Were booth subleases at an annual art-industry show exempt from Florida commercial-rent tax as trade-show subleases?

Subject

Art Trade Shows and Expositions

Plain-English summary

The annual art event qualified as an industry trade show, so exhibitor booth subleases were exempt from commercial-rent tax. The organizer, which published a trade magazine for galleries and frame shops, still had to pay tax on its prime convention-center lease.

The event's museum-style presentation and permission for exhibitors to sell art did not prevent trade-show status. Exhibitors remained responsible for registering and collecting and remitting sales tax on taxable retail sales.

What this means for you

The statute shifted rental tax to the sponsor's prime lease and exempted qualifying exhibitor subleases. It did not exempt the exhibitors' retail transactions.

Common questions

Q: Was the prime lease taxable? Yes.

Q: Were exhibitor-space subleases taxable? No.

Q: Did art sales disqualify the event? No.

Q: Were exhibitors excused from sales-tax duties? No.

Citations and references

• Fla. Stat. §§ 212.02(10)(i) and 212.031(1), (5) — real-property licenses and trade-show subleases
• Fla. Admin. Code r. 12A-1.070(7) — trade-show sublease exemption
• Pederson v. Green, 105 So. 2d 1 (Fla. 1958)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 01A-054

Original ruling text

SUMMARY

QUESTION: Do subleases at an art trade show qualify for an
exemption from tax under the provisions of s. 212.031(5),
F.S., for subleases of space at a convention or industry
trade show?

ANSWER - Based on Facts Below: Although the legislature did
not define the terms "convention or industry trade show"
for purposes of the exemption, words of common usage, when
used in a statute, should be construed in their plain and
ordinary sense. Accordingly, an art trade show would
qualify for the exemption.

Aug 24, 2001

Re: TAA 01A-054
Sales and Use Tax - Art Trade Shows and Expositions
Section 212.031(5), F.S.
Rule 12A-1.070(7), F.A.C.
("Client")

Dear:

This is a response to your letters dated April 16, 2001, and
June 14, 2001, requesting the issuance of a Technical Assistance
Advisement (TAA) concerning the above referenced party and
matter. Your letters and supporting documents have been
carefully examined, and the Department finds your request to be
in compliance with the requisite criteria set forth in Chapter
12-11, F.A.C. This response to your request constitutes a TAA,
and is issued to you under the authority of section 213.22,
Florida Statutes.

Facts

Your letter of April 16, 2001, states in pertinent parts:

[Client] publishes trade publications and produces trade
shows across the United States for numerous industries.
[Client] publishes [Trade Magazine], a trade magazine
intended for the industry segment comprised of art
galleries and frame shops. Consequently, the primary
subscribers to [Trade Magazine] are owners of art galleries
and frame shops. Additionally, [Client] produces [Art
Trade Show], an annual trade show in Florida directed at
the audience of this trade magazine.

[Trade Show]

[Client] produces [Art Trade Show] for five days in Florida
at the [Convention Center]. [Client] holds the prime lease
of the convention center. [Client] pays Florida sales tax
to the convention center on the prime lease of the
facility. [Client] then subleases space to exhibitors at
[Art Trade Show]. Exhibitors are permitted to make sales
of art at the show. However, most such sales are for
resale between galleries. As such, [Client] advises the
exhibitors that they must register with the Department and
collect and remit Florida sales tax on any retail sales.

[Art Trade Show] is intended for the type of upscale
audience that appreciates viewing fine art. The works
exhibited at the show are valued at up to $1,000,000. The
show is publicized in a manner similar to that of a museum
exhibition. The producers intend for the show to have a
museum quality to it. They intend for the exhibition to be
a relaxed, quiet environment designed for the appreciation
of art, rather than an environment for making sales.

Exhibitors

The readers and some advertisers of [Magazine] are
typically the exhibitors at [Trade Show]. The exhibitors
are primarily galleries from outside the state[,]with some
galleries from Florida. Each exhibitor brings examples of
the types of artwork shown at its gallery. This artwork is
often for display only and not for sale. In fact a
substantial majority of the exhibitors do not opt to have

their booths wired with telephone lines, which would allow
them to make credit card sales and approve checks.

The exhibiting galleries seek to have the work shown in
order to generate interest in the artists that they
represent. By exhibiting the artwork at the show, the
galleries seek to open up additional distribution channels
for their artists by creating awareness of these artists'
work. In showing a piece of artwork, the galleries
anticipate having other galleries and art enthusiasts
commission additional works of art by the artists
represented. The exhibitors may also bring the artists
that they represent to the show. Once a show is over some
pieces of artwork may be sold, but the primary purpose for
displaying the works of art at the show is to generate
interest in the artists' work and is not to sell the work
displayed. Most sales made at the show are sales for
resale between galleries. Retail sales of artwork at the
show are infrequent.

