Who owed Florida's rental car surcharge, battery fee, and waste tire fee when a dealer originated a vehicle lease and assigned it to a leasing company?

Plain-English summary

Florida made the originating automobile dealer responsible for the first 30-day rental car surcharge and the initial battery and waste tire fees.

The customer negotiated and signed the lease at the dealership and paid the first month's rent there before the leasing company decided whether to accept assignment. Because the surcharge became due with that first rent payment, the dealer owed a full 30-day surcharge even when the first month was shorter than 30 days.

The dealer also owed the lead-acid battery and waste tire fees when it first leased the vehicle. On the later sale and assignment to the leasing company, the tires were no longer new, so no second tire fee applied. The company could avoid a second battery fee by giving the dealer a resale certificate covering the battery.

What this means for you

• Liability followed the transaction occurring when each fee became due.
• The first month's rental car surcharge belonged to the originating dealer.
• Used tires did not trigger another new-tire fee on assignment.
• A resale certificate prevented a second battery fee on the vehicle sale to the assignee.

Common questions

Q: Who owed the rental car surcharge? A: The originating dealer, for 30 days.

Q: Who owed the first battery and tire fees? A: The dealer that first leased the vehicle to the customer.

Q: Did the leasing company owe those fees again? A: No second tire fee applied, and no second battery fee applied if the company gave a resale certificate.

Citations and references

• Fla. Stat. § 212.0606(1) — rental car surcharge
• Fla. Stat. § 403.718(1) — waste tire fee
• Fla. Stat. § 403.7185(1) — lead-acid battery fee
• Fla. Admin. Code r. 12A-12.001 — waste tire fee
• Fla. Admin. Code r. 12A-12.0011 — lead-acid battery fee
• Fla. Admin. Code r. 12A-16.002 — rental car surcharge
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96A-032

Original ruling text

Apr 30, 1996

Re: TAA 96A-032
Sales and Use Tax; Leased Vehicles; Rental Car Surcharge; Solid Waste Fees. Sections 212.0606(1), 403.718(1), and 403.7185(1), Florida Statutes. Rules 12A-12.001, 12A-12.0011, and 12A-16.002, Florida Administrative Code

Dear :

This is a response to your letter dated September 13, 1995, in which you requested a Technical Assistance Advisement (TAA) regarding the application of the rental car surcharge and solid waste disposal fees to leased vehicles. Your initial letter did not provide enough information for the issuance of a TAA. However, your letter of November 20, 1995, provided the additional information needed. Thus, this response to your request constitutes a Technical Assistance Advisement under Chapter 12-11, Florida Administrative Code, and is issued to you under the authority of Section 213.22, Florida Statutes.

FACTS

In your letter you state that the transaction in question begins when a potential customer contacts an independent Florida automobile dealer about leasing a vehicle. Negotiations between the parties are held at the dealership. The related paperwork is signed at the dealership, and the customer makes the initial payment there. You have stated that the initial payment includes the first month's rent and security deposit as well as the title and registration fees. This payment is made directly to the dealer.

After the lease has been formed, the dealer contacts your company, XXXX (hereinafter "Company"), to assign the lease. Company reviews the lease, and if it accepts the assignment,

remits payment for the vehicle to the dealership.

REQUESTED ADVISEMENT

You ask whether the dealership or Company is responsible for remitting the rental car surcharge, lead-acid battery and waste tire fees to the State of Florida.

APPLICABLE AUTHORITY

Section 212.0606(1), Florida Statutes, provides:

A surcharge of $2.00 per day or any part of a day is imposed upon the lease or rental of a motor vehicle licensed for hire and designed to carry less than nine passengers regardless of whether such motor vehicle is licensed in Florida. The surcharge applies to only the first 30 days of the term of any lease or rental. The surcharge is subject to all applicable taxes imposed by this part.

Section 403.718(1), F.S., provides in part:

For the privilege of engaging in business, a fee for each new motor vehicle tire sold at retail is imposed on any person engaging in the business of making retail sales of new motor vehicle tires within this state.... The fee imposed under this section shall be stated separately on the invoice to the purchaser. Beginning January 1, 1990, and thereafter, such fee shall be imposed at the rate of $1 for each new tire sold.... For purposes of this section, a motor vehicle tire sold at retail includes such tires when sold as a component part of a motor vehicle....

