(1)
(a) Any
person who manufactures, produces, compounds, processes, or fabricates in any
manner an article of tangible personal property for his own use shall pay a tax
upon the cost of the property manufactured, produced, compounded, processed, or
fabricated without any deduction therefrom on account of the cost of material
used, labor or service costs, or transportation charges.
(b) Elements of cost will include the
following materials, labor, service, or transportation costs that are
attributable to manufacturing, producing, compounding, processing, or
fabricating an article of tangible personal property for one's own use and
which are properly chargeable to the cost of the product under generally
accepted cost accounting standards.
1.
Material costs include the following:
a. All
direct materials and related freight costs that are physically observable as
being identified to the finished tangible personal property, that are consumed
in producing the property, or that become a component or ingredient of the
finished property. See paragraphs (c) and (d) below, for calculating the tax on
the cost of the finished product when sales tax has or has not been paid on
direct materials.
b. Material
handling and warehousing of direct materials and goods in process.
c. Manufacturer's excise taxes on
materials.
2. Labor costs
include the following:
a. The total direct
labor costs for employees or contract labor that are allocable to the
production of the finished property, including the entire amount of payroll
burden, which includes but is not limited to overtime premium, vacation and
holiday pay, sick leave pay, shift differential, payroll taxes, payments to a
supplemental unemployment benefit plan, and employee fringe benefits.
b. Compensation of officers, to the extent it
is allocated to production and not administrative functions.
c. Costs of service, engineering, design or
other support employees allocated to production.
3. Service costs include the costs of
non-employee services that are allocated to the production of the tangible
personal property, such as engineering, design or similar consulting or
professional services.
(c) Direct materials on which the tax has
been paid shall not be included when computing the tax on the cost of items of
tangible personal property manufactured, produced, compounded, processed, or
fabricated.
(d) Persons who
manufacture, produce, compound, process, or fabricate items of tangible
personal property for resale or for their own use or consumption may purchase
direct materials tax exempt but shall include the cost of the direct materials
when computing tax on the cost of the items so manufactured, produced,
compounded, processed, or fabricated for such persons' own use or consumption.
If tax has been paid on the direct materials, the method described in paragraph
(c) should be used when computing the tax on the cost of the items so
manufactured, produced, compounded, processed, or fabricated.
(e)
1. To
purchase direct materials tax exempt, dealers registered with the Department to
sell tangible personal property may extend a copy of their Annual Resale
Certificate (Form DR-13) to the selling dealer in lieu of paying tax at the
time of purchase. The cost of such materials is subject to tax on the cost of
the items so manufactured, produced, compounded, processed, or fabricated, as
provided in paragraph (d).
2.
Persons who do not sell tangible personal property are not required to register
with the Department as a dealer. However, to purchase direct materials tax
exempt, such persons may extend an Exemption Certificate, as provided in Rule
12A-1.038, F.A.C., to the
selling dealer in lieu of paying tax at the time of purchase. The cost of such
materials is subject to tax on the cost of the items so manufactured, produced,
compounded, processed, or fabricated, as provided in paragraph
(d).
(f) The tax is due
at the time the article of tangible personal property is manufactured,
produced, compounded, processed, or fabricated for use or consumption, and such
tax shall be remitted to the Department of Revenue in accordance with Rule
12A-1.056,
F.A.C.
(2) Fabrication
labor shall not be taxable where a person is using his own equipment and his
own personnel, for his own account, as a producer, subproducer, or coproducer
of a qualified motion picture. "Qualified motion picture" means all or any part
of a series of related images, either on film, tape, or other embodiment,
including but not limited to, all items comprising part of the original work
and film-related products derived therefrom as well as duplicates and prints
and all sound recordings created to accompany a motion picture, which is
produced, adapted, or altered for exploitation in, on, or through any medium or
device and at any location primarily for entertainment, commercial, industrial,
or educational purposes.
