Which charges by a Florida tour-services vendor were taxable for packages, admissions, hotel rooms, goods, and third-party activities?

Subject

Taxability of Charges/Tours Packages, Admissions, Hotel Accommodations and Tangible Personal Property

Plain-English summary

The tax result depended on what the vendor sold and whether a package separately itemized its components. Qualifying tour packages combining admissions with transportation, meals, or accommodations were not taxed when the voucher showed one unitemized price. Transportation between airports, hotels, and attractions was also not taxed, and the orientation-session handling fee was an exempt service charge.

Standalone attraction admissions and hotel rooms were taxable on the full amount charged to the customer, with the purchase-stage tax handled through a credit or resale-certificate method described in the ruling. Taxable goods such as the tea kits and electrical adaptors were taxable. Debit phone cards were not taxed when sold; the entity tracking card use owed the telecommunications taxes on charges for calls originating in Florida.

Genuine commissions paid for third-party sales or rentals—including suntan products, video cameras, and the refrigerator arrangement documented in the file—were not taxable to the tour vendor. But the balloon contract and voucher system showed that the vendor itself sold the hot-air-balloon admissions, so tax applied to the full advertised price.

What this means for you

Labels such as "service charge" or "commission" did not control. The Department examined the voucher, who contracted with the customer, who collected payment, whether components were itemized, and whether the vendor was actually reselling an admission or room.

Common questions

Were single-price day and night tour packages taxable? No, where the voucher did not separately itemize admissions, transportation, meals, or rooms.

Were individual attraction tickets taxable? Yes. The vendor had to collect tax on its full resale price and could credit tax previously paid.

Were hotel-only vouchers taxable? Yes, on the full accommodation charge.

Were third-party referral commissions taxable? No, where the third party actually sold or rented the taxable item.

Were hot-air-balloon rides merely third-party referrals? No. The reviewed agreement showed the vendor pre-booked and sold the rides through its voucher system.

Citations and references

• Fla. Stat. §§ 212.03(1)-(2), 212.04(1)(b)-(d), 212.05(1)(a)1.a. and (e)1.a., 212.08(7)(v)1., and 213.22
• Fla. Stat. ch. 203
• Fla. Admin. Code rr. 12A-1.005 and 12A-15.003

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94A-044

Original ruling text

Title:

Taxability of Charges/Tours Packages, Admissions,
Hotel Accommodations and Tangible Personal Property

Jul 15, 1994

Re: TAA 94A-044
Sales and Use Tax; Taxability of charges made to customers
purchasing tour packages, admissions, hotel accommodations,
and tangible personal property
Sections 212.04(1)(b)(c)(d), 212.08(7)(v)1., 212.03(1)(2),
212.05(1)(a)1.a., (e)1.a.
Chapter 203, F.S.
Rules 12A-1.005, 12A-15.003, F.A.C.

Dear :

This is in response to your original request for a
Technical Assistance Advisement (TAA) dated November 10, 1993,
and additional correspondence dated March 29, 1994, April 1,
1994, and May 11, 1994. Your client, XXX (hereinafter
"Vendor"), wishes to know whether sales tax is due on its
charges to customers for additional tour packages, hotel
accommodations, and admission tickets. Your letter dated
November 10, 1993, provided in pertinent part:

"Vendor' is a Florida corporation authorized to do and doing business in the State of Florida.Vendor' provides local
services to customers of tour operators located in the XXX....
These customers buy tour packages in the XXX from the tour
operators, and `Vendor' offers additional services to the
customers in the State of Florida in the form of:

"1. Arranging individual tickets to various attractions in
XXX;
"2. Arranging transportation services between lodging
facilities and attractions;
"3. Arranging additional vacation packages (including
transportation, hotel rooms and attraction tickets); and
"4. Arranging individual hotel rooms....

