When did a sale occur for Florida tax when a seller mailed a purchase agreement and waited for the customer to sign and pay?

Subject

Purchase Assessments

Plain-English summary

The taxable sale occurred when the seller received the customer's signed Agreement to Purchase and the required partial or full payment. Mailing the blank agreement to a potential customer was only an offer; some recipients never accepted or ordered anything.

Once the signed agreement and required payment arrived, the seller created an invoice and processed the order. Even when the customer paid only part of the price, tax was computed on the total sales price at that moment rather than waiting for final payment.

What this means for you

The ruling separated sending contract terms from receiving a positive act of acceptance. For this seller's process, the signed form plus required payment supplied that acceptance and fixed the tax date.

Common questions

Q: Was tax due when the seller mailed the purchase form? No. A blank offer that might never be accepted was not a sale.

Q: Did partial payment postpone tax on the unpaid balance? No. The ruling required tax on the full sales price when the transaction occurred.

Q: When were collected taxes due to the Department? The cited statute said collected taxes became state funds immediately and were due by the 20th day of the next month.

Citations and references

• Fla. Stat. §§ 212.02(16)(a), 212.15(1) — sale and remittance timing
• Fla. Admin. Code r. 12A-1.054(1) — tax due at the moment of the transaction
• Kendel v. Pontious, 261 So. 2d 167 (Fla. 1972)
• Bullock v. Harwick, 30 So. 2d 539 (Fla. 1947)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-015

Original ruling text

Title:

Purchase Assessments

Mar 24, 1993

RE: TAA 93A-015
Sales Tax; Tax due at time of sale
Sections 212.02(16)(a), 212.15(1), F.S.
Rule 12A-1.054, F.A.C.

Dear :

This is in response to your request for the issuance of a
Technical Assistance Advisement (TAA) concerning at what point
in time your firm, XXXXX (hereinafter "Seller"), is required to
recognize a sale transaction as having occurred in order to be
in compliance with this state's tax reporting requirements.
Accompanying your request is a copy of the "Agreement to
Purchase" form which is utilized by your firm in processing
customer orders. It is your contention that sales tax is due in
the month following the customer's payment (which accompanies
the completed "Agreement to Purchase" form) and not when the
"Agreement to Purchase" form is mailed to the potential
customer. Your letter provides in pertinent part:

"Type of Business: Selling of Advertising Specialty Items,
... key chains, mugs, pens, etc. printed for advertising, as a
Manufacturer[']s/Distributor[']s representative. Other products
can also be sold other than Advertising Items, which is the main
part of the business at this time.

"Sales Procedure: (for any products sold) Potential
customer is contacted by [Seller], customer and [Seller] agree
on item and price either verbally or after customer is sent a
written quote. [Seller] prepares a complete description of item
with terms and conditions of sale on an `AGREEMENT TO PURCHASE'
form (enclosed), which is then sent to customer. Customer must
sign the agreement, and send in full or partial payment for
item. Upon receipt of signed agreement and payment, order is

processed. NOT ALL AGREEMENT TO PURCHASE' FORMS SENT ARE
DEFINITE SALES, SOME DO NOT ORDER AT ALL EVER, STOPPING THE SALE
FOR GOOD."

DETERMINATION

As stated in your letter, several months may pass before a
potential customer returns a completed "Agreement to Purchase"
form and the required partial or full payment signifying
acceptance of your firm's proposal. Some potential customers
fail to return the agreement at all.

As provided in section 212.02(16)(a), F.S., a sale of
tangible personal property has occurred when there is a transfer
of title or possession of the property for a consideration. The
mere issuance of a purchase agreement form to a potential
customer which simply stipulates the terms and conditions of the
sale does not qualify as a sales transaction. 45 Fla Jur 2d,
Section 24, provides that an acceptance of an offer to buy or
sell must be evidenced by some positive act or conduct
communicated to the offeror. Kendel v. Pontious, 261 So.2d 167
(Fla. 1972); Bullock v. Harwick, 30 So.2d 539 (Fla. 1947).

The blank "Agreement to Purchase" form accompanying your
request contains a space where the payment terms agreed upon by
your firm and its customer(s) are to be entered. For those
instances where the customer remits only a partial payment with
the completed "Agreement to Purchase" form please be advised
that in accordance with Rule 12A-1.054(1), F.A.C., "... tax on
cash sales, credit sales, installment sales or sales made on any
kind of deferred payment plan shall be due at the moment of the
transaction..." Therefore, tax is to be computed on the total
sales price when the sales transaction occurs, regardless of
when full payment is received.

Evidence of the customer's acceptance of your offer occurs
when your company receives a completed "Agreement to Purchase"
form and the required partial or full payment of the merchandise
desired. It is at this point that your firm creates an invoice
for the customer and processes the customer's order, and it is
at this point the sale occurs.

Section 212.15(1), F.S., further provides that taxes become
state funds at the moment of collection and are due to this
department by the 20th day of the succeeding month.

Your letter's closing paragraph provides that the agreement
reviewed by this writer may be altered in the future; however,
its intent and purpose as evidence of the customer's acceptance
of your firm's proposal will not change. Please be advised that
this Technical Assistance Advisement will be binding only upon
the facts and circumstances as presented. Any future revisions
to documentation provided herewith will not be governed by this
response.

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 than
expressed in this response.

You are further advised that this response and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Betsy Turner
Technical Assistant
Statutory Compliance Section

BT/
Control # 6564