Did art and antique fairs qualify as industry trade shows so exhibitor-space subleases were exempt from Florida commercial-rent tax?

Plain-English summary

The art and antique fairs qualified as industry trade shows, making exhibitor-space subleases exempt from commercial-rent tax. The organizer still owed tax on its prime leases of the convention facilities.

The shows brought together artists, galleries, antique dealers, decorators, architects, collectors, and other industry participants to display and market art and antiques. Public attendance and retail sales did not disqualify a show from the statutory trade-show treatment.

What this means for you

The exemption covered the organizer's qualifying subleases to exhibitors, not the organizer's own convention-hall rent. Event documentation had to show a genuine exhibition promoting trade within an industry.

Common questions

Q: Were the convention-hall prime leases taxable? Yes.

Q: Were exhibitor booth or floor-space subleases taxable? No, for the qualifying shows.

Q: Did public attendance defeat trade-show status? No.

Q: Did retail sales at the shows defeat the exemption? No.

Citations and references

• Fla. Stat. § 212.031(1)(a), (c), (5) — commercial rent and industry-trade-show subleases
• Fla. Admin. Code r. 12A-1.070(7)(b) — convention and trade-show subleases
• Fla. Admin. Code r. 12A-1.060(1)(f) — trade-show dealer registration cited
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02A-006

Original ruling text

SUMMARY

QUESTION: Whether the subject art and antique shows qualify
as an industry trade shows for purposes of section
212.031(5), F.S., whereby Taxpayer pays tax on its prime
lease with the convention center and the subleases with
exhibitors are exempt from tax.

ANSWER-Based on Facts Below: Yes. The specific facts and
documentation provided by the Taxpayer indicate that the
art and antique shows do in fact qualify as industry trade
shows within the purview of section 212.031(5), F.S.
Therefore, the prime leases between Taxpayer and the
convention hall will be subject to sales tax while the
subleases between Taxpayer and exhibitors will be exempt
from sales tax.

Jan 30, 2002

Re: Technical Assistance Advisement 02A-006
Sales and Use Tax - Whether the Subject Art and Antique
Shows Qualify for the Exemption Contained in Section
212.031(5), F.S., for Industry Trade Show Leases
Sections: 212.031(1)(a), (c), (5), F.S.
Rule: 12A-1.070(7)(b), F.A.C.
Taxpayer FEI number: 65-0698336
XXX (herein Taxpayer)
XXX (herein the shows)
XXX (herein City A)
XXX (herein City B)
XXX (herein Location)
XXX (herein Location B)
XXX (herein Show #1)
XXX (herein Show #2)
XXX (herein Show #3)
XXX (herein Show #4)
XXX (herein Show #5)

Dear :

This is in response to your request, dated and received November
27, 2001, for the Department's issuance of a Technical
Assistance Advisement ("TAA") concerning the above referenced
parties and 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.

Facts

In your letter, you first request confirmation that the
Department's determination in the Internal Technical Advisement
(ITA) issued in the latter part of the year 2001, to Taxpayer's
predecessor-in-interest, finding that certain shows acquired by
Taxpayer were "industry trade shows" under section 212.031(5),
F.S., also applies to Taxpayer, where the material facts and
applicable law have not changed since that ITA was issued.
Second, you request confirmation that other similar shows
acquired by the Taxpayer and submitted for review are also
"industry trade shows" under section 212.031(5), F.S.

Pursuant to our telephone conversation on December 19, 2001, as
well as in your request for technical advice, you state that the
subject shows are all operated in the same manner. You further
state that the facts relating to such operation contained in
your response to a Request for Technical Advice, dated January
10, 2001, as well as the Internal Technical Advisement issued in
reply, are applicable to your current inquiry regarding the
operation of each show. Therefore, this response, as applicable
to each of the shows, is limited to the following specific
material facts.

Taxpayer organizes and sponsors art and antique fairs and
expositions in City A and City B. Taxpayer solicits exhibitors
to display their art and antiques at these shows. These shows
cater to produce trade both within the art and antiques industry
and with the general public.

Taxpayer leases floor space to these exhibitors. The City A
shows are conducted at Location A and the City B shows are
conducted at Location B. Taxpayer leases these facilities and
pays commercial rental tax to the landlord on the ground lease.

These shows feature 19th and 20th Century paintings, modern and
contemporary art, Old Masters, Impressionist, Post-Impressionist
paintings, sculptures, and antique furniture, jewelry, carpets,
textiles, rare books, manuscripts, and similar objects.

