Who owed Florida sales or use tax on portable bus-stop shelters supplied and installed for a regional transportation authority?

Subject

Sale and Installation of Bus Stop Shelters

Plain-English summary

The shelter contract was a public-works contract, making the contractor the taxable ultimate consumer. The shelters could be relocated, but the project was publicly authorized, bid and bonded like construction, required foundations and bolted installation, and left risk of loss with the contractor until delivery and turnover.

If the contractor manufactured or fabricated the shelters, it owed use tax on full manufactured cost. If it bought them, it had to pay sales tax to its suppliers. Because the contractor bore that tax as consumer, its contract charges to the transportation authority were not subject to sales or use tax again.

What this means for you

Portability did not prevent public-works treatment. The Department considered the project's public purpose, construction character, anchoring, installation obligations, insurance, and risk allocation together.

Common questions

Were the shelters' relocation capability decisive? No.

Who paid tax if the contractor fabricated them? The contractor, on full manufactured cost.

Who paid tax if the contractor bought them? The contractor paid its suppliers.

Was the authority's contract payment taxed again? No.

Citations and references

• Fla. Stat. §§ 1.01(8), 163.566(1), 163.570, 212.08(6), and 213.22
• Fla. Admin. Code rr. 12A-1.051(5) and 12A-1.094
• Housing by Vogue, Inc. v. Department of Revenue, 422 So. 2d 3 (Fla. 1982)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94A-036

Original ruling text

Jun 17, 1994

Re: Technical Assistance Advisement 94(A)-036
Sales Tax - Sale and Installation of Bus Stop Shelters
Pursuant to a Contract With a Governmental Entity
s. 212.08(6), F.S.
Rule 12A-1.094, F.A.C.
Parties: XXX (herein "the Contractor")
XXX (herein "the Authority")

Dear

This response is in reply to your, April 1, 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 parties. 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 imparts the following information regarding the
issue under advisement herein:

"We have a Purchase Order from the [Authority] to provide and
install bus stop shelters in public right-of-ways. On March 25,
1993, we wrote the Bureau of Taxpayer Assistance to clarify the
tax status of this transaction; our request and its supporting
documents are enclosed. On April 26, 1993 we received a nonbinding opinion from Mr. Dan Wagner of your department. Mr.
Wagner's reply and its attachments are also enclosed.

"In trying to understand Mr. Wagner's logic in reaching his nonbinding opinion we find repeated reference to a three pronged
test with the third prong (the intention of the owner) being the
most heavily weighted. The Owner's expressed intention to
relocate the shelters as their needs dictate should satisfy this

issue; however, we have expanded on the Owner's intentions and
we have also addressed the other two issues.

"First of all these are bus stop shelters, not bus stations, and
they are portable (see photo). They are installed in right-ofway not owned by the Authority and must be moved to accommodate
road widening, utility improvements, or bus route changes. They
can be installed, removed, stored, and then re-installed. They
do not become part of the real estate and [the Authority] has no
intention of transferring the ownership of the shelters to the
owner of the right-of-way. What more can be said to demonstrate
that the Owner's intentions satisfy every requirement mentioned
in Mr. Wagner's letter?

"Secondly, the method of attachment (bolts) is utilized to
maintain portability, prevent vandalism, and satisfy local
safety codes for wind loads; how else could they be held
down?

"Finally, the land is not adapted to the shelter. The land
is public right-of-way upon which there is currently a bus
stop. The addition, removal, or relocation of the shelter
is determined by the volume of boarders, not the property.

"We believe the bus stop shelters are tangible personal
property and as such enjoy [the Authority's] tax exemption.
Likewise, we think the concrete foundations are incidental
to the shelter and are tax exempt as well."

The following relevant excerpts are taken from the bid documents
submitted in support of your petition:

"PART III - TECHNICAL SPECIFICATIONS

"[The Authority] shall receive bids in accordance with the
conditions set forth in Part II for the furnishing/
installation of:... BUS STOP SHELTERS... meeting the
following specifications:

" ... 1.2 PROJECT DESCRIPTION....

"The project generally consists of:

"A. ... Mall Bus Stop

"1. Two large shelters installed on existing
foundations.
"2. Three large benches, four small benches, two lean
rails and two trash cans, installed on existing
concrete slabs or sidewalks....

"B. ... Mall Transfer Station

"1. Six large shelters with foundations installed in
an existing paved area....
"3. Remove existing paving and foundations as
required to install new foundations .... "

"PART II - SOLICITATION/CONTRACTUAL PROVISIONS ....

"2.20 Assumption of Risk of Loss:

"[The Authority] shall assume risk of loss of the equipment
upon delivery, installation and such start up or turnover
procedures as are set out in the specifications. Prior to
this delivery or release, the Contractor shall have risk of
loss of the equipment, including any damages sustained by
common carrier....

