Was a provider's lump-sum charge for insecticide applied to Florida golf-course soil subject to sales tax as a product sale?

Subject

Insecticide Used on the Soil of Golf Courses

Plain-English summary

The Department concluded that the provider's lump-sum charge was a taxable sale of insecticide to the golf-course operator. The provider sold a product used to control mole crickets and other turf-damaging insects and had trained contract agents apply it to golf-course soil with specialized equipment.

The application was not taxed as the statutory category of nonresidential pest-control service. That service category followed an industry classification covering services to dwellings and other buildings, while the stated work involved golf-course grounds and no building.

The transaction was still taxable because its true object was the insecticide itself. Title transferred after application, the provider invoiced $313 per acre in a lump sum, and sales tax appeared as a separate line item. Florida taxed retail sales of tangible personal property unless a specific exemption applied.

The agricultural exemption did not help. It covered insecticides, herbicides, and fungicides used on crops or groves, and the Department said a golf course was outside that exemption.

What this means for you

The ruling distinguished the label and statutory source of tax from the bottom-line result. Application to outdoor turf was not the enumerated building-related pest-control service, but the chemical sale itself remained taxable.

Bundling product and application into one price did not make the transaction exempt when the Department found the product was the true object and no golf-course exemption applied.

Common questions

Q: Was golf-course application a taxable nonresidential pest-control service? Not under the cited service provision, because that classification concerned pest control connected with buildings or structures.

Q: Why was the transaction taxable anyway? It was a retail sale of tangible personal property—the insecticide—to the golf-course operator.

Q: Did the crop exemption cover golf-course turf? No. The ruling limited that exemption to application on crops or groves.

Q: How did the provider bill the work? It charged a lump sum of $313 per acre and separately stated sales tax on the invoice.

Citations and references

• Fla. Stat. § 212.05(1)(a)1.a. — tax on retail sales of tangible personal property
• Fla. Stat. § 212.05(1)(k)1.b. — specified nonresidential pest-control services
• Fla. Stat. § 212.08(5)(a) — crop-or-grove exemption for specified agricultural chemicals
• Fla. Stat. § 212.21(3) — taxable privileges taxed unless specifically exempt
• Fla. Admin. Code R. 12A-1.001(5) and 12A-1.009 — golf-course spraying and pest-control guidance
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97A-025

Original ruling text

Apr 07, 1997

Re: Technical Assistance Advisement 97(A)-025
Insecticide Used on the Soil of Golf Courses
Section 212.05(1)(a)1.a., and (1)(k)1.b., 212.08(5)(a),
212.21(3), F.S.
Rule 12A-1.001(5)(a), 12A-1.009, F.A.C.
XXX (herein Provider)
XXX (a trademarked insecticide, herein Product)

Dear :

This is a response, styled a Technical Assistance Advisement, to
your letter dated December 12, 1996, in which you ask whether
the written agreements between Provider and operators of Florida
golf courses, whereby Provider contracts to apply the Product on
the soil of such courses, result in sales of the Product to the
golf course operators, or represent sales of pest control
services to such operators. You assert that Provider is selling
the Product to the operators, and in accordance with this
position, Provider has been collecting sales tax on the sales of
the Product. You ask the Department to affirm that the
transactions described below result in taxable sales of tangible
personal property, rather than the sales of pest control
services.

On the first page of your letter you describe a certain chemical
as "... the active ingredient in [the Product], [and that it] is
an insecticide that has proven to be very successful in
controlling mole crickets and other insects." You then add that
"[m]ole crickets are insects indigenous to the southern United
States that destroy turf and are a particular nuisance to Turf
Managers of golf courses."

The Product is formulated, manufactured or compounded either by
Provider at its plant outside Florida, or by independent firms
at plants in or outside Florida.

In your letter you also state that the Product is applied to the

soil of the golf courses in 4 acre sections. The charge for
application of the Product is a lump-sum amount of $313 per
acre. Sales tax is added by a separate notation on the invoice.

You state that the Product is only applied "... through slitapplication equipment by [Provider's] trained Agents, who
represent Provider to the customer throughout the transaction".
You state that slit-applicators are the only equipment used to
apply the Product. You add that "[t]itle to the [Product] does
not transfer until after application to infested areas."

