How did Florida tax supplies consumed in cleaning services versus items separately provided to cleaning customers?

Plain-English summary

The provider consumed ordinary cleaning supplies while performing taxable nonresidential cleaning services. It was the ultimate consumer of those supplies and had to pay sales tax or remit use tax on their purchase price.

Other products were supplied to customers without being consumed in the cleaning work. Those were resale items: the provider could give vendors a resale certificate and then collect sales tax from customers on the resale price.

The provider collected tax on the full customer charge for cleaning services and resale items. It did not have to separately state the components because both were taxable at the same rate, provided its backup records tied the resale items to a specific customer or contract.

What this means for you

Classify products by actual use. Items consumed in service delivery are taxable to the provider; items transferred to the customer can receive resale treatment with adequate tracking.

Common questions

Who paid tax on consumed cleaning supplies? The cleaning-service provider.

Could customer items be bought for resale? Yes.

Was item-by-item customer invoicing required? No, if all charges were taxed and adequate backup records were maintained.

Citations and references

• Fla. Stat. §§ 212.02(2), 212.02(14)(a), and 212.05(1)(a)1.a., (1)(i)1.b., and (1)(i)4. and Fla. Admin. Code rr. 12A-1.0091(8) and 12A-1.0161(5), as cited in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 11A-023

Original ruling text

SUMMARY
QUESTIONS:

1. Whether the Taxpayer may purchase the Resale Items for resale to its Customers by providing
   a resale certificate to its vendors, thus not being subject to tax when purchasing the Resale Items.
2. Whether the Taxpayer is the ultimate consumer of the Cleaning Supplies it purchases to use
   or consume in providing its Cleaning Services and whether it is obligated to pay sales tax or
   remit use tax on the purchase price paid for such Cleaning Supplies.
3. Whether the Taxpayer, when it sells both the Resale Items and Cleaning Services to its
   Customers, is obligated to collect sales tax on the entire amount it charges its Customers, unless
   the Customer is otherwise exempt from the obligation to pay sales tax.
4. Whether the Taxpayer needs to separately state on its invoices to its Customers (i) the price or
   the quantity of Resale Items provided to its Customers, or (ii) the price of Cleaning Services
   since the sale of all such items and services are subject to retail sales tax at the same rate.
   ANSWERS:
5. The Taxpayer does not use or consume the Resale Items when providing the Cleaning
   Services and thus is not the ultimate consumer of the Resale Items. The Taxpayer purchases the
   Resale Items for purposes of resale to its Customers and (i) may extend a resale certificate to its
   vendors (thus not being subject to tax when purchasing the Resale Items) and (ii) should collect
   sales tax on the price it charges its Customers for the Resale Items, unless the Customer is
   otherwise exempt from the obligation to pay sales tax. As a result, the Taxpayer is not subject to
   sales or use tax on its purchases of the Resale Items.
6. The Taxpayer is the ultimate consumer of the Cleaning Supplies it purchases to use or
   consume in providing its Cleaning Services and is obligated to pay sales tax or remit use tax on
   the purchase price paid for such Cleaning Supplies.
7. The Taxpayer sells both the Resale Items and Cleaning Services to its Customers and, as
   such, is obligated to collect sales tax on the entire amount it charges its Customers, unless the
   Customer is otherwise exempt from the obligation to pay sales tax.
8. The Taxpayer does not need to separately state on its invoices to its Customers the price it
   charges for or the quantity of Resale Items provided to its Customers, from the price charged for
   Cleaning Services, since the sale of all such items and services are subject to retail sales tax at
   the same rate, provided that the taxpayer maintains backup documentation sufficient to tie the
   Resale Items to a specific contract or Customer, which must be maintained and available for
   inspection if requested by the Department. The form and content of the sample documentation
   provided by the Taxpayer as Exhibit B to its request is acceptable and sufficient for this purpose.

