Could an out-of-state concrete fabricator credit tax paid there against Florida use tax on products imported for Florida real-property contracts?

Subject

Credit for Taxes Paid in Another State

Plain-English summary

Florida allowed a credit for the like sales or use tax lawfully imposed and paid to the other state on the fabricated concrete. Florida's tax base was full manufactured cost, and any difference between the other state's paid tax and Florida tax became due when the contractor imported the products for Florida use.

The other-state tax had to be paid before claiming the Florida credit or refund. For the described duplicate payments, Florida allowed a refund claim within three years with proof of payment to both states. The ruling separately warned that, for contracts on or after January 1, 1994, delivery into a surtax county triggered the applicable county surtax.

What this means for you

The credit prevented duplicate state-level tax only after valid other-state payment. It did not change Florida's manufactured-cost tax base or later county-surtax obligations.

Common questions

What value did Florida tax? The full manufactured cost of the contractor-produced items.

When did the Florida difference become due? Upon importation into Florida.

Could the contractor claim before repaying the other-state credit it had taken? No. The ruling required the other-state tax to be paid first.

Citations and references

• Fla. Stat. §§ 212.06, 212.06(7), 212.054, and 213.22
• Fla. Admin. Code rr. 12A-1.051, 12A-1.091(3), 12A-1.091(7), and 12A-15.008(1)(a)2.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-077

Original ruling text

Dec 22, 1993

RE: TAA 93A-077
Sales Tax - Credit for Taxes Paid in Another State
Section 212.06, Florida Statutes
Rules 12A-1.051 and 12A-1.091, F.A.C.

Dear :

This is in response to your letter dated June 9, 1993, in
which you request the issuance of a Technical Assistance
Advisement on the applicability of a tax credit for sales and
use tax lawfully imposed by and paid to the State of XXX.

Your letter states that your corporation is a subcontractor
in the performance of the fabrication and erection of precast
and prestressed concrete products. There are two manufacturing
facilities located in XXX where the fabrication occurs. The
fabricated products are transported to job sites in Florida by
common carrier or by an affiliated trucking company.

The State of XXX informed you that tax is due to XXX on the
manufactured cost of the product and that the amount paid to XXX
can be used to reduce the amount of tax due to another state
where the job site is located.

Representatives of this Department advised you that Florida
would not recognize the tax paid to XXX and that the full amount
of Florida use tax was due on the manufactured cost of the
product plus any discretionary tax if applicable.

Your request for a Technical Assistance Advisement,
specifically addresses the following questions:

"1. What are the tax consequences and implications from the
standpoint of the imposition of the XXX use tax on the total
fabricated costs incurred by a XXX-based concrete manufacturer
who uses and consumes a portion of the materials and products

manufactured in XXX in performing improvements to real property
located in Florida?
"2. When is/or should the XXX use tax be recognized as a
legally imposed tax for Florida tax purposes?
"3. Under what circumstance would the state of Florida
allow credit for a legally imposed XXX use tax pertaining to
materials fabricated for use and consumption in performing
Florida real property improvement contracts?"

STATUTORY AUTHORITY

Section 212.06(1)(a),(b), Florida Statutes provides in
part:
1)(a) The aforesaid tax 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, as the case may be,
shall be collectible from all dealers as herein defined on
the sale at retail, the use, the consumption, the
distribution, and the storage for use or consumption in
this state of tangible personal property or services
taxable under this part. The full amount of the tax on a
credit sale, installment sale, or sale made on any kind of
deferred payment plan shall be due at the moment of the
transaction in the same manner as on a cash sale.
"(b) Except as otherwise provided, any person who
manufactures, produces, compounds, processes, or fabricates
in any manner tangible personal property for his own use
shall pay a tax upon the cost of the product 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,
notwithstanding the provisions of s. 212.02 defining `cost
price'...."

Section 212.06(7), F.S., states in part:

"(7) The provisions of this chapter do not apply in respect
to the use or consumption of tangible personal property, or
distribution or storage of tangible personal property for

use or consumption in this state, upon which a like tax
equal to or greater than the amount imposed by this chapter
has been lawfully imposed and paid in another state,
territory of the United States, or the District of
Columbia. The proof of payment of such tax shall be made
according to rules and regulations of the department. If
the amount of tax paid in another state, territory of the
United States, or the District of Columbia is not equal to
or greater than the amount of tax imposed by this chapter,
then the dealer shall pay to the department an amount
sufficient to make the tax paid in the other state,
territory of the United States, or the District of Columbia
and in this state equal to the amount imposed by this
chapter...." [Emphasis Supplied]

REGULATORY AUTHORITY

Rule 12A-1.051(2)(a) and (e), and (5)(a), F.A.C., provides:

