When did deposits for executive suites, club seats, and multiyear season tickets become taxable admissions or license payments?

Subject

Admissions Tax-Deposits on Sky Box Seats

Plain-English summary

Refundable deposits for executive suites and club seats were not taxable admissions or real-property license payments when collected. The annual license fee was billed separately, and the deposits secured performance. They became taxable only if a breach or default caused the franchise to apply them to amounts due, provided the deposits remained liabilities on the books until that event and were then recorded as earned revenue.

The multiyear season-ticket deposit was also nontaxable while held as security and separately accounted for. It became taxable if the ticket holder did not renew after the final contract year and the deposit was applied to that year's ticket price, or if an early cancellation caused some or all of it to be forfeited. If the holder renewed and separately paid for the tickets, the deposit retained its nontaxable security-deposit status.

What this means for you

Calling an amount a deposit was not enough. The agreements had to make it genuinely refundable, separate it from current admission or license payments, deny present access based on the deposit alone, and keep it recorded as a liability until application or forfeiture.

Common questions

Were suite and club-seat deposits taxable when received? No, while refundable, separately charged, and carried as liabilities.

When did those deposits become taxable? When default or breach allowed the franchise to apply them to amounts due and recognize them as revenue.

What about the season-ticket deposit? It became taxable when applied to final-year tickets after nonrenewal or forfeited after early cancellation.

Did renewal itself trigger tax on the deposit? No. If the holder renewed and paid ticket charges separately, the deposit remained security.

Citations and references

• Fla. Stat. §§ 212.04(1) and (3), 212.06(1)(a), 212.15(1)-(2), 212.02(16)(a), 212.031(1)-(3), and 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94A-063

Original ruling text

Title:

Admissions Tax-Deposits on Sky Box Seats

Dec 05, 1994

Re: Technical Assistance Advisement 94(A)-063
Sales Tax - Applicability of the Admissions Tax to a
Deposit for Reservation of a Particular Seat for the Home
Games of a Sports Team
XXX (herein the "Taxpayer")
Address: XXX
Sales Tax Number: XXX
XXX (herein the "City")
XXX (herein the "League")
XXX (herein the "Bank")

Dear:

This response is in reply to your February 28, 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 and supporting documents impart the following
significant information regarding the issues under advisement
herein:

"The [Taxpayer] was organized for the purpose of purchasing
one of the two available expansion [sport] teams of the
[League]. If awarded the franchise, the [Taxpayer] would
play its regular season home games at the [Facility] in
[the City].

"The [City] and four other U.S. cities were in competition

for these two expansion teams. In order to show the [the
League] that [the City] would be a viable choice and that
there was ample fan support for the team; the [Taxpayer]
began accepting deposits for the right to purchase stadium
club seats and luxury executive suites if the [Taxpayer]
were awarded an expansion team. All of these deposits were
collected from prospective purchasers and held in escrow
for each purchaser by [the Bank].

"On [certain date], the [Taxpayer] was awarded one of the
expansion... teams by the [League]. The team will begin
playing [League] games in [certain year], with all home
games being played at the [Facility]. The [Taxpayer] will
sell three types of seating: luxury executive suites,
stadium club seats and season tickets.

"The relevant terms and conditions for purchasing Luxury
Executive Suites for purposes of this request are as
follows:

"The Executive Suites are licensed pursuant to an
agreement (Exhibit A) between the suite holder and the
[Taxpayer] for a term of seven or ten seasons
commencing with the [certain year] season. The
purchaser pays a License Fee for access to the
[Facility] all [Taxpayer] events, as well as other
events at the [Facility]. The purchaser was required
to pay a portion of the security deposit in 1993 to
show support to the [League] for the [City] to be
awarded one of the expansion teams. The [Taxpayer
was] not allowed access to these funds until January
1, 1994. All funds were deposited with [the Bank]
with the interest earned from these funds credited to
the individual suite holders through December 31,
1993. On January 1st of each year during the term of
the agreement, the [Taxpayer] will bill the suite
holder, for the succeeding season's license fee and
related sales tax; plus any additional security
deposit as a result of an increase in the license fee.

