Sales Tax Articles
Sales Tax State Activity Update - August 2006
Florida Offers Exemption on One-Time Computer Sale
The Florida Department of Revenue ruled in a Technical Assistance Advisement (TAA) that a one-time sale of computer equipment qualifies as an occasional or isolated sale, and thus is exempt.
Background
The taxpayers are entering into agreements with a third-party computer company ("Computer Company") to outsource their information technology functions. As part of the agreement, the taxpayers will divest certain information technology assets to the Computer Company in a one-time sale.
The taxpayers were not required to pay sales tax when these assets were originally purchased because of their classification as Internal Revenue Code section 501(c) (3) entities. The purchase of the equipment occurred prior to the period currently open under the statute of limitations. The taxpayers possess valid Florida sales and use tax exemption certificates.
This is a one-time sale for both taxpayers, and as such, will occur within a twelve-month period.
Analysis
Generally, Florida sales tax applies to the retail sale of tangible personal property within Florida. The taxable privilege upon which the sales tax is imposed is the engagement in the business of selling tangible personal property. Section 212.05, F.S. Florida law defines "business" to exclude occasional and isolated sales. Section 212.02(2), F.S. Rule 12A-1.037, F.A.C., outlines the characteristics of an occasional or isolated sale.
In order to qualify as an occasional sale, the latter rule requires that:
- Taxpayer have paid any applicable tax on its purchase of the equipment, unless the statute of limitations provided in Subsection 95.031(3), F.S., applies
- Taxpayer has engaged in no more than one other sale within the prior twelve months
- The equipment not be in the taxpayer's inventory
- The equipment not have been purchased for resale
- The transaction must not be specifically excluded by another provision.
Based on the information provided by the taxpayers all the provisions were met and the sale was exempt from sales and use tax.
View the full technical assistance advisement on the Florida Department of Revenue website.
(TAA No. 06A-013, Florida Department of Revenue, June 2, 2006)
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