"A. Individual Attraction Tickets

"In most cases, Vendor' uses a voucher (ExhibitA') to
authorize individual admissions by customers at various
attractions. Vendor' acquires these admission rights under contract with the attraction operators, who chargeVendor' a
discounted rate from the posted admission price and charge
Vendor' sales tax (i.e., admissions tax) on the discounted price. Attached hereto as Composite ExhibitB' are copies of a
representative contract between Vendor' and an attraction operator, and an invoice from the attraction operator toVendor' showing the payment of admissions tax by Vendor'.Vendor' then charges the customer the amount paid to the
attraction operator, plus a service charge to cover `Vendor's'
services in arranging the transaction.

"Occasionally, `Vendor' will purchase actual admission
tickets from an attraction operator, which will be conveyed to
the customer in the manner set forth above.

"B. Transportation Services

"Vendor' may arrange for transportation services to be provided to customers by third-party vendors for transport between their hotels and attractions.Vendor' earns a
commission for arranging these services. `Vendor' may directly
provide transportation services to customers between hotels and
attractions, which are sold as a package (using the Exhibit A
voucher) with attraction tickets and a service charge, all for a
single price.

"C. Vacation Packages

"Vendor' may arrange for additional vacation packages sold to customers. These packages would include hotel rooms, attraction tickets and transportation services.Vendor' pays
tax to the vendor on acquiring these items, and billing to the
customer is in a single price using the Exhibit A voucher.
`Vendor' will include in that price a service charge to the
customer.

"D. Hotel Rooms

"Vendor' uses a voucher system for attraction tickets (sic), similar to the method described above for attraction tickets, in arranging for individual hotel rooms for the customers.Vendor' uses the same voucher (Exhibit A) in
authorizing occupancy by the customer, and charges the customer
an amount based on the price (including tax) charged to Vendor' by the hotel operator plus a service charge forVendor's'
services in arranging the transaction.

"In addition to providing these services, `Vendor' receives
from the tour operators a

handling fee' based on a per

customer charge, as compensation for presenting an orientation
session and for making the services described above available to
customers. Vendor' also arranges local transportation for these customers to and from airports located in Florida, the charges for which are billed by the vendors toVendor' and by `Vendor'
to the tour operators, and are sold by the tour operators as
part of their vacation packages.

"The orientation sessions are conducted by Vendor' on premises rented byVendor' at convenient locations, such as a
hotel or dinner theater. `Vendor' will pay to the
owner/operator of the location any applicable tax on the rental.

"At the orientation session offered by Vendor' to customers,Vendor' also offers for sale tea kits', which include an electric kettle, cups, saucers, tea bags and biscuits. The kettle, cups and saucers represent over 25 percent of the value of the tea kit, andVendor' charges a
single price for the entire package. Vendor' does not pay sales tax on the tea kit when it is purchased. In addition, at the orientation sessions,Vendor' offers for sale electrical
adaptors for use of non-U.S. electrical appliances.

"At the orientation sessions, `Vendor' promotes the
availability of various amenities to customers, including
telephone cards, refrigerators, suntan products and video
cameras. These transactions are consummated in the following

manner:

"1. The telephone cards are credit cards which allow the
customer to pre-purchase credit for use in making local or
long distance telephone calls. Applicable tax on these
telecommunication services would be charged by the
telecommunications company when a call is made. Vendor' purchases the cards from the telecommunications company and sells them to customers for more than it paid for the cards. "2.Vendor' will arrange for customers to rent a small
refrigerator for their hotel room from a third-party
vendor. Vendor' collects the rental from the customer and remits the money to the vendor, less a 10 percent commission. The vendor delivers, sets up and removes the unit. "3. A representative of the suntan product vendor sells the products directly to customers at the orientation session and is responsible for collecting and remitting applicable sales tax. "4. Video camera rentals are arranged between the vendor and customer directly at the vendor's premises and the vendor is responsible for collecting and remitting applicable sales tax.Vendor' receives a commission from
the vendor on each rental.

"Vendor' also offers to arrange for hot-air balloon rides, which are sold by the vendor to the customer.Vendor' earns a
commission for arranging this transaction, and the vendor is
responsible for any sales tax due on the transaction...."

