Host, Christine Karpinski:  Now what exactly is taxable? I know this is always a big question that people ask me. They are like: Are cleaning fees taxable? Are pet fees taxable? What about deposits? Do you want to explain that a little bit more?

Guest, Belinda Watson:  Yes, I will talk about that. First of all the actual rental fee, the transfer rental fee is subject to tax. Now, if the landlord, or the person who is handling the rental, decides to attach all those fees and make it a part of the rental and you can't differentiate the different charges, then the entire charge will be taxable as a transient rental, which means that you will have state sales surtax, the discretionary tax, and those tourist development taxes.

Now, if those items are separately stated, as in the cleaning fees separately stated, residential cleaning is not taxable. So if separately stated and it is optional charge for the tenant, the cleaning fee is not going to be taxable.

Christine:  Belinda, you are saying “separately stated.” That could cause a little bit of confusion. Like, when I rent one of my properties, let's just say the rental rate is $1,500 a week, plus there is a $75 cleaning fee, plus the tax. In that situation, because I require the cleaning fee and they cannot rent without paying that cleaning fee, then that is absolutely taxable. Is that correct?

Belinda:  Those cleaning fees that are separately stated would be taxable as a cleaning fee. If they are taxable as a cleaning fee, then it is going to be subject to the six percent plus whatever the county discretionary tax is. If it is part of the rental ‑‑ when it is separately stated it is not going to be considered part of the rental, but just a separate transaction. Doesn't mean that both are taxable or non‑taxable, you then have to look at each situation in itself, but it could mean that is it taxable at different rates.

Christine:  Ah, I see. So the best thing to do is really contact your Sales Tax Department, give them your specifics, because everybody is going to have specific and different situations. It is probably best to call and double check with that, because obviously that is definitely something you want to check on.

The next question I wanted to ask is for people who maybe didn't know about collecting and paying sales taxes. Is there any amnesty for voluntary disclosure programs that the Florida Department of Revenue has, so that they are not going to get socked with all the penalties, and interest and fees and all that.

Belinda:  Yes there is. There is not an amnesty period so to speak. Those amnesty periods come as designated by the Florida Legislature. We don't have any of those right now. Kind of haven';t any for quite some time. During periods when a person wants to come forth and make a voluntary disclosure of the tax liabilities, there are benefits though.

Anyone who has previously not been contacted by the Department of Revenue, can voluntary disclose their liability, whether they have collected the tax from that tenant or that customer or not. When they come forward to us and when they report that tax under the voluntary disclosure program, we will waive the penalties, once the tax and the interest has been paid. That is provided that it is not tax that has been collected and not remitted. We will waive all the penalties.

Christine:  Those penalties can be pretty hefty. I have one of my Florida State Department of Revenue sales tax accounts that got messed up. My property is right on the county line, and they actually gave me the wrong county sales tax ID number. Then they realized it.

I think what happens is, everybody somebody new comes in to their office, they do an audit and say, "Oh, this person hasn't paid their taxes." But really that account has been closed. But it's just really confusing. But anyway the moral of the story is about four of five months ago, I got a sales tax bill for $1,500 for one month that supposedly I didn't file.

We were able to clear it up because I really did pay it, but it just got applied to the wrong account and all that. But I was astonished because most of that $1,500 was penalties and interest, and it was a period of time when it wasn't even booked, because it was the October to December period, which in Florida isn't booked very well.

Talking about that, do you know the largest amount that somebody has had to pay for non‑compliance?

Belinda:  I don't know any of the largest amounts that anyone had to pay due to non‑compliance, but they can get pretty hefty.

We have a statute of limitations for three years, so you are talking about three years of potential liabilities, which could be at a six percent sales tax plus any county taxes. You have some places that as high as 12 to 12.5 percent. So you are talking about those kinds of taxes.

Penalties are 10 percent of the amount of tax, and interest is at a variable rate which changes every January 1 and July 1. Right now the interest rate is 11 percent and it will change again January 1. The interest is accrued until the tax is paid.

Christine:  An interest rate of 11% is pretty high.

Belinda:  It is 11 percent now. The interest will accrue until the tax is paid, and it begins to accrue on the date of the liability. So that's why those fees add up so quickly and why they are so high. But you said, you had a situation where you received a bill, it was a very large bill, had a lot of penalty on it, the business had been closed, or maybe the payment had been applied to the wrong return.

The closing of a business is very important, so you let us know that. If you are no longer renting your property, you need to contact the Department of Revenue and give us something in writing that says that you are no longer renting that facility or that place, and that you want to cancel that number. If not, then we will assume that you are still open. We will make estimates as to what we anticipate your liability will be, based on your past history, because we have nothing else to go on.

