The purpose of the proposed amendments to Rule 12A-1.087, F.A.C., is to incorporate legislative changes in Section 12, Chapter 2016-220, Laws of Florida. The new exemption created in that section allows for the exempt sale of certain postharvest ...

 

DEPARTMENT OF REVENUE

Sales and Use Tax

RULE NO.:RULE TITLE:

12A-1.087Exemption for Power Farm Equipment; Suggested Exemption Certificate for Items Used for Agricultural Purposes

PURPOSE AND EFFECT: The purpose of the proposed amendments to Rule 12A-1.087, F.A.C., is to incorporate legislative changes in Section 12, Chapter 2016-220, Laws of Florida. The new exemption created in that section allows for the exempt sale of certain postharvest machinery and equipment. The rule change provides guidance on when the exemption applies and a suggested certificate to document an exempt sale.

SUMMARY: The proposed amendments provide guidance for those wishing to take advantage of the new exemption for certain postharvest machinery and equipment.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION: The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: 1) no requirement for the Statement of Economic Regulatory Costs (SERC) was triggered under Section 120.541(1), F.S.; and 2) based on past experiences regarding the procedures for processing written protests of assessments and rules of this nature, the adverse impact or regulatory cost, if any, do not exceed nor would exceed any one of the economic analysis criteria in a SERC, as set forth in Section 120.541(2)(a), F.S. Any person who wishes to provide information regarding a Statement of Estimated Regulatory Costs, or provide a proposal for a lower cost regulatory alternative, must do so in writing within 21 days of this notice.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 212.17(6), 212.18(2), 213.06(1) FS.

LAW IMPLEMENTED: 212.02(14)(c), (30), (31), (32), 212.05(1), 212.0501, 212.06(1), 212.08(3), (5)(a), (e), (7)(kkk), 212.085 FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW (IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):

DATE AND TIME: November 16, 2016, 9:00 a.m.

PLACE: 2450 Shumard Oak Boulevard, Building Two, Room 1220, 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: Becky Nall 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 IS: Kimberly Berg, Technical Assistance and Dispute Resolution, Department of Revenue, P.O. Box 7443, Tallahassee, Florida 32314-7443, telephone: [phone]

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

 

12A-1.087 Exemption for Power Farm Equipment; Electricity Used for Certain Agricultural Purposes; Suggested Exemption Certificate for Items Used for Agricultural Purposes.

(1) through (10) No change.

(11) Postharvest Machinery and Equipment.

(a)  For purposes of this rule, the following definitions will apply:

1. “Postharvest activities” means services performed on crops after their harvest with the intent of preparing them for market or further processing.  Postharvest activities include, but are not limited to, crop cleaning, sun drying, shelling, fumigating, curing, sorting, grading, packing, and cooling. Examples of qualifying postharvest activities are:  Banana ripening, bean cleaning, corn drying and shelling, delinting cotton seed (not including cotton ginning), grain cleaning and drying, grain grinding (not including custom grinding for animal feed), nut drying, hulling and shelling, seed cleaning and processing for postharvest propagation, sorting, grading, cleaning and packing fruits and vegetables, sun drying fruits and vegetables, tobacco grading (not including stemming and redrying), and waxing fruits and vegetables.

2.a. “Postharvest machinery and equipment” means tangible personal property or other property with a depreciable life of 3 years or more which is used primarily for postharvest activities.   A building and its structural components are not postharvest machinery and equipment unless the building or structural component is so closely related to the postharvest machinery and equipment that it houses or supports that the building or structural component can be expected to be replaced when the postharvest machinery and equipment is replaced.

b. Heating and air conditioning systems are not postharvest machinery and equipment unless the sole justification for their installation is to meet the requirements of the postharvest activities process, even though the system may provide incidental comfort to employees or serve, to an insubstantial degree, nonpostharvest activities.

3. “Primary business activity” means an activity representing more than 50 percent of the activities conducted at the location where the industrial machinery and equipment or postharvest machinery and equipment is located.

4. “Qualifying business” means a business classified under code 115114 of the NAICS (2007) whose primary business activity is one or more postharvest activities.

(b) The sale and repair, including charges for labor, parts and materials, of postharvest machinery and equipment to a qualifying business is exempt. The exemption applies to the postharvest machinery and equipment at the business location where the postharvest activity occurs.

