The purpose of the proposed amendments to Rule 12A-19.060, Florida Administrative Code (Sales for the Purpose of Resale), is to establish by administrative rule the requirements to document tax-exempt sales of communications services for resale by ...

DEPARTMENT OF REVENUE
Sales and Use Tax

RULE NO: RULE TITLE
12A-19.060: Sales for the Purpose of Resale
PURPOSE AND EFFECT: The purpose of the proposed amendments to Rule 12A-19.060, Florida Administrative Code (Sales for the Purpose of Resale), is to establish by administrative rule the requirements to document tax-exempt sales of communications services for resale by using the Department’s electronic system to verify communications services tax dealers’ registration numbers and resale certificate numbers, as required in Sections 8-10, Chapter 2007-106, Laws of Florida. This law requires the Department to establish a toll-free telephone number for the verification of valid communications services tax dealer registration numbers and resale certificates no later than January 1, 2008. In addition, the Department will provide an on-line certificate verification system to be used by selling dealers to verify communications services tax dealers’ registration numbers and resale certificate/business partner numbers.
The proposed amendments provide the three methods by which dealers must document the exempt nature of sales for the purpose of resale – to obtain a copy of the purchaser’s Communications Services Tax Annual Resale Certificate that is signed by the purchaser or the purchaser’s representative; to obtain a Transaction Resale Authorization Number issued by the Department; or, to obtain a Vendor Resale Authorization Number issued by the Department.
The proposed amendments provide that selling dealers may make tax-exempt sales for resale to a purchaser whose current Communications Services Tax Annual Resale Certificate is on file without seeking a new certificate for each subsequent sale during that calendar year. For sales made to purchasers who purchase on account from a dealer on a continual basis, the selling dealer is not required to obtain a new certificate for each calendar year.
The proposed amendments provide that selling dealers may document tax-exempt sales for resale by obtaining a Transaction Resale Authorization Number or a Vendor Resale Authorization Number from the Department by using the Department’s on-line Certificate Verification System or calling the Department’s nationwide toll-free telephone verification system. The proposed amendments provide the requirements for the selling dealer to obtain a transaction resale authorization number for each and every resale transaction and to document each resale transaction. Selling dealers who document sales for resale by obtaining a Vendor Resale Authorization Number from the Department must also obtain a signed copy of the purchaser’s Communications Services Tax Annual Resale Certificate. The proposed amendments provide how to obtain the Vendor Resale Authorization Number from the Department and the time periods during which the authorization number is valid.
SUBJECT AREA TO BE ADDRESSED: The subject of this workshop is the proposed requirements for communications services tax dealers to verify communications services tax certificate/business partner numbers for purposes of documenting tax-exempt sales of communications services for resale, utilizing the Department’s toll-free telephone verification system or the Department’s on-line certificate verification system.
SPECIFIC AUTHORITY: 202.16(2), 202.26(3)(c), (d) FS.
LAW IMPLEMENTED: 202.11(3), (10), (11), 202.13(2), 202.16(2), (4), 202.17(6), 202.34(3), (4)(c) FS.
A RULE DEVELOPMENT WORKSHOP WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
DATE AND TIME: October 30, 2007, 11:00 a.m.
PLACE: Room 118, Carlton Building, 501 S. Calhoun Street, Tallahassee, Florida
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Larry Green at [phone]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE DEVELOPMENT AND A COPY OF THE PRELIMINARY DRAFT, IF AVAILABLE, IS: Janet L. Young, Tax Law Specialist, Technical Assistance and Dispute Resolution, Department of Revenue, P. O. Box 7443, Tallahassee, Florida 32314-7443, telephone [phone]

THE PRELIMINARY TEXT OF THE PROPOSED RULE DEVELOPMENT IS:

12A-19.060 Sales for the Purpose of Resale.

(1) A sale for the purpose of resale is excluded from the tax imposed by and administered under Chapter 202, F.S., only when the sale is made in strict compliance with the provisions of this rule.

(2) For purposes of this rule, the following terms are defined as:

(a) A “dealer” means a person registered with the Department as a provider of communications services in Florida.

(b) An “active registered dealer” means a person who is registered with the Department as a communications services tax dealer and who is required to file a communications services tax return at least once during each applicable reporting period, as provided in Section 202.17(6), F.S.

(c) A “purchaser” means the person paying for or obligated to pay for communications services.

(3) A “sale for the purpose of resale” occurs when a person purchases communications services from a dealer and then resells the communications services, uses the communications services as a component part of communications services that are offered for retail sale, or integrates the purchased communications services into communications services offered for retail sale.

(4) ANNUAL RESALE CERTIFICATES ISSUED BY THE DEPARTMENT.

(a) Each newly registered dealer will receive a Communications Services Tax Certificate of Registration (Form DR-700014) and a Communications Services Tax Annual Resale Certificate (Form DR-700015). For each calendar year, the Department will issue to each active registered dealer a Communications Services Tax Annual Resale Certificate that specifically identifies the valid period of the certificate.

