Florida – Temporary Manufacturing Exemption Passed by Both Houses

SALT Report 2450 – Both Houses of the Florida State Legislature passed a bill that provides a temporary sales and use tax exemption for certain manufacturing businesses. Specifically, the Bill provides an exemption for industrial machinery and equipment when purchased by a qualified manufacturing business for the manufacture, processing, compounding, or production of tangible personal property for sale.

An eligible manufacturing business is defined in the Bill as any business whose primary business activity at the location where the industrial machinery and equipment will be located is one of the industries named in NAICS codes 31, 32, or 33.

Qualified industrial machinery and equipment are defined as tangible personal property or other property that has a depreciable life of 3 years or more and is an integral part of the manufacturing, processing, compounding, or production of tangible personal property for sale.

However, a building or other structure will not qualify as industrial machinery and equipment unless the building or structure is so closely related to the industrial machinery and equipment that it houses that the building or structure would be expected to be replaced if the machinery and equipment were replaced.

Additionally, heating and air conditioning systems do not qualify as industrial machinery and equipment unless the sole purpose for their installation is to meet certain requirements related to the production process, even if the system provides incidental benefits to the structure or employees.

Lastly, if at the time of purchase the purchaser provides the seller with a signed exemption certificate certifying that the purchaser is entitled to the exemption, the seller will be relieved of the responsibility of collecting tax on the sale of qualified items. If the purchaser misrepresents its entitlement to the exemption, the Department will hold the purchaser solely responsible for the unpaid tax.

Once approved by the Governor, the exemption provided in House Bill 7007 would be effective April 30, 2014 and would expire on April 30, 2017.

For Further Information

Florida State Legislature – House Bill 7007