Were weekly charges at a Chapter 509 motel for migrant, seasonal, or temporary workers exempt from Florida sales and tourist development tax?

Plain-English summary

Florida ruled that the proposed weekly motel charges were taxable because the arrangement qualified for none of the claimed transient-rental exemptions.

The establishment was to be licensed under Chapter 509 as a motel or transient apartment. The requester supplied no evidence of the separate health-agency permit required to operate a migrant labor camp. Florida also excluded permitted migrant labor camps and residential migrant housing from the statutory definition of a public lodging establishment. Calling the Chapter 509 property a migrant labor camp in its paperwork therefore did not establish the exemption in section 212.03(7)(d).

The document also failed the lease exemption in section 212.03(4). It called itself a license agreement, stated that the operator did not act under landlord-tenant law, and gave the occupant no property rights. On its own terms, it was not a lease.

A license can still qualify as a bona fide written agreement for continuous residence longer than six months under section 212.03(1), but this one did not. Its stated 185-day term conflicted with the substance of the arrangement: the intended occupants were migrant, seasonal, or temporary workers; payment was weekly; the rules set a checkout time; unregistered overnight guests were prohibited; and the operator limited its obligations to the public-lodging statute. The Department found those features consistent with transient rather than continuous long-term residence.

The weekly fee was therefore subject to Florida's 6% sales tax and the applicable local-option tourist development tax. The local rate was redacted in the published ruling.

What this means for you

Lodging operators

A label in a contract does not establish an exemption. Licensing status, required permits, occupant rights, payment terms, house rules, and the actual expected use of the property all matter.

Employers and housing providers

Housing migrant or seasonal workers does not by itself make a property an exempt migrant labor camp. This ruling relied on the absence of evidence of the required health-agency permit and the property's planned Chapter 509 lodging classification.

Accountants and tax professionals

Analyze each exemption separately. A license may potentially satisfy the written-agreement exception even when it is not a lease, but the agreement must genuinely provide continuous residence longer than six months. Also account for local tourist development tax when the Chapter 212 exemption fails.

Common questions

Q: Did describing the property as a migrant labor camp make its rentals exempt? A: No. The property was to be licensed as a Chapter 509 motel or transient apartment, and the requester showed no migrant-labor-camp permit.

Q: Was the license agreement treated as a lease? A: No. It expressly denied a landlord-tenant relationship and stated that the occupant acquired no property rights.

Q: Can a license agreement ever qualify for the over-six-month exception? A: Yes. The Department said a signed written license can qualify if it genuinely gives the occupant continuous residence for longer than six months.

Q: Why did the stated 185-day term not qualify here? A: The Department looked beyond that wording to the transient character of the occupants and the agreement's weekly payments, checkout time, overnight-guest restriction, and Chapter 509 provisions.

Q: What taxes applied?
A: The weekly fee was subject to the 6% state sales tax and the applicable local-option tourist development tax. The published document redacted the local rate.

Q: Did the Department tell the requester how to rewrite the agreement to avoid tax? A: No. It said designing a tax-avoidance contract was outside its role and limited its advice to applying the tax law to the submitted documents.

Q: Can another lodging operator rely on this TAA? A: Not automatically. The advisement says it binds the Department only for the requester and the specific licensing, permit, contract, occupant, payment, and lodging-operation facts described.

Citations and references

• Fla. Stat. § 212.03(1), (2), (4), (6)(b), and (7)(d) — transient-rental tax, continuous-residence exceptions, and migrant-labor-camp exemption
• Fla. Stat. § 381.008 — migrant labor camp and residential migrant housing definitions and permit framework
• Fla. Stat. §§ 509.013(4) and 509.242(1)(b), (e) — public lodging establishments, motels, and transient apartments
• Fla. Stat. § 125.0104(1), (2), and (3)(a) — local-option tourist development tax
• Fla. Stat. §§ 212.08(13) and 212.21(2) — exemptions must be expressly provided
• Fla. Stat. §§ 671.201(19) and 671.203 — definition and obligation of good faith
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96A-049

Original ruling text

Oct 17, 1996

Re: Technical Assistance Advisement (TAA) 96(A)-049 Sales Tax - Migrant Labor Camp Sections 212.03(7)(d); 381.008; 509.013(4); 509.242(1)(b) and (e); 212.03(1), (2) and (4); 125.0104(1), (2) and (3)(a); 212.08(13), and 212.21(2), F.S.