So if you have a coupon book, DR‑15, which is a sales tax coupon book, there is a form in there for close or sales of the business. If you are going through a property manager, the property manager cannot cancel your account. He can unlink it from his, but you would still be responsible for closing or canceling that account. It is very important.

Christine:  Very interesting. So that would be in a case where maybe you sell the property or just are no longer renting.

Belinda:  Absolutely.

Christine:  How is it that the Department of Revenue finds people who are noncompliant, who are not collecting and paying sales taxes?

Belinda:  We have several ways. Of course, we have special projects that may go on from time to time, and Florida, being one of those states where transient rental is very popular-- you could have a special project. I know that the counties and the state work together. Governmental agencies work together when it comes to common interest.

If a county has special programs going on, where they're searching in their computer to find out what property is homesteaded or not homesteaded, they could trigger some action on their part, and they may share that information with us. Likewise, we can share with them.

Christine:  How interesting.

Belinda:  Also, often times people call in and tell us that someone is renting their property and they're not registered with the Department of Revenue.

Christine:  Do you mean a whistle blower?

Belinda:  We do! We have a whistle blowers' program, and we have a reward program!

Christine:  Oh, really?

Belinda:  On our website, yes. It tells you all about all of that, if you whistle blow!

Christine:  If you want to be a whistle blower, and make some money, you can go on the website and...Oh gosh!

Belinda:  And you can fill out a form, yes! There's a form that's a DR‑55, which is an application for compensation of tax information. Now, in order for it to be awarded, it has to be proven that that person has purposefully evaded the tax, or there's been an on‑purpose violation. Other than that then, people call in and tell, and then we'll follow up, either by way of audit, education, or just having a person register and come forth with a voluntary disclosure, which is the best way.

The special project, like I said, [happen] all the time. Sometimes they could be a self‑audit, a form that is mailed out to the individual that says, "Do you rent your property? If so, do you realize these are the laws?" It gives a form to fill out to self‑disclose that information.

There are several ways, and those are just some of the more popular ways.

Christine:  Common ways.

On the advertisement for your property, like if you listed it online, does the Florida Department of Revenue require me to list the price without the taxes?

Belinda:  Yes. It's in your best interest to list the price without the tax because the statutes say the tax must be separately stated, and if the tax is not separately stated, then we will assume it has not been charged. So, you'll need to list the price of the unit without the tax, and then add the tax on top when you do the actual billing.

Christine:  Excellent. What if my property is not rented because, say, I own in Destin or Panama City, and from October to December I typically have no one in my property, am I still required to file that sales tax return?

Belinda:  Absolutely. You'd be required to file even if there's no revenue generated since you are an active registered business, whether that be a monthly filing or a quarterly filing. If you didn't generate any revenue, you will file a zero tax return, and it still would need to be filed timely to avoid penalty because the minimum penalty associated with filing is $50.

Christine:  Right. So, no need to pay 50 bucks if you don't have to!

Belinda:  Absolutely.

Christine:  In the State of Florida, this is always a point of confusion for a lot of owners as well, we rent to snowbirds, and typically we rent anywhere from one to three months at a time. Some parts of southern Florida, they do rent for four, five, or six months. What constitutes a long‑term rental where no sales tax is required to be charged?

Belinda:  A long‑term rental would be a situation where there is a bona fide lease agreement for a period of longer than six months, and that would make that rental not subject to the sales tax.

Christine:  And, what sort of proof do you have to provide?

Belinda:  You need to have a written lease.

Christine:  Ah!

Belinda:  You need to have a bona fide written lease, and that lease needs to state the length of time that the accommodations are occupied, or at least, intended to be occupied. It must state that the leaser or the tenant has been given exclusive use or possession of the property for the duration of the period. We must be able to determine that the lease is what we call, bona fide, meaning that the intent or the objective of the lease is to fulfill the commitment and the obligation without deceit or fraud.

Christine:  So then, definitely I have to send that paperwork in.

Well Belinda, we are out of time. I just want to thank you so much for joining us and sharing all this information about collecting and paying sales taxes.

I think it sort of scares people to have to deal with a Department of Revenue, but really, the Florida Department of Revenue is there for you. They're very easy to deal with and talk with. They've got the Education Department that Belinda works in. They've got all sorts of information online.

Again, Belinda, do you just want to give those websites and phone numbers one last time before we close?

Belinda:  Oh, yes! The State of Florida Department of Revenue's website is MyFlorida.com/DOR as in Department of Revenue. Our website has links to a lot of information that's available.

Also, we have an 800 number. If you're calling from within Florida, that number is 800‑352‑3671. If you're calling from outside the State of Florida, the number is 850‑488‑6800.

Then, of course, every local service center has a number; you can visit our website or call directory service and get a phone number for an office in your area.

Christine:  Excellent. Well, thank you so much Belinda. It's been very helpful.

And again, don't be afraid to call Belinda or anyone in her department if you have questions.