Could varied HVAC parts on one invoice be aggregated for Florida's $5,000 discretionary sales surtax limitation?

Plain-English summary

An HVAC equipment and parts wholesaler presented invoices containing many different components sold to one customer at one time. The invoice total exceeded $5,000, but no single bulk line exceeded the threshold, and the items were not sold as a complete set.

Florida found the first invoice failed the aggregation test. A single sale was documented, but the transaction was not multiple quantities of one item, and the evidence did not show that all parts formed one working or integrated unit. Statements that parts might enter different systems were not enough.

For a separate scenario, the ruling assumed all items other than an acetylene torch and tanks were components of one HVAC system. Under that assumption, one $5,000 limitation applied to the working-unit components. The installation tools were not part of the unit and remained outside the aggregated amount.

What this means for you

An invoice total alone does not create one surtax cap. The documents must show both one sale and items normally sold in bulk or assembled into the same identifiable working unit. Tools used to install the unit are not components of it.

Common questions

Did a single invoice automatically qualify? No. It satisfied only the single-sale side of the test.

Why did the assorted parts fail? They were different items, not a complete set, and could go into different systems rather than one documented working unit.

What documentation would better identify a full system? The ruling suggested listing all items needed for the set or identifying a “complete” system at a specified price and quantity.

How were the torch and tanks treated? Separately. They were installation tools, not components of the assumed working unit.

Citations and references

• Fla. Stat. § 212.054(2)(b)1. (multiple items and the $5,000 surtax limitation)
• Fla. Admin. Code r. 12A-15.004(3) (single sale, bulk sale, and working unit tests)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06A-028

Original ruling text

SUMMARY
QUESTION 1: The taxpayer provided an invoice which reflected that multiple items of tangible personal property were
purchased from a dealer at the same time; the quantity of each item purchased was listed on the invoice; all items
were delivered on the same date; the invoice total exceeded $5,000. The question is whether the invoice total
qualifies the sale for the $5,000 Discretionary Sales Surtax limitation.
ANSWER 1 - Based on Facts Below: Determination is made that the invoice total, being above $5,000, does qualify
for the $5,000 Discretionary Sales Surtax limitation as a single sale of multiple items; but the invoice did not meet the
bulk sale test, since the transaction is neither the sale of multiple quantities of a single item nor was there
documentation provided to support the fact that the items were sold as components of a working unit.
QUESTION 2: Using the same invoice as provided in Question 1, the taxpayer made additional statements that

1. these items are not normally sold as a set due to the many variations and particulars of each system;
2. the parts listed on the invoice may go into different systems and may not all be for the same system;
3. some of the items listed are not assembled directly with each other, but instead are assembled to other parts of the
   working unit.
   ANSWER 2 - Based on Facts Below: The statements made by the taxpayer, without any other evidence except the
   invoice, are not sufficient enough to clearly reflect that all items listed on the invoice provided were components of a
   working system. As such, the invoice does not qualify for the $5,000 Discretionary Sales Surtax limitation.
   QUESTION 3: The taxpayer provided an additional invoice which reflected that multiple single items (the largest
   quantity of the same single item totaled $3,3499.80) were sold on the same invoice. The invoice total exceeded
   $5,000. Two items listed on the invoice were tools sold for the installation of other items listed on the invoice. The
   taxpayer makes the statement in describing the invoice that, except for the two items, all other items are items that will
   become part of a working unit. The question is whether the $5,000 Discretionary Sales Surtax limitation applies to all
   items sold except the two that are tools rather than components of a working unit.
   ANSWER 3 - Based on Facts Below: Determination is made that the invoice does conform to the $5,000
   Discretionary Sales Surtax limitation on the total amount of the invoice, minus the cost of the tools sold on said
   invoice.

