Was a civic center's sale of controlled advertising space on scoreboards, press tables, and concourse signs subject to Florida sales or use tax?

Plain-English summary

Florida ruled that the civic center's controlled sale of advertising display space was not subject to sales or use tax.

The center sold advertising exposure on scoreboards, press tables, and concourse signs. The center itself ordered the fabric, installed and removed the signs, controlled what appeared and when, and imposed its own display rules. Advertisers could not occupy, alter, or control the locations.

Because the buyers received no occupation, control, sovereignty, or exclusion right, the Department found no taxable lease or license of real property and no lease of tangible personal property. That conclusion applied whether an advertising agency bought the space for a client or a company bought it for its own message. The agency's resale to its client and a commission paid by the center were also nontaxable.

The center's purchases of fabric and other sign material were exempt because the center was a public governmental entity, provided it gave sellers the required exemption certificate.

What this means for you

• Selling advertising exposure was different from transferring possession or control of the display location.
• The center's continuing control over installation, content, alteration, and removal drove the nontaxable result.
• The materials exemption rested on the center's governmental status and use of an exemption certificate.

Common questions

Q: Was advertising space sold directly to a company taxable?
A: No. The company received no lease or license right to occupy or control the space.

Q: Was an advertising agency's resale or commission taxable?
A: No, under the same facts.

Q: Were the center's fabric purchases taxable?
A: No, when the governmental center tendered its exemption certificate to the seller.

Citations and references

• Fla. Stat. § 212.031 — tax on leasing or licensing real property
• Fla. Stat. § 212.05(1)(a)1.a. — sales of tangible personal property
• Fla. Stat. § 212.08(6) — governmental sales-tax exemption
• Fla. Admin. Code r. 12A-1.038 — governmental exemption certificate
• Fla. Admin. Code r. 12A-1.070 — real property rentals and licenses
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96A-041

Original ruling text

Aug 12, 1996

Re: TAA 96A-041
Sale of Advertising Space in a Civic Center
Sections 212.031, 212.05(1)(a)1.a., 212.08(6), F.S.
Rules 12A-1.038, 12A-1.070, F.A.C.

Dear :

This is a response, styled a Technical Assistance Advisement, to
your letter dated May 8, 1996, wherein, as in your earlier
letter dated December 13, 1995, you ask whether the sale of
advertising space, solely within the XXXX, on two scoreboards,
advertising space on what you describe as "press tables," and in
the concourse are subject to sales or use tax. You also ask
whether the purchases by the XXXX Center (herein Center) of
certain fabrics used by the Center in the construction of the
signs are subject to sales or use tax. The Department has
responded to these facts in a Letter of Technical Advice dated
January 20, 1996. This Technical Assistance Advisement affirms
the determination expressed in the Letter of Technical Advice.

You provided the Department with copies of two contracts for the
sale of such space by the Center: one contract is executed by an
advertising agency, and the other by a company which purchased
the advertising space directly for its own benefit without the
participation of an advertising agency. In accordance with both
contracts, advertising space is purchased on the two scoreboard
signs within the Center, and in one contract advertising space
is also purchased on the concourse within the Center as well as
advertising space on "press tables."

In your letter you describe these spaces in the following
manner:
... these signs are similar to billboards, the [Center] has
complete control of the sign board and what goes up on them
and when they go up and down. [The Center] order[s] the
fabric with the advertiser's message and or/logo on it and

then [the Center] install[s] the sign on [the Center's]
scoreboard. The advertiser really has no rights to alter
or change the message at will. [The Center is] not leasing
the sign to them to do what they want with it. [The Center
is] just selling them part of the space on the large sign.
[The Center has] total control of the sign and [has]
regulations regarding the sign. The advertiser is simply
buying 'advertising space' that only [the Center's]
personnel can remove, alter or install.

Specifically, you ask the following questions which are
paraphrased as follows:

(1) Is the sale of the space taxable to either the
advertising agency, which will use it for its client's
advertising message, or to the Company, which will use it for
its own advertising benefit?

(2) Is the sale of the space taxable to the client of the
advertising agency in the instance when the purchase of the
space by the agency from the Center was not taxable?

(3) If the sale of the space to the agency is taxable,
what amount is subject to the tax when a commission is paid to
the agency by the Center?

(4) Is the purchase of certain fabrics or other sign
material by the Center subject to tax?

Department Response

The sale of space by the Center on the two scoreboards, the
press tables, and in the concourse of the Center, to be used for
advertising purposes either by an advertising agency, or by a
company which expects to use the space for its own advertising
benefit, is not subject to sales or use tax because the payments
made by such purchasers are not given for a license to use the
scoreboards or the other spaces, nor for the right to lease the
scoreboards and such other spaces. Section 212.031, F.S.,
which, in general, imposes the tax on the privilege of engaging
in the business of granting a license to use, or leasing of real

property, is not applicable to the facts you have provided the
Department. This statute is interpreted in Rule 12A-1.070,
Florida Administrative Code.

Neither the advertising agency, nor a company which purchases
the space for its own advertising use has been granted a license
to use the spaces, nor are either of the space purchasers
lessees of the spaces.

A license to use real property is a personal privilege to do one
or more acts on the land of another without possessing any
interest in the land. A license to do the act on such land
involves the occupation of the land by the one holding the
license so far as it is necessary to do the act by the licensee
of the real property. See, Devlin v. The Phoenix, Inc., 471
So.2d 93, 95 (Fla. 5DCA 1985). A lease of real property
contains in it the right of exclusion by the lessee to such
property of all others including the owner of the property.
See, Bodden v. Carbonell, 354 So.2d 927, 928 (Fla. 2DCA 1978).

Similarly, there is no license or lease of tangible personal
property should any of the spaces be attached to or be a part of
that classification of property, because, as in the license or
lease of real property, the elements of occupation, control, or
of sovereignty are not present.

The Department finds that the sale of the enumerated advertising
space by the Center does not contain the necessary elements to
constitute a taxable sale because there is no provision for
occupation, control, or the sovereignty over the scoreboards,
press tables, or concourse signs by the advertising agency, or
by the company purchasing such space for its own benefit.

Thus, the answer to the first question is in the negative for
the reasons provided above, as to both the advertising agency
and the company purchasing the space for its own use.

For the similar reasons, the second question is also answered in
the negative in that the lack of a right to occupy, control or
of sovereignty over the spaces creates no liability to pay sales
or use tax in the client to which the agency has sold the same

advertising spaces.

As to the third question, any commission paid to the agency by
the Center would not be a taxable transaction because nothing is
being sold which comes within the ambit of Part I, Chapter 212,
F.S., which imposes sales or use tax. Neither is real property
licensed or leased, nor is the Center selling tangible personal
property which in general is taxed under s. 212.05(1)(a)1.a.,
Florida Statutes. As has been stated in the response to the
first question, the sale of advertising space by the Center is
not taxable, under the facts you present.

The purchase of fabric by the Center for the construction of
advertising signs about which you ask in the forth question is
not subject to sales or use tax because in the enabling
legislation effective April 18, 1972, as the Special Act of the
state legislature appears in Chapter 72-606, L.O.F., a
Tallahassee-Leon County Authority is created and then identified
as "...a public agency, politic and corporate...."

Section 212.08(6), F.S., exempts from the imposition of sales
tax all sales made to a subdivision of government. However,
Center must tender to its sellers its certificate of exemption
as provided in Rule 12A-1.038, Florida Administrative Code.

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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