Was natural gas used exclusively to toast bread crumbs at a fixed manufacturing site exempt from Florida sales tax?

Subject

Natural Gas Used in Manufacturing

Plain-English summary

The manufacturer's natural-gas purchases were exempt from Florida sales tax once it supplied a corrected exemption certificate to the vendor. The gas was used exclusively at a fixed Florida location to toast bread crumbs manufactured for sale, and the company was not regulated by the Division of Hotels and Restaurants.

The certificate originally claimed the wrong theory—that the fuel became a material part of the product. The Department said the company should instead claim the boiler-fuel exemption for manufacturing tangible personal property for sale.

For tax already paid, the company had to seek the refund from its vendor. The ruling said the selling dealer first had to refund the customer before applying to the Department, and it cited a three-year refund deadline.

What this means for you

Qualifying use was not enough without the right certificate. The ruling required the manufacturer to accurately identify the exempt use and route a refund through the seller that collected the tax.

Common questions

Q: Was the gas exempt because it became part of the bread crumbs? No. The ruling corrected that box and used the manufacturing boiler-fuel exemption.

Q: Could the manufacturer request the refund directly from the Department? The ruling told it to request the refund first from the vendor.

Q: What operational facts mattered? Exclusive manufacturing use at a fixed Florida location, production for sale, and no Hotels and Restaurants regulation.

Citations and references

• Fla. Stat. §§ 212.08(7)(b), 215.26(2) — manufacturing fuel and refund deadline
• Fla. Admin. Code rr. 12A-1.014(6), 12A-1.059(10) — dealer refunds and fuel exemption
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-010

Original ruling text

Feb 17, 1993

RE: TAA 93A-010
Sales Tax Natural Gas Used in Manufacturing
Sections 212.08(7)(b), 215.26(2), F.S.
Rules 12A-1.014, 12A-1.059(10), F.A.C.

Dear :

This is in response to your letter dated January 7, 1993,
which requests the issuance of a Technical Assistance Advisement
(TAA) pursuant to Rule 12-11, F.A.C. You wish to know whether
purchases of natural gas made by your client, XXX [hereinafter
"Company"] are exempt from sales tax pursuant to Rule 12A-1.059
(10), F.A.C. Copies of the following documents accompanied your
request:

1) Form from "Company" authorizing you to gather
information from this department regarding its
anticipated refund
2) Resale certificate dated September 29, 1992, with your
signature
3) Request for refund dated September 29, 1992 (extended
to XXX.)
4) Form from "Company" authorizing you to contact XXX
5) Billing statement dated August 17, 1992

Your letter provides in part:

"We represent a manufacturer named [`Company']. They have
a fixed location at XXX....

"[`Company'] purchases natural gas from XXX. This gas is
used exclusively for their process of toasting bread
crumbs."

Your letter further provides that "Company" is not
regulated by the Division of Hotels and Restaurants. During our
telephone conversation on Monday, January 25, 1993, you stated

that the bread crumbs are manufactured for sale by "Company".

As provided in Section 212.08(7)(b), F.S., purchases of
natural gas used in an industrial manufacturing or production
process at a fixed location in this state are exempt from tax
provided the purchaser signs a certificate stating that the fuel
to be exempted is for use in the manufacturing process of
tangible personal property for sale. To qualify for the
exemption the manufacturer must not be subject to regulation by
the Division of Hotels and Restaurants of the Department of
Business Regulation.

On behalf of your client you extended the required
certificate to XXX on September 29, 1992. The certificate I
reviewed erroneously checked off that the purchase was exempt
since the fuel was to be incorporated as a material part of
tangible personal property for sale. "Company" should claim the
exemption for a boiler fuel used in a manufacturing process
which produces items of tangible personal property for sale.
Therefore, based upon the information contained in your request,
your client (i.e., "Company") is exempt from sales tax on its
purchases of natural gas used in its manufacturing process,
provided that it supplies a corrected certificate to its vendor.

As contained in Section 215.26(2), F.S., an application for
refund must be filed with the Comptroller within 3 years after
the right to such refund shall have accrued or else such right
shall be barred.

As provided in Rule 12A-1.014(6), F.A.C., the selling
dealer must first refund the tax collected in error to his
customer(s) before applying for a refund from this department.

Therefore, "Company" must request its refund of sales tax
paid in error directly from its vendor.

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 the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Betsy Turner
Technical Assistant
Statutory Compliance Section

BT/