Claiming Lawful Deductions on Your Sales Tax Return

The mysterious lawful deduction line, what is, what can be claimed there, would it flag an audit? About half of FDOR couldn’t answer this one for you without doing some research themselves; there are basically three categories a lawful deduction can fall into:

  1. You refunded tax to a customer
  2. You paid tax on items that you are selling (or incorporating into items you are selling)
  3. Enterprise zone jobs credits (but kiss that credit goodbye in 2016)
  4. ‘Any other deductions allowed by law’ (very vague isn’t it?)

Let’s go into a little detail with each one:

You refunded tax to a customer

Customer comes in, says this item sucks and they want their money back. So you refund them the amount of the item plus any tax that was collected. The tax amount you refunded to your customer can be entered on your lawful deduction (line 6 for DR-15 returns and line 5 for DR-15EZ returns).

You paid tax on items that you are selling (or incorporating into items you are selling)

Between rushing the kids out for school, packing your orders in your trunk and catching the family dog that managed to escape from the backyard – you realize you forgot to grab your resale certificate and will have to pay tax on all the items you intend to resale. Don’t panic, any tax that you are charged you can claim as a deduction on your lawful deduction line.

Enterprise zone jobs credits

Actually folks, this credit expired on 12/31/2015; you can read more about the expiration here L. So if you’ve never claimed it in the past – you can’t claim it as of the date of this post. And if you have claimed it in the past, then you already know how to claim it and there’s no need for me to explain it – so moving on . . .

‘Any other deductions allowed by law’

I’ve never seen this line used for anything outside of the three categories discussed above, except for a few occasions dealing with taxable subleases. If you sublease, then you can claim tax paid to your landlord for the area you are subleasing as a deduction. This applies only to the area you are subleasing and you will have to prorate the amount to calculate the deduction. You can find out more about the taxation of subleases here under 12A-1.070(8), F.A.C. Outside of those, there aren’t too many more examples about ‘any other deductions allowed by law’ and because of this I would recommend you receive something in writing from FDOR (make sure it’s something legally binding from FDOR’s Technical and Dispute Resolution Section) to clarify ‘any other deduction allowed be law’.

*Note: The lawful deduction amount cannot exceed the amount of tax collected; any remaining balances will have to roll forward to your next return, and so on and so on until you’ve exhausted the deduction. And will this flag an audit? Low amounts definitely not and higher amounts I’ve heard yes and no. If you have a high lawful deduction, you may want to just request a refund and you can read more about requesting refunds here*

If I Have No Tax Due, Do I Still Have To File A Return?

Yep, you’re still gonna have to give up a few minutes of your life that you will not get back to write a zero on a sheet of paper to mail off or type 0 on an online form to submit, and that goes for any type of return (Sales and Use Tax, Corporate Income Tax, Reemployment Tax, Insurance Premium Tax, Documentary Stamp Tax, Wireless E911 Fee, etc.). I know, I know – waste of resources of time but it is what it is.

 

Corporate Estimated Tax Broken Down:

Required Filers: Corporations owing more than $2,500 in Florida corporate income tax for the year.

Due Dates: Estimated tax payments are paid in installments and are due on or before (but electronic payments are to be initiated on or before the business day prior to the due date with the debit date being by the due date):

1st installment payment is due the last day of the 4th month of the corporation’s fiscal year end

2nd installment payment is due the last day of the 6th month of the corporation’s fiscal year end

3rd installment payment is due the last day of the 9th month of the corporation’s fiscal year end

4th installment payment is due the last day of the corporation’s fiscal year end

Calculation: (Estimated amount of tax due for corporation’s current tax year) x (0.90) x (0.25) = the minimum amount of each installment payment

Form to use: F-1120ES (available to file online or paper)

Calculations of Penalty and Interest for not paying or underpaying:

Penalty: (Installment amount subject to penalty) x (# of Days Late/365 or 366 for leap year) x (.12) = Penalty Due

Interest: (Installment amount subject to penalty) x (# of Days Late/365 or 366 for leap year) x (Floating Interest Rate) = Interest Due

Form to use to pay for penalty and interest for not submitting or underpaying estimated taxes: F-2220 (available to file online or paper)

Special Note: The F-1120ES say to pay four equal installments of the expected tax for the year but FDOR won’t penalize you if you pay in at least 90% of the expected tax for the year in four equal installments (See Chapter 220.34(2)(d), F.S.)