Were a city's pier leases to food-and-drink concessionaires exempt from Florida sales tax, and did the same rule cover a license?
Apply this to your situation
This page answers the general question as of 1998. Ezel answers yours, under current Florida tax law, with citations.
Subject
Rental Space
Plain-English summary
The city's pier leases to food-and-drink concessionaires were exempt from Florida tax on commercial real-property rentals, but its separate license agreement was taxable. The pier had already been treated as a recreational facility, and the reviewed leases required businesses such as restaurants, bakeries, coffee shops, ice-cream sellers, and similar tenants to sell food and drinks there.
The exemption applied only while each lessee actually provided both food and drink concessionaire services within the pier. Florida distinguished a lease, sublease, or rental from a license to use space. The rule expressly kept licenses taxable, so the city had to collect and remit tax on all consideration received under its license agreement.
The city also asked how to recover tax previously paid on exempt leases. The Department instructed it to submit the then-current refund form with supporting documents and original assignments of refund rights from the affected lessees. The advisement's specific limitation periods and form references describe the law and process in 1998, not necessarily current refund procedure.
What this means for you
For the historical concessionaire exemption applied here, both the location and the tenant's actual business mattered. A food-and-drink seller inside a qualifying recreational facility could receive exempt leased space, while a different use—or a tenant that stopped selling both food and drink—could lose the result.
Calling an occupancy arrangement a license had a direct tax consequence. The Department did not extend the lease exemption to the city's licensed pier space.
Common questions
Q: Were all rentals at the pier automatically exempt? No. The exemption depended on the lessee actually selling both food and drink as a concessionaire within the recreational facility.
Q: Did a license to use pier space qualify? No. The ruling said licenses had remained taxable and required tax on the license consideration.
Q: Could the city seek refunds of tax paid on exempt leases? Yes under the stated historical procedure, using a refund application, supporting records, and assignments of rights from lessees.
Q: Do the ruling's refund deadlines still apply today? The advisement states the deadlines in effect for those payments in 1998. A current claimant should verify today's statute, forms, and filing period.
Citations and references
- Fla. Stat. § 212.031(1)(a)10. — exemption for qualifying real property leased to food-and-drink concessionaires at recreational facilities
- Fla. Admin. Code r. 12A-1.070(1)(a)8., (b)3. — lease exemption, taxable licenses, and retail-concessionaire definition
- Fla. Stat. § 215.26 — refund claims and filing periods described in the advisement
- Fla. Stat. § 213.01 — fair, efficient, and impartial administration of revenue laws
- Fla. Stat. § 213.22 — Technical Assistance Advisements
Source
- Landing page: Florida Tax Law Library
- Advisement: TAA 98A-043
Original ruling text
SUMMARY
A City was leasing space on a pier to several different
Lessees. In a previous TAA, the pier was deemed to be a
recreational facility. The terms of the leases and other
supporting documentation indicated that the Lessees were
providing food and drink concessionaire services. Pursuant
to s. 212.031(1)(a), F.S., sales tax is imposed on the
privilege of renting, leasing, letting or granting a
license to use real property, unless such property is
specifically exempt. A specific exemption for property
leased, subleased, or rented to a person providing food and
drink concessionaire services within the premises of a
recreational facility is provided in s. 212.031(1)(a)10.,
F.S. Since all of the documentation indicated that
property was being leased to lessees providing food and
drink concessionaire services within the premises of a
recreational facility, this TAA provided that the City was
not responsible for collecting and remitting tax as long as
its lessees continue to sell both food and drinks on the
pier.
The City also entered into a license agreement with a
licensee for the license to use the pier. Since the
exemption provided in s. 212.031(1)(a)10., F.S., does not
inure to licenses for such spaces, the City was instructed
to collect and remit tax on all consideration received for
the license agreement.
Jun 12, 1998
Re: Technical Assistance Advisement 98A-043
Sales and Use Tax - Rental Space
Petitioner: XXX ("City")
FEI: XX
XXX ("Pier")
Sections: 212.031(1)(a)10., 215.26, F.S.
Rule: 12A-1.070, F.A.C.
