Florida: Sales Tax on Motor Vehicles Purchased By Snowbirds
- Sales Tax News
- Mar 24, 2014 | Gail Cole
Update, 7.7.2015: The Florida Department of Revenue has updated its tax information bulletin on this topic. It now contains a state tax rate chart that states whether or not Florida allows credit for taxes paid in each state. See the bulletin here.
Hundreds of thousands of snowbirds—the kind with second homes, not feathers—settle in Florida each winter. They flee the fierce winds and frigid temperatures of the north and they stay for up to six months at a stretch. Studies suggest they even settle in flocks, like the birds for which they’re named: Detroiters in Naples, Minnesotans on Sanibel Island, New Englanders in Sarasota.
The impact of snowbirds on Florida is huge, if difficult to pinpoint. They spend money, generating sales tax revenue. They own homes and contribute to property tax. Yet they also crowd roads and stress emergency medical services. Nonetheless, so long as winter continues and people have the means to escape it, snowbirds will head south seasonally along with their namesakes.
Thus the tax information publication recently issued by the Florida Department of Revenue: Motor Vehicles Sold in Florida to Residents of Another State.
Florida Statute Section 212.08(10) allows a partial exemption for motor vehicles purchased by out-of-state residents. According to the Department of Revenue:
“The tax imposed is the amount of sales tax that would be imposed by the purchaser’s home state if the vehicle were purchased in that state; however, the tax imposed must not exceed the Florida 6% tax rate.”
A snowbird’s home state doesn’t get the sales tax revenue for motor vehicles purchased in Florida, of course. ”The tax collected is Florida tax and must be paid to the Florida Department of Revenue.”
In order to qualify for the partial exemption, nonresident purchasers must complete Form DR-123, Affidavit for Partial Exemption of Motor Vehicle Sold for Licensing in Another State. The form declares a buyer’s intent to license the vehicle in the buyer’s home state within 45 days from the date of purchase. However, the buyer is not required to take the vehicle out-of-state.
Nonresident corporations and partnerships
The partial exemption described above does not apply to a nonresident corporation or partnership when:
- An officer of the corporation is a Florida resident;
- A stockholder who owns at least 10% of the corporation is a Florida resident; or
- A partner who has at least a 10% ownership in the partnership is a Florida resident.
However, the Department of Revenue notes that a partial exemption may be allowed “for corporations or partnerships if the vehicle is removed from Florida within 45 days after purchase and remains outside this state for a minimum of 180 days, regardless of the residency of the owners or stockholders of the purchasing entity.”
The states of Arkansas, Mississippi and West Virginia do not allow a credit for taxes paid to Florida. In other words, residents of those states must pay sales tax to Florida “at the rate imposed by their home state” on the purchase of a motor vehicle. When they license the vehicle in their home state, they’ll have to pay sales tax to that state, as well.
Motor vehicles purchased out-of-state and brought into Florida
When a vehicle is purchased outside of Florida and brought to the state for use within 6 months from the date of purchase, Florida sales tax may be due. Florida law “allows a credit to be given on tangible personal property brought into Florida where a like tax has been lawfully imposed and paid in another state.” If the tax paid is equal or greater to the amount due in Florida, no additional tax is due. If it’s less, the difference is due.
A vehicle purchased more than 6 months prior to being brought into Florida is presumed to not have been purchased for use in Florida. No Florida sales tax is due.