9223262, 12A-1.094 - Florida Administrative Rules, Law, Code, Register

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Florida Department of State and Division of Library and Information Services

Notice: 9223262

Notice of Proposed Rule

Department:

DEPARTMENT OF REVENUE

Division:

Sales and Use Tax, Surtax, Surcharge, and Fees; Communications Services Tax

Chapter:

SALES AND USE TAX

Overview

RULE:

12A-1.094

Public Works Contracts

PURPOSE:

Rule 12A-1.094, F.A.C. (Public Works Contracts), and Section 212.08(6), F.S., govern the taxability of transactions in which contractors and subcontractors purchase tangible personal property for use in public works contracts. Public works contracts are projects for public use or enjoyment, financed and owned by the government, in which private persons install tangible personal property that becomes a part of a public facility. The exemption in Section 212.08(6), F.S., is a general exemption for sales made directly to the government. Rule 12A-1.094, F.A.C., establishes the criteria that govern whether a governmental entity, rather than the public works contractor, is the purchaser of the materials.
Effective January 2, 2011, Section 8, Chapter 2010-138, L.O.F., requires governmental entities to issue a Certificate of Entitlement to purchase tangible personal property tax-exempt for a public works project to each vendor and each contractor certifying: (1) that the tangible personal property purchased will become part of a public facility; and (2) that the governmental entity will be liable for any tax, penalty, or interest due should the Department later determine that the items purchased do not qualify for exemption under Section 212.08(6), F.S. The law excludes a federal governmental entity from these requirements.
The purpose of the proposed amendments to Rule 12A-1.094, F.A.C., is to: (1) maintain, without change, the current criteria governing whether a governmental entity is the purchaser of tangible personal property that qualifies for exemption under Section 212.08(6), F.S.; (2) provide the requirements and format of the Certificate of Entitlement required by Section 8, Chapter 2010-138, L.O.F., effective January 2, 2011; and (3) provide that the governmental entity is prohibited from transferring the liability for tax, penalty, and interest to another party by contract or agreement. When in effect, the rule will provide for the taxability of transactions in which contractors and subcontractors purchase tangible personal property for use in public works contracts.

SUMMARY:

The proposed amendments to Rule 12A-1.094, F.A.C. (Public Works Contracts), incorporate the provisions of Section 212.08(6), F.S., as amended by Section 8, Chapter 2010-138, L.O.F., to provide that a governmental entity, excluding any agency or branch of the United States, is required to issue a Certificate of Entitlement, with the entity’s purchase order attached, to each vendor and to each contractor to affirm that: (1) the tangible personal property purchased from the vendor will go into and become a part of a public works; and (2) the governmental entity will be liable for any tax, penalty, and interest determined to be due if the Department determines that the tangible personal property purchased does not qualify for exemption.
The proposed amendments also provide: (1) that the governmental entity is prohibited from transferring the liability for tax, penalty, and interest to another party by contract or agreement; (2) that contracts with agencies or branches of the federal government, which are not required to issue a Certificate of Entitlement, must meet the criteria established in paragraph (4)(b) of the rule for the purchase of the tangible personal property for the public works to be tax-exempt; and (3) contractors who manufacture or fabricate tangible personal property must pay tax on the articles produced and may not accept a Certificate of Entitlement for these articles.

RULEMAKING AUTHORITY:

212.08(6), 212.17(6), 212.18(2), 212.183, 213.06(1) FS.

LAW:

92.525(1), 212.02(4), (14), (15), (16), (19), (20), (21), 212.06(1), (2), (14), 212.07(1), 212.08(6), (7)(bbb), 212.085, 212.18(2), 212.183, 213.37 FS.

PRINT PUBLISH DATE:

10/8/2010 Vol. 36/40

COMMENTS:

From 10/8/2010 To 10/29/2010 (21 Days)
The public comment period for this notice has already expired.

REFERENCE MATERIALS:

No reference(s).

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