Was an extra charge for a mobile-app security feature taxable when bundled with or separately stated from alarm monitoring?

Plain-English summary

Florida imposed sales tax on the additional charge for an optional mobile-app feature offered with a home-security monitoring service.

The app let customers remotely access additional security features and worked in conjunction with the provider's monitoring service. The Department treated it as a component of taxable detective, burglar-protection, and other protection services.

The conclusion did not depend on invoice presentation. The added charge remained taxable whether included in a monthly lump sum with monitoring and equipment or separately stated. The Department also said the app's features would constitute taxable security services even if the app were offered on a standalone basis.

What this means for you

Security and alarm companies

An optional software feature that enhances monitoring can be part of the taxable protection service even when customers pay a separate fee for it.

Billing teams

Separately stating the add-on did not remove it from tax because the nature of the feature, not the invoice format, controlled the result.

Common questions

Was the optional app charge taxable? Yes.

Did separate billing change the outcome? No.

Was the app only taxable because it was bundled? No. The Department said its security features would be taxable even if it were standalone.

Citations and references

• Fla. Stat. Sec. 212.05(1)(i)1.a.
• Fla. Admin. Code R. 12A-1.0092(2)(a)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 20A-027

Original ruling text

QUESTION:
Is the additional charge for XXXXXXXXX subject to sales tax, whether billed on each monthly
invoice as a lump sum or separately stated charge for basic security monitoring services and
equipment.
ANSWER:
The additional charge for XXXXXXXXXX is subject to sales tax, whether billed on each monthly
invoice as a lump sum charge or separately stated from the charge for basic security monitoring
services and equipment.
December 4, 2020
XXXXXXXXXXXXXXXXX
XXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXX
Re:

Technical Assistance Advisement (“TAA”) 20A-027
Sales and Use Tax – Burglar Protection and Monitor Services
Section 212.05(1)(i)1.a., Florida Statutes (F.S.), and
Rules 12A-1.0092(1), and (2)(a), Florida Administrative Code (F.A.C.)
XXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXX

Dear XXXXXXXXXXX:
This letter is a response to your petition received on XXXXXXXXXXXXXXX, for issuance of a
Technical Assistance Advisement (“TAA”) pursuant to Section 213.22, F.S., and Rule Chapter 1211, F.A.C., concerning the taxability of a security device used to provide security services. An
examination of your request has established you complied with the statutory and regulatory
requirements for issuance of a TAA. Therefore, the Department is hereby granting your request
for a TAA.

Technical Assistance Advisement
Page 2

REQUESTED ADVISEMENT
Taxpayer is seeking a determination as to whether the charge for XXXX is subject to sales tax
when billed with basic monitoring service and equipment as a monthly lump sum charge or
billed as a separately stated charge with basic monitoring service and equipment.
STATED FACTS
XXXXXXXXXX (“Taxpayer”) is a security company XXXXXXXXXXXXXXXXXXXXXXXXX, which
provides home security systems and monitoring services that are installed via wired and
wireless connectivity to link the customer's premises with Taxpayer’s monitoring center.
Taxpayer has a XXXXXX software product, XXXXX, which is a mobile application that allows
customers to remotely access a variety of additional security features available XXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. XXXXX is an optional add-on feature to
Taxpayer’s traditional monitoring service and customers pay an additional charge or fee to use
the feature.
When customers purchase XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
Devices and equipment XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX must
be connected to Taxpayer’s monitoring center XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.

Technical Assistance Advisement
Page 3

Pricing XXXXXXXXXXX is based on the system configuration XXXXXXXXXXXXXXXX.
XXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXX, XXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. The
quote for the configuration is provided by a security professional over the phone or during an
onsite visit with the customer. Within the quote, the price of each piece of equipment to be
used by the customer is separately stated.
LAW & DISCUSSION
In addition to sales tax imposed on tangible personal property, 1 Section 212.05(1), F.S.,
enumerates certain services that are subject to sales and use tax in this state. One such service
is detective, burglar protection, and other protection services (NAICS National Numbers
561611, 561612, 561613, and 561621). See s. 212.05(1)(i)1.a., F.S. 2
Rule 12A-1.0092(2)(a), F.A.C., defines detective, burglar protection, and other protection
services as those services which are “rendered to minimize or prevent loss or damage to life,
limb, or property and are of a kind typically performed by security or alarm system companies,
or are those investigative services which are rendered to obtain evidence or other information
for legal, business, employment, or personal purposes of a kind typically performed by
detective or investigative agencies.”
The U.S. industry code for establishments primarily engaged in selling security alarm systems,
such as burglar and fire alarms, along with installation, repair, or monitoring services, are
generally included under the NAICS National Number 561621. The following services are
included under the 2007 NAICS National Number 561621:
Alarm system monitoring services
Alarm systems sales combined with installation, repair, or monitoring services
Burglar alarm monitoring services
Burglar alarm sales combined with installation, repair, or monitoring services
Fire alarm monitoring services
Fire alarm sales combined with installation, repair, or monitoring services
Security alarm systems sales combined with installation, repair, or monitoring
services
o Security system monitoring services
o
o
o
o
o
o
o

The law encompasses burglar protection services and a vast array of specific security activity
provided by Taxpayer to protect life, limb, and property from theft, damage, destruction, etc.
The question in this inquiry involves the XXXXXX add-on feature which enhances the monitoring
Section 212.05, F.S., provides every person is engaged in a taxable privilege when engaging in the business
of selling or leasing, at retail, tangible personal property in this State. In order to exercise such a privilege, tax is
levied at a rate of 6%. See s. 212.05(1)(a)1.a., F.S.
2
“NAICS” means those classifications contained in the North American Industry Classification System, as published
in 2007 by the Office of Management and Budget, Executive Office of the President. See s. 212.05(1)(i)2., F.S.
1

Technical Assistance Advisement
Page 4

service. According to the information provided, XXXXXX is not a separate standalone device or
service from the security and monitoring services provided by Taxpayer. XXXXX works in
conjunction with Taxpayer’s monitoring services XXXXXXXXXXXXXXXXX. Even if XXXXXX was a
standalone App, the features of the XXXXX constitute taxable security services. As such, XXXX is
a component part of taxable monitoring services provided by Taxpayer, thus, XXXXX constitutes
a security service. Once the App is downloaded, XXXX is a part of the XXXXX of activities
performed by Taxpayer to provide taxable security services.
CONCLUSION
The additional charge for XXXXX is subject to sales tax, whether billed on each monthly invoice
as a lump sum charge or separately stated from the charge for basic security monitoring
services and equipment.
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 15
days of the date of this letter.
Sincerely,

Joseph D. Franklin III

Joseph D. Franklin III
Tax Law Specialist
Technical Assistance & Dispute Resolution
Record ID: 344086