In Florida, which tax must construction contractors collect and remit on taxable sales of tangible personal property?
Correct Answer
C) Sales and use tax
Florida contractors must collect and remit sales and use tax on taxable sales of tangible personal property. This includes certain construction materials and equipment sales, with specific exemptions for real property improvements.
Why This Is the Correct Answer
Sales and use tax is the state tax that Florida contractors must collect and remit when they sell tangible personal property to customers. This applies to construction materials, equipment, and supplies that are sold as tangible goods rather than incorporated into real property improvements. The Florida Department of Revenue requires contractors to register for sales tax collection when they make taxable sales of tangible personal property.
Why the Other Options Are Wrong
Option A: Federal excise tax
Federal excise tax is a federal tax on specific goods like fuel, tobacco, and alcohol, not a tax that contractors typically collect and remit on construction materials or equipment sales.
Option B: State unemployment tax
State unemployment tax (SUTA) is paid by employers on employee wages to fund unemployment benefits, not collected from customers on sales of tangible personal property.
Option D: Workers' compensation tax
Workers' compensation tax/premiums are insurance costs paid by employers to cover workplace injuries, not a tax collected from customers on sales transactions.
Memory Technique
Think 'SALES tax for SALES' - when contractors make actual sales of tangible items (not installations), they collect sales tax just like any retail store would.
Reference Hint
Florida Building Contractor's Reference Manual - Chapter on Tax Obligations and Business Licensing Requirements
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