How to Get Tax Exempt Status in Florida

Tax-exempt status is a designation that relieves certain organizations from paying specific taxes. In Florida, this status allows qualifying entities to retain more of their funds to support their core missions, which can enhance an organization’s ability to provide services. This exemption is not automatic and requires a formal application and approval process.

The scope of tax exemption in Florida primarily applies to sales and use tax, and in certain circumstances, corporate income tax. The process is distinct from federal tax exemption, meaning an organization must secure its state-level exemption separately from any determination made by the Internal Revenue Service (IRS).

Qualifying for Tax-Exempt Status in Florida

Eligibility for tax-exempt status in Florida is limited to organizations that serve a public good. These include entities organized for charitable, religious, educational, scientific, or literary purposes. The state also extends this privilege to specific organizations that contribute to cultural development or the good sportsmanship of minors. The nature of an organization’s primary activities is a determining factor in its qualification.

The most common exemption is from the Florida sales and use tax. This allows an entity to purchase or rent goods and services without paying the state sales tax, provided the purchases are for its nonprofit activities. For example, an educational institution could purchase textbooks and classroom supplies tax-free. This exemption provides a significant financial benefit by reducing operational expenses.

Florida also provides a potential exemption from its corporate income tax. Not-for-profit corporations that have obtained federal tax-exempt status under Section 501(c)(3) of the Internal Revenue Code are often not required to pay state income tax. This exemption has an exception for income from activities unrelated to the organization’s primary mission, known as unrelated business income. Such income is subject to Florida’s corporate income tax and must be reported using Form F-1120.

Property tax exemptions are also available to certain nonprofit organizations, but these are administered at the local level by county property appraisers. The requirements and application processes can vary between counties. Generally, the property must be owned by the nonprofit and used for its exempt purposes, and organizations must contact the property appraiser in the county where the property is located.

Required Information for a Florida Sales Tax Exemption

Before an organization can apply for a sales tax exemption in Florida, it must first secure its federal tax-exempt status from the IRS. The most common designation for this purpose is 501(c)(3), which is granted to charitable, religious, and educational organizations. Obtaining the official determination letter from the IRS is a mandatory prerequisite, as the Florida Department of Revenue will verify this status using the organization’s Federal Employer Identification Number (FEIN).

With the federal determination in hand, the next step is to gather the necessary organizational documents. These records provide evidence of the entity’s structure and purpose. Required documents include:

• Articles of incorporation as filed with the Florida Department of State
• The organization’s bylaws
• A detailed mission statement
• Financial statements for the most recent accounting period, such as a balance sheet and a statement of revenues and expenditures

The central document is the Florida Department of Revenue’s Form DR-5, the Application for Consumer’s Certificate of Exemption. This form must be downloaded from the department’s official website to ensure the most current version is used. The application requires specific information, including the organization’s legal name, mailing address, and FEIN.

Completing Form DR-5 involves transcribing details from your organizational and federal documents. You will need to provide the date of incorporation, the purpose of the organization, a description of its activities in Florida, and information about its officers or directors. It is important to fill out the application completely and accurately, as inconsistencies or missing information can lead to delays or rejection.

The Application Process for a Consumer’s Certificate of Exemption

Once Form DR-5 is fully completed and all supporting documents have been compiled, the organization can submit its application package to the Florida Department of Revenue. The primary method of submission is by mail to the specific address provided in the form’s instructions. It is advisable to send the package using a method that provides tracking and delivery confirmation.

After the application is mailed, the Department of Revenue reviews the submission. The processing time can range from a few weeks to several months, depending on the volume of applications. If the department requires additional information or clarification during its review, it will contact the organization. Responding to such requests promptly is important to avoid further delays.

Upon a successful review, the Florida Department of Revenue will issue a Consumer’s Certificate of Exemption, also known as Form DR-14. This certificate is the official document that proves the organization’s sales tax-exempt status. The certificate will include the organization’s name, its exemption number, and the effective and expiration dates of the exemption, and it will be sent by mail.

Using and Maintaining Your Sales Tax Exemption

To make a tax-exempt purchase, the organization must present a copy of its Consumer’s Certificate of Exemption to the vendor at the time of the transaction. The vendor is required to keep a record of the certificate for their own tax documentation. The exemption only applies to purchases made for the organization’s exempt purpose and paid for directly with the organization’s funds. Personal purchases made by employees or members of the organization are not eligible for the exemption, even if they are later reimbursed.

The Consumer’s Certificate of Exemption expires after five years, with the expiration date printed on the certificate. To maintain the exemption, the Florida Department of Revenue automatically reviews an organization’s eligibility using public information before the certificate’s expiration. If the organization continues to qualify, a new certificate is issued and mailed. The department will only contact an organization if more information is needed, meaning a renewal application is not typically required.