Which charges connected with renting, moving, and storing portable storage containers were subject to Florida sales tax?

Plain-English summary

A portable-storage company rented containers, required customers to use the company or its dealer for all container transportation, and offered warehouse storage and related services. Florida treated the mandatory delivery and moving charges as part of the taxable rental because customers could not obtain the container rental without buying those transportation services.

The container rental and rented dollies and pads were taxable rentals of tangible personal property. Monthly warehouse storage and warehouse access were taxable as leases or licenses to use real property, and the damage-waiver charge was taxable as a service warranty. Moving supplies were taxable sales of tangible personal property. Container repairs were taxable unless the dealer could document that absolutely no tangible personal property was used.

The container-cleaning charge was not taxable when customers could avoid it by cleaning the container themselves. The rescheduling or cancellation fee was also not taxable under the described terms because the customer could avoid it by not changing or canceling the appointment.

What this means for you

Separately stating a charge does not make it exempt. When transportation is mandatory to obtain a taxable rental, Florida may include it in the taxable sales price. Optional fees that arise solely from a customer's avoidable choice can receive different treatment under the facts of this advisement.

Common questions

Were the initial delivery, relocation, warehouse-move, extra-stop, non-paved-surface, and final pickup charges taxable? Yes. The rental agreement required the company or dealer to move the container, so those transportation charges were part of the taxable rental.

Were monthly container rent and rented dollies or pads taxable? Yes, as rentals of tangible personal property.

Were warehouse storage and access fees taxable? Yes. The Department treated them as charges for renting, using, or accessing warehouse space.

Were cleaning and cancellation fees taxable? Not under the stated terms, because customers could avoid those charges through their own choices.

Could a container-repair charge be exempt? Only if the dealer could show that absolutely no tangible personal property was used in the repair.

Citations and references

• Fla. Stat. § 212.02(16) (sales price and repair-service treatment)
• Fla. Stat. § 212.05(1)(a) and (c) (sales and rentals of tangible personal property)
• Fla. Stat. § 212.031 (leases and licenses to use real property)
• Fla. Stat. § 212.0506 (service warranties)
• Fla. Admin. Code r. 12A-1.045(3) (mandatory delivery charges)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 08A-003

Original ruling text

SUMMARY
QUESTION: Are the following charges subject to sales tax when associated with the
rental of temporary storage containers:
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Initial Delivery Charge
Move to New Location
Move to Warehouse
Move from Warehouse to New Location
Final Pick-up Charge
Additional Stop Charge
Non-paved Surface Fee
Monthly Rental of Container
Monthly Storage Outside or Inside Warehouse
Monthly Damage Waiver Rate
Container Cleaning Charge
Warehouse Access Fee
Reschedule/Cancellation Fee
Container Repair Services
Miscellaneous Supplies for Sale
Dollies and Pads for Rent

ANSWER: Based on the proposed terms and conditions provided in the Rental
Agreement, Appendix A to the Rental Agreement and the Taxpayer’s letter, the Initial
Delivery Charge, Move to New Location Charge, Move to Warehouse Charge, Move
from Warehouse to New Location Charge, Additional Stop Charge, Non-paved Surface
Fee for Delivery/Pick-up, Non-paved Surface Fee for Transportation and Final Pick-up
Charge, are all charges subject to sales tax, since a renter does not have an option to
avoid such charges.
The Container Cleaning and Rescheduling/Cancellation Fee is not subject to sales tax
since a customer has the option of cleaning the container before it is picked up by the
renting dealer.
The Reschedule/Cancellation Fee is not subject to tax under the conditions described in
the Rental Agreement.
The Moving Supplies and Equipment charge is taxable since such charge is the sales of
tangible personal property.
The Rental Charges and Damage Waiver Fee are each subject to sales tax.

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Technical Assistance Advisement
Rental of Tangible Personal Property

The Container Repair Service is taxable unless the dealer can show that absolutely no
tangible personal property was used in the repair.
The Monthly Rental of Container charge and the Dollies and Pads for rent charge are
taxable as the rental of tangible personal property.
The Monthly Storage Outside Warehouse charge, the Monthly Storage Inside Warehouse
charge, and the Warehouse Access Fee are all charges for the monthly rental, use, or
access to warehouse space and are each subject to sales tax.
The Monthly Damage Waiver Rate charge is a charge for a service warranty, and is
subject to sales tax

January 29, 2008
XXX
Re:

Technical Assistance Advisement 08A-003
Sales and Use Tax – Rental of Tangible Personal Property
Statute(s): Sections 212.02 and 212.05, F.S.
Rule Sections: 12A-1.036, 12A-1.045, 12A-1.070, 12A-1.071, F.A.C.
Petitioner: XXX (hereinafter referred to as Taxpayer)
FEIN: XXX

XXX
This Technical Assistance Advisement responds to your request dated May 17, 2006.
XXX may rely on this advisement unless the advisement is superseded by a change in
law, or the Department notifies the Taxpayer that this advisement is no longer valid.
FACTS
XXX (Taxpayer) is a XXX Company that engages in the business of providing,
transporting and storing portable storage containers.
The Taxpayer is a nationwide business that operates through independent dealers. The
Taxpayer books all customer orders through a central location and then coordinates the
pick-up and transportation of the storage container through the local dealer. Further, the
container must be moved by either the Taxpayer or the local dealer. The Taxpayer
collects all payments and handles all customer service issues.

