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Sales Tax: Are you paying all you should?

Today’s shaky economy challenges citizens to look for more ways to increase income and/or cut back on expenses, and the same goals are true for our state governments.

The Florida Department of Revenue (FDOR) has recently been conducting audits to ensure it’s receiving the correct amount of sales tax revenue. Sales tax (and the discretionary sales surtax imposed in some counties) is calculated on each taxable transaction, and the FDOR expects to be paid accordingly.

Calculating sales tax on whole dollar amounts is an easy task; however, calculating amounts when transactions fall between whole dollars is more complicated. To accurately determine tax rates in this situation, Florida uses a “bracket system.” This taxing system can cause the effective rate on total sales to fluctuate each month.

Consider the following example of ten sales:

Transaction

Amount

Sales Tax Due

(6%)

Effective Tax Rate Per Transaction

1

$2.35 $ .15

6.38 %

2

1.65 .10

6.06 %

3

.20 .02

10.00 %

4

1.55 .10

6.45 %

5

4.70 .29

6.17 %

6

9.40 .57

6.06 %

7

.35 .03

8.57 %

8

3.12 .19

6.09 %

9

.85 .06

7.06 %

10

1.08 .06

5.56 %

Total

25.25 1.57

6.22%

 

If you pay only 6% on the total, the FDOR loses 5¢. Multiply this loss by thousands of sales each month and you’ll see why sending an agent to audit your collections may be worth the effort.

To increase efficiency and collections, the FDOR implemented a new regulation, which began July 1, 2012, requiring all dealers to file and pay tax electronically to receive the collection allowance.

Online software aims to reduce errors and encourage timely payments (you can pay late, but you won’t receive the allowance if you do). If you don’t want your meager allowance, feel free to donate it to the Educational Enhancement Trust Fund as you file each return.

If you have questions about the new FDOR regulation or if you need help with an audit, let us know.

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