Did each monthly rental agreement under a Florida Mini-Lease program restart the 30-day rental-car surcharge?

Subject

Rental Car Surcharge/Lease Terms

Plain-English summary

The monthly rental agreements did not restart Florida's rental-car surcharge while the original Mini-Lease remained in force. The Department read the Mini-Lease and monthly forms together because the Mini-Lease set the overall rental duration and the monthly forms implemented that continuing term.

An extension of the Mini-Lease was different: the Department treated it as a renewal, making the $2-per-day surcharge applicable to the first 30 days of the extended term.

The lessor had collected surcharge amounts beyond the first 30 days under its good-faith interpretation. It could obtain a Department refund or take a credit on a later return only after refunding or crediting the affected customer, and the credit had to be taken within 36 months of remitting the surcharge.

What this means for you

For this historical program, separate monthly paperwork did not create separate surcharge periods when an overarching Mini-Lease fixed the duration and remained controlling. A true extension did create a new 30-day surcharge period. The contract structure and actual refund trail were essential to the result.

Common questions

Q: Did every monthly rental form trigger another 30 days of surcharge? No. Not while the governing Mini-Lease remained in force.

Q: Did extending the Mini-Lease trigger the surcharge? Yes. The extension was a renewal, and the first 30 days of the extended term were subject to the surcharge.

Q: Could the lessor simply claim back amounts already remitted? No. It first had to refund or credit the customer, then seek a refund or take a return credit within the stated 36-month period.

Citations and references

• Fla. Stat. § 212.0606(1) — rental-car surcharge and first 30 days
• Fla. Admin. Code r. 12A-16.001 — surcharge administration under sales-and-use-tax rules
• Fla. Admin. Code r. 12A-16.002(1)(b) — continuous rentals and renewals
• Fla. Admin. Code r. 12A-1.014(4)(b), (6), (7) — customer refunds and dealer credits
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-029

Original ruling text

May 10, 1993

RE: TAA 93A-029
Rental Car Surcharge/Lease Terms
Section 212.0606(1), F.S.
Rules 12A-16.001, 12A-16.002(1)(b),
and 12A-1.014, F.A.C.

Dear :

This is in response to your letter dated April 5, 1993, in
which you request a Technical Assistance Advisement (TAA) on
behalf of your client, XXX (hereinafter "Lessor") with respect
to the rental car surcharge which is stated in the following
terms:

"Specifically, Lessor' requests the advisement by the Department of Revenue... on the application of the rental car surcharge imposed pursuant to Section 212.0606(1), F.S. (1990 Supplement), and as promulgated in Rule 12A-16.002(1)(b), F.A.C.[,] to vehicles rented to customers for successive thirty day periods under an extended program described below as the XXX (hereinafter theMini-Lease Program' or the `Program').

"B. DESCRIPTION OF THE TRANSACTION

"Starting in April 1983 (and continuing to date), Lessor' developed aProgram' to reduce its monthly (30 day) rate when a
renter indicates an intention to rent a vehicle for an extended
period of time. If the customer does not comply with the
extended time, `Lessor' bills the customer at a higher rate.
The intended purpose of the Program, quite simply, is to provide
a rate differential for customers who agree to rent a car for an
extended period of time, as embodied in several successive
rental agreements covering successive rental periods.

"The Program requires many written conditions, including the
requirement that the renter execute separate rental agreements
for each month of the anticipated overall term at the start of

the rental as well as for each and every consecutive month.

"Prior to September 1, 1992, Lessor' employed the Mini-Lease Agreement attached hereto as Exhibit 1. (Mini-Lease I['])
Effective September 1, 1992, Lessor' employed the Mini-Lease Agreement attached hereto as Exhibit 2. (Mini-Lease II[']).

"Mini-Lease I. Item 1 sets forth both the monthly rates and the
intended overall terms of the program. Item 2 provides that if
the vehicle is returned earlier, a higher rate will apply. Item
8 states that the use of the vehicle shall be governed both by
the Program's conditions and the applicable Lessor' rental agreement in effect during the term. Item 8 also states that the customer must execute one rental agreement for each month of the term at the start of the term as well as for each month of any extension of the term. Item 9 indicates the renter's agreement to having the original vehicle replaced by a comparable vehicle. Item 12 indicates that the conditions of the Program shall be read in conjunction with the terms and conditions of theLessor' rental agreement. Item 12 also
provides that in the event of any conflict between the two
controlling documents over the rate, the conditions of the MiniLease prevail. Item 13 of the Program provides that payment is
due monthly as governed by each applicable `Lessor' rental
agreement.

