Which hotel rooms rented continuously to an employer for rotating crews qualified for Florida's six-month transient-rental exemption?

Subject

Transient Rentals

Plain-English summary

Only the floor of rooms continuously guaranteed for longer than six months qualified for the transient-rental exemption; variable, additional, or interrupted rooms remained taxable. The employer paid for guaranteed rooms whether or not crew members actually occupied them, and the hotel was required to keep those rooms available.

Using the submitted spreadsheets, the Department found all rooms taxable from July through December 1990 because continuous use dropped to zero on June 8, 1990. It then identified daily exempt floors of five rooms for January 1991, seven for February through April 1991, eight for May through October 1991, six for November 1991 through June 1992, and eight for July 1992 through March 1993. All other rooms were taxable.

The records did not consistently reconcile. The Department warned that incorrect spreadsheets would void its room-count determination. Refund applications for tax returned to the lessee had to be filed within three years after the refund right accrued, with separate applications for sales tax and local tourist-development tax.

What this means for you

The exemption followed continuous contractual occupancy rights in a fixed minimum number of rooms, not the overall duration of the business relationship or the total rooms used from day to day.

Common questions

Q: Did every room used during a multiyear crew contract become exempt? No.

Q: Did no-shows necessarily break continuity? The guaranteed-room arrangement included no-shows, but the Department calculated exemption from the supported daily minimum and treated the zero-room interruption as a reset.

Q: How long did the hotel have to claim a refund? Three years after the refund right accrued under the statute quoted in the ruling.

Citations and references

• Fla. Stat. § 212.03(4) — continuous residence longer than six months
• Fla. Stat. § 215.26(2) — three-year refund period
• Fla. Admin. Code r. 12A-1.061 — transient accommodations
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-066

Original ruling text

Sep 28, 1993

RE: TAA 93A-066
Sales Tax; Transient Rentals
Section 212.03(4), 215.26, F.S.
Rule 12A-1.061, F.A.C.

Dear :

This is in response to your request for a Technical
Assistance Advisement dated May 19, 1993, regarding the
imposition of sales tax on rooms rented by XXX [hereinafter
Hotel] to XXX [hereinafter Lessee]. Accompanying your request
were the following documents: contract number XXX (effective
September 1, 1989) entered into with Lessee and yearly updated
contracts; manual spread-sheets listing the number of rooms used
on a daily basis; aged accounts receivable reports covering
December 1989 through December 1990; a letter dated May 4, 1993,
from Lessee requesting a refund of "hotel taxes" paid in error,
inclusive of interest; and a copy of Rule 12A-1.061(23), F.A.C.

Your request provides in part:

"[Lessee], Contract XXX, has been using our hotel for their
employees (crew-members) since September 1989. We have been
collecting the applicable sales and use tax of 6% plus 3%
tourist tax on all their contracted rooms, whether the rooms
were occupied or not, plus additional rooms for extra
crew-members on a monthly basis....

"If [Lessee] qualifies for this tax-exemption, please
advise if we can refund all taxes after their first six months
of stay (a maximum of three years back taxes) or if there is a
restriction of [the] precise amount of rooms to be tax-exempt.

"The enclosed records will show a variance of contracted
rooms per month, which will continue during the following years.
The variance reflects the seasonal flights to Florida which
largely depend on our tourism...."

DETERMINATION

Section 212.03(4), F.S., provides in pertinent part:

"The tax levied by this section shall not apply to, be
imposed upon, or collected from any person... who shall
reside continuously longer than 6 months at any one hotel,
apartment house, roominghouse, tourist or trailer camp, or
condominium and shall have paid the tax levied by this
section for 6 months of residence in any one hotel... The
Department of Revenue shall have the power to reform the
rental contract for the purposes of this chapter if the
rental payments are collected in other than equal daily,
weekly, or monthly amounts so as to reflect the actual
consideration to be paid in the future for the right of
occupancy during the first 6 months."

The original contract entered into on July 1, 1989, between
[Hotel] and [Lessee] provides in part:

"1. Lessor hereby leases to [Lessee] and [Lessee] hereby
takes from Lessor for the exclusive use of [Lessee]
Flight/Inflight personnel, guaranteed single room(s) located on
Lessor's premises...

"Guaranteed single rooms shall mean that number of rooms
specified in writing by [Lessee] to Lessor in advance of the
month in which the rooms are needed, except that the number of
guaranteed rooms in any month shall not exceed the number in the
previous month unless the extra rooms are available at the time
of [Lessee's] written notice.... With respect to the number of
rooms which [Lessee] shall guarantee hereunder consistently and
continuously from day to day during any period of at least 30
days, Lessor shall provide the same rooms each day during such
period to [Lessee]. [Lessee] shall make rental payments for
guaranteed single rooms regardless of actual use....

"5. Should Lessor fail to make available guaranteed rooms,
Lessor shall arrange accommodations for [Lessee's]
Flight/Inflight personnel at another facility..." (Emphasis

Supplied)

During our telephone conversation on Thursday, July 15,
1993, you disclosed that the guaranteed rooms are requested via
telephone by [Lessee]. The rooms needed vary per day or week.
A facsimile was received by this writer on July 15, 1993, which
listed the number of rooms requested by Lessee for the months of
February and March, 1993. It was additionally disclosed that
the number of rooms contained on the spreadsheet includes "no
shows". However, the information contained on the spreadsheets
and the "guaranteed rooms" listed on the facsimile transmission
for February and March, 1993, are not in agreement on several
days. An attempt was made to trace the number of rooms shown on
the spreadsheets as being charged to Lessee for the period of
December 1989, through December 1990, to the "Summarized Aged
A/R Report" for the same period. Only one month (November 1990)
matched exactly (i.e., # rooms per spreadsheet x daily room rate
x .09 tax rate = A/R due for that month from Lessee). The month
of June 1990 differed by XXX.

Assuming that the information contained on the spreadsheets
is correct, your firm should refund the tax collected on the
following number of rooms per day for the specified month(s):
July 1990 through December 1990, all of the rooms are taxable
since zero rooms were continuously used on June 8, 1990; January
1991, 5 rooms per day are not taxable; February 1991, through
April 1991, 7 rooms per day are not taxable; May 1991, through
October 1991, 8 rooms per day are not taxable; November 1991,
through June 1992, 6 rooms per day are not taxable; and July
1992, through March 1993, 8 rooms per day are not taxable. All
other room rentals are taxable.

In accordance with s. 215.26(2), F.S., applications for
refunds must be filed within 3 years after the right to such
refund has accrued. For example, if your firm remitted the tax
collected in error (and subsequently refunded to Lessee) for the
month of January 1991, to this department on February 20, 1991,
it has until February 20, 1994, to file for the refund.

Two copies of Form DR-26, Application for Refund, have been
enclosed for your convenience. A separate application must be

prepared for each tax (i.e., sales and use tax and local option
tourist development tax). Should you have any questions
regarding the preparation of this form please contact the Refund
Section at (904) 488-8937.

Please be advised that should the information contained
within the spreadsheets be incorrect, this advisement is null
and void as to the number of rooms which should be exempted for
any particular period.

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/
Enclosure
Control # 8938