Could a county claim fuel-tax refunds for airport shuttle vehicles owned and operated by its contractor?

Plain-English summary

A county-owned airport hired an independent contractor to manage parking facilities and provide free shuttle transportation between parking lots and the terminal. The contract required the operator to supply, operate, maintain, repair, replace, and insure the shuttle fleet.

Florida found that the contractor, not the county, operated the vehicles. The county's hourly service payments and possible fuel-component fee did not turn the shuttles into county-operated vehicles.

It also did not matter whether the county or contractor purchased the fuel. Because the fuel was consumed in contractor-operated vehicles, the county could not claim the governmental fuel-tax refund.

What this means for you

Government funding, oversight, or fuel purchasing does not by itself establish government operation. Contract terms assigning the vehicles, costs, maintenance, and operating responsibility control the refund analysis.

Common questions

Who operated the shuttle vehicles? The contractor, which supplied the vehicles and bore the operating and ownership-related responsibilities.

Did county purchase of fuel make the vehicles county-operated? No. The ruling treated fuel purchasing as irrelevant to vehicle operation.

Did the public airport purpose qualify the fuel? No. The refund required fuel used in vehicles operated by the county, which these were not.

Citations and references

• Fla. Stat. § 206.41(4)(d) (government motor-fuel refund or credit)
• Fla. Stat. § 206.625(1) (refund claims)
• Fla. Stat. § 206.874(3)(b) (government diesel-fuel credits)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06B5-001

Original ruling text

SUMMARY
QUESTION: Do vehicles qualify for fuel tax refunds when such vehicles are operated by a contractor providing shuttle
service from parking lots of an county-owned airport to the airport terminal?
ANSWER - Based on Facts Below: No. The terms and conditions of the contract between the county and the
contractor were specific to require the contractor to submit a budget to the county which listed expenses required to
manage the parking lots of the airport and to provide airport shuttle service from the parking lots to the airport
terminal. However, for the airport shuttle service component of the contractor's dual services, the contract requires
that the contractor procure, maintain, and operate a fleet of vehicles, and provide maintenance, repair, replacement,
and insurance for all vehicles at the contractor's sole cost and expense. Further, the contractor must obtain fuel for
such vehicles at its sole cost and expense either from sources other than the county or from the county directly. Under
the condition where fuel is purchased by the contractor from sources other than the county, the county is obligated to
pay the contractor a fuel component fee based on a formula specified in the contract. It is determined, under the terms
and conditions of the contract, that ownership and operation of the vehicles used to provide shuttle services remained
with the contractor. Under this condition, the vehicles do not qualify as vehicles operated by the county, and the fuel
consumed by the vehicles does not qualify as fuel used in vehicles operated by the county, and subject to refund.

June 2, 2006

Re: Technical Assistance Advisement 06B5-001
Motor Fuel Tax Refund - Fuel Used by Airport Shuttle Service
Statute(s): Chapter 206, F.S.
Petitioner: XXX (hereinafter called "COUNTY")
FEI: XX
Dear :
This letter is a response to your petition dated January 31, 2006, for the Department's issuance of a Technical
Assistance Advisement ("TAA") concerning the above referenced party and matter. Additional information, including
the Management Agreement, was submitted with a letter dated April 3, 2006. 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
The subject, as listed in your letter of request for a Technical Assistance Advisement, is "Airport Shuttle Service
Contract (Agreement)." The letter was submitted with one enclosure: Management Agreement for Management &
Operation of Airport Parking Facilities. The Agreement sets forth the terms and conditions under which County enters

