Was dyed diesel used by a Florida head boat taking paying anglers beyond the three-mile territorial limit exempt from sales tax?

Plain-English summary

A Florida "head boat" charged passengers per person for day-long fishing trips. It left a Florida port, traveled beyond the state's three-mile territorial limit, stopped or moved among offshore fishing locations, and returned to the same port. Only the first and last three miles of the trip were physically within Florida waters.

The Department held that the vessel was transporting people for hire in interstate or foreign commerce. It relied on Department of Revenue v. New Sea Escape Cruises, Ltd., where the Florida Supreme Court treated a vessel that sailed beyond state waters and returned without entering a foreign port as engaged in foreign commerce.

The result was a complete exemption for the boat's dyed-diesel purchases under the mileage rules applied to these trips. Rule 12A-1.0641 states that, during continuous interstate or foreign movement, mileage from the territorial limit to the dock and back into international waters is not treated as Florida mileage. With no intrastate mileage entering the apportionment factor, all fuel purchases qualified.

The ruling separately held that the operator's vessel-part purchases qualified for the vessel exemption. But the fares or admission charges collected from passengers remained subject to sales tax.

What this means for you

A recreational fishing boat can still carry people in foreign commerce

The ruling acknowledges that charter boats and party boats are not "commercial fishing vessels" under the cited rule. The exemption instead applied because this boat transported passengers for hire beyond Florida's territorial limit.

Returning to the same Florida port did not prevent the exemption

The operator did not need to enter another state or foreign port. Following New Sea Escape, traveling beyond the three-mile limit and conducting the trip there was enough for interstate or foreign-commerce treatment.

The mileage rule produced a full—not merely prorated—fuel exemption

The taxpayer initially sought a prorated exemption. Because the rule disregarded the continuous port-to-limit and return mileage as Florida mileage, the Department concluded that the exemption applied to every fuel purchase under these facts.

Fuel, parts, and passenger charges are separate tax questions

The ruling exempted dyed diesel and vessel parts but expressly kept the passenger admission charges taxable. An exemption for vessel operation does not automatically exempt what customers pay to board.

Common questions

Q: Was the head boat a commercial fishing vessel?
A: No. The rule excludes sports or pleasure fishing boats, charter boats, and party boats from that definition. The boat qualified because it transported persons for hire in interstate or foreign commerce.

Q: Did the vessel have to visit a foreign port?
A: No. It sailed beyond Florida's three-mile territorial limit and returned to its home port, which the Department treated as foreign-commerce activity under the cited Florida Supreme Court case.

Q: Was only part of the dyed diesel exempt?
A: No. For these continuous trips, the mileage between the dock and territorial limit was not treated as Florida mileage, so the ruling applied the exemption to all fuel purchases.

Q: Were the fishing-trip fares exempt too?
A: No. The ruling expressly says all passenger admission charges remained subject to sales tax.

Citations and references

• Fla. Stat. § 212.08(4)(a)2. (fuel used by vessels transporting persons or property in interstate or foreign commerce)
• Fla. Stat. § 212.08(8) (vessels and parts used in interstate or foreign commerce)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)
• Fla. Admin. Code r. 12A-1.0641(2), (5), and (6) (mileage, parts, and dyed-diesel rules)
• Department of Revenue v. New Sea Escape Cruises, Ltd., 894 So. 2d 954 (Fla. 2005)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 09A-011

Original ruling text

SUMMARY
QUESTION: Whether dyed diesel fuel used in a fishing vessel engaged in interstate and
foreign is exempt from sales.
ANSWER: Taxpayer is engaged in interstate and foreign commerce and is eligible for the
exemption provided in Section 212.08(4), F.S., and Rule 12A-1.0641, F.A.C. Since the mileage
to and from the territorial limit to port dockside and return into international waters, is not
considered to be mileage in Florida, the exemption applies to all fuel purchases.
March 4, 2009
XXX
Re:

Technical Assistance Advisement 09A-011
Dyed Diesel Fuel Consumed in International Waters
XXX (Taxpayer)
Sales and Use Tax Number XXX
Sales and Use Tax
Section 212.08(4) and 212.08(8), Florida Statutes (F.S.)
Rule 12A-1.0641, Florida Administrative Code (F.A.C.)

Dear:
This response is in reply to your letter to the Department, dated October 14, 2008, in which you
are requesting the Department's issuance of a Technical Assistance Advisement ("TAA")
pursuant to s. 213.22, F.S., and Chapter 12-11, F.A.C., regarding dyed diesel fuel purchased for
the operation of a charter fishing vessel. An examination of your petition 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.
ISSUE
Whether dyed diesel fuel purchased for use in a charter fishing vessel operating outside Florida
waters is exempt from sales tax.
FACTS
As stated in your letter, Taxpayer operates a fishing vessel commonly referred to as a “head
boat” out of a Florida fishing village. Passengers pay a “per head charge” for a day long fishing
trip. Taxpayer collects and remits sales tax on all admission charges. The vessel departs from
the Florida port and travels to sea. It then anchors to fish, or continues to relocate offshore, most
commonly between XXX to XXX miles out. At the end of the day, the vessel returns to its home
port and the passengers disembark. In the normal course of the day, the vessel travels
approximately

