Were optional customer contributions to an electric utility's solar pilot program subject to sales or gross receipts tax?

Plain-English summary

The Florida Department of Revenue concluded that customer contributions to an electric utility's voluntary solar partnership pilot program were not subject to sales tax or gross receipts tax.

The contributions were completely optional, unrelated to actual electricity use, cancellable at any time, separately stated on the bill, and excluded from late-payment charges and collection action. They therefore were not charges for electrical power or energy and were not gross receipts from utility services.

What this means for you

Electric utilities

An optional program contribution can be distinguished from a utility charge when its billing and collection terms support that distinction.

Tax and billing teams

Keep the contribution separate from usage charges and preserve the voluntary, cancellable, non-collection features.

Common questions

Q: Were the contributions subject to sales tax?
A: No.

Q: Were they subject to gross receipts tax?
A: No.

Q: What facts drove the result?
A: They were optional, separately stated, unrelated to usage, cancellable, and not enforced like unpaid utility charges.

Citations and references

• Fla. Stat. §§ 203.01, 203.012(3), 212.02(19), 212.05, 212.21(2), and 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 14A-030

Original ruling text

Executive
Director
Marshall Stranburg

QUESTION:
WHETHER CONTRIBUTIONS TO A VOLUNTARY SOLAR
PARTNERSHIP PILOT PROGRAM ARE SUBJECT TO GROSS RECEIPTS TAX
AND/OR SALES TAX.
ANSWER:
NO, THE VOLUNTARY CONTRIBUTIONS – WHICH ARE
COMPLETELY VOLUNTARY, UNRELATED TO A CUSTOMER’S ACTUAL
ELECTRICITY USAGE, CANCELABLE AT ANY TIME, SEPARATELY STATED
ON THE CUSTOMER’S BILL, AND NOT SUBJECT TO ANY LATE PAYMENT
CHARGES OR COLLECTION ACTIONS – ARE NEITHER “CHARGES FOR
ELECTRICAL POWER OR ENERGY” NOR “GROSS RECEIPTS FROM UTILITY
SERVICES.” THEREFORE, THE VOLUNTARY CONTRIBUTIONS ARE NOT
SUBJECT TO SALES TAX OR GROSS RECEIPTS TAX.
December 3, 2014
RE:

Technical Assistance Advisement – TAA 14A-030
Sales and Use Tax and Gross Receipts Tax
Voluntary Solar Partnership Pilot Program
Chapters 203 and 212, Florida Statutes (“F.S.”)
XXXX (the “Taxpayer”)
FEI #: XXXX

Dear XXXX:
This is in response to your letter, dated XXXX, requesting this 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 application of Florida sales tax and gross receipts
tax to certain voluntary contributions received by an electric utility. 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 a TAA.
ISSUE
The issue involves whether contributions to a voluntary solar partnership pilot program
are subject to gross receipts tax and/or sales tax.

Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – Howard Moyes, Interim Director  Information Services – Damu Kuttikrishnan, Director

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

2
Technical Assistance Advisement

FACTS AS PRESENTED
The following presented facts are taken from your letter, dated XXXX, as well as your
follow-up correspondence of September 25, 2014. Taxpayer is an investor-owned
electric utility. Beginning XXXX, Taxpayer will offer a time limited Voluntary Solar
Partnership Pilot Program (the “Program”) to its customers in all territory served by
Taxpayer. Pursuant to the tariff approved by the Public Service Commission, Taxpayer’s
customers can voluntarily contribute to the Program, which is designed to construct and
operate commercial-scale, supply-side solar photovoltaic facilities. 1 Beginning in
XXXX, Taxpayer anticipates constructing two to five individual solar projects ranging
from XXXXkW to XXXXkW in size. Taxpayer will operate and own the ground
mounted systems or rooftop installations on structures such as commercial parking
canopies in communities throughout Taxpayer’s service territory. Taxpayer will size the
solar projects based on the level of participation, so that voluntary contributions will
approximate the project revenue net of estimated avoided fuel and emission costs.
Participation in the Program is completely voluntary. Residential, commercial, and
industrial customers who choose to enter the Program will contribute $XXXX monthly,
in addition to any charges for electric service applied under their otherwise applicable
metered rate schedule. This contribution is unrelated to a customer’s actual electricity
usage each month. Additionally, contributions may be utilized in any part of Taxpayer’s
service territory in the State of Florida and need not bear any relationship to the location
of the contributing customer. The only prerequisite to entering the Program is that the
customer does not have a delinquent balance. Customers may enroll or cancel their
enrollment at any time, and the Program will be offered on a month-to-month basis. The
voluntary contribution will be a separate line item on the customer’s bill and will not be
subject to any late payment charges or collection actions. If a customer opts into the
Program and fails to pay the voluntary contribution, the customer’s electric service will
not be disconnected. Customers enrolled in the Program do not directly receive energy
from the solar facilities constructed or operated.
The construction and operation of solar facilities under the Program will not be funded by
the general body of ratepayers. Participants will be able to go to the Program website to
see how much electricity is being produced from the solar facilities and the
corresponding fuel and environmental benefits. Taxpayer also will provide quarterly
reports with this information. At the end of XXXX, Taxpayer will report to the Public
Service Commission on the data gathered, and the Commission will determine whether to
terminate or continue the Program. Should the Program be terminated without adequate
participant contributions to cover the remaining revenue requirements for the facilities,
Taxpayer’s shareholders, and not its ratepayers, will absorb the difference.
You request confirmation that the voluntary contributions to the Program are not subject
to either the gross receipts tax or the sales tax.
1

