Was rent paid to a city for land used solely for a cellular tower, equipment cabinets, generators, and related equipment subject to Florida sales tax?

Plain-English summary

A Florida city leased land to a tenant solely to construct, install, maintain, and operate a communications center containing a cellular tower disguised as a flagpole, equipment cabinets, generators, and associated equipment.

Florida ruled that the rent was exempt from sales tax. Section 212.031(1)(a)5. covered real property on which towers, antennas, cables, accessory structures, or equipment—excluding switching equipment—were placed to provide mobile communications services.

The tenant's center provided cellular service, and the lease limited the property to that communications purpose.

What this means for you

The exemption depends on both the communications equipment and the property's use. Lease language and actual operations should show that the site is dedicated to qualifying mobile communications service.

Common questions

Was the city's tower-site rent taxable? No.

What service qualified? Mobile communications, including cellular telephone service.

Did the ruling include switching equipment? No; the quoted statutory description excluded it.

Citations and references

• Fla. Stat. § 212.031(1)(a)5., as quoted and applied in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 10A-040

Original ruling text

SUMMARY
QUESTION: Whether payment from a tenant who leased real property to construct, install,
maintain, and operate a communications tower, equipment cabinets, generators, and associated
equipment is subject to sales tax under Section 212.031, F.S.
ANSWER: Taxpayer’s lease of real property to the tenant for the sole purpose of constructing
and operating a communications center, which includes communications tower (flagpole),
equipment cabinets, generators and associated equipment to provide mobile communication
services is exempt from tax under Section 212.031(1)(a)5., F.S.

August 16, 2010
XXX
Re:

Subject: Technical Assistance Advisement (TAA) 10A-040
Sales and Use Tax – Use of Real Property
Section 212.031, Florida Statutes (F.S.)
City of XXX (Taxpayer)
FEI #: XXX

Dear XXX:
This is in response to your letter dated June 17, 2010, requesting this Department’s issuance of a
Technical Assistance Advisement (TAA) pursuant to Section 213.22, F.S., and Rule Chapter 1211, Florida Administrative Code (F.A.C.), concerning the use of real property. An examination
of your letter has established you have complied with the statutory and regulatory requirements
for issuance of a TAA. Therefore, the Department is hereby granting your request for a TAA.
Issue
Whether payment from a tenant who leased real property to construct, install, maintain, and
operate a communications tower, equipment cabinets, generators, and associated equipment is
subject to sales tax under Section 212.031, F.S.
Facts
Taxpayer, a City, entered into a lease agreement with a tenant on October 26, 2004, for tenant to
construct, install, maintain, and operate a communications tower (flagpole), equipment cabinets,
generators, and associated equipment. The communications tower provides cellular telephone
services. The agreement provides the following in pertinent part:

2. Communication Equipment: City hereby grants an exclusive lease to TENANT to
   construct, install, maintain, and operate the following but not limited to, described
   communications tower (flagpole), equipment cabinets, generators and associated

Technical Assistance Advisement
Page 2 of 3
equipment on the Property:

5. Use by TENANT: TENANT will use the Property for the sole purpose of
   constructing and operating a Communications Center….
   Requested Advisement
   Taxpayer requests a determination whether Taxpayer is required to collect sales tax on the rent
   paid under the lease.
   Applicable Authority and Discussion
   Subsection 212.031(1)(a), F.S., provides that “every person is exercising a taxable privilege who
   engages in the business of renting, leasing, letting, or granting a license for the use of any real
   property ….” However, Subsection 212.031(1)(a)5., F.S., provides an exemption from this tax
   for a “public or private street or right-of-way and poles, conduits, fixtures, and similar
   improvements located on such streets or rights-of-way, occupied or used by a utility or provider
   of communications services….” The exemption also applies to real property, wherever located,
   including buildings, on which are placed towers, antennas, cables, accessory structures, or
   equipment (not including switching equipment), used in the provision of mobile communications
   services. Mobile communications services are any one-way or two-way radio communications
   service that is carried between mobile stations or receivers and land stations, or by mobile
   stations communicating among themselves. Mobile communications service includes, but is not
   limited to, cellular communications services, personal communications services, paging services,
   specialized mobile radio services, and any other form of mobile one-way or two-way
   communications service.
   In this case, the property is leased to the tenant for the sole purpose of constructing and operating
   a communications center, which includes communications tower (flagpole), equipment cabinets,
   generators and associated equipment. The payments from tenant are exempt from sales tax
   under Subsection 212.031(1)(a)5., F.S., because mobile communications services are provided.
   Conclusion
   Taxpayer’s lease of real property to the tenant for the sole purpose of constructing and operating
   a communications center, which includes communications tower (flagpole), equipment cabinets,
   generators and associated equipment to provide mobile communication services is exempt from
   tax under Section 212.031(1)(a)5., F.S.
   This response constitutes a Technical Assistance Advisement under Section 213.22, F.S., 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, 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 that expressed in this

Technical Assistance Advisement
Page 3 of 3
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 Section 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,

Angel Sessions
Senior Tax Attorney
Technical Assistance and Dispute Resolution
(850) 922-4708
Record ID: 85025