Taxpayer solicits exhibitors and attendees from around the world
for its shows. Taxpayer advertises its shows extensively
through a variety of means that include trade direct mail; trade
publication advertising; electronic direct mail advertising to
art dealers; and direct mail to collectors, architects,
decorators, art galleries, antique dealers, and interior
designers, as well as to high-income Florida residents.
Taxpayer maintains an extensive Internet site where visitors may
register as trade visitors, professional (art) visitors, or
collector visitors.

As hybrid trade/public shows, Taxpayer's fairs and expositions
attract a significant number of trade buyers, as well as a large
number of dealers, decorators and collectors. Taxpayer
maintains admissions cards that identify each attendee as a
member of the trade or of the public. Substantial trade occurs
between exhibitors at these shows. At the contemporary art
shows, exhibitors tend to be galleries acting as the selling
agent for particular artists. These exhibiting galleries often
exchange bodies of works and/or schedule shows in their
galleries for other galleries' artists in an effort to open up
new geographic markets for their artists. At the fine
art/antique shows, exhibitors are marketing high-end works that
sell infrequently. These exhibitors buy and sell artwork among
themselves in order to freshen their respective inventories so
that they will have "fresh" inventory upon their return to their
respective gallery locations and/or bases of operations. These
shows also generate leads for exhibitors to make sales months
later, as many of the attendees are unable to walk into these
shows and make purchases of art and antiques of such high
caliber, given the substantial prices.

Taxpayer's Position

Taxpayer makes the following arguments regarding this issue.

Taxpayer contends that the industry trade show provision applies
to the subject art and antique shows.

Taxpayer notes that the Florida statutes and regulations do not
define the term "industry trade show" for purposes of section
212.031(5), F.S., and further notes that there are no reported
cases defining the term.

Tax statutes must be interpreted in a manner that both avoids
arbitrary and inequitable results and attains the legislative
purpose. Mills v. Corash, 249 So.2d 765, 769 (Fla.1st DCA
1971). Where terms in a statute may be susceptible to different
meanings, legislative intent is the guide to resolving any
dispute. E.g., Mikos v. Ringling Bros. - Barnum & Bailey
Combined Shows, Inc., 475 So.2d 292, 295 (Fla. 2d DCA 1985),
affd, 497 So.2d 630 (Fla. 1986).

Taxpayer argues that the Legislature intended to apply the
industry trade show provision to hybrid trade/public shows such
as boat shows. The industry trade show provision was enacted in
1978 as Senate Bill 269, sponsored by Senator Jack Gordon.
Taxpayer notes that in the legislative committee hearing (as
documented in the transcript) for this Bill, Senator Gordon
expressly stated his intention that the measure apply to public
shows such as the XXX. Furthermore, the legislative committee
reports for Senate Bill 269 support the Legislature's intent to
apply this provision to hybrid trade/public shows due to the tax
revenues generated by the attendees, which would far outweigh
the tax not charged on the exhibitors' space.

The Taxpayer states that it is entitled to similar treatment of
its hybrid shows. The Department has a duty to treat similarly
situated taxpayers equally. Regal Kitchens, Inc. v. Department
of Revenue, 641 So.2d 158, 164 (Fla. 1st DCA 1994). There is no
material factual or legal distinction between Taxpayer's art and

antique shows and a hybrid trade/public boat show. It is the
very fact of the "industry trade show" provision that puts
Florida on a level playing field with other states that do not
impose a commercial rentals tax and allows these shows to
attract vendors and generate substantial taxable sales and other
taxable transactions.

Consistent with the legislative intent of section 212.031(5),
F.S., Taxpayer's shows likewise spawn substantial tax revenues
for the state and for the respective counties through the
taxable hotel, restaurant and entertainment business generated
by the out-of-state exhibitors and attendees.

The "industry trade show" provision has also not been limited in
application to boat shows. Taxpayer notes that leading
automobile shows (such as Show #1 and Show #2) and computer
shows (such as Show #3 and Show #4), as well as boat shows (such
as Show #5) conducted at five different locations across
Florida, operate under the industry trade show provision and do
not charge tax on rentals of exhibitor space.

Taxpayer also notes that the Department has recently determined
that two similar art shows qualify as "industry trade shows"
under section 212.031(5), F.S. See TAA 01A-054 and TAA 01A-052.

