Were employee fees for mandatory airport ID badges and parking decals subject to Florida sales tax?

Plain-English summary

Mandatory airport identification-badge fees were not taxable, but employee parking fees were. Every airport worker had to obtain a badge, and the fee covered application processing and the badge itself. The Department treated the physical badge as incidental to the employment requirement, not as the employee's object of purchase.

Employees paid a monthly fee for parking spaces and received decals. Their main object was parking, and Florida specifically taxed parking-space rentals. The government owner, as a Florida political subdivision, had to collect that tax; the recurring parking activity was not an occasional or isolated sale.

What this means for you

Two cost-recovery charges can receive different treatment based on what the payer is actually buying. A required credential incidental to employment was not a retail sale, while access to a parking space was a specifically taxable rental.

Common questions

Q: Was the airport badge fee taxable? No.

Q: Did charging only administrative and badge costs change the parking result? No. The parking fee purchased use of a parking space.

Q: Did the political subdivision have to collect parking tax from its own employees? Yes.

Citations and references

• Fla. Stat. §§ 212.02(2), (15)(a) and 212.05(1)(a)1.a. — business, sale, and tangible property
• Fla. Stat. § 212.03(6) — tax on parking-space rentals
• Fla. Admin. Code r. 12A-1.037(5)(g) — parking not an occasional sale
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02A-027

Original ruling text

SUMMARY

QUESTION #1: Is sales tax due for fees collected from
employees receiving mandatory airport security badges?

ANSWER #1 - Based on Facts Below: No. The receipt of the
badge is a condition of employment, of which the transfer
of the badge is incidental. The employee's main object in
obtaining employment is not the purchasing of the badge.
As such, the Authority is not engaging in the business of
selling identification badges.

QUESTION #2: Is sales tax due on parking decals issued to
employees and employees of unrelated businesses operating
at the Airport?

ANSWER #2 - Based on Facts Below: Yes. The employee's main
object is to receive a parking space. Government entities
that are a Florida political subdivision must collect sales
tax on parking fees collected from their employees. The
sale of parking spaces is not an occasional or isolated
sale. Therefore, the taxpayer is engaging in the business
of selling parking spaces and must collect the tax.

May 23, 2002

Subject: Technical Assistance Advisement 02A-027
ID Badges and Parking Decals
Sales and Use Tax
Section 212.02(2), F.S.
Section 212.03(6), F.S.
XXX ("Aviation")
XXX ("Airport")
XXX (Owner)
Taxpayer Identification Number: XX

Dear :

This is in response to your letter dated March 19, 2002,

regarding the taxability of fees collected from employees for
identification badges and parking decals.

ISSUE #1

Whether sales tax is due on identification badges issued to
employees working at an airport?

FACTS

Owner, a political subdivision of the State of Florida, is the
owner of the Airport. The Airport is administered and operated
on behalf of the Owner by Aviation.

The practice of the Owner, through Aviation, is to require that
every person working at the Airport wear an identification
badge. The process of obtaining an identification badge requires
each person to fill out an application and pay a fee. The fee
charged by Aviation covers the administrative cost of processing
the application and the actual cost of the badge.

TAXPAYER POSITION

The fees charged for obtaining an identification badge or
issuing a parking decal to employees at the Airport are not made
with the object of some gain, benefit, or advantage inuring to
the Owner or Aviation. Aviation, by charging and collecting a
fee for the identification badges and parking decals to cover
its actual costs, is not engaging in the business of selling
tangible personal property at retail. Nor does the issuance of
identification badges and parking decals to Airport personnel
constitute a taxable service under the provisions of Chapter
212, Florida Statutes.

APPLICABLE STATUTES AND RULES

Section 212.05(1)(a)1.a., F.S., provides:

It is hereby declared to be the legislative intent that
every person is exercising a taxable privilege who engages
in the business of selling tangible personal property at

retail in this state, including the business of making mail
order sales, or who rents or furnishes any of the things or
services taxable under this chapter, or who stores for use
or consumption in this state any item or article of
tangible personal property as defined herein and who leases
or rents such property within the state.