Dear :
This letter is a response to your petition dated February
19, 1998, for the Department's issuance of a Technical
Assistance Advisement ("TAA") concerning the above referenced
party and matter. Your petition has been carefully examined and
the Department finds it to be in compliance with the requisite
criteria set forth in Chapter 12-11, F.A.C. This response to
your request constitutes a TAA and is issued to you under the
authority of s. 213.22, F.S.
DISCUSSION OF FACTS
In your letter, the attachments to your letter, and in our
telephone conversations, you presented the following:
The City owns the Pier and rents space on the Pier to
various businesses. The Florida Department of Revenue
("Department") responded in Technical Assistance Advisement
("TAA") 97(A)-011 that the Pier qualified as a recreational
facility. This TAA further provided that any lessee that
qualified as a "concessionaire" selling food and drink on
the Pier would be eligible for the exemption on its rental
payments made to the City as provided in s.
212.031(1)(a)10., F.S.
The following are pertinent excerpts from the leases and
amendments provided for review:
Lease #1:
THIS LEASE, is made and entered and declared to be
effective as of the 30th day of June, 1993, by and between
[CITY],... hereinafter referred to as the "Landlord"
(Landlord being the owner of the "Pier")... and Lessee
One,... hereinafter referred to as "Tenant"....
B. Premises:
(1) Suite:
22 in the Pier's first floor food court...
E. Use of Premises:
(1) Required, Permitted, Prohibited, and Exclusive Uses:
(a) Tenant's required uses are as follows:
(i) Food court restaurant which serves
grilled steak and onion sandwiches, fried
potatoes, and sausage, along with soft
drinks....
Amendment #1:
THIS PIER LEASE AGREEMENT... is made and entered into as of
the 17th day of October, 1996, by and between [City],...
("Landlord") and Lessee One,... ("Tenant")...
WHEREAS, Landlord and Tenant entered into a Pier Lease
Agreement ("Agreement")...
WHEREAS, Landlord and Tenant wish to amend the
Agreement....
C. Section F. of the Fundamental Lease Provisions Tenant's
Trade Name: Lessee One....
Lease #2:
THIS LEASE, is made and entered and declared to be
effective as of the 30th day of June, 1993, by and between
[CITY],... hereinafter referred to as the "Landlord"
(Landlord being the owner of the "Pier")... and Lessee
Two... hereinafter referred to as "Tenant"....
B. Premises:
(1) Suite:
16 in the Pier's first floor food court
E. Use of Premises:
(1) Required, Permitted, Prohibited, and Exclusive Uses:
(a) Tenant's required uses are as follows:
(i) Food court chicken and seafood shop which serves a
variety of chicken and seafood products....
Amendment #2:
THIS PIER LEASE AMENDMENT... is made and entered into as of
the 17th day of October, 1996, by and between [City]
("Landlord") and Lessee Two....
WHEREAS, Landlord and Tenant entered into a Pier Lease
Agreement ("Agreement") for the lease of Suite 16 of the
Pier on the 30th day of June 1993, and
WHEREAS, Landlord and Tenant wish to amend the Agreement.
...
B. Section E. (i) of the Fundamental Lease Provisions Use
Premises: Food court restaurant which serves... strawberry
shortcake,... strawberry cookies, strawberry pastries,
strawberry milkshake...[,] [b]akery items...
C. Section F. of the Fundamental Lease Provisions Trade
Name: Lessee Two....
Lease #3:
THIS LEASE, made and entered into this 29th day of April,
1993, by and between [CITY] hereinafter referred to as the
Landlord, and Lessee Three hereinafter referred to as
Tenant....
... [T]he Landlord does hereby lease to the Tenant, the
following described property for use as a manufacture and
sale of fudge, with the non-exclusive right to manufacture
and/or sale of cotton candy, roasted peanuts, fresh
squeezed fruit juices, and citrus fruit shipping that
certain space designated as food court... being located at
the... Pier....
- Tenant's Trade Name: Lessee Three...
Lease #4:
THIS LEASE, made and entered into this 14 day of Jan[.],
1988, by and between [CITY] hereinafter referred to as the
Landlord, and Lessee Four, hereinafter referred to as
Tenant....
... [T]he following described property for use as a Spanish
Restaurant that certain space designated as The Fourth
Floor... being located at the... Pier....