"Pursuant to the license agreement, the suite holder

is required to maintain a security deposit equal to
one season's license fee. The security deposit will
be refunded to the suite holder upon the occurrence of
one of the following events:

"1. The suite holder defaults under the agreement, at
which time the suite holder will be refunded the
security deposit less any amount deemed by the
[Taxpayer] to be a loss or damage suffered as a result
of the default. A suite holder will not be allowed
access to the stadium in the event of a default; or
"2. The suite holder does not renew the License
Agreement at the end of its term, at which time the
security deposit will be refunded to the suite holder.

"The relevant terms and conditions for purchasing Stadium
Club Seats for purposes of this request are as follows:

"The Stadium Club Seats will be purchased pursuant to
the terms of the agreement (Exhibit B) for a term of
five or seven seasons. The Club Seat Holder will pay
a License Fee which will provide for access to the
[Facility] for all home and pre-season... games of the
[the Taxpayer]. The Club Seat Holder was required to
pay a portion of the security deposit to show support
to the [League] for the [City] to be awarded one of
the expansion teams. The [Taxpayer was] not allowed
access to these funds until January 1, 1994. All
funds were deposited with [the Bank], with the
interest earned from these funds credited to the
individual club seat holder through December 31, 1993.

"The [Taxpayer] require[s] the Club Seat Holder to
maintain the equivalent of next season's License Fee
as a security deposit. On January 1st of each year
during the term of the agreement, the [Taxpayer] will
bill the Club Seat Holder the succeeding season's
License Fee and related sales tax; plus any additional
security deposit as a result of an increase in the
License Fee.

"The security deposit will be refunded to the Club
Seat Holder upon the occurrence of one of the
following events;
"1. The club seat holder defaults under the agreement,
at which time the club seat holder will be refunded
the security deposit less any costs incurred by the
[Taxpayer] to enforce the agreement and relicense the
club seats. The club seat holder cannot have use or
possession of the seat while in default of the
agreement; or
"2. The club seat holder does not renew the license
agreement at the end of its term, at which time the
security deposit will be refunded to the club seat
holder.

"On December 1, 1993, the [Taxpayer] began accepting
deposits for the right to purchase season tickets for the
home games of the [Taxpayer] for the [League] seasons
commencing in 1995, 1996, and 1997.

"The relevant terms and conditions for purchasing season
tickets for purposes of this request are as follows:

"All purchases of season tickets are for a three year
period commencing with the season beginning in [Year
One] and ending with the season beginning in [Year
Three]. The purchaser may renew, at a future date, the
season tickets for the [Year Four] and subsequent
seasons. The purchaser is required to pay a deposit
equal to one year's season ticket amount. Upon first
requesting to purchase the season tickets via the
order form, a $100 deposit was required. This deposit
was refunded if the season tickets ordered were not
available. If the season tickets were available, the
remainder of the deposit would be payable by the
purchaser on March 1, 1994[,] if the purchaser were on
an annual payment plan; or payable monthly, beginning
March 1, 1994, if the purchaser were on a monthly
payment plan (Exhibit C).

"The deposit will be held by the [the Taxpayer] until

one of the following events occur: the purchaser
decides not to renew his season tickets beyond [Year
Three] or the purchaser wishes to cancel his season
tickets prior to completion of the three year period.
If the purchaser decides not to renew his tickets for
[Year Four] and beyond, the deposit will be applied to
the purchase price of [Year Three] tickets. At that
time, the [Taxpayer] will invoice the purchaser for
the sales tax and other charges applicable to the
[Year Three] season. If the purchaser wishes to
cancel his tickets prior to completion of the three
year term, the purchaser will be refunded the deposit
less a reselling charge if the [Taxpayer] can resell
the tickets. If the [Taxpayer is] unable to resell the
tickets, the purchaser will forfeit his deposit. At
no time can the purchaser use the security deposit to
gain access to the home games of the [Taxpayer]."

