TIP 90A01-01 Jan 01, 1990 IMPORTANT NOTICE TO COMMERCIAL AND CHARTER BOAT OWNERS To better understand the information contained in this flyer, please observe the following definitions: "Commercial fishing" - the business of taking fish or other seafood such as shrimp, oysters, crayfish or sponges from salt or fresh waters for the commercial purpose of selling such seafood or sponges at wholesale or retail. "Charter fishing" - the business of providing a fishing boat or like vessel, with the crew furnished for a fixed charge per trip, without any major reduction in price when not filled to capacity. "Party boat" - the business of making a charge per person for participating in fishing or other sport activities where the owner supplies the crew, and the control and direction of the boat remains with the owner. SALES AND USE TAX Commercial fishing boats and the combination of commercial fishing and charter boats may fall into the following categories: 1. Boats used only for commercial fishing purposes outside the territorial waters of Florida; 2. Boats used only for commercial fishing purposes within the territorial waters of Florida; 3. Boats used only for commercial fishing purposes outside and inside Florida waters; 4. Boats used mostly for commercial fishing purposes outside the territorial waters of Florida and also for periodic charters; 5. Boats used mostly for commercial fishing purposes within the territorial waters of Florida and also for
periodic charters; 6. Boats used mostly for commercial fishing purposes outside and inside Florida waters and also for periodic charters; 7. Boats used mostly for charter and party fishing purposes and also for commercial fishing purposes. With the exceptions of categories (1), (2) and (7) a proration (portion) of the sales tax, rather than the entire amount of tax, is due upon certain boat operations described above. In category (1), purchases of supplies and fuel are exempt from taxation. In category (2), only fuel purchases are exempt. The application of the sales tax upon each of the above boat operations is as follows: I. If your boat falls in the category of number (3), (4), (5), or (6), discussed above, you will be allowed to pay a portion of the sales tax (pro-ration) upon your operations; that is, you as the owner of the boat must apply for a sales tax number and upon receipt of this registration number, you will be allowed to purchase those goods designed for the purpose of carrying on the operation of the boat, exempt from the sales tax. This is done through the extension of an affidavit to your supplier, declaring that yon are licensed by the state to purchase these goods tax exempt. Proration of the sales tax is computed as follows: -Supplies are purchased exempt from tax through the proper execution of the exemption certificate -Records of outside and inside mileage commercially fished, are kept -The total miles fished inside of Florida are divided by the total miles fished everywhere in order to get a ratio (percentage) -The total cost of goods purchased monthly is multiplied by the ratio (percentage) mentioned above
and this is the amount upon which the sales tax, (or use tax as is this case) is computed and is due on the monthly sales tax return to the Department of Revenue. II. If your boat falls in the category of numbers (2) or (7) mentioned above, no proration or exemption from the sales tax is allowed by law. The charge made by an owner or operator for chartering a boat, with a crew furnished solely for the purpose of fishing is exempt (CHARTER FISHING). When the owner of a boat supplies the crew, which remains under the control and direction of the owner, and makes a charge for each person for participating in fishing or other sport or activity, such as sightseeing or dinner cruises, the charge is taxable (PARTY BOAT FISHING). RETAIL SALES AND FUEL TAXES Commercial Fishing Those persons who earn their livelihood by "commercial fishing" are exempt from the payment of fuel taxes on purchases of diesel fuel used in boats exclusively within the territorial waters of Florida. For this exemption, a commercial fisherman should apply to the Department for a permit number and issue to the supplier an affidavit stating that the fuel is used only for commercial fishing purposes. Commercial fishing boats used only in Florida waters with periodic charter fishing trips do not qualify for the exemption. Gasoline (motor fuel) is taxable at the time of purchase, however the tax may be refunded in part by the Department of Revenue, if used for commercial fishing purposes. Combination of Commercial Fishing and Charter/Party Fishing If a boat engages in both commercial and charter fishing, a determination must be made as to which use is predominant in order to determine the application of the tax to the fuel
purchases. This type of boat which operates in and out of Florida waters or entirely outside Florida waters must make the following calculation: -by using mileage only originating and ending in Florida ports, the total commercial fishing mileage should be divided by the total mileage everywhere to determine the commercial fishing predominance percentage. If the calculated percentage is less than 50%, then the vessel is used predominantly for charter fishing purposes and the owner must remit the 5.7 cents tax per gallon to his vendor. If the calculated percentage is more than 50%, then the boat is used predominantly for commercial fishing purposes and the owner would prorate the 6% state sales tax due. The formula used to prorate this tax is as follows: -the Florida commercial fishing mileage and charter mileage everywhere, plus other taxable use mileage everywhere, divided by total mileage travelled everywhere, equals the proration percentage. In the case where a predominant commercial fishing boat with periodic charters, elects to pay his vendor the 5.7 cents per gallon tax on those transactions where the vessel is engaged in charter fishing, the following proration formula would apply to all fuel purchased other than charter: -the Florida commercial fishing mileage divided by commercial fishing everywhere equals the proration percentage. When mileage records are not adequate, engine hours or days may be used to estimate mileage in Florida to calculate predominance and proration under the 6% sales tax. Should yon have any immediate questions regarding this matter, please call the Taxpayer Assistance Section at the following telephone numbers in Tallahassee, Florida.
1-800-872-9909 (Florida only) (904) 488-6800 OR Contact your local area office of the Florida Department of Revenue