"2.30 Insurance:

"During the life of the Contract, the Contractor shall
provide, pay for and maintain with companies satisfactory
to [the Authority], the types of insurance described
herein....

"2.30.2 Commercial General Liability Insurance shall be
paid for and maintained by the Contractor.
Coverage shall include Personal Injury,
Contractual for this Agreement, Independent
Contractors, Broad Form Property Damage including
Completed operations, and Products and Completed

operations coverages and shall include coverage
for C' (collapse) andU' (underground) Property
Damage Liability exposures.

"Completed Operations Coverage shall be
maintained for a period of not less than three
(3) years following final acceptance by [the
Authority]....

"2.30.6 Builder's Risk Insurance shall be provided by
[the Authority] on the project insuring the
Contract Price and naming [the Authority] as the
Named Insured and the General Contractor,
Subcontractor, and subordinate Subcontractors as
to their interests on an `All Risk' form....
Loss, if any, under this coverage shall be
adjusted with [the Authority] with the
cooperation of the General Contractor and any
Subcontractor with the claim check made payable
to [the Authority] for their own interest and the
interests of the General Contractor and al[l]
subcontractors and subordinate subcontractors....

"November 30, 1992
NOTICE TO ALL BIDDERS
AMENDMENT NO. 2
BUS STOP SHELTERS
Dated October 23, 1992

*

*

*

"Additions to drawings: ...
"B. Contractor shall provide one 3/4" electrical conduit
with pull-wire routed from 2 feet outside of the
concrete slab area up into the center of one of the
shelters steel columns ....

"Item # 4 Page 29 Section 4.1 Bid and Performance Security

"The contract period is for three years. Section 4.1
states that the contractor shall be required to supply a

performance bond or Letter of Credit satisfactory to [the
Authority] equal to 100 percent of the estimated annual
contract amount. This would mean the contractor would only
be required to supply a performance bond equal to one third
of the total bid amount...."

REQUESTED ADVISEMENT

You favor a reply from the Department to the effect that the
Contractor and the Authority are exempt from payment of sales or
use tax on the bus stop shelters on the basis of the Contractor
being considered a retailer of tangible personal property in
performance of its contract with the Authority and the Authority
being an exempt governmental entity.

DISCUSSION AND ANALYSIS OF LAW

The following relevant statutory, administrative, and case law
are consulted in addressing the issue under advisement herein:

Section 212.08(6), F.S.: "(6) EXEMPTIONS; POLITICAL
SUBDIVISIONS.
"There are also exempt from the tax imposed by this chapter
sales made to the United States Government, a state, or any
county, municipality, or political subdivision of a state
when payment is made directly to the dealer by the
governmental entity. This exemption shall not inure to any
transaction otherwise taxable under this chapter when
payment is made by a government employee by any means,
including, but not limited to, cash, check, or credit card
when that employee is subsequently reimbursed by the
governmental entity. This exemption does not include sales
of tangible personal property made to contractors employed
either directly or as agents of any such government or
political subdivision thereof when such tangible personal
property goes into or becomes a part of public works owned
by such government or political subdivision thereof, except
public works in progress or for which bonds or revenue
certificates have been validated on or before August 1,
1959...." (Emphasis Supplied)

Chapter 163, Intergovernmental Programs, Part V, Regional
Transportation Authorities, s. 163.566(1), F.S.:
"'Authority' means a body politic and corporate created
pursuant to this part."

Section 163.570, F.S., Special region taxation: "Any
regional transportation authority created hereunder shall
be deemed a special tax district.... " (Emphasis Supplied)

Title I, Construction of Statutes, Chapter I, Definitions,
Section 1.01(8), F.S.: "(8) The words public body,'body
politic,' or `political subdivision' include counties,
cities, towns, villages, special tax school districts,
special road and bridge districts, bridge districts, and
all other districts in this state." (Emphasis Supplied)

In construing the exemption provided in s. 212.08(6), F.S.,
above, the Department must adhere to and be guided by the
longstanding 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).

REGULATORY LAW

Section 212.08(6), F.S., above, is elucidated by the ensuing
sections of the Department's Rule 12A-1.094, F.A.C.:

"(1) This rule shall govern the taxability of transactions
in which contractors manufacture or purchase supplies and
materials for use in public works, as that term is referred
to in Section 212.08(6), F.S. This rule shall not apply to
non-public works contracts as those contracts are governed
under the provisions of Rule 12A-1.051, F.A.C....