The following pertinent recitals are quoted from the terms and
conditions embodied in "EXECUTIVE SUITE LICENSE AGREEMENT" (the
"ESL Agreement") submitted as exhibit A to your petition:

"3. License Fee. The use and possession of the Suite shall
be contingent upon payment to Licensor of the fee (the
`License Fee') in the amounts and at the times set forth in
Exhibit One plus any sales, privilege, rental, use,
property or other governmental taxes or surcharges due with
respect to the License Fee or on account of the use and
possession of the Suite.
"11. Security Deposit. As security for the prompt and full
payment of the License Fee and the full and faithful
performance by Licensee of each and every other obligation
of Licensee under this Agreement, Licensee shall maintain a
security deposit in an amount equal to the next season's
License Fee. Simultaneously with the execution of this
Agreement, Licensee has deposited into the escrow account
discussed below as the initial Security Deposit fifty
percent (50%) of the sum set forth on Exhibit One as the
License Fee. Within six (6) months of the award of a
franchise to [the City], Licensee shall deposit as and when
directed by Licensor an additional fifty percent (50%) of

the sum set forth on Exhibit One as the License Fee. On or
about January 1st of each year during the term of this
Agreement, Licensor shall furnish to Licensee written
notice of the License Fee for the succeeding... season and
the additional amount, if any, which Licensee must provide
to Licensor to maintain Licensee's Security Deposit in an
amount equal to such succeeding season's License Fee. Such
additional amount shall be deposited with Licensor no later
than January 31st of each year. Until the award of the
Franchise, the security deposit shall be held in escrow and
may not be commingled with other funds of Licensor. After
the award of the Franchise, and the release of the escrow
account by the [League], the security deposit may be
commingled with other of Licensor's funds and may be used
by Licensor for any business purpose. If, at any time
during the term of this Agreement, any portion of the
License Fee or any other amount payable by Licensee to
Licensor pursuant to this Agreement is not promptly paid
when due, then Licensor may, without waiving any other
remedy which it may have under this Agreement, appropriate
and apply all or any portion of the security deposit to the
payment of such amount. Licensee shall, in such event and
upon written demand of Licensor forthwith remit to Licensor
an amount sufficient to restore the security deposit to the
then applicable security deposit, and Licensee's failure to
do so within ten (10) business days after receipt of such
demand shall constitute a breach of this Agreement. If
Licensee's right to the use and possession of the Suite is
terminated pursuant to Paragraph 14 below, then Licensor
may, at its option, appropriate and apply the security
deposit, or so much thereof as may be necessary, to
compensate Licensor for any loss or damage sustained or
suffered by Licensor due to Licensee's breach. Otherwise,
the security deposit shall be returned to Licensee at the
expiration of the term of this Agreement or any renewal
term, as applicable. Except as described in Paragraph 12
below, no interest shall be paid to Licensee on the
security deposit.
"12. Escrow Account and Refund of Security Deposit. Prior
to the award of a franchise to [the City] the security
deposit will be held in an escrow account at [the Bank].

