Does an RV park keep its transient-rental exemption after an ownership change, and must the new owners file a new declaration?

Plain-English summary

The Florida Department of Revenue concluded that an RV resort's exemption from sales tax on transient accommodations could continue after a change in ownership because the exemption depended on the facility's qualification, not the identity of its owner.

The park had to qualify both before and after the ownership change. That required more than half of its available rental units to be occupied by tenants who had continuously resided there for more than three months, together with the required prior Declaration of Taxable Status.

The successor owners did not have to file a new declaration if the prior owner had filed one and the facility continued to qualify. They still had to perform the annual status redetermination, notify the Department of the ownership change for its records, and could remain liable if the prior declaration did not accurately reflect the park's qualification.

What this means for you

RV-park buyers and operators

Verify the facility's actual occupancy history and prior filing before relying on the exemption. A change in legal ownership does not reset a facility's status, but it also does not cure a defective prior declaration.

Accountants and tax professionals

Retain the consecutive-three-month occupancy test and annual redetermination records. If the park stops qualifying, the rule requires notice and makes charges taxable in the next accounting year as described in the advisement.

Common questions

Q: Did the ownership change alone make the rentals taxable?
A: No.

Q: Did the new owners need to file another Declaration of Taxable Status?
A: No, if the prior owner filed one and the facility continued to qualify.

Q: Were the new owners protected if the prior declaration was wrong?
A: No. The Department warned that reliance on the prior filing would not prevent tax, interest, or penalty liability.

Citations and references

• Fla. Stat. §§ 212.02(10)(f), 212.03(1)(a) and (7)(c), and 213.22
• Fla. Admin. Code r. 12A-1.061(11)(d)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 13A-027

Original ruling text

Executive Director
Marshall Stranburg

QUESTION:
1- Are the rental charges for accommodations at [RV Resort] after a change in
ownership subject to sales tax, provided more than half of the total rental units are
occupied by tenants who have continuous residence in excess of three (3) months?
2- Are new owners of [RV Resort] required to file a new Declaration of Taxable Status
form?
ANSWER:

1. Accommodations at [RV Resort] are not subject to sales tax provided the facility
   qualified for the exemption both prior to and following the change in ownership. Since
   it is the facility and not the owner that determines whether an exemption is available, a
   change in ownership alone will not affect the taxable status of [RV Resort] park.
2. New owners are not required to file a new Declaration of Taxable Status form following
   the change in ownership, provided the prior owner filed such declaration and that the
   facility continues to qualify for the exemption.

December 11, 2013

Re:

Technical Assistance Advisement – TAA 13A-027
Sales and Use Tax – Transient Rental Accommodations
Sections: 212.02 and 212.03, Florida Statutes (F.S.)
Rule: 12A-1.061(11), Florida Administrative Code (F.A.C.)
Petitioner: XXX

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 parties 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, 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.

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
FACTS
Your request provided the following:
Background
[Corporation] is a Florida corporation that owns and operates an RV Park in
Florida called [RV Resort]. [Corporation] currently owns both the land and the
RV units on the land and directly employs the personnel providing services at
[RV Resort]. [Corporation] has been acquired by [New Corporation], which
intends to undertake certain restructuring steps with respect to [Corporation].
For this purpose, [Corporation] will create two wholly owned legal entities,
[Taxpayer #1] and [Taxpayer #2] [hereinafter collectively Taxpayers]. [Taxpayer

1] is a single-member LLC disregarded for federal income tax purposes.

[Taxpayer #2] is a single-member LLC that will “check the box” to be treated as a
corporation for federal income tax purposes.
[Corporation] will subsequently transfer operations of [RV Resort] to the
Taxpayers as follows:

1. [Corporation] will transfer the title to [RV Resort] RV units to
   [Taxpayer #2]]
2. [Corporation] will transfer the title to [RV Resort] land to [Taxpayer

1].