(3)
(a) Any person who manufactures factory-built
buildings for his own use in the performance of contracts for the construction
or improvement of real property shall pay a tax only upon the person's cost
price of items used in the manufacture of such buildings.
(b) For the purpose of this exemption,
"factory-built building" means a structure manufactured in a manufacturing
facility for installation or erection as a finished building; "factory-built
building" includes, but is not limited to, residential, commercial,
institutional, storage, and industrial structures.
(4) Any person who manufactures asphalt for
his own use shall calculate and remit the use tax on such asphalt, as provided
in subsection
12A-1.051(12),
F.A.C.
(5)
(a)
1. No
tax shall be imposed upon any person who manufactures or produces electrical
power or energy, steam energy, or other energy, when such power or energy is
used directly and exclusively in the operation of machinery or equipment that
is used to manufacture, process, compound, produce, fabricate, or prepare for
shipment tangible personal property for sale or to operate pollution control
equipment, maintenance equipment, or monitoring or control equipment, used in
such operations.
2.
a. Tax is not imposed upon electrical power
or energy, steam energy, or other energy manufactured or produced for a
person's own use at a single location, when such power or energy is used
directly and exclusively at such location, or at other locations if the energy
is transferred through facilities of the owner, in the operation of machinery
or equipment that is used to manufacture, process, compound, produce,
fabricate, or prepare for shipment tangible personal property for sale or to
operate pollution control equipment, maintenance equipment, or monitoring or
control equipment used in such operations.
b. Electrical power or energy manufactured or
produced for a person's own use transmitted and distributed by a public utility
to such person's facility at another location is taxable based upon the cost
price of such power or energy without any deduction therefrom on account of the
cost of material used, labor or service costs, or transportation
charges.
3. Electrical
power or energy manufactured or produced for a person's own use that is used
for space heating, lighting, office equipment, air conditioning, or any other
nonmanufacturing, nonprocessing, noncompounding, nonproducing, or
nonfabricating activity is taxable based upon the cost price of such power or
energy without any deduction therefrom on account of the cost of material used,
labor or service costs, or transportation charges.
(b) Tax is not imposed upon the manufacture
or production of electrical power or energy when such electrical power or
energy is consumed or dissipated in the transmission or distribution of
electrical power or energy for resale.
(6)
(a)
Tangible personal property manufactured, produced, compounded, processed, or
fabricated for use directly and solely in research or development, and
machinery and equipment used predominantly for research or development purposes
are exempt when the research or development has one of the following as its
ultimate goal:
1. Basic research or the
advancement of knowledge or technology in a scientific or technical field of
endeavor.
2. The development of a
new product, the improvement of an existing product, or the development of new
uses of an existing product, whether or not the product is offered for
sale.
3. The design and development
of prototypes, whether or not a resulting product is offered for
sale.
(b) For the purpose
of this subsection:
1. "Machinery and
equipment" includes, but is not limited to, molds, dies, machine tooling, and
other appurtenances or accessories for machinery and equipment, testing and
measuring equipment, test beds, and computers and software. Such machinery and
equipment may be purchased, leased, or self-fabricated. If self-fabricated, the
machinery and equipment includes the materials and labor for the design,
fabrication, and assembly of such items.
2. "Predominantly" means at least 50 percent
of the time.
3. "Product" means any
item, device, technique, prototype, invention, or process, which is, was, or
may become, commercially exploitable.
(c) Research or development does not include
ordinary testing or inspection of materials or products used for quality
control, market research, efficiency surveys, consumer surveys, advertising and
promotions, management studies, or research in connection with literature,
history, social science, psychology, or other similar nontechnical
activities.
(d)
1. Materials and labor may be purchased
tax-exempt when the purchaser extends an exemption certificate to the vendor or
supplier certifying that the materials and labor will be used directly and
solely for research or development purposes, as provided in Section
212.052, F.S.
