Florida Tax Lawyer Blog

Whenever a new potential client comes to your office, it is good practice to run a quick check. Among the initial checks that should be made by a Florida tax attorney or other tax professional is to make sure the person you are speaking to is an officer of the corporation and the corporation is in good standing with its state of incorporation. On May 7, 2013, the United States Tax Court issued an opinion that can be used as a reminder for a tax lawyer or other professional in John C. Hom & Associates, Inc. v. Commissioner, 140 T.C. No 11 (May 7, 2013).

The story starts with a company incorporating in California in 1986. The company had its rights and privileges to do business in California suspended in March, 2004 through April 13, 2012. On March 16, 2011, the IRS issued a notice of deficiency for over $200,000 in tax, penalties, and interest. On June 13, 2011, the petition was filed to challenge the assessment, and the IRS moved to dismiss the case because the corporation was suspended. The Taxpayer pointed out this fact and argued that, in addition, the notice had the wrong address to challenge the assessment on its face. Assuming the Taxpayer was suspended at the time of filing the Petition, and the IRS sent the notice to the wrong address, who wins?

Continue reading "BE A GOOD CORPORATE CITIZEN: TAX COURT RULES CORPORATION MUST BE IN GOOD STANDING TO FILE PETITION" »

On May 6, 2013, Senate passed the Marketplace Fairness Act . It was announced that the bill passed with a vote of 69 to 27. The bill provides for an exception for businesses with sales of less than $1 million annually. States which are members to the Streamlined Sales and Use Tax Agreement are automatically granted the authority and the remaining states are required to grant the authority. The legislation will now make its way to the House of Representatives, where anything can happen.

The Act is an attempt to provide clarity and certainty in a grey area of the law. While many proponents of the bill seem to think it puts all Internet retailers on a equal playing field, it is really just an enforcement tactic of existing tax law. Those not in favor of the law point to the administrative burdens placed on small taxpayers. It is true that software exists to calculate the tax rates in the countries 45 states with sales tax and some 9,600 jurisdictions, it may becomes extremely burdensome and expensive to determine what is and is not taxable.

I look forward to informing everyone about more developments in this evolving area of the law. I also welcome any comments on the issue.

About the author: Mr. Donnini is a multi-state sales and use tax attorney and an associate in the law firm Moffa, Gainor, & Sutton, PA, based in Fort Lauderdale, Florida. Mr. Donnini's primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Donnini is also a co-author in the CCH Expert Treatise Library, an author for SalesTaxSupport.com, and he is currently pursuing his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact him via email or phone listed on this page.

Our practice receives many calls dealing with collection due process hearings. The hearing is an opportunity for a Taxpayer to contest a tax assessment by the IRS. Recently, on April 18, 2013, the Tax Court issued a Memo (an opinion) regarding a collection due process hearing sought by two individuals. This memo serves as another reminder as to why it is often advantageous to get an experienced tax attorney involved when dealing with the state taxing agency or the IRS.

In this case, Kenneth Taggart, the Taxpayer and a Pennsylvania resident, worked as a real estate appraiser and broker. He owned two S-Corps, through which he conducted his businesses, and four rental properties. In September of 2007, the Petitioner timely filed his a zero 2006 Federal Income Tax Return, and then mailed an amended 2006 return in 2008 showing income of just over $100,000. Filing a zero return can be a useful tool to start the ticking of the statute of limitations even if the return shows 0. In addition, the Taxpayer filed a return for $133,000 in 2008 but failed to include the proper tax payment. The IRS ultimately assessed him $31,000 in tax due plus penalties and interest of about $2,000 as it is able to do under section 6651, IRC.

In 2009, an offer in compromise was received from the Taxpayer, which was rejected in early 2010 because the offer was less than reasonable in the IRS' view. The Taxpayer missed its 30-day appeal period but was afforded an opportunity to resubmit a new offer in compromise in March 2010. Before the appeal period had run, the IRS filed a notice of tax lien accompanied with a Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320. The Taxpayer submitted Form 12153 to challenge the premature Tax Lien filing. Following a conference and several correspondences with the IRS, the Taxpayer lost the challenge and his offers in compromise were denied.

