Should a Florida contractor separately charge a homeowner sales tax on plantation shutters sold and installed under a lump-sum contract?

Plain-English summary

The Florida Department of Revenue concluded that custom plantation shutters sold and installed under a lump-sum contract were a real-property improvement, so the contractor should not have separately charged the homeowner sales tax.

The shutters were screwed or bolted to the home's windows, served the windows' ordinary purposes, and were intended to remain permanently attached. Those facts made them fixtures. The Department distinguished ordinary blinds and shades that rest in brackets and retain their character as tangible personal property.

The contractor was the ultimate consumer of the materials and owed tax when buying them. It could recover that tax cost through the lump-sum contract price, but not as a separate sales-tax line charged to the customer.

What this means for you

Homeowners

A contractor's materials tax can be built into the job price even when the contractor should not separately collect retail sales tax from you.

Window-covering contractors

Classify the installed product and the contract form. Permanently attached plantation shutters were treated as fixtures here; removable blinds and shades were distinguished.

Common questions

Q: Were the plantation shutters taxable materials?
A: Yes, to the contractor as the consumer of materials used in the real-property job.

Q: Should the contractor separately state sales tax to the homeowner?
A: No, under the lump-sum installation contract described.

Citations and references

• Fla. Stat. §§ 212.02(9) and (16), 212.05, 212.06(14)(a)-(c), and 213.22
• Fla. Admin. Code r. 12A-1.051
• Commercial Finance Co. v. Brooksville Hotel Co., 123 So. 814 (Fla. 1929)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 13A-025

Original ruling text

Executive Director
Marshall Stranburg

QUESTION: Should Taxpayer have been charged sales tax on the sale and installation of
plantation shutters?

ANSWER: A lump sum contract for the sale and installation of plantation shutters is a
contract for the improvement to real property. Vendor should not have separately stated
the tax on the plantation shutters; rather, the tax should be included in the price of the
materials used to complete the contract.

November 7, 2013

Re:

Technical Assistance Advisement – TAA 13A-025
Sales and Use Tax – Plantation Shutters
Sections: 212.05, 212.06, Florida Statutes (F.S.)
Rule: 12A-1.051, Florida Administrative Code (F.A.C.)
Petitioner: XXX [hereinafter “Taxpayer”]

Dear XXX:
This letter is a response to your petition dated 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 s. 213.22, F.S.
Issue
Whether Taxpayer should have been charged sales tax on the sale and installation of plantation
shutters.
Presented Facts
Taxpayer entered into a contract with XXX (“Vendor”), for the purchase and installation of
plantation shutters for one dining room window, a sliding blind for lanai doors and venetian blinds
for three bedroom windows. Vendor provided Taxpayer with an invoice listing the quantity and
price of each item ordered. Sales tax was charged as a separate line item for all items on the invoice.
Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – James McAdams, Director  Information Services – Damu Kuttikrishnan, Director

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

Technical Assistance Advisement
Page 2
Taxpayer does not dispute that tax was due on the sales price of the blinds and understands that the
vendor can include sales tax in the cost of the plantation shutters when issuing the invoice; however,
Taxpayer does not agree with the vendor adding sales tax as a separate line item on the invoice.
Taxpayer and Vendor are currently in a dispute over the amount of refund Taxpayer is due based on
the return of defective merchandise and sales tax Taxpayer was charged as a separate line item.
Taxpayer has provided copies of correspondence between Vendor and himself attempting to resolve
the refund issue. However, Vendor asserts that the sales tax it charged Taxpayer cannot be refunded
since Vendor is required to pay taxes on its sales.
Law and Discussion
Section 212.05, F.S. provides that anyone involved in the business of selling tangible personal
property at retail is engaged in a taxable privilege and tax is due on each taxable transaction or
incident. The tax is calculated on the “sales price” of the item(s) sold. Section 212.02(16), F.S.
defines “sales price” to mean the total amount paid for tangible personal property, including any
services that are a part of the sale…
In order to determine whether the tax rules relating to tangible personal property or those related to
real property apply to this transaction, it is necessary to determine whether the installation of the
property at issue, namely the plantation shutters, becomes part of real property or retains the
characteristics of tangible personal property. “Tangible personal property” means and includes
personal property which may be seen, weighed, measured, or touched or is in any manner
perceptible to the senses… 1 “Real property” is defined in section 212.06(14)(a), F.S., as “the land
and improvements thereto and fixtures…” “Fixtures” mean 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… 2 Rule 12A-1.051(3) provides the criteria for determining
whether an item is a fixture. “Improvements to real property” includes the activities of building,
erecting, constructing, altering, improving, repairing, or maintaining real property. 3Section
212.05(1), F.S., provides that sales and repairs of tangible personal property are taxable. However,
the charge for a real property improvement or repair is not taxable.
In addition, the courts have provided some additional guidance in determining when property
attached to realty is considered a fixture rather than retaining its character as tangible personal
property. In Commercial Finance Co. v. Brooksville Hotel Co., 123 So. 814, 816 (Fla. 1929), the
Florida Supreme Court set out a three-part test for determining whether an object is a fixture or
personalty: 1) Is there actual annexation to the realty or something appurtenant thereto?; 2) Is the
item in question appropriately applied to the use or purpose of that part of the realty to which it is
connected?; 3) Did the party making the annexation intend the item to be a permanent accession to
the freehold? If the answer to these three questions is yes, the object is a fixture.