If a franchise is not awarded to [the City], the security
deposit will be returned to Licensee within ten (10) days
of the [League's] expansion decision together with interest
earned thereon from the day of deposit to the day of refund
at not less than eighty percent (80%) of the applicable
interest rate for ninety (90) day U.S. Treasury Bills. If
a franchise is awarded to [the City], the security deposit
will be paid to the Licensor upon such date as may be
determined by the [League]. Any interest earned (at the
rate specified above) from the date of deposit until such
date will be applied to Licensee's first season License
Fee. If the [League] has not awarded franchises by
December 31, 1993, the security deposit will be promptly
returned along with interest as specified above. Upon
return of the security deposit together with the foregoing
interest, this Agreement shall be terminated and the
parties shall have no further liability or obligation to
each other. An expansion decision must be evidenced by a
written authorization of the [League].
"14. Default. In the event Licensee shall fail to pay when
due any amounts (including without limitation the License
Fee or any security deposit) to be paid by Licensee
pursuant to this Agreement or if Licensee shall otherwise
default in the performance or observation of its duties and
obligations under this Agreement, Licensor may, at its
option, terminate the rights of Licensee hereunder by
giving Licensee ten (10) days prior written notice. In the
event that Licensee shall not have cured the default or
breach specified in said notice within said ten (10) day
period, then Licensor may, without further demand or
notice, terminate the right of Licensee to the use and
possession of the suite and all other rights and privileges
of Licensee under this Agreement and declare the entire
unpaid balance of the License Fee immediately due and
payable, whereupon Licensor shall have no further
obligation of any kind to Licensee and may enter the Suite
and remove all items of property of Licensee for storage at
Licensee's expense. Licensor shall use reasonable efforts
to relicense the right to the use and possession of the
Suite to another party; provided that, if there are any
other Suites in the Stadium available to be licensed,

Licensor may give priority to licensing such other suites.
Licensee shall remain obligated to make all payments due or
becoming due under this Agreement, but if Licensor licenses
the right to the use and possession of the Suite to another
party, then all amounts received from such other party
applicable to any remaining period of this Agreement shall
be applied first to the expense of relicensing and then to
the reduction of any obligations of Licensee to Licensor
under this Agreement. If the amounts collected by Licensor
upon any such relicensing are not sufficient to pay the
full amount of all such obligations of Licensee, Licensee
shall promptly pay any such deficiency. The foregoing
remedies of Licensor shall not be to the exclusion of any
other right or remedy set forth herein or otherwise
available to Licensor in law or in equity. Licensee shall
be responsible for all attorney's fees and costs incurred
by Licensor in the enforcement of this Agreement whether or
not litigation is actually commenced and including any
appellate proceedings. Licensee hereby waives trial by
jury. No waiver by Licensor of any default or breach by
Licensee of its obligations hereunder shall be construed to
be a waiver or release of any other or subsequent default
or breach by Licensee hereunder, and no failure or delay by
Licensor in the exercise of any remedy provided for herein
shall be construed to constitute a forfeiture or waiver
thereof or of any other right or remedy available to
Licensor."

The following pertinent recitals are quoted from the terms and
conditions embodied in "Club Seats" license agreement (the "CSL
Agreement") submitted as exhibit B to your petition:

"3. License Fee. Subject to the terms and conditions
herein, the use and possession of the Seats and the club
facilities shall be contingent upon payment to [Taxpayer's
Affiliate] of the annual license fee (`License Fee') plus
any sales, privilege, rental, use, property or other
government taxes or surcharges due with respect to the
License Fee or on account of the use and possession of the
Seats. The License Fee for the use and possession of the
Seats by Ticketholder for the initial... season..., shall

be $1,500.00 per seat and shall be due and payable on or
before January 31, 1995. The License Fee shall be subject
to a percentage increase, in [Taxpayer's Affiliate's] sole
discretion, each year during the term hereof (including any
renewal period), which percentage increase shall not exceed
the greater of five percent (5.0%) or the increase in the
Consumer Price Index for the preceding year. Such License
Fee shall be due and payable on or before January 31st of
each year.
"8. Security Deposit. As security for the prompt and full
payment of the License Fee and the full and faithful
performance by Ticket holder of each and every obligation
of Ticketholder under this Agreement, Ticketholder shall
maintain a security deposit in an amount equal to the next
season's License Fee. Simultaneously with the execution of
this Agreement, Ticketholder has deposited into the escrow
account discussed below an initial security deposit of $750
for each Seat. Within six (6) months of the award of a
franchise to [the City], Ticketholder shall deposit as and
when directed by [Taxpayer's Affiliate] an additional
security deposit of $750 for each Seat to complete the
security deposit with respect to the first season's License
Fee. Until the award of the franchise, the initial
security deposit shall be held in escrow and may not be
commingled with other funds of [Taxpayer's Affiliate].
After the award of the franchise by the [League], the
initial security deposit and any other security deposits
may be commingled with other [Taxpayer's Affiliate] funds
and may be used by [Taxpayer's Affiliate] for any business
purpose. On or about January 1st of each year during the
term of this Agreement, [Taxpayer's Affiliate] shall
furnish to Ticketholder written notice of the License Fee
for the succeeding ... season and the additional amount, if
any, which ticketholder must provide to [Taxpayer's
Affiliate] to maintain ticket holder's security deposit in
an amount equal to such succeeding season's License Fee.
Such additional amount shall be deposited with [Taxpayer's
Affiliate] no later than January 31st of each year. If at
any time during the term of this Agreement, any portion of
the License Fee or any other amount payable by Ticketholder
to [Taxpayer's Affiliate] pursuant to this Agreement is not

