Were a federal Job Corps center contractor's operating purchases subject to Florida sales and use tax?

Plain-English summary

Florida concluded that federal law protected the described Job Corps contractor from Florida sales and use tax on purchases used to operate its Florida center. The contractor was a for-profit corporation operating the center under a U.S. Department of Labor contract.

The Department explained that Florida law did not provide a state exemption for these purchases. Instead, 29 U.S.C. § 1707(c), applied through federal preemption, barred states and their subdivisions from requiring a qualifying Job Corps contractor to collect or pay sales, excise, use, or similar tax on property, services, or other items connected with operating the center.

The determination was tied to the contract documentation provided. It covered qualifying operating purchases only through the contract's stated end date, October 31, 1999.

Common questions

Was this a Florida statutory exemption? No. The TAA characterized the result as federal immunity based on preemption.

Did the protection cover every purchase by the contractor? The ruling covered purchases made by the contractor for use in operating the Job Corps center.

How long did the determination apply? Through October 31, 1999, the end date shown in the documented contract modification.

What supported the contractor's status? Its Department of Labor contract and the supplied amendments documenting operation of the Florida Job Corps center.

Citations and references

• 29 U.S.C. § 1707(c) (1998)
• U.S. Const. art. VI, cl. 2
• Fla. Stat. § 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98A-100

Original ruling text

SUMMARY

Title 29 of the United States Code, Section 1707(c),
provides that a qualified contractor is not liable to any
State to collect or pay any sales or use tax on the sale or
use of property, service, or other items used in connection
with the operation of a Job Corps Center, program, or
activity. Under the provisions of the taxpayer's contract
with the Department of Labor, it is a contractor operating
a federal job corps center under contract with the
Department of Labor. Therefore, any purchases made by the
taxpayer, as a job corps center contractor, for use in
operating such job corps center are not subject to
Florida's sales and use taxes through the contract end
date.

Dec 29, 1998

Re: Technical Assistance Advisement 98A-100
XXX [hereinafter "Taxpayer"]
Sales and Use Tax - Federal Pre-emption of Sales and Use
Taxes for Contractors Operating a Job Corps Center
29 U.S.C. Section 1707(c)

Dear :

This is a response to your letter dated October 14, 1998,
requesting a Technical Assistance Advisement (TAA) regarding the
above-referenced matter. This response to your request
constitutes a TAA under Chapter 12-11, Florida Administrative
Code (F.A.C.), and is issued to you under the authority of s.
213.22, Florida Statutes (F.S.).

FACTS

In your letter you state:

[Taxpayer], is a for-profit [out-of-state] corporation

which provides services to developmentally disabled
individuals and operates federal job corps centers via
contract with the United States Department of Labor
(hereinafter "D.O.L.") for the education and training of
young adults across the United States. In the state of
Florida, [Taxpayer] operates the XXX Job Corps Center in
XXX, Florida, under contract with the D.O.L. (contract
number XX-X-XXX-XX).

We believe that [Taxpayer] is immune from the payment of
sales and use taxes on all purchases made by it for the
operation of this job corps center pursuant to Title 29
Section 1707 of the United States Code. The Supremacy
Clause of the United States Constitution, Article VI,
Clause 2, provides that any state law which conflicts with
Federal law shall be subordinate to the federal law. The
Supremacy Clause states:

This Constitution, and the laws of the United States which
shall be made in Pursuance thereof; and all Treaties made,
or which shall be made, under the Authority of the United
States, shall be the supreme Law of the Land; and the
Judges in every State shall be bound thereby, and any Thing
in the Constitution or Laws of any State to the contrary
notwithstanding.

The portion of federal law applicable to [Taxpayer's]
status as a D.O.L. job corps center contractor reads in
pertinent part, "Such contractors shall not be liable to
any state ... to collect or pay any sales, excise, use, or
similar tax imposed upon the sale to or use by such
contractors of any property, service, or other item in
connection with the operation of a Job Corps Center,
program, or activity" (29 U.S.C.A. 1707(c)). See Attachment
"A" to this letter for a full reproduction of this statute.