[Corporation] will also transfer all of the [RV Resort] employees to [XXXXX]
Management, LLC, a wholly-owned subsidiary of [New Corporation] Resorts.
Subsequent to the transfers, [Corporation] will not conduct any activities related
to [RV Resort]. Prospectively, [RV Resort] operations will be conducted
collectively by the Taxpayers under the “[RV Resort]” name. The Taxpayers will
charge customers for RV Park accommodations (“Rental Charges”) on one
invoice pursuant to a combined lease agreement. The Rental Charges at [RV
Resort] will primarily consist of charges for transient accommodations and
specifically relate to the lease of [RV Resort] land owned by [Taxpayer #1] and
the lease of [RV Resort] units owned by [Taxpayer # 2]. The Taxpayers will
obtain respective Florida sales tax identification numbers in connection with [RV
Resort] operations. The employees of [XXXXX] Management LLC (previously
employees of [Corporation]) will provide services at [RV Resort] for which
[XXXXX] Management LLC will charge a management fee to the Taxpayers.
Rental Charges invoiced by [RV Resort] have historically qualified for a sales tax
exemption pursuant to Florida Statute § 212.03(7)(c), because [Corporation] filed
the Form DR-72-2 (“Declaration of Taxable Status”) and certified that more than
half of the total rental units available at [RV Resort] are occupied by tenants who
have a continuous residence in excess of three months (a “50 percent
requirement”). Currently, based on the annual redeterminations of the taxable

Technical Assistance Advisement
Page 3
status of [RV Resort], the facility continues to meet the 50 percent requirement. It
is also anticipated that the exemption requirements will be met on an annual basis
at [RV Resort] under the ownership of the Taxpayers.
REQUESTED ADVISEMENT
Taxpayers request guidance that Rental Charges for the accommodations at [RV
Resort] invoiced by the Taxpayers should not be subject to sales tax, provided more than half of
the total rental units available at [RV Resort] are occupied by tenants who have a continuous
residence in excess of three months as provided in Florida Statute § 212.03 (7)(c).
In addition, the Taxpayers request guidance that the Taxpayers, as new owners of [RV Resort],
should not be required to file new Declaration of Taxable Status forms declaring [RV Resort] as
an exempt facility, and that the Taxpayers should not be required to file new Declaration of
Taxable Status forms.
APPLICABLE LAW
Section 212.02(10)(f), F.S., states:
A “trailer camp,” “mobile home park,” or “recreational vehicle park” is a place where
space is offered, with or without service facilities, by any persons or municipality to the
public for the parking and accommodation of two or more automobile trailers, mobile
homes, or recreational vehicles which are used for lodging, for either a direct money
consideration or an indirect benefit to the lessor or owner in connection with a related
business, such space being hereby defined as living quarters, and the rental price thereof
shall include all service charges paid to the lessor.
Section 212.03(1)(a), F.S., states in part:
It is hereby declared to be the legislative intent that every person is exercising a taxable
privilege who engages in the business of renting, leasing, letting, or granting a license to
use any living quarters or sleeping or housekeeping accommodations in, from, or a part
of, or in connection with any .. tourist or trailer camp....
Section 2l2.03(7)(c), F.S., states:
The rental of facilities, as defined in s. 212.02(10)(f), which are intended primarily for
rental as a principal or permanent place of residence is exempt from the tax imposed by
this chapter. The rental of such facilities that primarily serve transient guests is not
exempt by this subsection. In the application of this law, or in making any determination
against the exemption, the department shall consider the facility as primarily serving
transient guests unless the facility owner makes a verified declaration on a form
prescribed by the department that more than half of the total rental units available are
occupied by tenants who have a continuous residence in excess of 3 months. The owner
of a facility declared to be exempt by this paragraph must make a determination of the

Technical Assistance Advisement
Page 4
taxable status of the facility at the end of the owner’s accounting year using any
consecutive 3-month period at least one month of which is in the accounting year. The
owner must use a selected consecutive 3-month period during each annual
redetermination. In the event that an exempt facility no longer qualifies for exemption by
this paragraph, the owner must notify the department on a form prescribed by the
department by the 20th day of the first month of the owner’s next succeeding accounting
year that the facility no longer qualifies for such exemption. The tax levied by this section
shall apply to the rental of facilities that no longer qualify for exemption under this
paragraph beginning the first day of the owner’s next succeeding accounting year. The
provisions of this paragraph do not apply to mobile home lots regulated under chapter
723.
Rule l2A-l.06l(11)(d), F.A.C., provides:
(d)1. Rental charges for transient accommodations at new trailer camps, new mobile
home parks (except mobile home lots regulated under Chapter 723, F.S.), and new
recreational vehicle parks are subject to tax until more than 50 percent of the total rental
units available are occupied by tenants who have continuously resided there for more
than three months. When more than 50 percent of the total rental units available are
occupied by tenants who have continuously resided there for more than three months, the
owner or owner’s representative of the camp or park is required to declare to the
Department that the rental of transient accommodations at the new camp or park is no
longer subject to tax. All rental charges for transient accommodations at a camp or park
are presumed taxable until the owner or owner’s representative has declared to the
Department that the charges for transient accommodations at the park qualify for
exemption.