Continue reading "IRS ISSUES TAX COURT MEMO DENYING CHALLENGE TO COLLECTION DUE PROCESS HEARING FOR TAX LIEN" »

Many individual and corporate taxpayers are becoming annoyed with rising tax rates. For many wealthy Americans, income is taxed federally and by many states at the corporate level and then taxed again when the income is distributed to the shareholders of the corporation. Without even taking into account state and local taxes, most corporations are taxed a 35% rate and, with the recent tax increases, individuals are taxed at a rate over 40%. This has led to some creative tax planning in the recent years.

One recent development, as explained in more detail at CNBC.com, is a move by a number of corporations, namely private prisons, casinos, and billboards, to convert to a Real Estate Investment Trust ("REIT"). The REIT was developed as a vehicle for investors to pool money and share costs when investing in a diversified real estate portfolio. In short, a REIT is an investment pool in which a company (a trust) essentially manages the money of its investors and returns the profits to the investors. For more information about a REIT, please click here to learn about NNN, the REIT that once employed me.

The REIT has been around for decades and was largely used by only for real estate holdings. Recently, companies such as the Correction Corporation of America, a large prison company, has received the IRS's blessing to be reclassified as a REIT. Other companies, such as Penn National Gaming, M Resort Spa and Casino, and Geo Group have also received the ok to be designated as a REIT.

The cornerstone of a REIT is that the investment has to be for real estate. Common examples are shopping malls, warehouses, hospitals, or even timberland. So, the obvious question surfaces, how is a prison or a casino a REIT? These types of businesses have taken the position that the company owns the real estate and the payments collected from governments for holding prisoners is no different than rent. Casinos have been able to accomplish REIT status by holding the real estate in a REIT and operating the casino through a tax-free subsidiary spinoff. The IRS has given its blessing via private letter rulings saying that these types of companies can qualify as a REIT.

From a tax perspective, the beauty of a REIT classification is that the entity itself, unlike a C-Corporation, is exempt from entity level income tax. In exchange for the tax break, the entity must distribute 90% of its taxable income to its shareholders.

To date there are over 1,000 REITs and about 10 are publically traded. With higher tax rates, one can only expect more and more creative tax planning. I look forward to reading about new developments and feedback as to techniques practitioners have seen in the recent year to avoid high tax rates.

About the author: Mr. Donnini is a multi-state sales and use tax attorney and an associate in the law firm Moffa, Gainor, & Sutton, PA, based in Fort Lauderdale, Florida. Mr. Donnini's primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Donnini is currently pursuing his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact him via email or phone listed on this page.

It is difficult to change the channel without hearing some development this week in the Boston Marathon explosion. This week in April, 2013 has been mostly a dark one. However, as we tend to in the face of crisis, our nation has shown its resolve and unity. While it can never replace the loss of life and the feeling of fear that stemmed from the incident, there have been some rays of sunshine. Among the acts of good faith to those struck by this horrible event are the IRS and the Massachusetts Department of Revenue. Each has shown some leniency for its respective filing deadlines.

With tax day marked as April 15, 2013, the IRS allowed for an extension as a result of the tragedy. Specifically, the IRS has allowed for a three-month filing and payment extension to Bostonians and others affected by the explosions. Consequently, no filings or payments will be due if completed by July 15, 2013. The three-month leniency applies to all individuals who are residents of Suffolk County, Massachusetts, including the City of Boston. The IRS also allowed an extension for victims and their families, first responders, and those who had preparers that were adversely affected.

Piggybacking on this idea was the Massachusetts Department of Revenue for state and local tax filings. Massachusetts announced that state and local tax payers have another week to file their returns. That means any person or business that has personal, business, or corporate income tax returns has at least until April 23, 2013 to file their returns.
While the Massachusetts Department of Revenue's announcement is not quite as lenient as the IRS', it was still an act of good faith and a seemingly good move by the Department of Revenue. I couldn't imagine the state or the IRS slapping a taxpayer with a late filing penalty or interest due to the Boston Marathon attack. It is an act that is large under the radar that deserves some attention, and I applaud both taxing agencies.

About the author: Mr. Donnini is a multi-state sales and use tax attorney and an associate in the law firm Moffa, Gainor, & Sutton, PA, based in Fort Lauderdale, Florida. Mr. Donnini's primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Donnini is currently pursuing his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact him via email or phone listed on this page.

It is no secret that states generate high amounts of tax revenue from excise tax. For public policy and political reason, alcohol and tobacco seem ripe for state governments to extort money from its citizens. As a result of high tax rates, businesses that buy and sell large quantities of alcohol and tobacco products find it worthwhile to fight rogue state agencies, such as the various Departments that regulate alcohol and tobacco tax. In a recent Louisiana case, McLane lost against the Department of Revenue in its challenge of the state's tobacco tax.

