How did Florida sales tax apply to one disclosed agent simultaneously representing multiple sellers of taxable goods and exempt services?

Subject

Agent Representing Multiple Principals

Plain-English summary

The agent's compensation from its principals was not subject to sales tax. The Department treated the agency work as professional or personal services, and the incidental individual reports and communications were not separately charged.

Sales through different principals were analyzed independently. A customer's simultaneous purchase of exempt professional services from one principal and taxable goods from another did not make the exempt service taxable. But if one principal sold taxable tangible property together with related services, that principal's total sales price was taxable.

The agent had to register as a dealer to collect tax on its principals' taxable Florida sales. One registration was sufficient for multiple principals, but a separate registration was required for each Florida business location.

What this means for you

The separation depended on real agency structure: disclosed principals, separate contracts, separate invoices, direct principal delivery, and no joint obligation among principals. The agent's commission could not be deducted from a principal's taxable selling price.

Common questions

Q: Was the agent's service fee taxable? No.

Q: Did taxable goods from one principal taint another principal's exempt service? No.

Q: Did the agent need a registration for every principal? No, only for each business location.

Citations and references

• Fla. Stat. § 212.08(7)(v) — professional and personal services
• Fla. Stat. § 212.02(17) — sales price including related services
• Fla. Admin. Code r. 12A-1.001(17) — service and information transactions
• Fla. Admin. Code rr. 12A-1.066, 12A-1.060(1)(a) — agents and dealer registration
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-022

Original ruling text

Apr 06, 1993

Re: Technical Assistance Advisement 93(A)-022
Sales Tax - Sale of Goods and Services Occurring Through a
Disclosed Agent Representing Multiple Principals
XXX (Herein "Agent or Taxpayer")
FEI# XXX
Address: XXX

Dear :

This response is in reply to your October 15, 1992, petition for
the Department's issuance of a Technical Assistance Advisement
("TAA") pursuant to s. 213.22, F.S., concerning the captioned
matter and party. Your petition 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. Therefore, the
Department is herewith granting your request for the issuance of
a TAA and the ensuing discourse shall embody said ruling.

DISCUSSION OF FACTS

Your petition and supporting documents state the following
significant information regarding the issue under advisement
herein:

FROM YOUR PETITION

[1.] "[Agent] is a Florida corporation."

[2.] "[Agent] is engaged in the business of acting as a
disclosed agent for various businesses who sell goods
and/or services within the State of Florida."

[3.] "Each of the businesses served by [Agent] will
maintain offices within the State of Florida within the
meaning of Section 212.02(a) [sic], Florida Statutes
(1991)."

[4.] "[Agent] will not act as disclosed agent for any
person or entity engaged in business within this State who
falls within the meaning of the term 'dealer' as defined by
Section 212.06, Florida Statutes (1991) unless the dealer
registers with the Department as required under Florida
law."

[5.] "The [Agent's] source of income shall come solely from
its principals. [Agent] will engage in professional and/or
personal services only for its principals and will not
provide any tangible personal property to the principals
(other than written reports of its activities on behalf of
the principal and written communications with the principal
for which no separate charges shall be made). The method
and manner of calculating the compensation to be paid to
the [Agent] by its principals may vary from principal to
principal but will generally be based upon a percentage of
sales made by the principal through the [Agent]. In some
instances the compensation may be a lump sum. A copy of
the written form of agreement between the [Agent] and its
principals is attached to this request as Exhibit 'A'. The
services to be provided by the [Agent] to its principals
are described in detail in Exhibit 'A' and include the
collection of monies for the principals as disclosed agent
of the principal for all goods and services sold by the
principal, including collection and remission to the
Department of any applicable sales, use or excise taxes."