"(2) Such contractors may include, among others, building,
electrical, plumbing, heating, painting, decorating,
ventilating, paper hanging, sheet metal, bridge, road,
landscape or roofing contractors and they may use one of
the following methods in arriving at the total contract
price:
"(a) Contracts in which the contractor or subcontractor
agrees to furnish materials and supplies and necessary
services for a lump sum;
"(e) When a contractor or subcontractor uses materials and
supplies in fulfilling either a lump sum, cost plus, fixed
fee, guaranteed price or any kind of contract except one
falling in class d above, he becomes the ultimate consumer
thereof. The person or dealer who sells such materials and
supplies to such contractor or subcontractor is making
sales at retail and is required to collect the tax from him
based upon the receipts from such sales.
"(5)(a) Contractors, except asphalt contractors, who
operate fabricating or manufacturing plants which make
items of tangible personal property for their own
consumption and use in the performance of contracts for the
construction or improvement of real property are subject to

tax upon the fabricated or manufactured cost of such
items." [Emphasis Supplied]

Rule 12A-1.091(3) and (7), F.A.C., provide:

"(3) The provisions of the Florida Sales and Use Tax shall
not apply to the use or consumption, or distribution or
storage of tangible personal property for use or
consumption in this state upon which a like tax equal to or
greater than the amount due this state has been lawfully
imposed and paid in another state, territory of the United
States, or the District of Columbia before use tax payable
to this state would otherwise have become due. If the
amount of tax so lawfully imposed and paid in another
state, territory of the United States, or the District of
Columbia is not equal to or greater than the amount of tax
imposed by Chapter 212, F.S., then the person from whom the
use tax is due shall pay to the Department of Revenue an
amount sufficient to make the tax paid in the other state,
territory of the United States, or the District of Columbia
and in this state equal to the amount imposed by that
Chapter.
"(7) Under Section 212.06(1), F.S., use taxis imposed upon
the cost of tangible personal property imported into this
state for use, consumption, distribution, or storage for
use or consumption in this state, after it has come to rest
and has become a part of the general mass of property in
this state, subject to the provisions contained in Rule
12A-1.045."

Rule 12A-15.008(1)(a)3., F.A.C., pertaining to the
Discretionary Sales Surtax, states:

"3. If taxable items of tangible personal property,
purchased in such manner that the state sales tax would not
be applicable at the time of purchase, are imported into a
taxing county for use, or consumption in the performance of
any kind of contract, except one falling in paragraph (b)
below, the surtax is not due on the tangible personal
property unless the contractor or subcontractor is a
registered dealer in the taxing county." [Emphasis

Supplied]

RESPONSE

Pursuant to Rule 12A-1.051(5)(a), F.A.C., cited above, tax
would be due on the full manufactured cost of the items so
manufactured, including but not limited to the cost of the
direct materials used to manufacture the above item(s) of
tangible personal property. For elements of cost price, please
reference enclosed Rule 12A-1.051(5)(b), F.A.C.

Pursuant to s. 212.06(7), F.S. and Rule 12A-1.091(3),
F.A.C., cited above, a tax credit is allowed for the sales and
use tax lawfully imposed by XXX against the Florida use tax due.
The State of Florida recognizes the tax imposed by XXX since the
impact of the XXX tax occurs at the point of fabrication/
manufacture for use (not for resale) of the fabricated product.

Pursuant to Rule 12A-1.091(7), F.A.C., the difference
between the tax paid to XXX and the tax due to Florida on the
manufactured cost would become due at the moment in time the
contractor imports the tangible personal property into Florida.

In accordance with Rule 12A-15.008(1)(a)2., F.A.C., the
Discretionary Sales Surtax which is imposed by various counties
in Florida, is not to be included in the computation of the tax
due to Florida, as your company is not located in a taxing
county within Florida. However, please be advised that
effective January 1, 1994, Chapter 93-222, Laws of Florida,
amended s. 212.054, F.S., to require dealers located in nonSurtax counties who deliver taxable tangible personal property
into a Surtax county, to collect (or accrue) and remit the
Surtax. Therefore, on future contracts, where the real property
is located in a surtax county, on or after January 1, 1994, you
would be required to accrue the Surtax at the appropriate rate
for that county. See attached Rule 12A-15.008(1)(a)2., F.A.C.

Per my telephone conversations with XXX on August 13, 1993,
and August 23, 1993, the use tax was remitted in full to XXX and
also to Florida on the manufactured cost. Discretionary Sales
Surtax has also been accrued and remitted to Florida. XXX

advised me that due to the information received from Florida, a
credit was taken with the State of XXX. However, it is my
understanding that the amount of this credit will be remitted
again to XXX. Thus, after this remittance the requirement will
have been met that the tax imposed by XXX was paid. As we
discussed, tax must be paid to XXX first before you are entitled
to claim a refund for the difference of the tax paid to XXX and
the tax due to Florida. As explained in the paragraph above, you
are also due a refund in the amount of the county Surtax paid in
Florida. A refund may be obtained from Florida within three
years from the date the tax was paid. Enclosed is Form DR-26,
Application for Refund, which should be completed in its
entirety and submitted with the necessary documentation
(returns, cancelled checks, etc. verifying tax paid to both
states), to support the claim for refund.

Enclosed are copies of the above cited rules and statutes
in their entirety for your review.
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,

Bonnie Everton
Technical Assistant

/e
Cont. #9255
Enclosures