Did a federally chartered relief organization and its local units have to collect Florida sales tax on their sales of goods and services?

Plain-English summary

The federally chartered relief organization and its chapters and blood-services region were instrumentalities of the United States. Under intergovernmental tax immunity, Florida could not require them to collect and remit sales tax on goods and services they sold through their Florida operations.

The seller's immunity did not turn taxable merchandise into exempt property. Customers using, consuming, distributing, or storing taxable purchases in Florida owed use tax unless another exemption applied.

Registered dealers reported the tax as taxable purchases on their sales and use tax returns; unregistered purchasers used the individual out-of-state purchase return identified in the advisement.

What this means for you

Seller immunity and product exemption are different questions. A purchaser may inherit the reporting obligation when Florida cannot compel the federal instrumentality to collect.

Common questions

Did the organization collect Florida sales tax? No.

Were its local units treated the same way? Yes.

Were customers automatically exempt? No. They owed use tax unless another exemption applied.

Citations and references

• Fla. Stat. § 212.05, 36 U.S.C. §§ 300101-300103, and Department of Employment v. United States, 385 U.S. 355 (1966), as cited in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 12A-012

Original ruling text

SUMMARY

QUESTION:
THE ISSUE IS WHETHER TAXPAYER, ITS CHAPTERS, AND ITS OTHER
ADMINISTRATIVE UNITS ARE REQUIRED TO COLLECT AND REMIT
FLORIDA SALES TAX ON ITS SALE OF TANGIBLE PERSONAL PROPERTY.
ANSWER:
TAXPAYER AND ITS LOCAL UNITS ARE NOT OBLIGATED TO COLLECT
AND REMIT SALES TAX ON ITS SALE OF GOODS AND SERVICES IN
FLORIDA, BECAUSE THEY ARE INSTRUMENTALITIES OF THE UNITED
STATES. HOWEVER, TAXPAYER’S CUSTOMERS ARE REQUIRED TO PAY
USE TAX TO THE DEPARTMENT ON THEIR PURCHASES UNLESS
ANOTHER EXEMPTION APPLIES.
January 27, 2012
Re:

Technical Assistance Advisement - TAA 12A-012
Sales and Use Tax – Federal Instrumentality
XXX (Taxpayer)
Section 212.05, Florida Statute (F.S.)

Dear XXX:
This letter is a response to your petition received XXX, for the Department's issuance of
a Technical Assistance Advisement ("TAA") concerning the above referenced party and
matter. Your petition has been carefully examined and the Department finds it to be in
compliance with the requisite criteria set forth in Chapter 12-11, Florida Administrative
Code. This response to your request constitutes a TAA and is issued to you under the
authority of Section 213.22, F.S.
Issue
The issue is whether Taxpayer, its chapters, and its other administrative units are required
to collect and remit Florida sales tax on its sale of tangible personal property.
Presented Facts
Taxpayer is a federally chartered instrumentality of the United States. 36 U.S.C. §
300101 (2010), and Dept. of Employment v. United States, 385 U.S. 355, 358 (1966).
Taxpayer’s purpose is to provide volunteer aid in time of war to the sick and wounded of
the Armed Forces, in accordance with the spirit and conditions of various treaties of

Technical Assistance Advisement
Page 2
Geneva, to carry out a system of national and international relief in time of peace, and to
conduct other activities consistent with the foregoing purposes. 36 U.S.C. § 300102
(2010). Taxpayer’s chapters and blood services region are chartered by Red Cross and
are recognized as local units of Taxpayer. 36 U.S.C § 300103 (2010), and Amended and
Restated Bylaws of Taxpayer (Rev. April 5, 2011).
Taxpayer sells goods and services, including branded items, disaster preparedness kits,
and training classes, through its chapters and blood services regions throughout the
United States, including Florida. These items are sold in pursuit of Taxpayer’s purpose
to provide relief to victims of disaster, and to help people prevent, prepare for, and
respond to emergencies.
Taxpayer’s Position
Taxpayer believes it is not obligated to collect and remit sales tax on the sale of goods
and services to the Department of Revenue, because it is an instrumentality of the United
States.
Law and Discussion
Taxpayer was held by the United States Supreme Court as an instrumentality of the
United States for purposes of immunity from state taxation levied on its operations.
Dept’ of Employment, at 358. Taxpayer’s local units are chartered by Taxpayer, and are
a part of Taxpayer; hence, the local units are also federal instrumentalities. “Under the
Supremacy Clause, as interpreted in a line of cases dating to McCulloch v. Maryland, 17
U.S. (4 Wheat.) 316, 436-37, 4 L.Ed. 579 (1819), federal instrumentalities are immune
from taxation by a State, unless such taxation is specifically authorized by Congress.”
United States v. District of Columbia, 558 F.Supp.213, 218 (1982), quoting United States
v. Maine, 524 F.Supp. 1056, 1058 (D.Me. 1981). Because Taxpayer and its local units
are instrumentalities of the United States, they are not obligated to collect sales and use
tax on items they sell.
Although the state cannot require Taxpayer or its local units to collect tax on their sales,
the prohibition does not create an exemption for the taxable items sold. Section
212.05(1)(b), F.S., imposes a tax on the cost price of each item or article of tangible
personal property when the item is used, consumed, distributed, or stored for use or
consumption in this state. Hence, the purchaser of items sold by Taxpayer owes use tax
on the items purchased unless another exemption applies. A purchaser who is a
registered dealer for sales tax in Florida should report the tax due as a taxable purchase
on its sales and use tax return. A purchaser who is not a registered dealer in Florida
should report the tax using Form DR-15MO, Florida Tax on Purchases.

Technical Assistance Advisement
Page 3
Conclusion
Taxpayer and its local units are not obligated to collect and remit sales tax on its sale of
goods and services in Florida, because they are instrumentalities of the United States.
However, Taxpayer’s customers are required to pay use tax to the Department on their
purchases unless another exemption applies.
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
upon 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 from that which is 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 10 days of the date of this letter.

Sincerely,

Angel Eason
Senior Attorney
Technical Assistance and Dispute Resolution
(850) 717-7312
Control # 105849