Florida Sales Tax Payment

[Fernando Imperatori]

Hello, hope you are healthy and safe.

I'm very aware of section (s.) 212.02(12), Florida Statutes (F.S.) which states ALL money collected from a tenant in a Commercial Property is considered rent and as such it's subjected to Sales Tax (5.5% + 1% Miami-Dade).

I have a BIG objection with this statue. In one example, part of the money collected is used for paying Ad Valorem Tax annually. This means I'm paying taxes on taxes. Also Condominium Associations are tax exempt, so I'm paying taxes on untaxed money as well. 

How does this make any sense?

Most accountants I have spoken about this say that I shouldn't worry since the tax money that I'm collecting from a tenant to pay the government doesn't affect my bottom line since it's just taxes. 

BUT it does affect my bottom line since I could offer a more competitive rent price to my current and prospective tenats if I they paid taxes on actual rent profit only (instead of money that is being somehow "held on escrow" by the Landlord, i.e. Property Tax , CAI fees).

Does this make any sense? It looks like to me that I'm paying taxes on taxes and taxes on legally untaxed money.

I've spoken to some Landlords that only charge sales tax on the actual "rent profit" and don't tax the whole rental amount received by a tenant. I've yet to see their books to confirm, but is this an option? Would this method of paying tax would pass a Local Authority and/or IRS audit?

Any leads or comments on this issue are greatly appreciated.