into a contract with an independent contractor who provides shuttle service for airport patrons between parking lots
and the airport terminal.
Your letter sets forth the following facts:
[COUNTY] owns and operates the [COUNTY] [Airport]. Currently, the County competitively bids out the management,
operation, and maintenance of all on-site airport parking facilities, including short term parking, long term parking,
premium parking, park and ride, and the toll plazas. As part of the contract for the management and operation of the
airport parking facilities, the County's Contractor provides a fleet of van-type vehicles to shuttle passengers, free of
charge and at regular intervals, to and from the distant parking lots and the airport terminal, twenty-four hours a day
three hundred and sixty-five days a year. [Footnote not quoted] This service is essential to the operation of the airport
since there is no other mode of transportation from the distant parking lots to the airport terminal. The County has final
approval over all shuttle service operating procedures and the shuttle transportation service plan. The County is
responsible for all costs related to the airport parking facilities and shuttle services and receives all revenue generated
by the airport parking facilities. Under the contract attached as Exhibit "A", the County bears the financial responsibility
of providing fuel to the Contractor, by either paying the Contractor a "Fuel Component Fee" (¶ 5.02(A)) or purchasing
fuel to be provided to the Contractor (¶ 5.02(B)). The Contractor is compensated for its services solely through a
management fee. Consequently, allowing the County to provide tax-exempt fuel to its Contractor will benefit the
County alone, as the Contractor does not pay fuel expenses under the terms of the contract.
In the attached contract, specifically ¶ 5.02(B)2 [Footnote not quoted], the County seeks to furnish the Contractor with
tax-exempt motor fuel without charge for exclusive use in the performance of the above cited contract....
... [COUNTY] fulfills a public function by operating [Airport] and that, in operating the airport, it should be afforded the
discretion to determine which facilities are necessary to the proper operation of the airport. The County has
determined that parking facilities, including an airport shuttle service, are necessary to the proper functioning of
[Airport]. It has also determined that airport shuttle services can be provided more economically through a
contractor....
By furnishing free airport shuttle service to and from airport parking facilities and the terminal, the County is providing
a service that is integral to the operation of [Airport]. The County is, therefore, authorized under Chapter 206, to
furnish tax-exempt fuel to its airport shuttle Contractor and to seek all tax refunds available to the County as a
licensed local government user of fuel.
[COUNTY's] Board of County Commissioners is licensed as a Local Government User with the Department of
Revenue.
OPERATOR (as used in this response) is the party, other than COUNTY, that is bound by the Agreement to provide
management and operation services of the airport’s parking facilities and shuttle transportation services.
REQUESTED ADVISEMENT

The County requests a ruling that the fuel purchased by the County and furnished without charge to a Contractor for
exclusive use in airport shuttle buses operated on behalf of and for the benefit of the County is used exclusively by the
County for a tax-exempt purpose.
LAW
Section 206.41(4)(d), F.S., provides:
The portion of the tax imposed by paragraph (1)(g) which results from the collection of such taxes paid by a
municipality or county on motor fuel or diesel fuel for use in a motor vehicle operated by it shall be returned to the
governing body of such municipality or county for the construction, reconstruction, and maintenance of roads and
streets within the municipality or county. A municipality or county, when licensed as a local government user, shall be
entitled to take a credit on the monthly diesel fuel tax return not to exceed the tax imposed under paragraphs (1)(b)
and (g) on those gallons which would otherwise be eligible for refund.
Section 206.625(1), F.S., provides:
Those portions of the county fuel tax imposed by s. 206.41(1)(b) which result from the collection of such tax paid by a
municipality or county on motor fuel for use in a motor vehicle operated by it shall be returned to the governing body of
each such municipality or county according to the administrative procedures in s. 206.41 for the construction,
reconstruction, and maintenance of roads and streets within the respective municipality or county.
Section 206.874(3)(b), F.S., provides statutory authority for the on-road use of dyed diesel fuel in motor vehicles
owned by local governments. Section 206.874(4), F.S., however, qualifies the authority granted to local governments
for the on-road use of dyed diesel by stating:
(4)(a) Notwithstanding the provisions of this section allowing local governments and school districts to use dyed or
otherwise untaxed diesel fuel in motor vehicles, each county, municipality, and school district, to qualify for such use,
must first register with the department as a local government user of diesel fuel.
(b) Local government users of diesel fuel shall be required to file a return accounting for diesel fuel acquisitions,
inventory, and use, and remit a tax equal to 3 cents of the 4-cent tax required under s. 206.87(1)(a), plus the taxes
required under s. 206.87(1)(b), (c), and (d) each month to the department.
(c) Any county, municipality, or school district may receive a credit for additional taxes paid under s. 206.87(1) directly
to the department for any highway use of untaxed diesel fuels.
d) Each county, municipality, or school district may receive a credit for additional taxes paid under s. 206.87 for the
highway use of diesel fuel, provided the purchases of diesel fuel meet the requirements relating to refunds for motor
fuel purchases under s. 206.41.
DISCUSSION

