How did Florida tax custom signs and awnings sold, installed, or repaired by an out-of-state dealer using local contractors?

Plain-English summary

The Florida Department of Revenue divided custom signs and awnings by whether installation made them a permanent part of real property.

For permanently attached signs or awnings, the out-of-state seller acted as a real-property improvement contractor even when a local contractor performed installation and billed the seller. The seller owed use tax on the item's cost, including fabrication, and did not charge the Florida customer sales tax on the lump-sum improvement or repair.

Signs that did not become permanently attached remained tangible personal property. The seller had to collect sales tax on the entire charge, including installation or repair labor.

What this means for you

Sign and awning companies

Classify each installation by permanence and real-property attachment before invoicing. The same product category can produce contractor use tax or retail sales tax.

Out-of-state dealers

Hiring a Florida installer does not prevent you from being the real-property contractor when you sell the completed installed improvement to the customer.

Common questions

Q: Were permanently attached signs taxable retail sales?
A: No. The dealer instead owed use tax on its costs.

Q: Were removable signs taxable?
A: Yes, including installation or repair charges.

Citations and references

• Fla. Stat. §§ 212.05, 212.06, and 213.22
• Fla. Admin. Code rr. 12A-1.043 and 12A-1.051

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 13A-014

Original ruling text

Executive Director
Marshall Stranburg

QUESTION:
1- Are the charges to the Taxpayer’s customers for the sale and installation of the
various categories of signs and awnings taxable as sales of tangible personal
property?
2- Does the Department consider the Taxpayer, an out-of-state dealer, to be making
improvements to realty when the Taxpayer through a third party local contractor
installs signs and awnings in Florida?
3- Should the Taxpayer charge sales or use tax on charges for the installation and/or
repair of signs and awnings?
ANSWER:
1- When the Taxpayer makes a sale of a sign or awning that is permanently attached to
and becomes a part of realty, the Taxpayer is not selling tangible personal property.
Rather, the Taxpayer is performing a real property improvement and should accrue
and remit use tax on the cost, including fabricated cost, to the Department. Signs that
do not become permanently attached and do not become a part of realty are sales of
tangible personal property. The Taxpayer should charge its customer sales tax on the
entire charge, including any installation cost.
2- The Taxpayer is acting as a real property improvement contractor, subject to Rules
12A-1.043 and 12A-1.051, F.A.C., when it sells and installs an awning or a sign that
is installed through a local contractor when the Taxpayer is billed for the installation,
which bill it in turn passes on as a part of its lump sum billing to the Florida
customer.
3- When the Taxpayer sells and installs, or repairs, an awning or a sign that becomes a
part of realty, the Taxpayer should not charge the customer sales tax. Rather, the
Taxpayer should accrue and remit use tax on the costs of the awning or sign,
including fabricated costs for the items used in the performance of the contract.
When the sale/repair is for a sign that does not become permanently attached to
realty, the sale/repair is for the sale/repair of tangible personal property, and the
Taxpayer should charge sales tax on the entire charge, including any installation
costs.

Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – James McAdams, Director  Information Services – Tony Powell, Director

www.myflorida.com/dor
Tallahassee, Florida 32399-0100

Technical Assistance Advisement
Page 2 of 9
July 19, 2013

Re:

Technical Assistance Advisement – TAA 13A-014
Sales and Use Tax – Custom Signs
Sections 212.05 and 212.06(14), Florida Statutes (F.S.)
Rules 12A-1.043 and 12A-1.051, Florida Administrative Code (F.A.C)
XXX (“Taxpayer”)
FEIN: XXX

Dear XXX:
This response is in reply to your letter dated XXX, 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 Department’s position on the Taxpayer’s sales
of signs in this state. An examination of your letter 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.
PRESENTED FACTS
Taxpayer’s letter dated XXX, provides the following facts:
[Taxpayer] is a manufacturer of signs that it sells to customers in Florida as well
as other states. [Taxpayer’s] customers are primarily well-known retailers that
lease space in shopping malls across the country. A majority of the larger signs it
produces have the retailer’s names on them, are electrically illuminated, and are
installed prominently over the entryways of the respective retailers’ stores. The
signs are all manufactured at [Taxpayer’s] facility in XXX. Signs are typically
ordered by a customer who is planning for the opening of a new store. After the
customer’s signs have been manufactured and are ready for shipment, [Taxpayer]
will arrange for the signs to be picked up at its XXX facility and shipped by a
common carrier and have them transported to the customer’s designated location
in Florida. [Taxpayer] does not use its employees to install signs. Instead,
[Taxpayer] contracts with a [third] party installer in Florida to do to the
[installation]. Once the installation is complete, the [third] party installer will
invoice [Taxpayer] for its services. [Taxpayer] in turn invoices its customer for
the selling price negotiated for the signs, along with separately stated charges for
[third] party installation fees, permit fees, site survey fees and charges for
shipment of the property to the customer. [Taxpayer] charges a lump-sum
amount for each sign that includes the manufactured cost of the sign plus a profit
markup amount for each sign listed on a customer’s invoice.

