How did Florida TAA 24A-012 treat concession fees paid for licenses to use real property?

Plain-English summary

The Department treated the concession fees or commissions paid to associations as taxable consideration for licenses to use real property.

The taxpayer satisfied its payment obligation by sending the applicable tax directly to each association along with the fee. The association then had responsibility for timely remitting that tax to the Department.

If an association failed to remit the tax, the taxpayer would not be liable when adequate books and records showed that it had properly paid the tax to the association. The association would instead be directly liable for the tax, interest, or penalty.

What this means for you

When a business pays for permission to operate on another party's Florida real property, the payment may be a taxable real-property license fee. Proof that the tax was paid to the licensor is critical.

Common questions

Were the concession fees taxable? Yes.

Could the taxpayer pay the tax to the associations? Yes.

What protected the taxpayer if an association did not remit? Adequate books and records proving proper payment of the tax to the association.

Citations and references

• Fla. Stat. §§ 212.031, 212.02(10)(i), 212.07(8), and 212.15(1) and Fla. Admin. Code r. 12A-1.070(4)(a), (4)(b), and (16), as cited in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 24A-012

Original ruling text

E
. oe . . *
iT s Florida Department of Revenue Jim Zingale
; Technical Assistance and Dispute Resolution Executive Director
i
FLORIDA
5050 West Tennessee Street, Tallahassee, FL 32399 floridarevenue.com

QUESTION #1: Are Fees, paid by Taxpayer to Associations under the
Agreements, subject to sales tax under Rule 12A-1.070(4)(a), Florida Administrative Code
(“F.A.C.”)?

ANSWER: Yes.

QUESTION #2: Assuming the answer to question (1) above is “yes,” does Taxpayer’s method of
paying sales tax to Associations (i.e., where the Agreements separately break out
the percentages for Fees and for the sales taxes, and then Taxpayer remits separate checks to
Associations, one for Fees and one for the sales taxes), satisfy Taxpayer’s obligations under Rule
12A-1.070(4)(b), F.A.C., with respect to payment of sales taxes due in connection with Fees paid
under the Fs Agreements?

ANSWER: Yes, as long as Taxpayer remits the applicable taxes on its licenses to use real property
directly to Associations, it is then Associations’ responsibilities to timely remit such taxes to the
Florida Department of Revenue (“DOR”).

QUESTION #3: Assuming that Taxpayer pays to Associations the proper amount of sales tax due
under the Po Agreements as described in question (2) above via remittance of separate
checks for Fees and for the sales tax, if Associations subsequently fail to pay that sales tax to the
DOR, is it correct that under Rule 12A-1.070(16), F.A.C., Taxpayer will not have any liability to
DOR for such non-payment?

ANSWER: Yes, as long as Taxpayer maintains adequate books and records to reflect that it paid
the proper amount of taxes to Associations for Associations’ granting licenses to use real property
to Taxpayer, Associations will then be directly liable to DOR for tax, interest, or penalty due on
any such transactions.

Technical Assistance Advisement
August 27, 2024
Page 2

August 27, 2024

Vio Fi

Subject: Technical Assistance Advisement #24A-012

Sales and Use Tax

Sections 212.02, 212.031, 212.07, and 212.15, Florida Statutes (F.S.)
Rule 12A-1.070, Florida Administrative Code (F.A.C.)

("Taxpayer")

BP#:

Po

This is in response to your letter received requesting this Department’s issuance
of a Technical Assistance Advisement (“TAA”) pursuant to Section(s.) 213.22, F.S., and Rule
Chapter 12-11 F.A.C, Florida Administrative Code, regarding the matter discussed below. Your
request 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.

Requested Advisements

Question #1: Are Fees paid by Taxpayer to Associations under the PF Agreements
(“Agreements”) subject to Florida sales and use tax (“sales tax”) under Rule 12A-1.070(4)(a),
F.A.C.?

Question #2: Assuming the answer to question (1) above is “yes,” does Taxpayer’s method of
paying that sales tax to Associations (i.e., where the i Agreements separately break
out the percentages for Fees and for the sales taxes, and then Taxpayer remits separate checks to
Associations, one for Fees and one for the sales taxes), satisfy Taxpayer’s obligations under Rule
12A-1.070(4)(b), F.A.C. with respect to payment of sales taxes due in connection with Fees paid
under the Agreements?

Question #3: Assuming that Taxpayer pays to Associations the proper amount of sales tax due
under he ii Agreements as described in question (2) above via remittance of separate

Technical Assistance Advisement
August 27, 2024
Page 3

checks for Fees and for the sales tax, if Associations subsequently fail to pay that sales tax to DOR,
is it correct that under Rule 12A-1.070(16), F.A.C., Taxpayer will not have any liability to DOR
for such non-payment?

Facts

Taxpayer’s business involves renting and related items to individuals who are
, Or . Those individuals pay Taxpayer
for the rentals, and Taxpayer timely remits the appropriate amount of sales tax thereon to the
Florida Department of Revenue (“DOR”). Those rental transactions ‘iii and related
items are not the subject of this TAA request.