Dear :

This response is in reply to your letter of May 28, 1996, in which you request a Technical Assistance Advisement ("TAA") on the subject indicated above. Enclosed with your letter was a copy of a blank "license agreement" for "XXXX, A Migrant Labor Camp" [hereinafter referred to as the "Motel"]. In my letter of June 24, 1996, which I sent by facsimile and U.S. Mail, I requested a copy of the rules and regulations to which you refer. I received the rules and regulations from you on June 27, 1996. In my letter of June 27, 1996, sent by facsimile and U.S. Mail, I requested that you indicate what type of public housing establishment your dwelling unit would be classified as pursuant to s. 509.242(1), F.S. We received a facsimile on June 28, 1996 in response to my inquiry of June 27, 1996. Having received the requested collateral information, 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 letter of May 28, 1996, provides:

I am contemplating ownership of a transient establishment licensed under Chapter 509, the Division of Hotels and Restaurants. I will not handle any daily rentals. I intend to cater to low income people who fit the

description of migrant, temporary and seasonal workers as exempted in the taxing statute; therefore, according to the taxing statute[,] I will have a migrant labor camp. I will not be renting to tourists or the traveling public.

I must maintain for at least two years guest registrations, which each tenant is required to sign. I will have rules and regulations which pertain to the occupancy in addition to the lease and the registration.

My proposed 3 page lease is enclosed and is intended to be a bona fide written lease for longer than six months, if that is necessary, since my facility is also the tenants' principle residence. I intend to be a migrant labor camp according to SS 212.03; and the tenants rent rather than own their own homes.

Pertinent portions of the unexecuted license agreement (hereinafter referred to as the "Agreement") you enclosed with your letter provide:

This [Agreement] is made on this __ day of
__, 19, between the [Motel],... and
_______, hereinafter called LICENSEE. This is a bona fide written agreement for longer than six months for the use of living quarters. F.S. 212.03(1). The [Motel] is a migrant labor camp as defined in F.S. 212.03(7)(d). The LICENSEE and the [Motel] agree that the [Motel] is the LICENSEE's principal residence, F.S. 212.03(7)(a), 212.03(7)(c), and that the LICENSEE rents rather than owns LICENSEE'S home. F.S. 212.03(7)(b). LICENSEE is hereby granted a license for the use of the below described premises within the terms of this agreement. LICENSEE knowingly and intelligently waives any claims to property rights in the [Motel] and knowingly and intelligently waives the provisions of Chapters 83, F.S., and agrees to abide by the provisions of Chapter 509, Florida Statutes.

WITNESSETH: [Motel] hereby licenses to LICENSEE and LICENSEE EXCLUSIVELY hires and takes from [Motel] the following described premises located in... County, State of

Florida: Unit # _____ at... Street, City, Florida XXX for a term of one hundred eighty-five days beginning on the above date and ending at 11 a.m. on the last day of the term unless renewed prior thereto. IT IS THE INTENT OF THE LICENSEE TO OBTAIN A LICENSE FROM THE [MOTEL] FOR THE RESIDENTIAL PREMISES, CONTINUOUSLY, FOR OVER SIX MONTHS....

The following terms and conditions in the "Agreement" are pertinent to our discussion:

1. LICENSEE shall pay the LICENSE FEE of $ _____ in advance
   each week to [Motel] at... Street, prior to 11 a.m., for the license granted herein....

2. LICENSEE understands and agrees that [Motel] operates
   under the Florida Laws and Rules for Public Lodging in Chapter 509, F.S., and LICENSEE is granted a license:
   [Motel] does not operate under laws governing Landlord/Tenants in Chapter 83, F.S., and LICENSEE obtains no property rights under this agreement....

