Could purchasing-card statements and software reports replace vendor invoices for Florida sales-and-use-tax records?

Subject

Record Retention

Plain-English summary

A consolidated purchasing-card statement by itself was not an adequate substitute for vendor invoices, but the statement and related software reports could work together. To qualify, the combined records had to identify the seller, buyer, item purchased, sales price, location of the sale, and amount of Florida sales tax collected. If any required element was missing, the records were insufficient.

The program was designed to replace paper invoices for low-dollar business purchases. Statements showed basic vendor, cardholder, amount, and date information, while desktop reports could add the sales price, tax collected, transaction total, tax situs, ship-to ZIP code, processing or transaction date, and purchase description when vendors supplied the data.

Florida warned that a ship-to ZIP code might not precisely identify the local taxing jurisdiction and suggested capturing the full ship-to address. When the jurisdiction could not be pinned down, the card records were useful transaction evidence but were not a complete invoice substitute; the cardholder needed added documentation showing that the proper tax was collected or remitted.

What this means for you

Electronic purchasing records can support Florida sales-and-use-tax compliance, but only if the combined system preserves the same core facts an invoice would show. A paperless design is not enough when it omits the item, seller, buyer, price, tax, or exact location.

Billing timing is a separate problem. A taxpayer could not delay Florida use-tax payment until a card statement arrived. If a statement cycle crossed calendar months or listed only a later processing date, the cardholder might need earlier records to identify the actual transaction date and pay on time.

Common questions

Q: Was the monthly card statement alone sufficient? No. The Department approved only the statement combined with the system's detailed reports.

Q: Was a ship-to ZIP code always enough to identify tax situs? No. The ruling said a ZIP code might not identify the proper local-option-tax jurisdiction and suggested using the full ship-to address.

Q: What if the seller did not collect Florida tax? The purchaser had to pay Florida use tax directly and keep enough documentation to show the taxable transaction and timely remittance.

Q: Could the purchaser wait for the statement before paying use tax? No. Receipt of a vendor invoice or card statement did not extend the statutory due date or excuse late-payment penalties.

Citations and references

• Fla. Stat. §§ 212.06, 212.07(2), (9), 212.15(1) — tax timing, separately stated tax, and purchaser liability when tax cannot be proved paid
• Fla. Stat. §§ 212.13(2), 213.35 — required records and retention period
• Fla. Admin. Code r. 12A-1.093 — sales-and-use-tax books, invoices, and other records
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98A-048

Original ruling text

SUMMARY

A company developed a corporate purchasing card system to
eliminate paperwork and consolidate invoices. The software
program allows the company's client to use a corporate
purchasing card to make low-dollar direct business
purchases. The program consolidates supplier invoices on a
monthly statement which captures the vendor's name, city
and state, the cardholder's account number and name, the
amount of sales tax collected, the nature of the item or
service purchased, the transaction amount and the
transaction date. When the appropriate taxing jurisdiction
can be precisely identified on the statement, the statement
will be considered an acceptable substitute for vendor
generated invoices. The consolidated billing state, in
combination with the reports generated by the software
program are sufficient if they identify the seller, buyer,
item purchased, sales price, location of the sale, and the
amount of Florida sales tax collected. If any of these
items are missing, the information would be insufficient.
When the cardholder is responsible for Florida use tax, the
statement will be considered acceptable as accurate
information concerning the transaction, but additional
documentation may be necessary to confirm timely remittance
of the tax.

Jul 01, 1998

Re: TAA 98(A)-048
Sales and Use Tax - Record Retention
Sections 212.06, 212.07, 212.13, 212.15, 213.35, F.S.
Rule 12A-1.093, F.A.C.
XXX (hereinafter Taxpayer)
Taxpayer I.D. # XX

Dear :

This is a response to your petition dated December 18, 1997, for

the Department's issuance of a Technical Assistance Advisement
("TAA") concerning the above referenced matter. This petition
consisted of a short cover letter and an attached proposed TAA
dated "December 1997." Your letter and attached document have
been carefully examined and the Department finds it to be in
compliance with the requisite criteria set forth in Chapter 1211, F.A.C. This response to your request constitutes a TAA and
is issued to you under the authority of s. 213.22, F.S.

