When did a bulk equipment order count as one sale for Florida's $5,000 county discretionary-surtax limitation?

Subject

Discretionary Sales Surtax/$5,000 Limitation

Plain-English summary

A bulk equipment order counted as one sale for the $5,000 discretionary-surtax limitation when a written purchase order or agreement specified the quantity and required delivery within a definite time. Multiple deliveries, multiple invoices, and back-ordered items did not split the transaction if delivery occurred within that stated period.

The treatment applied both when equipping a new institutional laundry, laundromat, or dry cleaner and when an existing business bought replacement or refurbishment equipment.

Without a qualifying written order or agreement, each delivery was a separate sale. The same delivery-by-delivery result applied to indefinite-quantity and open-end purchase orders.

The ruling separately said surtax applied only when the statutory county-location conditions were met. On the described facts, both the dealer location and delivery location had to be in counties imposing a surtax; delivery to the customer's business in a non-surtax county did not meet those conditions.

What this means for you

The $5,000 cap depended on transaction documentation, not merely on sending one invoice. A definite quantity and delivery period in a written order were essential, while later invoices and back-orders could remain part of that one documented sale.

Common questions

Q: Did a back-order automatically create a second sale? No, if it remained within the specific written order and was delivered within the stated time.

Q: Did the rule apply only to new businesses? No. It also applied to refurbishment purchases.

Q: How were open-end orders treated? Each delivery was treated as a separate sale for the limitation.

Citations and references

• Fla. Stat. § 212.054(2)(a), (2)(b)1, and (3)(a) — county surtax and $5,000 limitation
• Fla. Admin. Code r. 12A-15.004(2)(d) — written orders and multiple deliveries
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-025

Original ruling text

Title:

Discretionary Sales Surtax/$5,000 Limitation

Apr 20, 1993

RE: TAA 93A-025
Discretionary Sales Surtax
Application of $5,000 Limitation
Section 212.054(2)(a), (b) 1., and (3)(a), F.S.
Rule 12A-15.004(2)(d), F.A.C.

Dear :

This is in response to your letters of February 19, 1993
and March 9, 1993, in which you requested the issuance of a
technical assistance advisement on behalf of XXX (hereinafter
"Taxpayer") concerning the proper application of the
discretionary sales surtax $5,000 limitation to sales of dry
cleaning and laundry equipment to customers located in various
counties in Florida. Your March 9, 1993, letter which revised
your request for a technical assistance advisement in your
February 19, 1993, letter provides in pertinent part:

Statement of Facts

"XXX (the `Taxpayer') is a Florida corporation, and is in
the business of selling dry cleaning and laundry appliances
and equipment to newly established Institutional Laundries
and Dry Cleaners, as well as to already established
Institutional Laundries, Laundromats and Dry Cleaners.
Institutional Laundries refers to the section of a hotel,
hospital or other institution that performs in-house
laundry service for that institution.

"Generally, the new Institutional Laundry, Laundromat or
Dry Cleaner will purchase all of the necessary equipment
from the taxpayer as one working unit to make its business
operational pursuant to a single written contract.
Further, it is the custom and generally accepted business
practice to sell the necessary equipment pursuant to a

single written contract to the new Institutional Laundry,
Laundromat or Dry Cleaner. The equipment includes:

"1. For Institutional Laundries, the Taxpayer will
normally sell large commercial washers and dryers and
water heaters and boilers, in addition to special
irons and folders for the sheets and towels provided
by the institution.
"2. For Laundromats, the Taxpayer will normally sell
commercial sized and normal sized washers and dryers
in addition to hot water heaters.
"3. And for Dry Cleaners, the Taxpayer will normally sell
between ten and twenty different types of equipment
that are specific to the working needs of the
establishment. Generally, they include a dry-cleaning
machine, a spotting board, presses for pants and
shirts, steamers and finishers for dresses, boilers
for steam, condensers to settle the steam at the end
of the day, washing machines and dryers for laundered
clothes, and conveyors (or carousels) for the purpose
of storing the clothes for pick up.

"After the equipment for each of the establishments
mentioned above have lived their useful lives, the
purchaser will seek to replace or refurbish each of the
sets of equipment mentioned above, though in some instances
the purchaser will not need a full set of all pieces of
equipment as some pieces last longer than others. It is at
this time that an owner of an Institutional Laundry,
Laundromat or Dry Cleaner will order new pieces, as needed,
from the Taxpayer.

"Regardless of whether the purchaser is `setting up' or
refurbishing his establishment, each sale of equipment will
be made pursuant to a single written contract. Further,
the invoicing for the machinery will be made on one invoice
unless there is a back-order on some of the equipment
described in the contract. In this case, one invoice will
be made for the initial load of equipment and a separate
invoice will be made for the back-ordered load. However,
the initial load, in addition to the back-ordered load will

be included in one purchase order pursuant to a single
contract.

