Did a Florida seller of travel have to register as a sales-tax dealer and collect tax again on lump-sum vacation packages?

Plain-English summary

Florida allowed the travel seller to sell its vacation packages for one lump-sum price without registering as a sales-tax dealer or collecting additional state or local-option tax from the customer. Tax was paid when the travel seller bought each taxable component, and the package met the statutory conditions preventing a second layer of tax.

The company was registered as a Florida seller of travel and planned to sell packages mainly online. Each package contained at least two components, such as attraction admissions, hotel accommodations, meals, automobile rentals, or golf green fees. Customers received one package price with no itemized amount for any component.

Some admissions and meals came from related corporations. Those companies charged the same discounted prices they regularly offered to unrelated preferred travel agents and collected applicable sales tax. Unrelated hotels and other vendors charged the applicable transient-rental, sales, and local taxes on their components.

Three core conditions prevented additional tax

Section 212.04(1)(d) and Rule 12A-1.005(6) imposed no additional tax when:

1. The vacation package contained two or more components.
2. The customer price did not separately itemize admissions, lodging, transportation, meals, or other components.
3. The travel agent bought every component from another party and paid all sales tax due at purchase.

The related-party rule added another safeguard: a component seller in the same controlled corporate group could not charge the travel agent less than the price charged to unrelated agents under normal industry practices.

Losing a condition changed the result

The Department said the travel seller would have to register and collect applicable tax if it:

• Itemized package components to customers.
• Received a specially discounted related-party component price below normal unrelated-agent pricing.
• Failed to pay the tax due when purchasing a taxable component.

What this means for you

Travel agents and tour operators

An all-in package can avoid an additional retail tax layer when tax is paid upstream and the customer sees one bundled price. Maintain vendor invoices and proof of tax payment for every taxable component.

Related attractions and hotels

Controlled-group pricing must reflect the amount charged to unrelated travel agents under normal industry practices. A special internal discount can force itemization and collection at the package-sale level.

Online travel sellers

Website design matters. Displaying separate component prices can change the tax treatment even if checkout ultimately shows a total.

Common questions

Q: How many components were required?
A: At least two, such as admission plus lodging, meals, transportation, or another travel component.

Q: Could the customer see separate prices?
A: No. The ruling depended on a single package price without itemization.

Q: Was tax ignored entirely?
A: No. Tax due on each taxable component was paid when the travel seller purchased it from the supplier.

Q: Could related companies supply components?
A: Yes, if they charged no less than the price offered to unrelated travel agents under normal industry practices and collected the applicable tax.

Citations and references

• Fla. Stat. § 212.04(1)(d) — no additional tax on qualifying travel packages
• Fla. Stat. § 559.927(10) — definition of seller of travel
• Fla. Admin. Code r. 12A-1.005(6) — vacation-package conditions, itemization, and related-party pricing
• Fla. Admin. Code r. 12A-1.060 — sales-tax dealer registration

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-054

Original ruling text

SUMMARY
FACTS: Taxpayer is a corporation registered with the Secretary of State to do business in Florida. Taxpayer is also
registered with the Department of Agriculture and Consumer Services as a "seller of travel" pursuant to Florida
Statutes Ch. 559, Part XI (Sections 559.926 et seq.).
Taxpayer is in the business of selling vacation packages. The vacation packages will be sold to the public for a single
lump-sum price with no itemization of the individual components. The vacation packages consist of a combination of
admissions to a recreational facility, meals, and other items, such as transient accommodations, automobile rentals,
and golf course green fees. The vacation packages will include two or more of these identified components.
Components will either be purchased from unrelated parties or be purchased from related parties at the same price
charged to unrelated travel agents. Taxpayer will pay the applicable sales tax on all of the purchased components of
the packages, including the transient accommodations, automobile rentals, and golf course green fees.
QUESTION: Is Taxpayer required to register as a dealer and collect and remit sales tax or local option tax under
Chapter 212, F.S., on its sales of vacation packages.
ANSWER - Based on Facts Below: Under the provisions of s. 212.04(1)(d), F.S., and Rule 12A-1.005(6), F.A.C.,
Taxpayer is not required to register as a dealer and is not required to collect and remit any sales tax or local option tax
under Chapter 212, F.S., on its sales of vacation packages. If Taxpayer were to itemize the components of the
vacation packages to its customers, if Taxpayer were to purchase components from related entities for a specially
discounted price not available to others, or if Taxpayer were to fail to pay the applicable sales tax due on the purchase
of each of the components of the vacation packages, Taxpayer would no longer meet the criteria established in s.
212.04(1)(d), F.S., and Rule 12A-1.005(6), F.A.C., for tax-exempt sales of vacation packages. Taxpayer would then
be required to register with the Department as a dealer and collect the applicable sales tax on its sales.