Technical Assistance Advisement
Page 3 of 9
[Taxpayer] also sells XXX to its customers. The XXX are manufactured by
unrelated companies that sell the XXX to [Taxpayer] who in turn sells the
specifically made XXX to its customers, installed. [Taxpayer] also hires thirdparty contractors to install the XXX. The contractors invoice [Taxpayer] for their
work, and [Taxpayer] includes the installation charge as a separate line item on its
invoice to its customers.
When repairs to signs are needed by its customers in Florida, [Taxpayer]
subcontracts the repair work out to instate sign companies who perform the
needed repairs and bill [Taxpayer] for their work. [Taxpayer] in turn bills its
customer for the repairs. The subcontractor is responsible for providing all the
necessary tools, parts, and any other items needed to repair the sign.
Taxpayer manufactures and sells five (5) major types of signs. Taxpayer’s
correspondence provides descriptions of the signs as follows:
Cabinet Signs: This type sign is usually positioned prominently just outside a
retailer’s store, and will generally have the store’s name on it. Cabinet signs can
be made of different types of materials including, aluminum sheet metal, plastic,
etc. They are either screwed or bolted into sheetrock on the outside of the store
or, if too heavy, they are screwed or bolted into the metal or wood studs on which
the sheetrock is hung. These signs are easily removable. To do so, one would
take out the screws or bolts that fasten them to the sheetrock or studs. Therefore,
there would be virtually no damage to the realty upon the removal of this type of
sign.
Channel Letters: These signs also appear over the doorways of retail stores or on
walls inside the stores. They consist of individually fabricated letters made from
sheet metal or plastic. A number of pins are mounted on each of the letters that
make up the sign. An equal number of individual receptor brackets are
strategically implanted in the wall on which the letters will be placed. These
receptors are placed so that they line up with the pins on each of the letters. The
letters are then pushed into the receptors and then secured with nuts. Once
installed, the back of the letters protrude from the wall by an inch or more. These
letters can either be face lit or back lit, according to the customer’s requirements.
The letters can easily be removed from the brackets on which they sit by
unscrewing the nuts and pulling the letters and pin out of their brackets.
Digital Imaging: These are digital images that are reproduced by our client on
varying types of media. They are printed at [Taxpayer’s] Kentucky facility using
very large digital printers. The images are poster like and can be quite large.
Some of these signs can be up to 82 inches wide. Barricade graphics are an
example of a digital image. They typically appear on the outside of a store that is
under construction and advertise its future opening. Digital imaging is also used

Technical Assistance Advisement
Page 4 of 9
to produce murals that are placed in store windows or sometime applied to walls
using adhesives. They can also be free standing as well. Digital images can be
easily removed from the various surfaces on which they are attached or mounted.
Vinyl Graphics: This category is produced from large sheets of vinyl materials
that are cut using a computer-controlled cutting machine that generates the
individual letters. The letters are usually applied to windows, but can also be
applied to walls using adhesives. Vinyl letters are easily removable using a
scraping device.
Non-Illuminated Signs: This category would encompass signs that are made from
flat, cut out letters typically made of acrylic or foam-type materials. These signs
are usually attached to surfaces through the use of silicone or tape and are easily
removable.
REQUESTED RULINGS
Taxpayer requests information regarding how to tax each specific transaction going
forward. Specifically, the Taxpayer lists as issues the following:

1. Under Florida sales/use tax laws, are the charges to [Taxpayer’s] customers
   for the sale and installation of each of the aforementioned categories of signs
   or XXX taxable as sales of tangible personal property?
2. Does the Department of Revenue consider [Taxpayer] to be making
   improvements to realty when it [sells] and installs any of the categories of
   signs or XXX and therefore treat [Taxpayer] as a manufacturer/contractor
   subject to the provisions of [Rule 12A-1.051, F.A.C]?
3. Should [Taxpayer] charge sales/use tax on the charges it bills its customers for
   installation of signs and XXX?
4. Should [Taxpayer] charge sales/use tax on the charges it bills to its customers
   for the repairs made to signs and XXX?
   APPLICABLE STATUTES AND RULES
   The appropriate taxation of the sale and installation of Taxpayer’s signs and/or XXX is
   dependent upon whether Taxpayer is, through a subcontractor, performing a real property
   improvement contract, or whether Taxpayer is selling and installing tangible personal
   property. Section 212.05, F.S., generally imposes tax on the sale of tangible personal
   property, including any services that are a part of the sale, when the sale occurs in
   Florida. The sale is deemed to have occurred in Florida when the purchaser takes
   possession of the item in Florida.