3. LICENSEE understands and agrees that since the license
   granted herein is based partly on the number of people living in the unit, it is a violation of this agreement to have any unregistered guests in the unit who stay overnight.

4. LICENSEE is responsible for and agrees to pay any and
   all taxes that may ever become due for LICENSEE's license to use the above described property of the [Motel]. LICENSEE may be liable to the.... County Comptroller and the Florida Department of Revenue for Tourist Development Tax and Sales Tax upon breaching this lease. A term of less than six months might subject LICENSEE to the taxes.
   ...

5. LICENSEE has been advised to seek the advice of an
   attorney and hereby acknowledges and understands that License may be waiving substantial statutory rights by entering into this agreement, and Licensee knowingly, voluntarily, and intelligently agrees to limit the

liability of the [Motel] to the provisions of Chapter 509, Florida Statutes, exclusively.

13. LICENSEE, or a member of Licensee's family, is a
    migrant, seasonal or temporary worker as defined in Section 212.03(7)(d), Florida Statutes.... (Emphasis Supplied)

The "Notice To All Licensees Per F.S. 509.101" you sent by facsimile on June 27, 1996, contains the following information pertinent to our discussion:

Following are this leasing establishment's Rules and Regulations. These Rules and Regulations shall control the liabilities, responsibilities and obligations of all parties. A copy of Florida Statu[t]e 509 is maintained in the office of this leasing establishment and shall be made available for review upon request.

Rule 1. All terms agreed upon in the Rental Application signed by the Licensee before occupancy are considered Rules and Regulations of this establishment and are to have the same effect as if listed here.

Rule 2. The laws and ordinances of the United States of America, State of Florida, XXXX County, and City of XXXX shall be precisely followed. Any Licensee breaking such law or ordinance shall be considered breaking the Rules and Regulations of this establishment. The laws and ordinances shall specifically include but not be limited to the following:

....

Rule 5. No Licensee may allow a party (unregistered and not paid for) to spend the night on the property.

Rule 11. Check out time is 4:00 p.m.....

As mentioned above, we received a response from you on June

28, 1996, to my inquiry of June 27, 1996. You were asked to indicate what type of public housing establishment your dwelling unit would be classified as pursuant to s. 509.242(1), F.S. A copy of that statute was enclosed. You replied as follows:

Per your request, our establishment will be classified as a motel - 509.242(1)(b) or Transient Apartment 509.242(1)(e). It is our intention to attempt to rent residences and be exempt from sales tax where ever possible. It is imperative that the TAA (or multiple TAA's you issue if necessary because of multiple classifications) be as broad and liberal as possible rather than narrow.

REQUESTED ADVISEMENT

Please provide an official binding statement (T.A.A.) to advise if the enclosed lease is sufficient to meet the exemptions from sales tax, and, if not, what I must change in order for it to conform for exemption. I need this information as soon as possible in order to comply with the law.

DISCUSSION OF LAW

Your request suggests two different avenues by which the rental of units in your establishment may be exempt from sales tax. First let us examine the law relevant to the exemption for migrant labor camps found in s. 212.03(7)(d), F.S., quoted as follows:

(d) The rental of living accommodations in migrant labor camps is not taxable under this section. "Migrant labor camps" are defined as one or more buildings or structures, tents, trailers, or vehicles, or any portion thereof, together with the land appertaining thereto, established, operated, or used as living quarters for seasonal, temporary, or migrant workers.

"Migrant labor camps" and "residential migrant housing" are regulated by the Department of Health and Rehabilitative Services pursuant to Chapter 381, F.S. A permit must be

obtained to operate either a migrant labor camp or residential migrant housing. Section 381.008, F.S., provides the following definitions for these terms:

(5) "Migrant labor camp" - One or more buildings, structures, barracks, or dormitories, and the land appertaining thereto, constructed, established, operated, or furnished as an incident of employment as living quarters for seasonal or migrant farmworkers whether or not rent is paid or reserved in connection with the use or occupancy of such premises.

