Was a contractor's charge for disassembling, removing, packing, and arranging shipment of customer-owned equipment taxable?

Plain-English summary

Florida found no taxable sale because the contractor only removed and arranged shipment of equipment the customer already owned.

The work involved disassembly, removal from sites in Florida and Georgia, disposal of cables and related debris, packing, and outbound shipment arrangements. Although a subcontractor invoice mentioned miscellaneous packing materials, the contractor did not sell tangible personal property to the customer.

What this means for you

Equipment-removal contractors should define whether the agreement is solely for labor and logistics or also transfers parts, packing goods, replacement property, or repaired items. The ruling addressed the service-only facts presented.

Common questions

Q: Did the contractor sell the removed equipment?
A: No. The customer already owned it.

Q: Did packing materials make the whole charge taxable?
A: Not under the documents and facts reviewed.

Q: Did the ruling address installing replacement equipment?
A: No.

Citations and references

• Fla. Stat. § 212.02 — sales definitions
• Fla. Stat. § 212.08(7)(v) — service provision cited in the determination
• Fla. Admin. Code r. 12A-1.006 — property-related services cited in the ruling
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 03A-023

Original ruling text

SUMMARY

QUESTION: Is uninstalling equipment subject to tax?

ANSWER - Based on Facts Below: Taxpayer contracts for the
removal and shipment of equipment. Taxpayer is not selling
any tangible personal property to the customer to which
these services are provided. Therefore, there is no charge
which is subject to tax.

May 06, 2003

Re: Technical Assistance Advisement 03A-023
Sales and Use Tax - Uninstall Service - Equipment
Section: 212.02, F.S.
Rule: 12A-1.006, F.A.C.
Petitioner: XXX (herein "Taxpayer")
FEI: XX

Dear :

This letter is a response to your petition dated December 12,
2002, for the Department's issuance of a Technical Assistance
Advisement ("TAA") concerning the above referenced party and
matter. Your petition 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 s. 213.22, F.S.

FACTS

The petition sets forth the following facts:

[Customer] ... contracted with [Taxpayer] to perform what
is termed in the Telecom industry as an "un-install". The
"un-install" project is [summarized] as a removal service
on the [Customer] purchase orders as well as detailed on

the Detailed Scope of Work prepared by [Taxpayer's] project
manager. Basically, [Taxpayer] was obligated to
disassemble, remove, and arrange from shipment out of the
state equipment owned by [Customer] at multiple sites
within Florida and Georgia.... [T]he peripherals were
trashed such as cable racking, cables, and [Taxpayer]
removed all trash associated with this removal service.

Taxpayer subcontracts out the work to Subcontractor. A sample
invoice provided from Subcontractor to Taxpayer shows the use of
"miscellaneous materials" used in the performance of the work.
Taxpayer asserts that the materials are packing materials.

The documentation submitted by Taxpayer suggests that some sort
of telecommunications or networking equipment is the subject of
the project.

REQUESTED ADVISEMENT

Taxpayer requests advice on the taxability of the contract.

DETERMINATION

Section 212.08(7)(v), Florida Statutes, provides an exemption
for professional and personal services.

Taxpayer contracts for the removal and shipment of equipment.
Taxpayer is not selling any tangible personal property to the
customer to which these services are provided. Therefore, there
is no charge which is subject to tax.

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 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,

Sara D. Faulkenberry
Tax Law Specialist
Technical Assistance and Dispute Resolution
850/414-9838

Control #53008