1

Sec. 212.02(9), F.S.
Sec. 212.06(14)(b), F.S.
3
Sec. 212.06(14)(c)
2

Technical Assistance Advisement
Page 3

In this case, there is an actual annexation to realty since the plantation shutters were either screwed
or bolted to the windows of Taxpayer’s home. Next, the plantation shutters are appropriately applied
to the use and purpose of the part of the realty to which they are connected since they are being used
for the purpose that one uses shutters for namely, controlling the amount of sunlight that enters a
room, to provide privacy, security, enhancement of the home’s aesthetics, etc. Based on the
information provided in Taxpayer’s request it can be assumed that by entering into a contract with
Vendor and paying for the cost and installation of custom shutters, in addition to the significant
changes to the window seals necessary to install the shutters, that it was Taxpayer’s intention that the
shutters would become a permanent accession to his home. Therefore, the plantation shutters would
be considered a fixture for purposes of determining that the tax rules relating to real property would
apply to this transaction.
Pursuant to Rule 12A-1.016(b)(2), F.A.C., draperies, shades and blinds have been determined to be
tangible personal property. Rule 12A-1.051 (g), F.A.C., emphasizes this position by excluding the
items listed in Rule 12A-1.016, F.A.C., from treatment as real property improvements. Rule 12A1.051, F.A.C., provides further guidance to persons making improvements to real property. Rule 12A1.051(18), F.A.C., specifically excludes blinds and shades from being classed as improvements to real
property. However, blinds and shades differ from plantation shutters in one significant aspect: blinds and
shades are not attached in any manner to the real property. They rest in brackets; even though the
brackets are screwed or bolted into the wall or window frame, the minimal value of the bracket does not
make the blinds and shades into improvements to real property. Plantation shutters, on the other hand, are
usually directly screwed or bolted into the wall or window frame, and when they are attached as such,
they are properly classified as improvements to real property.
The appropriate taxation of plantation shutters and materials incorporated in their installation depends
upon the type of contract vendor has with its customers. According to the information provided by
Taxpayer, Vendor both provides and installs the blinds and shutters. Rule 12A-1.051(4), Florida
Administrative Code, outlines the tax requirements of lump sum and similar contracts for the
improvement to real property and it states as follows:
(4) General rule of taxability of real property contractors. 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, unless the contractor has entered a retail sale plus installation contract.
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 also pay
tax on all materials they fabricate for their own use in performing such contracts, as discussed in
subsection (10). 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 Supplied)

Charges for improvements to real property made by the contractor to the customer are generally not
subject to tax. Instead, the contractor pays tax to its supplier on its purchase of materials and
supplies used in the performance of the job. The contractor recoups the tax it pays on the materials

Technical Assistance Advisement
Page 4

by including it as a cost of the job; the tax should not be separately stated to the customer. In this
case, Vendor should not have separately stated the tax on the plantation shutters; rather it should
have been included in the price of the shutters, which likely would have resulted in a higher cost to
Taxpayer.
Regardless whether it performed the installation, Vendor was correct to charge you tax on the
plantation shutters, however, Taxpayer should not have been charged tax as a separate line item.
Conclusion
A lump sum contract for the sale and installation of plantation shutters is a contract for the
improvement to real property. Vendor should not have separately stated the tax on the plantation
shutters; rather it should be included in the price of the materials used to complete the contract.
Closing Statement
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,

Sara D. Faulkenberry
Senior Tax Specialist
Technical Assistance and Dispute Resolution
Control # 144509