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Technical Assistance Advisement
Rental of Tangible Personal Property

In a typical transaction, the local dealer will deliver a storage container to the customer’s
location, where the customer is permitted to load the container for a period of days. On
the designated day, the local dealer will pick-up the storage container and transport it to
the local dealer’s storage facility. The local dealer receives a commission in return for
the services provided.

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Technical Assistance Advisement
Rental of Tangible Personal Property
Taxpayer’s agreement with its customers provides that the customer will rent the
container from the Taxpayer and the Taxpayer will provide transportation services and/or
storage services. Importantly, the agreement between the Taxpayer and its customer
requires that the Taxpayer provide all transportation and storage services; the customer is
not permitted to use a third-party to transport the storage container.
Initially, the Taxpayer will provide only local and intrastate transportation to its
customers, although eventually the Taxpayer plans to expand into interstate operations.
The Taxpayer will impose the following charges and fees. For each fee, the Taxpayer
has provided its proposed tax treatment.
Transportation Charges

1. Initial Delivery Charge: This charge is separately stated and is in return for delivering
   the empty container to a customer’s location. The Taxpayer asserts that this fee is
   taxable.
2. Move to New Location: This charge is separately stated and is in return for moving
   the container from a customer’s initial location to another customer-designated location.
   The Taxpayer asserts that this fee is taxable.
3. Move to Warehouse: This charge is separately stated and is in return for picking up a
   loaded container from the customer’s location and transporting the container to the local
   dealer’s warehouse for storage. The Taxpayer asserts that this fee is taxable.
4. Move from Warehouse to New Location: This charge is separately stated and is in
   return for picking up a loaded container from the local dealer’s warehouse and delivering
   the container to the customer’s location. The Taxpayer asserts that this fee is taxable.
5. Final Pick-Up Charge: This charge is separately stated and is in return for picking up
   an empty container from the customer’s location after the customer has unloaded the
   container. The Taxpayer asserts that this fee is taxable.
6. Additional Stop Charge: This charge is separately stated and is in return for
   delivering the container to an additional location. The Taxpayer asserts that this fee is
   taxable.
7. Non-paved Surface Fee – Delivery/Pickup and Transportation: This fee is charged
   because a customer has requested an empty container be placed and/or removed from a
   non-paved surface location to some other location. The Taxpayer asserts that this fee is
   taxable.

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Technical Assistance Advisement
Rental of Tangible Personal Property

Rental and Storage Charges

1. Monthly Rental of Container: This charge is separately stated and is in return for
   rental of the container. The Taxpayer asserts that this fee is exempt.
2. Monthly Storage Outside or Inside Warehouse: This charge is separately stated and
   is in addition to the base monthly rental of container charge. It is charged in return for
   providing outside storage for the container. The Taxpayer asserts that this fee is exempt.
3. Monthly Damage Waiver Rate: This charge is separately stated and is in return for
   not holding the customer liable for certain damage should the storage container break
   while in the customer’s possession. The Taxpayer asserts that this fee is exempt.
4. Container Cleaning Charge. This is a separately stated charge that is only imposed if
   the customer fails to properly clean the container when the container is returned to the
   Taxpayer. The Taxpayer asserts that this fee is taxable.
5. Warehouse Access Fee: This is a separately stated charge that is only imposed if the
   customer requires access to the container while it is in storage at the local dealer’s
   warehouse. The Taxpayer asserts that this fee is taxable.
6. Reschedule/Cancellation Fee: This fee is separately stated and only charged when the
   customer changes or cancels a delivery time or date after the driver has been dispatched.
   The Taxpayer has made no assertion on the tax treatment of this fee.
7. Container Repair Services: This fee is separately stated and is in return for repair
   services that the customer has to pay for, which are not covered by a damage waiver. The
   Taxpayer asserts that this fee is taxable.
   Moving Supplies and Equipment
8. Miscellaneous Supplies for Sale: This charge is separately stated and is imposed for
   supplies that a third-party vendor ships directly to the customer. The Taxpayer asserts
   that this fee is exempt.
9. Dollies and Pads for Rent: This charge is separately stated and is in return for the
   rental of dollies and pads for a specific period of time. The Taxpayer asserts that this fee
   is exempt.

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Technical Assistance Advisement
Rental of Tangible Personal Property
REQUESTED ADVISEMENT
The Taxpayer requests that the Department provide a ruling on the proper tax treatment
of the charges described above.

