MEMBERS

AGENDA FLORIDA DEPARTMENT OF REVENUE Meeting Material Available on the web at:

MEMBERS Governor Rick Scott Attorney General Pam Bondi Chief Financial Officer Jeff Atwater Commissioner Adam H. Putnam

October 25, 2016

Contacts:

Debra J. Longman Director of Legislative and Cabinet Services (850) 617-8324

MaryAnn Murphy, Executive Asst. II (850) 717-7138

9:00 A.M. LL-03, The Capitol Tallahassee, Florida

ITEM

SUBJECT

RECOMMENDATION

1. Respectfully request approval of and authority to publish Notices of Proposed Rule in the Florida Administrative Register for rules relating to General Tax Administration. The proposed amendments revise forms to reflect statutory changes enacted by the 2016 Legislature, update annual tax rates, and clarify forms to improve readability.

(ATTACHMENT 1)

RECOMMEND APPROVAL

ATTACHMENT 1

Executive Director

Leon M. Biegalski

October 25, 2016

MEMORANDUM

TO:

The Honorable Rick Scott, Governor

Attention: Kristin Olson, Deputy Chief of Staff

Amanda Carey, Cabinet Aide

The Honorable Jeff Atwater, Chief Financial Officer Attention: Robert Tornillo, Director of Cabinet Affairs

Stephanie Leeds, Deputy Director of Cabinet Affairs Kimberly Renspie, Cabinet and Legislative Analyst

The Honorable Pam Bondi, Attorney General Attention: Kent Perez, Associate Deputy Attorney General

Rob Johnson, Director of Legislative and Cabinet Affairs Erin Sumpter, Deputy Director of Cabinet Affairs Andrew Fay, Special Counsel

The Honorable Adam Putnam, Commissioner of Agriculture and Consumer Services

Attention: Brooke McKnight, Director of Cabinet Affairs Jessica Field, Deputy Cabinet Affairs Director

THRU:

Leon Biegalski, Executive Director

FROM:

Debbie Longman, Director, Legislative and Cabinet Services

SUBJECT: Requesting Approval to Hold Public Hearings on Proposed Rules __________________________________________________________________________

Statement of Sections 120.54(3)(b) and 120.541, F.S. Impact: No impact. The Department has reviewed the proposed rules for compliance with Sections 120.54(3)(b) and 120.541, F.S. The proposed rules will not likely have an adverse impact on small business, small counties, or small cities, and they are not likely to have an increased regulatory cost in excess of $200,000 within 1 year. Additionally, the proposed rules are not likely to have an adverse impact or increased regulatory costs in excess of $1,000,000 within 5 years.

Child Support ? Ann Coffin, Director General Tax Administration ? Maria Johnson, Director Property Tax Oversight ? Dr. Maurice Gogarty, Director Information Services ? Damu Kuttikrishnan, Director

Florida Department of Revenue

Tallahassee, Florida 32399-0100

Memorandum October 25, 2016 Page 2

What is the Department requesting? Section 120.54(3)(a), F.S., requires the Department to obtain Cabinet approval to hold public hearings for the development of proposed rules. The Department therefore requests approval to publish a Notice of Proposed Rule in the Florida Administrative Register for each of the following proposed rules.

Legislative Changes

Why are the proposed rules necessary? These rule changes are necessary to incorporate statutory changes made by the 2016 Legislature as provided below.

What do the proposed rules do?

Veterans' Organizations, Sale of Food and Beverages, Rule 12A-1.0115, F.A.C.: the proposed changes incorporate the new sales tax exemption provided in Section 212.08(7)(n), F.S., by Section 12 of Chapter 2016-220, L.O.F. The statutory provision permits qualified veterans' organizations to sell food and drink exempt from sales tax to members of qualified veterans' organizations if the sales are in connection with the customary activities of the organization.

Postharvest Machinery & Equipment, Sales Tax Exemption, Rule 12A-1.087, F.A.C.: the proposed changes add guidance on the new sales tax exemption for certain postharvest machinery and equipment provided in Section 212.08(7)(kkk), F.S., by Section 12 of Chapter 2016-220, L.O.F. The statutory exemption allows for the exempt sale of certain postharvest machinery and equipment to qualified businesses.

Secondhand Dealers, Rule 12A-17.003, F.A.C.: the proposed changes implement Chapter 2016059, L.O.F., which modified provisions related to secondhand dealers. The law change added a kiosk option, and clarified registration and holding requirements for dealers. Rule changes update registration information to accommodate these new provisions.

Aviation Fuel for Air Carriers, Rule 12B-5.300, F.A.C.: the proposed changes incorporate revisions made to the fuel tax exemption provided in Section 206.9825, F.S., by Section 6 of Chapter 2016-220, L.O.F. The statutory provision permits air carriers to purchase aviation fuel exempt from tax if they meet certain specified requirements.

Corporate Income Tax, Rules 12C-1.013, 1.0222, 1.034, and 1.051, F.A.C.: the proposed changes incorporate revisions made to Chapter 220, F.S., by Sections 13 through 19 of Chapter 2016-220, L.O.F. These changes:

Modify how "adjusted federal income" is defined and calculated for Florida corporate income tax;

Conform the timing of filing returns, making payments, and filing declarations to federal provisions; and

Remove obsolete provisions related to earlier tax years.

