Posted on January 05, 2019
As of January 1, 2019, there is a new rate change for some Florida areas in communication service tax for which Florida’s Department of Revenue issued a rate change. The total local Communication Service Tax (CST) rate for Marco Island has decreased to 3.9% where it was previously 5.22% which is a 1.32% decrease from the previous rate, a major area for communication service tax. A new 5.22% local tax will be imposed on Indiantown located in Martin County. This is a new rate for Indiantown, so they will have to adjust to an increase in communication service tax.
CST is a tax imposed on each sale of communication services in Florida. Some examples include television, streaming services like video and music, and mobile communications. Dealers will usually collect the tax from customers and pay the tax to the Department of Revenue. If no tax was collected, then the liability is on the customer to pay the tax as communications use-tax. This is a difficult thing when the customer is a homeowner who may not know about these rules.
Communications services are defined as “voice, data, audio, video, or any other information or signals, transmitted by any medium.” These can include cell phones as well as paid subscriptions like Netflix and Hulu.
Certain sales of communication services will be exempt. In these cases, dealers should not collect taxes and consumers should not accrue use-tax on certain exempt sales. These sales include: sales for resale made to proper businesses that have valid resale certificate documentation, sales or purchases of internet access, sales to federal agencies, religious and educational organizations, as well as sales to nursing homes or retired housing. For each customer that is exempt, the customer will need to provide proper documentation for the exemption, which may include written evidence for nonprofits and government agencies or even a valid Florida resale certificate for registered businesses.
Total local CST rates will change for municipalities or unincorporated land located within certain counties. Total local CST rates include the local rate imposed under the CST statute and any sales surtax that may be imposed under the sales and use tax statute. These counties include: Alachua, Broward, Collier, Hillsborough, Lee, Martin, Okaloosa, St Lucie, and Washington. Many of these rates will be increasing in January to a rate of 7.2% in Alachua County.
For more information of specific rates, refer to the Florida Department of Revenue Jurisdiction Database to access all the CST rates for your county and prepare your business on how it may be affected.
The new rates will be effective for all bills issued on or after January 1, 2019, regardless of the date that the service is rendered or transacted. These rates will stay in effect until further notice by the Department of Revenue. All dealers and customers who interact with these communication taxes need to be aware of the new rates and when they apply. Check your local bulletins and news articles to see if your county or business is going to be affected.
Tips for the Taxpayer
If you are a dealer in communications, be sure you update and record new CST rates and are charging the correct users. If you are a consumer, evaluate whether you are being charged appropriate rates and keep up to date with all guidelines with CST tax. Know when to accrue on use-tax, check all exemptions for proper documentation (Publication #10A19-08), and ensure your resale certificates for the state of Florida are up to date each year.
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Contributor: Michael Mech
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