Which private-area-lighting charges were subject to Florida sales tax and gross receipts tax for residential and commercial utility customers?

Plain-English summary

Florida assigned different sales-tax and gross-receipts-tax treatment to three private-area-lighting charges based on what each charge purchased and whether the customer was residential or commercial.

The utility installed, maintained, replaced, and removed lighting equipment on existing poles or on new utility-provided poles at customer property. The electricity was not separately metered. Customers paid a flat monthly fee plus a fuel-adjustment charge based on estimated energy use.

Bundled fixture and electricity charge

The monthly private-area-lighting charge covered both leased tangible personal property—the fixture and sometimes the pole—and electric energy. Commercial customers owed both taxes.

Residential electricity ordinarily qualified for the household-utility sales-tax exemption quoted in section 212.08(7)(j). But the bundled residential charge also included taxable equipment rent, which had no residential exemption. The Department treated the bundle as one transaction subject to sales tax, while the electricity component also made the receipt subject to gross receipts tax.

Fuel-adjustment charge

The separately stated fuel adjustment represented only estimated electricity consumption. It was subject to sales tax and gross receipts tax for commercial customers. For residential customers, the household-electricity exemption removed sales tax, but gross receipts tax still applied because the charge was for electric energy.

Pole charge

A separately stated charge for the pole was rent for tangible personal property. It was subject to sales tax for both residential and commercial customers. It was not subject to gross receipts tax because it did not pay for electricity.

What this means for you

Utility billing labels and bundling materially affected the result. Separating an electricity-only adjustment allowed the residential sales-tax exemption to apply, while combining exempt residential electricity with taxable equipment caused the whole monthly lighting charge to be treated as taxable under this TAA.

Common questions

Q: Was the bundled residential lighting charge exempt because household electricity was included?
A: No. The taxable fixture-rental component caused the bundled charge to be subject to sales tax.

Q: Was a residential fuel adjustment subject to sales tax?
A: No, when separately stated and based solely on electricity consumption. Gross receipts tax still applied.

Q: Was the pole charge subject to gross receipts tax?
A: No. It was a charge for rented equipment rather than electric energy.

Q: Could the utility rely on another taxpayer's earlier TAA?
A: No. This ruling expressly said the earlier TAA had no precedential value for this taxpayer.

Citations and references

• Fla. Stat. § 203.01(1)(a)1, (b) — gross receipts tax on utility services
• Fla. Stat. § 212.02(15)(a) — lease or rental within the definition of sale
• Fla. Stat. § 212.05(1)(a)1.a, (e)1.c — tax on tangible personal property and electrical energy
• Fla. Stat. § 212.08(7)(j) — residential household utility exemption
• Fla. Admin. Code r. 12A-1.053(1)(a) — tax treatment of electric power or energy
• Fla. Admin. Code r. 12B-6.001(1)(b) — gross receipts tax on utility-service providers

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-067

Original ruling text

SUMMARY
FACTS: Taxpayer is an integrated electric utility providing generation, transmission, and distribution services to
residential and commercial customers. Taxpayer offers its customers private area lighting service. The private area
lighting service in this instant case includes the installation, maintenance, replacement, and removal of lighting
equipment. The lights can be installed on existing service poles, or the Taxpayer can install a new service pole and
the light fixture on the customer's property. The electric energy used to provide the lighting in this instant case is not
separately metered. Taxpayer charges the customer a flat monthly fee and a fuel adjustment charge that is based on
the estimated amount of energy used. In some cases, monthly charges for the light fixture and a light pole will be
bundled together as one charge under "Private Area Lighting Charges," because the light and pole comprise a single
unit.
QUESTION: Is the charge for private area lighting service subject to sales tax and gross receipts tax?
ANSWER - Based of Facts Below:
Private Area Lighting Charges: This is a monthly charge for a light fixture and for the cost of electricity for the light.
Taxpayer's separately stated monthly charge to commercial and residential customers for private area lighting service
is subject to sales tax and gross receipts tax, because such charges are for the lease or rental of tangible personal
property and for electric energy.
Fuel Adjustment Charges: This is a monthly charge based solely on an estimated amount of electricity consumed
per light fixture. Taxpayer's separately stated monthly fuel adjustment charge to commercial customers is subject to
sales tax and gross receipts tax, because such charges are for electric energy. For residential customers, Florida law
provides an exemption from sales tax for the sale of electric power or energy for use in residential households.
Taxpayer should not charge residential customers sales tax on separately stated monthly fuel adjustment charges.
However, separately stated monthly fuel adjustment charges to residential customers are subject to the gross receipts
tax, because such charges are for electric energy.
Private Area Light Pole Charges: This is the monthly charge for the pole(s) on which the light(s) is/are mounted.
Charges for the lease or rental of tangible personal property are subject to sales tax. Taxpayer's separately stated
monthly private area light pole charges to both commercial and residential customers are subject to sales tax. Such
charges are not subject to the gross receipts tax to either commercial or residential customers because the charges
are not for electric energy.