3(f) Percentage Rent Rate: Minimum Gross Sales of... 5%
food & Merch. 6% liquor....
Amendment #4:
THIS AMENDMENT TO PIER LEASE... is made and executed this
1st day of May, 1993 by and between [CITY]... (herein
"Landlord"), and Lessee Four... (herein "Tenant")....
WHEREAS, the purpose of this Lease Amendment is to modify,
supplement, and amend the Lease....
- Use.
4.1 ... Tenant shall use the premises as a restaurant,
banquet, catering, and full service bar facility....
Lease #5:
THIS LEASE ("Lease"), made and entered into this 5th day of
August, 1993, by and between [CITY],... hereinafter
referred to as the "Landlord" (and owner of the Pier), and
Lessee Five... hereinafter referred to as "Tenant"....
E. Use of Premises:
(1) Permitted Uses:
A full service restaurant and lounge.... Liquor and other
beverages shall also be table waited....
Lease #6:
THIS LEASE, made and entered into this 12th day of April,
1988, by and between [CITY] hereinafter referred to as the
Landlord, and Lessee Six, hereinafter referred to as
Tenant....
... [T]he Landlord does hereby lease to the Tenant, the
following described property for use as a Hamburger, Hot
Dog Food Operation..., being located at... the Pier....
- Premises:
(a) Location Suite #18
- Use of Premises:
(a) Permitted Use: Hamburgers, hot dogs, topping bar,
fries, slush, popcorn, roasted peanuts, grilled chicken
sandwich[e]s, soda....
Assignment of Lease
I, the undersigned, hereby assign my right, title, and
interest in that certain lease dated April 12, 1988, known
as The Pier lease entered into between [City] and Lessee
Six, to Assignee... Dated this 23rd day of February, 1989.
Agreement For Assignment of Subscription Rights
Assignee and Assignor hereby agree to the following terms
and conditions regarding the assignment of subscription
rights...
WHEREAS, "Assignor" desires to sell to "Assignee" his
subscription rights....
-
That "Assignee" shall be assigned by "Assignor",
"Assignor's" right, title and interest to his subscription
rights to leased property.... -
That "Assignee" hereby agrees to be responsible for all
lease payment[s] owed and due to the above-named landlord
and shall hold "Assignor" harmless from same.... -
"Assignor" shall assign all his rights in the lease
between "Assignee" and [City]. "Assignor" shall execute
any and all documents necessary to assign said leasehold
rights....
Lease #7:
THIS "LEASE," is made and entered and declared to be
effective as of the 18th day of December, 1997, by and
between [CITY],... hereinafter referred to as the
"Landlord" (Landlord being the owner of the "Pier" as
herein defined), and Lessee Seven... hereinafter referred
to as "Tenant"....
c. Term:
(1) "Commencement Date":
January 1, 1998...
E. Use of Premises:
(1) Required, Permitted, Prohibited, and Exclusive Uses:
(a) Tenant's required uses are as follows:
(i) Bar and restaurant...
Lease #8:
THIS LEASE, is made and entered and declared to be
effective as of the 20th day of February, 1996, by and
between [CITY],... hereinafter referred to as the
"Landlord" (Landlord being the owner of the "Pier" as
herein defined), and Lessee Eight, hereinafter referred to
as "Tenant."
E. Use of Premises:
(1) Required, Permitted, Prohibited, and Exclusive Uses:
(a) Tenant's required uses are as follows:
(i) Food court restaurant which serves the following items:
Coney Island (hot dog on bun with chili, onions and
mustard)... Beverages...
Lease #9:
THIS LEASE, is made and entered and declared to be
effective as of the 30th day of June, 1993, by and between
[CITY],... hereinafter referred to as the "Landlord"
(Landlord being the owner of the "Pier" as herein defined),
and Lessee Nine... hereinafter referred to as "Tenant"....
B. Premises:
(1) Suite:
17 in the Pier's first floor food court
E. Use of Premises:
(1) Required, Permitted, Prohibited, and Exclusive Uses:
(a) Tenant's required uses are as follows:
(i) Food court restaurant which serves gourmet coffee and
related coffee and bakery products....
F. Tenant's Trade Name:
Lessee Nine...