In connection with its business, Taxpayer enters into Agreements (“Agreements”)

with various (“Associations”) on
in exchange for Taxpayer’s use of Associations’

properties to conduct its business. Agreements grant to Taxpayer licenses to operate its business
on the portions of the that are owned or managed by Associations, and Taxpayer agrees to
pay a concession fee/commission (“Fee”) for those licenses. Fee is based on a percentage of the
rentals paid to Taxpayer from those persons using the and related items. The
percentage can vary from Association to Association, but the concept is the same for all of them.
Under Agreements, Taxpayer pays to Associations Fees as well as associated sales tax. Under a
provision in Agreements, Taxpayer remits two checks payable to Associations: one check for Fee
and one check for the sales tax based on Fees. Agreements also contain a provision that obligates
Associations to remit the sales tax amount to DOR.

Applicable Authority and Discussion

Section 212.031, F.S., imposes sales tax on the privilege of engaging in the ... license‘ to use real
property, unless the Florida Statutes provide a specific exemption for such real property. Section
212.031(1)(c), F.S., imposes the sales tax at the rate of 4.5%? on the total rent or license fee charged
for such real property by the person charging or collecting the license fee. In addition, the local
option discretionary sales surtax imposed by the county where the real property is located applies
to the total rent charged. Section 212.031(3), F.A.C., provides that the sales tax imposed on the
privilege of granting a license to use real property shall be charged by the lessor or person receiving
the rent or payment in and by a rental or license fee arrangement with the lessee or person paying
the rental or license fee, and shall be due and payable at the time the lessor receives such rental or
license fee payment.

‘ Section 212.02(10)(i), F.S., defines the term, “license,” as “the granting of a privilege to use or occupy a building or
a parcel of real property for any purpose.”

? Effective June 1, 2024, the state sales tax rate imposed under s. 212.031, Florida Statutes (F.S.), on the total rent
charged for renting, leasing, letting, or granting a license to use real property (also known as “commercial rentals”) is
reduced from 4.5% to 2.0%.

Technical Assistance Advisement
August 27, 2024
Page 4

DOR’s interpretation of s. 212.031 is provided in 12A-1.070(4)(a) and (b), F.A.C., which reiterates
that sales tax is due on the total consideration received by the lessor for granting a license to use
real property to a lessee in Florida and that the lessor is responsible for remitting such tax.

Section 212.07(8), F.S., provides that “any person who has leased, occupied, or used or was
entitled to use any real property and cannot prove that the tax levied by this chapter has been paid
to his or her lessor or other person is directly liable to the state for any tax, interest, or penalty due
on any such transactions.”

Section 212.15(1), F.S., provides that “the taxes imposed by this chapter shall become state funds
at the moment of collection.”

Rule 12A-1.070(16), F.A.C., provides that any person “who has leased, occupied, or used or was
entitled to use any real property and cannot prove that the tax has been paid to his lessor or other
person shall be directly liable to the State for any tax, interest, or penalty due on any such taxable
transaction.”

Conclusions

QUESTION #1: Are Fees paid by Taxpayer to Associations under Agreements subject to sales
tax under Rule 12A-1.070(4)(a), F.A.C.?

ANSWER: Yes.

QUESTION #2: Assuming the answer to question (1) above is “yes,” does Taxpayer’s method of
paying that sales tax to Associations (i.e., where Agreements separately break out the percentages
for Fees and for the sales tax, and then Taxpayer remits separate checks to Associations, one for
Fees and one for the sales tax), satisfy Taxpayer’s obligations under Rule 12A-1.070(4)(b), F.A.C.
with respect to payment of sales tax due in connection with Fees paid under Agreements?

ANSWER: Yes, as long as Taxpayer remits the applicable taxes on its licenses to use real property
directly to Associations, it is then Associations’ responsibilities to timely remit such taxes to DOR.

QUESTION #3: Assuming that Taxpayer pays to Associations the proper amount of sales tax due
under Agreements as described in question (2) above via remittance of separate checks for Fees
and for the sales tax, if Associations subsequently fail to pay such sales tax to DOR, is it correct
that under Rule 12A-1.070(16), F.A.C., Taxpayer will not have any liability to DOR for such non-
payment?

ANSWER: Yes, as long as Taxpayer maintains adequate books and records to reflect that it
properly paid taxes to Associations for Associations’ granting licenses to use real property to

Technical Assistance Advisement
August 27, 2024
Page 5

Taxpayer, Associations will then be directly liable to DOR for tax, interest, or penalty due on any
such transactions.

This response constitutes a TAA 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 with an edited copy of your request
for TAA, 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 ten (10) 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)717-6363.

Sincerely,

Leigh €. Ceci
Leigh L. Ceci, MAcc
Tax Law Specialist

Technical Assistance & Dispute Resolution

CC:

Record ID: 7001189939

Technical Assistance Advisement
August 27, 2024
Page 6

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