"Lessor' consistently interpreted theresolution of conflict'
provision of Item 12 to protect the customer as to the monthly
rate. In the event of a conflict over the applicable rental
rate, the terms of the Mini-Lease, embodying the lower monthly
rental, prevail.

"Mini-Lease II. The initial paragraph, terms and conditions,
states: TheLessor' Mini-Lease Rate Program (Program') is a special rate offered in connection with a series of consecutive, renewable thirty (30) day rental agreements (Term') (emphasis
supplied). It further states that `the Program is subject to
the terms and conditions of the applicable rental [agreement]
and the additional conditions below....' Item 1 sets forth both
the monthly rates and the intended overall terms of the program.
Item 2 provides that if the vehicle is returned a higher rate

will apply. It also provides that the customer's failure to rent
the vehicle for all the monthly terms of the Mini-Lease results
in the customer's paying the higher, 30-day rate.

"Item 10 provides that `Lessor' may exchange the vehicle for a
comparable vehicle. Item 13 provides that payment is due
monthly as governed by each applicable rental-agreement. For
each month of the overall term stated in the Mini-Lease, a
rental agreement is closed as an individual 30 day agreement.
If a payment is not made, then as a matter of course, the MiniLease Program is voided and the renter is no longer entitled to
the Program's rate.

"The initial paragraph of Mini-Lease II specifies that in the
event of any conflict between the two controlling documents, the
conditions of the individual monthly rental agreement prevail.
A violation of the Mini-Lease removes the discounted rate and
the customer is obligated to pay the full 30 day monthly rate as
set forth in the initial paragraph.

"C. DISCUSSION

"Because Lessor' interpreted the Program to encompass a series of successively renewed 30-day rental agreements for the protection of the customer's right to a preferred rate as well asLessor's' interest in having the car rented for all of the
successive rental periods, Lessor' naturally treated rentals for successive periods under the Mini-Lease Program asrenewals' for purposes of the statute and the rule.

"`Lessor' has thus acted reasonably since the enactment of
section 212.0606[, F.S.,] and Rule 12A-16.002(1)(b) [, F.A.C.,]
in the treatment of the Mini-Lease agreements throughout ... as
successive renewals for the purposes of the rental car
surcharge, and collected and remitted the surcharge amounts to
the State for periods in excess of the first 30 days....

"D. REQUESTED RELIEF

"`Lessor' thus requests the issuance of a Technical Assistance
Advisement concerning the following points:

"1. Whether, in connection with Mini-Lease II, it is the
Department's position that `Lessor' should in the future collect
the rental car surcharge beyond the first 30-day period provided
under the Mini-Lease Rate Program.

"2. If the answer to Question 1 is yes, whether, if a prior
Mini-Lease Customer (Customer') (under either Mini-Lease I or II) who can document that he or she paid the car rental surcharge for periods beyond the first 30-day agreement seeks a refund,Lessor' may refund such `excess' amount to the
customer, and take a credit for the amount of such refund on a
subsequent automobile rental surcharge return filed with the
Department within 36 months, pursuant to Rule 12A-1.014,
F.A.C.?"

"3. Whether `Lessor's' interpretation of the application of Rule
[12]A-16.002(1)(b), F.A.C., was a reasonable interpretation in
the circumstances, and in the absence of other clarification
from the Department."

STATUTORY/REGULATORY AUTHORITY

Section 212.0606(1), F.S., provides, in part:

"A surcharge of $2.00 per day or any part of a day is
imposed upon the lease or rental of a motor vehicle
licensed for hire and designed to carry less than nine
passengers regardless of whether such motor vehicle is
licensed in Florida. The surcharge applies to only the
first 30 days of the term of any lease or rental...."

Rule 12A-16.001, F.A.C., provides in part:

"For the purpose of administering the Rental Car Surcharge
... all rules relating to Sales and Use Tax (Chapter 12A-1,
Florida Administrative Code) shall apply to the surcharge,
except in those situations where rules relating to the
surcharge have been issued to clarify specific statutory
provisions."