(b) The business name and mailing address of the certificate holder, the certificate/business partner number, the registration effective date, and the expiration date of the certificate, and the purposes for which the certificate may be provided will be indicated on each Communications Services Tax Annual Resale Certificate.

(c) The effective date of a dealer’s initial Communications Services Tax Annual Resale Certificate will be the postmark date of the application or, when delivered by means other than the United States Postal Service, the date the application is received by the Department.

(d) In the event that a dealer’s original Communications Services Tax Annual Resale Certificate is lost or destroyed, a replacement may be requested by visiting any local Department of Revenue Service Center to personally obtain a copy or by contacting the Department at [phone] (in Florida only) or [phone]. Persons with hearing or speech impairments may call the Department’s TDD, at [phone] or [phone]. Written requests should be addressed to Account Management Central Registration, Florida Department of Revenue, P. O. Box 6480, Tallahassee, Florida 32314-6480.

(5) A Communications Services Tax Annual Resale Certificate is considered valid when a signed copy of the certificate is provided to the selling dealer in lieu of payment of the tax on any sale made on or after the registration effective date and on or prior to the certificate expiration date, as indicated on the certificate; and when a selling dealer receives a signed copy of the certificate in good faith.

(6) A dealer making a sale for resale is required to document the exempt sale by CHOOSING ONE of the following three methods: PROVISIONS APPLICABLE TO SELLING DEALERS.

(a) COPIES OF ANNUAL RESALE CERTIFICATES OBTAINED BY THE SELLING DEALER. A selling dealer who makes a sale for the purpose of resale must obtain and receives a signed copy of the purchaser’s current a valid Communications Services Tax Annual Resale Certificate or a Transaction Resale Authorization Number or Vendor Resale Authorization Number issued by the Department in lieu of tax will be in compliance with the requirements of this rule and is relieved from any liability for any tax due on that sale.

1. The copy of the Communications Services Tax Annual Resale Certificate must be signed by the purchaser or the purchaser’s authorized representative.

2. A selling dealer may make sales for resale to a purchaser whose current Communications Services Tax Annual Resale Certificate is on file without seeking a new certificate for each subsequent transaction during that calendar year. A new Communications Services Tax Annual Resale Certificate must be obtained each calendar year. Except for sales made to purchasers who purchase on account from the dealer on a continual basis, a selling dealer may only make exempt sales for resale to purchasers during the calendar year for which the purchaser’s Communications Services Tax Annual Resale Certificate appears valid on its face.

3. For sales made to purchasers who purchase on account from a dealer on a continual basis, the selling dealer may rely upon the Communications Services Tax Annual Resale Certificate beyond the expiration date of the certificate and is not required to obtain a new certificate each calendar year.

a. For purposes of this paragraph, the phrase “purchase on account from a dealer on a continual basis” means that the selling dealer has a continuing business relationship with a purchaser and makes recurring sales on account to that purchaser in the normal course of business.

b. For purposes of this paragraph, a sale “on account” refers to a sale where the dealer extends credit to the purchaser and records the debt as an account receivable, or where the dealer sells to a purchaser who has an established cash or cash on delivery (C.O.D.) account, similar to an “open credit account.”

c. For purposes of this paragraph, purchases are made from a selling dealer on a “continual basis” if the selling dealer makes sales to the purchaser no less frequently than once in every twelve-month period in the normal course of business.

(b) TRANSACTION RESALE AUTHORIZATION NUMBER ISSUED AT POINT-OF-SALE – VALID FOR SINGLE TRANSACTION ONLY. In lieu of obtaining a signed copy of the purchaser’s Communications Services Tax Annual Resale Certificate for each tax-exempt sale made for the purposes of resale, the selling dealer may obtain a Transaction Resale Authorization Number or a Vendor Resale Authorization Number from the Department.

1. A “transaction resale authorization number” must be obtained by the selling dealer at the point-of-sale by using the Department’s on-line Certificate Verification System at www.myflorida.com/dor/eservices or by calling the Department’s nationwide toll-free telephone verification system at [phone].

2. When using the Department’s on-line Certificate Verification System, the dealer may key up to five (5) purchaser’s communications services tax certificate/business partner numbers into the system. When using the Department’s automated nationwide toll-free verification system, the selling dealer is prompted to key in a single purchaser's communications services tax certificate/business partner number. The system will either issue a 13-digit transaction resale authorization number or alert the selling dealer that the purchaser does not have a valid resale certificate. Selling dealers using the automated telephone verification system who do not have a touch-tone phone will be connected to a live operator during the hours of 8:00 a.m. to 7:00 p.m. (Eastern Time), Monday through Friday. Persons with hearing or speech impairments may call the Department's TDD at [phone] or [phone].

3. A transaction resale authorization number is not valid to exempt subsequent resale purchases made by the same purchaser. A selling dealer must obtain a new transaction resale authorization number for each and every resale transaction.

4. The selling dealer must document the transaction resale authorization number on the sales invoice, purchase order, or a separate form that is prepared by either the purchaser or the selling dealer. The sales invoice, purchase order, or separate form must contain the following statement: “The purchaser hereby certifies that the communications services being purchased are for resale.” This statement must be followed by the signature of the purchaser. The signature may be obtained by the selling dealer through use of an electronic signature pad or other electronic method.

