Florida Department of Revenue Issues Binding Advisement to the Nacm-Icpc Allowing Care

FLORIDA DEPARTMENT OF REVENUE ISSUES BINDING ADVISEMENT TO THE NACM-ICPC ALLOWING “CARE OF” ADDRESSING OF DIRECT PURCHASE INVOICES TO GOVERNMENTAL ENTITIES

The NACM Improved Construction Practices Committee (NACM ICPC) has led the industry for almost two decades to educate and protect material suppliers who sell direct to governmental entities in order to avoid errors and omissions that, upon audit, can result in payment of sales tax and penalties.

If you have followed us on this journey through legislative and administrative advocacy, you know that our work has produced clarified rules and statutory revisions, the most recent of which requires governmental entities to issue a Certificate of Entitlement attesting to the requirements they must meet in order to be tax exempt, and acknowledging that if they err in these requirements, taxes and penalties are their responsibility.

We have been instrumental in obtaining binding interpretations and Tax Information Publications (TIPs) from Florida Department of Revenue (FDOR) that provide clear guidance to material suppliers and have established a very beneficial connection with the sales tax technical assistance department in Tallahassee to provide direct assistance to our members.

Most recently the ICPC has requested and received a binding Technical Assistance Advisory (TAA 14A-005) from the FDOR that permits a supplier to send invoices to the tax exempt governmental entity in care of (c/o) the contractor or subcontractor. This TAA was requested when an ICPC member was pressured by a large school district to direct invoices in this manner in order to be paid, in contravention to the rules governing tax exempt transactions as we have always understood them, which provide, “The vendor’s invoice must be issued to the governmental entity, rather than to the contractor.”

With this new TAA in hand, NACM members can include “c/o the contractor or subcontractor’s name” on invoices to the tax exempt entity if the purchase order requests the “c/o” to be made. FDOR has concluded that “c/o,” most commonly used by the postal service, designates an intermediary who transfers mail to the final addressee. Using this reasoning the “c/o” will not violate the intent of the rule, and the governmental entity remains liable for receipt of the invoice.

As always, all other requirements for direct purchase must be followed. And remember -- the sales tax exemption for direct purchase does not apply to materials that are fabricated or manufactured by the supplier. For a full copy of TAA 14A-005 return to the previous page and click the next link.

We hope this new TAA will provide relief to suppliers who are directed to invoice “c/o” the contractor or subcontractor on public projects.