How did Florida tax fabricated stairs sold as goods, exported out of state, or installed as real-property improvements?

Plain-English summary

The taxpayer fabricated customized circular or curved stairs and parts, sometimes selling them as goods and sometimes permanently installing them for builders or homeowners.

Uninstalled stairs and parts sold at retail in Florida were taxable tangible personal property. A sale destined outside Florida was not subject to Florida sales tax only when the contract committed the property to export at the time of sale and the export movement remained continuous and unbroken. The result did not change depending on whether the taxpayer used its own truck or a common carrier, provided the export and recordkeeping requirements were met.

When the taxpayer fabricated and installed stairs as permanent real-property improvements, it was the real-property contractor and ultimate consumer. It should not charge sales tax to the customer, but it had to accrue tax on its fabricated cost. Materials incorporated into stairs sold without installation were purchases for resale and could be acquired without sales or use tax.

What this means for you

The same fabricated item can follow different tax rules depending on whether it is sold as movable property, irrevocably exported, or installed into real property. Contracts, delivery records, and the party performing installation are decisive.

Common questions

Were uninstalled stairs sold in Florida taxable? Yes, unless a specific exemption applied.

Did using the seller's truck instead of a carrier defeat export treatment? No, if the contract and records showed a continuous, unbroken export from Florida.

Who owed tax when the taxpayer installed the stairs? The taxpayer, as real-property contractor, owed tax on its fabricated cost and did not charge tax on the contract price.

Citations and references

• Fla. Stat. §§ 212.02(14)(c), 212.05, and 212.06 and Fla. Admin. Code rr. 12A-1.0015, 12A-1.005, 12A-1.051, and 12A-1.063, as discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 11A-012

Original ruling text

SUMMARY
QUESTION:
Whether sales tax is due on the sale of stairs and stair parts or is the Taxpayer is required to pay
or accrue use tax on the supplies and materials it purchases to fabricate the stairs and stair parts
for which the Taxpayer installs.
ANSWER:
Taxpayer is required to collect Florida sales tax on tangible personal property it sells that it does
not install, unless the sale is committed to the exportation process at the time of sale, and the
exportation process remains continuous and unbroken until the property is exported from
Florida. Florida sales tax applies in the same manner whether Taxpayer delivers the items with
its own truck or ships them through a common carrier.
Taxpayer is a real property contractor when it sells and installs the stairs and/or stair parts and is
considered as the ultimate consumer of the materials and supplies it purchases to fabricate the
items. However, Taxpayer should not pay sales tax or accrue use tax on materials and supplies it
purchases to fabricate stairs and stair parts when it does not install the items; because the
purchase is considered a purchase for resale.

May 2, 2011
XXX
Re:

Subject: Technical Assistance Advisement (TAA) 11A-012
Sections 212.02(14), 212.05, 212.06, Florida Statutes (F.S.)
Rules 12A-1.0015, 12A-1.005 and 12A-1.051, 12A-1.063, Florida Administrative Code
(F.A.C.)
XXX (Taxpayer)
FEI #: XXX

Dear XXX:
This is in response to your letter dated March 10, 2011, requesting this Department’s issuance of
a Technical Assistance Advisement (“TAA”) pursuant to section 213.22, F.S., and Rule Chapter
12-11, F.A.C., concerning the above referenced matter. 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.

Technical Assistance Advisement
Page 2 of 5

Issue
Whether sales tax is due on the sale of stairs and stair parts or is the Taxpayer required to pay or
accrue use tax on the supplies and materials it purchases to fabricate the stairs and stair parts for
which the Taxpayer installs.
Facts
Taxpayer specializes in fabricating and installing customized circular/curved stairs and related
parts. Taxpayer may sell the stairs and/or parts to its customers in Florida and outside Florida. It
may also install the stairs and/or parts as part of the sale. Taxpayer requests advice on the
applicability of Florida sales and use tax when it sells stairs and/or parts to its customers in
Florida and outside Florida and whether it makes any difference if Taxpayer delivers the item(s)
in its own truck or ships the item(s) through a common carrier. Taxpayer also requests advice on
the applicability of Florida sales and use tax when it sells and installs the stairs and/or parts for
its customers.
Taxpayer provided proposals to illustrate typical transactions with its customers.
Applicable Authority and Discussion
Section 212.05, F.S., imposes a sales tax on every person who engages in the business of selling
tangible personal property at retail in this state. The tax is levied on each taxable transaction or
incident at the rate of 6 percent of the sales price of each item or article of tangible personal
property when sold at retail in this state. When Taxpayer sells stair parts, circular stair carriage,
and other items to builders or homeowners and does not install the item(s), Taxpayer is selling
tangible personal property at retail, and the transaction is subject to sales tax.
However, tangible personal property imported, produced, or manufactured in Florida for export
is not subject to Florida sales tax when the importer, producer, or manufacturer delivers the
property to a licensed exporter for export outside Florida or to a common carrier for shipment
outside Florida, or mails the property by United States mail to a destination outside Florida. See
Section 212.06(5), F.S., and Rule 12A-1.005, F.A.C. In this case, items that Taxpayer sells and
delivers to builders and homeowners outside Florida are not subject to Florida sales tax provided
there is sufficient documentary evidence that the property sold was irrevocably committed to the
exportation process. Rule 12A-1.0015(2)(b), F.A.C., provides the following examples of
methods to commit the property to the exportation process at the time of sale:

1. The dealer is required by the terms of the sale contract to deliver the property outside
   Florida using the dealer’s own mode of transportation;
2. The dealer is required by the terms of the sale contract to mail the property by United
   States mail to a destination located outside Florida; or

Technical Assistance Advisement
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3. The dealer is required by the terms of the sale contract to deliver the property to a
   carrier, licensed customs broker, or forwarding agent for final and certain movement
   of the property to a destination located outside Florida.
   Rule 12A-1.0015(2)(c), F.A.C., requires the following records to be maintained to document that
   the property is committed to the exportation process at the time of sale and that the exportation
   process is continuous and unbroken until the property is exported from Florida:
4. Internal delivery orders identifying the property sold and the destination and date of
   delivery that are supported by receipts of expenses incurred in delivering the
   property, such as trip tickets or truck logs signed by the person who delivers the
   property;
5. United States Postal Service parcel post receipts with supporting documentation
   identifying the property and the destination;
6. Common carriers’ receipts, bills of lading, or similar documentation that evidences
   the delivery destination;
7. Export declaration;
8. Receipts from a licensed customs broker; or
9. Proof of export signed by a customs officer.
   As provided by Rule 12A-1.0015(2)(b) and (c), F.A.C., sales you made that are committed to the
   exportation process at the time of sale are not subject to Florida sales tax whether the delivery is
   made with your truck or with a common carrier if the requirements above are met.
   Use tax is imposed on “any person who manufactures, produces, compounds, processes, or
   fabricates in any manner tangible personal property for his or her own use.” Section
   212.06(1)(b), F.S. Rule 12A-1.051, F.A.C. provides guidance on sales and use tax for
   contractors who “purchase, acquire, or manufacture materials and supplies for use in the
   performance of real property contracts ….” In this case, contracts to manufacture and install
   stairs and stair parts that are affixed to real property are real property contracts.
   Real property contractors “are the ultimate consumers of materials and supplies they use to
   perform real property contracts and must pay tax on their costs of those materials and supplies
   .…” Rule 12A-1.051(4), F.A.C. Rule 12A-1.051(4), F.A.C., further provides in pertinent part
   as follows:
   Contractors performing only … [lump sum contracts] do not resell the tangible personal
   property used to the real property owner but instead use the property themselves to
   provide the completed real property improvement. Such contractors should pay tax to
   their suppliers on all purchases.… They should charge no tax to their customers,
   regardless of whether they itemize charges for materials and labor in their proposals or
   invoices, because they are not engaged in selling tangible personal property. Such
   contractors should not register as dealers unless they are required to remit tax on the
   fabricated cost of items they fabricate to use in performing contracts. (Emphasis added.)

Technical Assistance Advisement
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When Taxpayer fabricates and installs the stairs and stair parts to be permanently attached to
realty, it is making improvements to real property. Taxpayer should not charge tax to the
customer in any amount, but it should accrue tax on its fabricated cost of materials it uses to
make the stairs and stair parts. This rule applies whether the installation occurs inside or outside
Florida, because Taxpayer is the ultimate consumer of materials and supplies it uses to perform
the real property contract.
The terms “retail sales,” “sale at retail,” “use,” “storage,” and “consumption,” do not include the
sale, use, storage, or consumption of industrial materials for future processing, manufacture, or
conversion into articles of tangible personal property for resale when such industrial materials
become a component or ingredient of the finished product. See Section 212.02(14)(c), F.S., and
Rule 12A-1.063, F.A.C. Hence, Taxpayer should not pay sales tax or accrue use tax on materials
and supplies it purchases that become a component of the stair and stair parts that it sells and
does not install, because the purchase is considered a purchase for resale.
Conclusion
Taxpayer is required to collect Florida sales tax on tangible personal property it sells that it does
not install, unless the sale is committed to the exportation process at the time of sale, and the
exportation process remains continuous and unbroken until the property is exported from
Florida. Florida sales tax applies in the same manner whether Taxpayer delivers the items with
its own truck or ships them through a common carrier.
Taxpayer is a real property contractor when it sells and installs the stairs and/or stair parts and is
considered as the ultimate consumer of the materials and supplies it purchases to fabricate the
items. However, Taxpayer should not pay sales tax or accrue use tax on materials and supplies it
purchases to fabricate stairs and stair parts when it does not install the items; because the
purchase is considered a purchase for resale.
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
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

Technical Assistance Advisement
Page 5 of 5

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) 717-7312
Record ID: 99682