Like many states, Louisiana levies a 20% excise tax on the distribution of smokeless tobacco in its state. Louisiana takes the position that the first person to distribute tobacco in Louisiana is liable for the tobacco tax. Specifically, the Louisiana law says that tax is due on 20% of the "invoice price" -- an "invoice price" being the "manufacturer's net invoiced price as invoiced to the tobacco dealer by the manufacturer." Clear enough? In this particular case, McLane purchased its smokeless tobacco from US Smokeless Tobacco Brands, which is a subsidiary of UST Manufacturing. McLane then sells its tobacco to customers in Louisiana.

At its core, McLane had a simple and straightforward argument that it should not be liable for the tax. McLane argued that it was not a manufacturer so how could Louisiana tax them at the "manufacturers net invoice" price because it buy tobacco from UST Brands, which is not a manufacturer. Even if it was liable for the tax shouldn't the tax be at the invoice price charged from the Manufacturer to its sales arm?

Continue reading "ANOTHER STATE TOBACCO TAX CASE SHOWS THE 'CLARITY' OF TOBACCO TAX LAWS" »

I am sure many people, myself included, have seen the movements on the airwaves and social media discussing the same-sex marriage case out of California. From constant coverage online and on news stations, to many changing their Facebook default picture, the California same-sex marriage case has grabbed the national spotlight over the last few months in 2013. Unaware of exactly what was unfolding, I have attempted to become apprised of the situation in California. Although the ruling will likely have little value for a tax attorney in South Florida, it is interesting from a constitutional and tax law perspective.

By way of background, the status of same-sex marriage is unique in California because the state granted same-sex marriage licenses to couples in June, 2008. The same year in November, Proposition 8 ended same-sex marriages within California. Upset by the state constitutional amendment, a group took the issue to federal court to challenge the constitutionality of Proposition 8 and won on August 4, 2010 (See Perry v. Schwarzenegger). The case was appealed to the 9th Circuit Court of Appeals.

On July 31, 2012, Judges Reinhardt and Smith delivered the opinion of the 9th Circuit. Specifically, California enacted Proposition 8 which stripped the couples of the right to have their relationships recognized by the state as a "marriage." Conversely, same-sex couples had all other rights and responsibilities, but California classified them as "domestic partners." The challengers argued that the amendment violated the Fourteenth Amendment of the U.S. Constitution.

Continue reading "Hollingsworth v. Perry: California Same-Sex Marriage Case Will Have Tax Implications As Well" »

As many of you are aware, I have been closely following the Gate Fuel Services & Gate Petroleum in Florida. Those cases involved settled refund claims for gas stations that had purchased equipment for pollution control and were used in the manufacturing process. In January of 2013, a Virginia company took advantage of a creative similar sales tax planning strategy.

Specifically, the Virginia taxpayer operated an oil and natural gas well drilling operation. As the result of a sales tax audit, the Department of Taxation issued an assessment for use of equipment and supplies in the taxpayer's business. The equipment and supplies at issue were pit liners and storage tanks.

The taxpayer believed that the pit liners and storage tanks qualified for the "pollution control" exemption because the equipment was used "primarily for the purpose of abating or preventing pollution of the atmosphere or waters" of Virginia. Conversely, the Department asserted that the equipment was not exempt because the Department only recognized pollution control equipment certified by the Virginia Department of Mines, Minerals, and Energy (DMME) for periods through 2006.

Following the contest of the taxpayer for the particular equipment, the Virginia Department of Taxation changed its position. In fact in P.D. 12-73, The Department "immediately and retroactive to July 1, 2006, recognize[d] the pollution control equipment administered by DMME." Further, the taxpayer had its audit referred back to the audit division for the period at issue and was even issued a refund!

This case is one of many over the past several months that have allowed companies in the petroleum related industries to claim a refund on equipment purchases. Odds are that, if you or your client has purchased any business equipment in the last three years, there is probably an exemption of sales tax available. Please feel free to call or email me for a consultation.

About the author: Mr. Donnini is a multi-state sales and use tax attorney and an associate in the law firm Moffa, Gainor, & Sutton, PA, based in Fort Lauderdale, Florida. Mr. Donnini's primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Donnini is currently pursuing his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact him via email or phone listed on this page.