Lease #10:
THIS LEASE, is made and entered and declared to be
effective as of the 30th day of June, 1993, by and between
[CITY],... hereinafter referred to as the "Landlord"
(Landlord being the owner of the "Pier" as herein defined),
and Lessee Ten... hereinafter referred to as "Tenant"....
E. Use of Premises:
(1) Required, Permitted, Prohibited, and Exclusive Uses:
(a) Tenant's required uses are as follows:
(i) Bakery and delicatessen serving food items...
(ii) The sale of non-packaged (dispensed) beer and wine...
(iii) The sale of non-alcoholic fancy fruit drinks...
F. Tenant's Trade Name:
Lessee Ten
Amendment #10:
THIS PIER LEASE AMENDMENT ("FIRST AMENDMENT") is made and
entered into as of the 17th day of October, 1996, by and
between [City],... ("Landlord") and Lessee Ten...
("Tenant")...
WHEREAS, Landlord and Tenant entered into a Pier Lease
Agreement ("Agreement")...
WHEREAS, Landlord and Tenant wish to amend the
Agreement....
C. Section F. of the Fundamental Lease Provisions Tenant's
Trade Name: Lessee Ten.
Lease #11:
THIS LEASE, made and entered into this 19th day of January,
1988, by and between [CITY] hereinafter referred to as the
Landlord, and Lessee Eleven, hereinafter referred to as
Tenant....
... [T]he Landlord does hereby lease to the Tenant, the
following described property for use as an Ice Cream/frozen
dessert parlour that certain space... being located at
the... Pier...
- Tenant's Trade Name: Lessee Eleven....
First Assignment of Lease #11
(*Please note that XXX is President and XXX is Secretary of
XXX).
THIS ASSIGNMENT OF LEASE is made this 2nd day of August,
1989, by and between Assignor... (collectively the
"Tenant") and Assignee... (the "Buyer").
WHEREAS, The Tenant has agreed to sell and the Buyer has
agreed to purchase the business know (sic) as XXX, located
at the... Pier (the "Leased Premises"); and
WHEREAS, The Tenant would not sell and the Buyer would not
buy such assets unless the lease between the City, as
landlord (the "Landlord") and the Tenant, as tenant, dated
January 19, 1988 (the "Lease") was assigned to Buyer....
PARAGRAPH 1: ASSIGNMENT
The Tenant does hereby assign, transfer, and set over to
the Buyer all of the Tenant's right, title an (sic)
interest in and to the Lease....
Second Assignment of Lease #11
... Lessee and Assignor, hereby transfer and assign to
Assignee... its successors and assigns, as Assignee, all
our rights and interest in that certain lease ("Lease")
between Lessee Eleven, as Lessee and ("City") as Lessor for
the lease....
First Amendment #11:
THIS PIER LEASE AMENDMENT ("Amendment") is made and entered
into as of the 19th day of July, 1991, by and between
[CITY] (hereinafter referred to as "Landlord") and Lessee
Eleven (hereinafter referred to as "Tenant")...
WHEREAS, Landlord and Tenant entered into a Pier Lease
Agreement for the lease of Suite 15 at the... Pier on the
19th day of January, 1988.
WHEREAS, Landlord and Tenant wish to amend The Pier Lease
Agreement.
- Under Paragraph 4... of the Fundamental Lease Provisions
permitted use: sale of ice cream products,... candies...,
packaged snacks..., coffee....
Requested Advisement
Are the above leases exempt under s. 212.031(1)(a)10.,
F.S.? If so, how can the City pursue a refund of taxes paid in
error?
Department's Determination
Section 212.031, F.S., provides in pertinent part:
(1)(a) It is 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 real property unless such property is:...
- Leased, subleased, or rented to a person providing food
and drink concessionaire services within the premises of
a... recreational facility....
Rule 12A-1.070, F.A.C., provides in pertinent part:
(1)(a) Every person who rents or leases any real property
or who grants a license to use, occupy, or enter upon any
real property is exercising a taxable privilege unless such
real property is:...
- ... [L]eased, subleased, or rented to a person providing
food and drink concessionaire services within the premises
of a... recreational facility; however, licenses for such
spaces have been taxable since July 1, 1986, and remain
taxable....