[6.] "The [Agent] will only accept orders for goods and/or
services as the disclosed agent for its principals. The
[Agent] will not manufacture or sell any goods in its own
right or on its own behalf. The goods and/or services
supplied will be supplied directly to the customer by the
principal. A copy of the order form and contract used by
the [Agent] for the acceptance of orders on behalf of its
principals is attached hereto as Exhibit 'B'. In some
cases where a customer orders goods and/or services from
more than one of [Agent's] principals, separate orders will
be accepted for each principal. In other cases, [Agent]
will accept orders for more than one principal
simultaneously from a single customer."

[7.] "In some transactions the [Agent's] principals will be
engaged in exempt sales utilizing [Agent's] services as
agent, in some transactions [Agent's] principals will be
engaged in partially exempt and partially taxable sales
utilizing [Agent's] services as agent and in others
[Agent's] principals will be engaged in completely taxable
sales utilizing [Agent's] services as agent."

[8.] "In some transactions the [Agent] will take orders for
more than one principal from a single customer. In such
transactions, each principal will bill the customer
separately through [Agent] as agent."

[9.] "In every case a separate contract will exist between
each principal and the customer for the goods and/or
services ordered from the principal by the customer
regardless of whether the customer simultaneously orders
goods and/or services from more than one principal or
orders goods and/or services from only one principal."

FROM AGENCY AGREEMENT

"1. AGENT is hereby appointed the sole and exclusive agent
for PRINCIPAL for the sale of the following goods and/or
services:...

"3. AGENT agrees to use its best efforts to collect all
monies due and owing for PRINCIPAL'S goods and/or services
sold including any applicable state, federal and/or local
sales, use and excise taxes....

"8. AGENT may simultaneously take orders from a single
CUSTOMER for PRINCIPAL'S goods and/or services and goods
and/or services from other principals of AGENT; provided
however, that AGENT shall make certain that PRINCIPAL is
not bound jointly or severally with the other principals to
any resulting contracts between AGENT'S other principals
and the CUSTOMER by virtue of AGENT'S actions.

"9. AGENT shall invoice all of PRINCIPAL's customers for

goods and services of the PRINCIPAL separately from any
goods and services provided to the CUSTOMER by any other of
AGENT's principals.

"10. All goods and services ordered by PRINCIPAL's
customers through AGENT shall be delivered and/or shipped
directly to the CUSTOMERS by the PRINCIPAL and not through
AGENT. PRINCIPAL shall be responsible for all
transportation and/or transmission costs."

FROM ORDER FORM AND CONTRACT

The ORDER FORM AND CONTRACT ("Contract") embodies language
whereby the customer acknowledges that Agent is a disclosed
agent for specified principals which are individually named in
the Contract.

"CUSTOMER expressly agrees that in the event the CUSTOMER
in [sic] purchasing goods and/or services from more than
one SUPPLIER under this Contract, that the SUPPLIERS of the
goods and/or services are not jointly or severally
obligated to CUSTOMER with respect to each other's goods
and/or services under the Contract or otherwise. CUSTOMER
expressly acknowledges and agrees that the SUPPLIERS are
not engaged in a joint enterprise but have hereby elected
to use the same AGENT for the purposes of selling their
respective goods and/or services to CUSTOMER.

"CUSTOMER further expressly agrees that in the event goods
and/or services are being purchased from more than one
SUPPLIER as set forth hereinabove, that this instrument
constitutes and evidences a separate contract between
CUSTOMER and each SUPPLIER listed above for the goods
and/or services indicated as being purchased from each
SUPPLIER and that no SUPPLIER is obligated to CUSTOMER in
whole or in part for the performance of any other SUPPLIER.

"CUSTOMER agrees that AGENT shall invoice CUSTOMER
separately for the goods and services supplied by each
SUPPLIER and that acceptance of partial payment of any
invoice shall not constitute waiver of any rights SUPPLIER

or AGENT may have against CUSTOMER. Further CUSTOMER agrees
that no action or inaction by AGENT or any SUPPLIER shall
affect or waive any rights of any SUPPLIER under this
instrument."

