Did a nursing-home vending machine void the facility's residential electricity exemption?

Subject

Vending Machine in Nursing Home

Plain-English summary

The vending machine did not void the nursing facility's electricity exemption. Electricity used in areas connected with resident care and daily life was residential-household use, including the machine used by staff, residents, and guests.

What this means for you

A small ancillary use did not destroy the exemption where it remained connected to residents' care and daily living. Different nonresidential use could change the result.

Common questions

Q: Was the exemption lost? No.

Q: Who used the machine? Staff, residents, and guests.

Q: What connection mattered? Resident care and daily life.

Citations and references

• Fla. Stat. § 212.08(7)(j) — residential-utility exemption
• Fla. Admin. Code r. 12A-1.053 — electricity
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00A-035

Original ruling text

SUMMARY

QUESTION: Will the use of a vending machine, by staff,
residents and their guests, at the nursing facility void
the nursing facility's exemption for its use of
electricity.

ANSWER - Based on Facts Below: The electricity used in
areas of a nursing home that are connected in some manner to
the resident's care and daily life activities would not be
subject to sales tax. The exemption would include a nursing
facility that has a vending machine that is used by staff,
residents, and their guests.

Jun 28, 2000

RE: Technical Assistance Advisement 00A-035
XXX (Taxpayer)
Vending Machine in Nursing Home
Section 212.08(7)(j), F.S.
Rule 12A-1.053, F.A.C.

Dear :

This letter is a response to your letter dated April 12, 2000,
requesting that the Department issue a Technical Assistance
Advisement (TAA) concerning the above-referenced taxpayer and
tax issue. Your petition has been carefully examined and the
Department finds that it is in compliance with the requisite
criteria set forth in Rule Chapter 12-11, F.A.C. This response
to your request constitutes a TAA, and is issued to you under
the authority of s. 213.22, F.S.

FACTS

The Taxpayer owns a nursing facility in Florida that has a
vending machine located at the facility. The staff, residents,
and their guests use this machine.

REQUESTED ADVISEMENT

You ask whether the use of a vending machine, by staff,
residents and their guests, at the nursing facility will void
the exemption the nursing facility gets for its use of
electricity.

LAW AND DISCUSSION

Section 212.08(7)(j), F.S., provides that electricity is not
subject to sales or use tax when sold to:

... residential households... by utility companies who pay
the gross receipts tax imposed under s. 203.01,...
regardless of whether such sales of utilities... are
separately metered and billed direct to the residents or
are metered and billed to the landlord. If any part of the
utility ... is used for a nonexempt purpose, the entire
sale is taxable. The landlord shall provide a separate
meter for nonexempt utility... consumption....

As to the applicability of s. 212.08(7)(j), F.S., interpreted by
Rule 12A-1.053, F.A.C., to electricity sold to your client, the
following characteristics must exist if your client is to
qualify to receive such an exemption:

The electricity, if served through a single meter, must not be
used for a nonexempt purpose. A "nonexempt purpose," in the case
of a nursing facility, would be the consumption of electricity
in a part of the facility premises used for conducting
activities of a commercial nature not directly related to the
care and living needs of the residents. Such "nonexempt purpose"
includes, for example, a portion of the premises used as a bank,
or travel office. Such "nonexempt purpose" would also include,
for example, the facility used in the treatment of nonresidents
by physical therapists, or other care providers, when a charge
is made for such care.

You should note that electricity is exempt, and is not used for
a "nonexempt purpose," when it is consumed in the kitchen,

dining areas, administrative office, or the employees' areas of
the nursing home.

In Beverly Enterprises-Florida, Inc. v. Dept. of Revenue, No.
94-2259-CA-16-L (Fla., 8th Cir.Ct.), the court was asked to make
a determination whether or not the entire square footage under a
lease of real property to a for-profit corporate lessee of a
physical facility, which was utilized by the lessee to conduct
its nursing home business, was subject to tax under s. 212.031,
F.S. The Final Judgment issued by the court held that, under the
facts of the Beverly case, the entire nursing home was used
exclusively as a dwelling unit, since each and every area of the
nursing home contributes to the "ultimate care" of the residents
residing therein. Thus, the court concluded that the nursing
home premises should not be apportioned into multiple use and
there should be no proration of lease payments. This ruling
would apply to related facilities operating under Chapter 400,
F.S., including assisted living facilities.

CONCLUSION

Using Beverly as guidance, the areas of a nursing home that are
connected in some manner to the resident's care and daily life
activities would not be subject to tax. This would include a
vending machine that is used by staff, residents, and their
guests. The exemption provided by Rule 12A-1.053, F.A.C., is
applicable to nursing facilities that have a vending machine.
Under these circumstances, the charge for electricity used by
Taxpayer's nursing facility is exempt.

This response constitutes a Technical Assistance Advisement
under issued pursuant to s. 213.22, F.S., which is binding on
the Department only under the facts and circumstances described
in your request for this advice, as specified in s. 213.22, F.S.
Our response is predicated upon those facts and the specific
situation summarized above. You are advised that subsequent
statutory or administrative rule changes or judicial
interpretations of the statutes or rules upon which this advice
is based may subject similar future transactions to a different
treatment from that which is expressed in this response.

You are further advised that this response, your request, and
related backup documents are public records under Chapter 119,
F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request that your provide the undersigned
with an edited copy of your request for a Technical Assistance
Advisement, the backup material, and this response, deleting
names, addresses, and any other details which might lead to
identification of the taxpayer. Your response should be
received by the Department within 15 days of the date of this
letter.

Sincerely,

Ron Gay
Technical Assistance
and Dispute Resolution

/rg
control #41108