Was the state-required $8 FDLE criminal-history-check fee collected on a firearm sale subject to Florida sales tax?

Subject

FDLE Criminal History Check Fee

Plain-English summary

The $8 FDLE criminal-history-check fee was not subject to sales tax when separately stated and identifiable from the firearm's taxable price. The Department found that the government-provided background check was not a taxable detective or protection service and that the mandatory fee fell outside the firearm's sales price.

The ruling suggested labeling the invoice line "FDLE Background Check Fee" rather than the less precise "Gun Check" to create a clearer audit trail.

What this means for you

The exclusion depended on the charge being imposed by Florida law, remitted for the state background check, and separately shown. A dealer-added screening or service charge would not necessarily receive the same treatment.

Common questions

Was the firearm itself exempt? No. The ruling addressed only the $8 fee.

Did the fee have to be separately stated? Yes.

What invoice description did the Department suggest? "FDLE Background Check Fee."

Citations and references

• Fla. Stat. §§ 212.02(17), 212.05(1)(k)1., 213.22, and 790.065(1)(b)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94A-035

Original ruling text

Jun 17, 1994

Re: Technical Assistance Advisement 94(A)-035 Sales Tax - Whether FDLE Criminal History Check Fee of $8 is Subject to Sales Tax Taxpayer: XXX Address: XXX Sales Tax Number: XXX FEI#: XXX

Dear :

This response is in reply to your March 2, 1994, petition for the Department's issuance of a Technical Assistance Advisement ("TAA") pursuant to s. 213.22, F.S. Your petition regards the referenced matter and party. The Department has carefully examined your petition and finds it to meet the criteria set forth in Chapter 12-11, F.A.C., requisite to issuance of a TAA. Therefore, the Department is by this response issuing the requested TAA.

DISCUSSION OF FACTS

Your petition and supporting documents impart the following significant information regarding the issues under advisement herein:

"A criminal history record check is required by the State of Florida of every person who is not a law enforcement officer or does not have a concealed weapons permit. Each month these fees collected for criminal history record checks are sent to the Florida Department of Law Enforcement....

"We are submitting a copy of a sample invoice showing that the criminal history record check fee is charged as a separate item. Note on the invoice it is shown as a gun check fee. Our customers have told us no sales tax should be charged on the criminal history record check fee since

it is paid to the State of Florida and is required by the State of Florida."

The sample invoice, no. 05488 dated 2-23-94, submitted with your request shows that the fee is separately state and designated "Gun Check".

REQUESTED ADVISEMENT

You endeavor to elicit the Department's advice regarding the following specific questions:

"In collecting these fees that are submitted to the State of Florida, we need to know if any sales tax should be charged.... Please rule on whether we should be collecting any sales tax on the criminal history record check fee."

DISCUSSION OF LAW

We consult the following provisions of statutory and case law in addressing the matter under advisement:

Section 212.05, F.S.: "212.05 Sales, storage, use tax.-"It is hereby declared to be the legislative intent that every person is exercising a taxable privilege who engages in the business of selling tangible personal property at retail in this state, including the business of making mail order sales, or who rents or furnishes any of the things or services taxable under this chapter, or who stores for use or consumption in this state any item or article of tangible personal property as defined herein and who leases or rents such property within the state. "(1) For the exercise of such privilege, a tax is levied on each taxable transaction or incident, which tax is due and payable as follows:.... "(k) At the rate of 6 percent on charges for all: "1. Detective, burglar protection, and other protection services (SIC Industry Numbers 7381 and 7382). Any law enforcement officer, as defined in s. 943.10, who is performing approved duties as determined by his local law enforcement agency in his capacity as a law enforcement

officer, and who is subject to the direct and immediate command of his law enforcement agency, and in his uniform as authorized by his law enforcement agency, is performing law enforcement and public safety services and is not performing detective, burglar protection, or other protective services, if the law enforcement officer is performing his approved duties in a geographical area in which the law enforcement officer has arrest jurisdiction. Such law enforcement and public safety services are not subject to tax irrespective of whether the duty is characterized as extra duty,'off-duty,' or `secondary employment,' and irrespective of whether the officer is paid directly or through his agency by an outside source. The term "law enforcement officer" includes full-time or part-time law enforcement officers, and any auxiliary law enforcement officer, when such auxiliary law enforcement officer is working under the direct supervision of a full-time or part-time law enforcement officer...." (Emphasis Supplied)

SIC industry number 7381 includes:

Armored car service

Investigators, private

Detective agencies

Lie detection service

Dogs, rental of: for

Polygraph service

private service

Protective service, guard

Fingerprint service

Security guard service

Guard service

SIC industry number 7382 includes:
Burglar alarm monitoring

Security systems devices,

and maintenance

burglar and fire alarm:

Fire alarm monitoring

monitoring and maintenance

and maintenance

SIC industry number 9221 includes government establishments primarily engaged in law enforcement, traffic safety, police and other activities related to the enforcement of the law and preservation of order. This SIC industry number encompasses:

Bureaus of criminal

Police departments

investigation - government Sheriffs' offices Highway patrols

State police

Marshals' offices, police

Section 212.02(17), F.S.: "Sales price' means 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. Trade-ins or discounts allowed and taken at the time of sale shall not be included within the purview of this subsection."

