Sales Tax State Activity Update -October 2008

Florida expands Manufacturing Exemption to include R&D

The Florida Administrative Tax Code § 12A-1.043 had been amended, effective September 15, 2008, concerning manufacturing exemptions. The revision of the code (1) provide that items of tangible personal property manufactured, produced, compounded, processed, or fabricated for use directly and solely in research or development are exempt; (2) remove obsolete provisions; (3) provide that machinery and equipment used predominantly for research or development purposes is exempt; (4) define the terms “machinery and equipment” and “predominantly”; (5) provide how materials and labor may be used directly and solely for research or development purposes, and how machinery and equipment used predominantly in research or development activities may be purchased tax-exempt when the purchaser issues an exemption certificate to the selling dealer certifying the tax-exempt use of the item or issues a copy of the purchaser's direct pay permit to the selling dealer; and lastly it (6) clarify that a prototype or product of research or development used by the developer, including being offered for sale, is subject to tax.

This Florida Administrative Code may be viewed at the Florida Department of Revenue. (Florida Department of Revenue, Administrative Code, effective September 15, 2008)

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