DISCUSSION OF FACTS

You provided the following facts:

Taxpayer has developed a corporate purchasing card program that
offers the customers of financial institutions, who issue the
card, a new way of purchasing goods and services. It has been
designed to create a "paperless" purchasing environment by
eliminating hardcopy paper invoices. In order to achieve this,
taxpayer and card-issuing financial institutions have developed
desktop reporting software programs that will provide corporate
purchasing card users with a consolidated billing statement and
reports. The statements will provide purchasers with the
vendor's name, city and state, the cardholder's account number
and name, the transaction amount and the transaction date. The
desktop reporting software program will generate reports that
will allow the customer to identify the sales price of the
property, the amount of tax collected, the total amount of the
transaction, the tax situs of the sale, the transaction and/or
processing date and a brief description of the purchase to the
extent this information has been provided by the vendors.

REQUESTED ADVISEMENT

You requested that the Department of Revenue consider whether
the statements and reports generated by the corporate purchasing
card program constitute an acceptable substitute for vendor
generated invoices. You also request that the Department
consider the generated statements and reports to comply with
state sales and use tax laws if they precisely identify the
appropriate taxing jurisdiction. You have also requested that
the Department of Revenue consider if, when the appropriate

taxing jurisdiction cannot be precisely identified, the
statements and reports generated by the program are acceptable
as accurate information concerning the transaction. In these
cases, the statement and reports would confirm the taxable
transaction, and the customer would be responsible for providing
additional information to document that the appropriate rate of
tax was paid for the particular taxing jurisdiction.

ANALYSIS OF LAW

Section 212.13(2), F.S., provides, in pertinent part:

(2) Each dealer, as defined in this chapter, shall secure,
maintain, and keep as long as required by s. 213.35 a
complete record of tangible personal property or services
received, used, sold at retail, distributed or stored,
leased or rented by said dealer, together with invoices,
bills of lading, gross receipts from such sales, and other
pertinent records and papers as may be required by the
department for the reasonable administration of this
chapter....

Section 213.35, F.S., provides:

Each person required by law to perform any act in the
administration of any tax enumerated in s. 72.011 shall
keep suitable books and records relating to that tax, such
as invoices, bills of lading, and other pertinent records
and papers, and shall preserve such books and records until
expiration of the time within which the department may make
an assessment with respect to that tax pursuant to s.
95.091(3).

Rule 12A-1.093(1), (2), and (3), F.A.C., provides:

(1) The Department of Revenue has the power to prescribe
the records to be kept by all persons subject to the taxes
imposed by Chapter 212, F.S.
(2) Each dealer defined in Chapter 212, F.S., each licensed
wholesaler, and any other person subject to the tax imposed
by Chapter 212, F.S., shall keep and preserve a complete

record of all transactions, together with invoices, bills
of lading, gross receipts from sales, RESALE CERTIFICATES,
CONSUMER EXEMPTION CERTIFICATES and other pertinent records
and papers as may be required by the Department of Revenue
for the reasonable administration of Chapter 212, F.S., and
such books of account as may be necessary to determine the
amount of tax due thereunder.
(3) All such books, invoices and other records shall be
open for inspection by the Department of Revenue at all
reasonable hours at the dealer's store, sales office,
warehouse or place of business located in this state. Any
dealer who maintains such books and records at a point
outside this state shall make such books and records
available for inspection by the Department of Revenue where
the general records are regularly kept.

Section 212.15(1), F.S., provides, in pertinent part:

(1) The taxes imposed by this chapter shall... become state
funds at the moment of collection and shall for each month
be due to the department on the first day of the succeeding
month and be delinquent on the 21st day of such month....

Section 212.07, F.S., provides, in pertinent part:

(2) ... [T]he amount of the tax shall be separately stated
as Florida tax on any charge ticket, sales slip, invoice,
or other tangible evidence of sale....
(9) Any person who has purchased at retail, used, consumed,
distributed, or stored for use or consumption in this state
tangible personal property, admissions, communication or
other services taxable under this chapter, or leased
tangible personal property, or who has leased, occupied, or
used or was entitled to use any real property, space or
spaces in parking lots or garages for motor vehicles,
docking or storage space or spaces for boats in boat docks
or marinas, and cannot prove that the tax levied by this
chapter has been paid to his or her vendor, lessor, or
other person is directly liable to the state for any tax,
interest, or penalty due on any such taxable transactions.

Section 212.06(1), F.S., provides, in pertinent part:

(1)(a) ... 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.

