Could a Florida dealer keep resale and exemption certificates as computer-scanned records instead of paper?

Subject

Request to Store Tax Exempt Certificates on Computer

Plain-English summary

Florida had no objection to the company scanning and storing customer resale and exemption certificates on a computer. The electronic records had to contain every item required on a properly executed certificate and remain legible, readable, available, and organized so they did not unduly disrupt a Department audit.

The company was responsible for providing the equipment needed to read, locate, and reproduce the records. If the system failed those access and quality standards, the Department could determine taxable sales and purchases by testing or sampling under section 212.12(6)(b).

What this means for you

Electronic storage did not relax the underlying certificate rules. A dealer still needed the purchaser's required identification, authorization, dates, registration or exemption number, and other certificate information; the only approved change was the storage medium.

Common questions

Q: Did Florida require the paper originals under this ruling? No. Computer-stored optical scans were acceptable on the stated conditions.

Q: Who had to provide audit-access equipment? The dealer maintaining the records.

Q: What if scans were unreadable or hard to retrieve? The Department could use a test or sample to determine taxable transactions.

Citations and references

• Fla. Stat. § 212.12(6)(a)-(b) — recordkeeping, examination, and test or sample determinations
• Fla. Stat. § 212.21(2) — sales taxable unless specifically exempt
• Fla. Stat. § 212.07(1)(b) — strict compliance for resale
• Fla. Admin. Code r. 12A-1.038(1) — contents of resale and exemption certificates
• Fla. Admin. Code ch. 12-24, pt. II — electronic recordkeeping material enclosed with the ruling
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98A-072

Original ruling text

SUMMARY
Section 212.12(6)(a), F.S., provides that the Department is
given the power to prescribe the records to be kept by all
persons subject to sales tax. It goes on to provide that
it is the duty of every person to keep and preserve all
invoices and other records of goods subject to tax under
Chapter 212, F.S. Further, it states that all such books,
invoices and other records shall be open to examination at
all reasonable hours to the Department or any of its duly
authorized agents. The Department is authorized to
prescribe suitable records to be kept by all persons
subject to Chapter 212, F.S. The Department has no
objection to a firm storing Tax Exempt Certificates in a
computer, provided the records are legible, readable and
maintained in a manner which does not unduly disrupt the
normal flow of the Department's audit. It will be the
firm's responsibility to make available the necessary
equipment for purposes of reading, locating and reproducing
any records maintained in the computer. This is based on
the premise that the information required on a properly
executed resale and exemption certificate is stored in the
computer for each purchaser. Should the computer records
not comply with availability, readability and legibility
requirements, or unduly disrupt the audit, the Department,
pursuant to section 212.12 (6)(b), F.S., may make a
determination of taxable sales and purchases on a test or
sampling basis.

Sep 23, 1998

Re: TAA 98A-072
Request to Store Tax Exempt Certificates on Computer
Section 212.12(6), F.S.
Rule 12A-1.038(1), F.A.C.

Dear :

This is in response to your letter of August 6, 1998, in
which you requested the issuance of a technical assistance
advisement regarding whether it is acceptable to the Department
of Revenue for your company to store tax exempt certificates of
your company's customers on computer via optical scanning. You
furnished this office a copy of a letter of technical advice
from the Department, dated July 13, 1998, addressing this issue.

APPLICABLE AUTHORITY

Section 212.12(6)(a), F.S., provides that the Department is
given the power to prescribe the records to be kept by all
persons subject to sales tax. It goes on to provide that it is
the duty of every person to keep and preserve all invoices and
other records of goods subject to tax under Chapter 212, F.S.
Further, it states that all such books, invoices and other
records shall be open to examination at all reasonable hours to
the Department or any of its duly authorized agents.

Section 212.21(2), F.S., provides that it is the specific
legislative intent to tax each and every sale, use, storage,
consumption or rental levied and set forth in Chapter 212, F.S.,
except those that are specifically exempted therefrom by Chapter
212, F.S. Section 212.07(1)(b), F.S., provides that a resale
must be in strict compliance with the rules and regulations of
the Department. Rule 12A-1.038, F.A.C., states that a sale is
taxable unless the dealer obtains from the purchaser either a
resale certificate or a certificate evidencing that the
purchaser holds a consumer's certificate of exemption. The
resale certificate must be signed by the dealer, or the dealer's
authorized representative; must state that the property was
purchased for resale; and must bear the date, the name and
address of the purchaser, the effective date of the certificate,
and the number of the dealer's certificate of registration. The
certificate evidencing that the purchaser is an exempt
organization must be signed by an authorized representative of
the organization; and must bear the number of the organization's
consumer's exemption certificate, the effective date of the
certificate, and the expiration date of the certificate.

DEPARTMENT RESPONSE

The Department is authorized to prescribe suitable records
to be kept by all persons subject to Chapter 212, F.S. The
Department has no objection to your firm's storing the above
mentioned records in a computer, provided the records are
legible, readable and maintained in a manner which does not
unduly disrupt the normal flow of the Department's audit. It
will be your firm's responsibility to make available the
necessary equipment for purposes of reading, locating and
reproducing any records maintained in the computer. This is
based on the premise that the information required on a properly
executed resale and exemption certificate is stored in the
computer for each purchaser.

A note of caution: should the computer records not comply
with availability, readability and legibility requirements, or
unduly disrupt the audit, the Department, pursuant to section
212.12 (6)(b), F.S., may make a determination of taxable sales
and purchases on a test or sampling basis.

For your information, enclosed is Rule 12-24 Part II
dealing with electronic record keeping.

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,

Richard S. Harrod
Senior Tax Specialist
Technical Assistance & Dispute
Resolution

RSH/h
Control No. 34981
Enclosure