When a Florida dealer delivers a car to an out-of-state customer in Florida, the sale may be eligible for a partial exemption on Florida’s 6% sales tax rate. Our state allows for a partial exemption on the rate, depending on the customer’s home state tax rate. (Be sure you are using the correct Florida Tax Information Publication (TIP), dated 1/11/19.)
If the purchase is eligible for a partial exemption, the sales tax rate listed on the TIP’s chart for the state of which the purchaser is a resident is the amount of tax a dealer should charge the purchaser (unless that rate exceeds the Florida 6% tax rate, in which case the rate would be 6). As noted in the TIP, because the sale takes place in Florida, the tax collected is to be remitted to the Florida Department of Revenue (DOR).
To be eligible for the lower tax rate, the purchaser must give the dealer a completed, notarized Affidavit for Partial Exemption of Motor Vehicle Sold for Licensing in Another State (Form DR-123). If the customer fills a DR-123 correctly listing the “Sales Tax Rate” in the TIP, this is this amount that should be collected/remitted to the Florida DOR. The dealer should keep this in their files for 3 years.
- Example #1: For Alabama residents, a Florida dealer would fill out the DR-123 form and indicate/remit 2% sales tax to the Florida DOR, which the customer would get credit for in Alabama.
- Example #2: For California residents, a Florida dealer would fill out the DR-123 form and indicate 6% sales tax. Why? Because, even though California has a 7.25% sales tax, Florida dealers are only allowed to charge 6% to those vehicles sold within the state. And even though you’re charging the state rate, the dealer still must receive a completed DR-123.
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