There are a number of special considerations that a used car dealer must be aware of when selling a retail vehicle. The State of Florida (and many of its counties) have placed requirements of taxes and fees onto your sales transaction in such a way that you may find it hard to be accurate. And, if you are not accurate and through ignorance dont charge enough to cover these taxes and fees you will be required to dig into your profits to pay them yourself (unless you can talk your customer into coming back and paying more money months after the sale was made).
Most dealers are already aware of the local discretionary sales tax (surtax) which some Florida Counties have imposed on sales. This optional sales tax is applicable only to the first $5000 of the sale and is chargeable to any purchaser whose residence is in a surtax county. Even if your county does not charge a surtax, when you sell to someone who lives in a surtax county you must collect the surtax and submit a completed copy of State form DR-37 and the appropriate surtax money to your local tax collector with the application for title and/or registration.
The amount of sales tax to be collected by a dealer is based on the full selling price of the vehicle less the amount allowed for a trade-in. You should also be aware that dealer get-ready, notary and handling, mechanical breakdown and extended service agreements are all fully taxable. Dont be confused by the legal sounding name: notary and handling. If you think it is not taxable because it is a government fee, you are wrong. The only exception is that you probably could avoid sales tax on it if you use the services of an outside notary and if you only charge the prescribed state allowed fee and if you absolutely made no profit on the fee. Thats too many ifs to bother with. Charge the tax and get on with business.
If you sell a vehicle to a resident of another state, the sales tax you collect is equal to the amount the person would have paid if he had bought the car in his own state. But, never charge more than 6%. If the customers state charges less than 6% you should only charge that lesser amount. But, you should be sure to have the customer sign a notarized statement that he will register his car in his home state within 45 days (form DR-123). A pamphlet showing the appropriate sales tax rate for each state in the USA is available from the Florida Department of Revenue.
If you rent or lease vehicles, you must collect $2 per day for the first 30 days. You must separately itemize this fee on the customers invoice, and you must charge sales tax on this fee. If the lease or rental agreement is renewed, the first 30 days of the new term is again subject to the surcharge even though it is the same vehicle and the same person. If the customer is exempt from sales tax, such as a church or government body, the rental/lease surcharge is not chargeable.
There is a waste tire fee of $1 imposed on new tires sold at retail, for use either on the road or off the road in this state. If it is sold as a component of a vehicle, the fee is still required. Most dealers just pay the $1 to the supplier who sold them the tire and then just consider the fee to have been included in the price of the vehicle when it is sold. With tires, this appears to be an acceptable method of handling the fees. At $1 per new tire, this fee is more of a nuisance to a dealer than it is worth. Avoiding paperwork and the accompanying explanations to customers makes this a worthwhile method. In the case of new tires, you must have a line-item or a statement on the invoice stating that a fee of $1 per tire has been charged.
A fee of $1.50 is imposed for new or re-manufactured lead-acid batteries designed for use in a vehicle. This fee is due when the battery is sold separately or when it is sold as a component part of a motor vehicle at retail. Most used car dealers just include the fee as being part of the selling price of the vehicle and simply eat the $1.50 fee.
As a dealer, you certainly may itemize and charge your customer for each of the above fees. But, this type of charge is so small and so misunderstood by the public that it is probably smarter to just eat the fees and forget it.
Both tire and battery fees are reported and paid by the 20th of the month following the sale. Form DR-15SW is used to make this report. Even if you sell nothing, you still must file the report.
And now, for the usual disclaimer. This article is written with the hope that the author has correctly understood the statutes and materials presented to him by the State of Florida. In truth, the author has made mistakes before, and may do so again. Please, verify this information with your accountant or attorney before taking any action.