In your request for a TAA, you pose the following question: "Is the sale of fuel to a county to be furnished without
charge to its airport shuttle bus contractor for exclusive use in transporting airport passengers between airport parking
facilities and the terminal on behalf of the county regarded as the sale of tax-exempt fuel to a local government for its
exclusive use?" There are at least three (3) issues within this one question, each of which requires a response. First,
the sale of fuel to a county, to the State, or to any other political subdivision of the State is never totally exempt from
fuel taxes imposed under Chapter 206, F.S. Second, fuel "furnished without charge" is not regarded as a "sale." Third,
since it is apparent that the contractor and the local government are separate legal entities, has sufficient evidence
been provided to make the determination that the shuttle vehicles are vehicles included in the fleet of the vehicles
operated by the local government? The response to the third issue will be in the CONCLUSION section of this TAA.
In the Requested Ruling section of your letter, you state:
The County requests a ruling that the fuel purchased by the County and furnished without charge to a Contractor for
exclusive use in airport shuttle buses operated on behalf of and for the benefit of the County is used exclusively by the
County for a tax-exempt purpose.
The Agreement provided with your request for a TAA, provides, in Section 4.01:
4.01 Budget. For the first Contract Year and each subsequent Contract Year of this Agreement, OPERATOR shall
prepare and submit for the Department's review and consideration an annual operating budget in a form and detail
satisfactory to the Department. The annual operating budget shall be submitted at least ninety (90) days prior to July 1
of each Contract Year in a form approved by the Department. The annual operating budget for the first Contract Year
shall be provided for review and approval of the Department prior to execution of this Agreement by COUNTY....
B. The annual operating budget must reflect operations in accordance with the Operating and Procedures Manual
approved by the Department. The annual operating budget shall be subject to approval of the Department within thirty
(30) days of receipt thereof and shall be subject to review from time to time if requested by either OPERATOR or the
Department. If the Department fails to approve the proposed annual operating budget within the thirty (30) day period,
then the annual operating budget for the prior Contract Year shall be used by the parties until a new annual operating
budget is approved. All approvals or revisions of the annual operating budget by the Department shall be set forth in
writing and shall thereafter be binding upon OPERATOR. Any expenditures in excess of the total approved
budget will not be reimbursed by COUNTY and will be at OPERATOR's expense. OPERATOR acknowledges
and agrees that the Department shall also have the right to disapprove of specific line items within the annual
operating budget.... [Emphasis supplied]
F. Except as otherwise provided for herein, the approved annual operating budget shall not include the following
(which shall be deemed to be included in the Annual Management Fee and Fuel Component Fee): [Emphasis
supplied]

8. All costs associated with OPERATOR's customer service vehicle, shuttle transportation service vehicles and
   utility cart (golf cart), including, but not limited to, acquisition, operation and maintenance. Operation and maintenance
   shall include, but not limited to, insurance, fuel and repairs.... [Emphasis supplied]

The Agreement provided with your request for a TAA, provides, in Section 4.06:
4.06 Service and Operating Standards. OPERATOR shall provide the following services throughout the term of this
Agreement:...
...U. OPERATOR shall be responsible for purchasing any property and equipment included in the annual operating
budget, except as may be purchased and provided by the Department. Title to all property and equipment included in
the annual operating budget (and/or for which OPERATOR has received reimbursement from COUNTY) shall be
vested in COUNTY upon delivery or installation of same. Upon request of the Department, OPERATOR shall provide
COUNTY with a bill of sale or other evidence of the transfer of ownership of the property and/or equipment. In the
event that revised operating procedures require additional or replacement equipment be obtained, OPERATOR
agrees to procure such equipment in the time and manner prescribed by the Department....
Section 4.04, of the Agreement provides further in pertinent part:
4.04 Shuttle Transportation Service. OPERATOR must procure, maintain, and operate a fleet of van-type vehicles,
which are in compliance with the requirements of the Americans with Disabilities Act, with stand-up headroom, such
as an ElDorado Aero Elite 320 or equivalent, seating for approximately twenty to twenty-four (20-24) passengers
(including the driver) but not less than twenty (20) passengers (including the driver) with front entrance and exit for
transportation service between the Park & Ride Lots, Airport’s terminal building and any established off premises
overflow lots....
A. OPERATOR shall provide for a minimum of four (4) shuttle vehicles, not more than two (2) model years old and
twenty thousand (20,000) miles on the Commencement Date, to be available and operational at all times.
M. Notwithstanding any other provision of this Agreement to the contrary, OPERATOR acknowledges and agrees that
OPERATOR shall provide for all vehicle maintenance, repair and replacement at OPERATOR's sole cost and
expense. OPERATOR acknowledges that OPERATOR shall not be reimbursed for actual fuel costs. In the event
COUNTY does not provide fuel directly for shuttle transportation service vehicles pursuant to Section 5.02 (B),
OPERATOR shall obtain fuel for such vehicles at its sole cost and expense through other sources....
[Emphasis supplied]
Section 5.01 of the Agreement provides in part:
5.01 Annual Management Fee and Compensation for Shuttle Transportation Service. In consideration for the
management and operation of the Airport's public parking facilities and shuttle transportation services as required
pursuant to this Agreement, COUNTY shall pay to OPERATOR the Annual Management Fee and hourly rates for
shuttle transportation services set forth below:
Initial Term

