Was a separately stated furniture 'Delivery and Setup Fee' taxable when store customers could avoid delivery but the single fee also covered assembly and placement?

Plain-English summary

The Florida Department of Revenue ruled that the combined furniture delivery-and-setup fee was taxable. A delivery charge can be excluded when it is separately stated and the purchaser can avoid it, but these sellers bundled transportation with taxable setup and installation in one amount.

The petition covered showroom furniture retailers and an online furniture seller. Third-party trucking companies delivered the furniture and placed it in customers' homes. Setup ranged from positioning an item to assembling bunk beds, tables, wall units, and other large pieces.

The online fee could not be avoided

Online customers had no pickup option. Because they could not avoid transportation, Rule 12A-1.045 made the delivery charge taxable even though it appeared separately on the invoice.

Store customers could pick up furniture at designated depots or stores and avoid the fee. That made the transportation part potentially excludable.

Setup was taxable installation

Rule 12A-1.016(3)(a) taxed labor and services used to install tangible personal property that did not become real property. The Department treated furniture assembly and placement as installation.

Installation remained taxable even if separately stated or optional. It also did not matter that a particular customer could decline setup after choosing delivery, because the customer paid the same combined fee.

Combining delivery and setup made the whole fee taxable

The store sellers charged one optional lump sum for both transportation and installation. The delivery amount was not separately stated from the taxable setup amount.

As a result, the entire fee was included in the taxable sales price for both store and online sales.

What this means for you

Furniture and appliance retailers

If you want optional delivery to be evaluated separately, state the transportation charge independently from assembly, placement, installation, haul-away, or other services.

E-commerce sellers

A separately shown delivery line can still be taxable when customers have no way to avoid delivery.

Billing and tax teams

Review the invoice, customer pickup choices, contract terms, passage of title, insurance during transit, and what delivery personnel actually do at the destination.

Common questions

Q: Were store customers allowed to pick up furniture?
A: Yes. They could use specified depots or, in some circumstances, the nearest retail location and avoid the fee.

Q: Could online customers avoid delivery?
A: No.

Q: What counted as setup?
A: Placement and assembly, including bunk beds, tables, wall units, and other large furniture.

Q: Did declining setup make the fee nontaxable?
A: No. The charge stayed the same, and the seller offered delivery and setup as one bundled service.

Q: What was the final result?
A: The full delivery-and-setup fee was taxable for both the showroom retailers and the online seller.

Citations and references

• Fla. Stat. § 212.02(16) — sales price includes services that are part of the tangible-property sale
• Fla. Stat. § 212.05 — tax on retail tangible personal property
• Fla. Admin. Code r. 12A-1.045 — when transportation charges are taxable or excludable
• Fla. Admin. Code r. 12A-1.016(3)(a) — taxable installation labor and services
• Department of Revenue v. B & L Concepts, Inc., 612 So. 2d 720 (Fla. 5th DCA 1993) — optional, separately stated incidental delivery charges

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 05A-016

Original ruling text

SUMMARY
QUESTION: Is a separately stated "Delivery and Setup Fee" that is imposed only at the option of the purchaser
properly included in the taxable sales price of the item sold?
ANSWER - Based on Facts Below: Yes. The Delivery and Setup Fee is a separately stated lump sum charge that is
optional to the customer. Although a separately stated delivery fee that is imposed only at the option of the customer
could be excluded from the taxable sales price of the item sold, installation charges, such as the setup, are subject to
tax, regardless whether the charges are separately stated and imposed only at the option of the customer. Since the
delivery charge and the setup (installation) charge are made as a single amount, the charge is subject to tax.