Memorandum October 25, 2016 Page 3

Were comments received from external parties? No. A rule workshop was scheduled to be held on September 21, 2016, if requested in writing. No request was received and no workshop was held. No comments were received by the Department.

Form Updates

Why are the proposed rules necessary? These rule changes are necessary to incorporate statutory revisions made by the 2016 Legislature, to modify annual tax rates, and to incorporate changes that will make the forms easier to use.

What do the proposed rules do?

This rulemaking will adopt legislative and administrative changes to 25 forms used by the Department in the administration of the following taxes, fees, and surcharges (chronological by rule chapter):

Administrative Forms ? 1 form (Rule 12-24.011, F.A.C.) Sales and Use Tax ? 6 forms (Rule 12A-1.097, F.A.C.) Motor Vehicle Warranty Fee ? 1 Form (Rule 12A-13.002, F.A.C.) Secondhand Dealers ? 2 forms (Rule 12A-17.005, F.A.C.) Communications Services Tax ? 3 forms (1 of these forms was adopted via emergency rule and is included herein to make the form permanent) (Rule 12A-19.100, F.A.C.) Fuel and Pollutant Taxes ? 1 form (Rule 12B-5.150, F.A.C.) Gross Receipts Tax ? 1 form (Rule 12B-6.005, F.A.C.) Insurance Premium Taxes, Fees, and Surcharges ? 3 forms (Rule 12B-8.003, F.A.C.) Corporate Income Tax ? 7 forms (Rule 12C-1.051, F.A.C.)

Were comments received from external parties? No. A rule workshop was scheduled to be held on September 21, 2016, if requested in writing. No request was received and no workshop was held. No comments were received by the Department.

For each rule, attached are copies of: ? Summary of the proposed rule, which includes: o Statements of facts and circumstances justifying the rule; o Federal comparison statement; and o Summary of the workshop ? Rule text

STATE OF FLORIDA DEPARTMENT OF REVENUE CHAPTER 12-24, FLORIDA ADMINISTRATIVE CODE PAYMENT OF TAXES AND SUBMISSION OF RETURNS BY ELECTRONIC MEANS; TAXPAYER RECORDKEEPING AND RETENTION REQUIREMENTS

AMENDING RULE 12-24.011

SUMMARY OF PROPOSED RULE The proposed amendments modify an incorporated form to allow for additional reporting categories. The specific changes to Form DR-655 (Tax Type/Tax Type Code ? Florida eServices), incorporated by reference in Rule 12-24.011, F.A.C. (Public Use Forms), are to add two new types of taxes which are now being collected on behalf of the Department of Business and Professional Regulation. The form now provides tax type coding information necessary to file returns for alcoholic beverages and tobacco taxes for direct wine shipments and passenger vessels.

FACTS AND CIRCUMSTANCES JUSTIFYING PROPOSED RULE The proposed amendments to Rule 12-24.011, F.A.C., adopt, by reference, changes to a form currently used to report taxes collected by the Department on behalf of the Department of Business and Professional Regulation. The changes are the addition of two new tax categories, which are necessary for accurate reporting of alcoholic beverages and tobacco taxes for direct wine shipments and passenger vessels.

1

FEDERAL COMPARISON STATEMENT The provisions contained in these rules do not conflict with comparable federal laws, policies, or standards.

SUMMARY OF RULE DEVELOPMENT WORKSHOP SEPTEMBER 21, 2016

A Notice of Proposed Rule Development was published in the Florida Administrative Register on September 7, 2016 (Vol. 42, No. 174, p. 3937), to advise the public of the proposed changes to Rule 12-24.011, F.A.C. (Public Use Forms), and to provide that, if requested in writing, a rule development workshop would be held on September 21, 2016. No request was received by the Department and no workshop was held. No written comments were received by the Department.

2

NOTICE OF PROPOSED RULE DEPARTMENT OF REVENUE PAYMENT OF TAXES AND SUBMISSION OF RETURNS BY ELECTRONIC MEANS; TAXPAYER RECORDKEEPING AND RETENTION REQUIREMENTS RULE NO: RULE TITLE: 12-24.011 Public Use Forms. PURPOSE AND EFFECT: The changes to Form DR-655 (Tax Type/Tax Type Code ? Florida eServices), incorporated by reference in Rule 12-24.011, F.A.C., are to add two new types of taxes which are now being collected on behalf of the Department of Business and Professional Regulation. The form now provides tax type coding information necessary to file returns for alcoholic beverages and tobacco taxes for direct wine shipments and passenger vessels. SUMMARY: The proposed amendments modify an incorporated form to allow for additional reporting categories. SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION: The Agency has determined that these rules will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rules. A Statement of Estimated Regulatory Cost has not been prepared by the agency. The Agency has determined that the proposed rules are not expected to require legislative ratification based on the Statement of Estimated Regulatory Cost or if no Statement of Estimated Regulatory Cost is required, the information expressly relied upon and described herein: 1) no requirement for the Statement of Economic Regulatory Costs (SERC) was triggered under Section 120.541(1), F.S.; and 2) based on past experiences regarding the procedures for processing written protests of

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