Technical Assistance Advisement
Page 5 of 9
Section 212.06(14), F.S., provides the following regarding improving real property:
(14) For the purpose of determining whether a person is improving real property,
the term:
(a) “Real property” means the land and improvements thereto and fixtures and
is synonymous with the terms “realty” and “real estate.”
(b) “Fixtures” means items that are an accessory to a building, other structure,
or land and that do not lose their identity as accessories when installed but that do
become permanently attached to realty. However, the term does not include the
following items, whether or not such items are attached to real property in a
permanent manner: property of a type that is required to be registered, licensed,
titled, or documented by this state or by the United States Government, including,
but not limited to, mobile homes, except mobile homes assessed as real property,
or industrial machinery or equipment. For purposes of this paragraph, industrial
machinery or equipment is not limited to machinery and equipment used to
manufacture, process, compound, or produce tangible personal property. For an
item to be considered a fixture, it is not necessary that the owner of the item also
own the real property to which it is attached.
(c) “Improvements to real property” includes the activities of building, erecting,
constructing, altering, improving, repairing, or maintaining real property.
Rule 12A-1.051, F.A.C., provides in pertinent part:
(2) Definitions. For purposes of this rule, the following terms have the following
meanings:

(c)1. "Fixture" means an item that is an accessory to a building, other structure, or
to land, that retains its separate identity upon installation, but that is permanently
attached to the realty. Fixtures include such items as wired lighting, kitchen or
bathroom sinks, furnaces, central air conditioning units, elevators or escalators, or
built-in cabinets, counters, or lockers.

2. In order for an item to be considered a fixture, it is not necessary that the owner
   of the item also own the real property to which the item is attached. A retained
   title provision in a sales contract or in an agreement that is designated as a lease
   but is in substance a conditional sales contract is not determinative of whether the
   item involved is or is not a fixture. Similarly, the fact that a lessee or licensee of
   real property rather than the lessor/owner enters into a contract for an item to be
   permanently attached to the real property does not prevent that item from being
   classified as a fixture.

Technical Assistance Advisement
Page 6 of 9

(h)1. "Real property contract" means an agreement, oral or written, whether on a
lump sum, time and materials, cost plus, guaranteed price, or any other basis, to:

c. Furnish and install tangible personal property that becomes a part of or is
directly wired or plumbed into the central heating system, central air conditioning
system, electrical system, plumbing system, or other structural system that
requires installation of wires, ducts, conduits, pipes, vents, or similar components
that are embedded in or securely affixed to the land or a structure thereon.

Rule 12A-1.043(1), F.A.C., sets forth the procedure for calculating tax on the fabricated
cost of taxable items.
Paragraph (4) of Rule 12A-1.051, F.A.C., provides that contractors are the ultimate
consumers of the materials and supplies they use to perform real property contracts and
must pay tax on the costs of those materials and supplies. Further, subsection (17) of the
rule provides that contractors engaged in the activity of installing XXX and signs that are
permanently attached to realty are considered real property contractors.
From s. 212.06(14), F.S., “real property” is land, improvements to land, and fixtures.
“Fixtures” are “items that are an accessory to a building, other structure, or land and that
do not lose their identity as accessories when installed but that do become permanently
attached to realty.” Although the determination whether an item is a fixture requires
review of all the facts and circumstances, a prerequisite is that it must be attached to the
real property in some manner indicating that it has become part of the real property and
will remain in place indefinitely. Custom designed signs made for a specific customer
that are screwed or bolted to the customer’s facility, such as the Taxpayer’s “cabinet” and
“channel letter” signs, would be considered as permanently attached and becomes real
property when installed.
Thus, when Taxpayer is responsible for the manufacture and installation of an awning or
sign that becomes an improvement to real property, using a Florida subcontractor for the
installation, Taxpayer is the ultimate consumer of the materials incorporated into the
awning or sign, and Taxpayer owes use tax on the fabricated costs of the awning or sign.
Based on the above provided descriptions, it appears that XXX, “cabinet” signs and
“channel letters” signs become a part of real property when installed. The “digital
imaging,” “vinyl graphics,” and “non-illuminated,” signs may or may not become a part