September 20, 2006

Re: Technical Assistance Advisement 06A-028
Sales Tax - Discretionary Sales Surtax Limitation

Statute(s): 212.054, F.S.
Rule(s): 12A-15.004, F.A.C.
Petitioner: XXX (hereinafter "Taxpayer")
FEI: XX
Dear
This letter is a response to your petition dated December 28, 2005, 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 (F.A.C.). This response to your request constitutes a TAA and is issued to you under the
authority of s. 213.22, Florida Statutes (F.S.).
Facts
Your letter sets forth the following facts:
[Taxpayer] is a wholesaler of XXX equipment and parts. Normally, one invoice is produced for one sales order
(purchase order). Sales can be of a single item, such as a compressor, etc., or can be multiple quantities of items that
the taxpayer normally sells in multiple quantities and that their customers purchase in multiple quantities. Taxpayer
maintains multiple locations, and the location of the customer (destination) determines which local surtax rate to apply
to the sales price.
Requested Advisement
You request advice on whether any portion of the taxpayer's transactions is covered under the $5,000 surtax limitation
as a bulk/working unit sale.
Law
Section 212.054, F.S., provides in part:
... (2)(a) The tax imposed by the governing body of any county authorized to so levy pursuant to s. 212.055 shall be a
discretionary surtax on all transactions occurring in the county which transactions are subject to the state tax imposed
on sales, use, services, rentals, admissions, and other transactions by this chapter and communications services as
defined for purposes of chapter 202....
(b) However:

1. The sales amount above $5,000 on any item of tangible personal property shall not be subject to the surtax....
   Rule 12A-15.004, F.A.C., provides in part:

... (2)(a) The surtax does not apply to the sales amount above $5,000 on any item of tangible personal property....
(3) When multiple items of tangible personal property are sold by a dealer to the same purchaser at the same time,
the $5,000 limitation applies when the sale or purchase is a single sale that meets the requirements of paragraph (a)
and is a sale of items normally sold in bulk or items that comprise a working unit, or a part of a working unit, that
meets the requirements of paragraph (b).
(a) SINGLE SALE. The sale or purchase of multiple items of tangible personal property must be a single sale in which
the purchaser buys all items of tangible personal property from the dealer at the same time.

1. There must be an invoice, sales slip, charge ticket, written purchase order or agreement, or other tangible evidence
   of sale that establishes the items were sold in a single sale.
2. A single sale of items of tangible personal property that is documented by a written purchase order or written
   agreement executed between a purchaser and the selling dealer must:
   a. Provide for a specific quantity of tangible personal property; and
   b. If delivery of all items does not occur at the same time, provide for a specific time period within which delivery of the
   tangible personal property to the purchaser must be made.
3. Each delivery of items of tangible personal property, under the provisions of a written purchase order or written
   agreement that does not specify the quantity and the time period during which delivery of the property will occur, will
   be a single sale....
   (b) ITEMS NORMALLY SOLD IN BULK OR ITEMS THAT COMPRISE A WORKING UNIT. A single sale must be a
   sale of items of tangible personal property that meets at least one of the following conditions:
4. The items are multiple quantities of a single item that the dealer normally sells in multiple quantities in the normal
   course of the dealer's business or that the purchaser normally buys in multiple quantities in the normal course of the
   purchaser's business;
5. The items are normally sold as a set or a unit and the utility of each for its intended purposes is dependent on the
   set being complete;
6. The items are normally sold in a single sale by the seller to the purchaser for use in the normal business practice of
   the purchaser as an integrated unit; or
7. The items are component parts that have no utility unless assembled with each other to form a working unit or part
   of a working unit.
   Discussion, Analysis, and Response