Taxpayer states that in TAA O1A-054, the Department applied the
plain and ordinary meaning of "industry trade show" as "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". The Department also noted that "[t]he exemption does
not restrict the convention or trade show from making retail
sales". The plain meaning of "industry trade show" also applies
to the City A and City B shows. As determined in TAA O1A-054,
these shows are exhibitions of art and antiques designed to
stimulate sales and interest within the industry.

In TAA O1A-052, the Department noted that the "trade show or
convention" definition in Rule 12A-1.060(1)(f)1., Fla. Admin.
Code, does not apply because that rule implements a distinct
term used in a different statute that accomplishes an entirely
different legislative purpose.

These rulings show that the Department has applied the industry
trade show provision to trade shows open to the public at which
retail sales are made. Taxpayer is entitled to the same
treatment, and it is entitled to application of the industry
trade show provision.

Requested Advisement

The subject shows are "industry trade shows" within the meaning
of Section 212.031(5), F.S., whereby Taxpayer pays tax on its
prime lease with the convention center and the subleases with
the exhibitors are exempt from the tax imposed pursuant to
section 212.031, F.S.

Law

Section 212.031, F.S., provides in pertinent part:

(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....

(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....

(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(7)(b), F.A.C., provides:

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.

Discussion

Rule 12A-1.060(1)(f), F.A.C., entitled "Registration", contains
the controlling provisions of law for exhibitors who wish to
make sales at trade shows or conventions. Thus, exhibitors at
the Show who are making sales of tangible personal property
should act in accordance with this rule provision.

Section 212.031, F.S., and Rule 12A-1.070, F.A.C., are, however,
the controlling provisions of law for the lease, rental, or
license to use commercial real property.

As noted above, section 212.031(1)(a), F.S., provides that it is
a taxable privilege to engage in the business of renting,
leasing, letting, or granting a license to use commercial real
property. In 1978, section 212.031, F.S., was amended to
provide an exemption from sales tax on subleases of convention
halls, exhibition halls, or auditoriums, whether publicly or
privately owned, when used for a convention or industry trade
show. The sponsor who holds the prime lease is subject to tax
on the prime lease. See section 212.031(5), F.S. and Rule 12A1.070(7)(b), F.A.C. The exemption provided in section
212.031(5), F.S., does not restrict the trade show or convention
from making retail sales.

Although the legislature did not define the terms "convention or
industry trade show" for purposes of the exemption contained in
section 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).

The Webster's Dictionary has provided the following definitions:

"Industry" is defined as a branch of manufacture and trade: the
electronics industry.

"Trade" is defined as the people working in or associated with a
specified industry or business.

"Show" is defined as a public exhibition or theatrical
presentation.

Webster's II, New Riverside Dictionary (1984).

It would appear from the facts as presented that the subject
shows qualify as industry trade shows within the purview of
section 212.031(5), F.S. The shows specifically cater to the
art and antique industries, featuring such items as 19th and
20th Century paintings, modern and contemporary art, Old
Masters, Impressionist, Post-Impressionist paintings,
sculptures, and antique furniture, jewelry, carpets, textiles,
rare books, and manuscripts.

Clearly, the individuals who are invited to attend these shows
are "working in or associated with" the art or antique
industries. The Taxpayer represents these shows as trade shows,
advertising through a variety of means that include trade direct
mail; trade publication advertising; electronic direct mail
advertising to art dealers; and direct mail to collectors,
architects, decorators, art galleries, antique dealers, and
interior designers.

Finally, these shows serve a purpose beyond retail sale
transactions. New business opportunities are fostered for
exhibitors attending the shows. At the contemporary art shows,
exhibitors tend to be galleries acting as the selling agent for
particular artists. These exhibiting galleries often exchange
bodies of works and/or schedule shows in their galleries for
other galleries' artists in an effort to open up new geographic
markets for their artists. At the fine art/antique shows,
exhibitors are marketing high-end works that sell infrequently.
These exhibitors buy and sell among themselves in order to
freshen their respective inventories.

Response

Based on the facts, law, and analysis as presented, a
determination is made that the subleases of booth space to
exhibitors of these shows are exempt from sales tax pursuant to
section 212.031(5), F.S.

This response constitutes a Technical Assistance Advisement
under section 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 section 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 section 213.22, F.S. Confidential information
must be deleted before public disclosure. In an effort to
protect confidentiality, we request that 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 that 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,

Shehla A. Milliron
Senior Attorney
Control # 47729