Annual

Managemente

Hourly Rate for
Shuttle

FEE

Transportation
Service (Not
Including Fuel
Component Fee)

Contract
Year 1

$___ $_____

Contract
Year 2

$___ $_____

Contract
Year 3

$___ $_____

Renewal Terms
Contract
Year 4

$___ $_____

Contract
Year 5

$___ $_____

Payment of the Annual Management Fee shall be prorated and paid monthly together with the monthly charges for
shuttle transportation services. Monthly charges for shuttle transportation services shall be based on the actual
number of hours the shuttle transportation service vehicles are in operation. Payments shall be made within thirty (30)
days of the Department's receipt of OPERATOR's monthly report of Gross Revenues and billing for shuttle
transportation services. OPERATOR's billing for shuttle transportation services shall include the number of hours each
vehicle was used in the provision of the services.
Section 5.02 of the Agreement provides:
5.02 Fuel Component Fee.
A. In addition to the hourly rate for shuttle transportation services set forth in Section 5.01, COUNTY shall pay to
OPERATOR $_____ per hour for shuttle transportation services based on the actual number of hours the shuttle
transportation service vehicles are in operation ("Fuel Component Fee"). The Fuel Component Fee shall be increased
annually on each anniversary of the Commencement Date by the percentage in the "Consumer Price Index", which
shall be defined as the Consumer Price Index for All Urban Consumers, U.S. City Average, Transportation, Private
Transportation, Motor Fuels, (1982-84 = 100), Not Seasonally Adjusted, in the manner hereinafter set forth. The first
annual increase shall be calculated based on the percentage change in the Consumer Price Index from the
Commencement Date through the first anniversary of the Commencement Date, but shall not take effect until the
second full month following the anniversary date. Subsequent annual increases shall likewise be calculated based on

the percentage change in the Consumer Price Index between each anniversary date of the Commencement Date, but
shall not take effect until the second full month following the then current anniversary date. Notwithstanding the
foregoing, in the event the most current base index period ceases to be 1982-84 = 100, the most current base index
period shall be used. In the event the "Transportation, Private Transportation, Motor Fuels" item series ceases to be
published, the Department shall choose a substantially similar item series for calculation of the annual increase to the
Fuel Component Fee. In the event the Consumer Price Index is not available, a reliable governmental or other
nonpartisan publication evaluating similar information used in determining the Consumer Price Index shall be used.
OPERATOR acknowledges that COUNTY reserves the right to modify the provisions of this Section 5.02 during any
renewal term.
B. Notwithstanding the foregoing, COUNTY may elect, upon written notice to OPERATOR, to directly provide
OPERATOR with fuel for its shuttle transportation service operations hereunder. Such election shall be in lieu of
payment of the Fuel Component Fee provided for in Section 5.02(A). In the event COUNTY elects to provide
OPERATOR with fuel for its shuttle transportation service operations hereunder, OPERATOR shall comply, and shall
cause its employees, contractors and agents to comply, with all policies, procedures, rules and regulations of the
Department and COUNTY, as now may exist or as hereinafter established by the Department or COUNTY, applicable
to the provision of fuel by COUNTY, including, but not limited to, procedures for tracking and auditing OPERATOR's
use of fuel. COUNTY may elect to suspend or terminate the provision of fuel at any time upon written notice to
OPERATOR. Upon suspension or termination of provision of fuel by COUNTY, the provisions of Section 5.02 (A) shall
be reinstated during the period of the suspension or upon such termination. OPERATOR shall only use fuel provided
pursuant to this paragraph for the provision of services required to be provided by OPERATOR hereunder and for no
other purpose whatsoever. OPERATOR shall not permit its employees, contractors or agents to use fuel purchased by
COUNTY for personal use or any other purposes that are not specifically authorized by this Agreement. Use of fuel
supplied by COUNTY pursuant to this paragraph by OPERATOR or its employees, contractors or agents for any other
purpose, other than for the purposes set forth herein, shall be a material default of this Agreement. OPERATOR shall
be responsible for the payment of any local, state or federal taxes, surcharges or assessments, if any, associated with
or payable as a result of OPERATOR's use of fuel purchased by COUNTY. OPERATOR shall use best efforts to
conserve fuel in its operations hereunder. The Department may make the election to provide fuel to OPERATOR for
the purposes set forth herein on behalf of COUNTY; provided that a determination has been made that COUNTY is
not precluded from providing fuel to OPERATOR by state or federal law.
ANALYSIS
ARTICLE IV - OBLIGATIONS OF OPERATOR, Section 4.01, Budget:
The provisions of this section of the Agreement clearly indicate, first, that any expenditures in excess of a budget
submitted by OPERATOR to and approved by COUNTY will not be reimbursed by COUNTY, and second, the budget
submitted by OPERATOR to COUNTY shall not contain either the acquisition cost of the shuttle transportation service
vehicles, or the projected cost of fuel used by such vehicles. The conditions of Section 4.01 lead to a determination
that, since the acquisition cost of the shuttle transportation vehicles is not a cost that COUNTY reimburses,
OPERATOR remains owner and operator of said vehicles throughout the term of the Agreement. Under this condition,
the vehicles are vehicles operated by OPERATOR, rather than by COUNTY.

