Were duty-free goods exempt from Florida sales tax when an international passenger received them on the jetway at the aircraft door?

Plain-English summary

The duty-free goods qualified as exempt export sales when delivered to international passengers at the aircraft door. The retailer verified each passenger's name and international ticket, and its registers would not allow a sale without that information. Passengers received the merchandise only after surrendering their boarding passes and walking down the jetway toward the plane.

Those controls rebutted the normal presumption that customer possession in Florida means Florida delivery. The Department found a continuous export journey with a high degree of certainty and only a remote chance of domestic diversion.

If a flight could not depart and passengers had to leave, the retailer took back all duty-free merchandise and held it in a restricted area until the passengers' later international departure.

What this means for you

The exemption rested on the timing and control of delivery. The customer did not receive the goods in an ordinary retail area; delivery occurred at the immediate point of departure after the boarding pass had been surrendered.

Duty-free status by itself is insufficient. Retailers need facts that demonstrate a continuous export process and prevent the goods from entering domestic use.

Common questions

Q: When did the passenger receive the goods? After surrendering the boarding pass, on the jetway at the aircraft door.

Q: Why was domestic diversion considered remote? The passenger was already proceeding to the international aircraft, and the retailer reclaimed the goods if the flight did not depart.

Q: Did the usual statutory export shipment methods apply? No. The ruling said none of the listed methods was present, but the retailer rebutted the resulting presumption through proof of continuous and certain export.

Citations and references

• Fla. Stat. § 212.06(5)(a)1. — Florida-delivery presumption and export shipment methods
• Fla. Admin. Code r. 12A-1.064 — interstate and foreign-commerce sales
• Fred McGilvray, Inc. v. Askew, 340 So. 2d 475 (Fla. 1976) — statutory methods describe certainty of export and the presumption can be rebutted
• Great Lakes Dredge & Dock Co. v. Department of Revenue, 381 So. 2d 1078, 1084-85 (Fla. 1st DCA 1979) — continuous foreign journey and remote domestic diversion
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97A-074

Original ruling text

Nov 12, 1997

Re: Technical Assistance Advisement 97A-074
Sales Tax - Duty Free Export Sales
Section 212.06(5)(a)1., F.S.
Rule 12A-1.064, F.A.C.

Dear :

This is a response, styled a Technical Assistance Advisement
(TAA), to your letter dated August 15, 1997, wherein you asked
the Department to issue an expedited TAA to your client, XXX
(hereinafter "Client"), concerning whether certain duty free
sales made to airline passengers departing the United States
from the XXX (hereinafter "Airport") are subject to Florida
sales tax under Chapter 212, Florida Statutes.

At issue is whether the statutory presumption under s.
212.06(5)(a)1., F.S., interpreted by Rule 12A-1.064, F.A.C.,
that a retail sale made to a person physically present, who
takes possession of the tangible personal property at the time
of the sale, has been delivered in this state, has been rebutted
due to the continuousness and certainty of the exportation
process.

Facts

In your letter you state that:

[Client's] operations as a duty free shop meet all U.S.
Federal requirements for duty-free shops. Purchases from
[Client's] duty free shop at the [Airport] are only made
after the sales person has confirmed the passenger's name
and has ascertained that the person is scheduled to depart
from the United States within a few hours. The purchases
are not delivered to the passenger until they reach the
aircraft door to ensure exportation. In rare instances
where the aircraft is unable to depart due to mechanical
problems or due to weather conditions, and the passengers

must depart the restricted areas to spend the night in an
area hotel, all of the duty-free goods are taken from the
passengers on the flight and placed in a restricted or
duty-free area. The goods can then be retrieved by the
passengers in the manner in which they first received them
when [they] board their flight out of the United States.
[Client] is solely responsible for any discrepancies
between the goods sold for departure on a flight and any
goods not returned if the flight does not depart. Again, no
one may purchase duty-free goods from [Client's] store
unless they possess an airline ticket showing that they are
departing on an international flight. Without proper
information from a valid airline ticket and the passenger's
name, the duty-free shop's computerized registers will not
permit a sale.

In a supplemental letter, dated September 2, 1997, you added
that:

[D]eparting international passengers are delivered their
duty-free goods only after they have given their boarding
pass to the gate agent and traveled down the ramp which
leads to the aircraft door.

Department Response

Based on all the information provided the Department has
determined that while none of the criteria stated in s.
212.06(5)(a)1., F.S., are present, the sales to ticketed
international passengers otherwise qualify as export sales under
Florida law.

In Fred McGilvray, Inc. v. Askew, 340 So.2d 475 (Fla. 1976), the
Florida Supreme Court considered the three criteria provided in
s. 212.06(5)(a)1., F.S., as to the mode of shipment of goods
outside the state and determined that the statutorily specified
shipment by licensed exporter, common carrier, or by the United
States mail were descriptive of the certainty of exportation,
and if any one of these modes of transportation was selected
then no statutory presumption was present that the goods were
not purchased for export. Thus, the goods were not subject to

tax. If none of the three methods of shipment is selected, then
the presumption arises in s. 212.06(5)(a)1., F.S., that the
goods were not purchased for export. Such a presumption can be
rebutted.

The First District Court of Appeal, in Great Lakes Dredge & Dock
Company v. Department of Revenue, 381 So.2d 1078 (Fla. 1DCA
1979), stated that this rebuttal can be achieved by a showing
that the "property has been started upon its foreign
transportation in a continuous route or journey with a high
degree of certainty that it is headed for its foreign
destination and will not be diverted to domestic use." Id. at
1084. The goods in that case were dedicated to a continuous and
certain process of exportation in that the property was ordered
pursuant to a foreign contract and was marked for exportation.
The court determined that the limited delays before shipment
were "... merely necessary steps in the exportation process and
did not result in the goods settling into the mass of property
of the state." Id. at 1084. The court also noted that "[a]ny
possibility that Great Lakes would divert the goods to the
domestic market was remote and did not occur." Id. at 1085.

Using the rationale in the Great Lakes decision, and considering
the specific facts in this instant case, this certain and
continuous process appears to be present. The transfer of that
property from Client to its customer, who is in the almost
immediate and contiguous point of departure from the country, is
a necessary step in the exportation process and does not result
in the goods settling into the mass of property in Florida. As
also found in the Great Lakes case, the possibility that the
goods would be diverted to the domestic market is remote in that
the passengers have already surrendered their boarding passes
and are already on the jetway leading to the aircraft which is
to transport those passengers out of the United States. If for
some unforeseen reason the aircraft is unable to depart as
scheduled and the passenger are forced to disembark the plane
without leaving the country, all duty free merchandise,
purchased by the passengers from Client, is taken from the
passengers and stored in a restricted area by Client until such
time as it can be retrieved by the respective passengers upon
their departure from the United States.

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,

Kama Schultz
Tax Law Specialist
Tax Policy Dispute Resolution

Ctrl No: 30623