What is sales and use tax

Businesses that sell any sort of good are subject to sales and use tax. Sales tax is the amount that the merchant must charge to customers who purchase goods for use rather than resale. Sales tax is generally a fixed percentage of the value of the good. Other taxes that accompany sales tax may also apply for specialty occupations, such as merchants selling luxury goods, hotels, and restaurants.

The merchant must collect the tax from the customer and not simply pay the taxes from the proceeds of the sale. The taxes withheld must be deposited with the states department of revenue on a regular basis.

The taxing state is the location where the good was sold. It does not matter the location where the seller is located.

Use tax is a separate tax that is similar to sales tax and applies to the purchase of goods by individuals or businesses. Use tax is assessed when goods are purchased for use or consumption and sales tax is not paid on the item. Any seller who sells more than five hundred thousand dollars worth of goods per year and provides a purchaser with a sales receipt or sales invoice in conjunction with a sale, as defined under section This total rate shall reflect any applicable state or local sales tax authorized under the laws of this state.

Generally, the department collects and distributes only state and local sales and use taxes. A sales or use tax return must be filed for the reporting period even though you have no tax to report. More detailed information is listed below. Sales tax is imposed on retail sales of tangible personal property and certain services. All sales of tangible personal property and taxable services are generally presumed taxable unless specifically exempted by law. Persons making retail sales collect the sales tax from the purchaser and remit the tax to the Department of Revenue.

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Investopedia does not include all offers available in the marketplace. Related Terms Understanding Taxes A mandatory contribution levied on corporations or individuals by a level of government to finance government activities and public services. What is Sales Tax? A sales tax is a consumption tax imposed by the government on the sale of goods and services. Personal Property Tax Many state and local governments tax tangible personal property, such as cars and boats, in addition to real property, such as homes and land.

The harmonized sales tax is a hybrid of the Canadian goods and services tax and provincial sales tax applied to goods and services.

We apologize for any inconvenience. It is effective immediately and expires on December 31, Each sale, admission, storage, or rental in Florida is taxable, unless the transaction is exempt. Sales tax is added to the price of taxable goods or services and collected from the purchaser at the time of sale. Use tax is due on the use or consumption of taxable goods or services when sales tax was not paid at the time of purchase.

For example:. Many Florida counties have a discretionary sales surtax county tax that applies to most transactions subject to the sales or use tax. The county surtax rate applies to a taxable item or service delivered into a county imposing a surtax. The surtax rate that applies to motor vehicles and mobile homes is determined by the home address of the purchaser. In addition to state sales and use tax and discretionary sales surtax, Florida law allows counties to impose local option transient rental taxes on rentals or leases of accommodations in hotels, motels, apartments, rooming houses, mobile home parks, RV parks, condominiums, or timeshare resorts for a term of six months or less.

For a list of local option transient rental taxes, visit the Department's Local Option Taxes webpage. In many counties, the local transient rental taxes are reported and remitted directly to the local government; however, sales tax and discretionary sales surtax on transient rentals are always reported and remitted to the Department. Before you begin business in Florida, you must first find out if your business activity or products will be subject to sales and use tax.

If it is, you must register to collect sales tax or pay use tax. Here is a partial list of business activities that require you to register with the Florida Department of Revenue:. Effective July 1, , businesses that collect and remit sales and use taxes to the Florida Department of Revenue must use a rounding algorithm when calculating the sales tax due on a transaction.

Using this algorithm, the computation of the tax must be carried to the third decimal place; if the third decimal place is greater than 4, the tax must be rounded up to the next cent. Businesses may apply the rounding algorithm to the aggregate tax amount computed on all taxable items on an invoice or to the taxable amount on each individual item on the invoice.

Use of the rounding algorithm takes effect July 1, , and businesses have until September 30, to update their point-of-sale systems. The sales tax and discretionary sales surtax may be shown as one total, or the sales tax and surtax may be shown separately. Effective tax rates and rate divisors may be used by certain industries when it is impractical to separately state Florida sales tax on an invoice, sales slips, receipt, billing, or other evidence of a sale.

These industry specific effective tax rates and rate divisors, and instructions for computing sales tax and discretionary sales surtax are available in the following brochures:.