Section 790.065, F.S.: "(1) No licensed importer, licensed manufacturer, or licensed dealer shall sell or deliver from his inventory at his licensed premises any firearm to another person other than a licensed importer, licensed manufacturer, licensed dealer, or licensed collector, until he has:.... "(b) Collected a fee from the potential buyer for processing the criminal history check of the potential buyer. The fee shall be $8. The Department of Law Enforcement shall, by rule, establish procedures for the fees to be transmitted by the licensee to the Department of Law Enforcement. All such fees shall be deposited into the Department of Law Enforcement Operating Trust Fund, but shall be segregated from all other funds deposited into such trust fund and must be accounted for separately. Such segregated funds must not be used for purpose other than the operation of the criminal history checks required by this section...."

The rules of construction for statutory definitions which define what is to be taxed differ from those governing the construction of statutory exemptions. In construing statutory exemptions the

Department must adhere to and be guided by the long-standing and fundamental precept of statutory construction, established by the Florida Supreme Court, which mandates that exemptions from or exceptions to taxing statutes must be strictly construed against the taxpayer. See Asphalt Pavers v. Dept. of Revenue, 584 So.2d 57 (Fla. 1st DCA 1991); Dade Cty. Taxing Auth. v. Cedars of Lebanon, 355 So.2d 1205 (Fla. 1978), reh. den. April 5, 1978; Williams v. Jones, 326 So.2d 425 (Fla. 1975), reh. den. March 4, 1976; Straughn v. Camp, 293 So.2d 689 (Fla. 1974); United States Gypsum Company v. Green, 110 So.2d 409 (Fla. 1959). Conversely, the Florida Supreme Court has ruled that a statutory definition which defines what is to be taxed is to be strictly construed against the taxing authority. See State Ex Rel. Drum Service Company of Fla. v. Kirk, 234 So.2d 358, 359 (Fla. 1970)

The Supreme Judicial Council of Maine stated in Communication Telecasting Service v. Johnson, 220 A.2d 500, (Maine 1966) in quoting Snite v. Department of Revenue, 74 N.E. 2d 877, 879, 880 (Illinois 1947), that:

"If the article sold is the substance of the transaction and the service rendered is merely incidental to and an inseparable part of the transfer to the purchaser of the article sold, then the vendor is engaged in the business of selling at retail and the tax which he pays is measured by the total cost of the article and service."

Moreover, largely analogous to the issue under advisement is the treatment of certain governmentally imposed fees relating to the sale of motor vehicles. With respect to motor vehicle sales, it has been the Department's long standing position that the standard for determining whether a particular fee or charge is to be excluded from the taxable sales price hinges on whether the fee or charge is mandated by the state, its subdivision or by any state or license tag agency or office. Thus governmentally mandated fees such as tag, title, registration, lien recording, or similar fees or any service fee charged by such agency or office when separately stated should be excluded from the taxable sales price.

CONCLUSIONS OF LAW

With respect to the levy of sales tax pursuant to s. 212.05(1)(k)1., F.S., on certain detective, burglar protection, and other protection services classified under SIC industry numbers 7381 and 7382, the criminal history check services provided by the Florida Department of Law enforcement pursuant to s. 790.065, F.S., do not fall within the purview of either of such SIC industry numbers. Instead, the criminal history check services provided by the Florida Department of Law Enforcement pursuant to s. 790.065, F.S., come within the scope SIC industry number 9221. Accordingly, the criminal history check services provided by the Florida Department of Law Enforcement pursuant to s. 790.065, F.S., do not constitute taxable detective, burglar protection, or other protection services as contemplated by s. 212.05(1)(k)1., F.S. Consequently, the $8 fee (the "Fee") which must be collected form the potential purchaser of the firearm pursuant to s. 790.065(1)(b), F.S., is not subject to sales tax under s. 212.05(1)(k)1., F.S.

Next, we turn to the broader question of whether the Fee is subject to sales tax on some other basis under the provisions Chapter 212, F.S. The statutory definition of the term "sales price" provided in s. 212.02(17), F.S., does not specifically address the Fee. Neither is there an express exemption provided elsewhere in Chapter 212, F.S., for the Fee. Further, the provisions of s. 790.065, F.S., do not address whether the Fee is exempt from sales tax. Inasmuch as the definition of the term "sales price" provided in s. 212.02(17), F.S., constitutes a statutory definition defining what is to be taxed, it must be strictly construed against the taxing authority pursuant to Drum Service Company, supra. Additionally, sound reasoning and consistency suggests that the department's long standing policy with respect to governmentally imposed fees resulting from motor vehicle transactions should apply in a like fashion to the Fee resulting from firearms sales. The fact that the object of the sale is a gun rather than a car should be immaterial in ascertaining whether a governmentally imposed fee resulting from the sale is subject to sales tax.

Therefore, we hereby enter our finding that the Fee being

imposed by the State of Florida pursuant to s. 790.065(1)(b), F.S., against the purchaser of a firearm falls beyond the intended scope of the statutory definition of sales price provided in s. 212.02(17), F.S. As such, the Fee should be excluded from the amount on which sales tax is collected so long as it is separately stated and identifiable apart from the taxable elements of the sales price. It is suggested that a more distinctive audit trail would be established if the Fee were denominated on your invoices as the "FDLE Background Check Fee". This would leave no uncertainty that the Fee shown on the invoice is that imposed by s. 790.065(1)(b), F.S.

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/

Control No. 14111