Simplified Exemption Process for Nonprofit Organizations

New for 2016 and available in Florida is Form DR-5 (Application for a Consumer's Certificate of Exemption). This application is available on the Florida Department of Revenue’s website. It is intended to expedite the process for establishing whether companies are exempt from paying tax on purchases.

Florida Exemption Certificates are good for five years. With the new form, exemption certificate holders no longer have to reapply for a new exemption certificate when they expire. Sixty days before the existing exemption certificate expires the DOR will review the validity of the organization’s exemption. A review of the public information for non-profit organizations or governmental entities located within the state will be done to ensure they are eligible for the exemption. Providing the organization still meets the exemption requirements, they will receive a new certificate via mail. If the DOR is unable to determine whether an organization meets the exemption requirements, they will contact the entity in writing requesting more information. The correspondence will list documentation needed in order for an exemption to be approved. Entities located outside the state will receive letters asking if they want to have their exemption renewed.

Failure to respond to the DOR’s correspondence will result in the organization not receiving exemption status. A letter will also be sent to an organization if the DOR determines they are no longer exempt. Organizations that are not exempt or lose their exemption status will be obligated to pay tax on taxable transactions and purchases.

Tips for the Taxpayer

You should frequently review your sales data in every state to make sure you are complying with what is necessary regarding sales tax exemption certificates. It is important to collect and store sales exemption certificates for all your exempt sales.  Without these there is an audit risk that past due taxes, penalties, and interest may be assessed.

It is also important that you frequently review any changes to tax regulations regarding exempt and taxable items in order to make sure exemption certificates are only issued by your organization on purchases which are truly exempt.

For More Information

If you are interested in learning more about this topic or other tax topics, please visit our Tax Publications under News and Events at www.allynintl.com.

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Contact us and we can provide a customized cost-effective solution to meet your company’s needs. For further information on Allyn Tax services, please contact: tax@allynintl.com.

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