promptly paid when due, then [Taxpayer's Affiliate] may,
without waiving any other remedy which it may have under
this Agreement, appropriate and apply all or any portion of
the security deposit to the payment of such amount.
Ticketholder shall in such event and upon written demand of
[Taxpayer's Affiliate] forthwith remit to [Taxpayer's
Affiliate] an amount sufficient to restore the security
deposit to the then applicable security deposit and
Ticketholder's failure to do so within ten (10) business
days after receipt of such demand shall constitute a breach
of this Agreement. If Ticketholder's right to the use and
possession of the seats is terminated pursuant to the
default provisions of this Agreement, then [Taxpayer's
Affiliate] may, at its option, appropriate and apply the
security deposit, or so much thereof as may be necessary,
to compensate [Taxpayer's Affiliate] for any loss or damage
sustained or suffered by [Taxpayer's Affiliate] due to
Ticketholder's breach. Otherwise, the security deposit
shall be returned to Ticketholder at the expiration of the
term of this Agreement, or any renewal term. Except as
described herein, no interest shall be paid to Ticketholder
on the security deposit.

"10. Default. In the event Ticketholder shall fail to pay
when due any amounts (including, without limitation, the
License Fee or any security deposit) required to be paid by
Ticketholder pursuant to this Agreement or if Ticketholder
shall otherwise default in the performance or observation
of its duties and obligations under this Agreement,
[Taxpayer's Affiliate] may, at its option, terminate the
rights of Ticketholder hereunder by giving Ticketholder ten
(10) days prior written notice. In the event that
Ticketholder shall not have cured the default or breach
specified in said notice within said ten (10) day period,
then [Taxpayer's Affiliate] may, without further demand or
notice, terminate the right of Ticketholder to the use and
possession of the Seats and all other rights and privileges
of Ticketholder under this Agreement and declare the entire
unpaid balance of the License Fee immediately due and
payable, whereupon [Taxpayer's Affiliate] shall have no
further obligation of any kind to Ticketholder.

[Taxpayer's Affiliate] shall use reasonable efforts to
relicense the right to the use and possession of the Seats
to another party; provided that, if there are any other
club seats in the Stadium available to be licensed,
[Taxpayer's Affiliate] may give priority to licensing such
other club seats. Ticketholder shall remain obligated to
make all payments due or becoming due under this Agreement,
but if [Taxpayer's Affiliate] licenses the right to the use
and possession of the Seats to another party, then all
amounts received from such other party applicable to any
remaining period of this Agreement shall be applied first
to the expense of relicensing and then to the reduction of
any obligations of Ticketholder to [Taxpayer's Affiliate]
under this Agreement. If the amounts collected by
[Taxpayer's Affiliate] upon any such relicensing are not
sufficient to pay the full amount of all such obligations
of Ticketholder, Ticketholder shall promptly pay any such
deficiency. The foregoing remedies of [Taxpayer's
Affiliate] shall not be to the exclusion of any other right
or remedy set forth herein or otherwise available to
[Taxpayer's Affiliate] in law or equity. Ticketholder
shall be responsible for all attorney's fees and costs
incurred by [Taxpayer's Affiliate] in the enforcement of
this Agreement whether or not litigation is actually
commenced and including any appellate proceedings.
Ticketholder hereby waives trial by jury. No waiver by
[Taxpayer's Affiliate] of any default or breach by
Ticketholder of its obligations hereunder shall be
construed to be a waiver or release of any other or
subsequent default or breach by Ticketholder hereunder, and
no failure or delay by [Taxpayer's Affiliate] in the
exercise of any remedy provided for herein shall be
construed to constitute a forfeiture or waiver thereof or
of any other right or remedy available to [Taxpayer's
Affiliate]."

