Were sales of pre-cut submerged logs exempt as agricultural commodities or as resale inventory?

Subject

Pre-Cut Submerged Timber

Plain-English summary

Recovered pre-cut river-bottom timber was not exempt as an agricultural commodity. Florida's definition did not include forestry products, so the logs had no product-based agricultural exemption.

The logger nevertheless did not have to collect tax when a buyer acquired the logs to manufacture finished wood products for ultimate retail sale and gave a resale certificate. A buyer purchasing for its own direct consumption or use would not fit that resale treatment.

What this means for you

The sale could be nontaxable because it was for resale, not because submerged timber was an exempt commodity. The purchaser's intended use and certificate were essential.

Common questions

Q: Were the recovered logs agricultural commodities? No.

Q: Could a wood-products manufacturer buy them without tax? Yes, with a resale certificate and resale-manufacturing use.

Q: Could a direct consumer use that treatment? No.

Citations and references

• Fla. Stat. § 212.02(27) — agricultural commodity
• Fla. Stat. § 212.06(1)(a) — tax on retail sales and use
• Fla. Stat. § 212.07(7) — agricultural commodity transactions
• Fla. Admin. Code r. 12A-1.048 — sales for resale
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00A-061

Original ruling text

SUMMARY

QUESTION: Whether the sale of pre-cut timber recovered from
a river bottom is subject to sales tax when sold to persons
acquiring such timber for the purpose of manufacturing
finished wood products for the ultimate retail consumer
trade?

ANSWER - Based on Facts Below: Pre-cut timber recovered
from the river floor is not an "agricultural commodity" and
is not exempt from sales tax imposed by Chapter 212, F.S.
If purchasers use the timber for manufacturing finished
wood products for the ultimate consumer retail trade and
not for their own direct consumption or use, they may
extend a certificate of resale to the seller of the timber
in lieu of paying sales tax on the purchase.

Oct 30, 2000

Re: Technical Assistance Advisement 00A-061
Sales and Use Tax - Pre-Cut Submerged Timber
XXX ("Taxpayer")
Social Security Number: XX
Section 212.07, F.S.
Rule 12A-1.048, F.A.C.

Dear :

This response is in reply to your letter dated July 10, 2000,
requesting the Department's issuance of a Technical Assistance
Advisement ("TAA") pursuant to s. 213.22, F.S., and Chapter
12-11, F.A.C., regarding the referenced matter and parties. An
examination of your petition has established that you have
complied with the statutory and regulatory requirements for
issuance of a TAA. Therefore, the Department is hereby granting
your request for issuance of a TAA.

ISSUE

Whether the sale of pre-cut timber recovered from a river bottom
is subject to sales tax when sold to persons acquiring such
timber for the purpose of manufacturing finished wood products
for the ultimate retail consumer trade.

FACTS

You operate a "deadhead" logging business in which you recover
"pre-cut" submerged timber from river bottoms. The logs were
previously cut over 100 years ago and have been preserved by the
water. You sell the logs "as is" to buyers who haul them to
their site for use in making finished wood products such as
hardwood flooring, staircase parts and mouldings, lumber, and
cabinets for the ultimate retail consumer trade. You are
licensed as a timber harvester with the Department of
Environmental Protection.

LAW

As provided in Section 212.06(1)(a), F.S., sales tax, at the
rate of 6 percent, shall be collectible from all dealers on the
sale at retail, the use, the consumption, the distribution, and
the storage for use or consumption in this state of tangible
personal property or services taxable under this chapter. As
provided in Section 212.07(07), F.S., sales of agricultural
commodities by any person, other than the producer, to any
person who purchases them for the purpose of acquiring raw
products not for direct consumption but for use or for sale in
the process of preparing, finishing or manufacturing such
agricultural commodity for the ultimate retail consumer trade is
exempted from any and all provisions of Chapter 212, F.S. The
term "agricultural commodity" is defined in Section 212.02(27),
F.S., as horticultural, aquacultural, poultry and farm products,
and livestock and livestock products. This definition does not
include "forestry products."

CONCLUSION

It is our determination that pre-cut timber recovered from the
river floor is not an "agricultural commodity" and is not

specifically exempt from sales tax imposed by Chapter 212, F.S .
However, since your company sells the timber to purchasers who
acquire them for use in the process of manufacturing finished
wood products for the ultimate retail consumer trade and not for
their own direct consumption or use, you are not required to
collect sales on such sales provided you obtain a certificate of
resale from the purchaser.

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

Richard R. Parsons
Tax Law Specialist
Technical Assistance & Dispute Resolution
(850) 922-4838
Control No. 41937