You provided, among other things, a copy of a Memorandum issued by the Public Service Commission,
as well as a copy of the tariff.

3
Technical Assistance Advisement

LAW AND DISCUSSION
Sales Tax
The general rule is that the sale of tangible personal property at retail in this state is
considered a taxable privilege. See s. 212.05, F.S. The tax is imposed on the sales price of
each item or article of tangible personal property when sold at retail, unless specifically
exempt. See ss. 212.05(1)(a)1.a. and 212.21(2), F.S. The term “tangible personal property”
is defined, in part, to include “personal property which may be seen, weighed, measured, or
touched, or is in any manner perceptible to the senses, including electric power or energy
….” See s. 212.02(19), F.S. The tax rate for charges for electrical power or energy is 4.35
percent. See s. 212.05(1)(e)1.c., F.S.
Gross Receipts Tax
Florida imposes a gross receipts tax on, among other things, utility services. The gross
receipts tax is imposed – at the rate of 2.5 percent – on “gross receipts from utility
services that are delivered to a retail consumer in this state.” 2 See s. 203.01(1)(a)1., (b)1.,
F.S. The term “utility service” is defined in s. 203.012(3), F.S., as follows:
(3) “Utility service” means electricity for light, heat, or power; and
natural or manufactured gas for light, heat, or power, including
transportation, delivery, transmission, and distribution of the electricity or
natural or manufactured gas. This subsection does not broaden the
definition of utility service to include separately stated charges for tangible
personal property or services which are not charges for the electricity or
natural or manufactured gas or the transportation, delivery, transmission,
or distribution of electricity or natural or manufactured gas. (emphasis
added).
Florida also imposes an additional gross receipts tax – at the rate of 2.6 percent – “on
charges for, or the use of, electrical power or energy that is subject to the tax levied
pursuant to s. 212.05(1)(e)1.c. or s. 212.06(1). The tax shall be applied to the same
transactions or uses as are subject to taxation under s. 212.05(1)(e)1.c. or s. 212.06(1).”
See s. 203.01(1)(a)3., (b)4., F.S.
After reviewing the information provided, the Department agrees that the voluntary
contributions to the Program – which are completely voluntary, unrelated to a customer’s
actual electricity usage, cancelable at any time, separately stated on the customer’s bill,
and not subject to any late payment charges or collection actions – are neither “charges
for electrical power or energy” nor “gross receipts from utility services.” Therefore, the
voluntary contributions to the Program are not subject to sales tax or gross receipts tax.

2

Gross receipts subject to the gross receipts tax for the provision of electricity include “receipts from
monthly customer charges or monthly customer facility charges.” See s. 203.01(7), F.S.

4
Technical Assistance Advisement

CONCLUSION
Taxpayer’s customers’ voluntary contributions to the Program are not subject to gross
receipts tax or sales tax.
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 10 days of the date of this letter.
Sincerely,

Thomas A. Kovacik
Senior Attorney
Technical Assistance and Dispute Resolution
(850) 717-7756

Record ID: 176351