Were individualized financial and inventory reports furnished by the described service bureau subject to Florida sales tax?

Plain-English summary

The service bureau's individualized financial, inventory, and aging reports were exempt from Florida sales tax as a professional service. The Department relied on rules treating client statements as inconsequential elements of an exempt bookkeeping or professional service when no separate charge is made.

The quoted rules also distinguished personal or individualized information from a taxable information service when the report is not, or may not be, substantially incorporated into reports for other customers. In that situation, the service provider pays tax on tangible personal property it buys and uses to provide the service.

What this means for you

The historical exemption turned on the nature of the service and delivery: client-specific analysis, no separate charge for the statements, and no substantial reuse in reports sold to others. The ruling does not establish the treatment of standardized databases, separately priced reports, or modern digital products.

Common questions

Were the individualized reports taxable? No. The Department classified them as part of an exempt professional service.

Why were the delivered statements not treated as taxable sales? The rules described them as inconsequential elements for which no separate charge was made.

Could the provider ignore tax on its own supplies? No. The quoted rule required the information provider to pay tax on tangible personal property purchased for use in the service.

Did the ruling decide the treatment of standardized reports sold to many customers? No. Its reasoning focused on information personal or individual to the client and not substantially incorporated into other customers' reports.

Citations and references

• Fla. Admin. Code R. 12A-1.32(6), quoted for exempt bookkeeping services and inconsequential client statements with no separate charge.
• Fla. Admin. Code R. 12A-1.01(21)(a)-(b), quoted for professional-service transactions and personal or individualized information.
• Fla. Stat. § 213.22, governing the advisement's taxpayer-specific binding effect and public release.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 85A-028

Original ruling text

Sep 06, 1985

Re: Technical Assistance Advisement #85A-028 Taxable status of Reports Furnished by Service Bureau

Dear

This is in response to your letter of XXX in which you request the issuance of a Technical Assistance Advisement regarding the taxable status of various reports furnished by your company. Your prior letter of May 7, 1985, provides in part:

"XXX is a service bureau that provides a number of statistical reports on its clients financial holdings and their individual inventory, as well as ageing reports on their financial holdings in inventory.

"Our software is run on a mainframe under control of XXX located in XXX. We also give the end-client the ability of locating inventory from other clients. At a future date, we may offer this service to other clients outside the boundaries of the state of Florida."

Rule 12A-1.32(6), F.A.C., provides:

"(6) When a Service Bureau performs a bookkeeping service for a client, such as keeping a set of records and the furnishing of financial statements, payrolls, tax reports, accounts receivable and accounts payable statements, etc., the charge therefore is for a professional service and is exempt. The various statements furnished are construed to be sales as inconsequential elements for which no separate charges are made."

Rule 12A-1.01(21)(a) and (b), F.A.C., provides:

"(21) SERVICE TRANSACTIONS.
"(a) Professional, insurance or personal service transactions which involve sales as inconsequential

elements for which no separate charges are made are exempt. "(b) The furnishing of information, including a written report to a person of a personal or individual nature and which is not or may not be substantially incorporated in reports furnished to other persons, is not an information service within the meaning of the law and is exempt. In such cases the person furnishing the information is required to pay the tax on the purchases of tangible personal property used by him in connection therewith."

Therefore, the individualized reports which your company furnishes would be exempt from tax as a professional service. This response constitutes a technical assistance advisement 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 and your request are public records under Chapter 119, F.S., which are subject to disclosure to the public under the conditions of s. 213.22, F.S. Your name, address, and any other details which might lead to identification of the taxpayer must be deleted by the department before disclosure. In an effort to protect confidential information, we request you notify the undersigned in writing within 15 days of any deletions you wish made to the request or this response.

Sincerely,

Jonathan E. Swift
Technical Assistant

JES/pb