"The Company, though based in XXX, makes sales of its
equipment outside XXX to numerous other counties in
Florida.

Advisement Request

"The following Advisement is requested with respect to the
issues presented below:

"(1) Whether, under FAC rule 12A-1.15.004(2)(d), the sale
of laundry equipment and appliances, pursuant to a single
written contract constitutes one sale' for purposes of the $5,000 ceiling limitation upon which the XXX, or any other county imposing a sales surtax, can impose its surtax when the sale is made to the same purchaser at the same time and that purchaser is a new Institutional Laundry, Laundromat or Dry Cleaner. "(2) Whether, under FAC rule 12A-15.004(2)(d), the sale of laundry equipment and appliances pursuant to a single written contract constitutesone sale' for purposes of the
$5,000 ceiling limitation upon which the XXX, or any other
county imposing a sales surtax, can impose its surtax when
the sale is made to the same purchaser at the same time and
that purchaser is upgrading or refurbishing his/her
Institutional Laundry, Laundromat or Dry Cleaning
establishment.
"(3) Whether, on not the facts stated above, the Company is
properly invoicing the transactions described above to be
in accordance with the requirements under FAC Rule
12A-15.004(2)(d) which states that delivery must occur
within the time specified in the purchase order or
agreement in order to constitute `one sale' notwithstanding
the fact that the property must be delivered in
installments or that multiple deliveries may be necessary
to consummate delivery to the purchaser.

"The following are the positions that the Taxpayer proposes
to the Department of Revenue applying the law in FAC rule

12A- 15.004(2)(d) to the facts at hand:

"ISSUE(1)

"FAC rule 12A-15.004(2)(d) gives guidance as to how and
when a business can apply the $5,000 limitation to bulk
sales made as one working unit....

"On the facts, the taxpayer believes that when it makes a
sale of equipment pursuant to a single written contract to
either a new Institutional Laundry, Laundromat or Dry
Cleaner, the sale should be treated as if it were a single sale' for purposes of the $5,000 limitation. This is because it is generally accepted business practice in the taxpayer's industry toset up' a new Laundromat or Dry
Cleaner by selling, in bulk, all of the equipment to make
it operational pursuant to a single written contract.

"The sale of the different kinds of equipment, as described
on our facts, to Institutional Laundries, Laundromats and
Dry Cleaners consists of the necessary elements to operate
each institution. Therefore, in analogizing FAC rule
12A-15.004(2)(d) to the facts at hand, it would be
necessary to conclude that the taxpayer's bulk sale, and
sale of a single unit, of different types of equipment that
are necessary in the operations of an Institutional
Laundry, Dry Cleaner or Laundromat would also be subject to
a single $5,000 limitation.

"ISSUE (2)

"Because the rules under FAC rule 12A-15.004 do not
distinguish between sales of equipment that are made to a
new business and sales that are made to an existing
business, there is no reasonable basis to believe that bulk
sales of equipment would be treated different[ly] in either
case....

"Therefore, the taxpayer believes that FAC rule 12A-15.004
applies regardless of whether a Laundromat or Dry Cleaner
is purchasing equipment for `setting up' a new business or

replacing or refurbishing the old equipment in an already
existing Laundromat or Dry Cleaning establishment since the
refurbishing or replacing of equipment in either of the
types of establishments mentioned herein would be purchased
pursuant to a single written agreement.

"ISSUE(3)

"Regarding the invoicing restriction in ISSUE(3), the
taxpayer believes that he is in full compliance with the
requirements of 12A-15.004(2)(d) which requires that if all
other requirements are met, the sale of more than one item
will be classified as one sale' provided that such items
are delivered within the time specified within the contract
notwithstanding the fact the property may be delivered in
installments or multiple deliveries may be necessary to
consummate delivery to the purchaser.

"On the facts, the taxpayer has presented that all of his
sales are always made pursuant to a single contract. The
sale is further documented by one invoice for the entire
sale unless there is a back-order where a second invoice
will follow. In this instance, if there is a back-order,
the first invoice will indicate that a back-order and
second invoice will follow. Therefore, because FAC Rule
12A-15.004(2)(d) requires that delivery must occur within
the time specified within the single written contract, it
is the Taxpayer's position that their signed contracts and
invoicing mechanisms comply with the rule, and all sales
pursuant to a single written contract should qualify for
the $5,000 limitation, including back-order sales where a
second invoice will follow."