CONCLUSIONS OF LAW

The records prescribed by the Department of Revenue include
invoices, bills of lading, sales receipts, and other records or
papers showing that the proper tax was collected on all
transactions. The information which is normally captured on
these documents includes who purchased the tangible personal
property or taxable services, who sold it, what was sold, the
date of the sale, the location of the sale, the sales price and
the amount of any Florida sales tax collected.

To be considered an acceptable substitute for vendor generated
invoices, the statements and reports generated by your corporate
purchasing card program must capture all information which is
normally captured on a vendor invoice or other sales document.
This information must include the shipping location so that the
appropriate taxing jurisdiction may be identified. From the
facts you have given, it appears that your purchasing card
program currently captures, on its statements, the vendor's
name, city and state, the cardholder's account number and name,
the transaction amount, and the transaction date. If the vendor
enters all of the necessary information, the desktop reporting
software program will generate reports that allow the customer
to identify the sales price of the property, the amount of tax
collected, the total amount of the transaction, the tax situs of
the sale, the ship-to zip code, the transaction and/or
processing date and a brief description of the purchase.

The information captured by your purchasing card system will
identify a state taxing jurisdiction. However, the ship-to zip
code alone may not properly identify the appropriate taxing
jurisdiction for purposes of determining any local option taxes
which may be due. Therefore, you may wish to modify your
purchasing card program to capture the entire ship-to address so

that the appropriate taxing jurisdiction may be precisely
identified. With this information, the purchasing card
statements and reports together will provide the identity of the
buyer, identity of the seller, what was sold, the date of the
sale, the location of the sale, the sales price and the amount
of Florida sales tax collected. Thus, these statements and
reports, when taken together, will be considered an acceptable
substitute for vendor generated invoices.

If your purchasing card client(s) makes Florida taxable
transactions and Florida Sales Tax is not collected from the
vendor, your client(s) must pay Florida Use Tax directly to the
State of Florida. Sales or Use Tax is due at the moment of the
transaction on all cash sales, credit sales, installment sales,
or sales made on any kind of deferred payment plan. In
addition, this tax is due on the first day of the month
following the month of the transaction. If the purchasing card
statement is issued on a cycle other than a calendar month, your
client(s) must be aware that tax may be due prior to receipt of
the purchasing card statement. Also, if the statement does not
identify the transaction date, your client(s) must be aware that
the processing date may be in a month other than the transaction
date. In these cases, your client(s) may need documentation of
the transaction prior to receipt of the purchasing card
statement, or documentation to substantiate the actual
transaction date, to ensure that Florida Use Tax is paid in a
timely manner.

DETERMINATION

The consolidated billing statement alone is insufficient.
However, the statement, in combination with the reports
generated by the software program do appear to be sufficient
since they identify the seller, buyer, item purchased, sales
price, location of the sale, and the amount of Florida sales tax
collected. If any of these items are missing, the information
would be insufficient.

Additionally, when the appropriate taxing jurisdiction cannot be
precisely identified, your purchasing card system statements and
reports will be considered as reliable information concerning

the transaction, but will not be considered an acceptable
substitute for vendor generated invoices. In these instances,
your cardholder must provide additional documentation to
substantiate that the proper tax was collected or remitted.

Please note that a taxpayer cannot extend the due date or
payment of Florida Use Tax based on receipt of a vendor
generated invoice; accordingly your cardholder will not be
permitted to extend the due date or payment of Florida Use Tax
based on receipt of the purchasing card system statement or the
processing date of the transaction. In addition, a receipt of a
vendor generated invoice after the date Florida Use Tax is due
and payable is not considered reasonable cause for compromise of
late payment penalties when Use Tax is paid on receipt of such
invoice. Also, a receipt of the statement generated by the
purchasing card system after the date Florida Use Tax is due and
payable will not be considered reasonable cause for compromise
of late payment penalties when Use Tax is paid upon receipt of
the statement.

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 confidential
information, we request you notify the undersigned in writing
within 15 days of any deletions you wish made to the request or
this response.

If you have further questions with regard to this matter and
wish to discuss them, you may contact Technical Assistance and
Dispute Resolution, Department of Revenue, P.O. Box 7443,
Tallahassee, Florida 32314-7443.

Sincerely

Bruce H. Williams
Technical Assistance and Dispute Resolution
(850) 488-2506

BW/bw
Ctrl# 32093