(8) "Residential migrant housing" - A building, structure, barracks, or dormitory, and the land appertaining thereto, that is rented or reserved for occupancy by five or more migrant farmworkers, except:....

(c) A hotel, motel, or resort condominium, as defined in chapter 509, that is furnished for transient occupancy. (Emphasis Supplied)

Motels are regulated pursuant to chapter 509, F.S., by the Division of Hotels and Restaurants of the Department of Business and Professional Regulation. Section 509.013(4), F.S., provides in pertinent part:

(4)(a) "Public lodging establishment" means any unit, group of units, dwelling, building, or group of buildings within a single complex of buildings which is rented more than three times in a calendar year for periods of less than 30 days or 1 calendar month, whichever is less, or which is advertised or held out to the public as a place regularly rented to guests. License classifications of public lodging establishments, and the definitions therefor, are set out in s. 509.242. ... (Emphasis Supplied)

(b) The following are excluded from the definition in paragraph (a):...

5. Any migrant labor camp or residential migrant housing
   permitted by the Department of Health and Rehabilitative

Services; under ss. 381.008-381.0085;

....

Paragraphs (b) and (e) of section 509.242(1), F.S., as amended by Chapter 96-384, Laws of Florida, provide:

(1) A public lodging establishment shall be classified as a hotel, motel, resort condominium, nontransient apartment, transient apartment, roominghouse, bed and breakfast inn, or resort dwelling if the establishment satisfies the following criteria: ....

(b) Motel. -- A motel is any public lodging establishment which offers rental units with an exit to the outside of each rental unit, daily or weekly rates, offstreet parking for each unit, a central office on the property with specified hours of operations, a bathroom or connecting bathroom for each rental unit, and at least six rental units, and which is recognized as a motel in the community in which it is situated or by the industry.

(e) Transient apartment. -- A transient apartment is any apartment building in which units are advertised or held out to the public as available for rent to transient occupancy.

Now let us examine the law pertinent to the possible exemption of your establishment as a rental with a lease period of more than six months. The ensuing quotes from Florida Statutes are relevant to the application of sales tax and the tourist development tax on transient rentals and the exemption for continuous residence.

Section 212.03(1), (2) and (4), F.S., provides in part:

(1) It is hereby 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 to use any living quarters or sleeping or housekeeping accommodations in, from, or a part of, or in

connection with any hotel, apartment house, roominghouse, or tourist or trailer camp. However, any person who rents, leases, lets, or grants a license to others to use, occupy, or enter upon any living quarters or sleeping or housekeeping accommodations in apartment houses, roominghouses, tourist camps, or trailer camps, and who exclusively enters into a bona fide written agreement for continuous residence for longer than 6 months in duration at such property is not exercising a taxable privilege. For the exercise of such taxable 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. Such tax shall apply to hotels, apartment houses, roominghouses, or tourist or trailer camps whether or not there is in connection with any of the same any dining rooms, cafes, or other places where meals or lunches are sold or served to guests. (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.... (4) The tax levied by this section shall not apply to, be imposed upon, or collected from any person who shall have entered into a bona fide written lease for longer than 6 months in duration for continuous residence at any one hotel, apartment house, roominghouse, tourist or trailer camp, or condominium, or to any person who shall reside continuously longer than 6 months at any one hotel, apartment house, roominghouse, tourist or trailer camp, or condominium and shall have paid the tax levied by this section for 6 months of residence in any one hotel, roominghouse, apartment house, tourist or trailer camp, or condominium. Notwithstanding other provisions of this chapter, no tax shall be imposed upon rooms provided guests when there is no consideration involved between the guest and the public lodging establishment. Further, any person who, on the effective date of this act, has resided

continuously for 6 months at any one hotel, apartment house, roominghouse, tourist or trailer camp, or condominium, or, if less than 6 months, has paid the tax imposed herein until he or she shall have resided continuously for 6 months, shall thereafter be exempt, so long as such person shall continuously reside at such location.... (Emphasis Supplied)

