Were consulting services for software-system compliance and validation subject to Florida sales tax?

Plain-English summary

A purchaser hired a consultant to help identify quality-impacted software systems, establish an electronic-records and electronic-signatures compliance program, create a computer-system validation plan, and validate agreed systems.

The purchaser confirmed that it received no computer hardware, software, or other tangible personal property from the consultant.

Florida treated the work as a nontaxable consulting service. Services not specifically taxed by chapter 212 generally were not taxable unless provided with a sale of tangible personal property, and no such property was transferred here.

What this means for you

Standalone consulting can remain outside Florida sales tax when the engagement does not include hardware, software, or another taxable property transfer. The actual deliverables matter.

Common questions

What services were provided? Compliance-program development, validation planning, and computer-system validation assistance.

Was software transferred? No. The purchaser expressly confirmed that no hardware or software was acquired from the consultant.

Would bundled property potentially change the analysis? The ruling limited its result to consulting provided without tangible personal property.

Citations and references

• Fla. Stat. § 212.02(15)-(16), (19) (sale, sales price, and tangible personal property)
• Fla. Stat. § 212.05 (taxable sales and specified services)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06A-011

Original ruling text

SUMMARY
QUESTION 1: Are consulting services subject to Florida sales tax?
ANSWER 1 - Based on Facts Below: No. Pursuant to Chapter 212, F.S., consulting services are not subject to tax
as long as there has been no exchange of tangible personal property. This charge is construed to be a service.

May 22, 2006

Re: Technical Assistance Advisement 06A-011
Sales Tax - Consulting Services
Sections 212.02, 212.05, Florida Statutes
XXX (Purchaser)
FEI # XX
Dear:
This response is in reply to your letter dated April 26, 2006, requesting the Department's issuance of a Technical
Assistance Advisement ("TAA") pursuant to Section 213.22, F.S., and Rule Chapter 12-11, F.A.C., regarding the
Department's position on the issue of consulting services. An examination of your letter 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
According to the information provided in your letter and the supporting documentation, on September 23, 2004,
Purchaser, entered into an agreement with ("Consultant"), for consulting services.
The agreement states in pertinent part:
Proposal Goal: To determine which parts of [Purchaser] software systems are considered 'Quality Impacted' and
ensure that the software and supporting procedures conform to the FDA 21CFR Part 11 statutes for Electronic
Records Electronic Signatures retention.
Proposed work for [Consultant].

1. Work with [Purchaser] Personnel to Establish a FDA 21CFR Part 11 Electronic Records Electronic Signatures
   Compliance Program:
   a. XXX

b. XXX
c. XXX
d. XXX
e. XXX
f. XXX

2. Work With [Purchaser] Personnel to Establish a Quality Computer System (QCS) Master Validation Plan for System
   Life Cycle:
   a. XXX
   b. XXX
   c. XXX
   d. XXX
   e. XXX
3. Work with [Purchaser] Personnel to Validate agreed upon Quality Computer System (QCS) per Master Validation
   Plan
   a. XXX
   b. XXX
   c. XXX
   During our telephone conversation of May 5, 2006, you confirmed that Purchaser did not purchase any tangible
   personal property, such as computer hardware or software, from Consultant in conjunction with the consulting
   services.
   Requested Advisement and Taxpayer Position
   You seek advisement on the taxability of the services described above, which you believe are exempt as professional
   services.
   Applicable Authority

Section 212.05, F.S., provides in part:
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...
Section 212.02, F.S., provides in pertinent part:
(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.
(16) "Sales price" means the total amount paid for tangible personal property, including any services that are a part of
the sale....
(19) "Tangible personal property" means and includes personal property which may be seen, weighed, measured, or
touched or is in any manner perceptible to the senses...
Response
Services, except those authorized by Chapter 212, F.S., are generally not subject to tax unless they are provided in
conjunction with the sale of tangible personal property.
Therefore, the consulting services described herein and rendered to Purchaser are exempt from Florida sales and use
tax given that no tangible personal property was provided to Purchaser.
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 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.
Sincerely,

Heather S. Miller
Senior Tax Specialist
Technical Assistance and Dispute Resolution
(850) 922-4835