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

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