The IRS letter is not a Florida exemption
This is the most common misunderstanding about Florida nonprofit taxes. Your IRS determination letter exempts you from federal income tax. It does nothing, by itself, about Florida sales tax or county property tax.
FDACS makes the distinction explicitly in its own instructions: the IRS determination letter “is not to be confused with a Certificate of Exemption issued by the Florida Department of Revenue, which exempts your organization from paying state sales tax.”
Three different exemptions, three different applications, two different levels of government.
1. Florida sales and use tax
What it does. Lets the organization buy goods and services without paying Florida sales tax.
How you get it. Apply to the Florida Department of Revenue on Form DR-5. If approved, DOR issues a Consumer’s Certificate of Exemption, Form DR-14, which you present to vendors.
What you need first. The IRS determination letter. This is a sequencing point that catches new organizations: you cannot get the Florida certificate on the strength of a pending Form 1023, so sales tax paid during the months you are waiting on the IRS is generally not recoverable. Budget for it.
Two limits worth knowing. The certificate covers purchases the organization makes for its own exempt use. It does not let staff or board members buy personal items tax-free, and it does not automatically excuse the organization from collecting sales tax when it sells taxable goods, such as a gift shop, merchandise, and certain event sales. The DR-14 expires and must be renewed every five years.
2. County property tax (ad valorem)
What it does. Exempts real property and tangible personal property used for exempt purposes.
Who grants it. The county property appraiser, and not the State itself. For example, Pinellas, Hillsborough and Miami-Dade each run their own process.
How you get it. Form DR-504, the ad valorem tax exemption application for charitable, religious, scientific, literary, hospital, nursing home and homes for special services use.
The deadline is March 1, and it is the hardest date in Florida nonprofit compliance. Miss it and you generally pay that year’s tax and apply again for the next year.
Use is what matters, not ownership. The exemption turns on the property being used for the exempt purpose. A building the organization owns but leases out commercially, or a portion used for unrelated activity, can be partially or wholly taxable. Buying a building in November and applying in April is a very expensive sequence.
3. Florida corporate income tax
Florida imposes a corporate income tax, and an organization exempt under section 501(c)(3) is generally not subject to it on exempt-function income. The federal determination carries most of the weight here.
The exception is unrelated business income. If the organization has UBI reportable to the IRS on Form 990-T, Florida may require a return as well. This is the one to raise with your accountant rather than assume away.
What this looks like as a sequence
- Incorporate in Florida.
- Get the EIN.
- File Form 1023.
- Receive the IRS determination letter.
- Then file Form DR-5 for the sales tax certificate.
- If you own or are buying property, file Form DR-504 before March 1.
- Register with FDACS before soliciting, which is separate from all of the above.
Steps 5 and 6 cannot be pulled forward, which is the argument for not letting the Form 1023 drift.
For how these sit alongside your other annual obligations, see our Florida nonprofit compliance checklist and calendar.
This article is general information, not legal advice, and reading it does not create an attorney-client relationship. Rules differ by state and change over time. Please speak with a licensed attorney about your own situation.