Due to the rising cost and high taxes of cigarettes throughout the country, individuals and businesses are coming up with creative ways to avoid the tax on cigarettes and tobacco. From clubs, to specialty stores, and even peoples' homes, establishments that allow smokers to make their own cigarettes are on the rise. Companies such as RYO have installed thousands of machines throughout the nation in an effort to combat the rising costs of cigarettes, which are over $66 per carton in some states. The machines can reduce costs to as low as $20 per carton in some states, which has resulted in an industry that has quadrupled in size over the past few years. What is often overlooked by many of these do-it-yourself stores is whether allowing customers to partake in cigarette making morphs them into a cigarette manufacturer. In most states, becoming a cigarette manufacturer can impose strict and expensive license requirements as well as burdensome state taxes.

For example, in January, 2013, a nonprofit club in Michigan acquired a cigarette making machine. The club purchased the machine as a convenience for its members in a non-commercial setting. Concerned as to whether this practice turned the company into a "manufacturer" of tobacco products under Michigan law, the company requested a Letter Ruling, specifically LR 2013-1, Michigan Department of Treasury, January 31, 2013. The club took it a step further and asked whether the club member operating the cigarette machine would also be a manufacturer.

Under Michigan law, MCL 205422(m)(ii), any person who operates or allows another to operate a "cigarette making machine" for the purpose of generating a cigarette is a "manufacturer." The defined "cigarette making machine," means a machine or device that 1) is capable of being loaded with tobacco, cigarette papers or tubes, or any other component related to a cigarette, 2) is designed to produce a cigarette, 3) is commercial grade, and 4) is powered by something other than human power. Applying this nice narrow and concise definition, the state determined that the machines used were the dreaded "cigarette making machine."

Being that a "cigarette making machine" was present, the Michigan Department of Treasury looked to whether the club and/or its members are "manufacturers." Shockingly, the Department determined that any club member who operates the machine is a manufacturer and the club itself is also a manufacturer because it is permitting club members to operate the machine. This is clearly the Legislature's intent when creating these laws.

Michigan was kind enough to allow an exemption for self-consumption if the machine at issue is not a "cigarette making machine," the machine is located at the home of the person operating it, and the cigarettes are purely for self-consumption. This exemption is almost laughable when you really think about it. First, it is tough to imagine a machine that would not meet the definition of a cigarette making machine. Further, I am sure the state is interested in expanding its resources to tax and require licensing for all of the individuals who come forward to admit their in-home cigarette production. I guess Michigan is encouraging smokers to roll their own cigarettes by hand at home? This is clearly safer than having companies do this for them.

About the author: Mr. Donnini is a multi-state sales and use tax attorney and an associate in the law firm Moffa, Gainor, & Sutton, PA, based in Fort Lauderdale, Florida. Mr. Donnini's primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Donnini is currently pursuing his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact him via email or phone listed on this page.

It is no secret that professional golf can be extremely lucrative for its star players. Not only do the tour golfers make substantial income from the golf tournaments in which they do well, but they can also make exponentially more money from endorsement or royalty deals. As all sports, especially professional golf, gain international popularity, how income is allocated becomes increasingly important. If a professional golfer makes the majority of his money in the United States, but lives in a foreign country, how much of the income should be attributable to his activities here in the United States?

Specifically, the Spanish born and aptly named "El Nino," entered into an endorsement agreement with TaylorMade. Under the seven year agreement that commenced in 2002, TaylorMade received the rights to use the Swiss resident's likeness, image, signature, voice, and any other symbol to promote its products. El Nino had to also exclusively wear and use TaylorMade golf products and "associated brands," which were Adidas and Maxfli. Regardless of your personal beliefs TaylorMade apparently signed the young golf star because it believed he would add a "cool, athletic, and competitive" element to the TaylorMade brand, which would appeal to the "fun" side of young golfers. The tour pro had to wear the brand on and off the golf course, play in at least 20 professional golf events per year, and had to fulfill several other obligations of TaylorMade.

Although the deal seemed one sided, it wasn't all bad for El Nino. In 2003 through 2005 his base royalty fees from TaylorMade were $7 million. From 2005 on, his income was performance driven and would range from $3 million (if he finished ranked below 21st) to $9 million (if he finished ranked #1). In addition, he could earn bonuses depending on the events he won in a given year. For the golf fans out there, there was also an apparent disagreement between the then rising star and TaylorMade that led to several contract amendments because the golf pro refused to use the MaxFli ball.

