Important Note: Please use this information as guidance only, contact a certified CPA to discuss the information contained and follow your accountants advice.
Many Design Manager Clients have asked Design Manager Technical Support for help in correctly applying the local discretionary sales tax or surtax that is imposed by several Florida counties. The local discretionary sales tax is a tax imposed on the first $5,000.00 of each item sold that comprises a working unit. Assembled window treatments, for example, comprise a single working unit, but 5 sets of the assembled window treatment must be subjected to the surtax separately.
To view a copy of the letter of technical advice sent to Design Manager by the state of Florida - see the attached file below.
Using the information contained in this letter, the Design Manager Sales Tax Window for Palm Beach in Florida would be setup as follows:
Note that some merchandise such as tile on a floor may be considered real property improvements and may not be taxable. Therefore, the designer must be aware of these rules when determining the setting of the taxable check box and the item quantity when entering each item/component. In some cases the quantity may need to be left blank and placed into the item description so that Design Manager will treat the items as one unit for tax purposes (i.e. 200 floor tiles).
Notes about Freight, Design Fee, Installation, Labor, and Time:
Installation and Labor are generally not taxable. Therefore, Time Billing (the Designers labor) is generally not taxable (not that some types of time billing may be taxable as a service). If Design Fee comprises the mark-up or a percentage of an item for the purposed of comprising the designers profit then it is taxable. Design Fee that refers to labor is not. Freight and Delivery is considered taxable and can be considered part of the total taxable amount of a single item so long as the freight or delivery date was designated on the vendor PO or invoice. Separate freight invoices received for items should be entered as separate line items in Design Manager so that the surtax applies to the price separately.
Again, it is important that your accountant has the last word in deciding how you should tax your clients as they are the ones representing you in an audit.
Here are some helpful links about rates (as of July 20th, 2011)