May 9, 2011
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Comment
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Ken,
I am a bit confused about what my fellow Florida Dealer mentioned April 23, 2011 about sales tax having "exceptions" which was follow up comments from what Rob Garfeild mentioned on 4/16/2011 about Florida publication #800018. Curiously I am wondering if the nameless Florida Dealer may be one of the guys Rob and I are loosing business to because we show and charge sales tax and apparently he may not. I know your not a tax lawyer but maybe you can help clarify some issues for all us Florida dealers.
First, does your standard alarm contracts define alarm system equipment sold to be personal property even though most or all of it may become attached to real property? If yes, then defined as personal property would it not all be taxable because both material and labor combine to make a alarm system sold as tangible personal property?
Example for this is selling a new alarm system to the owner of a existing building, including the material and labor for $2,000.00. We would normally show the additional 6% Florida sales tax $120.00 for a total of $2,120.00. Would your understanding be this is the correct way or not? If yes, Should we not pay sales tax when we purchase our equipment from a distribution because of charging sales tax to the final consumer just once which is when they purchase all from us?
Is there a difference in selling a alarm system to the builder/developer who is not the actual consumer/property owner who will end up using the alarm system, that is to say is it considered part of real property and sold to a builder who is likely not wanting to be taxed for the alarm system if he charges sales tax when he sells the home?
Second, in the Florida publication #800018 it is mentioned the services which are subject to sales tax are both Burglar and Fire alarm monitoring and maintenance. My question is how do you define "maintenance"?. Is the material (equipment purchased from distributors) and our labor used to perform alarm "maintenance" combined and the total then is taxable maintenance?
An example of maintenance would be the repair of a low battery signal for the owner of a monitored alarm. This type of maintenance does include a battery therefore should we not charge tax on the total for the battery and labor?
Also, for the maintenance example above is it again appropriate to purchase the battery from our distributor without paying sales tax because the battery is taxed later when sold to the actual consumer?
Finally, I would like to know if you or anyone (Florida Dealer) else know the chapter/verse number of the Florida Department or Revenue laws where there are "exceptions" written in the law that give multiple scenarios of instances where you do not need to charge sales tax for installing or maintaining alarm systems?
Ken, I understand you may not want to put your official opinion on all of these questions but I was hoping through your discussion forum there may be good advice.
Mark in Florida
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Response
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I'd really rather hear from an accountant or tax lawyer who wants to participate in this discussion. They would have the better advice.
Yes the alarm contracts define all equipment as personalty, but I don't think that the taxing authorities will feel bound by that characterization. The taxing authority may have its own definitions despite the contract terms.
Maintenance means any form of service.
I think most alarm companies charge sales tax for sale, installation, monitoring and service. Let's hear how everyone handles this issue.