Were electricity sales under a utility's filed residential tariff exempt from Florida sales tax?

Subject

Tax on Utilities-Residential Households

Plain-English summary

Electricity sold to a unit classified as residential under the utility's filed tariff was treated as exempt household utility service. The exemption applied to purchases by the owner or lessee and could include electricity billed to a landlord for a tenant's residential use.

The classification was not permanent if the facts changed. If the owner or lessee later used the unit for a commercial purpose, the Department would no longer treat it as exempt. The Department also said the administrative rule was being revised to state this position more clearly.

What this means for you

The utility's residential tariff classification established the household treatment under this ruling, but actual commercial use could override the exemption.

Common questions

Q: Did the utility need separate proof of more than six months of residential use? The ruling's final test relied on the residential tariff classification, not a separate six-month showing.

Q: Could landlord-billed electricity qualify? Yes, if it was sold for residential household use.

Q: What happened if part of the unit was used commercially? The Department said it would no longer consider the unit exempt.

Citations and references

• Fla. Stat. § 212.08(7)(j) — household utility and fuel exemption
• Fla. Admin. Code r. 12A-1.053 — electric power and energy
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-067

Original ruling text

Sep 28, 1993

RE: TAA 93A-067
Sales and Use Tax on Utilities-Residential Households
Section 212.08(7)(j), F.S.
Rule 12A-1.053, F.A.C.

Dear :

Your letter of June 25, 1993, received in this office on August
10, 1993, requested a Technical Assistance Advisement on behalf
of your client, XXX (Hereinafter "Commission"), with respect to
the above referenced matter. This response constitutes a
Technical Assistance Advisement under Chapter 12-11, Florida
Administrative Code, and is issued to you under the authority of
s. 213.22, Florida Statutes.

DISCUSSION OF FACTS

The letter states the following significant facts:

"[Commission] has approximately 18,000 customers on R.S.
Schedule (Residential) Tariff filed with the Public Service
Commission, of which 2,100 have been taxed by the
Department. In the previous [Commission] audit, the
Department of Revenue took the position that sales tax
liability existed for these residential rate users unless
long term use of greater than 6 months was proven.
Additionally, the Department took the position that if any
level of non-residential activity occurred at the
residence, then the entire residential service was taxable
(for example, home office). The position of [the
Commission] during that Audit was that classification by
[Commission] as a residential account pursuant to the
Utilities' tariffs was sufficient to meet the statutory
exemption cited above."

Your letter further states:

"It appears that the Department of Revenue has altered its
position in this matter since the 1990 audit of [the
Commission]."

In support of this statement, you enclose copies of a Notice of
Decision, dated September 2, 1992, to another utility provider
and a letter from the Department to a representative of thirtytwo municipally owned electric utilities, from which you cite
passages.

REQUESTED ADVISEMENT

You request technical assistance and advisement as to:
"[W]hether sales pursuant to [Commission's] residential tariff
schedule are exempt from sales tax."

RELEVANT AUTHORITY

Section 212.08(7)(j), F.S., provides an exemption for the sales
of utilities to residential households:

"(j) Household fuels--Also exempt from payment of the tax
imposed by this chapter are sales of utilities to
residential households or owners of residential models in
this state by utility companies who pay the gross receipts
tax imposed under s. 203.01, and sales of fuel to
residential households or owners of residential models,
including oil, kerosene, liquefied petroleum gas, coal,
wood, and other fuel products used in the household or
residential model for the purposes of heating, cooking,
lighting, and refrigeration, regardless of whether such
sales of utilities and fuels are separately metered and
billed direct to the residents or are metered and billed to
the landlord. If any part of the utility or fuel is used
for nonexempt purposes, the entire sale is taxable. The
landlord shall provide a separate meter for nonexempt
utility or fuel consumption."

Rule 12A-1.053, F.A.C., describes the imposition of sales tax on
the sale of electric power and energy:

"(1)(a) The sale of electric power or energy by private or
public utilities and rural electric cooperative
associations is taxable. Electric power or energy is
exempt when it is separately metered and sold for use in
residential households (including trailer lots) direct to
the actual consumer by utilities who are required to pay
the gross receipts tax imposed by Section 203.01, Florida
Statutes. Such electric power or energy is exempt even
though metered and billed direct to the landlord (mastermetered)...."

DISCUSSION/RESPONSE

As provided in s. 212.08(7)(j), F.S., the sale of utilities to
residential households is exempt from tax. This would include
electricity sold to a landlord for use by a tenant provided the
transaction is deemed to be a sale to a "residential household".

The Department has taken the position that when a unit is
classified as "residential" by the utility provider, based on
its tariffs filed with the Public Service Commission, the unit
will be considered a "residential household" for sales tax
purposes, thereby exempting the owner or lessee's purchases of
utilities from tax. However, should the owner or lessee
subsequently use the unit for a commercial purpose, the
Department will no longer consider the unit exempt for sales tax
purposes.

Rule 12A-1.053, F.A.C., previously cited in part, is being
reviewed by the Department of Revenue and a revised version
of this administrative rule will be promulgated in the near
future. Rule language, which will clarify the Department's
position as stated above, will be incorporated into the
revised rule.

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,

Delores Overcash
Technical Assistant

DO/
Ctrl #10324