Manufacturers are at the heart of the supply-demand equation. By transforming raw materials into components for construction, items for consumer purchase and more, you play a critical role in our economy.
So any efforts to reduce your costs and increase output will help fuel the fire of economic growth—which is why Florida has a wide range of sales tax exemptions for manufacturers. When your company is able to keep more of its money, it can buy more materials, reinvest in itself or even improve working capital to produce even more goods to fill increasing demand.
What is exempt?
While each equipment/materials type has specific requirements, a few guidelines apply to most (if not all) eligible purchases:
- The purchase must be tangible property with a depreciable life of three years or more.
- The purchase must be used as an integral part in the manufacturing, processing, compounding or production of tangible personal property for sale.
- The equipment purchased must be used at a fixed location in Florida.
- Some types of purchases also have restrictions on when the machinery or equipment must be put into use.
Buildings and structural components are not included unless they can be expected to be replaced when the machinery and compounds it houses is replaced (due to a close structural relationship). Additionally, heating and air conditioning systems are not considered industrial machinery/equipment unless their sole purpose is to meet the requirements of the production process (even if, as a side benefit, it provides incidental comfort to employees).
There’s a wide range of purchases often made by manufacturing firms that are exempt from sales tax. While it would be exhaustive to list all of them, here are their general classifications.
Mixer drums – Used at any location within Florida to mix, agitate, and transport freshly mixed concrete in a plastic state; also includes parts and labor required to affix an exempt mixer drum to a mixer truck.
Industrial machinery and equipment – Including parts and accessories for the equipment when purchased prior to the date the machinery and equipment are placed in service.
Postharvest machinery and equipment – Equipment used in services performed on crops after harvest, such as crop cleaning, sun drying, shelling, curing, etc.
New and expanding business – Machinery and equipment purchased for exclusive use by a new business.
Spaceport activities – Equipment used in activities directed or sponsored by Space Florida on spaceport territory.
How do I know if my company is eligible for these exemptions?
For the purposes of sales tax exemptions, manufacturing is defined as “the sale, use, consumption, or storage of industrial materials, including chemicals and fuel, used in future processing, manufacturing, or conversion into tangible personal property for resale.” A company is not eligible if it manufactures or produces products for its own use.
The exemption applies only to industries covered under the following SIC Industry Major Group Numbers in the Standard Industrial Classification Manual (1987):
- 10 (metal mining)
- 12 (coal mining)
- 13 (oil and gas extraction)
- 14 (mining and quarrying of nonmetallic minerals, except fuels)
- 20 (manufacturing and processing of food and kindred products)
- 22 (textile mill products)
- 23 (apparel and other finished products made from fabrics and similar materials)
- 24 (lumber and wood products, except furniture)
- 25 (furniture and fixtures)
- 26 (paper and allied products)
- 27 (printing, publishing, and allied industries)
- 28 (chemicals and allied products)
- 29 (petroleum refining and related industries)
- 30 (rubber and miscellaneous plastics products)
- 31 (leather and leather products)
- 32 (stone, clay, glass, and concrete products)
- 33 (primary metal industries)
- 34 (fabricated metal products, except machinery and transportation equipment)
- 35 (industrial and commercial machinery and computer equipment)
- 36 (electronic and other electrical equipment and components, except computer equipment)
- 37 (transportation equipment)
- 38 (measuring, analyzing, and controlling instruments; photographic, medical and optical goods; watches and clocks)
- 39 (miscellaneous manufacturing industries)
- 212 (cigar production)
To take advantage of sales tax exemptions, you must complete an exemption certificate and present it when making your equipment purchases. (Click here to see a sample of a certification you can use.)
If you’ve paid sales tax on past purchases that could have been exempted, you can submit an Application for Temporary Tax Exemption Permit and receive a refund on the tax paid. This can be done for eligible purchases made up to three years prior to the date you file the application.
Your CPA firm can help you get the necessary certificates so you can better leverage these sales tax exemptions.
All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.