French Brown | Legislative Tax Updates

October 04, 2023   |   Brokerage

Tax lawyer French Brown joins the podcast to discuss updates within the 2023 Florida Legislature that affect tax exemptions, sales taxes, and other relevant topics.

In the latest episode of In Our Expert Opinion, the podcast explores some of the latest updates within the 2023 Florida Legislature. French Brown, a shareholder and Florida tax lawyer at Dean Mead, joins the episode to explain what’s new regarding agricultural sales tax exemptions, Florida’s sales tax rate on commercial rent, and much more. This episode delves into the intricate details of each of these updates, outlining how the 2023 Florida Legislature will impact various facets of the state’s economy and real estate market.

Below is an excerpt from the interview. Listen above for the full podcast.

How does the Florida Legislature affect agriculture? There's a number of sales tax exemptions for farmers and for those in the agricultural business - things like tractors, seed, and all sorts of various things. 

One new thing, that the legislature created an exemption for last year, was barbed wire and hog wire fencing. Think about cattle and other types of livestock that you would want to protect and contain in an area. Those items would be exempt from sales tax, but those exemptions are very narrowly construed.

Farmers and cattlemen were initially under the impression that the exemption might include other types of fencing that may not be specifically barbed wire or hog wire, but the Florida Department of Revenue said that barbed wire and hog wire are the only things that are exempt.

The 2023 legislature did what likely should have been done last year. They now include any permanent or temporary fencing used to specifically contain or process cattle. That's going to make an exemption for things like temporary panels, corrals, wooden fencing, and any of those things that are being used to specifically contain, or use in the processing of, cattle.

What other agricultural sales tax exemptions are available? There's probably about 12 or 15 different sales tax exemptions that farmers can take advantage of. The problem is that for most of those exemptions, the farmer would essentially have to sign an affidavit, give it to his vendor or merchant, and swear that they were going to be using the item for an agricultural purpose.

If the Department of Revenue found out that you used it for the wrong purpose, they would go after the farmer and not the business that sold it. That was a very cumbersome process.

In order to streamline that a bit, Florida decided to borrow something that farmers in Georgia have. In Georgia, they have what's called the GATE Card. Essentially, it's issued to farmers who can just provide that one card to their vendors and it covers all of their qualifying purchases.

Florida is now going to be instituting a new card - the TEAM Card. That should be going into effect on January 1, 2024 and will be administered by both the Department of Revenue and by the Department of Ag and Consumer Services.

Are there any updates with agricultural property taxes? Any farmer is going to be familiar with the Greenbelt Classification which lowers their property values, but those are the ad valorem property taxes that are based on the value of your property.

The other thing is special assessments for things like waste and fire. The 2023 legislature included another provision that's going to benefit farmers and individuals who have property that's deemed agricultural for property tax purposes. That will be a straight prohibition on those special assessments.

What is new with Florida’s business rent tax? Florida is the only state in the nation that has a sales tax on commercial leases. If you lease your property to an individual, and they are paying your property taxes, the Department of Revenue takes the position that you're also supposed to pay sales taxes on those property taxes.

In 2021, the state of Florida passed an online sales tax bill. Instead of us having to pay those taxes directly, our vendors would now collect it and send it to Florida. The legislature estimated that this change was going to increase Florida revenue collections.

As a result of the pandemic, Florida also had a huge drain on the unemployment system. One of the important things that the 2021 legislature did was essentially freeze unemployment compensation rates for employers.

The 2023 legislature decided to take the extra online sales tax money and refill the unemployment compensation trust fund, but they were not going to raise the unemployment taxes on employers. With the money after that, the legislature decided to slash the sales tax on commercial leases, or the business rent tax, as soon as that trust fund is rebuilt. The current projection is that the trust fund is going to be replenished next year. On August 1, 2024, that sales tax on commercial leases is going to be reduced at the state level down to 2%.

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