REQUESTED ADVISEMENT

You seek the Department's advice regarding the following
specific questions:

[1.] "Taxpayer requests a written ruling as to whether the
services it provides to its principals are taxable (i[.]e.
must [Taxpayer] collect and remit sales tax on the
compensation it receives for the services it provides to
its principals under the agency agreement attached to this
request as Exhibit `A')."

[2.] "The second issue on which the [Taxpayer] requests a
written ruling is whether by the act of taking orders for
more than one principal simultaneously from a single
customer, which orders may include both exempt professional
services and non-exempt tangible property, the [Taxpayer]
must collect and remit sales tax for the cost of all of the
orders simultaneously placed by the customer with
[Taxpayer] for several of its principals."

[3.] "The third issue on which the [Taxpayer] requests a
ruling is whether a disclosed agent acting on behalf of two
or more principals engaged in the sale of tangible personal
property within this State must register separately as a
'dealer' agent for each principal so engaged or register
only a single time as a 'dealer'."

RESPONSE, QUESTION 1:

DISCUSSION OF LAW

We consult the following passage of the Florida Statutes as
pertinent to the resolution of your first question:

Section 212.08(7)(v), F.S., 1992 Supplement: "1. Also

exempted are professional, insurance, or personal service
transactions that involve sales as inconsequential elements
for which no separate charges are made.
"2. The personal service transactions exempted pursuant to
subparagraph 1. do not exempt the sale of information
services involving the furnishing of printed, mimeographed,
or multigraphed matter, or matter duplicating written or
printed matter in any other manner, other than professional
services and services of employees, agents, or other
persons acting in a representative or fiduciary capacity or
information services furnished to newspapers and radio and
television stations. As used in this subparagraph, the
term `information services' includes the services of
collecting, compiling, or analyzing information of any kind
or nature and furnishing reports thereof to other persons."
(Emphasis Supplied)

The operative rule construing the forgoing statutory section is
Rule 12A-1.001(17), F.A.C., which states the following:

"(17)... (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...."
(Emphasis Supplied)

FINDING

The Department finds that the services of Agent rendered
pursuant to the Agency Agreement ("Agreement") submitted as
Exhibit "A" to your request constitute the rendition of a
professional or personal service respective of s.
212.08(7)(v)1., F.S., above. Moreover, the reports and written
communications Agent provides to its principals incident to the

performance of its services are of a personal or individual
nature, are not separately charged to principals, and are not
for substantial incorporation into reports furnished to other
persons respective of Rule 12A-1.001(17)(b), F.A.C., and in any
event are precluded from subjection to sales tax since they are
provided by the Agent "... acting in a representative or
fiduciary capacity..." respective of s. 212.08(7)(v)2., F.S. It
is, therefore, the Department's determination that the amounts
paid to Agent in consideration for services rendered under the
Agreement are not subject to sales tax. However, the taxable
selling price billed to a customer of Agent's principal may not
be reduced by the amount of compensation flowing from principal
to Agent for performance of Agent's services.

RESPONSE, QUESTION 2:

DISCUSSION OF LAW

Recalling that the provisions of s. 212.08(7)(v)1., F.S., 1992
Supplement, introduced above, where a principal represented by
an agent makes sales to a Florida customer through the agent of
professional or personal services (other than those services
taxable under s. 212.05(1)(k), F.S., 1992 Supplement) which do
not involve the sale of taxable tangible personal property other
than inconsequential elements for which no separate charge is
made, then such sales of services are exempt from the imposition
of sales tax. Neither s. 212.08(7)(v), F.S., nor Rule
12A-1.001(17), F.A.C., provide that the exemption of
professional or personal service transactions is compromised and
disallowed when sales occurs through a disclosed agent of the
principal who happens to represent other principals who
simultaneously sell taxable tangible personal property through
the same agent to the same customer purchasing the professional
or personal services.