March 29, 2005

Re: Technical Assistance Advisement 05A-016
Sales and Use Tax - Delivery Charges
Sections: 212.02, 212.05, F.S.
Rules: 12A-1.016, 12A-1.045, F.A.C.
Petitioners: XXX
Dear:
This letter is a response to your petition dated December 28, 2004, 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, Florida
Administrative Code. This response to your request constitutes a TAA and is issued to you under the authority of s.
213.22, Florida Statutes.
FACTS
The petition sets forth the following information:
Furniture Retailers and Furniture Online Seller sell furniture at retail. Furniture Retailers maintain showrooms
throughout Florida and elsewhere in the country. Furniture Online Seller maintains a website through which it sells
furniture at retail. Furniture Retailers and Furniture Online Seller typically collect and remit Florida sales tax on sales of
furniture delivered to a buyer in Florida. Furniture Retailers and Furniture Online Seller contract with third party
trucking companies that are available to deliver and set up the furniture sold by Furniture Retailers and Furniture
Online Seller. Most customers who purchase furniture sold by Furniture Retailers, and all customers who purchase
from Furniture Online Seller, have the furniture delivered to them by a third party trucking company that works under
contract to Furniture Retailers or Furniture Online Seller. As explained in more detail below, customers of Furniture
Retailers are given the option of either picking up their furniture at specified locations or having it delivered to them.

Customers of [Furniture Online] Seller are given no option to pick up their furniture purchases. They can opt to buy
from one of the Furniture Retailers instead of buying online.
The delivery personnel, who are not employees of Furniture Retailers or Furniture Online Seller, place the furniture in
the customer's home upon delivery. Such "set-up" runs the gamut from simply placing the furniture in a specified
location, to assembly of bunk beds, tables, wall units, or other large pieces of furniture. The set-up does not involve
installation of any property that would be considered "fixtures" under the Department's Rule 12A-1.051, Florida
Administrative Code. Instead, the services at issue include assembly and placement of the furniture.
If a customer chooses to have the furniture delivered (or, in the case of the [Furniture Online] Seller, chooses to buy
online and therefore have the furniture delivered) and the customer pays a delivery fee, the customer may choose not
to accept any set-up services. In such a case, the customer still pays the same amount for delivery services, even
though the customer never received the set-up services.
These customers pay Furniture Retailers or [Furniture Online] Seller a delivery charge that is separately itemized on
the furniture invoices issued to the customer by Furniture Retailers or [Furniture Online] Seller. The amount of the
delivery charge is tied to the amount of furniture delivered. In some cases, the persons delivering the furniture will also
pick up from the customer used mattresses and return these to Furniture Retailers' locations where they are disposed
of by Furniture Retailers.
Notwithstanding this service, customers - except those customers opting to purchase from [Furniture Online] Seller also are given the option of picking up furniture at Furniture Retailers' depots within fifty (50) miles of the customer’s
residence. If this option is elected, there is no additional charge to the customer. And, for those customers who do not
live within fifty (50) miles of one of Furniture Retailers' depots, the customer is afforded the option of picking up the
furniture at one of Furniture Retailer's retail locations closest to the customer's residence. A customer who resides
within fifty (50) miles of one of Furniture Retailers' depots is not given the option of picking up the furniture at Furniture
Retailers' showrooms, but must do so at the depot.
Advertising of Furniture Retailers and [Furniture Online] Seller discloses the fact that separate delivery charges may
apply. Furniture Retailers notify customer that they have three options for receipt of items they purchased. These
delivery options are disclosed to customers in writing in the showrooms and in close proximity to the cashier locations.
Customers in fact utilize the various options for receiving their purchases, although the majority of customers opt for
delivery of the items. (As previously noted, customers of [Furniture Online] Seller do not have these same options.)
The sales invoices used by Furniture Retailers and [Furniture Online] Seller reflects that the seller retains title to the
furnishings during delivery. Specifically, paragraph 7 of the... "Terms and Conditions," which are printed on the back of
the sales invoices... provides that "We [seller] retain title to furnishings until delivered to you [buyer] and paid for in
full."...
If a customer who receives delivery of the furniture (as opposed to customer pick-up of the furniture) pays for the
furniture with cash, a check or a credit card, the payment is treated by Furniture Retailers and [Furniture Online] Seller
as a deposit until the furniture is delivered. If the customer pays with a private label credit card of Furniture Retailers,