In a telephone conversation on January 29, 1997, the Department
learned that the sales effort in Florida is conducted solely by
employees of Provider. After the application of the Product,
which is achieved by contract personnel and not by employees of
Provider, the golf course operator is billed a lump-sum by, and
pays the invoiced amount directly to, Provider. Pursuant to a
separate contract, Provider pays its agents for the work of
applying the Product to the grounds of the golf course.

You assert that Provider is selling the Product to the golf
course operator. You consider the lump-sum sale of the Product
to be taxable to such operator. You cite Rule 12A-1.001(5)(a),
F.A.C., which, while providing an exemption to insecticides
which are used in the cultivation of crops, does describe the
spraying of golf courses as taxable. You opine that since the
billing is by a lump-sum amount, without an enumeration of
materials and labor, the entire lump-sum is taxable.

You also cite Rule 12A-1.009(7), F.A.C., which describes the
application of insecticides to lawns as not taxable. You
conclude on page 2. that "[o]ne can logically argue that the
application of insecticide to golf courses would also fall
within the boundaries of this rule and would not be subject to
sales tax. However, the materials and labor are not separately
stated so the entire transaction must be evaluated."

You conclude that the true object of the sale is the Product
itself. In support of this view you add that:

"[t]he service is provided with the product in order to

comply with EPA standards which prohibit the over-thecounter sale of [a certain chemical]. The service is then
incidental to the retail sale of the product to the
customer. Since insecticides are taxable when applied to
golf courses, and the application of the Product is
incidental to the sale of this insecticide, we maintain
that the entire transaction is subject to Florida sales
tax. The tax is passed on to the customer as a separate
line item on the invoice/purchase order."

You request confirmation of this view by the Department.

Department Response

Section 212.05(1)(k)1.b., F.S., levies sales tax on "...
nonresidential pest control services (SIC Industry Group Number
734)." The designation "SIC" means, Standard Industrial
Classification Manual, 1987.

The tax is levied on the privilege of engaging in the business
of providing this enumerated service. Thus, the statute taxes
the furnishing of the service of nonresidential pest control.
However, such service must be rendered in conjunction with a
building or structure because SIC Industry Group Number 734 is
entitled Services to Dwelling and Other Buildings.

Thus, the statute, s. 212.05(1)(k)1.b., F.S., taxes pest control
services rendered to nonresidential buildings. Consequently,
the application of the Product to Florida golf courses, under
the facts you provide which include no reference to pest control
to a golf course building, is not a taxable transaction
described in s. 212.05(1)(k)1.b., F.S., or in Rule 12A-1.009,
F.A.C., which interprets the statute.

However, Provider is engaged in the privilege of selling the
Product to the golf course operator. Section 212.05(1)(a)1.a.,
F.S., imposes the tax on the sale of tangible personal property.
Provider invoices, in a lump sum, the sales of the Product to
the golf course operators and as you state, the sales tax is
separately stated on the invoice.

Section 212.21(3), F.S., declares the legislative intent "... to
tax each and every taxable privilege made subject to the tax or
taxes, except such sales, admissions, uses, storages,
consumptions, or rentals as are specifically exempted...."
There is no exemption granted to the sales of the Product to the
golf course operators.

The statutes do include a specific exemption granted in s.
212.08(5)(a), F.S. which exempts insecticides, herbicides, and
fungicides used for application on "crops or groves." However,
this provision does not provide an exemption to the sale of the
Product to a golf course operator, because a golf course does
not come within the reach of the exemption.

Thus, s. 212.05(1)(a)1.a., F.S., levies the tax on the
transaction you describe. Rule 12A-1.001(5), F.A.C., describes
the spraying of golf courses as taxable.

Albeit not part of your inquiry, it is noted that since Provider
is engaged in the business of selling the Product, its
acquisition by Provider from another seller, or in the instance
of manufacture or compounding by provider is not subject to tax.

In sum, The department affirms the collection of sales tax by
Provider from the golf course operators on the sale of the
Product.

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

Ctrl. No. 27472