Technical Assistance Advisement
Page 7 of 9
of realty when installed depending upon the circumstances and the intended purpose of
the specific sign. For example, digital imaging vinyl panels or other similar material sign
attached to storefront windows noting the store is under construction or advertising a
future opening are not classified as a “fixture,” and are tangible personal property. Thus,
sales tax is due on the full sales price, including any installation labor charged. Vinyl
panels that are permanently attached to a building or other such structure are fixtures and
classified as real property are improvements to realty. As such, use tax is due on the total
cost of materials and supplies, including any fabrication costs. Vinyl graphics and vinyl
letters attached to storefront windows are not classified as a fixture and are tangible
personal property. Non-illuminated signs attached to structures like the brick entrance to
a subdivision which is intended to remain in place indefinitely and would be considered a
fixture of real property.
Therefore, when Taxpayer contracts with a Florida customer either for the sale and
installation or the repair of XXX, “cabinet” signs, and “channel letter” signs, Taxpayer is
deemed the ultimate consumer of the materials and supplies used in the real property
contract or repair and must accrue and remit use tax on the total costs, including
fabricated costs. When acting as a real property contractor, Taxpayer’s purchase and use
of tangible personal property, for use in the performance of the real property contract, are
subject to the provisions of Rules 12A-1.043, and 12A-1.051, F.A.C. Taxpayer should
not charge its customers sales tax on such contracts, as Taxpayer does not resell the
tangible personal property to the customer. Rather, Taxpayer should accrue and remit
use tax on the costs, including fabricated costs, used in the performance of the real
property contract.
When Taxpayer sells and installs a sign or vinyl graphic that is not attached to realty in a
manner indicating that it has become a part of realty and will remain in place indefinitely,
Taxpayer is installing tangible personal property and should charge the customer tax on
the entire sales price, including any services that are a part of the sale.
In response to your specific questions:
Question 1: Under Florida sales/use tax laws, are the charges to Taxpayer’s customers
for the sale and installation of each of the aforementioned categories of signs or XXX
taxable as sales of tangible personal property?
Response: The sale and installation of XXX and signs that are permanently attached to
and become a part of real property are not sales of tangible personal property. Taxpayer
should not charge its customer sales tax on real property improvement contracts because
Taxpayer is not reselling tangible personal property. Rather Taxpayer should accrue and
remit use tax on the costs of materials and supplies, including any fabrication costs, used
in the performance of the real property contract. Signs that are not permanently attached
to and that do not become a part of the real property are sales of tangible personal
property. Taxpayer should charge its customer sales on the sales price of the sign
including labor.

Technical Assistance Advisement
Page 8 of 9
Question 2: Does the Department of Revenue consider Taxpayer to be making
improvements to realty when it sells and installs any of the categories of signs or XXX
and therefore treat Taxpayer as a manufacturer/contractor subject to the provisions of
Florida Rule 12A-1.051, F.A.C.?
Response: Yes, Taxpayer is acting as a real property contractor when it sales and installs
an awning or sign that becomes a part of real property, and is subject to Rules 12A-1.043
and 12A-1.051, F.A.C., under those circumstances.
Question 3: Should Taxpayer charge sales/use tax on the charges it bills to its customers
for installation of signs and XXX?
Response: When Taxpayer sells and installs an awning or sign that becomes a part of
real property, Taxpayer should not charge its customer sales tax. Rather, Taxpayer
should accrue and remit use tax on the costs of the XXX and signs, including fabricated
costs, for the items and supplies used in the performance of the contract. When Taxpayer
sells and installs a sign that does not become permanently attached to realty, Taxpayer is
making a sale of tangible personal property and should charge the customer sales tax on
the entire sales price.
Question 4: Should Taxpayer charge sales/use tax on the charges it bills to its customers
for repairs made to signs and XXX?
Response: When Taxpayer makes a repair of an awning or sign that is a part of realty,
Taxpayer is responsible for use tax on the costs of the supplies and materials used in the
performance of the real property repair. If the repair is made to an item of tangible
personal property, Taxpayer should charge the customer sales tax on the entire sales
price.
CONCLUDING STATEMENT
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 this 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 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 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

Technical Assistance Advisement
Page 9 of 9
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,

Horace Royals
Tax Law Specialist
Technical Assistance and Dispute Resolution
(850) 717-7289

Record ID: 139450