Which concessionaire location fees qualified for Florida's event-facility percentage-of-sales lease exemption?

Subject

Real Property Lease to Concessionaire

Plain-English summary

Only the dinner-theater concession could use the event-facility lease exemption. Property at all five photography locations was licensed “during an event,” but the statute also required a listed qualifying facility. The dinner theater qualified as a theater; the theme park, private museum, and amusement attraction did not.

At the dinner theater, a prorated fixed monthly minimum was taxable. When the percentage-of-sales calculation produced a larger payment, only the excess above that minimum was exempt. The fees at all nonqualifying facilities remained taxable even when calculated from sales.

What this means for you

Three separate conditions mattered: use during an event, operation at a listed facility, and a payment genuinely based on sales rather than a fixed price. Satisfying only one or two was not enough.

Common questions

Q: Were activities at all locations conducted during events? Yes.

Q: Which venue qualified? The dinner theater.

Q: Did a minimum monthly guarantee qualify as percentage rent? No.

Q: What portion could be exempt at the dinner theater? The amount above the fixed minimum when that excess was based on sales.

Citations and references

• Fla. Stat. § 212.031(1)(a)12. — event-facility concessionaire lease 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-061

Original ruling text

SUMMARY

QUESTION 1: Is the property in the subject agreements
leased/licensed "during an event" for purposes of the
exemption provided by s. 212.031(1)(a)12., F.S.?

ANSWER 1 - Based on Facts Below: Yes, the property in the
subject agreements is leased/licensed "during an event" for
purposes of the exemption provided by s. 212.031(1)(a)12.,
F.S.

QUESTION 2: Are the lessors/licensors under the four
respective agreements "qualifying facilities" under s.
212.031(1)(a)12., F.S.?

ANSWER 2 - Based on Facts Below: The dinner theater is a
"qualifying facility" under s. 212.031(1)(a)12., F.S., but
the theme park, amusement attraction, and private museum
are not "qualifying facilities."

QUESTION 3: Are monthly payments made by a concessionaire
for a lease/license to use real property "based on a
percentage of sales" under s. 212.031(1)(a)12., F.S., when
the concessionaire is required to make a monthly minimum
payment?

ANSWER 3 - Based on Facts Below: Monthly payments made by a
concessionaire are fully taxable when they are based on the
monthly minimum. However, when the concessionaire makes
payments exceeding the monthly minimum, that excess portion
above the minimum is "based on a percentage of sales" under
s. 212.031(1)(a)12., F.S., and is therefore exempt.

Oct 03, 2001

Re: Technical Assistance Advisement 01A-061
Sales and Use Tax - Real Property Lease to Concessionaire
Sections: 212.031(1)(a)12., F.S.

("Taxpayer")

Dear:

This is in response to your letter dated April 13, 2001,
received April 16, 2001, which requests that the Department
issue a Technical Assistance Advisement ("TAA") concerning the
above referenced matter. Your letter has been carefully examined
and the Department finds it 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, F.S.

Issues Presented

Whether fees paid by Taxpayer to the licensor of each of the
locations at which Taxpayer operates its business are subject to
sales tax?

Discussion of Facts

Taxpayer is the owner of photographic technology marketed under
the trade name XXX. Taxpayer engages in the business of
producing and selling photographs using this technology.
Taxpayer's business is conducted predominantly at tourist
attractions. Taxpayer's TAA request involves business
operations at XXX Florida locations.

At each of the XXX locations, Taxpayer acts as a concessionaire
to the owner of the attraction. In four of the five locations
submitted for consideration Taxpayer operates under a written
concession agreement identified as a license agreement. In the
XXX location there is no written agreement. In each case,
Taxpayer is responsible for maintaining hours of operation
consistent with the hours of operation of the attraction,
purchasing its own supplies and equipment, providing its own
personnel, photographing guests, producing and selling the
photographs to the guests, and collecting applicable sales tax
on each transaction.

(Attraction A)

Attraction A is a dinner theater. Guests at Attraction A view
and participate in medieval tournament games in a two-hour show
filled with pageantry, magic, and heraldry. A theme-related
dinner is served in connection with the event. The facility is
structured as a grand ceremonial arena with guests seated around
a central tournament field.

