Sales Tax Articles
Sales Tax State Activity Update - January 2008
Florida Exempts Employee Background Check and Drug Test Services
In a Technical Assistance Advisement (TAA) the Florida Department of Revenue (FDOR) advised a taxpayer that background checks and drug testing analysis were not enumerated taxable services pursuant to Section 212.05(1)(i), F.S.
Facts
The taxpayer provides background checks and drug tests to employers such as hospitals, employee staffing agencies, transportation companies, and retailers. These services include consumer credit information, consumer reports, or investigative consumer reports in connection with evaluation of individuals for employment, promotion, reassignment, or retention as an employee. The taxpayer provides these services to their customers only for the latter purposes.
In addition the services also entail providing social security number verification, single county criminal search, national criminal database search, motor vehicle records search, seven-year county criminal search, and a Florida State Department of Law Enforcement search.
To initiate the purchase of the services, a customer completes a Services Agreement that is executed by both parties. Upon execution of the Services Agreement, the customer obtains access to a Computerized Service Request Program (CSRP).The customer accesses the CSRP and completes a computerized request form. The CSRP is designed to interact with other computer programs to obtain the requested information.
In cases where a drug test is desired, the customer is directed to send the individual to a testing facility. The results are reviewed by the employees of the testing facility, and are communicated to the customer. The taxpayer does not perform actual drug testing. There is no surveillance, interviews, or physical contact performed to verify or confirm any of the information provided to the customer.
Advice
Background screening information service is not subject to sales tax as under the provision of Section 212.05(1)(i), F.S. The reports generated from CSRP do not constitute an information service since they are provided to a single customer. Therefore, the charge for the reports is not taxable pursuant to Rule 12A-1.062(3)(b) and (5), F.A.C.
Drug screening performed at a lab is not subject to tax, when the charge is separately stated on the invoice. This type of service is not a detective, burglar protection, or other protection service under Section 212.05(1)(i)1., F.S., and is therefore not taxable.
This Technical Assistance Advisement can be viewed on the Florida Tax law Website.
(FDOR, TAA 07A-038, 10/26/2007)
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