Were goods shipped by an out-of-state seller through a Florida freight forwarder for export exempt from Florida sales and use tax?

Plain-English summary

The seller did not have to collect Florida sales tax, and the buyer did not owe use tax, while the goods moved continuously through Florida for export. Both commercial parties were outside Florida, the goods were outside the state when sold, and a common carrier brought them to a Florida freight forwarder with the final out-of-state destination already identified.

The property had to be irrevocably committed to export at the time of sale. Diversion to the buyer or its representative in Florida, or another break in the export process, would create use tax.

The submitted purchase invoices were not enough by themselves. The company also had to keep the export documentation required by Rule 12A-1.064(1).

What this means for you

Routing goods through a Florida warehouse or forwarder can remain exempt only when the export movement is fixed, continuous, and documented. Intent to export later is not sufficient.

Common questions

Q: Was the seller required to collect Florida sales tax? No.

Q: Did the buyer owe use tax? No, while export remained unbroken.

Q: What if the goods were diverted in Florida? Use tax applied.

Q: Were invoices enough proof? No.

Citations and references

• Fla. Stat. § 212.06(1)(a), (5)(a)1. — sales and use tax and property committed to export
• Fla. Admin. Code r. 12A-1.064(1) — interstate and foreign commerce documentation
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 01A-076

Original ruling text

SUMMARY

QUESTION: Would goods shipped into Florida by an out-ofstate company, for further export outside the state, be
exempt from sales and use tax?

ANSWER - Based on Facts Below: Company is not obligated to
collect sales tax, because: 1) the seller and buyer are
both located outside Florida; 2) the property, at the time
of sale, was outside Florida; and 3) Company shipped the
goods into Florida from a point outside the state, by
common carrier. The buyer is not obligated to pay a use
tax, since the goods are irrevocably committed to the
exportation process at the time of sale. However, if the
exportation process is broken while the property is in the
state, a use tax will apply.

QUESTION: Are purchase invoices sufficient documentation
for exempting the transactions?

ANSWER - Based on Facts Below: Company should also retain
documentation of the exportation process as required by
Rule 12A-1.064(1), F.A.C.

Dec 21, 2001

Re: TAA 01A-076
Sales and Use Tax - Drop Shipments
Section 212.06(1)(a) and (5)(a)1., F.S.
Rule 12A-1.064(1), F.A.C.
XXX (Company)
FEI: XX

Dear :

This is a response to your letter dated November 1, 2001,
requesting the issuance of a Technical Assistance Advisement
(TAA) concerning the above referenced party and matter. Your
letter and supporting documents have been carefully examined,

and the Department finds your request to be in compliance with
the requisite criteria set forth in Chapter 12-11, F.A.C. This
response to your request constitutes a TAA, and is issued to you
under the authority of section 213.22, Florida Statutes.

Facts

Pursuant to your letter, all your company's transactions follow
the same fact pattern:

1) The goods we [Company] are selling to the buyers are not
manufactured in Florida.

2) The buyers are not registered in Florida since they have
no nexus in your state.

3) [Company] (the vendor) is located outside Florida, but
is a registered Florida dealer for the purpose of
collection and remittance of Florida sales tax.

4) The goods are shipped into Florida via common carrier.

5) The goods are shipped to a consolidator or freight
forwarder in Florida.

6) The final destination of the goods is outside the State
of Florida and is stated in the text of our invoices.

7) The buyers, when they place the orders with the vendor
[Company], are outside the State of Florida, and they are
placing it with a customer service person who's outside the
State of Florida.

8) The goods are shipped to Florida from inventories
located outside the state.

9) The purchase orders which [Company] receives from the
buyers are from outside the State of Florida.

With your letter, you have submitted copies of two invoices:
Invoice XX, dated 9/06/01, and Invoice #XX, dated 9/24/01. On

each invoice, notations are made which indicate the following:
(1) the sales rep is located in XXX; (2) the goods are shipped
from, and manufactured outside, Florida; (3) the goods are
shipped via common carrier; (4) the sale is generated outside
Florida; and (5) the final destination is XXX.