At Attraction A, Taxpayer takes photographs of guests posing
with the pageant king and queen. Random photographs are also
taken of guests wearing their paper crowns while feasting and
cheering on their tournament team. Taxpayer also takes "head on
body" shots wherein a guest's head and face are superimposed
over various medieval scenes. Photos are sold with clear
plastic frames or cardboard Attraction A theme frames.

(Attraction B)

Attraction B is a marine oriented theme park. Within Attraction
B are a combination of marine animal exhibits, stadiums, and the
related amusement attractions. Live shows at Attraction B
include 1) performances by trained sea animals and their
trainers, 2) water ski and water sport performances by human
participants, and 3) cultural reviews.

Within Attraction B, Taxpayer operates two locations, each under
a separate written concession license agreement. The first,
Location 1, is a dolphin feeding photograph concession. Location
1 is a large outdoor exhibition pool surrounded by guest viewing
areas. The pool contains live dolphins. Periodically throughout
the day, Attraction B personnel conduct an educational and
instructional program on dolphin feeding, allowing guests to
feed, touch, and otherwise interact with dolphins. Taxpayer
takes random photographs of guests interacting with dolphins
that are then superimposed over an Attraction B-themed display
and sold to park guests with plastic frames.

The second Attraction B photograph concession is a studio
located at the Location 2, where a Hawaiian-themed review show
is performed. Taxpayer sells several Attraction B-themed headon-body shots similar to those sold at Attraction C.

(Attraction C)

Attraction C is a museum where curiosities and oddities are
exhibited. At Attraction C, Taxpayer takes head-on-body shots
wherein the guests head and face are superimposed on magazine
covers, movie and television scenes, celebrity photographs and
other scenes (including several shots where the guest's face can
be superimposed on Attraction C unusual photographs). Head and
body photos are sold with plastic frames or cardboard movie and
magazine-themed frames.

(Attraction D)

Attraction D is an attraction similar to a science center.
Within the attraction are over 85 hands-on educational
scientific-themed interactive exhibits. At Attraction D,
Taxpayer sells head-on-body shots and frames similar to those
sold at Attraction C. Taxpayer pays Attraction D a percentage
of its sales but has no written agreement.

Applicable Statutes and Rules

212.031 Lease or rental of or license in real property.--

(1)(a) It is declared to be 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 unless such
property is:

12. Rented, leased, subleased, or licensed to a
    concessionaire by a convention hall, exhibition hall,
    auditorium, stadium, theater, arena, civic center,
    performing arts center, or publicly owned recreational
    facility, during an event at the facility, to be used by
    the concessionaire to sell souvenirs, novelties, or other
    event-related products. This subparagraph applies only to
    that portion of the rental, lease, or license payment which
    is based on a percentage of sales and not based on a fixed
    price.

Discussion and Analysis of Law

Section 212.031(1)(a)12., F.S., provides an exemption for real
property leased by a concessionaire at certain facilities when
such property is leased "during an event at the facility." The
exemption applies "only to that portion of the rental, lease, or
license payment which is based on a percentage of sales and not
based on a fixed price." See s. 212.031(1)(a)12., F.S.
Facilities qualifying for the exemption are, convention halls,
exhibition halls, auditoriums, stadiums, theaters, arenas, civic
centers, performing arts centers, and publicly owned
recreational facilities. See s. 212.031(1)(a)12., F.S.

I. "During an Event"

The phrase "during an event" is not defined for purposes of this
statutory exemption. Words of common usage, when used in a
statute, should be construed in their plain and ordinary sense.
See Pederson v. Green. Black's Law Dictionary, Sixth Edition,
1990 (hereinafter "Black's Law") defines the term "during" as
follows:

During. Throughout the course of; throughout the
continuance of; in the time of; after the commencement and
before the expiration of.

Black's Law defines the term "event" as follows:

Event. The consequence of anything; the issue or outcome of
an action as finally determined; that in which an action,
operation, or series of operations, terminates. Noteworthy
happening or occurrence. Something that happens....