Continue reading "FORE! Tax Court Sides with IRS in El Nino's Royalty Income Allocation" »

Many individuals and businesses receive notices from the IRS in one form or another. The individual, owner, or agent of the business often calls our office asking what they can do to contest an IRS letter. This article was written to give a brief overview of the IRS procedure from first notice to Tax Court.

The first contact with the IRS is often in the form of an audit notice. The letter is required to identify the type of tax the IRS is auditing and the period for which the taxpayer is being audited. Upon the completion of the audit, the IRS issues a proposed adjustment. The taxpayer has two obvious options at this point; it can either agree or disagree. If the taxpayer agrees the IRS requires the execution of a Form 870. If the taxpayer disagrees with the findings the IRS will issue what is known as a 30 day letter.

If and when the 30 day letter is issued, the taxpayer's options become more convoluted. If the taxpayer appeals the 30 day letter within 30 days, then the case is sent to the IRS appeals office. This is an important step taken by the taxpayer because, unlike the at the audit level, this is the first time the IRS can consider the hazards of litigation in its settlement negotiations. If the matter is worked out in Appeals at this stage, then Form 870 AD is executed by the IRS and the taxpayer. If the matter is not settled within Appeals or the taxpayer simply ignores the 30-day letter from the start, then after 30 days a 90-day letter issued.

Continue reading "Me or My Company Received an IRS Notice - What Can I Do? IRS Procedure On the Road to Tax Court" »

A recent Virginia ruling brings up a topic that comes up in our state and local tax practice constantly. If a contractor in State X purchases materials and uses the material in a real property contract in State or Country Y, does the contactor owe use tax on purchases in State X? The answer in most states is yes. Is this fair? Or, even further, is this constitutional?

This scenario was brought to light in a Virginia Letter Ruling, No 12-207, issued on December 13, 2012. In the ruling, the unfortunate requestor was a dealer in Virginia and sold materials to a customer who constructs US embassies overseas. The material purchases are shipped to the dealer's consolidating receiving point (CRP) in Virginia. The materials are temporarily stored and prepared for overseas shipment.

The ruling started by addressing a Virginia construction company that improves real estate and furnishes tangible personal property to become real estate outside of Virginia. Like most states, Virginia takes the position that, in that scenario, the dealer is the end user of the TPP and owes use tax. However, Virginia has an exemption for contractors who purchase TPP "used solely in another state or in a foreign country." Specifically, the contractor can obtain a certificate of exemption if certain criteria are met. Further, the Virginia Department of Revenue went out of its way to remind contractors that a resale exemption does not work in this scenario because the contractor is the end user of real property and is not a reseller of TPP.

This evidences one of dozens of rules that may come to a surprise for the uninformed real property contractor. If you are a real property contractor, it is probably advisable to contact your state and local tax professional when beginning a new project or business. For the professionals out there reading this, I would be anxious to hear whether your state has a similar rule. I think you will find most states do.

About the author: Mr. Donnini is a multi-state sales and use tax attorney and an associate in the law firm Moffa, Gainor, & Sutton, PA, based in Fort Lauderdale, Florida. Mr. Donnini's primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Donnini is currently pursuing his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact him via email or phone listed on this page.

In my daily routine of reading state and local tax cases across the country, I recently inquired to the State of Florida for the status of an innovative sales tax case unique to the gasoline and petroleum industry this week. As many of you know, I have had the pleasure of growing up and assisting in my family's petroleum business that has owned, operated, and distributed petroleum and gasoline in South Florida for over 30 years. Therefore, cases like Gate Fuel Services & Gate Petroleum, catch my attention and I really root for innovative and aggressive taxpayers like the one in these cases.

I brought this concept up to several gas station owners at the 2012 Florida Petroleum Marketers Association ("FPMA") Fuel Expo and many met my suggestion with criticism or disbelief. It is still difficult for me to understand how a room full of dozens of Florida's gas station owners, operators, and distributors, would rather discuss the latest developments with their beer vendors over a tall cold one, rather than sit and listen to me rant about Florida sales tax. For all of the naysayers out there, I have recently received word from the State of Florida, that the Gate cases were recently settled.

