Florida Sales Tax for Manufacturers: Key Exemptions, Compliance and Best Practices

Navigating Florida sales tax can be one of the more challenging parts of managing a manufacturing business. For manufacturers in Florida, staying compliant with sales and use tax rules is essential to avoid penalties, audits and unexpected liabilities. At the same time, knowing the available exemptions can preserve cash flow and enhance the long-term value of your operation.

What Items Are Exempt From Florida Sales Tax

Manufacturers should evaluate the taxability of each item in their production process. Here’s a simple framework:

Raw materials & component parts: Usually exempt when they become part of a final product for sale. Suppliers should receive an exemption certificate.

General business-use items: Items for maintenance, office use or administration are typically not exempt.

Machinery and equipment: Exempt if:

• The business has a qualifying manufacturing NAICS code (31, 32, 33).
• Equipment is used at a fixed Florida location in the production of tangible personal property.
• It has a depreciable life of three years or more and is integral to the manufacturing process.

Florida also provides exemptions for repairs and parts under specific conditions. Be sure to check the latest guidelines from the Florida Department of Revenue.

When Should Manufacturers Charge Florida Sales Tax?

The need to collect and remit sales tax depends on:

• Customer type:
  • End users: Charge tax.
  • Retailers/resellers: No tax if they provide a valid exemption certificate.
  • Nonprofits/government agencies: Often exempt, but a certificate is still required.
• Product status: Some goods and services are inherently non-taxable. Understanding which applies to your products is essential.

Maintaining accurate and updated exemption certificates is a key component of compliance.

How Frequently Do Florida Sales Tax Rules Change?

Sales tax rules in Florida are subject to legislative change, often annually. For example, exemptions on manufacturing equipment have shifted from temporary to permanent over recent years. Certificates of exemption typically expire every 1-3 years and must be reviewed and renewed to stay compliant.

What If You Should Have Paid Sales Tax But Weren’t Charged?

If a vendor didn’t charge tax when they should have, the buyer is responsible for paying use tax, which matches the state sales tax rate. These situations often arise with out-of-state purchases or equipment brought into Florida. Fixed asset audits frequently identify these gaps, especially if the equipment doesn’t meet exemption criteria.

Florida Sales Tax and Commercial Lease Transactions

Florida uniquely imposes sales tax on commercial leases, including related-party leases within the same business entity structure. The tax applies to:

• Base rent
• Common area maintenance (CAM) charges
• Insurance or property tax payments paid by the tenant

The state tax rate is currently 5.5%, plus any applicable county-level discretionary sales surtax.

Are Out-of-State Sales Taxable?

Thanks to economic nexus laws, manufacturers may owe sales tax in other states even without a physical presence. Each state sets its own thresholds (often $100,000 in sales or 200 transactions). Once nexus is met, registration, collection and remittance obligations begin and continue until formal withdrawal.

Best Practices to Stay Compliant

1. Understand NAICS qualifications and register correctly.
2. Maintain current exemption certificates for all qualifying purchases.
3. Review your fixed asset purchases regularly.
4. Audit your process annually to identify tax exposure.
5. Consult with a CPA or tax advisor who specializes in manufacturing and sales tax laws.

Why It Matters

A strong sales tax compliance process not only avoids penalties and audit risk but also makes your business more attractive to potential investors or buyers. Tax issues are among the top red flags during due diligence.

As James Moore Partner Mike Sibley notes, “Brushing these kinds of things under the rug could eventually impact a potential buyer’s feeling about your company. Taking the time to establish a clear process results in a long-term payoff.”

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