December 9, 2004

Re: Technical Assistance Advisement 04A-067
Sales Tax and Gross Receipts Tax
Charges for Private Area Lighting

Section: 212.02(15)(a), F.S.
Section: 212.05(1)(a)1.a. and (1)(e)1.c., F.S.
Section: 212.08(7)(j), F.S.
Section: 203.01(1)(a)1. and (b), F.S
Rule: 12A-1.053(1)(a), F.A.C.
Rule: 12B-6.001(1)(b), F.A.C.
Dear :
This response is in reply to your petition dated June 14, 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.
Facts
The XXX (hereinafter collectively referred to as "XXX"), is an integrated electric utility providing generation,
transmission, and distribution services to residential and commercial customers in and around the XXX area. One of
the services XXX offers its customers is private area lighting. Private area lighting service includes the installation,
maintenance, replacement, and removal of the lighting equipment. The lights can be installed on existing service
poles, or the XXX can install a new service pole and the light fixture or equipment on any reasonable location on the
customer’s property. In the instant case, the electric energy used to provide the lighting is not separately metered.
The private area lighting equipment, which includes the light and/or pole (hereinafter collectively referred to as
"equipment"), remains the property of XXX and is installed, operated, maintained, and replaced, as needed, by XXX.
The customer has no responsibility or ownership interest in the equipment. Customers are allowed to choose between
several different styles of light fixtures and poles.
The standard agreement between XXX and the customer is for a minimum of three years. XXX charges the customer
a flat monthly fee and a fuel adjustment charge that is based on the estimated amount of energy used. The size of the
light or the wattage of the light is used to determine the estimated amount of electric energy used by the customer.
Charges for private area lighting are the same for both residential and commercial customers. Charges are based on
the installed cost of the equipment (light and pole), operation and maintenance costs (which includes the estimated
cost of electricity), depreciation, and a return to XXX for the investment in such equipment. The installed cost includes
engineering, materials, labor, vehicle/equipment cost, and any outside contractor expenses, plus any overhead for
fringe benefits on labor and stocking costs for materials. The operation of the light is controlled by a photocell which
turns the light on at dusk and off at dawn.
The Department has reviewed XXX's Electric Rate Tariff (hereinafter "Tariff") filed with the Florida Public Service
Commission relative to the issue in this TA. The effective date of Tariff is XXX. Private area lighting is specifically
provided in XXX, sheet numbers XXX, XXX and XXX. Under the provision "XXX," found on sheet number XXX, XXX's

charges for private area lighting include:
Minimum Bill: The minimum monthly bill shall be the sum of all charges under contract. The monthly charge includes
the basic cost of electricity for the light.
Under the "XXX" section found on sheet number XXX, XXX will impose an additional monthly charge when it provides
a pole.
On XXX, and again on XXX, the Department contacted XXX for additional information on the pricing methods used by
XXX to charge customers for private area lighting. XXX indicated that XXX separately itemizes on a customer's bill or
invoice the following charges for private area lighting:

• Private Area Lighting Charges: This is the monthly charge for the light fixture to cover the operation and
  maintenance costs as well as a return to XXX. This monthly charge includes the basic cost of electricity for the light.
• Fuel Adjustment: This is a monthly charge based on an estimated amount of electricity consumed per light fixture.
• Private Area Light Pole Charges: This is the monthly charge for the pole(s) on which the light(s) is/are mounted.
  In some cases, monthly charges for the light fixture and light pole will be bundled together as one charge under
  "Private Area Lighting Charges," because the light and pole comprise a single unit.
  Requested Advisement
  For commercial customers, XXX currently collects both sales tax and gross receipts tax on charges for private area
  lighting. For residential customers, XXX collects gross receipts tax. Recently, XXX became aware of Technical
  Assistance Advisement 97A-032, dated May 5, 1997 (hereinafter "TAA-032"), which addresses the taxability of certain
  equipment furnished by a utility. XXX is concerned that the decision provided in TAA-032 may indicate that its
  imposition and collection of taxes on charges for private area lighting may be incorrect. XXX has asked for a TAA
  relative to the issue of whether it should continue collecting and remitting sales tax and gross receipts tax on charges
  for private area lighting.
  Applicable Authority and Discussion
  To summarize the issue at hand, XXX offers its residential and commercial customers private area lighting service.
  XXX imposes several monthly itemized charges for this service. The question that has been posed is whether XXX's
  charges to its customers for private area lighting service are subject to sales tax and to the gross receipts tax.
  The charge for electricity is subject to sales tax pursuant to section 212.05(1)(e), F.S. Here, section 212.05(1), F.S.,
  states in pertinent part:
  212.05 Sales, storage, use tax.-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 of 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.

(e)1. At the rate of 6 percent on charges for:...
c. Electrical power or energy, except that the tax rate for charges for electrical power or energy is 7 percent.
Section 212.08(7)(j), F.S., provides a specific sales tax exemption on sales of utilities to residential households by
utility companies who pay the gross receipts tax. For your information, s. 212.08(7)(j), F.S., provides the following:
(j) Household fuels.-Also exempt from payment of the tax imposed by this chapter are sales of utilities to residential
households or owners of residential models in this state by utility companies who pay the gross receipts tax imposed
under s. 203.01, and sales of fuel to residential households or owners of residential models, including oil, kerosene,
liquefied petroleum gas, coal, wood, and other fuel products used in the household or residential model for the
purpose of heating, cooking, lighting, and refrigeration, regardless of whether such sales of utilities and fuels are
separately metered and billed direct to the residents or are metered and billed to the landlord. If any part of the utility
or fuel is used for a nonexempt purpose, the entire sale is taxable. The landlord shall provide a separate meter for
nonexempt utility or fuel consumption. For the purposes of this paragraph, licensed family day care homes shall also
be exempt.
Section 212.02(15)(a), F.S., defines the term "sale" as follows:
(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.
Rule 12A-1.053, F.A.C., provides additional guidance on the sale of electricity. Here, paragraph (1)(a) of this rule
provides:
The sale of electric power or energy by an electric utility is taxable. The sale of electric power or energy for use in
residential households, to owners of residential models, or to licensed family day care homes by utilities who are
required to pay the gross receipts tax imposed by Chapter 203, F.S., is exempt. Also exempt is electric power or
energy sold by such utilities and used in the common areas of apartment houses, cooperatives, and condominiums, in

residential facilities enumerated in Chapter 400, F.S., and in other residential facilities. However, if any part of the
electric power or energy is used for a non-exempt purpose, the entire sale is subject to tax.
The charge for electricity is also subject to gross receipts tax, under section 203.01, F.S. Here, the law provides:
(1)(a)1. Every person that receives payment for any utility service shall report by the last day of each month to the
Department of Revenue, under oath of the secretary or some other officer of such person, the total amount of gross
receipts derived from business done within this state, or between points within this state, for the preceding month and,
at the same time, shall pay into the State Treasury an amount equal to a percentage of such gross receipts at the rate
set forth in paragraph (b)....
(b) The rate applied to utility services shall be 2.5 percent....
Rule Chapter 12B-6, F.A.C., provides regulatory guidance for the gross receipts tax. Rule 12B-6.001, F.A.C., provides
in part, the following:
(1) A tax is imposed on every person receiving payment for any utility service at the rate of 2.5 percent on the total
amount of gross receipts derived from business done within this state or between points within this state. Gross
receipts means total payments received in money, goods, services, or other valuable consideration by every person
for "utility services." For purposes of this rule chapter, the term "utility service" means electricity for light, heat, or
power and natural or manufactured gas for light, heat, or power.

