain provisions.
Some Residential Services Receive a Partial Exemption
Residential telephone service is exempt from the state portion of the communications services tax. This service is subject to the state gross receipts and local portions of the tax. Mobile telephone, cable, and direct-to-home satellite services are fully taxable, even if provided to a residence.
Who Must Register to Collect Tax?
A business that sells communications services, cable services, direct-to-home satellite services, or other related services must register as a dealer for communications services tax. One registration is required for each legal entity, regardless of the number of locations. You can register using our secure Internet site.
Dealers who collect local communications services tax must notify the Florida Department of Revenue of the method they will use to assign addresses to the correct taxing jurisdiction. To notify us of a change in the method you will use to assign addresses, complete Form DR-700020, Notification of Method Employed to Determine Taxing Jurisdiction.
Direct Pay Permits — Self-accrual authority may be allowed to qualifying entities for one of two purposes.
We may grant a direct pay permit for interstate communications services when the majority of the communications services used are for communications that originate outside of Florida and terminate within the state.We may grant a direct pay permit for tax due upon determination when the taxable status of sales of communications services will only be known upon use.
To apply for a direct pay permit, complete Form DR-700030, Application for Self-Accrual Authority/Direct Pay Permit — Communications Services Tax.
The tax includes a state rate of 6.8 percent plus a gross receipts tax rate of 2.37 percent, for a combined state communications services tax rate of 9.17 percent. Each local taxing jurisdiction may add its own local tax rate on communications services.
Direct-to-home satellite services are taxed at a total rate of 13.17 percent. Local tax does not apply to these satellite services.
The state and gross receipts tax rates stay fairly constant. However, local tax rates can change frequently. A list of all the current and past local jurisdictional rates is on Florida Tax Internet site. For a list of current rates only, download the Jurisdiction Rate Table.
Filing and Paying Taxes
You can file and pay communications services tax using Revenue's secure Internet site or you may develop an in-house software application for direct electronic filing of your tax returns. If you are interested in direct filing, please contact us by secure e-mail. Before you can file and pay your taxes electronically, you must enroll in our e-Services program. Please take time to view our detailed electronic filing and payment information. Taxpayers who report and pay tax electronically can download a payment due date calendar.
Businesses whose communications services tax collections are less than $20,000 per year may pay and report tax using a paper DR-700016 return. Returns and payments are due on the 1st and late after the 20th day of the collection period following the collection period. However, we encourage all taxpayers to file and pay electronically.
A dealer using one or more of the qualifying methods to ensure proper address-to-jurisdiction assignment for purposes of collecting local communications services tax will be granted an allowance of .75 percent (.0075) of the total tax due.
Using the DOR address/jursidiction database to verify the accurate assignment of customer addresses to tax jurisdictions.Using a database developed by the dealer that has been certified by DOR to verify the accurate assignment of customer addresses to tax jurisdictions.Using a DOR-certified database supplied by a vendor to verify the accurate assignment of customer addresses to tax jurisdictions.Using ZIP+4 and matching an address to its specific tax jurisdiction.
If a qualifying method is not used to ensure proper address-to-jurisdiction assignment, a collection allowance of .25 (.0025) percent will be granted.
Direct-to-home satellite service providers receive the .75 (.0075) percent collection allowance.
The DOR Address/Jurisdiction Database identifies the local taxing jurisdiction for addresses in Florida. The database is based on information provided by local taxing jurisdictions and is updated every six months.
Certification of Databases
Dealer or vendor databases can be certified for their accuracy of assignment of street addresses to the proper jurisdiction. Dealers or database vendors can request database certification by filing an Application for Certification of Communications Services Database (Form DR-700012).
Annual Resale Certificate
The communications services tax has an annual resale certificate separate from the one issued for sales and use tax. Once registered, dealers will be sent an Annual Resale Certificate for Communications Services Tax (Form DR-700015). This certificate is used for the tax-exempt purchases of communications services to be resold. We will send each active dealer a new certificate each year. It cannot be used for sales tax purposes.
Here are some points for selling dealers to remember about accepting an Annual Resale Certificate for Communications Services Tax.
- Selling dealers must document all exempt sales for resale. You can document these sales by obtaining a copy of the purchaser's annual resale certificate or using Revenue's online verification system. Or, you can call 877-FL-RESALE (877-357-3725) toll-free and select communications services tax.
- When a selling dealer obtains a signed resale certificate, additional sales during the year to the same purchaser do not require a new certificate. If the purchaser buys on account on a continual basis, the selling dealer needs to obtain a certificate valid at the time of purchase, but does not need to obtain a new certificate each year.
- If the purchaser knows their communications services tax certificate/business partner number, the selling dealer can obtain a Transaction Resale Authorization Number online at the time of sale. Or, you can call 877-FL-RESALE (877-357-3725) toll-free and select communications services tax. The Transaction Resale Authorization Number received by phone or online is valid for that transaction only. If a purchaser has already provided a copy of their resale certificate, selling dealers can obtain a unique Vendor Resale Authorization Number by using the online certificate verification system.
- Dealers may upload a batch file of up to 50,000 accounts and receive a Vendor Authorization Number for each the next day. Vendor Authorization Numbers are valid for sales to each purchaser during the calendar year.
For more information, see TIP 07A19-05.
Informing the Customer
Dealers must itemize and separately state taxes on customer's bills. The taxes must be identified as Florida communications services tax and local communications services tax, respectively.
Consumers who purchase taxable communications services from a seller that does not collect tax must report and pay use tax. Complete Form DR-700019, Communications Services Use Tax Return.
Download a communications services tax brochure from Florida Tax website.