(b)3. For purposes of this rule, the term "retail
concessionaire," which may be either a lessee or licensee,
shall mean any person who makes sales of food or drink
directly to the general public within the premises of a...
recreational facility....
Section 215.26, F.S., provides in pertinent part:
(1) The Comptroller of the state may refund to the person
who paid same, or his or her heirs, personal
representatives, or assigns, any moneys paid into the State
Treasury which constitute:...
(b) A payment where no tax... is due....
(2) Application for refunds as provided by this section
must be filed with the Comptroller, except as otherwise
provided in this subsection, within 3 years after the right
to the refund has accrued or else the right is barred.
Except as provided in chapter 198 and s. 220.23, an
application for a refund of a tax enumerated in s. 72.011,
which tax was paid after September 30, 1994, must be filed
with the Comptroller within 5 years after the date the tax
is paid. The Comptroller may delegate the authority to
accept an application for refund to any state agency, or
the judicial branch, vested by law with the responsibility
for the collection of any tax, license, or account due. The
application for refund must be on a form approved by the
Comptroller and must be supplemented with additional proof
the Comptroller deems necessary to establish the claim;
provided, the claim is not otherwise barred under the laws
of this state. Upon receipt of an application for refund,
the judicial branch or the state agency to which the funds
were paid shall make a determination of the amount due. If
an application for refund is denied, in whole or in part,
the judicial branch or such state agency shall notify the
applicant stating the reasons therefor. Upon approval of
an application for refund, the judicial branch or such
state agency shall furnish the Comptroller with a properly
executed voucher authorizing payment.
Pursuant to s. 212.031(1)(a), F.S., sales tax is imposed on
the privilege of renting, leasing, letting or granting a license
to use real property, unless such property is specifically
exempt. A specific exemption for property leased, subleased, or
rented to a person providing food and drink concessionaire
services within the premises of a recreational facility is
provided in s. 212.031(1)(a)10., F.S. All of the above leases
indicate that property is being leased to lessees providing food
and drink concessionaire services within the premises of a
recreational facility (the Pier). Accordingly, as correctly
provided in TAA 97(A)-011, the City is not responsible for
collecting and remitting tax on the above leases as long as its
lessees are actually selling both food and drink on the Pier.
Please note, however, that the exemption provided in s.
212.031(1)(a)10., F.S., does not inure to licenses for such
spaces. Licenses have been taxable since July 1, 1986, and
remain taxable. Consequently, the City should collect and remit
sales and use tax on all consideration received for the license
agreement between it and Licensee.
Section 215.26(1), F.S., requires the Department to refund
taxes to the same person who remitted the taxes to the State.
In the instant case this would mean directly to the City, not
its lessees. The Florida Statutes also require that the dealer
first refund all monies to its customer before it may obtain a
refund from the State. The City maintains that this is not
feasible since it does not have the funds with which to finance
a refund to its lessees. However, the City may be able to work
out a solution with its lessees where the lessees assign their
rights to a refund to the City. The Department would then,
based upon such assignments, refund the overpayments to the
City.
Section 213.01, F.S., requires the Department to administer
the revenue laws in a fair, efficient, and impartial manner. In
order to achieve those requirements, under certain limited
circumstances, the Department has allowed persons to assign
their rights to refunds to another. Accordingly, based on the
facts and circumstances of City's situation, the only equitable
option is for the Department to make a refund to City's lessees
based on Assignment of Rights from the lessees. Therefore, I
have enclosed a suggested format for such assignment of rights.
In order to claim a refund of taxes erroneously collected
on real property rentals, City must submit an Application for
Refund, Form DR-26, to the Department of Revenue. I have
enclosed a Form DR-26. The refund claim must be accompanied by
an original Assignment of Rights form for each property and
copies of all supporting documentation relating to each
assignment for which the refund is being claimed. It should be
noted that a refund of any tax charged prior to October 1, 1994,
is barred by the statute of limitations. However, assuming the
City obtains the requisite assignments, City will have five
years within which to file a claim for refund for any taxes paid
on or after October 1, 1994.
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 upon 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 from that
which is 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 that 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 this response.
Sincerely,
Leigh L. Ceci
Tax Law Specialist
Enclosures
Control #33033
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