APPLICABLE AUTHORITY

Section 212.054(2)(a) and (3)(a), F.S., provides:

"(2)(a) The tax imposed by the governing body of any county
authorized to so levy pursuant to s.212.055 shall be a
discretionary surtax on all transactions occurring in the
county which transactions are subject to the state tax

imposed on sales, use, rentals, admissions, and other
transactions by this part. The surtax, if levied, shall be
computed as the applicable rate or rates authorized
pursuant to s. 212.055 times the amount of taxable sales
and taxable purchases representing such transactions....
"(3) For the purpose of this section, a transaction shall
be deemed to have occurred in a county imposing the surtax
when:
"(a) The dealer is located in the county, delivery is made
to a location within the county or to a location within a
county also imposing the surtax, and the sale includes
tangible personal property, except as otherwise provided
herein; provided, that the sale of any motor vehicle or
mobile home of a class or type which is required to be
registered in this state or in any other state shall be
deemed to have occurred only in the county identified as
the residence address of the purchaser on the registration
or title document for such property...."

Section 212.054(2)(b)1., F.S., provides:

"(b) However:
"1. The tax on any sales amount above $5,000 on any item of
tangible personal property and on long distance telephone
service shall not be subject to the surtax. For purposes of
administering the $5,000 limitation on an item of tangible
personal property, if two or more taxable items of tangible
personal property are sold to the same purchaser at the
same time and, under generally accepted business practice
or industry standards or usage, are normally sold in bulk
or are items that, when assembled, comprise a working unit
or part of a working unit, such items must be considered a
single item for purposes of the $5,000 limitation when
supported by a charge ticket, sales slip, invoice, or other
tangible evidence of a single sale or rental."

Rule 12A-15.004(2)(d), F.A.C., provides:

"(d) Where a purchase order is issued by the purchaser to
the selling dealer, or an agreement is made between the
selling dealer and the purchaser which is reduced to

writing, that provides for the purchase of a specific
quantity of tangible personal property which, according to
the terms and conditions set out in the purchase order or
agreement, is to be delivered to the purchaser within a
definite specified time, such transaction constitutes one
sale for purposes of the $5,000 limitation. Delivery of
the tangible personal property so ordered within the time
specified in the purchase order or agreement will
constitute one sale notwithstanding that due to the nature
of the property it must be delivered in installments or
that multiple deliveries may be necessary to consummate
delivery to the purchaser. In the absence of a written
purchase order or written agreement reflecting the above
conditions, each individual delivery of tangible personal
property is to be considered one sale. Each individual
delivery of tangible personal property on purchase orders
for indefinite quantities or open-end purchase orders is
considered to be one sale."

DEPARTMENT RESPONSE

The applicability of the surtax to Taxpayer's sale of dry
cleaning and laundry equipment to customers located in various
counties in Florida is governed by section 212.054(2)(a), F.S.,
which provides that the surtax shall be imposed on all
transactions occurring in the county levying the surtax, which
transactions are subject to the state tax imposed on sales, use,
rentals, admissions, and other transactions under Chapter 212,
F.S., and section 212.054(3)(a), F.S., which states that a
transaction is deemed to have occurred in a county imposing the
surtax when the dealer is located in the county, delivery is
made to a location within the county or to a location within a
county also imposing the surtax and the sale includes tangible
personal property. Unlike sales tax, both criteria must be met
to make the transaction subject to the surtax.

If Taxpayer sells items of tangible personal property to a
customer located in XXX, a county which imposes a surtax, or to
a customer located in another county also imposing a surtax, the
surtax is applicable to the transactions. However, if Taxpayer
sells items of tangible personal property to a customer located

in a non surtax county and delivery takes place at the
customer's place of business, surtax does not apply as the
provisions of section 212.054(3)(a), F.S., would not have been
met which require that both the dealer and the customer be
located in a county imposing the surtax.

Concerning the application of the $5,000 limitation to
Taxpayer's bulk sales of various types of laundry and dry
cleaning equipment, Rule 12A-15.004(2)(d), F.A.C., quoted above,
states that where a purchase order is issued by the purchaser to
the selling dealer, or an agreement in writing is made between
the buyer and the selling dealer, that provides for the purchase
of a specific quantity of tangible personal property which
according to the terms of the purchase order or agreement is to
be delivered to the purchaser within a definite specified time,
such transaction constitutes one sale for purposes of the $5,000
limitation notwithstanding the fact that the purchaser is
invoiced more than one time (including back-orders) provided
that the deliveries are made within the time specified in the
purchase order or written agreement. This limitation applies to
purchases by new laundries, laundromats, or dry cleaners and to
ones that are refurbishing their places of business with
purchases of such equipment.

However, in the absence of a written purchase order or
written agreement, each individual delivery of tangible personal
property is to be considered one sale where purchase orders for
indefinite quantities or open-end purchase orders are employed,
each delivery of tangible personal property is also considered
to be a single sale. Under these circumstances, the $5,000
limitation will apply separately to each delivery of tangible
personal property.

Enclosed for your convenience is a list of the counties
which impose a discretionary sales surtax at this writing.

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,

Richard S. Harrod
Technical Assistant

RSH/pb
Enclosure
Con. #7321