Could a condominium association treat cable television included in a transient room charge as a service bought for resale?

Plain-English summary

Florida found that the condominium association was not reselling cable television service to its transient guests.

The association paid tax when it bought cable service, included a $2.50 daily cable amount in the quoted room rate, and let a guest decline the service for a $2.50 reduction. But the invoice still showed only one charge for room accommodations. It did not separately bill or separately state tax on a second cable-service sale.

Because the invoice evidenced a single transient-rental transaction, the association was the consumer of the cable service. It could not give the cable provider a resale certificate. It had to pay the provider's cable-service tax and collect and remit tax on the total rental charged to the guest.

What this means for you

• Calling part of a room rate an optional cable charge did not establish a resale when the guest invoice showed only one rental charge.
• A resale certificate was unavailable because the association consumed the cable service in providing the accommodation.
• The transient-rental tax applied to the total rental shown on the invoice.

Common questions

Q: Did the guest's ability to reject cable service make it a separate sale? A: No. The Department relied on what the invoice actually showed: one charge for accommodations.

Q: Could the association buy cable service tax free with a resale certificate? A: No.

Q: What tax did the association collect from guests? A: The tax on the total transient-accommodation rental.

Citations and references

• Fla. Stat. § 212.02(15)(b) — leases of accommodations as sales
• Fla. Stat. § 212.03(1) — tax on total transient-accommodation rental
• Fla. Stat. § 212.05(1)(e)1.b. — television system program services
• Fla. Stat. § 212.07(2) — collection and separate statement of tax
• Fla. Admin. Code rr. 12A-1.038, 12A-1.046(11)(b)1.b., 12A-1.086
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96A-026

Original ruling text

Apr 18, 1996

Re: Technical Assistance Advisement 96A-026 Resale of Cable Television Services Sections 212.02(16)(b), 212.03(1), 212.05(1)(e)1., and (1)(e)1.b., 212.07(2), F.S. Rules 12A-1.038, 12A-1.046(11)(b)1.b., 12A-1.086, F.A.C.

Dear :

This is a response, styled a Technical Assistance Advisement, to your undated letter received in the Department's offices on September 27, 1995, in which you seek the Department's determination of the appropriate manner of applying sales tax on the provision of cable television service by XXXX (herein Association), to condominium units which are rented by Association, in behalf of the unit owners, as transient accommodations in the instance when the cable television service is initially purchased by Association from the cable television provider. You state that the Association pays sales tax to the cable television provider.

You state in paragraph 3. that the Association "... then resells
[the] cable television service to its transient guests. The charge for such cable service is included in the quoted room rate at $2.50 per day." In paragraph 6. you describe the provision of this service as "... an additional luxury item..." which is not "... necessary for the rental or occupancy of the guest room." In paragraph 5. you state that "[s]hould any transient guest choose not to purchase cable television service... [the Association] will disconnect cable service in the guest room for the duration of the guest's stay, and deduct
$2.50 per day from the total bill."

If the option to reject the service is not exercised, as you explain in paragraph 7., the "[a]pplicable state sales tax on the total amount of the bill, including the daily cost of cable television, is charged to the guest." You state in the same

paragraph that the tax collected from the transient guests is remitted to the Department by Association. You also, in paragraph 9., explain that Association "... pays less sales tax each month to its cable television service provider than it collects from its customers."

You propose alternative methods of paying and collecting the tax.

In paragraph 8. you opine that pursuant to Rule 12A-1.038, F.A.C., a resale certificate could be extended by the Association to the cable television provider.

In the same paragraph you alternatively suggest that the provision in Rule 12A-1.046(11)(b)1.b., F.A.C., is applicable. This rule provision, which relates to local telephone service, reads in part that if a person "... pays less sales tax to the telecommunication service provider than it collects from customers, the [business] must remit the sales tax collected, less the amount paid to the telecommunication service provider, directly to the state. If the amount of taxes paid to the telecommunication service provider is greater than the amount collected from the customers, no additional sales tax will be due to the state for the local service."

Department response

Sales tax was initially imposed on cable television service by Section 4, Chapter 71-360, L.O.F., which taxed the provision of "wired television service." Section 18, Chapter 90-132, L.O.F., effective July 1, 1990, provided for the substitution in s. 212.05(1)(e)1., F.S., of the present wording, "television system program service" for the words "wired television." The taxability of television system program services is currently expressed in s. 212.05(1)(e)1.b., Florida Statutes. Thus, cable television service is presently taxable, and has been taxable since 1971.

Section 212.07(2), F.S., requires a dealer "... as far as practicable, [to] add the amount of the tax imposed under this chapter to the sale price, and the amount of the tax shall be

separately stated as Florida tax on any charge ticket, sales slip, invoice, or other tangible evidence of sale." This statute is interpreted in Rule 12A-1.086, Florida Administrative Code.

Thus, on the invoice or billing issued by Association to a lessee, in which the lessee did not exercise the option to refuse the cable television service, the charge for the transient accommodations is in one amount, part of which, you state, is the cable television service charge. However, this latter amount is not separately stated. The lessee gains from a review of the invoice that a single charge has been made for the accommodations.

It is evident from the invoice that Association bills the lessee only for a room rental. It does not bill the lessee for room accommodations, and a charge for the cable television service.

The tax which appears on the invoice is separately stated as required in the cited portion of s. 212.07(2), Florida Statutes. However, the tax amount which appears on the invoice is the tax on the room rental as imposed by s. 212.03, Florida Statutes. There is no tax separately stated for the other sale which, you contend, is the sale of cable television service.

Sales tax is a "privilege or occupation" tax as imposed on discrete transactions. See, Gaulden v. Kirk, 47 So. 2d 567, 579 (Fla. 1950). Here, the lease of transient rental space is a "sale" as that term is defined in s. 212.02(15)(b), Florida Statutes. Subsection (1) of s. 212.03, F,.S., imposes the "privilege or occupation" tax on the "... total rental..." charged for transient living accommodations.

Having found that only a single sale is evident on the invoice, the Department takes the position that Association is not engaged in reselling cable television service. Rather, Association is the consumer of such service and is obligated to pay the appropriate tax to the cable television service provider. Consequently, Association may not extend a resale certificate to the cable television service provider.

Association should pay the appropriate sales tax to the cable television service provider, and collect and remit to the Department the appropriate sales tax on the total rental, as herein discussed, which it charged the transient rental lessee.

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,

Robert G. Parsons
Tax Law Specialist
Tax Policy and Dispute
Resolution

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Ctrl. No. 23334