August 3, 2011
XXX
RE:

Technical Assistance Advisement 11A-023
Sales and Use Tax
Taxability of Products Used to Provide Cleaning Services.
Sections: 212.02(14)(a), 212.05(1)(a)1.a, 212.05(1)(i)1.b, 212.02(2),
212.05(1)(i)4., Florida Statutes (F.S.)
Rules: 12A-1.0091(8), 12A-1.0161(5), Florida Administrative Code (F.A.C.)
XXX (herein Taxpayer)
FEI: XXX

Dear XXX:
This letter is a response to your request dated June 2, 2011, for the Department’s issuance of a
Technical Assistance Advisement (“TAA”) concerning the above referenced party and matter.
Your request has been carefully examined and the Department finds it to be in compliance with
the requisite criteria set forth in Chapter 12-11, F.A.C. This response to your request constitutes
a TAA and is issued to you under the authority of s. 213.22, F.S.
FACTS
XXX (the “Taxpayer”) is a XXX corporation which is in the business of providing contract
cleaning services to commercial establishments and state and local governments in numerous
states, including Florida (“Cleaning Services”). Taxpayer contracts with the owners, landlords
or managers (each a “Customer”) of commercial and government buildings to provide Cleaning
Services. In return for providing the Cleaning Services, the Taxpayer charges a flat contract rate,
calculated on a per square foot basis. The rate will vary depending upon the amount and type of
Cleaning Services to be provided and whether the Taxpayer will supply certain tangible personal
property to the Customer in addition to providing the Cleaning Services. These items of tangible
personal property include hand soaps, toilet paper, paper towels, trash can liners, disposable
toilet seat covers and feminine hygiene products (“Resale Items”). The Customers have the
option to purchase the Resale Items or not. The charge to the Customer will vary depending
upon whether or not the Customer exercises its option to purchase the Resale Items. If these
Resale Items are to be sold by the Taxpayer to its Customer, then the Taxpayer charges a higher
square foot rate than it would have had the Customer not contracted to buy the Resale Items.
The Taxpayer maintains records of the quantity, and its cost basis, of Resale Items that are
provided to each Customer on a monthly basis. The Taxpayer attached a sample of such records
as Exhibit B to its request for the issuance of this TAA.
The Taxpayer is a registered dealer with the Florida Department of Revenue and, when
purchasing the Resale Items, the Taxpayer provides a resale certificate to its vendors for the
Resale Items. The Taxpayer does not pay any sales tax (or use tax) on any of the Resale Items,

but rather acquires them solely to transfer them to its Customers as a retail sale. In contrast,
when purchasing the cleaning products and supplies used or consumed by it in performing the
Cleaning Services from its vendors (for example, mops, cleaning chemicals, polishes, vacuums,
brooms, etc.) (“Cleaning Supplies”), the Taxpayer does pay sales tax on all such items, because
it is the ultimate consumer of those Cleaning Supplies.
REQUESTED ADVISEMENT

1. Whether the Taxpayer may purchase the Resale Items for resale to its Customers by providing
   a resale certificate to its vendors, thus not being subject to tax when purchasing the Resale Items.
2. Whether the Taxpayer is the ultimate consumer of the Cleaning Supplies it purchases to use
   or consume in providing its Cleaning Services and whether it is obligated to pay sales tax or
   remit use tax on the purchase price paid for such Cleaning Supplies.
3. Whether the Taxpayer, when it sells both the Resale Items and Cleaning Services to its
   Customers, is obligated to collect sales tax on the entire amount it charges its Customers, unless
   the Customer is otherwise exempt from the obligation to pay sales tax.
4. Whether the Taxpayer needs to separately state on its invoices to its Customers (i) the price or
   the quantity of Resale Items provided to its Customers, or (ii) the price of Cleaning Services
   since the sale of all such items and services are subject to retail sales tax at the same rate.
   APPLICABLE LAW
   Section 212.02(14)(a), F.S., provides that a “retail sale” or a “sale at retail” means a sale to a
   consumer or to any person for any purpose other than for resale in the form of tangible personal
   property, or services taxable under this chapter . . .”.
   Section 212.05(1)(a)1.a., F.S., imposes a tax on “. . . the sales price of each article of tangible
   personal property sold at retail in this state . . .”.Section 212.05(1)(i)1.b., F.S., imposes a tax on
   “nonresidential cleaning . . .”.
   Section 212.05(1)(i)4., F.S., provides:
5. If a transaction involves both the sale or use of a service taxable under this paragraph
   and the sale or use of a service or any other item not taxable under this chapter, the
   consideration paid must be separately identified and stated with respect to the taxable and
   exempt portions of the transaction or the entire transaction shall be presumed taxable.
   The burden shall be on the seller of the service or the purchaser of the service, whichever
   applicable, to overcome this presumption by providing documentary evidence as to which
   portion of the transaction is exempt from tax. The department is authorized to adjust the
   amount of consideration identified as the taxable and exempt portions of the transaction;

