Florida Sales and Use Tax on Motor Vehicles

Florida’s sales and use tax laws on motor vehicles are extensive and nuanced, impacting everyone from individual buyers to dealerships and leasing companies. Whether you’re purchasing, leasing, or trading in a vehicle, understanding the intricacies of these tax rules is essential for ensuring compliance and avoiding unnecessary penalties. This guide explores the key aspects of Florida’s motor vehicle tax regulations, including taxable transactions, exemptions, discretionary surtax rules, and filing requirements.

What Is a Motor Vehicle Under Florida Law?

Florida defines a motor vehicle as any automobile, motorcycle, truck, trailer, semi-trailer, truck tractor, or similar vehicle designed for operation on public roads. These vehicles are primarily used to transport persons or property and are powered by means other than human muscle. The classification also extends to:

• Recreational Vehicles (RVs): This includes travel trailers, camping trailers, motorhomes, private motor coaches, van conversions, park trailers, and fifth-wheel trailers.
• Other Vehicles: Any vehicle that requires titling, licensing, or registration in Florida falls under this definition.

Who Is Considered a Motor Vehicle Dealer?

In Florida, a motor vehicle dealer is defined as any entity registered with the Florida Department of Revenue (DOR) to sell motor vehicles. Dealers play a crucial role in collecting and remitting sales and use tax on behalf of buyers.

What Transactions Are Taxable?

Florida imposes a sales and use tax, along with any applicable discretionary surtax, on most transactions involving motor vehicles. The tax applies to both new and used vehicles that are sold, leased, delivered, imported, or used within the state. The taxable amount includes:

• Sales Price: The total purchase price of the motor vehicle.
• Accessories and Add-Ons: Any additional accessories or equipment included in the sale.
• Dealer-Imposed Fees: Charges for preparation, settlement, or closing, as well as freight, handling, or delivery costs.
• Commissions: Fees paid to brokers or intermediaries involved in the transaction.
• Other Dealer Expenses: Any costs the dealer requires the purchaser to pay.

Important Exception: Charges required by state law, such as fees for titling, licensing, or recording a lien, are exempt from sales tax.

Trade-In Allowance

Florida provides a trade-in allowance that reduces the taxable sales price of a motor vehicle when tangible personal property is traded in as part of the transaction. Here are the specifics:

• Dealer Transactions: Registered motor vehicle dealers can deduct the value of the trade-in during a single transaction.
• Private Sales: In private transactions, the trade-in must involve an aircraft, boat, motor vehicle, or mobile home to qualify for the allowance.

Discretionary Sales Surtax

Most Florida counties impose a local discretionary sales surtax, which applies to the first $5,000 of a motor vehicle’s purchase price. The surtax is determined by the purchaser’s address as it appears on the vehicle’s title or registration.

To find the surtax rate for a specific county, refer to Form DR-15DSS, Discretionary Sales Surtax Information. 

Credit for Taxes Paid to Other States

Florida provides a credit for sales or use taxes paid to other U.S. states, territories, or the District of Columbia. This credit reduces the amount of tax owed to Florida upon registering the vehicle in the state.

Example: If a vehicle is purchased in a state with a 4% sales tax, the purchaser must pay an additional 2% (plus any applicable surtax) when registering the vehicle in Florida to meet the state’s 6% tax rate.

Exemptions from Sales and Use Tax

Certain motor vehicle transactions are exempt from sales and use tax. Dealers must maintain proper documentation to support these exemptions. Common exemptions include:

1. Dealer Purchases for Resale or Lease: Vehicles bought by Florida-registered motor vehicle dealers for resale or lease are exempt.
2. Out-of-State Deliveries: Sales where the dealer delivers the vehicle to a purchaser outside of Florida.
3. Freight Forwarders: Transactions where the dealer ships the vehicle to a common carrier, licensed exporter, or freight forwarder for delivery outside Florida.
4. Exempt Entities: Vehicles purchased by entities with a valid Florida Consumer’s Certificate of Exemption (Form DR-14) are exempt if the purchase is made with the entity’s funds and the vehicle is titled in the entity’s name.

Partial Exemptions:

• Veterans Administration Payments: Portions of a vehicle’s price paid directly by the Veterans Administration are exempt, while any amount paid by the purchaser is taxable.
• Sales to Nonresidents: When a vehicle is sold to a resident of another state with a sales tax rate lower than Florida’s 6%, the purchaser’s home state tax rate is applied. To qualify, purchasers must:
  
  • Provide a completed, notarized Form DR-123.
  • License the vehicle in their home state within 45 days.

Reporting Partial Exemptions

For dealers, reporting sales to nonresidents who qualify for partial exemptions involves calculating the taxable and exempt portions of the sales price. This process is outlined in the Sales and Use Tax Return (Form DR-15) and involves:

1. Determining the tax rate in the purchaser’s home state.
2. Calculating the taxable amount based on the home state rate.
3. Reporting the taxable and exempt amounts on the appropriate lines of Form DR-15.

Example: A vehicle sold for $14,356 to a resident of Alabama (with a 2% sales tax rate) would have $4,785.33 reported as taxable and $9,570.67 reported as exempt. The tax due would be $287.12.

Loaned Vehicles

Motor vehicle dealers frequently loan vehicles at no charge under specific conditions. These loans are generally tax-exempt when:

• The vehicle is loaned as a temporary replacement during repairs or service.
• The vehicle is loaned to a high school for driver education programs.
• The vehicle is used for demonstration purposes and has a dealer’s license plate.

Other vehicle loans may be subject to use tax and surtax based on the IRS’s Automobile Annual Lease Value Table.

Dealer and Leasing Company Registration Requirements

If you sell or lease motor vehicles in Florida, you must register with the Department of Revenue to collect and remit sales and use tax. This requirement applies to:

• Dealers selling more than two vehicles within any 12-month period.
• Leasing companies that lease vehicles to Florida residents.
• Out-of-state leasing companies with customers in Florida.

Registration can be completed online or by submitting a Florida Business Tax Application (Form DR-1). Upon approval, registrants receive:

• Certificate of Registration (Form DR-11).
• Florida Annual Resale Certificate for Sales Tax (Form DR-13).

Filing and Payment Deadlines

Tax returns and payments are due on the first day of the month following the reporting period and late after the 20th. If the 20th falls on a weekend or holiday, the deadline extends to the next business day.

• Dealers must file returns even if no tax is due for the period.
• Electronic filing is required for businesses remitting $5,000 or more in sales tax annually.

Late Penalties:

• A minimum penalty of $50 or 10% of the tax owed applies to late filings.
• Interest is charged on overdue payments at a floating rate.