I. Single Sale Test
All items sold to one purchaser pursuant to a single written purchase order or contract can meet the single sale test. In
the case of contracts that result in multiple deliveries of materials, a contract must identify the specific quantity of
materials to be sold, and it must identify the specific end date by which all of the materials must be delivered. If the
contract is open ended as to quantity of materials or the end delivery date, then each invoice will stand alone for
purposes of the single sale test.
II. Bulk Sale/Working Unit Test
Multiple items meeting the single sale test may not necessarily qualify for the $5,000 discretionary sales surtax
limitation. They must also meet the bulk sale/working unit test.
Bulk sale test. A bulk sale is simply multiple quantities of a single item sold at one time to a single purchaser. For
instance, 1,000 cubes of bricks is a bulk sale. However, bricks and mortar together are not a bulk sale.
Working unit test. To meet the working unit test, multiple different items must comprise a set in which each component
is required in order for the unit to function as intended. Using the bricks and mortar example, bricks and mortar that
will be combined to form the siding of a single building constitute a working unit.
You provided three scenarios in your letter along with copies of invoices for the three scenarios. Your scenarios will be
addressed using the information reflected on the invoices provided for each scenario, and followed by the
Department's response:
Scenario #1:
The invoice provided under this scenario reflects that:10 drain pans ($304.20); 56 eighteen inch collars ($117.04); 20
packs of XX painted ZIPs ($264.20); 50 XX Float Switch Clip-ons ($225.00); 50 XX Float In-line Switches ($425.00);
334 various grills of different sizes ($1,855.40); 65 XX Ducts ($1,162.80); 184 connecting collars ($214.98); and, 75
Roof Vents ($468.00), were sold to one customer at the same time. The amount charged before tax was $XX. Three
hundred sixty-six dollars and fifty-six cents ($366.56) tax was computed on the amount charged at the rate of 7
percent (sale occurred in XX County), resulting in a total of $XX charged to the customer.
Response: The invoice reflects that multiple items of tangible personal property were purchased from the dealer at the
same time; the quantity of each item purchased is listed on the invoice; and, all items were delivered on November 29,
2005. Although the invoice total is greater than $5,000, the total price of the 334 grills sold (the largest multiple sale of
a single item) is XX which is below the $5,000 discretionary sales surtax limitation.
Determination is made that the transaction under this scenario (based on the accompanying invoice) is a single sale
of multiple items and conforms with the provisions of Rule 12A-15.004(3)(a), F.A.C. However, for the transaction to
qualify for the $5,000 discretionary sales surtax limitation, the transaction must also meet the bulk sale test. The
transaction does not meet the bulk sale test under the provisions of Rule 12A-15.004(3)(b)1., F.A.C., because the

transaction is a single sale of multiple items, rather than a sale of multiple quantities of a single item. The transaction
does not meet the working unit test, since the items listed on the invoice are not sold as sets or units. Information has
not been provided concerning whether the items on the invoice comprise a working unit or part of a working unit.
Since the total price of the 334 grills sold (the largest multiple sale of a single item) is below the $5,000 discretionary
sales surtax limitation, like all other items on the invoice, the price of each grill is subject to discretionary sales surtax.
Scenario #2:
Same facts as scenario #1. Taxpayer request[s] advice as to whether the invoice [provided under Scenario #1]
(purchase order) would be subject to the discretionary sales surtax limitation because of 12A-15.004(3)(b)2., 3., or 4.[,
F.A.C.] All parts listed on the invoice go into the installation/service of a XXX.
...these items are not normally sold as a set due to the many variations and particulars of each system. Customers do
not order by requesting a 'set' of items to install an XYZ system. Instead, each customer orders each part needed in
accordance with their particular plans and specifications for the system.
...the items sold are not of themselves an integrated [unit], but would form a part of an integrated unit. Each part by
itself has no function, but is part of an integrated system. However, the parts listed on the invoice may go into different
systems and may not all be for the same system. The parts listed are also not all the parts that are required for a
complete integrated unit.
...These items listed do not comprise all the component parts that are needed to form a working unit XX Also, some of
the items listed are not assembled directly with each other, but instead are assembled to other parts of the working
unit.
Response: Subparagraph 2. of Rule 12A-15.004(3)(b), F.A.C., provides that items are normally sold as a set or a unit
and the utility of each for its intended purposes is dependent on the set being complete. To apply the $5,000
discretionary sales surtax limitation to a complete air conditioning and heating system, either all items necessary to
complete the set XX must be listed on the invoice, or a designation similar to "complete air conditioning and heating
unit" should be listed on the invoice at a specified price, and the number 1 entered under the "QTY ORD" column.
Rule 12A-15.004(3)(d)2., F.A.C., provides:
When a XX, who normally purchases several heating and air conditioning units at the same time, purchases several
units from a selling dealer who bills for the units on one invoice, the surtax applies to the first $5,000 on the total
amount of the invoice.
Determination is made that the transaction depicted under Scenario #2 does not conform with the provisions of Rule
12A-15.004(3)(b)2., because, as stated in your letter, "these items are not normally sold as a set due to many
variations and particulars of each system."
Subparagraph 3. of Rule 12A-15.004(3)(b), F.A.C., provides that items that are normally sold as a single sale by the
seller to the purchaser for use, in the normal business practice of the purchaser, as an integrated unit are items