The following pertinent recitals are quoted from the terms and
conditions embodied in season tickets "Payment Plan Agreement"
(the "STPP Agreement") submitted as exhibit C to your petition:

"MONTHLY PAYMENT PLAN (A or B)

"You begin monthly payments of $30.00 in March 1994. The
first $100.00 of your monthly payments will complete your
$300.00 deposit, and the balance of the payments will cover
30 games at $30.00, sale tax and $2.50 per game per seat
City surcharge for the three-year term. If you do not wish
to renew your seats for [Year Four] and beyond, you pay
only sales tax and City surcharge for the 1997 season, and
use your deposit for your [Year Three] tickets.

"A. Enclosed is a voided check. Please automatically
withdraw my payment to the [Taxpayer] from this
account on the first business day of every month
beginning on March 1, 1994.
Social Security number/Tax ID:
(for transfer confirmation purposes only)
"B. Enclosed is a check for $55.00 payable to the
[Taxpayer] which includes my March 1 payment and $25
to partially defray processing costs for physical
checks. Please send me a payment book with monthly
coupons and I will mail you a check for receipt by the
first of every month.

"ANNUAL PAYMENT PLAN
"You send in $100.00 for receipt by March 1, 1994 to
complete your $300.00 deposit. In March 1995, March 1996,
and March 1997 you pay upon invoice $300.00 plus sales tax
and $2.50 per game per seat City surcharge for the upcoming
season. If you do not wish to renew your seats for [Year
Four] and beyond, you pay only sales tax and City surcharge
for the [Year Three] season and use your deposit to pay for
your [Year Three] tickets.

"C. I will pay the enclosed invoice by March 1. Invoice me
annually in 1995 and 1996 and I will pay by March 1
each year.

"If you wish to renew for the [Year Four] season and beyond
you will be offered the right to retain your seats by
entering into a new contract on renewal terms offered at
that time for [Year Four] and beyond.

"I agree to abide by the terms of the payment plan
indicated above and the enclosed Terms and Conditions."

REQUESTED ADVISEMENT

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

"Based on the facts presented herein, the [Taxpayer]
respectfully requests a ruling as follows:

"No sale has occurred at the time the [Taxpayer]
receives any portion of the deposit since there is no
transfer of title or possession of the executive
suites, stadium club seats, or season tickets. The
purchaser has only the right to use the seating at the
Stadium upon payment of the Licensing Fees and ticket
amounts at a future date. Thus, no sales tax is due at
the time the deposit is collected since no sale has
occurred."

DISCUSSION OF LAW

Resolution of the issue under advisement turns on whether the
Taxpayer's charge of the security deposits pursuant to the ESL,
CSL, and STPP Agreements respectively constitutes payment of an
advance admission or a prepaid license fee for the right or
privilege to use real property at the point in time that such
amounts are initially charged or received. In deliberation of
this issue we consult the following pertinent statutory
provisions:

Section 212.04, F.S., Admissions tax; rate, procedure,
enforcement:
"(1)(a) It is hereby declared to be the legislative intent
that every person is exercising a taxable privilege who
sells or receives anything of value by way of admissions.
"(b) For the exercise of such privilege, a tax is levied at
the rate of 6 percent of sales price, or the actual value
received from such admissions, which 6 percent shall be
added to and collected with all such admissions from the

purchaser thereof, and such tax shall be paid for the
exercise of the privilege as defined in the preceding
paragraph....
"(3) Such taxes shall be paid and remitted at the same time
and in the same manner as provided for remitting taxes on
sales of tangible personal property, as hereinafter
provided.... (Emphasis Supplied)