however, a consideration that the taxable and exempt portions are inaccurately stated and
that the adjustment is applicable must be supported by substantial competent evidence.
Section 212.02(16), F.S., provides “sales price means the total amount paid for tangible personal
property, including any services that are a part of the sale.”
Section 212.02(2), F.S., provides that taxable use excludes “sales at retail of property in the
regular course of business.”
Rule 12A-1.0161(5), F.A.C. provides:
“Service providers are considered the ultimate consumer of any taxable personal
property used in providing their services.”
DISCUSSION
The Taxpayer sells nonresidential Cleaning Services to its Customers and, at the option of the
Customers, also sells Resale Items to its Customers. The Taxpayer uses or consumes certain
Cleaning Supplies in its provision of the Cleaning Services, and pays sales tax on those items
when purchased, but the Taxpayer neither uses nor consumes any of the Resale Items in
providing Cleaning Services to its Customers.
The Taxpayer provides two taxable items to its Customers, nonresidential Cleaning Services
(Section 212.05(1)(i)1.b., F.S.) and items of tangible personal property (i.e., the Resale Items
defined above) (Section 212.05(1)(a)1.a., F.S.).
The Customer can freely elect to acquire the Cleaning Services with or without purchasing the
Resale Items, and the Taxpayer charges its Customer more if the Customer decides to purchase
the Resale Items than the Taxpayer would have charged if the Customer elected not to purchase
any Resale Items.
Section 212.05(1)(i)4., F.S., requires a separate identification of sales of taxable services from
nontaxable services and other items that are not taxable only if the seller or service provider
intends to avoid collecting and remitting sales or use tax on some portion of the total invoice
amount. It does not, however, require separate identification in order to demonstrate that all or
any part of the transaction is a retail sale. The Taxpayer’s transactions only involve taxable
Cleaning Services and, if purchased by the Customer, taxable Resale Items, and the Taxpayer
does, in fact, collect and remit sales tax on the total invoice amount, unless the Customer is not
subject to tax.
Section 212.05(1)(i)1.b., F.S., imposes a sales tax on nonresidential Cleaning Services. Rule
1.0161(5), F.A.C., in pertinent part, provides “[s]ervice providers are considered the ultimate
consumers of any tangible personal property used in providing their services” (emphasis added).

Rule 12A-1.0091(8), in pertinent part, provides “cleaning service providers are considered the
ultimate users or consumers of the tangible personal property sold to them and used in
connection with this service” (emphasis added). As presented in the facts contained in this
ruling, the Taxpayer is providing taxable nonresidential Cleaning Services and, in providing the
Cleaning Services, uses or consumes Cleaning Supplies. It does not, however, use or consume
the Resale Items in providing the Cleaning Services. As such, only the Cleaning Supplies are
used or consumed by the Taxpayer in providing the Cleaning Services and only the Cleaning
Supplies are taxable to the Taxpayer.
CONCLUSION

1. The Taxpayer does not use or consume the Resale Items when providing the Cleaning
   Services and thus is not the ultimate consumer of the Resale Items. The Taxpayer purchases the
   Resale Items for purposes of resale to its Customers and (i) may extend a resale certificate to its
   vendors (thus not being subject to tax when purchasing the Resale Items) and (ii) should collect
   sales tax on the price it charges its Customers for the Resale Items, unless the Customer is
   otherwise exempt from the obligation to pay sales tax. As a result, the Taxpayer is not subject to
   sales or use tax on its purchases of the Resale Items.
2. The Taxpayer is the ultimate consumer of the Cleaning Supplies it purchases to use or
   consume in providing its Cleaning Services and is obligated to pay sales tax or remit use tax on
   the purchase price paid for such Cleaning Supplies.
3. The Taxpayer sells both the Resale Items and Cleaning Services to its Customers and, as
   such, is obligated to collect sales tax on the entire amount it charges its Customers, unless the
   Customer is otherwise exempt from the obligation to pay sales tax.
4. The Taxpayer does not need to separately state on its invoices to its Customers the price it
   charges for or the quantity of Resale Items provided to its Customers, from the price charged for
   Cleaning Services, since the sale of all such items and services are subject to retail sales tax at
   the same rate, provided that the taxpayer maintains backup documentation sufficient to tie the
   Resale Items to a specific contract or Customer, which must be maintained and available for
   inspection if requested by the Department. The form and content of the sample documentation
   provided by the Taxpayer as Exhibit B to its request is acceptable and sufficient for this purpose.
   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 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 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 850-717-6729.
Sincerely,

Joseph D. Franklin III
Tax Law Specialist
Technical Assistance and Dispute Resolution
JDF3
Control #: 107795