Your request seeks a response to the following issues:

"1. Whether the vacation packages arranged by Vendor' for customers are subject to sales tax; "2. Whether transportation services arranged byVendor'
for customers are subject to sales tax;
"3. Whether the handling fee' earned byVendor' is
subject to sales tax;
"4. Whether the service charge earned by `Vendor' for
arranging individual attraction tickets for customers is subject

to sales tax;
"5. Whether the service charge earned by Vendor' for arranging individual hotel rooms for customers is subject to sales tax; "6. Whether the sale byVendor' of tea kits, adaptors, and
phone cards is subject to sales tax;
"7. Whether the commissions earned by Vendor' on the sale by third-party vendors of suntan products, or the rental of refrigerators and video cameras, are subject to sales tax; and "8. Whether the commissions earned byVendor' in arranging
for the sale of hot air balloon rides by third-party vendors are
subject to sales tax...."

Your letter dated March 29, 1994, presented copies of the
following additional documentation: an agreement entered into by
Vendor and XXX on July 27, 1993, which evidences that the hotel
operator will charge Vendor sales tax on the rooms rented by it
at a wholesale rate; a statement dated February 11, 1994, in
which the hotel operator bills Vendor for hotel charges,
inclusive of tax; a completed voucher evidencing a customer's
purchase of a "2 Night Bahamas Getaway"; an agreement entered on
March 18, 1994, between Calling Card and Owners Abroad Group; a
copy of Vendor's internal memorandum regarding its arrangement
with the refrigerator rental company; and an agreement signed by
Vendor on January 13, 1994, with XXX.

Additionally, your letter dated April 1, 1994, contained a
copy of a document which transferred the balance due on one of
Vendor's customer's for a two night stay at XXX, inclusive of
tax, to a receivables account. This amount ($55.50) was then
billed to Vendor by XXX on a statement dated February 11, 1994.

DETERMINATION

As provided in your original letter dated November 10,
1993, the sample voucher identified as Exhibit A is used by your
client to bill its customers for attraction tickets, hotel
accommodations, and sales of vacation packages. Space is
identified on the voucher where your client is to insert the
number of adults and children entitled to use the voucher.
Additionally, spaces are identified on the voucher for your

client's insertion of the adult price and child price on its
sales of attraction tickets, hotel accommodations, and vacation
packages. There is a column which provides for the insertion of
the total amount due for the adults in the party as well as the
total amount due for any children in the party.

Question #1:

As correctly cited in your letter, section 212.04(1)(d),
F.S., provides that no additional tax is due on an admission if
the admission is incorporated as part of a package sold by a
travel agent; if the package includes admissions and transient
rentals, transportation, or meals; and if there is no separate
itemization of the admission, transient rental, transportation,
or meal in the sales price of the package.

Exhibit C (which accompanied your letter dated November 10,
1993) is a copy of Vendor's pamphlet entitled "The Best of
Florida". This document has been submitted in support of your
argument that Vendor does not separately itemize charges for
meals (when provided), hotel accommodations, transportation and
admission to various attractions (identified as "Day Time Trips"
on Exhibit C) when it sells vacation packages. For example, for
a single charge, Vendor offers a tour of XXX, a buffet lunch,
and a gospel cruise.

As evidenced by Exhibit B in your correspondence, dated
November 10, 1993 (Travel Industry Sales Agreement), Vendor
correctly pays tax when it purchases admission tickets at a
discounted rate from XXX.

Since the blank voucher submitted for review does not allow
for the separate itemization of the sales price charged for the
admission, transportation, and/or meal, no sales tax is due on
Vendor's sales of "Day Time Trips" or "Night Time Trips" (i.e.,
vacation packages) as identified in its pamphlet entitled "The
Best of Florida".

In regards to Vendor's activities listed under "Something
Completely Different" in the referenced pamphlet entitled "The
Best of Florida", please be advised that charges for ski lessons

are exempt from tax in accordance with section 212.08(7)(v)1.,
F.S., which governs personal, insurance, or professional service
transactions that involve sales as inconsequential elements.
Additionally, sales tax is not due on Vendor's sales of cruises
to the Bahamas. However, in accordance with Rule 12A1.005(4)(p), F.A.C., tax is due on Vendor's sales of admissions
for rides in helicopters.