August 31, 2004

Re: Technical Assistance Advisement 04A-054
Sale of Vacation Packages
Sales and Use Tax
Section: 559.927(1), F.S.
Section: 212.04(1)(d), F.S.
Rule: 12A-1.005(6), F.A.C.
Petitioner: XXX ("Taxpayer")
FEI: XX
Dear :
This response is in reply to your petition dated August 3, 2004, requesting the Department's issuance of a Technical

Assistance Advisement ("TAA") pursuant to s. 213.22, F.S., and Chapter 12-11, F.A.C., regarding the above
referenced matter and party. An examination of your petition has established that you have complied with the statutory
and regulatory requirements for issuance of a TAA. Therefore, the Department is hereby granting your request for
issuance of a TAA.
Stated Facts
In your letter, you provide the following facts:
[Taxpayer] is a foreign corporation registered to do business in Florida and also registered with the Department of
Agriculture and Consumer Services as a "seller of travel" pursuant to Florida Statutes Ch. 559, Part XI (Sections
559.926 et seq.). XXX, (Corporation A) owns and operates XXX in ..., Florida doing business as XXX. XXX
(Corporation B) owns and operates XXX in..., Florida doing business as XXX. [Corporation A] and [Corporation B] sell
taxable admissions to XXX, to members of the general public, to [Taxpayer] and to unrelated travel agents. [Taxpayer,
Corporation A and Corporation B] are all members of the same controlled group of corporations for federal income tax
purposes.
[Taxpayer] will sell vacation packages on the basis hereinafter described. [Taxpayer] will purchase admissions to XXX
from [Corporation A and Corporation B], respectively, and will also purchase on-site meals... from [Corporation A and
Corporation B] for inclusion in the vacation packages further described below. In all cases, the prices charged to
[Taxpayer] by [Corporation A and Corporation B] will be not less than those charged by [Corporation A and
Corporation B] to unrelated parties under normal industry practices. More particularly, the prices charged to
[Taxpayer] for admissions and meals will be the discounted amounts [Corporation A and Corporation B] regularly use
in making sales to unrelated, preferred travel agents. Sales from [Corporation A] to [Taxpayer] and account
settlements between the two will be recorded in internal statements, monthly reporting and intercompany accounts.
The same will be true of sales from [Corporation B] to [Taxpayer]. [Taxpayer] will record the revenue and expenses
from its sale of vacation packages on its books, which revenue and expenses may thereafter be transferred within the
affiliated group, but such subsequent intercompany transfers will not affect the sales prices charged by [Corporation A
and Corporation B] to [Taxpayer] nor affect the corresponding Chapter 212 taxes to be paid to the State of Florida.
[Corporation A and Corporation B] are registered to do business in the State of Florida and are registered as sales tax
dealers with the Florida Department of Revenue pursuant to Chapter 212, Florida Statutes. [Corporation A and
Corporation B] will charge State sales tax, and any applicable local option surtaxes, on the sales of all taxable
components to [Taxpayer] and remit such taxes to the Department. [Taxpayer] will also buy hotel accommodations
from unrelated third parties for inclusion in the vacation packages it sells. Accommodations will be purchased from
various established hotel chains. Those hoteliers will charge State transient rental tax and applicable local taxes on
the accommodations sold to [Taxpayer] and have the responsibility for remitting the same to the Department.
[Taxpayer] may also buy other components for inclusion in vacation packages from unrelated parties, such as
automobile rentals, golf course green fees, and the like, and pay to such third parties all applicable State sales taxes
and local option surtaxes on all taxable components. [Taxpayer] will sell vacation packages that include two or more
of the components identified above. All of the vacation packages will include admission to XXX. Most of the sales of
these vacation packages will be done over the Internet. Customers will generally effect purchases by credit card and

