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River County City of Vero Beach Enterprise Zone Development Agency PROPOSED CHANGES TO FL ENTERPRISE ZONE PROGRAM Business Equipment Sales Tax Refund —Text Amendment The following are proposed text changes for consideration by the FL Department of Revenue as the agency refines the language of the Enterprise Zone Business Equipment Sales Tax Refund program, as defined under Chapter 212.08, F.S. These text amendments are initially done through the rule making process,including a series of public hearings. Current: The Business Equipment Sales Tax Refund is the most frequently used program under the Enterprise Zone program. A company located within the Zone that purchases equipment used in the Zone can apply for a refund of a portion of the state sales tax paid on that item. The program's criteria: - Business must be located within an Enterprise Zone. - Business equipment purchased must have a sales price of at least$5,000 per unit. - Equipment purchased must be used exclusively in an Enterprise Zone for at least 3 years Over the past year, several businesses in our Enterprise Zone have spent many hours providing a multitude of back-up documentation that the Dept. of Revenue has asked for to support the companies' requests for sales tax refunds on eligible expenditures. In the end,the companies were either denied their refund or received a fraction of what was requested. The situation has put this program in a very negative light. In talking with Enterprise Zone Coordinators elsewhere in Florida,they are experiencing these same challenges. *Historic: In the 2000 Legislative session,there was an amendment to the Enterprise Zone N"MW program to add an additional "qualifier"to the program criteria. The intent was to reduce the volume of small dollar refund claims by raising the minimum purchase price for eligibility. In the last days of committee meetings,the$500 minimum originally proposed was increased to $5,000 and the new qualifier now reads: (5)EXEMPTIONS;ACCOUNT OF USE.— Paragraph(h)(9). For the purposes of this exemption,"business property"means new or used property defined as"recovery property" in is. 168(c)of the Internal Revenue Code of 1954, as amended, except: (d) Business property having a sales price of under$S,000 per unit. *Proposed: Change the minimum purchase price threshold to the originally proposed$500,and change the word"unit"to"purchase". This would allow a business to submit a refund request based on the total purchase reflected on an invoice, $500 or higher, rather than each itemized unit on an invoice having to meet a minimum dollar amount threshold. As most of the businesses in an enterprise zone are very small businesses,this could allow for more participation. More clearly defined language would alleviate the major challenges our businesses are currently experiencing. NOTE: HB965, filed by Rep. Reed on 2/21/13, lowers the purchase price threshold to$2,500 Alternatively,as proposed by an EZDA member: To entice increased spending by small businesses in an Enterprise Zone, allow a business to save up their receipts over the year and submit to the Dept. of Revenue once the minimum threshold is met in the aggregate. .. Next page please 5