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