Furniture Retailers are not paid for the furniture until delivery is complete. The furniture remains insured under
coverage to Furniture Retailers or [Furniture Online] Seller while it is in the process of being delivered. Furniture
Retailers and Furniture Online Seller historically have collected and remitted Florida sales tax on the delivery charges
listed on invoices for a sale of furniture in Florida....
REQUESTED ADVISEMENT
Advice is requested on the taxability of the delivery/set-up fee for both Furniture Retailers and Furniture Online Seller.
LAW AND DISCUSSION
Section 212.05, Florida Statutes, generally imposes tax on the sale of tangible personal property. The tax is based on
the sales price of the tangible personal property sold. The term "sales price" is defined in Section 212.02(16), Florida
Statutes, to mean in pertinent part "the total amount paid for tangible personal property, including any services that
are a part of the sale."
Rule 12A-1.045, Florida Administrative Code, discusses the sales tax as it relates to transportation charges, and it
states in pertinent part as follows:
(1) "Transportation charges" include carrying, delivery, freight, handling, pickup, shipping, and other similar charges or
fees.
(2) Transportation charges which are not separately stated on an invoice or bill of sale, but are included in the sales
price of taxable tangible personal property, are subject to tax.
(3)(a) Where the seller agrees to deliver tangible personal property to some designated place and the purchaser
cannot elect to avoid the charge for transportation services, the charge for the transportation service is subject to tax,
even if separately stated on an invoice or bill of sale.

(4)(a) The charge for transportation services is not subject to tax when both of the following conditions have been met:

1. The charge is separately stated on an invoice or bill of sale; and
2. The charge can be avoided by a decision or action solely on the part of the purchaser.... (Emphasis Supplied)
   The court held, in Department of Revenue v. B & L Concepts, Inc., 612 So.2d 720 (Fla. 5DCA 1993), that separately
   stated delivery charges that are imposed only at the option of the purchaser, and that are incidental to the sale of
   tangible personal property, are not properly includable in the taxable sales price of tangible personal property sold.
   Rule 12A-1.045, Florida Administrative Code, is consistent with the findings of the court.
   Furniture Online Seller does not afford its customers the option of avoiding the delivery/set-up charge. Therefore, the
   charge is subject to tax to Furniture Online Seller's customers. Furniture Retailers do offer their customers the option
   of avoiding the delivery/set-up charge. While a separately stated delivery charge imposed only at the option of the

purchaser is not subject to tax, a charge that includes both delivery and set-up must be more closely examined.
Rule 12A-1.016(3)(a), Florida Administrative Code, discusses the taxable status of installation charges, and it states
as follows:
The total consideration received for labor or services used in installing tangible personal property which is sold and
does not become a part of realty, is taxable even though such charge may be separately stated. (Emphasis Supplied)
Installation charges are taxable when sold with taxable tangible personal property regardless whether the installation
charges are separately stated or optional to the purchaser. The petition describes the set-up service as including
installation of the item(s) purchased. It is irrelevant that the customer sometimes declines the set-up service portion of
the delivery and setup service.
Furniture Retailers charge a single lump-sum, albeit optional, fee for the delivery and installation of tangible personal
property. The transportation charge is not separately stated, since installation is included in the same lump-sum
amount. In addition to being optional to the purchaser, transportation charges must be separately stated from any
other charges in order to be excluded from the taxable sales price of tangible personal property. Therefore, Furniture
Retailers' charge for delivery/set-up is subject to tax, since the set-up charge (installation) is taxable and the delivery
charge (transportation) is not separately stated from the taxable set-up charge.
CONCLUSION
The delivery/set-up fee charged by Furniture Online Seller and Furniture Retailers is subject to tax. The set-up portion
of the lump sum fee includes installation of tangible personal property, which is taxable regardless whether the
purchaser is given the option to avoid the fee. And, in the case of Furniture Online Seller, the delivery/set-up fee is not
optional.
This response constitutes a Technical Assistance Advisement under Section 213.22, Florida Statutes, 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, Florida Statutes. 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, Florida Statutes, and are subject to disclosure to the public under the conditions of s. 213.22, Florida
Statutes. 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
Control #62477
cc: Rhonda Pearson, Tax Auditor IV, Tampa Service Center