Question #2:

As cited in your letter, Rule 12A-1.005(4)(p), F.A.C.,
provides that charges made for chartered or regularly scheduled
aircraft, bus, taxi, trolley, or train travel are not subject to
tax. Charges made by Vendor to transport its customers to and
from airports or to and from various attractions are not subject
to sales tax, whether Vendor uses vehicles it owns and operates
or Vendor charters the appropriate vehicles from a third party.

Question #3:

The compensation received by Vendor for providing
orientation sessions is not subject to tax. The transaction is
exempt pursuant to s. 212.08(7)(v)1., F.S., which exempts from
tax personal, professional, and insurance transactions that
involve sales of tangible personal property as inconsequential
elements for which no separate charges are made. Vendor owes
use tax on any tangible personal property used by it in
presenting the seminar.

Question #4:

As presented in your correspondence dated November 10,
1993, Exhibit B (Travel Industry Sales Agreement), Vendor is
charged a reduced admission price by XXX. Vendor pays sales tax
to the attraction on the reduced admission price. Exhibit C
(which is a pamphlet given by Vendor to its customers) has
sections identified as "Go As You Please" and "Florida Fun By
Night". These sections list the gate admission charged to enter
various attractions located in Florida. Next to the gate
charges are slightly reduced prices which are charged by Vendor
for each adult or child admission ticket sold to its

customer(s). The blank voucher (Exhibit A) submitted for review
contains areas where Vendor is to insert the adult price and
child price charged to enter the attraction. For those
transactions which solely involve the sale of admission tickets
("Go As You Please" section and "Florida Fun By Night" section
on Exhibit C of November 10, 1993, correspondence) the prices
inserted on the voucher are itemized since no other services or
products were purchased.

Section 212.04(1)(c), F.S., which became effective July 1,
1991, provides in pertinent part:

"The provisions of this part that authorize a tax exempt
sale for resale do not apply to sales of admissions. However,
if a purchaser of an admission subsequently resells the
admission for more than the amount paid, the purchaser shall
collect tax on the full sales price and may take credit for the
amount of tax previously paid...."

Since the admission charges made to Vendor's customers are
greater than the admission charges paid by Vendor to the
applicable attractions, Vendor must be guided by the above
statutory provision. Vendor is required to pay sales tax when
it purchases admissions to the various Florida attractions.
Vendor is also required to collect sales tax on the total sales
price billed to its customers for the admission vouchers.
Vendor may then take a credit on Line 6 of its sales and use tax
return for the taxes previously paid on the admissions.

In addition to the sales tax, Rule 12A-15.003(2)(e),
F.A.C., requires Vendor to also charge discretionary sales
surtax on its
sales of attraction tickets or vouchers for attractions located
within a county imposing the surtax.

Question #5:

As presented in your letter, there are instances where the
only transaction entered into by Vendor and its customer is the
acquiring of hotel accommodations. Your request provides that
Vendor pays sales tax to the hotel operator on the amount it is

charged for the hotel accommodation. Vendor then charges an
increased rate to its customer. Your letter dated November 10,
1993, stated that Vendor presents its customer with the same
voucher (Exhibit A - November 10, 1993, correspondence)
discussed throughout this response.

However, correspondence dated May 11, 1994, submitted a
copy of a document entitled "Accommodation Receipt" for review.
As stated in your letter dated May 11, 1994, this document is
"... a voucher from `Vendor' to a customer for the purchase of a
hotel room only...." The Accommodation Receipt, which is
retained by the guest, identifies the hotel, the customer, the
arrival date, the number of nights the customer will be staying
at the hotel, the number of rooms paid for, and the price paid.

Vendor is required to charge sales tax on the total taxable
sales price billed to its customer(s) since the amount shown on
the voucher exclusively represents the charge made for the hotel
accommodations. Section 212.03(1), F.S., provides in pertinent
part:

"... For the exercise of such privilege, a tax is hereby
levied in an amount equal to 6 percent of and on the total
rental charged for such living quarters or sleeping or
housekeeping accommodations by the person charging or
collecting the rental...."

