Could a Florida wholesale motor-vehicle dealer register and plate a vehicle held for resale without triggering sales or use tax?

Plain-English summary

Florida refused to authorize tax-free regular license plates for vehicles held in a wholesale dealer's resale inventory. Licensing, titling, or registering the vehicle triggered use tax because Chapter 212 contained no express or implied exemption for the arrangement.

Wholesale dealers could not use interchangeable dealer plates and could issue no more than two 30-day temporary tags for the same vehicle. That created a practical problem when extensive reconditioning took longer than 60 days and the vehicle needed to travel to repair shops, parts stores, auctions, or other dealers.

The Department acknowledged those facts but found they did not create a tax exemption. Keeping the vehicle in resale inventory and offering it for sale after reconditioning did not allow the dealer to obtain a regular plate without tax.

What this means for you

Wholesale motor-vehicle dealers

Registering an inventory vehicle is different from using an interchangeable dealer plate. Under this ruling, a regular title, license, or registration for the vehicle creates use-tax consequences even if resale remains the ultimate plan.

Reconditioning and logistics teams

Long repair timelines and temporary-tag limits did not change the tax result. Plan transportation and registration choices with those limits in mind.

Accountants and tax professionals

Do not treat resale-inventory status alone as an exemption from the tax-documentation requirement tied to vehicle title, licensing, and registration.

Common questions

Q: Could the wholesale dealer obtain a regular plate tax-free? A: No.

Q: Did it matter that the vehicle remained in inventory and was offered for resale? A: No. The Department still found that licensing, titling, or registration triggered use tax.

Q: Why did the dealers request regular plates? A: Wholesale dealers could not use dealer plates, and the law allowed no more than two 30-day temporary tags for the same vehicle while lengthy reconditioning could exceed 60 days.

Q: Did the Department find an exemption anywhere in Chapter 212? A: No express or implied exemption applied to the stated facts.

Q: Can another dealer rely on this TAA? A: Not automatically. The advisement states that it binds the Department only under the facts and circumstances described in the request, and later legal changes or judicial interpretations may produce a different result.

Citations and references

• Fla. Stat. § 212.06(10) — tax evidence required before a vehicle title, license, or registration may issue
• Fla. Stat. § 320.27(1)(c)3. — wholesale dealer restriction on dealer plates
• Fla. Stat. § 320.131(2) — 30-day temporary tags and two-tag limit
• Fla. Admin. Code r. 12A-1.007(8) — motor-vehicle tax treatment cited in the advisement heading
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96A-053

Original ruling text

Nov 22, 1996

Re: Technical Assistance Advisement 96A-053 Sales and Use Tax - Registration of Motor Vehicles Held in Inventory for Sale by Wholesale Motor Vehicle Dealers s. 212.06(10), F.S., and Rule 12A-1.007(8), F.A.C. Parties: XXXX (Herein "the Association") Wholesale Motor Vehicle Dealers Who are Members of the Association (Herein referred to individually as "Member" or collectively as "the Members")

Dear :

This response is in reply to your May 23, 1996, 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 imparts the following background information relative to the issue under advisement herein:

Wholesale motor vehicle dealers are licensed by the Department of Highway Safety and Motor Vehicles. These dealers are only authorized to buy from or sell to licensed motor vehicle dealers or auctions. Wholesale dealers may not sell motor vehicles at retail.

Unlike other motor vehicle dealers, a wholesale motor vehicle dealer is specifically prohibited from using dealer license plates (s. 320.27(1)(c)(3), F.S.). Dealer license plates are used on vehicles owned by the dealer which are part of the dealer's inventory and are being offered for

sale. Dealer license plates may also be used when the vehicle is being operated in connection with a dealer's business (e.g., transporting vehicles to and from auctions, other dealerships and repair facilities; allowing potential buyers an opportunity to test drive the vehicle). Each dealer license plate is interchangeable on any vehicle owned by the dealership which is part of the dealer's inventory and which is being offered for sale. Since these license plates are not assigned to any particular vehicle but are assigned to the dealership to be placed on vehicles for resale, no sales tax is due when these license plates are purchased.

When a wholesale motor vehicle dealer transports a motor vehicle to and from auctions and motor vehicle dealership locations, the wholesale motor vehicle dealer must use Temporary Tags, as authorized by s. 320.131, F.S.

A significant number of wholesale motor vehicle dealers recondition vehicles prior to reselling them. In some cases, especially those involving high priced vehicles (e.g., Jaguars, Porsches, etc.), the reconditioning process can be quite extensive and lengthy. During the reconditioning phase, the wholesale motor vehicle dealer must test drive and transport the vehicle to various body shops, repair facilities, parts stores, etc. Although the vehicle may not yet be fully reconditioned, the vehicle is nonetheless part of the wholesale dealer's inventory and is being offered for sale upon completion of the reconditioning process.

Sometimes this process may take 90 or more days to complete. In such cases, the wholesale dealer loses the authorization to transport the vehicle as needed. The reason for this is found in s. 320.131(2), F.S., which authorizes the sale and use of temporary tags. This section specifically states: "... A temporary tag shall be valid for 30 days, and no more than two shall be issued to the same person for the same vehicle." Therefore, a wholesale motor vehicle dealer has no lawful means by which to transport any vehicle

remaining in its inventory for a period longer than 60 days.

An official of the Bureau of Titles and Registrations, Division of Motor Vehicles, Department of Highway Safety and Motor Vehicles (DHSMV), was contacted regarding this problem. When asked if the department would allow a wholesale motor vehicle dealer to purchase a regular license plate, strictly for the purpose of placing it on a vehicle for resale, without collection of sales tax, the response was "no". The official did state, however, that should a ruling from the Department of Revenue allow DHSMV the authority to sell regular license plates under these conditions, they would reverse their position.

REQUESTED ADVISEMENT

You request the following of the Department:

It is respectfully requested that the Department of Revenue issue a Technical Assistance Advisement which would authorize the Department of Highway Safety and Motor Vehicles to issue regular license plates to wholesale dealers to be placed on vehicles which are part of their inventory and are being offered for sale, without the requirement to collect sales tax.

DISCUSSION OF LAW

Section 212.06(10), F.S., provides in relevant part the following: (10) No title certificate may be issued on any boat, mobile home, motor vehicle, or other vehicle, or, if no title is required by law, no license or registration may be issued for any boat, mobile home, motor vehicle, or other vehicle, unless there is filed with such application for title certificate or license or registration certificate a receipt, issued by an authorized dealer or a designated agent of the Department of Revenue, evidencing the payment of the tax imposed by this chapter where the same is payable. For the purpose of enforcing this provision, all

county tax collectors and all persons or firms authorized to sell or issue boat, mobile home, and motor vehicle licenses are hereby designated agents of the department and are required to perform such duty in the same manner and under the same conditions prescribed for their other duties by the constitution or any statute of this state. All transfers of title to boats, mobile homes, motor vehicles, and other vehicles are taxable transactions, unless expressly exempt under this chapter. (Emphasis Supplied)

Chapter 212, F.S., does not contain any express or implicit exemption from sales or use tax for the licensing, titling, or registration of a vehicle under the instant facts and circumstances.

CONCLUSIONS OF LAW

In view of the fact that s. 212.06(10), F.S., does not contain any express or implicit exemption from sales or use tax for the licensing, titling, or registration of a vehicle by a wholesale dealer under the instant facts and circumstances, the act of licensing, titling, or registration of a vehicle by a wholesale dealer under the instant facts and circumstances will, thus, give rise to the application of use tax under Chapter 212, F.S.

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
Tax Policy and Dispute Resolution

DW/

Control No. 24691