XXX
Page 2 of 4

XXX to XXX miles, with only the first three and last three miles within Florida territorial
waters. Taxpayer seeks guidance to the effect it is entitled to a prorated exemption from sales
tax on dyed diesel fuel purchases. It is Taxpayer’s position that it is engaged in interstate and
foreign commerce and the exemption is allowed under Section 212.08(4), F.S.
LAW AND DISCUSSION
As provided in Section 212.08(4)(a)2., F.S., “[m]otor fuels and diesel fuels are taxable as
provided in chapter 206, with the exception of those motor fuels and diesel fuels used by railroad
locomotives or vessels to transport persons or property in interstate or foreign commerce, which
are taxable under this chapter only to the extent provided herein.” (Emphasis added). The basis
of the tax for vessels shall be the ratio of intrastate mileage to interstate or foreign mileage
traveled by the carrier's vessels that were used in interstate or foreign commerce and that had at
least some Florida mileage during the previous fiscal year of the carrier, such ratio to be
determined at the close of the fiscal year of the carrier.”
Section 212.08(8)(a), F.S., states that the sale or use of vessels and parts thereof used to transport
persons or property in interstate or foreign commerce, including commercial fishing vessels, is
subject to the taxes imposed in Chapter 212, F.S., only to the extent provided it herein. “The
basis of the tax shall be the ratio of intrastate mileage to interstate or foreign mileage traveled by
the carrier's vessels which were used in interstate or foreign commerce and which had at least
some Florida mileage during the previous fiscal year.”
As provided in Paragraph (c) of Section 212.08(8), F.S., “[i]t is the intent of the Legislature that
neither subsection (4) nor this subsection shall be construed as imposing the tax provided by this
chapter on vessels used as common carriers, contract carriers, or private carriers, engaged in
interstate or foreign commerce, except to the extent provided by the pro rata formula provided in
subsection (4) and in paragraph (a).”
Rule 12A-1.0641(6)(a), F.A.C., provides that:
The sale of dyed diesel fuel to the owner, operator, or the owner's agent or
representative of vessels operated to transport persons or property for hire in
interstate or foreign commerce or for commercial fishing purposes is subject to
the partial exemption provided in s. 212.08(4)(a)2., F.S. Tax imposed is based on
the vessel owner's mileage apportionment factor.
To purchase dyed diesel fuel exempt from sales tax at the time of purchase, the owner, operator,
or the owner's agent or representative is required to execute a statement to the selling dealer
declaring that the fuel will be used in a vessel operated to transport persons or property for hire
in interstate or foreign commerce. See Rule 12A-1.0641(6)(b), F.A.C.

XXX
Page 3 of 4

Rule 12A-1.0641(2)(b), F.A.C., states that the mileage of vessels from the territorial limit to port
dockside and return into international waters, foreign or coastwise, in the continuous movement
of persons or property in interstate or foreign commerce is not considered to be mileage in
Florida.
As stated in Rule 12A-1.064(2)(c), F.A.C., the term "commercial fishing vessel" includes a
vessel designed, constructed, and used exclusively for the taking of fish, crayfish, oysters,
shrimp, and sponges from the salt and fresh waters for sale. Vessels used for sports or pleasure
fishing, such as pleasure fishing boats, charter boats, or party boats, are not commercial fishing
vessels.
In the recent Supreme Court case, Department of Revenue vs. New Sea Escape Cruises, Ltd.,
894 So.2d 954 (Fla. 2005), the Court ruled that “cruises-to-nowhere operations” that leave the
State of Florida are in foreign commerce, not intrastate commerce, and thus the partial
exemption set forth in Section 212.08(8)(a), F.S., should be applied. Therefore, the court
approved the decision to apply the partial tax exemption to cruise-to-nowhere operations.
The determinative issue in New Sea Escape was whether a vessel which conducted a “cruise-tonowhere,” where the vessel loaded passengers in Florida, transited Florida waters to beyond 3
miles, conducted all its entertainment activities while beyond 3 miles, then returned to port
without entering a foreign port, was engaged in interstate and foreign commerce. The Court
ruled that it was engaged in interstate and foreign commerce and that the exemption provided by
Section 212.08(8), F.S., applies.
It is your assertion that notwithstanding minor distinctions of operation, the Court’s decision in
New Sea Escape applies to Taxpayer’s recreational fishing operations, and its purchases of dyed
diesel fuel used in such operations qualify for the partial exemption provided for in Rule 12A1.0641(6), F.A.C. You argue that although the New Sea Escape case dealt specifically with the
use tax on gambling equipment, there is no real distinction between a boat that takes passengers
beyond the territorial limit to gamble, and a boat that takes its passengers beyond the territorial
limit to fish.
CONCLUSION
Although there are factual distinctions between the New Sea Escape case and the case at hand,
these distinctions do not prohibit Taxpayer from qualifying for the exemption granted in
212.08(4), F.S. One boat takes its passengers on a gambling trip and the other on a fishing trip.
The end result is the same. In both instances, the vessels are transporting persons in interstate or
foreign commerce.
Pursuant to the recent Florida Supreme Court decision, Department of Revenue v. New Sea Escape
Cruises, Ltd., 894 So. 2d 954 (Fla. 2005), Taxpayer is engaged in interstate and foreign commerce
and is eligible for the exemption provided in Section 212.08(4), F.S., and Rule 12A-1.0641, F.A.C.

XXX
Page 4 of 4
Since the mileage to and from the territorial limit to port dockside and return into international
waters, is not considered to be mileage in Florida, the exemption applies to all fuel purchases.
In addition to the exemption granted for dyed diesel fuel purchases, Taxpayer also qualifies for the
exemption on its purchases of parts used on the vessel. See Rule 12A-1.0641(5), F.A.C. All
admission charges collected by Taxpayer from its passengers are subject to sales tax.
This response constitutes a Technical Assistance Advisement under s. 213.22, F.S. which is
binding on the department only under facts and circumstances described in the request for this
advice as specified in s. 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.
If you have any further questions with regard to this matter and wish to discuss them, you may
contact me directly at (850) 922-4838.
Sincerely,

Richard R. Parsons
Tax Law Specialist
Technical Assistance & Dispute Resolution
Record ID: 53036