Florida Administrative Code › 12 - DEPARTMENT OF REVENUE › 12A - Sales and Use Tax › Chapter 12A-1 - SALES AND USE TAX › Section 12A-1.043 - Manufacturing

Current through Reg. 50, No. 138; July 16, 2024
(1)
(a) Any
				person who manufactures, produces, compounds, processes, or fabricates in any
				manner an article of tangible personal property for his own use shall pay a tax
				upon the cost of the property manufactured, produced, compounded, processed, or
				fabricated without any deduction therefrom on account of the cost of material
				used, labor or service costs, or transportation charges.
(b) Elements of cost will include the
				following materials, labor, service, or transportation costs that are
				attributable to manufacturing, producing, compounding, processing, or
				fabricating an article of tangible personal property for one's own use and
				which are properly chargeable to the cost of the product under generally
				accepted cost accounting standards.
1.
				Material costs include the following:
a. All
				direct materials and related freight costs that are physically observable as
				being identified to the finished tangible personal property, that are consumed
				in producing the property, or that become a component or ingredient of the
				finished property. See paragraphs (c) and (d) below, for calculating the tax on
				the cost of the finished product when sales tax has or has not been paid on
				direct materials.
b. Material
				handling and warehousing of direct materials and goods in process.
c. Manufacturer's excise taxes on
				materials.
2. Labor costs
				include the following:
a. The total direct
				labor costs for employees or contract labor that are allocable to the
				production of the finished property, including the entire amount of payroll
				burden, which includes but is not limited to overtime premium, vacation and
				holiday pay, sick leave pay, shift differential, payroll taxes, payments to a
				supplemental unemployment benefit plan, and employee fringe benefits.
b. Compensation of officers, to the extent it
				is allocated to production and not administrative functions.
c. Costs of service, engineering, design or
				other support employees allocated to production.
3. Service costs include the costs of
				non-employee services that are allocated to the production of the tangible
				personal property, such as engineering, design or similar consulting or
				professional services.
(c) Direct materials on which the tax has
				been paid shall not be included when computing the tax on the cost of items of
				tangible personal property manufactured, produced, compounded, processed, or
				fabricated.
(d) Persons who
				manufacture, produce, compound, process, or fabricate items of tangible
				personal property for resale or for their own use or consumption may purchase
				direct materials tax exempt but shall include the cost of the direct materials
				when computing tax on the cost of the items so manufactured, produced,
				compounded, processed, or fabricated for such persons' own use or consumption.
				If tax has been paid on the direct materials, the method described in paragraph
				(c) should be used when computing the tax on the cost of the items so
				manufactured, produced, compounded, processed, or fabricated.
(e)
1. To
				purchase direct materials tax exempt, dealers registered with the Department to
				sell tangible personal property may extend a copy of their Annual Resale
				Certificate (Form DR-13) to the selling dealer in lieu of paying tax at the
				time of purchase. The cost of such materials is subject to tax on the cost of
				the items so manufactured, produced, compounded, processed, or fabricated, as
				provided in paragraph (d).
2.
				Persons who do not sell tangible personal property are not required to register
				with the Department as a dealer. However, to purchase direct materials tax
				exempt, such persons may extend an Exemption Certificate, as provided in Rule
				12A-1.038, F.A.C., to the
				selling dealer in lieu of paying tax at the time of purchase. The cost of such
				materials is subject to tax on the cost of the items so manufactured, produced,
				compounded, processed, or fabricated, as provided in paragraph
				(d).
(f) The tax is due
				at the time the article of tangible personal property is manufactured,
				produced, compounded, processed, or fabricated for use or consumption, and such
				tax shall be remitted to the Department of Revenue in accordance with Rule
				12A-1.056,
				F.A.C.