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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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We are a texas company but we have an office in florida that

Resolved Question:

We are a texas company but we have an office in florida that imports some components to build our products from china. The parts came into tampa florida port facility with a stated value of about $90,000. We later received a huge $9000 bill from the state of florida for 'use' tax on the incoming items? Is this correct??
Submitted: 10 months ago.
Category: Tax
Expert:  Lev replied 10 months ago.

Lev :

Hi and welcome to our site!
Let first understand the situation. Use tax is due on purchases made out of state and brought into Florida within six months of the purchase date.
Why Florida is asking you about the tax due? Mainly because they have information about imported goods - and do not have information where these goods are going. Because you did not report that goods are sold (and sales tax are collected) - taxing authorities assume that goods are used within Florida - and as such might be subject of use tax.
As states are short on revenue - the became more aggressive on their collection efforts - and your assessment letter is the result of that effort.
Because goods were transported out of Florida and used in a different state - you generally need to reply to their assessment letter that you disagree with the assessment and provide copies (do not send originals!) of supporting documents for your statement.
Generally - you need to tell that goods were not consumed in Florida - and because of that they are NOT subject of Florida use tax.

Lev :

If you do not feel comfortable - while not required - you may have a local CPA representing your company with Florida DOR and prepare a response letter for your company. So if FL DOR would have any further question - they will be addressed by a qualified professional.

Customer:

What if these are parts used in warranty repairs of our products? Does it matter if the customer is a florida resident?

Lev :

Yes - that is important - if parts are used in Florida - they are subject of Florida sales tax (if sold to customers) or use tax if used internally for business activities ( for warranty or other reasons).

Lev :

In case goods are partially used in Florida and partially transported to another state - your issue is more complicated. But you will owe the use tax ONLY on goods used in Florida - so you need to be very precised to account that amount.

Customer:

So if we use a part that cost $10 to repair a lock sold in Ohio what happens then?

Lev :

Then - you need to be clear - if the repair occurred in Florida - you will calculate the use tax on $10.
If the part was transported to Ohio - you need to provide supporting documents - and there will not be Florida taxes - but you might be subject of Ohio taxation.

Customer:

I see. That is useful - thank you.

Lev :

The main point - the place where the part is used - that physical place will determine - which law should be applied.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22749
Experience: Taxes, Immigration, Labor Relations
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