Florida Administrative Code
12 - DEPARTMENT OF REVENUE
12A - Sales and Use Tax
Chapter 12A-19 - COMMUNICATIONS SERVICES TAX
Section 12A-19.070 - Assignment of Service Addresses to Local Taxing Jurisdictions; Liability for Errors; Avoidance of Liability Through Use of Specified Methods; Reduction in Collection Allowance for Failure to Use Specified Methods

1. In determining the liability for any additional local communications services taxes, interest, and penalties of a dealer who does not use a method as described in paragraph (2)(a) and has failed to assign one or more service addresses to the correct local taxing jurisdiction, the Department will take into account all underpayments and overpayments of the local tax.

2. The dealer will be held liable for the net aggregate underpayment of tax and associated interest and penalties for incorrectly assigning one or more service addresses when:

3. In addition, a specific penalty of 10 percent of any tax collected but reported to an incorrect jurisdiction as a result of an incorrect address assignment, not to exceed $10, 000 per return, will be imposed on any dealer that does not use a database described in paragraph (2)(a).

1. The Address/Jurisdiction Database;

2. A database that has been certified by the Department, as provided in Rule 12A-19.072, F.A.C.;

3. An enhanced zip code method, as discussed in Rule 12A-19.073, F.A.C.; or

4. A database that, upon audit by the Department, is determined to have met the accuracy rate criterion required for certification under Rule 12A-19.072, F.A.C.

1. A dealer is exercising due diligence if that dealer expends reasonable resources to accurately and reliably implement one or more of the methods described in paragraph (a) and maintains adequate internal controls in the assignment of service addresses.

2. A communications services dealer must maintain records to establish that the dealer has exercised due diligence for the period of time during which the Department is authorized to assess taxes on sales of communications services by that dealer. Examples of such records include instructions or procedures provided to employees, contracts and correspondence with third-party vendors or service providers concerning the acquisition or maintenance of data, documentation establishing that the data was consistently updated at least once every six months, records concerning customer or local taxing jurisdiction objections to the assignment of service addresses and responses to those objections, records of changes made to the assignment of service addresses and when the changes were made, and any other records that pertain to the acquisition, maintenance, and revision of the data upon which service address assignments are based. For purposes of documenting that the dealer corrected errors within 120 days of notice or discovery, dealers should maintain documentation that establishes that the amount of time between the initial notification or discovery of the error and correction of the error did not exceed 120 days. Keeping records of each step within the process or procedures used to correct the error is not necessary; however, to establish due diligence, the dealer must be able to demonstrate that the overall time required to correct errors did not exceed 120 days. A dealer will not be entitled to the protection described in paragraph (a) during any period that the dealer does not have records establishing that the dealer exercised due diligence for that period.

3. If a communications services dealer uses a certified database provided by a third-party vendor, the communications services dealer must exercise due diligence in its own conduct in using the database. A dealer using a certified database provided by a third-party vendor is exercising due diligence if that dealer expends reasonable resources to accurately and reliably implement the third-party vendor's certified database and maintains adequate internal controls in the assignment of service addresses. As part of its due diligence, the dealer must comply with the vendor's instructions or directions in the dealer's use of the certified database. Further, the dealer has a duty to take reasonable steps to ascertain that the vendor maintains the database so as to ensure continuing qualification for certification. For example, if a vendor failed to provide an update to the database when scheduled to do so, a reasonable and prudent dealer relying on that vendor's database would contact the vendor and make inquiry. A dealer that uses a third-party vendor's certified database must ensure that when the dealer discovers or is notified of errors in assignments of service addresses, the errors are corrected within 120 days from discovering or being notified of such errors and that procedures are in place to ensure that the error is not repeated when a subsequent update is obtained from the vendor. Nothing in this subparagraph requires a dealer using a certified database to update its database more than two (2) times a year, so long as each update incorporates all changes received from the vendor since the prior update.

1. Employing one or more of the methods described in paragraph (a) protects a dealer from liability for any additional local communications services taxes and related interest and penalties that would otherwise have been due to a local taxing jurisdiction. All requests by a purchaser for a refund or credit must comply with the provisions of Section 202.23, F.S., which controls a purchaser's entitlement to a refund or credit. A dealer's employment of one or more of the methods described in paragraph (a) does not deprive a purchaser of the right to a refund or credit of overpayment of local communications services taxes resulting from an erroneous assignment of that customer's service address to a local taxing jurisdiction with a higher rate than that in effect in the correct local taxing jurisdiction. If a purchaser complies with the procedural requirements of Section 202.23, F.S., and establishes that the dealer has incorrectly assigned the purchaser's service address and that an overpayment of local communications services tax has resulted, the dealer must refund or credit the amount of the overpayment to the purchaser. Upon making such refund or credit, the dealer would be entitled to an equal refund or credit from the Department upon proper reporting to the Department of the amount and jurisdictions involved. Dealers are not entitled to retain or take credits for taxes collected from any customers assigned to an incorrect local taxing jurisdiction in excess of the taxes due to the correct local taxing jurisdiction unless a refund or credit has been provided to the customer.

2. For purposes of this paragraph, a purchaser that requests a refund or credit from the provider in accordance with the provisions of Section 202.23, F.S., and that establishes that a dealer has assigned the purchaser's service address to a different local taxing jurisdiction from the one to which that address was assigned in the effective Address/Jurisdiction Database as of the date of the sale has established a presumption that the dealer's assignment was erroneous, because the effective Address/Jurisdiction Database is conclusive for purposes of the communications services taxes. If a dealer believes that the assignment of the purchaser's address in the Department's database is incorrect, the dealer should refer the claim for a refund or credit to the Department for a determination in accordance with the procedures in Section 202.23, F.S. A dealer who assigned a purchaser's service address in accordance with the effective Address/Jurisdiction Database at the time of the sale on which the purchaser asserts that tax was overpaid should refer the purchaser to the Department in order for the purchaser to object to the Address/Jurisdiction Database as a substantially affected person. The dealer is not required to make a refund or credit to the purchaser unless the Department has subsequently revised the assignment of that address to correct an error, such revision was to the effective Address/Jurisdiction Database that became effective prior to the date of the sale involved in the claim as provided in paragraph (3)(g) of Rule 12A-19.071, F.A.C., and the purchaser has requested a refund or credit in the manner required by Section 202.23, F.S. The provisions of this rule are subordinate to Section 202.23, F.S., and are intended to provide additional information regarding the effect of incorrect service address assignments by dealers who are employing a method identified in paragraph (2)(a).