they will receive a confirmation identifying [Taxpayer] as the seller of the vacation package. Credit card payments will
be deposited to [Taxpayer’s] bank account and swept on a daily basis into a central corporate account for cash
management purposes. A listing of the various vacation packages to be offered will appear on a website that identifies
[Taxpayer] as the seller of the vacation packages. A guest purchasing a vacation package from the website must start
with a package that includes an admission and hotel accommodations; neither may be purchased separately and
there is no separate pricing of these two components. The guest must enter the dates on which the admission and
accommodations are to be used and the number of adults and children in the party. The guest may also select
additional components at that time, none separately priced, furnishing the same dates and number in party
information. When the guest has finished selecting the desired vacation package, a single package price is displayed.
If the guest wants to proceed with the purchase, appropriate credit card information must then be entered and a
booking confirmation is returned to the guest. All vacation packages will be sold solely on a package price basis; there
will be no itemization of any of the components of any vacation package. [Taxpayer] is not making any sales in Florida
except the sale of such vacation packages.

[Taxpayer] is registered as a seller of travel and intends to renew the registration annually as required. [Taxpayer] will
sell several different vacation packages. Those initially being offered will be set forth on the website described above.
Different or additional vacation packages may be offered from time to time and changes in the aggregate prices for
any or all vacation packages may change from time to time, but in no event will the prices of the components in any
such vacation package be separately itemized.
Requested Advisement
Under the fact pattern presented, you have asked the Department to issue a Technical Assistance Advisement stating
that Taxpayer is not required to register as a dealer and is not required to collect and remit any sales tax or local
option tax under Chapter 212, F.S., on its sales of vacation packages.
Applicable Authority and Discussion
As noted in your letter, Chapter 212, F.S., does not have a definition for the term "seller of travel." Therefore, the
Department can use the definition in s. 559.927(10), F.S., which provides the following:
(10) "Seller of travel" means any resident or nonresident person, firm, corporation, or business entity who offers for
sale, directly or indirectly, at wholesale or retail, prearranged travel, tourist-related services, or tour-guide services for
individuals or groups, including, but not limited to, vacation or tour packages, or vacation certificates in exchange for a
fee, commission, or other valuable consideration. The term includes any business entity offering membership in a
travel club or travel services for an advance fee or payment, even if no travel contracts or certificates or vacation or
tour packages are sold by the business entity.
Section 212.04, F.S., provides statutory guidance on sales of admissions in Florida. More specific to the issue at hand
is language provided in s. 212.04(1)(d), F.S., for "sellers of travel" who purchase individual travel components for
resale. Here, the law provides:

(1)(d) No additional tax is due on components incorporated as part of a package sold by a travel agent if the package
includes two or more components such as admissions, transient rentals, transportation, or meals; if all of the
components were purchased by the travel agent from other parties and any sales tax due on such purchases was
paid; and if there is no separate itemization of the admission, transient rental, transportation, meal, or other
components in the sales price of the package. This paragraph does not apply if the actual price charged for a
component by the dealer to a travel agent is less than the price charged to unrelated parties under normal industry
practices and the dealer and the travel agent are members of the same controlled group of corporations for federal
income tax purposes. [Emphasis Supplied.]
Rule 12A-1.005, F.A.C., provides regulatory guidance on the sale of admissions in Florida. Subsection (6) of the rule
provides the following:
(6) SALES OF VACATION PACKAGES.
(a) For purposes of this subsection, a "vacation package" means a bundle consisting of two or more components,
such as admissions, transient rentals, transportation, or meals. Coupon books, maps, or other incidental items, that
are provided free of charge as part of a vacation package are not considered "components" for purposes of this
subsection.
(b) Tax is due on the purchase of taxable components of a vacation package at the time of purchase. No additional
tax is due on the components that are incorporated into a vacation package and sold by a travel agent, when all of the
following conditions are met:

1. The vacation package sold by the travel agent includes two or more components;
2. There is no separate itemization of the sales price of the package for the admission, transient rental, transportation,
   meal, or any other component of the vacation package; and
3. All components of the vacation package were purchased by the travel agent from other parties and any sales tax
   due on such purchases was paid at the time of purchase.
   (c) A travel agent who itemizes the sales price of the taxable components of a vacation package must register with the
   Department as a dealer. (See Rule 12A-1.060, F.A.C., Registration). Travel agents who itemize the sales price of the
   taxable components of a vacation package are required to collect tax from the purchaser as follows:
4. When the itemized components are sold for the same amount or less than was paid for each of them, the travel
   agent is not required to collect any additional tax. No credit is allowed for tax paid on the purchase of the taxable
   components.
5. When the itemized components are sold for more than the purchase price of each component, the travel agent is
   required to collect tax on the sales price of the taxable components. The travel agent may take a credit of tax
   previously paid for the taxable components that are separately itemized at a sales price greater than the purchase

price of the component.
(d) When the seller of components of a vacation package and the purchasing travel agent are members of the same
controlled group of corporations for federal income tax purposes and the amount charged for the component is an
amount less than the price charged to unrelated travel agents under normal industry practices, the related travel agent
is required to itemize the sales price of the components to the purchaser and collect tax on the itemized taxable
components. The travel agent may take a credit of tax previously paid for the taxable components.
To summarize the transactions at issue, Taxpayer is registered as a seller of travel in the business of providing
vacation packages. The vacation packages will be sold to the public for a single lump-sum price with no itemization of
the individual components. The vacation packages consist of a combination of admissions to XXX owned by
Corporation A and XXX owned by Corporation B, both of which are related companies to Taxpayer, meals purchased
from Corporation A and Corporation B, and other items, such as transient accommodations, automobile rentals, and
golf course green fees that are purchased from unrelated companies. The vacation packages will include two or more
of these identified components. Corporation A and Corporation B charge Taxpayer discounted amounts that are
regularly used in making sales to unrelated, preferred travel agents and will collect sales tax from Taxpayer. Taxpayer
will also pays sales tax on the other purchased components of the packages, including the transient accommodations,
automobile rentals, and golf course green fees.
Under the fact pattern you presented, Taxpayer is not required to register as a dealer and is not required to collect
and remit any sales tax or local option tax under Chapter 212, F.S., on its sales of vacation packages. However, if
Taxpayer were to itemize the components of the vacation packages to its customers, if Corporation A and/or
Corporation B were to charge Taxpayer less than the price charged to unrelated parties under normal industry
standards, or if Taxpayer fails to pay the applicable sales tax due on the purchase of each of the components of the
vacation packages, Taxpayer would no longer meet the criteria established in s. 212.04(1)(d), F.S., and Rule 12A1.005(6), F.A.C., for tax-exempt sales of vacation packages. Taxpayer would then be required to register with the
Department as a dealer and collect the applicable sales tax on its sales.
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.
If you have any further questions with regard to this matter and wish to discuss them, you may contact me directly at

(850)922-4729.
Sincerely,
Gary L. Gray
Tax Law Specialist
Technical Assistance & Dispute Resolution
Control No: 61088