Are guaranteed and non-guaranteed indoor-plant maintenance contracts taxable service warranties in Florida?

Plain-English summary

The Department ruled that both of the provider's indoor-plant maintenance contract types were taxable service warranties. Guaranteed maintenance included pruning, rotating, watering, cleaning, fertilizing, and plant replacement. Non-guaranteed maintenance included the same upkeep services but not replacement.

Plant replacement was not necessary for the contract to be taxable. Florida's service-warranty law covers agreements that indemnify the holder for maintaining, repairing, or replacing taxable tangible personal property, and the Department found that pruning, rotating, watering, cleaning, and fertilizing plainly constituted maintenance of indoor plants.

The provider was therefore correct to charge tax on non-guaranteed maintenance, and the customer was not entitled to a refund of tax previously paid on those services.

What this means for you

A maintenance agreement can be a taxable Florida service warranty even if it promises upkeep only and does not replace the covered property. Here, the property itself—indoor plants—was taxable when sold at retail, so the statutory exclusion for otherwise exempt property did not apply.

Common questions

Were guaranteed plant-maintenance contracts taxable? Yes.

Were non-guaranteed contracts taxable without plant replacement? Yes. The listed upkeep activities independently counted as maintenance.

Was the customer owed a refund of previously paid tax? No.

Citations and references

• Fla. Stat. § 212.0506; Fla. Admin. Code r. 12A-1.105; and Pederson v. Green, 105 So. 2d 1 (Fla. 1958), as cited in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 09A-053

Original ruling text

October 21, 2009

XXX
XXX
XXX
XXX
Re:

Technical Assistance Advisement 09A-053
Sales and Use Tax – Indoor Plant Maintenance Services
XXX (“Taxpayer”)
Taxpayer’s Identification Number: XXX
Section 212.0506, Florida Statutes (F.S.)
Rule 12A-1.105, Florida Administrative Code (F.A.C.)

Dear XXX:
This response is in reply to your two letters to the Department dated May 26, 2009, and September
2, 2009, 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 referenced matter.
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
The issue is whether an interior plant maintenance service is a service warranty subject to sales tax
Stated Facts and Requested Advisement
Taxpayer sells and leases indoor plants and provides indoor plant maintenance services. Taxpayer
offers two basic types of indoor plant maintenance services. The two types are guaranteed
maintenance and non-guaranteed maintenance. Guaranteed maintenance includes pruning, rotating,
watering, cleaning, fertilizing, and plant replacement. Non-guaranteed maintenance includes all
services of guaranteed maintenance except plant replacement. In some cases, Taxpayer will offer a
combination of the two types of maintenance services.
You state that your company charges sales tax on all its maintenance services. Recently, however,
one of your long standing customers has refused to pay you sales tax on its non-guaranteed
maintenance service contract and has asked for a refund of the tax paid on prior maintenance
charges. Consequently, you have asked for a ruling on the tax treatment of your indoor plant
maintenance services.

Technical Assistance Advisement
Page 2 of 4
Applicable Authority
Section 212.0506, F.S., provides in pertinent part the following:
212.0506 Taxation of Service Warranties
(1) It is the intent of the Legislature that every person is exercising a taxable
privilege who engages in this state in the business of soliciting, offering, providing,
entering into, issuing, or delivering any service warranty.
(2) For exercising such privilege, a tax is levied on each taxable transaction or
incident, which tax is due and payable at the rate of 6 percent on the total
consideration received or to be received by any person for issuing and delivering any
service warranty.
(3) For purposes of this section, “service warranty” means any contract or agreement
which indemnifies the holder of the contract or agreement for the cost of
maintaining, repairing, or replacing tangible personal property. The term “service
warranty” does not include contracts or agreements to repair, maintain, or replace
tangible personal property if such property when sold at retail in this state would not
be subject to the tax imposed by this chapter, nor does it include such contracts or
agreements covering tangible personal property which becomes a part of real
property.
Rule 12A-1.105, F.A.C., provides in pertinent part the following:
12A-1.105 Service Warranties
(1)(a) Every person who solicits, offers, provides, enters into, issues, or delivers any
service warranty, or who receives, on behalf of another person, any consideration
from a service warranty holder is exercising a taxable privilege and shall register as
a dealer with the Department of Revenue before such person may engage in or
conduct business in this state….
(b)1. The term “service warranty” means any contract or agreement which
indemnifies the holder of the contract or agreement for the cost of maintaining,
repairing, or replacing tangible personal property, whether or not the contract
provides for the furnishing of parts….

(2)(a) The tax shall be due at the rate of 6 percent on the total consideration received
or to be received by any person for the privilege of engaging in the business of
soliciting, offering, providing, entering into, issuing, or delivering any service
warranty.

Technical Assistance Advisement
Page 3 of 4

(b) The tax shall be due and payable by the person receiving consideration from the
service warranty agreement holder at the time such consideration is received. The
person receiving the consideration from the service warranty agreement holder shall
collect the tax and remit it to the Department at the times and in the manner provided
in Rule 12A-1.056, F.A.C.
(c) Any dealer registered with the Department who performs repairs or maintenance
of tangible personal property indemnified under a service warranty may purchase
repair parts, materials, and labor incorporated into the repair or maintenance of
indemnified property tax-exempt for purposes of resale. The repair dealer is required
to issue a copy of the dealer’s Annual Resale Certificate
Discussion and Response
As provided in Section 212.0506, F.S., and 12A-1.105, F.A.C., every person is exercising a taxable
privilege who engages in the business of soliciting, offering, providing, entering into, issuing, or
delivering any service warranty in Florida. The term “service warranty” means any contract or
agreement which indemnifies the holder of the contract or agreement for the cost of maintaining,
repairing, or replacing tangible personal property. The term “service warranty” does not include
contracts or agreements to repair, maintain, or replace tangible personal property that would not be
subject to sales tax when sold at retail in Florida.
The question which remains is whether plant maintenance services are taxable. Since there is no
definition of the term “maintenance” in statute, it is necessary to look to principles of statutory
construction for guidance. Words of common usage when used in a statute should be given their
plain ordinary meaning. Pederson v. Green, 105 So.2d, 1 (Fla. 1958). The word “maintenance” is
defined in Merriam-Webster’s Collegiate Dictionary, Tenth Edition, as “the upkeep of property or
equipment.” Clearly, pruning, rotating, watering, cleaning, and fertilizing indoor plants are all
activities that are involved in maintaining such indoor plants.
In the instant case, Taxpayer is in the business of selling indoor plants. Indoor plants are tangible
personal property and are subject to sales tax when sold at retail in Florida. Taxpayer is also in the
business of maintaining and in some cases replacing indoor plants. Contracts or agreements
Taxpayer enters into for maintaining and replacing indoor plants are service warranties subject to
sales tax. Therefore, Taxpayer’s contracts or agreements for guaranteed maintenance and nonguaranteed maintenance for indoor plants are subject to tax. Taxpayer is correct in charging its
customer sales tax for the non-guaranteed indoor plant maintenance service. Taxpayer’s customer
should not be given a refund of the taxes previously paid on non-guaranteed indoor plant
maintenance services.
This response constitutes a Technical Assistance Advisement under s. 213.22, F.S., which is binding
on the Department only under the facts and circumstances described in the request for t his 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

Technical Assistance Advisement
Page 4 of 4
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,

Richard R. Parsons
Tax Law Specialist
Technical Assistance & Dispute Resolution
850-922-4838
Record ID: 68018