FINDING

It is the finding of the Department that to give the effect to
the exemption provided in s. 212.08(7)(v)1., F.S., 1992
Supplement, intended by the Florida legislature, it is necessary
to treat the sales by each principal through Agent independently

of those by other principals through Agent for purposes of
determining the application of sales tax. Therefore, Agent
should not collect sales tax on the amounts billed through Agent
by its principal to a Florida customer for the rendition of
professional or personal services (excluding services specified
in s. 212.08(7)(v), F.S., 1992 Supplement) by the principal
provided the principal rendering such services is not also
furnishing the customer with taxable tangible personal property
other than inconsequential elements for which no separate charge
is made. This holds true notwithstanding the fact that
contemporaneous to the Florida customer's purchase of the
professional or personal services it also purchases taxable
tangible personal property through Agent from a different
principal than the one providing the professional or personal
services. Moreover, where any given principal sells both taxable
tangible personal property and services to the same customer
through Agent, then the total sales price, as defined in s.
212.02(17), F.S., 1992 Supplement, billed by the principal
through Agent relative to such transaction is subject to sales
tax. The provisions of s. 212.02(17), F.S., define the term
"sales price" to mean and include "... the total amount paid for
tangible personal property, including any services that are a
part of the sale, valued in money, whether paid in money or
otherwise, and includes any amount for which credit is given to
the purchaser by the seller, without any deduction therefrom on
account of the cost of the property sold, the cost of materials
used, labor or service cost, interest charged, losses, or any
other expense whatsoever. "Sales price" also includes the
consideration for a transaction which requires both labor and
material to alter, remodel, maintain, adjust, or repair tangible
personal property...."

RESPONSE, QUESTION 3:

DISCUSSION OF LAW

Relative to your third question, we turn to the provisions of
Rule 12A-1.066, F.A.C., which state in pertinent part:

"(1)(a) Every agent, auctioneer, broker, or other person
engaged in any business activity of making sales of

tangible personal property with the object of private or
public gain, benefit, or advantage, either direct or
indirect, who sells at retail, or who offers for sale at
retail, or who has in his possession for sale at retail, is
required to register as a dealer under Part I, Chapter 212,
F.S., and collect and remit any applicable tax on the total
retail sales price of any taxable item of tangible personal
property without any deduction for any expense, such as
storage, commission, repairs, etc. It is immaterial that:
"1. The auctioneer, broker, factor or other person may not
have possession of the tangible personal property;
"2. The title to the tangible personal property cannot be
transferred to the purchaser without further action on the
part of the principal; or
"3. The purchaser has disclosed the identity of the
principal....
"(c) The following words and terms, when used in this
section, shall have the following meaning, unless the
context clearly indicates otherwise:
"1. `Agent' is a person appointed by a principal or
authorized to act for a principal in a transaction
involving the sale of an item a tangible personal
property." (Emphasis Supplied)

FINDING

There is no debate that Agent's activities make it an "Agent"
within the meaning ascribed to such term in the above rule and
that agent is, consequently, obliged to register as a dealer for
the collection and remittance of sales tax on sales of its
principals' tangible personal property to Florida customers
based on the total retail sales price "without any deduction for
any expense, such as storage, commission, repairs, etc."
However, in applying this Rule the Department has never
considered the rule to contemplate or mandate multiple
registrations of an agent which represents multiple principals.
To the contrary, the Department considers a single registration
of an agent representing multiple principals to be sufficient
unless the agent maintains more than one business location
within the State of Florida, in which case a separate
registration would be required for each business location to

comply with the provisions of Rule 12A-1.060(1)(a), F.A.C., but
still not for each different principal represented by the agent.
Therefore, Agent need not obtain a separate Certificate of
Registration corresponding to each different principal it
represents, but instead need only have and maintain a separate
Certificate of Registration for "each place of business" as
required by Rule 12A-1.060(1)(a), F.A.C.

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,

Daniel M. Wagner, Jr.
Tax Law Specialist

DW/