Florida Administrative Code › 12 - DEPARTMENT OF REVENUE › 12A - Sales and Use Tax › Chapter 12A-15 - DISCRETIONARY SALES SURTAX › Section 12A-15.008 - Construction Contractors Who Repair, Alter, Improve, and Construct Real Property; Refund of Surtax

Current through Reg. 50, No. 138; July 16, 2024
(1) LUMP SUM, COST
				PLUS, FIXED FEE, OR GUARANTEED PRICE CONTRACTS.
(a) Contractors or subcontractors purchasing
				tangible personal property from a dealer for use in a lump sum, cost plus,
				fixed fee, guaranteed price, or similar type of contract must pay the surtax to
				the selling dealer, when the property is delivered to a location within a
				county imposing the surtax. The surtax to be paid to the selling dealer is
				based on the rate imposed in the county where delivery of the tangible personal
				property is made. When the tangible personal property is delivered to a
				location within a county not imposing the surtax, no surtax is due.
(b) A contractor or subcontractor who is not
				required to be a registered dealer and who owes use tax on taxable items of
				tangible personal property purchased out-of-state, in another country, or
				through a remote sale for use in a lump sum, cost plus, fixed fee, guaranteed
				price, or similar type of contract is not required to pay surtax when paying
				the applicable use tax to the Department.
(c)
1.
				Contractors and subcontractors are required to pay use tax on the fabricated
				cost of items of tangible personal property they manufacture, produce,
				compound, process, or fabricate for their own use in performing contracts. When
				the contractor or subcontractor owes use tax on the fabricated cost of items
				manufactured, produced, compounded, processed, or fabricated for use at a
				manufacturing plant site located within a surtax county, the contractor or
				subcontractor is required to pay surtax on such fabrication cost. Labor
				incurred at the job site where the item will be incorporated into a real
				property improvement or transportation from the plant where an item was
				fabricated to the job site is not subject to tax or surtax. See Rule
				12A-1.043, F.A.C., for
				determining fabrication cost.
2.
				Contractors who pay sales tax to vendors for direct materials that are
				incorporated into fabricated items of tangible personal property are not
				required to pay use tax on the cost of those materials. Contractors who are
				registered as dealers may elect either to pay sales tax to their vendors on
				direct materials or to extend a copy of their Annual Resale Certificate and
				accrue use tax when the materials are used for fabrication. If sales tax is
				paid on the purchase of direct materials at the time of purchase, the county of
				delivery determines whether surtax is due. If use tax is accrued at the time of
				fabrication of the items, the surtax must also be accrued when the fabrication
				occurs within a county imposing a surtax.
3. Contractors and subcontractors who are
				located within a county imposing a surtax, and who have elected and have been
				authorized by the Department to use an alternate tax calculation method, must
				compute the surtax on the appropriate percentage of the contract price at the
				same time and in the same manner in which use tax is computed.
4. The $5, 000 limitation is applicable to
				the fabricated cost when the written contract or agreement specifies the
				particular project for which the fabricated item of tangible personal property
				is to be used.
5. Example: A
				contractor operates a roofing tile manufacturing plant in a surtax county. The
				contractor sells roofing tiles, as well as uses roofing tiles in performing
				real property contracts. The contractor is a registered dealer and purchases
				raw materials tax exempt by extending a copy of the dealer's Annual Resale
				Certificate. The contractor enters a contract to furnish materials and install
				a tile roof for $15, 000. The direct materials cost is $5, 000 and the other
				taxable fabrication costs are $3, 000, for a total of $8, 000 on which use tax
				must be accrued. The contractor must accrue sales tax and surtax, because the
				fabrication occurs at the plant located within a surtax county. If roofing
				contractors were permitted to accrue use tax on 40 percent of the contract
				price, use tax would be due on $6, 000, because the fabrication occurred at the
				plant located within a surtax county. Whether the contractor computes use tax
				on $8, 000 actual cost or on $6, 000 on a percent of contract price basis,
				surtax only needs to be accrued on $5, 000, because the fabricated tangible
				personal property is identified to the specific
				contract.