Subsection (2) further provides:

"(2) The tax provided for herein shall be in addition to
the total amount of the rental, shall be charged by the
lessor or person receiving the rent in and by said rental
arrangement to the lessee or person paying the rental, and
shall be due and payable at the time of the receipt of such
rental payment by the lessor or person, as defined in this
chapter, who receives said rental or payment...."

Regarding the imposition of sales tax on the hotel
accommodations leased by Vendor for the purpose of re-rental,
Vendor has two options: 1) Vendor should pay the applicable
sales tax due on the initial lease of the hotel room(s) to the

hotel operator; collect sales tax from its customer(s) on the
total sales price paid for the accommodations (as evidenced by
the voucher); and then take a credit on its sales tax return for
the tax paid to the hotel operator; or 2) Vendor may extend a
properly executed resale certificate to the hotel operator in
lieu of paying tax on those rooms acquired for the purpose of
re-rental.

Question #6:

In accordance with s. 212.05(1)(a)1.a., F.S., Vendor is
required to charge sales tax at the rate of 6 percent of the
sales price when it sells taxable tangible personal property.
Should the sale occur within a county imposing the discretionary
sales surtax the surtax must also be collected by Vendor.

In reference to Vendor's sales of debit phone cards (i.e.,
customer prepays for telecommunication service) your letter
dated November 10, 1993, presents that Vendor purchases the
cards from a telecommunication company. Your letter further
states that the telecommunication company selling the debit
cards to Vendor will charge the applicable tax when a call is
made. Accompanying your correspondence dated March 29, 1994,
was a copy of a Wholesale Agreement entered into on March 18,
1994, by Calling Card and Owners Abroad Group. As disclosed
during our telephone conversation on May 11, 1994, Vendor
assured you that this is the same arrangement under which it is
operating with Calling Card.

The Wholesale Agreement submitted for review merely stipulates
that the purchaser (i.e., Vendor) is obligated to purchase 1,000
calling cards at $10.00 per card, to be discounted by 35%. A
balance of 6,500 cards are to be purchased before March 18,
1995. As stated during our telephone conversation on Tuesday,
June 7, 1994, Vendor purchases the debit cards for $6.50 and
then sells the cards to its customers for $10.00 which entitles
the customer(s) to $10.00 worth of telecommunication service.
Customers may purchase more than one card from Vendor.

Regarding the use of debit cards, a computer usually tracks
the length of each call and when a call is completed an amount

is deducted from the value of the card. It is the Department's
position that the entity responsible for tracking each card and
its usage (i.e., makes the deductions from the card's balance
for each call made) is responsible for collecting and remitting
the applicable gross receipts and sales taxes due.

Chapter 203, F.S., imposes a gross receipts tax at the rate
of 2.5 percent on telecommunication services such as local
telephone service; toll telephone service, including intrastate,
interstate and international telephone service; pay telephone
service; pagers and beepers; voice mail; and so forth. Section
212.05(1)(e)1.a., F.S., imposes sales tax at the rate of 7
percent on all charges for telecommunication services defined or
described in ss. 203.012 and 203.012(2)(a), F.S.

There is no sales tax or gross receipts tax due when the
debit cards are sold by Vendor to its customers. However,
should Vendor be the entity responsible for tracking the usage
of the cards it would be responsible for remitting the sales tax
and gross receipts tax due to this department for the total
charge deducted from the value of the card for all calls that
originate in Florida. Vendor would then be required to extend a
properly executed resale certificate to the telecommunications
provider which would allow the provider to sell the
telecommunication service to Vendor tax exempt since the service
is purchased for resale.

Purchases of the debit cards by the telecommunication
company are subject to tax.

Question #7:

Commissions earned by Vendor when taxable goods are sold or
leased by third parties to its customers are not subject to
sales tax. Using the examples in your request, no sales tax is
due on the commission paid to Vendor when its customers rent
video cameras from a particular camera shop; nor is sales tax
due on the commission paid to Vendor when its customers purchase
tanning products from a merchant attending the orientation
seminar.