Section 212.06(1)(a), F.S.: "The aforesaid tax at the rate
of 6 percent of the retail sales price as of the moment of
sale, 6 percent of the cost price as of the moment of
purchase, or 6 percent of the cost price as of the moment
of commingling with the general mass of property in this
state, as the case may be, shall be collectible from all
dealers as herein defined on the sale at retail, the use,
the consumption, the distribution, and the storage for use
or consumption in this state of tangible personal property
or services taxable under this part. The full amount of the
tax on a credit sale, installment sale, or sale made on any
kind of deferred payment plan shall be due at the moment of
the transaction in the same manner as on a cash sale."
(E.S.)

Section 212.15, F.S.: "(1) The taxes imposed by this
chapter shall, except as provided in s. 212.06(5)(a)2.e.,
become state funds at the moment of collection and shall
for each month be due to the department on the first day of
the succeeding month and be delinquent on the 21st day of
such month. All returns postmarked after the 20th day of
such month are delinquent.
"(2) Any person who, with intent to unlawfully deprive or
defraud the state of its moneys or the use or benefit
thereof, fails to remit taxes collected under this part is
guilty of theft of state funds...."

Section 212.02(16)(a), F.S.: "'Sale' means and includes:
"(a) Any transfer of title or possession, or both exchange,
barter, license, lease, or rental, conditional or
otherwise, in any manner or by any means whatsoever, of
tangible personal property for a consideration...."
(Emphasis Supplied)

Section 212.031, F.S.: "(1)(a) It is declared to be the
legislative intent that every person is exercising a
taxable privilege who engages in the business of renting,
leasing, letting, or granting a license for the use of any
real property....
"(c) For the exercise of such privilege, a tax is levied in
an amount equal to 6 percent of and on the total rent or
license fee charged for such real property by the person
charging or collecting the rental or license fee....
"(2)(a) The tenant or person actually occupying, using, or
entitled to the use of any property from which the rental
or license fee is subject to taxation under this section
shall pay the tax to his immediate landlord or other person
granting the right to such tenant or person to occupy or
use such real property.
"(3) The tax imposed by this section shall be in addition
to the total amount of the rental or license fee, shall be
charged by the lessor or person receiving the rent or
payment in and by a rental or license fee arrangement with
the lessee or person paying the rental or license fee, and
shall be due and payable at the time of the receipt of such
rental or license fee payment by the lessor or other person
who receives the rental or payment. The owner, lessor, or
person receiving the rent or license fee shall remit the
tax to the department at the times and in the manner
hereinafter provided for dealers to remit taxes under this
chapter. The same duties imposed by this chapter upon
dealers in tangible personal property respecting the
collection and remission of the tax; the making of returns;
the keeping of books, records, and accounts; and the
compliance with the rules and regulations of the department
in the administration of this chapter shall apply to and be
binding upon all persons who manage any leases or operate
real property, hotels, apartment houses, roominghouses, or
tourist and trailer camps and all persons who collect or
receive rents or license fees taxable under this chapter on
behalf of owners or lessors...." (Emphasis Supplied)

It is essential to consider the legal definition and attributes
of a "security deposit" in addressing the issue under

advisement. To this end, we consult the following definition of
the term "security deposit" quoted from Black's Law Dictionary,
Sixth Edition:

"Security deposit. Money deposited by tenant with landlord
as security for full and faithful performance by tenant of
terms of lease, including damages to premises. It is
refundable unless the tenant has caused damage or injury to
the property or has breached the terms of the tenancy or
the law governing the tenancy. Such deposits are regulated
by statute in most states...."

Additionally, 34 Fla Jur 2d s. 41, provides in relevant part the
following:

"The term `security deposit' means any money held by the
landlord as security for the performance of the rental
agreement, including, but not limited to, amounts held by
the landlord for damages caused by the tenant's breach of
lease prior to its expiration period...."