Advisement Requested

1. Whether Company's sales activities are exempt from Florida's
   sales and use tax.

2. Whether the invoices submitted with Company's request would
   be sufficient documentation for exemption.

Applicable Law and Discussion

Section 212.06(1)(a), F..S., provides the legislative intent
that tax is due at the rate of 6 percent of the retail sales
price as of the moment of sale, 6 percent of the cost price as
of the moment of purchase, or 6 percent of the cost price as of
the moment of commingling with the general mass of property in
this state. However, certain exceptions are provided under
subsection (5). Under the provisions of s. 212.06(5)(a)1., F.S.:

... [It] is not the intention of this chapter to levy a tax
upon tangible personal property imported, produced, or
manufactured in this state for export, provided that
tangible personal property may not be considered as being
imported, produced, or manufactured for export unless the
importer, producer, or manufacturer delivers the same to a
licensed exporter for exporting or to a common carrier for
shipment outside the state or mails the same by United
States mail to a destination outside the state;....

Rule 12A-1.064, F.A.C., which governs sales in interstate and
foreign commerce, provides in part:

(1)(a) Sales tax is imposed on the sales price of each item
or article of tangible personal property, unless otherwise
exempt, when the property is delivered to the purchaser or
his representative in this state. However, the tax does not

apply to tangible personal property irrevocably committed
to the exportation process at the time of sale, when such
process has been continuous or unbroken.

(b) Intent of the seller and the purchaser that the
property will be exported is not sufficient to establish
the exemption; nor does delivery of the property to a point
in Florida for subsequent transportation outside Florida
necessarily constitute placing the property irrevocably in
the exportation process. Tangible personal property shall
be deemed committed to the exportation process if:

1. The dealer is required by the terms of the sale contract
   to deliver the goods outside this state using his own mode
   of transportation. The dealer must retain in his records
   trip tickets, truck log records, or other documentation
   reflecting the specific items and export destination;

2. The dealer is required by the terms of the sale contract
   to deliver the goods to a common carrier for final and
   certain movement of such property to its out of state
   destination. Sales by a Florida dealer are exempt when the
   dealer delivers the merchandise to the transportation
   terminal for shipment outside this state and secures a dock
   or warehouse receipt and a copy of the bill of lading. On
   shipments to points outside the United States, a shipper's
   export declaration shall also be obtained;

3. The dealer is required by the terms of the sale contract
   to mail the goods by United States mail for final movement
   of such property to its out of state destination; or

4. The dealer is required by the terms of the sale contract
   to deliver the goods to a licensed customs broker for
   delivery to a point outside this state. As used herein the
   term "licensed customs broker" means a person licensed by
   the United States custom service to act as a custom house
   broker. The dealer must retain documentation provided by
   the licensed customs broker that delivery was made to a
   point outside this state.

5. If a person imports goods into this state for
exportation from this state, a use tax will be due unless
such person can demonstrate that the tangible personal
property was irrevocably committed to the exportation
process at the time of importation and that the exportation
process was continuous and unbroken while such property was
within this state.

(c) Regardless of the documentary evidence held by the
dealer to show delivery of the property was made to a
common carrier for shipment to a point outside this state,
tax will apply if the property is diverted in transit to
the purchaser or his representative in this state, or for
any other reason it is not delivered outside this state....

Determination

1. Company is not obligated to collect sales tax, because: 1)
   the seller and buyer are both located outside Florida; 2) the
   property, at the time of sale, was outside Florida; and 3)
   Company shipped the goods into Florida from a point outside the
   state, by common carrier. The buyer is not obligated to pay a
   use tax, since the goods are irrevocably committed to the
   exportation process at the time of sale. However, if the
   exportation process is broken while the property is in the
   state, a use tax will apply.

2. Company should retain documentation of the exportation
   process as required by Rule 12A-1.064(1), F.A.C.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment from that
which is expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Dee Overcash
Senior Tax Specialist

Control #47408