Attendees

The trade show is marketed to readers of [Magazine],
i.e.[,] art gallery and frame shop owners. Representatives
of these galleries and shops comprise more than half of the
attendees at the art trade show. This target audience is
often given "VIP" tickets to the shows, which are free of
charge. However, the general public is admitted to these
shows for an admission price of about $10. [Client]
correctly collects and remits Florida sales tax and any
applicable local option sales surtax on these admissions.
The general public is admitted to these shows in order to
create awareness and generate interest in the artwork and
in the artists.

With your letter of June 14, 2001, you enclosed copies of the
following for our review: (1) an exhibitor application for
exhibit space for the period January 6-10, 2000; (2) an
exhibitor agreement for the period January 20-25, 2000; and (3)
an exhibitor application and contract for the period January 1822, 2001.

You further state:

[Client] pays Florida sales tax to [Convention Center] on
the prime lease of the facility. Therefore, if [Client]s]
exhibition is a convention or industry trade show, then the
subleases of space to exhibitors will be exempt from
Florida sales and use tax.

Webster's Ninth New Collegiate Dictionary (1988) defines
the word convention as "an assembly of persons met for a
common purpose". The terms industry trade show and trade
show are not defined in the dictionary. However, it
defines the word industry as "a department or branch of a
craft, art, business, or manufacture" and as "a distinct
group of productive or profit-making enterprises". The
word trade is defined as "the group of firms engaged in a
business or industry". The word show is defined as "a
large display or exhibition arranged to arouse interest or
stimulate sales". Hence, the term industry trade show
means a large display or exhibition that is arranged to
arouse interest or stimulate sales by a group of firms
engaged in a business or industry. [Trade Show] is most
certainly an industry trade show by this definition.

Advisement Requested

Whether subleases of space at [Trade Show] qualify for the
exemption from Florida's sales and use tax provided in s.
212.031(5), F.S., for subleases of space at a convention or
industry trade show.

Applicable Law and Discussion

Section 212.031(1)(a), Florida Statutes (F.S.), provides that it
is the legislative intent that every person is exercising a
taxable privilege who engages in the business of renting,
leasing, letting, or granting a license for the use of any real
property, with certain enumerated exceptions. A "license" to
use real property is defined in s. 212.02(10)(i), F.S., as "...
the granting of a privilege to use or occupy a building or a

parcel of real property for any purpose."

Section 212.031(1)(c), F.C., provides in part:

(c) For the exercise of such privilege, a tax is levied in
an amount equal to 6 percent of and on the total rent or
license fee charged for such real property by the person
charging or collecting the rental or license fee. The
total rent or license fee charged for such real property
shall include payments for the granting of a privilege to
use or occupy real property for any purpose and shall
include base rent, percentage rents, or similar charges.
...

An exemption from the tax is provided under s. 212.031(5), F.S.,
as follows:

(5) When space is subleased to a convention or industry
trade show in a convention hall, exhibition hall, or
auditorium, whether publicly or privately owned, the
sponsor who holds the prime lease is subject to tax on the
prime lease and the sublease is exempt.

Rule 12A-1.070, F.A.C., interprets and replicates the provisions
of s. 212.031, F.S. Subsection (7) of the rule states:

(7)(a) Where a tenant or person occupying, using, or
entitled to use any real property which is subject to tax
sublets or assigns and collects rentals or license fees on
a taxable portion of the lease or licensed premises, such
tenant or other person shall be required to register as a
dealer and collect and remit the tax on all such subrentals or assignments.

(b) Notwithstanding the provisions of paragraph (a), when
space is subleased to a convention or industry trade show
in a convention hall, exhibition hall, or auditorium,
whether publicly or privately owned, the sponsor who holds
the prime lease is subject to tax on the prime lease and
the sublease shall be exempt.

Determination

Although the legislature did not define the terms "convention or
industry trade show" with respect to the exemption provided in
s. 212.031(5), F.S., words of common usage, when used in a
statute, should be construed in their plain and ordinary sense.
Pederson v. Green, 105 So.2d 1 (Fla. 1958). Based on the facts
provided in your letters, we agree that the Trade Show would
qualify as an "industry trade show".

The exemption from sales tax provided under s. 212.031(5), F.S.,
is for subleases of convention halls, exhibition halls, or
auditoriums, whether publicly or privately owned, when used for
a convention or industry trade show. Tax is due on the prime
lease of the hall or auditorium. The exemption does not
restrict the convention or trade show from making retail sales.

Therefore, Client should follow the guidelines in Rule 12A1.070(7), F.A.C., and pay tax on the prime lease. The sublease
of space to exhibitors is exempt from tax.

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 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 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,

Dee Overcash
Senior Tax Specialist

Control #45643
Control #43858