2. The following is a suggested format for an
exemption certificate for purchases of materials and labor:
EXEMPTION CERTIFICATE
ITEMS OF TANGIBLE PERSONAL PROPERTY AND LABOR
USED IN RESEARCH OR DEVELOPMENT
This is to certify that purchases of tangible personal
property or labor on or after ________ (date) from ________ (Selling Dealer's
Business Name) will be directly and solely used in research or development
activities, as provided in Section
212.052, F.S. These research or
development activities are located at:
______________________________________________________
(Street)
______________________________________________________
(City and State)
I understand that if I fraudulently issue this certificate to
evade the payment of tax, I will be liable for payment of the tax plus a
penalty of 200% of the tax and be liable for fine and punishment provided by
law for conviction of a felony of the third degree, as provided in Section
775.082,
775.083 or
775.084, F.S.
Under penalties of perjury, I declare that I have read the
foregoing document and that the facts stated in it are true to the best of my
knowledge and belief.
_______________________________
___________________________________________________________
Purchaser's Name (Print or Type) Purchaser's Address
_______________________________
___________________________________________________________
Signature and Title Florida Sales and Use Tax Number (if
applicable)
_______________________________
___________________________________________________________
Date Federal Employer's Identification Number
(if applicable)
(e)
1.
Machinery and equipment, including materials and labor used in the
self-fabrication of machinery and equipment, may be purchased or leased
tax-exempt when the purchaser extends an affidavit to the vendor or supplier
stating that the item(s) will be used predominantly for research or development
purposes, as provided in Section
212.08(18),
F.S.
2. The following is a
suggested format of an affidavit to be provided to the selling dealer or
lessor:
AFFIDAVIT
MACHINERY AND EQUIPMENT USED IN RESEARCH OR
DEVELOPMENT
I, the undersigned individual, hereby declare that the
purchase(s) or lease(s) of machinery and equipment, including materials and
labor used in the self-fabrication of machinery and equipment, on or after
________ (date) from ________ (Selling Dealer's Business Name), will be used
predominantly in research or development activities, as provided in Section
212.08(18),
F.S.
These research or development activities are located
at:
______________________________________________________
(Street)
______________________________________________________
(City and State)
I understand that if I fraudulently issue this affidavit to
evade the payment of Florida sales tax, I will be liable for payment of the tax
plus a penalty of 200% of the tax and be subject to conviction of a third
degree felony.
Under penalties of perjury, I declare that I have read the
foregoing affidavit and that the facts stated in it are true to the best of my
knowledge and belief.
______________________________________________________
Purchaser's Name (Print or Type)
______________________________________________________
Signature and Title
______________________________________________________
Date
(f) Instead of furnishing an exemption
certificate, as provided in paragraph (d), or an affidavit, as provided in
paragraph (e), any purchaser who holds a valid Sales and Use Tax Direct Pay
Permit, as provided in Rule
12A-1.0911, F.A.C., may extend a
copy of the permit to the selling dealer to make purchases tax-exempt under
this subsection.
(g) When a
prototype or product of research or development is used by the developer for
any purpose other than research or development, including being offered for
sale, it is subject to tax.
Notes
Fla. Admin. Code Ann. R. 12A-1.043
Rulemaking Authority
212.052(5),
212.08(18)(c),
212.18(2),
213.06(1) FS.
Law Implemented 212.02(4), (7),
212.052,
212.06(1),
212.08(18),
212.085,
212.12(12)
FS.
New 10-7-68,
Amended 1-7-70, 6-16-72, 1-19-74, 12-26-83, Formerly 12A-1.43, Amended 1-2-89,
2-28-90, 3-20-96, 7-27-99, 10-2-01, 9-15-08, Amended by
Florida
Register Volume 46, Number 242, December 15, 2020 effective
12/31/2020.
New 10-7-68, Amended 1-7-70, 6-16-72, 1-19-74, 12-26-83,
Formerly 12A-1.43, Amended 1-2-89, 2-28-90, 3-20-96, 7-27-99, 10-2-01, 9-15-08,
12-31-20.
