What corrections did Florida make to TAA 98A-006 about direct sales to distributors and end consumers?

Subject

Collection and Remittance Agreement

Plain-English summary

TAA 98A-006R did not issue a new full ruling; it corrected four statements in TAA 98A-006. The changes were:

• Buyers could be end consumers and/or distributors, rather than only one or the other.
• Buyers transmitted order forms to the seller's out-of-state location; the original statement had limited transmission to U.S. mail.
• When a buyer identified as an end consumer, the seller charged tax on the actual retail sales price, not the more general phrase “total sales price.”
• Local-option surtax for end consumers in surtax counties was also based on the actual retail sales price, not suggested retail price.

The Department additionally recommended a due-diligence effort to determine whether products were actually bought for resale or for an end consumer's use or consumption. The seller should maintain adequate books and records supporting its sales treatment.

What this means for you

The clarification focused on actual transaction facts rather than labels or catalog values. Tax and local surtax followed the actual retail price charged on end-consumer sales, while resale treatment required a reasonable effort to determine the buyer's role and records that could substantiate it.

Because the published document does not include the original TAA 98A-006 analysis, it cannot answer every question about the collection-and-remittance agreement by itself.

Common questions

Q: Could the same individual be both a distributor and an end consumer? Yes. The revision expressly changed “or” to “and/or.”

Q: Did orders have to be sent by U.S. mail? No. The correction used the broader term “transmits.”

Q: What price controlled tax on end-consumer sales? The actual retail sales price.

Q: What price controlled local-option surtax? The actual retail sales price for end consumers located in surtax counties, under the clarification's stated method.

Q: What did the Department say about resale documentation? The seller should perform due diligence to distinguish resale from consumption and maintain adequate books and records.

Citations and references

• The clarification cites no specific statute or administrative rule.
• It expressly clarifies TAA 98A-006 dated February 26, 1998.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98A-006R

Original ruling text

Status: Clarification of TAA 98A006, dated February 26, 1998

May 08, 1998

Re: Technical Assistance Advisement 98A-006R
Sales and Use Tax - Collection and Remittance Agreement
Petitioner: XXX (herein "Taxpayer")
FEI:XXX

Dear :

Please note the following clarifications to the above
referenced Technical Assistance advisement (TAA):

As previously stated: The Taxpayer's sales are made to
individuals who may either be the end consumer or the
Distributor of the products.

Corrected statement: The Taxpayer's sales are made to
individuals who may be the end consumer and/or the Distributor
of the products.

As previously stated: When placing orders, the Distributor
or end consumer indicates whether it is acting as an end
consumer or Distributor, selects the products to be purchased,
totals the amount purchased, where applicable, adds tax based on
its location, and sends in the order form through the U.S. mail
to the Taxpayer's location outside Florida.

Corrected statement: When placing orders, the Distributor
or end consumer indicates whether it is acting as an end
consumer or Distributor, selects the products to be purchased,
totals the amount purchased, where applicable, adds tax based on
its location, and transmits the order form to the Taxpayer's
location outside Florida.

As previously stated: When a sale is made to an individual
who indicates that he or she is an end consumer, the Taxpayer

charges tax on the total sales price.

Corrected statement: When a sale is made to an individual
who indicates that he or she is an end consumer, the Taxpayer
charges tax on the actual retail sales price.

As previously stated: In relation to local option surtaxes,
as determined by the rate of the end consumer's location, the
Department requires that the Taxpayer collect and remit local
option surtaxes on all sales made to the end consumers located
in surtax counties, based on the suggested retail sales price.

Corrected statement: In relation to local option surtaxes,
as determined by the rate of the end consumer's location, the
Department requires that the Taxpayer collect and remit local
option surtaxes on all sales made to the end consumers located
in surtax counties, based on the actual retail sales price.

Also, in response to your request that the Department
respond to the Taxpayer's proposed method of documentation,
please be advised that the Department suggests that the Taxpayer
make a "due diligence" effort to determine if the items sold are
for resale or whether such items are for use or consumption by
an end consumer. The Department further suggest that the
Taxpayer maintain adequate books and records to substantiate its
sales.

Please feel free to contact me if I can be of further
assistance.

Sincerely,

Leigh L. Ceci
Tax Law Specialist

Control #33697