"(a) Contractor' is one who is engaged in the repair, alteration, improvement or construction of real property. Contractors include, but are not limited to, persons engaged in building, electrical, plumbing, heating, painting, decorating, ventilating, paperhanging, sheet metal, roofing, bridge, road, waterworks, landscape, pier or billboard work. This definition includes subcontractors. "(b)Public works' are defined as construction projects
for public use or enjoyment, financed and owned by the
government, in which private persons undertake the
obligation to do a specific piece of work. The term
`public works' is not restricted to the repair, alteration,
improvement, or construction of real property and fixed
works where the sale of tangible personal property is made
to or by contractors involved in public works contracts.
Such contracts shall include, but not be limited to,
building, electrical, plumbing, heating, painting,
decorating, ventilating, paperhanging, sheet metal,
roofing, bridge, road, waterworks, landscape, pier or
billboard contracts....
"(2) The purchase or manufacture of supplies or materials
by the contractor for incorporation into a public works
project is taxable to the contractor since he is the
ultimate consumer....
"(3)(a) The purchase or manufacture of tangible personal
property for resale to a governmental body is exempt from
tax provided this exemption shall not include sales of
tangible personal property made to contractors employed
either directly or as agents of the United States
Government, a state, or any county. municipality, or
political subdivision of a state when such tangible
personal property goes into or becomes a part of public
works financed or owned by such governmental bodies or
political subdivisions....
"(b) With regard to contracts with government entities, the
exemption in subsection (3)(a) is appropriate only where
the levy would otherwise fall on the government itself, or
on an agency or instrumentality so closely connected with
that government that the two cannot realistically be viewed
as separate entities, at least insofar as the activity
being taxed is concerned. A finding of exempt status,

however, requires something more than the implication of
traditional agency notions, so that to resist a state's
taxing power, a private taxpayer must actually stand in the
government's shoes as a principal, rather than as a
contractor employed either directly or as the government's
agent. A contractor will not be deemed to actually stand
in the government's shoes if the contractor has a
substantial independent role in making purchases.
Accordingly, the fact that title passes directly to the
government and payment is made with government funds, in
and of itself, cannot characterize the transaction as an
exempt purchase if the purchasing entity, in its role as a
purchaser, is sufficiently distinct from the government.
"(4) The exemption in subsection (3)(a) is a general
exemption for sales made to the government. The exception
in subsection (2)(a) is a specific exception for sales to
contractors. A determination of whether a particular
transaction is properly characterized as an exempt sale to
a government entity or a taxable sale to a contractor shall
be based on the substance of the transaction, rather than
the form in which the transaction is cast. The Executive
Director or... designee in the responsible division will
determine whether the substance of a particular transaction
is governed by subsection (2)(a) or is a sale to a
governmental body as provided by subsection (3) of this
rule based on all of the facts and circumstances
surrounding the transaction as a whole. The Executive
Director or... designee in the responsible division will
give special consideration to factors which govern the
status of the tangible personal property prior to its
affixation to real property. Such factors include
provisions which govern bidding, indemnification,
inspection, acceptance, delivery, payment, storage, and
assumption of the risk of damage or loss for the tangible
personal property prior to its affixation to real property.
Assumption of the risk of damage or loss is a paramount
consideration. A party may be deemed to have assumed the
risk of loss if the party either: bears the economic burden
of posting a bond or obtaining insurance covering damage or
loss; or enjoys the economic benefit of the proceeds of
such bond or insurance. Other factors that may be

considered by the Executive Director or... designee in the
responsible division include whether: the contractor is
authorized to make purchases in its own name; the
contractor is jointly or severally liable to the vendor for
payment: purchases are not subject to prior approval by the
government; vendors are not informed that the government is
the only party with an independent interest in the
purchase; and whether the contractors are formally
denominated as purchasing agents for the government. Sales
made pursuant to so called cost-plus',fixed-fee, lump sum', andguaranteed price' contracts are taxable sales to
the contractor unless it can be demonstrated to the
satisfaction of the Executive Director or... designee in
the responsible division that such sales are, in substance,
tax exempt sales to the government.
"(5) Contractors who manufacture materials for
incorporation into public works shall be liable for tax in
the manner provided in Rule 12A-1.051(5) or (6), F.A.C....
(Emphasis Supplied)

An agency's administrative interpretation of a statute by rule
has been accorded great deference by the courts, and will not be
overturned unless the agency's interpretation of the statutes is
clearly erroneous; reviewing court will defer to any
interpretation within the range of possible interpretation. See
Pershing Industries v. Department of Banking, 591 So.2d 991, 993
(Fla. 1 DCA 1991); Eager v. Florida Keys Aqueduct Authority, 580
So.2d 771 (Fla. 3 DCA 1991); Natelson v. Department of Ins.; 454
So.2d 31 (Fla. 1 DCA 1984); State ex rel. Szabo Food Serv., Inc.
of N.C. v. Dickinson, 286 So.2d 529 (Fla. 1973), reh. den. Jan.
9, 1974.