Regular events are conducted at each of the "facilities" at
which Taxpayer operates its business pursuant to the subject
agreements. At Attraction A, Taxpayer photographs guests while
they view and participate in medieval tournament games in a twohour show and enjoy a theme-related dinner. At Attraction B's
Location 1, Taxpayer takes theme-related novelty photographs of
guests there to view educational and instructional programs on

dolphin feeding conducted by Attraction B personnel. At
Attraction B's Location 2, Taxpayer takes theme-related novelty
photographs of guests attending the park's Hawaiian-themed
review show. At the Attraction C, Taxpayer takes theme-related
novelty photos of guests while the museum performs its daily
exhibition of curiosities and oddities. At Attraction D,
Taxpayer takes theme-related novelty photographs of guests while
they enjoy and participate in hands-on, educational, scientificthemed interactive exhibits. Thus, it appears that at each
location, the subject property is being leased or licensed
"during an event" for purposes of the exemption provided by s.
212.031(1)(a)12., F.S.

II. Qualifying Facilities

The exemption provided by s. 212.031(1)(a)12., F.S., applies to
property leased, subleased, rented, or licensed by a "...
convention hall, exhibition hall, auditorium, stadium, theater,
arena, civic center, performing arts center, or publicly owned
recreational facility...." It must be determined whether the
facilities that house the five subject locations are qualifying
facilities under the exemption.

Attraction A

Attraction A's brochures and commemorative programs describe it
as a "Dinner & Tournament." On a number of web addresses
listing Florida attractions, Attraction A is described as a
"dinner theater." Guests of Attraction A view a number of
medieval-themed performances, including a simulated tournament
with a predetermined outcome. The facility in which guests of
Attraction A are seated is a rising tiered structure surrounding
the central performance area in which the tournament is played
out.

"Theaters" are included in the list of qualifying facilities
under s. 212.031(1)(a)12., F.S. However, no statutory
definition is provided for the term "theater." 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). Accordingly, the following definitions of the term

"theater" are taken from Merriam-Webster OnLine: Collegiate
Dictionary (2000), http://www.merriam-webster.com/dictionary.htm
(31 July 2001) (hereinafter "Merriam-Webster"):

1b: a building for dramatic performances...

3a: a place rising by steps or gradations... b: a room
often with rising tiers of seats for assemblies (as for
lectures or surgical demonstrations).

Attraction A appears to meet two of the possible definitions of
the term "theater" cited above. As mentioned previously,
"theaters" are qualifying facilities for purposes of the
exemption provided by s. 212.031(1)(a)12., F.S. Accordingly,
Attraction A is a qualifying facility.

Attraction B

Attraction B's brochures refer to it as a "theme park." On a
number of web addresses Attraction B is described as a "theme
park." Attraction B is comprised of a variety of marine animal
exhibits and marine-themed amusement attractions. According to
Merriam-Webster, a "theme park" is "... an amusement park in
which the structures and settings are based on a central theme."

Attraction B appears to meet the definition of the term "theme
park" cited above. "Theme parks" are not included in the list of
facilities qualifying for the exemption provided by s.
212.031(1)(a)12., F.S. Accordingly, Attraction B is not a
qualifying facility.

Attraction C
Attraction C's brochures refer to Attraction C as a "museum."
Attraction C's web site also refers to Attraction C as a museum.
Attraction C is a place at which curiosities and oddities are
exhibited to guests. According to Merriam-Webster, a "museum"
is "... an institution devoted to the procurement, care, study,
and display of objects of lasting interest or value; also... a
place where objects are exhibited."

Attraction C appears to meet the definition of the term "museum"

cited above.

"Museums" are not included in the list of facilities qualifying
for the exemption provided by s. 212.031(1)(a)12., F.S.
However, the term "exhibition hall" is included in the list of
qualifying facilities. No statutory definition is provided for
the term "exhibition hall." As previously mentioned, 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). Accordingly, the following definitions of the term
"exhibition" are taken from Merriam-Webster:

1: an act or instance of exhibiting...

3: a public showing (as of works of art, objects of
manufacture, or athletic skill)...

The following definitions of the term "hall" are also taken from
Merriam-Webster:

3: a large usually imposing building for public or
semipublic purposes

6: a large room for assembly: AUDITORIUM

7: a place used for public entertainment

Of the preceding definitions of the term "hall," only definition

6. does not involve a public or semi-public use. For further
   guidance on this definition we look to Merriam-Webster, which
   defines the term "auditorium" as "1: the part of a public
   building where an audience sits; 2: a room, hall, or building
   used for public gatherings." Both definitions of the term
   "auditorium" involve a public use. Thus, it appears that even
   definition 6. of the term "hall" must be understood to involve a
   public use. Accordingly, the term "exhibition hall" must be
   understood generally to refer to a building, hall, or room,
   holding or containing public or semipublic assemblies, for the
   purposes of viewing an exhibition or showing is made to the
   public.