Many of you may recall, I wrote an article for my law firm's blog in May 2012, about two companion sales and use tax cases. Both cases Gate Petroleum Co. v. Florida Department of Revenue, Case No. 12-CA-381 (2d Cir. Ct. 2012), andGate Fuel Service v. Florida Department of Revenue, 12-CA-379 (2d Cir. Ct. 2012),were filed in Leon County, home of the Florida Department of Revenue. The Gate cases centered around a refund denial for sales and use tax in the amounts of $160,935 and $ $45,071, respectively. In both cases, the Florida Department of Revenue ("DOR") admittedly opposed the refund claims based essentially the same innovative theory of recovery.

For the uninformed, the retail gas station taxpayers in the cases alleged that they made certain equipment purchases that were exempt from Florida sales and use tax. Specifically, the Taxpayers argued that fuel storage equipment which holds regular and premium-grade fuel in underground tanks, mixes the two at the dispenser, and creates a mid-grade gasoline for sale at its retail locations. Being that this is the pump system at most modern gas stations, how come every gas station that has purchased taxable equipment in the last three years are not going for the refund? in short, they all should.

Continue reading "Gas Station Owners and Petroleum Distributors: Go Get Your Sales and Use Tax Refunds " »

It never ceases to amaze me as to the types of cases and industries that come up in our practice. In late 2012, a Taxpayer, or its representative, inquired to the Missouri Department of Revenue whether certain sales it made to its customers are subject to Missouri sales and use tax. As a state and local tax attorney and the proud recipient of a recent jawbone graft, this particular ruling caught my attention. Specifically, in LR 732, Mo. Dept. of Revenue (August 10, 2012), a dental supply and service distributor sold single patient use medical materials to its customers. The medical materials happened to be used for structural support for bone tissue during jaw bone grafting.

Like every one of the 45 states and the District of Colombia that has a sales and use tax regime, Missouri has a medical supply exemption. Medical exemptions are often popular ways for Legislatures to look popular by exempting items such as food and medicine that is necessary for people to survive. States take the position that taxpayers should not be burdened with state taxes for items that are essential.

At issue in LR 732, Mo. Dept. of Revenue (August 10, 2012) was Missouri's exemption for "orthopedic devices" such as rigid or semi rigid leg, arm, back or neck braces that are used to support weak or deformed body, or restrict or eliminate motion in diseased or injured body parts. Sounds delicious, don't it? In any event, the Taxpayer was curious if jawbone grafting materials fit within this gruesome sounding exemption.

Continue reading "MULTI-STATE SALES AND USE TAX: Would You Rather Read About Sales Tax or Get Some Jawbone Grafting " »

As a son to an owner of a family gas station business, I have heard every remark in the book of complaints for gas prices being too high. Next time you are looking to yell or criticize your gas station owner or distributor, remember the impact of taxes that contribute to overly increased gas prices. Below are some changes Florida made in the past year regarding gas prices.

On November 12, 2012, the Florida Department of Revenue issued Tax Information Publication ("TIP") No 12B05-01. The full TIP can be found here. In summary, the TIP adjusted motor fuel tax rates in Florida based on the National Consumer Price Index ("CPI").

Specifically, motor fuel tax increased from 16.6 cents per gallon to 16.9 cents per gallon at the state level. In diesel fuel tax increased from 16.6 cents per gallon to 16.9 cents per gallon as well. In addition, the county tax increased from 13.9 cents per gallon to 14.1 cents. In total, diesel fuel tax went from 30.5 cents per gallon to 31 cents.

Florida taxes also increased taxes levied on terminal suppliers and wholesalers to kick off 2013. In addition to the 16.9 cent state tax on fuel which is collected at the rack, terminal suppliers must also collect a minimum fuel option tax in the amount of 10.9 cents per gallon on each gallon of fuel sold to wholesalers. Therefore, a total tax collected by terminal suppliers on motor fuel sold to licensed wholesalers is up to 27.8 cents per gallon.

Once the wholesaler purchases the fuel, the tax does not stop there. The wholesale must remit to the Florida Department of Revenue the local option rate above the minimum on motor fuel sold to retail dealer s or end users.

The various Exhibits can be found here.

About the author: Mr. Donnini is a multi-state sales and use tax attorney and an associate in the law firm Moffa, Gainor, & Sutton, PA, based in Fort Lauderdale, Florida. Mr. Donnini's primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Donnini is currently pursuing his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact him via email or phone listed on this page.