2. Once the owner or owner’s representative has declared to the Department that the
   rental charges for transient accommodations at the camp or park are exempt, the owner or
   owner’s representative is required to make a redetermination of the taxable status of the
   camp or park at the end of the owner’s accounting year. To make this determination, the
   owner must use a consecutive three month period with at least one month in the
   accounting year. In the event that charges for transient accommodations at an exempt
   camp or park no longer qualify for exemption, the owner or owner’s representative must
   notify the Department no later than the 20th day of the first month of the owner’s next
   succeeding accounting year that the rental charges for transient accommodations at the
   camp or park have become taxable. The rental charges for transient accommodations at
   that camp or park will become taxable on the first day of the owner’s next succeeding
   accounting year.
3. The Department prescribes Form DR-72-2, Declaration of Taxable Status-Trailer
   Camps, Mobile Home Parks, and Recreational Vehicle Parks, incorporated by reference
   in Rule 12A-1.097, F.A.C., as the form to be used for the purposes of declaring the rental
   charges for transient accommodations at a trailer camp, mobile home park (except mobile
   home lots regulated under Chapter 723, F.S.), or recreational vehicle park exempt and
   notifying the Department at the time of annual redetermination that the rental charges for

Technical Assistance Advisement
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transient accommodations at an exempt camp or park have become taxable. This form is
not required to be filed with the Department when the owner or owner’s representative of
an exempt camp or park determines at the time of annual review that the rental charges
for transient accommodations continue to qualify for exemption.
RESPONSE
The rental of transient accommodations is generally subject to Florida sales tax, unless the rental
qualifies for an exemption. The Florida Statutes provide an exemption for trailer camps, mobile
home parks (except mobile home lots regulated under Chapter 723, F.S.), and recreational
vehicle parks when certain criteria are met. To receive the exemption from tax, the park must
rent more than 50 percent of its units to tenants who have continuously resided there more than
three months. The owner of the park must declare to the Department that the 50 percent
requirement has been met to receive the exemption. This can be done by submitting Form DR72-2 to the Department. The Department will presume all rentals in the park to be taxable unless
the declaration by the owner is made.
Since it is the facility and not the owner that determines whether an exemption is available, a
change in ownership alone will not affect the taxable status of the park. If the prior owner had
filed a Declaration of Taxable Status affirming that the facility qualified for exemption, the new
owner is not required to file a separate declaration following the change in ownership, so long as
the facility continues to qualify for exemption.
CONCLUSION
In summary, the answers to your specific requests are as follows:

1. Accommodations at [RV Resort] invoiced by the Taxpayers are not subject to sales tax
   provided the facility qualified for exemption both prior to and following the change in
   ownership.
2. Since it is the facility and not the owner that determines whether an exemption is
   available, a change in ownership alone will not affect the taxable status of the RV Park.
3. Taxpayers are not required to file a new Declaration of Taxable Status following the
   change in ownership, provided the prior owner had filed such declaration and that the
   facility continues to qualify for the exemption.
   Please be aware that reliance on the prior owner’s declaration as to the taxable status of the
   facility will not protect the new owner from liability for tax, interest, or penalty, if it is
   determined that the facility did not qualify for exemption during the period covered by the prior
   owner’s declaration. In addition, even though the Taxpayer’s are not required to file a new
   Declaration of Taxable Status, please notify the Department of the change in ownership, when it
   is completed, for record purposes.
   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

Technical Assistance Advisement
Page 6

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) 717-7289.
Sincerely,
Horace Royals
Tax Law Specialist
Technical Assistance & Dispute Resolution
Record ID: 150313