ARTICLE IV - OBLIGATIONS OF OPERATOR, Section 4.06, Service and Operating Standards:
Section 4.06, subsection U., reaffirms the condition, found in Section 4.01, that only specified operating costs shall be
included in the annual operating budget submitted to COUNTY by OPERATOR. However, Section 4.06 requires
additionally that title and ownership to all property and equipment included in the annual operating budget shall be
vested in COUNTY upon delivery or installation of same. Since the acquisition cost of shuttle transportation vehicles is
prohibited, under Section 4.01, from inclusion in the annual operating budget submitted by OPERATOR,
determination is made that title and ownership of said vehicles remain in custody of OPERATOR during the term of
the Agreement. Under this condition, the vehicles are vehicles operated by OPERATOR rather than COUNTY.
ARTICLE IV - OBLIGATIONS OF OPERATOR, Section 4.04, Shuttle Transportation Service:
With respect solely to the fuel used by shuttle transportation vehicles, the cited provisions of Section 4.04 of the
Agreement are interpreted to, first, give notice to OPERATOR that COUNTY shall not reimburse OPERATOR for
actual fuel costs, and second that if it is determined that COUNTY cannot provide tax-exempt fuel to OPERATOR,
then OPERATOR shall obtain fuel for the shuttle transportation vehicles at its (OPERATOR's) sole cost and expense
thorough other sources. The determination is made, based on the conditions of Section 4.04, that the entity which
purchases the fuel used by the shuttle transportation vehicles is not relevant to whether the vehicles are operated by
COUNTY.
ARTICLE V - PAYMENTS, RECORDS AND REPORTING, Section 5.01, Annual Management Fee and
Compensation for Shuttle Transportation Service:
Section 5.01 provides that the amount of the Annual Management Fee and the Compensation for Shuttle
Transportation Service shall be determined, prorated, and paid monthly, and shall be based on the actual number of
hours the shuttle transportation service vehicles are in operation. Since this fee is not included in the operating
budget, but determined on a monthly basis, based on the provisions of the section, and since the fee is not a direct
cost associated with either the purchase of shuttle vehicles or the purchase of fuel used by the vehicles, it is
determined that the fee is a cost paid by COUNTY to OPERATOR, for providing the service of managing the parking
facilities and for providing shuttle transportation services. As such, OPERATOR is the entity providing both the
services and the vehicles. Under this condition, the vehicles are vehicles operated by OPERATOR, rather than by
COUNTY.
ARTICLE V - PAYMENTS, RECORDS AND REPORTING, Section 5.02, Fuel Component Fee:
Section 5.02 provides that the amount of the Fuel Component Fee shall be paid to OPERATOR by COUNTY based
on the actual number of hours the shuttle transportation service vehicles are in operation. The Fuel Component Fee
shall be paid by COUNTY in addition to the Annual Management Fee and Compensation for Shuttle Transportation
Service provided in Section 5.01. However, if COUNTY finds that it can provide fuel to OPERATOR for use in the
shuttle transportation service vehicles, then the Fuel Component Fee will not be paid by COUNTY to OPERATOR.
Determination is made that under either option fuel taxes will be paid on purchases. Under the condition where

COUNTY buys fuel from its suppliers, COUNTY will pay fuel taxes to its suppliers. Under the condition where
OPERATOR buys fuel from its suppliers, OPERATOR will pay fuel taxes to its suppliers. The determination is made,
based on the conditions of Section 5.02, that the entity which purchases the fuel used by the shuttle transportation
vehicles is not relative to whether the vehicles are operated by COUNTY.
CONCLUSION
It is determined, based on the terms and conditions of the cited sections of the Agreement between COUNTY and
OPERATOR, that COUNTY is not the entity which operates vehicles providing shuttle transportation services at
[Airport]. As such, fuel used in shuttle transportation service vehicles is not fuel used in vehicles operated by
COUNTY. Therefore, COUNTY is not authorized to obtain refunds of fuel taxes paid on fuel used in airport shuttle
vehicles.
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 and Dispute Resolution
Control # 19320