Section 403.7185(1), F.S., provides in part:

For the privilege of engaging in business, a fee for each lead-acid battery sold at retail is imposed on any person engaging in the business of making retail sales of leadacid batteries within this state. Beginning October 1, 1989, and thereafter, such fee shall be imposed at the rate

of $1.50 for each lead-acid battery sold....

Rule 12A-12.001, F.A.C., provides in part:

(1) For the privilege of engaging in business, a fee for each new motor vehicle tire sold at retail in this state is imposed at the rate of 50 cents for each new tire sold during 1989 and at the rate of $1 for each new tire sold during 1990 and subsequent years.

(2) The fee is imposed upon the dealer selling the tire and not upon the purchaser.

(3) The fee is required to be stated separately on the sales invoice or other tangible evidence of sale given to the purchaser.

(4) The fee is to be included in the price upon which sales or use tax or any other tax imposed by part I of chapter 212, Florida Statutes, is computed, even though the fee is listed as a separate item on the invoice.

(5) For purposes of this rule:

(a) "Tire" means a continuous solid or pneumatic rubber covering encircling the wheel of a motor vehicle. (b) "Vehicle" means a mechanism or device in, upon, or by which a person or property is or may be transported....

(d) "New tire" is one that has never been used in the movement of a motor vehicle, regardless of the time that has elapsed since it was manufactured, offered for sale, sold, or the time during which it was used as a spare tire. A tire is not "new" for purposes of this rule if it has been so used, including a tire that has been used but has been recapped or retreaded.

(e) The terms "sold at retail" and "retail sales" include the sale of a new motor vehicle tire as a separate item or the sale of the tire as a component part of a new or used motor vehicle that is sold at retail. However, they do not

include the sale of new motor vehicle tires to a person solely for the purpose of resale, as provided in subsection (6)....

Rule 12A-12.0011, F.A.C., provides in part:

(1)(a) For the privilege of engaging in business, a fee at the rate of $1.50 for each lead-acid battery sold at retail in this state is imposed on each person engaging in the business of making retail sales of lead-acid batteries within this state.

(b) The fee is payable on such a sale whether the battery is new, used, or remanufactured.

(c) The fee is payable if the battery is sold as a component part of a motor vehicle, vessel, or aircraft or other property.

(d) Notwithstanding paragraphs (a) and (b), the fee is not payable if the battery is sold to recycle components.

(2) The fee is imposed upon the dealer selling the battery and not upon the purchaser....

(6) For purposes of this rule:

(a) A "lead-acid battery" is a storage or secondary battery containing lead plates that will function as a battery when the electrolyte is added, and that is designed for use in motor vehicles, vessels, and aircraft.

(b) "Motor vehicle" means an automobile....

(c) The term "sale" means and includes 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 a lead-acid battery for a consideration.

(d) The term "sold at retail" includes the sale of a lead-

acid battery as a separate item or as a component part of a new or used motor vehicle, vessel, aircraft, or other machinery or equipment that contains a battery designed for use in a motor vehicle, vessel, or aircraft. The terms "sold at retail" does not include the sale of a lead-acid battery to a person solely for the purpose of resale, as provided in subsection (7), or the sale of a lead-acid battery for the purpose of recycling its component parts....

(7)(a) The sale of a lead-acid battery to a person solely for the purpose of resale is not a "sale at retail", as defined in paragraph (6)(d), provided the seller shall have taken from the purchaser a sales tax resale certificate to the effect that the battery was purchased for resale. A resale certificate given to the seller for sales tax purposes will also be sufficient evidence that the sale was not a retail sale for purposes of the fee....

(c) A sale to a leasing company of a lead-acid battery or vehicle or machinery of which the lead-acid battery is a component part is not a retail sale for purposes of the fee, if the purchaser gives the seller a sales tax resale certificate. Instead, the fee is payable by the leasing company when it first puts the vehicle into use in this state....

Rule 12A-16.002, F.A.C., provides in part:

(1)(a)1. The lease or rental in Florida of a for hire passenger motor vehicle is subject to a surcharge of $2.00 per day, or any part thereof, regardless of whether the vehicle is licensed in Florida. For the purposes of this rule, one day is defined as 24 consecutive hours.

2. The term "for hire passenger motor vehicle" means any
   automobile designed to carry fewer than nine (9) passengers let or rented to another for consideration; offered for lease or rent as a means of transportation for compensation; advertised; or generally held out as being for lease or rent. The term "for hire passenger motor

vehicle" does not include any motorcycle, moped, truck, truck trailer, travel trailer, camping trailer, recreational vehicle with living facilities, or van conversion.