Section 125.0104(1), (2) and (3)(a), F.S., provides the application of the Local Option Tourist Development Tax as follows:

(1) SHORT TITLE. This section shall be known and may be cited as the "Local Option Tourist Development Act." (2) APPLICATION. The provisions contained in chapter 212 apply to the administration of any tax levied pursuant to this section. (3) TAXABLE PRIVILEGES; EXEMPTIONS; LEVY; RATE. (a) It is declared to be the intent of the Legislature that every person who rents, leases, or lets for consideration any living quarters or accommodations in any hotel, apartment hotel, motel, resort motel, apartment, apartment motel, roominghouse, mobile home park, recreational vehicle park, or condominium for a term of 6 months or less is exercising a privilege which is subject to taxation under this section, unless such person rents, leases, or lets for consideration any living quarters or accommodations which are exempt according to the provisions of chapter 212.

XXXX rate for the Local Option Tourist Development Tax is currently XXX, which is additional to the statewide 6 percent sales tax.

Section 212.08(13), F.S., provides in part:

(13) No transactions shall be exempt from the tax imposed by this chapter except those expressly exempted herein....

Section 212.21(2), F.S., provides in part:

(2) It is hereby declared to be the specific legislative

intent to tax each and every sale, admission, use, storage, consumption, or rental levied and set forth in this chapter, except as to such sale, admission, use, storage, consumption, or rental as shall be specifically exempted therefrom by this chapter subject to the conditions appertaining to such exemption....

CONCLUSIONS OF LAW

We have reviewed the "Agreement", rules and regulations, and collateral information you have sent us.

With respect to your request to recommend changes to the "license agreement" to conform it for exemption, we must respectfully advise you that it is not a function of this agency to advise a taxpayer how to structure a contract in order to escape the application of sales tax. You are asking the Department to take an active role in helping you to devise a tax avoidance strategy. This exceeds the Department's role of rendering advice to facilitate the understanding of and compliance with the tax laws. We must therefore confine our observations and comments to the application of sales tax to the terms and conditions of the "license agreement", the rental application, and the notice to all licensees.

Please be advised that the Department has no official role in the administration of the Florida Residential Landlord and Tenant Act, contained in Chapter 83, Florida Statutes.

It is important to keep in mind that, in interpreting statutory exemptions, the Department must adhere to and be guided by the long-standing and fundamental precept of statutory construction, established by the Florida Supreme Court, which mandates that exemptions from or exceptions to taxing statutes must be strictly construed against the taxpayer. See Asphalt Pavers v. Department of Revenue, 584 So.2d 55, 57 (Fla. 1st DCA 1991); Dade County Taxing Authorities v. Cedars of Lebanon Hospital Corporation, Inc., 355 So. 2d 1202, 1205 (Fla. 1978), reh. den. April 5, 1978; Williams v. Jones, 326 So.2d 425, 435 (Fla. 1975), reh. den. March 4, 1976; Straughn v. Camp, 293 So.2d 689, 695 (Fla. 1974); United States Gypsum Company v.

Green, 110 So.2d 409, 413 (Fla. 1959).

Additionally, in discerning legislative intent in a statutory exemption or exception, the Florida Supreme Court doctrine on strict construction against the taxpayer must be the overriding consideration when employing the following fundamental principle of statutory construction:

It is a fundamental principle of statutory construction that legislative intent and policy concerns must control our construction of statutes and that the determination as to the intent of the legislature is based upon the plain and ordinary meaning of the language in the statute itself. See Holly v. Auld, 450 So.2d 217 (Fla. 1984).

With the guidance of the legal precepts quoted above, let us first examine the question of exemption of your Motel as a migrant labor camp pursuant to s. 212.03(7)(d), F.S.