(1) For the exercise of such privilege, a tax is levied on
each taxable transaction or incident, which tax is due and
payable as follows:

(a)1.a. At the rate of 6 percent of the sales price of each
item or article of tangible personal property when sold at
retail in this state, computed on each taxable sale for the
purpose of remitting the amount of tax due the state, and
including each and every retail sale.

Section 212.02(2) and (15)(a), F.S., provides:

(2) "Business" means any activity engaged in by any person,
or caused to be engaged in by him or her, with the object
of private or public gain, benefit, or advantage, either
direct or indirect. Except for the sales of any aircraft,
boat, mobile home, or motor vehicle, the term "business"
shall not be construed in this chapter to include
occasional or isolated sales or transactions involving
tangible personal property or services by a person who does
not hold himself or herself out as engaged in business, but
includes other charges for... all leases or rentals of or
licenses in parking lots or garages for motor vehicles,...
as defined in this chapter and made subject to a tax
imposed by this chapter.... Any tax on such sales,
charges, rentals, admissions, or other transactions made
subject to the tax imposed by this chapter shall be
collected by the state, county, municipality, any political
subdivision, agency, bureau, or department, or other state
or local governmental instrumentality in the same manner as
other dealers, unless specifically exempted by this
chapter....

(15) "Sale" means and includes:

(a) Any transfer of title or possession, or both, exchange,
barter, license, lease, or rental, conditional or
otherwise, in any manner or by any means whatsoever, of
tangible personal property for a consideration.

RESPONSE

Here, the receipt of the badge is a required condition of
employment and therefore its transfer is incidental. There is
no real motive or inducement to purchase an identification badge
for purposes of section 212.02(15)(a), F.S. Authority is not
engaging in the business of selling tangible personal property
as provided by section 212.05, F.S.

ISSUE #2

Whether sales tax is due on parking decals issued to employees
and employees of unrelated businesses operating at the Airport?

FACTS

As a courtesy to the Airport personnel, Aviation has designated
certain parking lots around the Airport to be used by persons
employed at the Airport. The practice is to require each
employee who needs a place to park his/her vehicle to pay a
nominal fee for the use of such parking lots. Upon payment of
the fee, Aviation issues the employee a parking decal. The fee
is payable on a monthly basis. The fees collected by Aviation
for the parking decals cover the cost of the decals, shuttle
services to and from the employee parking lots to the Airport
terminals, and maintenance of the lots.

APPLICABLE STATUTE AND RULES

Section 212.03(6), F.S., provides:

(6) It is the legislative intent that every person is
engaging in a taxable privilege who leases or rents parking
or storage spaces for motor vehicles in parking lots or
garages, who leases or rents docking or storage spaces for

boats in boat docks or marinas, or who leases or rents tiedown or storage space for aircraft at airports. For the
exercise of this privilege, a tax is hereby levied at the
rate of 6 percent on the total rental charged.

Rule 12A-1.037(5)(g), F.A.C., provides:

(5) The sale of tangible personal property, or the sale of
services, under any one of the following circumstances, is
taxable and is not an occasional sale if:....

(g) Such sale involves admissions; communication services;
or taxable rentals, leases, or licenses of transient rental
accommodates, real property, parking lots, garages,
docking, tie down spaces, or storage spaces for motor
vehicles, boats, or aircraft.

RESPONSE

The employee's main object of paying the fee is to use a parking
space. Since the employees are provided parking spaces, the
charge is taxable as provided by section 212.03(6), F.S.
Government entities that are a Florida political subdivision
must collect sales tax on parking fees collected from their
employees. The sale of parking spaces is not an occasional or
isolated sale as provided by Rule 12A-1.037(5)(g), F.A.C.
Therefore, the Owner is engaging in the business of selling
parking spaces as provided by section 212.02(2), F.S., and
section 212.03(6), 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 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 advise 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,

Charles Wallace
Senior Attorney
Technical Assistance and Dispute Resolution
(850) 922-4734

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Enclosure