CASE LAW

The issue of the application of sales and use tax relative to
the performance of a contract for a governmental entity
involving the furnishing and installation of articles which do
not necessarily become fixed improvements to realty following
installation was specifically addressed by the Florida Supreme
Court in the matter of Housing by Vogue, Inc. v. Department of
Revenue, 422 So.2d 3 (Fla. 1982). In this case, the Florida

Supreme Court held that relocatable classrooms capable of being
moved from site to site without damage to the structure, which
the parties agreed were tangible personal property, did
nonetheless constitute public works within the meaning of the
sales tax law. In reaching this conclusion, the court
collectively considered and relied on the following elements:
(i) the similarity of the relocatable classrooms to a fixed
building or structure; (ii) the construction type nature of the
project which was bid, administered, and bonded in the same
manner as a fixed building or project; (iii) the similarity of
the relocatable classrooms to realty inasmuch as they were set
on footings and anchored to the ground so as to operate in much
the same manner as a fixed structure would; and (iv) the fact
the work was authorized by statute for public purposes.
Therefore, as the court found the contract to be a public works
contract by the presence of the above elements, it held that
materials purchased by the builders and used in performance of
the contract with the Florida Department of Education for
construction and installation of the units were taxable to the
contractor.

The Department's Rule 12A-1.094, F.A.C., above, conforms to the
case law established by Housing by Vogue, supra. Recall that
Rule 12A-1.094(1)(b), F.A.C., in defining the term public works
states that: "The term 'public works' is not restricted to the
repair, alteration, improvement, or construction of real
property and fixed works.... [e.s.]" Further, recall that Rule
12A-1.094(2), F.A.C., above, mandates that the contractor is the
ultimate consumer and is subject to tax on the purchase and/or
manufacture of materials for incorporation into public works.

CONCLUSIONS OF LAW

The subject contract manifests all the elements which lead the
Florida Supreme Court in Housing by Vogue, supra, to rule that
the contract covering the relocatable classrooms was a public
works contract. First, the construction of bus stop shelters is
authorized by state law for public purposes. Second, the work
under the contract is construction like in nature inasmuch as it
was bid, let, administered, and bonded in the same manner as a
standard building project. Based on the terms and conditions

set forth in the sample contract, the Contractor must satisfy
bonding and insurance requirements substantially equivalent to
those of a standard construction contract with a governmental
body. The Contractor and not the state bears the burden of risk
of loss, damage, theft, etc., of the bus stop shelters and other
materials up until the point that delivery, installation and
start up or turnover procedures are completed. Lastly, like the
portable classrooms in Housing by Vogue, the bus stop shelters
are undeniably similar to realty inasmuch as they are anchored
and affixed to a poured concrete foundation by means of bolts so
as to serve the same purpose as would a similar fixed structure
installed in a more permanent manner. Under the contract, the
contractor is not just manufacturing and furnishing materials
like a materialman, but additionally carries out the
installation of the bus stop shelters by fulfilling its
contractual obligation to pour a foundation (unless one already
exists), to set such components of the shelters in place on the
foundation support structure according to plans, to true and
plumb the components of the shelters as necessary, and anchor
the shelters to the foundation by means of bolting. Therefore,
the notion that the manufacturer should somehow just be
considered a materialman making retail sales of prefabricated
bus stop shelters to the Authority is not supported by the
evidentiary matter.

Therefore, as the Florida Supreme-Court did in Housing by Vogue,
we are compelled to conclude that the subject contract does fall
squarely into the classification of a "public works" contract as
contemplated by the above statutory, administrative, and case
law. Accordingly, pursuant to the provisions of Rule 12A1.094(2) and (5), F.A.C., we are compelled to conclude that the
Contractor under the subject Contract is the ultimate consumer
of and is subject to use tax on the bus stop shelters and other
materials it manufactures or fabricates to perform the Contract
based on the full manufactured cost of such items (See Rule 12A1.051(5), F.A.C. (enclosed), for guidance on fabricated cost
elements). If the Contractor is not itself manufacturing or
fabricating the bus stop shelters, the Contractor should be
paying sales tax to its supplier(s) when purchasing the shelters
and other materials and supplies necessary to perform the
Contract with the Authority. Since the Contractor is the

ultimate consumer of and owes sales or use tax on the noted
items in performance of a public works contract, the charges by
the Contractor to the Authority pursuant to the Contract are not
subject to sales or use tax.

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. 14765
Enclosures