CONCLUSIONS OF LAW

Hence, in order to establish that the security deposits required
under the terms and conditions of the ESL, CSL, and STPP
Agreements (collectively the "Agreements") are subject to sales
tax it must be shown that such amounts are in substance the
advance payment of admissions or the prepayment of license fees
for the use of real property. The terms and conditions embodied
in the Agreements fail to support that the security deposits
required thereunder constitute in substance the advance payment
of admissions or the prepayment of license fees for the use of
real property.

Specifically, with respect to the ESL and CSL Agreements,
articles 11 and 8 respectively provide that the security deposit
is refundable upon expiration of the term of such agreements.
The provisions of these articles go on to specify that only upon
the future occurrence of the event of a default or breach of the
Agreements either by nonpayment of any amount payable under the
terms of such Agreements or by nonperformance or observation of

any other duty or obligation under such Agreements is the
Taxpayer or the Taxpayer's Affiliate allowed to appropriate and
apply the security deposits in curing the default or breach.
Moreover, under article 3 of both the ESL and CSL Agreements,
the license fee is payable separate and apart from the security
deposit required by both agreements. Therefore, the substance
of the ESL and CSL Agreements supports that the security
deposits required under articles 11 and 8 of said agreements
respectively are in fact just that, "security deposits" and not
advance payments of admissions or the prepayment of license fees
for the use of real property. Therefore, we find that the
security deposits required under articles 11 and 8 of the ESL
and CSL Agreements respectively are not subject to sales or use
tax unless and until such time there occurs a breach or act of
default which leads to all or a portion of the security deposit
being appropriated and applied to amounts due and payable by the
Licensee under such agreements. This is conditioned upon the
security deposits required under the ESL and CSL Agreements
being recorded as liabilities on the books of the Taxpayer or
the Taxpayer's Affiliate respectively until such time as there
occurs a breach or default under such agreements and the
security deposit(s) are appropriated and recorded as earned
revenue through the accounts of the Taxpayer (ESL Agreement) or
the Taxpayer's Affiliate (CSL Agreement).

Considering now the security deposit required under the STPP
Agreement, such amount is not appropriated and applied as
payment for season tickets unless and until the Ticketholder
decides in the final year of the three year STPP Agreement not
to renew his or her season tickets. In other words,
appropriation of the security deposit as payment for season
tickets is a contingency conditioned upon the occurrence of a
future event (nonrenewal of season tickets in the final year of
the STPP Agreement). If in the final year of the contract the
Ticketholder decides not to renew his or her tickets, then the
Taxpayer can appropriate and apply the security deposit to the
payment for season tickets for the final year of the STPP
Agreement. As with the license fees and security deposits under
the ESL and CSL Agreements, the STPP Agreement requires a
separate payment(s) for the season tickets each year separate
and apart from the required security deposit. Therefore, we

find that the security deposit required under the STPP Agreement
is not subject to sales or use tax unless and until: (i) the
final year of the STPP Agreement in those cases where the
Ticketholder decides not to renew his or her season tickets and,
thus, frees the deposit for application toward payment of the
season ticket price for the final year of the STPP Agreement or
(ii) the Ticketholder cancels the STPP Agreement early and
thereby forfeits all or a portion of security deposit. If the
Ticketholder chooses to renew his or her season tickets and pays
the charge for the season tickets according to the STPP
Agreement, then the "security deposit" would retain the identity
of a "security deposit" and, hence, would remain at that
juncture a nontaxable amount. This is conditioned upon the
security deposit required under the STPP Agreement being
recorded as a liability on the books of the Taxpayer until the
event of an early cancellation of the STPP Agreement or the
final year of the STPP Agreement where the Ticketholder decides
not to renew his or her season tickets either of which results
in all or a portion of the security deposit being appropriated
and recorded as earned revenue through the accounts of the
Taxpayer.

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. 14500