Rule 12A-16.002(1)(b), F.A.C., provides in part:
"(b) The surcharge applies to each lease or rental of a for
hire passenger motor vehicle, specified in the lease or
rental agreement, on the first thirty (30) days the vehicle
is continuously leased or rented to one lessee or renter.
"1. If a for hire passenger motor vehicle is leased or
rented to one lessee or renter under an agreement for
thirty (30) continuous days or fewer, or for an unspecified
continuous duration, the surcharge shall be collected and
remitted on the lease or rental payments due up to the
first thirty (30) days. If the lease or rental agreement
is renewed at any time for an additional period, the
renewal constitutes a new lease or rental and, therefore,
the surcharge is due until thirty (30) continuous days is
reached on the renewed lease or rental agreement.
"2. If a for hire passenger motor vehicle is leased or
rented to one lessee or renter under an agreement for a
specific duration, in excess of thirty (30) continuous
days, the surcharge shall be collected and remitted on
lease or rental payments due for thirty (30) continuous
days. If the lease or rental agreement is renewed for an
additional period, the renewal constitutes a new lease or
rental and, therefore, the surcharge is due until the
thirty (30) continuous day maximum is reached on the
renewed lease or rental agreement...."

Rule 12A-1.014, F.A.C., provides in part:

"(4)(b) Any dealer who is entitled to a refund of taxes
paid to the Department of Revenue may, in lieu of applying
to the Department for a refund, take credit for such amount
on any subsequent report filed within 36 months of the date
on which the dealer remitted the tax to the state....
"(6) Whenever a dealer credits a customer ... for tax
erroneously collected, he must refund such tax to his
customer before this claim to the State for credit or
refund will be approved.
"(7) A taxpayer who has overpaid tax to a dealer, or who
has paid tax to a dealer when no tax is due, must secure a
refund of the tax from the dealer and not from the
Department of Revenue...."

DETERMINATION

Specifically, "Lessor" has requested a determination from
the Department regarding the application of the rental car
surcharge, imposed under Section 212.0606, F.S., to vehicles
rented to customers for successive thirty day periods under its
Mini-Lease Program.

Under the agreements described as Mini-Lease I and MiniLease II, the customer, in order to take advantage of a reduced
rental rate, is required to execute an agreement for the rental
of a car for a specific duration and additionally the lessee is
required to execute a monthly rental agreement. Where the
rental term is less than eleven months, the customer may extend
the rental term not to exceed eleven months. Under either type
of mini-lease agreement, if the customer fails to meet the
conditions of either the mini-lease agreement or the monthly
rental agreement, a default occurs and the customer is subject
to a higher rental rate.

The mini-lease agreement and the subsequent monthly rental
agreements must be construed with reference to each other at a
time the mini-lease agreement is in force. Furthermore, the
mini-lease document, not the monthly rental agreement, sets
forth the duration of the rental period. Therefore, contrary to
the view taken by "Lessor" in good faith, the Department does
not view the execution of the monthly rental agreements at a
time the mini-lease is in force as constituting separate rental
contracts susceptible to the surcharge. However, an extension
of the mini-lease agreement would be deemed a renewal and the
rental car surcharge of $2.00 per day or portion of a day would
apply to the first 30 days of the extended rental term.

In accordance with Rule 12A-16.001, F.A.C., the rental car
surcharge is administered in accordance with the sales and use
tax rules and regulations (Chapter 12A-1, F.A.C.).
Specifically, Rule 12A-1.014, F.A.C., provides that in the event
a dealer erroneously collects tax from a customer, the customer
must request a refund or credit from the dealer. Once the
dealer has credited or refunded the tax to a customer, the

dealer is then entitled to request a refund from the Department
of Revenue or to take a credit on a subsequent return within 36
months of the date on which the dealer remitted the tax.
Therefore, "Lessor" may be allowed a credit of any rental car
surcharge credited or refunded to a customer with respect to the
mini-lease agreements which are the subject of this TAA and in
accordance with Rule 12A-1.014, 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 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,

Sharon Gallops
Technical Assistant

SG/pb
Cont. #8176