Attraction C is a privately owned "museum" that generates income
from the individual admissions that it offers to its guests. It
is not used for public or semi-public assemblies, but rather to
individually entertain customers having diverse interests.
Accordingly, Attraction C is not an "exhibition hall."
Attraction C is not a qualifying facility for purposes of the
exemption provided by s. 212.031(1)(a)12., F.S.

Attraction D

Attraction D's brochures refer to it as an "attraction."
Attraction D's website refers to Attraction D as a "themed
attraction," and as a "fun-filled interactive entertainment
center." Attraction D is a facility at which guests view and
interact with entertaining science-themed exhibits, including
simulated earthquakes, roller coasters, and an electrically
charged "Bridge of Fire."

According to Merriam-Webster, an "amusement park" is:

[A] commercially operated park having various devices for
entertainment (as a merry-go-round and roller coaster) and
usually booths for the sale of food and drink.

Notwithstanding the scientific theme, Attraction D appears to be
in the nature of an "amusement park." Neither the term
"amusement park," nor the terms "themed attraction" or
"entertainment center" appear in the list of facilities
qualifying for the exemption provided by s. 212.031(1)(a)12.,
F.S. Accordingly, Attraction D is not a qualifying facility.

III. Based on a Percentage of Sales

The exemption provided by s. 212.031(1)(a)12., F.S., applies
"only to that portion of the rental, lease, or license payment
which is based on a percentage of sales and not based on a fixed
price." The license agreements for the Attraction A location,
and Attraction B Locations 1 and 2, require Taxpayer to make
minimum monthly payments during those months when revenue
generated from its sales dips below a certain level. These
minimum monthly guarantee payments are based on a fixed amount,

the annual minimum payment, which is prorated monthly. Such
minimum payments are not "based on a percentage of sales" within
the meaning of s. 212.031(1)(a)12., F.S., but are instead "based
on a fixed price". However, during months when the monthly
payment exceeds the monthly minimum, that portion of the payment
which exceeds the monthly minimum is "based on a percentage of
sales" for purposes of the exemption provided by s.
212.031(1)(a)12., F.S., and is not subject to sales tax.

The license agreements for the Attraction D (evidenced by the
October 8, 1998 letter from XXX) and Attraction C locations
apparently do not require Taxpayer to make a minimum payment
when its sales dip too low in a particular month. Under both
agreements, Taxpayer's payments are based on a percentage of its
sales and not on a fixed price. Accordingly, Taxpayer's
payments under these two agreements are "based on a percentage
of sales" for purposes of the exemption provided by s.
212.031(1)(a)12., F.S.

Conclusion

Attraction A License Agreement

With respect to the Attraction A license agreement, it is
determined that during the months when payments exceed the
monthly minimum, that portion of the payment which exceeds the
monthly minimum is "based on a percentage of sales," and is not
subject to sales tax. However, when a monthly payment is made
based upon pro-ration of the annual minimum amount, the entire
payment is subject to sales tax. Such payments are taxable
because they are not based upon a percentage of sales, but
rather upon a minimum monthly guarantee.

Attraction B - Location 1 License Agreement

With respect to the Attraction B - Location 1 license agreement,
it is determined that the monthly privilege fees paid by
concessionaire are subject to sales tax, because Attraction B is
not a qualifying facility under. s. 212.031(1)(a)12., F.S.

Attraction B - Location 2 License Agreement

With respect to the Attraction B - Location 2 license agreement,
it is determined that the monthly privilege fees paid by
concessionaire are subject to sales tax, because Attraction B is
not a qualifying facility under. s. 212.031(1)(a)12., F.S.

Attraction C License Agreement

With respect to the Attraction C license agreement, it is
determined that the monthly privilege fees paid by
concessionaire are subject to sales tax, because Attraction C is
not a qualifying facility under s. 212.031(1)(a)12., F.S.

Attraction D License Agreement

With respect to the Attraction D license agreement, it is
determined that the monthly privilege fees paid by
concessionaire are subject to sales tax, because Attraction D is
not a qualifying facility under s. 212.031(1)(a)12., F.S.

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 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,

Case A. Bodiford
Attorney
Control #44918