(c) VENDOR RESALE AUTHORIZATION NUMBER FOR REGULAR CUSTOMERS WHO HAVE PREVIOUSLY SUBMITTED DOCUMENTATION TO THE SELLING DEALER – VALID FOR CALENDAR YEAR ISSUED. In lieu of obtaining a Transaction Authorization Number or a signed copy of the purchaser’s valid Communications Services Tax Annual Resale Certificate for each tax-exempt sale made for the purposes of resale, the selling dealer may obtain a Vendor Resale Authorization Number from the Department. This option is available to selling dealers throughout the calendar year without limitation.

1. The “Vendor Resale Authorization Number” is a customer-specific authorization number that will be valid for all sales for resale made to a particular customer during the calendar year. When obtaining a Vendor Resale Authorization Number, the selling dealer must obtain a signed copy of the purchaser’s Communications Services Tax Annual Resale Certificate to document that the purchaser is authorized to make tax-exempt purchases for the purposes of resale. Once a Vendor Resale Authorization Number is obtained for that customer, the selling dealer is not required to obtain a Communications Services Tax Annual Resale Certificate from that customer each year.

2. To obtain vendor resale authorization numbers, the selling dealer must use the Department’s on-line Certificate Verification System at www.myflorida.com/dor/eservices. The system also allows the user to upload a batch file of up to 50,000 accounts for verification of a Communications Services Tax Annual Resale Certificate number and to, 24 hours later, retrieve the file containing the Vendor Authorization Numbers for sales made for the purposes of resale to each purchaser during the calendar year.

3. The selling dealer may make exempt sales for resale to a customer during the period in which the vendor resale authorization number for that customer is valid. Vendor resale authorization numbers are valid for the remainder of the calendar year during which they are issued. However, vendor resale authorization numbers issued by the Department in November or December shall be valid for the remainder of the current calendar year and for the next calendar year.

(7) BURDEN OF ESTABLISHING EXEMPT NATURE OF SALES FOR RESALE.

(a)(b) Copies of Communications Services Tax Annual Resale Certificates that are obtained after the sale from purchasers who were active registered dealers at the time of the sale and are submitted to the Department during an audit or subsequent informal protest period of the audit will be considered sufficient compliance with this rule.

(b)(c) A sale made to a person who was not an active registered dealer at the time of the sale is a retail sale, and the sale can never be considered a sale for resale. However, a selling dealer who accepts a signed copy of a Communications Services Tax Annual Resale Certificate that appears valid on its face will not be held liable for the tax on such transaction, if it is later determined that the purchaser was not an active registered dealer.

(d) A selling dealer may make sales for the purpose of resale to a purchaser who has previously provided a copy the purchaser’s current Communications Services Tax Annual Resale Certificate that is on file without seeking a new copy of the purchaser’s Communications Services Tax Annual Resale Certificate for each subsequent transaction during that calendar year. A selling dealer must obtain a new copy of the purchaser’s Communications Services Tax Annual Resale Certificate from its purchasers for sales made for the purpose of resale in subsequent calendar years.

(8)(7) PROVISIONS APPLICABLE TO PURCHASING DEALERS.

(a) A signed copy of a Communications Services Tax Annual Resale Certificate may only be provided by an active registered dealer who holds a valid Communications Services Tax Certificate of Registration issued by the Department.

(b) A dealer whose Communications Services Tax Certificate of Registration has been revoked by the Department or whose registration has been inactivated or canceled is prohibited from providing copies of its Communications Services Tax Annual Resale Certificate in lieu of paying the tax due on its purchases of communications services. A dealer who provides a copy of its Communications Services Tax Annual Resale Certificate for any purchase after its Communications Services Tax Certificate of Registration has been revoked, inactivated, or canceled will be held liable for the tax, penalty, and interest on all such purchases.

(c) In the event that a purchasing dealer provides a copy of its Communications Services Tax Annual Resale Certificate to a selling dealer and subsequently consumes the communications services by not reselling the communications services, the purchasing dealer must pay all applicable communications services taxes directly to the Department with its first return due subsequent to the consumption of the communications services.

(9)(8) REQUIRED RECORDS. A dealer is required to document the nature of sales made for the purpose of resale and is required to maintain copies of Communications Services Tax Annual Resale Certificates, Vendor Resale Authorization Numbers, Transaction Authorization Numbers, and receipts, invoices, billing statements, or other tangible evidence of such sales until the tax imposed by and administered under Chapter 202, F.S., may no longer be determined and assessed under Section 95.091(3), F.S. Electronic storage by a selling dealer of a signed copy of a purchaser’s Communications Services Tax Annual Resale Certificate and other required documentation through use of imaging, microfiche, or other electronic storage media will be sufficient compliance with the provisions of this subsection.

Specific Authority 202.16(2), 202.26(3)(c), (d) FS. Law Implemented 202.11(3), (10), (11), 202.13(2), 202.16(2), (4), 202.17(6), 202.34(3), (4)(c) FS. History–New 1-31-02, Amended 7-16-06,_________.