(b) The gross receipts tax is levied upon the provider of utility services. The tax may be wholly or partially separately
itemized at the option of the utility provider on a customer's bill, invoice, statement, or other evidence of sale. When
wholly or partially separately itemized, every person, including governmental units and charitable and religious
organizations, is liable for the payment of the tax to the service provider. The gross receipts tax is a tax imposed on
the privilege of doing business and is an item of cost to the service provider. The service provider remains fully and
completely liable for the payment of the tax, even when the tax is wholly or partially separately itemized on the
customer's bill, invoice, statement, or other evidence of sale.
With reference to TAA-032, section 213.22(1), F.S., provides in pertinent part:
... Technical assistance advisements shall have not precedential value except to the taxpayer who requests the
advisement and then only for the specific transaction addressed in the technical assistance advisement, unless
specifically stated otherwise in the advisement....
Private Area Lighting Charges:
XXX's separately stated monthly charge for private area lighting service is in part a charge for a light fixture and in part
for the basic cost of electricity for the light. Therefore, XXX's charges for private area lighting service include a charge
for tangible personal property (the light fixture - and in some cases the light fixture and light pole) and a charge for
electric energy. Charges for the lease or rental of tangible personal property are subject to sales tax. Notwithstanding

the above cited residential exemption from sales tax, charges for electric energy by a utility company are subject to
both sales tax and to the gross receipts tax.
Commercial Customers: XXX's separately stated monthly charge to commercial customers for private area lighting
service is subject to sales tax and gross receipts tax, because such charges are for the lease or rental of tangible
personal property and for electric energy.
Residential Customers: For residential customers, Florida law provides an exemption from sales tax for the sale of
electric power or energy for use in residential households. However, as referenced above, the separately stated
monthly charge for private area lighting includes charges for two components bundled together under one pricing
structure. The two components sold are tangible personal property and electric energy. Florida law does not provide a
residential exemption for the sale or lease of tangible personal property such as lighting fixtures. Since the monthly
charge for private area lighting includes a charge for tangible personal property (with no accompanying sales tax
exemption) and a charge for electric energy (with an accompanying partial sales tax exemption for residential
households), the charge must be treated as a single transaction subject to sales tax. Therefore, XXX's separately
stated monthly charge to residential customers for private area lighting is subject both to sales tax and to the gross
receipts tax.
Fuel Adjustment Charges:
This is a monthly charge based solely on an estimated amount of electricity consumed per light fixture.
Commercial Customers: XXX's separately stated monthly fuel adjustment charge to commercial customers is subject
to sales tax and gross receipts tax, because such charges are for electric energy.
Residential Customers: For residential customers, Florida law provides an exemption from sales tax for the sale of
electric power or energy for use in residential households. XXX should not charge residential customers sales tax on
separately stated monthly fuel adjustment charges. However, separately stated monthly fuel adjustment charges to
residential customers are subject to the gross receipts tax, because such charges are for electric energy.
Private Area Light Pole Charges:
This is the monthly charge for the pole(s) on which the light(s) is/are mounted. Charges for the lease or rental of
tangible personal property are subject to sales tax. XXX's separately stated monthly private area light pole charges to
both commercial and residential customers are subject to sales tax. Such charges are not subject to the gross receipts
tax to either commercial or residential customers because the charges are not for electric energy.
TAA-032 has no precedential value in the instant case.
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., which are subject to disclosure to the public under the conditions of s. 213.22, F.S. Your request
for specific deletions of confidential information has been received. These deletions will be made prior to public
disclosure.
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: 60567