HCBA Lawyer Magazine Vol. 29, No. 2 | Page 46

tenants Can reduCe sales taX With targeted donations
Real Property Probate & Trust Section
Chairs: Kristin Morris – Shutts & Bowen & Elaine McGinnis – Law Office of Elaine McGinnis, P.A.
tenants can receive up to
a dollar-for-dollar credit
against the state sales tax
that would otherwise be
A
s of October 1, 2018,
Florida businesses
that lease commercial
real property in
Florida may apply to the Florida
Department of Revenue to receive
a tax credit on the sales tax that
is customarily paid by tenants on
commercial leases. Tenants can
receive up to a dollar-for-dollar
credit against the state sales tax
that would otherwise be collected
by the landlord and remitted to
the Department. The credit
would be based upon the amount
of money donated to specific
nonprofit charitable organizations 1
that offer educational scholarships
in Florida under the “Florida
Sales Tax Credit Scholarship
Program,” codified as Section
212.099, Florida Statutes (2018).
The state tax credit is equal
to 100 percent of the “eligible
contributions” 2 made to a
nonprofit scholarship funding
organization (SFO) that is part
of the Gardiner Scholarship
Program or the Florida Tax Credit
Scholarship Program, as defined
in Section 1002.395(2)(f), Florida
Statutes (2018).
All tenants are eligible, but
they must apply to the Department
of Revenue to reserve tax credits
because they are approved on
a first-come, first-served basis.
The application requires tenants
to provide the following:
44
collected by the landlord.
© Can Stock Photo / designer491
• fiscal year of the contribution;
• name of the SFO;
• contribution/corresponding
credit amount;
• address of the property
subject to tax; and
• federal EIN of landlord.
If the Department approves
the application, it must provide
a copy of its approval letter to
the tenant and the SFO. When the
SFO receives eligible contributions,
it must provide a separate certificate
of contribution to tenants, which
must include the following:
• tenant’s name;
• tenant’s federal EIN;
• contribution date and amount;
• name of SFO; and
• landlord’s federal EIN.
Tenants must deliver the
Department’s approval letter
and the SFO’s certificate to
their landlords, and upon receipt,
landlords must reduce the
commercial rent tax collected
by the amount of the eligible
contributions indicated on the
Certificate. The reduction may not
exceed the amount of the approved
tax credit or the amount of tax
otherwise collected by the landlord.
If tenants are unable to use all of
the tax credits in a particular fiscal
year, they may carry forward any
unused credit for up to 10 years.
Tenants may not transfer their
tax credits or carry-forwards to
another entity unless they intend to
convey or transfer effectively all of
their business’s assets, together with
their interests in the commercial
lease that is the subject of the tax
credit. Tenants must be mindful
that no credits are available for
local or county discretionary sales
surtaxes and, therefore, must
continue remitting this portion
of tax on rent to their landlords.
A “charitable organization” must
be a state university or an independent
college/university that is eligible to
participate in the William L. Boyd, IV,
Florida Resident Access Grant Program.
See §§ 1002.385 and 1002.395, Fla. Stat.
2 An “eligible
contribution”
is a monetary
contribution from
a tenant to a SFO.
It is important to
note that tenants
are not able to
designate a specific
student as the
recipient of the
eligible contribution.
1
Authors:
Josh Podolsky
and Derek Larsen-
Chaney – Phelps
Dunbar, LLP
NOV - DEC 2018
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HCBA LAWYER