ANALYSES
The following analysis will include citations to applicable statutes, rules, and court cases.
If you would like to research these authorities in more detail, the Department provides
them in its Tax Law Library, found on the Internet at “http://dor.myflorida.com/dor/law”.
This Technical Assistance Advisement is based on the Rental Agreement, Appendix A to
the Rental Agreement, and your letter, dated May 17, 2006.
Rental Charges & Damage Waiver. Florida imposes sales tax on the lease or license to
use real property. See Section 212.031, Florida Statutes (F.S.) For instance, the rental of
a building or a part of a building is subject to tax. Florida also imposes sales tax on the
lease or rental of tangible personal property, which is any tangible item that is not realty.
See Section 212.05(1)(c), F.S.
Florida also imposes sales tax on charges for service warranties. See Section 212.0506,
F.S. Service warranties are agreements that indemnify against having to pay for repairs
of tangible personal property.
Just these three statutory provisions provide answers for several of your charges. Your
Monthly Rental of Container charge and your Dollies and Pads for rent charge are for
the monthly rental of tangible personal property. Thus, these charges are taxable
pursuant to Chapter 212.05(1)(c), F.S.
Your Monthly Storage Outside Warehouse charge, Monthly Storage Inside
Warehouse charge, and your Warehouse Access Fee are for the monthly rental, use, or
access to warehouse space. As such, they are either licenses to use or leases of real
property. In either case, they are taxable pursuant to Section 212.031, F.S.
Your Monthly Damage Waiver Rate charge is a charge for a service warranty, and as
such, is taxable pursuant to Section 212.0506, F.S.
Container Repair Service. Florida law presumes that charges for repair services are
taxable, unless the dealer can show that absolutely no tangible personal property was
used in the repair. See Section 212.02(16), F.S. Thus, unless your records can show that

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Technical Assistance Advisement
Rental of Tangible Personal Property
no tangible personal property was used in the repair, your Container Repair Service
charges are taxable pursuant to Sections 212.02(16) and 212.05(1), F.S.
Transportation Charges. With only a few exceptions, Florida does not impose sales tax
on services only. However, when a service is sold with the sale or rental of a taxable
item, the service becomes part of the sales price and is subject to tax. See Section
212.02(16), F.S., which states that the “sales price” includes any charges for services that
are part of the sale. The same reasoning can be applied to transportation services.
Florida does not impose sales tax on transportation services alone. However, when those
services are sold with sale or rental of taxable tangible personal property or other taxable
services, the transportation services become part of the sales price subject to tax. Please
see Rule 12A-1.045, F.A.C., for more guidance on this issue.
Paragraph (3) of Rule 12A-1.045, F.A.C., provides that when a seller agrees to deliver an
item to a location and the customer has to purchase the transportation if it wants the
taxable item, both the charge for the item and the delivery charges are subject to sales tax.
Applying this concept to your transportation charges, the Rental Agreement indicates that
the customer agrees not to move the container; that you are responsible for transporting
the container to the various locations. Thus, when you rent the storage container, the
customer has no choice but to also purchase the transportation services. In that
circumstance, transportation charges are subject to tax. Thus, the Initial Delivery
Charge, Move to New Location Charge, Move to Warehouse Charge, Move from
Warehouse to New Location Charge, Additional Stop Charge, Non-Paved Surface
Fee for Delivery/Pick-up, Non-Paved Surface Fee for Transportation, and Final
Pick-up Charge are all part of the sale to the customer and are taxable pursuant to
Sections 212.05(1) and 212.02, F.S.
Container Cleaning and Rescheduling/Cancellation Fees. Your description of the
Container Cleaning Charge indicates that the customer may avoid the charge if the
customer sweeps and removes all debris from the container before returning it. Since the
charge can be avoided solely through a decision of the customer, the Container
Cleaning Charge is not part of the sales that you described. It is not subject to tax under
the situations you have presented.
Your description of the Reschedule/Cancellation Fee indicates that the customer can
avoid paying this charge by not rescheduling or canceling the appointment. Since the
charge can be avoided solely because of a decision of the customer, the
Reschedule/Cancellation Fee is not subject to tax under the circumstances that you have
described.

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Technical Assistance Advisement
Rental of Tangible Personal Property
Moving Supplies and Equipment. You describe the Moving Supplies and Equipment
charge as imposed in return for the purchase of tangible personal property such as straps,
locks, pads, and other moving-related equipment. Since it is in return for the sale of
tangible personal property, the Miscellaneous Supplies for Sale charges are taxable
pursuant to Section 212.05(1)(a), F.S.
This Technical Assistance Advisement is issued pursuant to Section 213.22, F.S., and it is
binding on the Department only under the facts and circumstances that your provided. If
additional relevant facts were not provided, you may not rely on this Technical
Assistance Advisement. Additionally, statutes, rules, or court decisions can subject can
supercede this advice and subject similar future transactions to a different tax treatment

This response, your request and all related backup documents are public records under
Chapter 119, F.S., and are subject to public disclosure in certain circumstances.
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 # 21324