subject to the $5,000 discretionary sales surtax limitation. To qualify for this provision, a seller must normally sell items
as a single sale, and the purchaser must normally buy the items sold by the seller as an integrated unit. "These items
listed do not comprise all the component parts that are needed to form a working unit (air conditioning and heating
system)."
Determination is made that the transaction also does not conform with the provisions of Rule 12A-15.004(3)(b)3.,
because the items, listed as separate items on the invoice, do not collectively form an integrated unit when installed.
Rule 12A-15.004(3)(b)4., F.S., provides that items which are component parts that have no utility unless assembled
with each other to form a working unit or part of a working unit are subject to the $5,000 discretionary sales surtax
limitation under the working unit test. In the working unit test example, the working unit is identified as a single
building, where bricks and mortar are purchased and used collectively to form the building.
However, as you state "... the parts listed on the invoice may go into different systems and may not all be for the same
system." Without knowing whether the parts are for the same system, a determination cannot be made if the items on
the invoice form part of a working unit, and therefore, qualifying for the $5,000 limitation. The items sold must
comprise one working unit or parts of one working unit to qualify for the limitation.
Scenario #3:
Same basic facts as scenario #1. For purposes of this scenario, reference is made to [the] scenario #3 example
invoice. Also, for this scenario, the assumption will be made that the invoice is subject to the discretionary sales surtax
limitation. On this particular invoice, there are two items that are marked by *. These are not items that will become a
part of a working unit, but are tools to be used in the installation of the unit. These items are an acetylene torch and
tanks. As the assumption is made here that all other items on this particular invoice [are] subject to the discretionary
sales surtax limitation, taxpayer request[s] advice as to whether the tools should be considered separately in applying
the discretionary sales surtax limitation. For instance, the total amount for the torch and tanks is $XX. The total
amount for all other items is $XX. Should the surtax apply to the first $5,000 of the $XX and the $XX [?] Again, noting
our assumption that all items except for the torch and tank are subject to the discretionary sales surtax limitation.
The invoice provided under this scenario reflects that: 144 filters ($XX) 144 Vent Hoods ($XX); 28 drain pans ($XX);
250 Condensing Unit Tie Downs ($XX); 48 Roof Vents ($XX); 631 Grills ($XX); 84 Thermo Fin 3" UL ($XX); 11 Malco
Tek 5/16"; X 3/4" 5C PKs ($XX); 2 R OXY ($XX); and, 1 MC ACET ($XX) were sold to a customer at the same time.
As stated in the facts under Scenario #3, the acetylene torch and tanks are not items sold that became a part of a
working unit, but are tools used in the installation of the unit. The amount charged on the invoice, before tax, was
$XX.) $XX tax was computed on the amount charged at the rate of 7 percent (sale occurred in XX County), resulting
in a total of $XX charged to the customer.
Response: A XXX (like the building in the working unit test) is deemed a working unit. An assumption will be made
that the items listed on the scenario #3 example invoice are items that are component parts of the air conditioning and
heating system that comprise one working unit.

Noting this assumption (no advisement is provided as to whether the example 3 invoice actually meets the working
unit test), determination is made that the scenario 3 example invoice does conform with the provisions of Rule 12A15.004(3)(b)4., and the amount of $XX XX invoice total, minus the total amount charged for the acetylene torch and
tank [$XX]) is subject to the $5,000 discretionary sales surtax limitation. All items listed on Scenario #3 Example
Invoice (except the acetylene torch and tanks) are items purchased that have no utility unless assembled with each
other to form a working unit. A working unit in this case is an air conditioning and heating system. The acetylene torch
and tanks are not part of the working unit and therefore, the charges for these items are not included in the amount
subject to the limitation under Rule 12A-15.004(3)(b)4., F.A.C.
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,
Lynwood Taylor
Tax Law Specialist
Technical Assistance & Dispute Resolution
Record ID: 18547