As indicated in the statutory citations quoted above, the regulation of migrant labor camps is performed by the Department of Health and Rehabilitative Services (HRS) pursuant to the authority of ch. 381, F.S. An operator of a migrant labor camp must obtain a permit from HRS. There is no evidence to show that such a permit has been obtained for the Motel. Migrant labor camps are not regulated pursuant to ch. 509, F.S., which regulates "public lodging establishments," and which is the statute under which the Motel is to be licensed. In fact, s. 509.013(4)(b)5., F.S., quoted above, specifically excludes migrant labor camps or residential migrant housing from the definition of a "public lodging establishment." You indicate that your Motel will be licensed either as a motel or as a transient apartment pursuant to s. 509.242(1)(b) or (e), F.S. Based upon these inconsistencies, the Department finds that while the Agreement and accompanying documents reference the migrant labor camp exemption in s. 212.03(7)(d), F.S., the substance of these contracts indicates that the Motel will be licensed as a public lodging establishment pursuant to ch. 509, F.S. The substance of a transaction and not the form dictates its tax treatment. See Department of Revenue v. Seaboard Coastline Railroad Co., 480 So.2d 1359, 1353 (Fla. 1st DCA

1985), reh. den. Jan. 28, 1986, 492 So.2d 1331 (Fla. 1986), rev. den. June 13, 1986; Department of Revenue v. Anheuser-Busch, 527 So.2d 877 (Fla. 1st DCA 1988), reh. den. Aug. 1, 1988. Accordingly, the Department finds that your Agreement is not patterned to the exemption for migrant labor camps under s. 212.03(7)(d), F.S.

Next, we turn to the question of whether your Agreement is a "bona fide written agreement for continuous residence for longer than 6 months in duration"[s. 212.03(1), F.S.] or a "bona fide written lease for longer than 6 months in duration for continuous residence"[s. 212.03(4), F.S.].

First, we revert to a discussion of the exemption for bona fide written leases provided for under s. 212.03(4), F.S. The terms "bona fide written lease" or "bona fide written agreement" are not defined in the Florida Statutes; therefore, we must look to its common and ordinary meaning. Black's Law Dictionary, sixth edition, provides the following definitions:

Bona fide. In or with good faith; honestly, openly, and sincerely; without deceit or fraud....

Lease. Any agreement which gives rise to relationship of landlord and tenant (real property) or lessor and lessee (real or personal property).... Contract wherein one lets to the other a certain space, property or building for specified unit of time....

The contract between the Licensee and your Motel is designated as a "license agreement"; not a lease. In fact, paragraph (5) of the terms and conditions of the Agreement specifically state that the Motel "does not operate under laws governing Landlord/Tenants in Chapter 83, F.S., and Licensee obtains no property rights under this agreement." Thus, according to the Agreement, no landlord/tenant relationship exists and the instrument is not a lease. Since the instrument is not a lease, the license agreement would not be eligible for the exemption provided for leases under s. 212.03(4), F.S.

Next we turn to a discussion of the applicability of the

exemption provided for "bona fide written agreements for continuous residence for longer than 6 months in duration" provided under s. 212.03(1), F.S.

It is our position that when the tenant and the landlord have in good faith executed a signed, written agreement, such as a license, that provides for the tenant's right to occupy the living accommodations for a period longer than six months, such agreement is considered a bona fide written agreement for continuous residence for longer than 6 months in duration, for purposes of the exemption granted under s. 212.03(1), F.S.

Having established that the Agreement is a "written agreement," we now turn to the question of whether the substance of the Agreement is a bona fide agreement for continuous residence for greater than 6 months. Based upon the Black's definition of "bona fide," we examine the question of whether the Agreement represents a "good faith" Agreement for continuous residence for longer than six months in duration.

General provisions of the Uniform Commercial Code contained in Chapter 671.203, F.S., discuss the obligation of good faith. Section 671.201(19), F.S., provides the following definition for the term:

(19) "Good faith" means honesty in fact in the conduct or transaction concerned.

Section 671.203, F.S., specifically provides:

Obligation of good faith. -- Every contract or duty within this code imposes an obligation of good faith in its performance or enforcement.