(c) Suggested Exemption Certificate for Postharvest Machinery and Equipment.

1. Any person who purchases items that qualify for the postharvest machinery and equipment exemption must issue an exemption certificate to the selling dealer to purchase such machinery or equipment tax-exempt. The exemption certificate must contain the purchaser’s name and address, the reason for the exemption, and the signature of the purchaser or an authorized representative of the purchaser.

2. The selling dealer is only required to obtain one certificate for sales made for the purposes indicated on the certificate and is not required to obtain an exemption certificate for subsequent sales made to the same purchaser for the exempt purpose indicated on the exemption certificate. The selling dealer must maintain the required exemption certificates in its books and records until tax imposed by Chapter 212, F.S., may no longer be determined and assessed under Section 95.091(3), F.S.

3. Dealers who accept in good faith the required certificate from the purchaser or lessee will not be assessed sales tax on sales of postharvest machinery and equipment. In such instances, the Department will look solely to the purchaser or lessee for any additional sales or use tax due.

4. Selling dealers may contact the Department at 1(800)352-3671 to verify the specific exemption specified by the purchaser or lessee. Persons with hearing or speech impairments may call the Florida Relay Service at 1(800)955-8770 (Voice) and 1(800)955-8771 (TTY).

5. The following is a suggested format of an exemption certificate to be issued by any person purchasing or leasing postharvest machinery or equipment qualifying for exemption under Section 212.08(7)(kkk), F.S. The Department does not furnish the printed exemption certificate to be executed by purchasers or lessees when purchasing tax-exempt machinery or equipment.

SUGGESTED PURCHASER’S EXEMPTION CERTIFICATE

FOR POSTHARVEST MACHINERY OR EQUIPMENT

This is to certify that the items identified below, purchased on or after ___________ (date) from ______________________ (Selling Dealer’s Business Name) are purchased, leased, licensed, or rented for the following category of use:

(  ) Postharvest machinery or equipment.

(  ) Repairs to, or parts and accessories for, postharvest machinery or equipment.

 

I further certify that I qualify for an exemption from sales tax under s. 212.08(7)(kkk), F.S., for all eligible purchases made from this day forward and that:

(   ) I am a qualifying business.

(   ) The postharvest machinery and equipment being purchased will be used at a fixed location in Florida to perform postharvest activities, which are services performed on crops, after their harvest, with the intent of preparing them for market or further processing.  Examples include crop cleaning, sun drying, shelling, fumigating, curing, sorting, grading, packing, and cooling.

(   ) Any parts and materials being purchased will be used to repair, and will be incorporated into, the machinery and equipment.

 

I understand that if I use the item for any purpose other than the one I stated, I must pay tax on the purchase or lease price of the taxable item directly to the Department of Revenue.

 

I understand that if I fraudulently issue this certificate to evade the payment of sales tax I will be liable for payment of the sales tax plus a penalty of 200% of the tax and may be subject to conviction of a third degree felony.

 

Under penalties of perjury, I declare that I have read the foregoing document and that the facts stated in it are true.

 

Purchaser’s Name _____________________________________________________________

Purchaser’s Address ___________________________________________________________

Name and Title of Purchaser’s Authorized Representative ______________________________

Sales and Use Tax Certificate No. (if applicable) ______________________________________

By ___________________________________________________________________________

(Signature of Purchaser or Authorized Representative)

Title _________________________________________________________________________

(Title – only if purchased by an authorized representative of a business entity)

Date _______________________

Rulemaking Authority 212.17(6), 212.18(2), 213.06(1) FS. Law Implemented 212.02(14)(c), (30), (31), (32), 212.05(1), 212.0501, 212.06(1), 212.08(3), (5)(a), (e), (7)(kkk), 212.085 FS. History–New 10-7-68, Amended 1-7-70, 6-16-72, 10-18-78, 7-20-82, 4-12-84, Formerly 12A-1.87, Amended 12-13-88, 3-1-00, 6-19-01, 9-15-08, 1-17-13, 1-11-16, _____.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Kimberly Berg

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Governor and Cabinet

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: October 25, 2016

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: September 7, 2016