However, there appears to be some discrepancy in your
letter dated November 10, 1993, regarding the treatment of
rental refrigerators. The fourth page of your request provides
that Vendor collects the rental fee from the customer and remits
ninety percent of the fee to a third party vendor. The tenth
page of your request provides that a third party vendor is
responsible for collecting and remitting the applicable sales
tax.

Vendor's pamphlet entitled, "The Best of Florida" (Exhibit
C) provides in part:

"Fridge Hire
"Save money by hiring a fridge for your hotel room. Save
by buying drinks in bulk from the supermarket. Your
representative will arrange for it to be delivered to your
room."

Exhibit D in your correspondence dated March 29, 1994, is
an internal memorandum which outlines the arrangement between
Vendor and Mary (refrigerator rental company). As stated in
your letter of the same date, there is no formal written
agreement between Vendor and the refrigerator rental company.
The memorandum provides in pertinent part:

"Reps do not physically sell fridges, they will only need
to promote at W.G.T. (Ideal opportunity - during hotel
info/rooms) and by giving interested guests a flyer. Guests who
contact Mary will be hired fridges direct and all responsibility
for cash and collection will be hers (she will provide flyers
and display card). She will inform every two weeks as to
commission and relevant reps who recommended etc...."

As provided in your letter and the referenced memorandum
dated March 29, 1994, Vendor is not the entity leasing the
refrigerators. Therefore, sales tax is not due on the commission
paid by "Mary" to Vendor when Vendor's customers rent
refrigerators from "Mary".

Question #8:

As presented in Rule 12A-1.005(4)(q), F.A.C., charges made
for hot air balloon rides are subject to sales tax. Your letter
dated November 10, 1993, states that the balloon rides are sold
by an independent vendor. However, Vendor's pamphlet entitled
The Best of Florida (identified as "Exhibit C" in correspondence
dated November 10, 1993) provides the following in reference to
hot air balloon rides:

"Something Completely Different

Adult

Child

110.00

3-

Age
*

*

*

"Hot Air Balloon

$150

11
"Be a part of the actual balloon crew and get a birds eye
view of all the attractions...."

The pamphlet then instructs customers to see their
representatives for details.

Additionally, your correspondence dated March 29, 1994,
submitted a copy of an agreement entered into by XXX and Vendor
in January 1994 (Exhibit E). The referenced agreement provides
in part:

"... Upon signing this agreement [Vendor] agrees to
continue to use XXX as their balloon company for their clients.
[Vendor] will pre-book all flights using the voucher system and
call in all booking with the following information: name of
client, voucher number, room number if available, number of
people in the party and the date of the flight.

"XXX will collect the vouchers from the clients after the
flight and bill [Vendor], minus 20% commission as prior agreed
upon.

"1994 Balloon Flight Rates: (rates include sales tax)

One Adult
Child (under 12)

$150.00 per person
$110.00 per person..."

Based upon the above information, Vendor is the entity

selling the hot air balloon admissions to its customers. Tax is
due on the total amount charged by Vendor to its customer(s).
Please be advised that in accordance with section 212.04(1)(b),
F.S., the selling dealer must display at the box office or other
place where the admission charge is made a notice disclosing the
price of the admission, and the tax shall be computed and
collected on the basis of the actual price of the admission
charged by the dealer. Since Vendor's pamphlet states that the
price of the balloon ride is $150.00 per adult, this is the
basis upon which sales tax is to be computed. As you know, this
differs from Vendor's agreement with XXX, which states that the
$150.00 per adult charge is inclusive of tax.

In regards to your closing statement that your client
wishes to self-disclose any sales tax liability which it may
have, please be advised that the Department is amenable to
abating the penalty associated with any sales tax due. Mr. Jim
Johnson, Assistant Director of the Division of Taxpayer
Assistance, may be contacted at 922-4744 for further
information.

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
Tax Law Specialist
Statutory Compliance Section

BT/
Control #14731