Sales Tax on the Assets You Sell in Florida

Why most of your equipment can change hands without sales tax

Florida charges sales tax on most sales of tangible goods. In Duval County the combined rate is 7.5%, which is the 6% state rate plus the county surtax. On a large equipment list, that would be real money.

The good news is that Florida has an occasional or isolated sale rule. In general, when you transfer all or substantially all of your business property to one buyer in one sale, that transfer is exempt from sales tax.

That covers the ordinary pieces of a working company: desks, shelving, computers, shop tools, kitchen equipment, phone systems and the like. The buyer takes them over as part of buying the whole operation, not as a customer buying goods.

The key words are "all or substantially all." The exemption is built for selling a business, not for selling things a business owns. The more your deal looks like a complete handoff, the more comfortably it fits.

Vehicles, boats and aircraft follow their own path

The occasional sale rule does not reach motor vehicles, boats, aircraft or mobile homes. Those are taxed when the buyer titles and registers them in their own name, even if they were part of a whole business sale.

For many Jacksonville companies this matters. A pool service company may have a fleet of trucks. A marine contractor may own work boats and barges. An aviation shop may own an aircraft or two.

In practice, the buyer handles the tax when they go to title those assets. Your part is making sure titles are clean, liens are paid off or addressed at closing, and the price for each titled asset is written down clearly.

That written price matters because it is the figure the buyer will use when they title the asset. A vague lump sum for "all vehicles" creates questions later. A schedule listing each one by year, make and value does not.

Inventory and the buyer's resale certificate

Inventory is a separate question. If the buyer is going to resell the goods on your shelves, the sale of that inventory to them is generally covered by their Annual Resale Certificate from the Department of Revenue.

That means the buyer needs to be registered to collect sales tax before closing, so they have a certificate to hand you. In an asset sale the buyer is usually a new company, so this is a step for their side to finish early.

Ask for a copy of the certificate and keep it with your closing file. If the Department of Revenue ever asks why no tax was collected on the inventory, that certificate is your answer.

• Pharmacies and retail shops usually carry the most inventory.
• Service companies often have parts and chemicals that are resold to customers.
• Supplies used up inside the business are not resale inventory and deserve a closer look.

Selling equipment piece by piece is a different story

Some owners sell off a truck here and a machine there for months before or after the real sale. Those smaller sales do not look like a transfer of the whole business, and they can be taxable.

The same goes for a deal where you keep a large share of the equipment back and sell it later to someone else. If the main sale does not move substantially all of the property, the exemption may not fit as cleanly.

If you have surplus equipment you want to clear out, talk with your CPA about timing before you start listing it. It is easier to plan the order of sales than to fix it after the fact.

The asset allocation is where the facts get set

Every asset sale includes an allocation that splits the price among equipment, inventory, vehicles, goodwill and any noncompete. Buyers and sellers usually negotiate it, because it drives federal tax for both sides.

It also drives Florida sales tax questions. The allocation shows what was sold, in what amounts, and to whom. Titled assets, resale inventory and everything else should each be clear on that schedule.

Your CPA should review the allocation before you sign, not after. Most companies selling below about $2 million close as asset sales, so this comes up often.

Our page on selling a Jacksonville company covers where it fits in the timeline.

When you want a specific answer from Tallahassee

Whether a sale qualifies depends on its facts. If yours are unusual, such as a sale split across two buyers or the sale of just one division, you can ask the Department of Revenue for a technical assistance answer on your specific situation.

A technical assistance request lays out the facts and asks how the law applies to them. It takes time, so start it well before your target closing date if you think you will need it.

Most straightforward sales of a whole company never need one. Your CPA or closing attorney can tell you whether your deal is ordinary or worth a formal question.

Your own sales tax account still needs a final return

Even when the asset transfer itself is exempt, your company's sales tax account does not close by itself. You must file a final return and pay all tax due within 15 days after the sale or closing.

That final return covers the period from your last return through the closing date. It also ties directly to the buyer's concern about your unpaid taxes, which we cover in Florida successor tax liability.

Please confirm the details for your own deal with your CPA or closing attorney, since a small change in structure can change the answer.

Want to know what your company could sell for before you work through the tax side? Request a private value range or call (904) 555-0129.