While the phrase "bona fide agricultural purposes," as defined in Fla Jur 2d, Words and Phrases 169, is used with reference to agricultural concerns, the term "bona fide" contained with such phrase is not, in itself, exclusively applicable to only agriculture. The Department is supported in its argument by the explication of the term "bona fide" provided in the context of agricultural purposes as follows:

The term "bona fide" imposes the requirement that the agricultural use be real, actual, and of a genuine nature, as opposed to a sham or deception. The concept of "bona fide" includes "in good faith," "genuine," and "without fraud or deceit."(Emphasis Supplied)

You have conceded that the tenant/licensee will have the characteristics of a migrant, temporary or seasonal worker, as described in your letter of May 28, 1996 and again in paragraph 13 of the Agreement. Your letter also indicates that you are "contemplating ownership of a transient establishment." You indicated that one of the regulatory classifications of your Motel pursuant to Chapter 509, F.S., is as a "transient apartment."

In considering whether the agreement is bona fide, the Department looks to the substance of the transaction rather than the form (see previously mentioned cites). Once again, while the form of the Agreement suggests that it is a license to use the units for a period of 185 days, the substance of the Agreement, which provides that the licensee is a migrant, temporary, or seasonal worker, casts significant doubt whether this is a "real or actual" license to use the units for a period greater than six months.

Several provisions of the Agreement and the Rules and Regulations are consistent only with those used in short term leases. The provisions which are atypical of long term leases are as follows: a specified check-out time; a prohibition against the stay of additional overnight guests; and the weekly payment of rent.

It is important to note that, in regard to contracts, Florida's courts have indicated that the intent of the parties must be determined from the nature and object of the transaction. Boyette v. Carden, 347 So. 2d 759 (Fla. 1st DCA 1977); Bay Management, Inc. v. Beau Monde, Inc., 366 So. 2d 788 (Fla. 2nd DCA 1978); Royal Oak Landing v. Pelletier, 620 So. 2d 786 (Fla. 4th DCA 1993). Again, the substance of a transaction and not the form dictates its tax treatment. See previously

mentioned citations. You have indicated that it is your intent to lease to "migrant, temporary, or seasonal worker(s)." The description rendered to your tenants is of a transitory nature which suggests that such tenants seldom reside in one place beyond one half of a year. In addition, paragraph 11. of the Agreement restricts the liability of the Motel exclusively to the provisions of Chapter 509, F.S., which regulates public lodging establishments. Please note that the definition provided for "public lodging establishment" in s. 509.013(4)(a), F.S., quoted above, indicates that such establishments are usually rented to guests more than three times in a calendar year for periods of less than 30 days or 1 calendar month, or are advertised to the public as places regularly rented to guests.

In Bay Management, Inc. v. Beau Monde, Inc., supra, the Court found that, in construing a contract, it must consider the objects accomplished, and to such end, should place itself in the position of the parties when the contract was entered into. It is necessary to gather meaning of the parties from the whole instrument and not from lines taken out of context, and wherever possible to construe apparent conflicting provisions of a contract so that the provisions do not conflict. Berwick Corp. v. Kleinginna Invest. Corp., 143 So. 2d 684 (Fla. 3rd DCA 1962). The temporary or seasonal description of your tenants and the provisions mentioned above which are consistent with transient rentals appear to directly conflict with the 185-day term of the Agreement. It is the intention of the Legislature to provide "a tax on the rental of lodging facilities that primarily serve transient guests"[s. 212.03(6)(b), F.S.].

Based upon the foregoing, the Department finds that the Agreement is not in substance a bona fide (real or actual) written agreement for a period in excess of six months as provided by s. 212.03(1), F.S. Since the Motel would not be eligible for any of the exemptions discussed [s. 212.03(1) and (4); and s. 212.03(7)(d), F.S.], the weekly fee would be subject to Sales and Use Tax (6 percent) and the Local Option Tourist Development Tax (XXXX).

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,

Carol Schwarz
Senior Tax Specialist

Enclosure
Control No. 25724