(b) The surcharge applies to each lease or rental of a for hire passenger motor vehicle, specified in the lease or rental agreement, on the first thirty (30) days the vehicle is continuously leased or rented to one lessee or renter....

2. If a for hire passenger motor vehicle is leased or
   rented to one lessee or renter under an agreement for a specific duration in excess of thirty (30) continuous days, the surcharge shall be collected and remitted on lease or rental payments due for thirty (30) continuous days. If the lease or rental agreement is renewed for an additional period, the renewal constitutes a new lease or rental and, therefore, the surcharge is due until the thirty (30) continuous day maximum is reached on the renewed lease or rental agreement....

(3)(a) Each person engaged in the business of leasing or renting for hire passenger motor vehicles is required to collect and remit the surcharge.

(b) The surcharge is due and payable when the lease or rental payments are to be made by the lessee or renter as they accrue under the terms of the lease or rental agreement....

(d)1. When the term of a lease or rental is for twelve (12) months or more and the vehicle is leased or rented in Florida, the surcharge is due and payable when the vehicle is registered, licensed, or titled in this state, regardless of where the vehicle is to be used.

2. When the term of a lease or rental is for twelve (12)
   months or more and the vehicle is leased or rented from a person outside this state, it is presumed subject to the surcharge if it is registered, licensed, or titled in this

state. This presumption may be rebutted only by documentary evidence that the vehicle was used outside this state continuously for thirty (30) days or more before it was brought into this state....

DISCUSSION

Under Section 212.0606(1), Florida Statutes, the rental car surcharge applies to only the first 30 days on any subject lease or rental. Rule 12A-16.002(3)(b), Florida Administrative Code, states that the surcharge is due and payable when the rental payment from the lessee or renter is due.

Under the facts you presented, the first month's rent (which is assumed to be the first 30 days' rent) is paid directly to the dealership before Company is even offered the opportunity to assume the lease. Thus, it is the dealership, as the lessor of the vehicle at the time the rental car surcharge becomes due, which is responsible for remitting the surcharge. Since the first month's rent is assumed to cover a thirty day period, the dealer is responsible for remitting a surcharge which covers 30 days, even if the first month's rent covers less than thirty days. That is, even if the lease is entered into during the month of February, the dealer is responsible for remitting the full 30 days surcharge.

The lead-acid battery fee applies to each sale of a leadacid battery, even if the battery is "used". Rule 12A12.0011(1)(b), F.A.C. "The term `sale' means and includes any transfer of title or possession, or both, exchange, barter, license, lease, or rental...." Rule 12A-12.0011(6)(c), F.A.C. Thus, when the dealership first leases the battery to the customer as a component part of the motor vehicle, the dealership will need to remit the lead-acid battery fee. When the car is subsequently sold to Company, as part of the transaction involving the assumption of the lease, Company should issue a resale certificate covering the lead-acid battery fee to dealership as provided for in Rule 12A-12.0011(7), F.A.C. Since the lead-acid battery fee will have already been remitted on the lease of the entire vehicle to customer, Company will not need to remit the lead-acid battery fee on the assumed lease.

Section 403.718(1), F.S., only imposes a fee on the sale of new tires. Rule 12A-12.001(5)(d), F.A.C., states that a new tire is one which "has never been used in the movement of a motor vehicle." Thus, when dealership first leases the car to the customer it must remit the waste tire fee on the tires included as component parts of that vehicle. When the car is subsequently sold to Company, as part of the transaction involving the assumption of the lease, the tires have already been used by the customer. Thus, they are no longer "new" tires and the waste tire fee will not apply to that transaction. Thus, the waste tire fee should be remitted only once by the dealership upon the leasing of the vehicle to customer.

CONCLUSION

Under the facts presented, the dealership is responsible for remitting the rental car surcharge on the first month's lease of the vehicle. The dealership is also responsible for remitting the lead-acid battery fee and waste tire fee due on the lease to the customer. Finally, unless the dealership has received a certificate of resale from Company covering the leadacid battery, a second lead-acid battery fee will need to be charged on the sale of the vehicle to Company.

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,

Kama Schultz
Senior Tax Specialist

KDS
Control No. 24051