Accordingly, since [Taxpayer] is operating the XXX Job
Corps Center under contract with the federal D.O.L. and is
therefore a job corps center operator as meant under
Section 1707 of the United States Code, any purchases it
makes for uses related to its operation of the XXX Job

Corps Center are not subject to Florida's sales and use
taxes by virtue of the federal pre-emption doctrine.

For documentation and support purposes, attached to this
letter is a copy of select pages from [Taxpayer's] contract
with the D.O.L. signed by a D.O.L. representative
(Attachment "B", 2 pages), a copy of a letter modifying the
contract to extend through the present date (Attachment
"C", 3 pages), and a copy of a D.O.L. letter of intent to
renew the contract into the future (Attachment "D", 1
page)....

Attachment "A" was enclosed and states the proposition that the
Taxpayer has asserted. Further, the enclosure accurately
reflects current federal law.

Attachment "B" was enclosed and provides verification that
Taxpayer is a federal D.O.L. job corps center contractor
operating in XXX, Florida.

Attachment "C" provides, in pertinent part:

MODIFICATION

1. Statement of Work - Period of Performance is amended in
   part to add the following statement: "In accordance with
   the renewal option, the contractor shall continue to
   operate the XXX Job Corps Center during the period November
   1, 1997 through October 31, 1998."

Attachment "D" provides, in pertinent part:

This letter is to advise you that in accordance with
Section G., Item II of Contract No. XX-X-XXX-XX, we plan to
unilaterally extend the period of performance for the
continued operation of the XXX Job Corps Center for one
year. The one year option to extend will be for the period
November 1, 1998 through October 31, 1999. A unilateral
modification to the contract will be executed during the
last week of October 1998. This preliminary notice of

intent doesn't commit the government to an extension.

Further documentation was received by this office, in the form
of an "AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT,"
providing, in part:

MODIFICATION

1.Section F., F-1 - Deliveries or Performance - is amended
in part to add the following statement: "In accordance with
the renewal option, the Contractor shall continue to
operate the XXX Job Corps Center during the period of
November 1, 1998 through October 31, 1999."

REQUESTED ADVISEMENT

The issue is whether the Taxpayer, a federal Department of Labor
jobs corps center contractor, is subject to Florida's sales and
use tax.

APPLICABLE LAW

The relevant federal law is 29 U.S.C. Section 1707(c), which
provides as follows:

(c) Taxation of Job Corps operations prohibited

Transactions conducted by a private for-profit contractor
or a nonprofit contractor in connection with the
contractor's operation of a Job Corps Center, program, or
activity shall not be considered as generating gross
receipts. Such contractors shall not be liable, directly
or indirectly, to any State or subdivision thereof (nor to
any person acting on behalf thereof) for any gross receipts
taxes, business privilege taxes measured by gross receipts,
or any similar taxes imposed on, or measured by, gross
receipts in connection with any payments made to or by such
contractor for operating a Job Corps Center, program, or
activity. Such contractors shall not be liable to any
State or subdivision thereof to collect or pay any sales,

excise, use, or similar tax imposed upon the sale to or use
by such contractors of any property, service, or other item
in connection with the operation of a Job Corps Center,
program, or activity.

DETERMINATION

There are no exemptions available under state law for purchases
made in connection with a job corps center. However, the
federal law, quoted above, does provide for "immunity" from
payment of any State's sales and use taxes if the purchases are
made by contractors operating a federal job corps center and the
purchases are used in the operation of such job corps center.
This is not an "exemption" but rather "immunity" provided by the
federal government under the concept of federal pre-emption of
state law.

Based on the documentation provided by the taxpayer, the
taxpayer is operating a job corps center under contract with the
United States Department of Labor. Based upon the Supremacy
Clause of the United States Constitution and 29 U.S.C. Section
1707(c), any purchases made by the taxpayer, as a job corps
center contractor, for use in operating such job corps center
are not subject to Florida's sales and use taxes through the
contract end date, which is October 31, 1999.

This response constitutes a Technical Assistance Advisement
under Section 213.22, F.S., which is binding on the Department
only under the facts and circumstances described in the requests
for this advice, as specified in Section 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 Section 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 response.

Sincerely,

Jennifer J. Silvey
Attorney
Technical Assistance & Dispute Resolution

Control #: 35567
JJS/