How did Florida tax sales, installation, rental, repair, supplies, warranties, and bottled water involving water-conditioning systems?

Plain-English summary

Florida treated a water conditioner installed into a home's plumbing system for one contracted materials-and-labor price as a real-property fixture. The installer was the ultimate consumer and owed tax on its material cost; it did not add sales tax to the customer's invoice. A homeowner-installed unit or removable countertop system remained tangible personal property, making the full sales price—including installation for the countertop unit—taxable.

Leased or rented systems also remained personal property because they were not intended as permanent additions to the realty. The entire lease charge, including separately stated installation, was taxable unless the agreement was actually a conditional sale of a real-property improvement.

Repair treatment followed the same classification. Fixture repairs were not charged sales tax, but the repairer owed tax on materials. Repairs to personal property were taxable on labor and parts when any tangible property was supplied.

The ruling also found water-softener salt and manufactured replacement filters taxable; qualifying drinking-water purification chemicals exempt; warranties on personal-property systems taxable but fixture warranties not; and qualifying bottled drinking water exempt unless disqualifying carbonation, minerals, or flavoring were added outside a regulated treatment facility.

Common questions

Did separately stating installation make an installed fixture taxable to the customer? No. The Department still treated the described contract as a lump-sum real-property improvement.

Were countertop systems taxable? Yes. They remained removable tangible personal property.

Were leased systems treated as fixtures? No. The ruling treated them as personal property because they were not intended to be permanent.

Was water-softener salt exempt as a purification agent? No. The TAA expressly said it was taxable.

Citations and references

• Fla. Stat. §§ 212.05 and 212.06(14)
• Fla. Admin. Code r. 12A-1.051
• Fla. Stat. § 212.0506
• Fla. Stat. § 212.08(4)(a)1.
• Fla. Admin. Code r. 12A-1.020(15)
• Fla. Stat. § 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99A-001

Original ruling text

SUMMARY

If a water conditioner or water softener is sold at a
contracted price which includes all materials and labor for
the installation, and the unit is installed into and
becomes part of the plumbing system in the dwelling, the
water conditioner/softener becomes a fixture, and the
contract is a lump sum real property improvement contract.
Taxpayer is deemed to be the ultimate consumer, and is thus
responsible for use tax on the cost of the water softener,
as well as all other materials and supplies used to perform
the installation. No sales tax should be added to the
customer's invoice for such a contract.

The sale of a counter top water softener that does not
become part of the plumbing system of the dwelling is a
sale of tangible personal property. Taxpayer should
collect sales tax from the purchaser on the charge for the
unit, including any installation charge, even if the
installation charge is separately stated.

When a water conditioning system is being leased or rented
to a customer, the system retains its status as personalty,
because it is not intended to become a permanent annexation
to the real property. Thus, sales tax is due on the entire
charge for the lease of the tangible personal property,
including installation, even if the installation charge is
separately stated.

The taxability of a repair to a water conditioner depends
on whether the water conditioner becomes a fixture. If the
water conditioner becomes a fixture, the repair is not
subject to sales tax, but the repairer would owe use tax on
the cost price of any materials and supplies used in
performing the real property repair. However, if the water
conditioner retains its status as tangible personal
property, the repairer must collect sales tax from the
customer on the total charge for the repair, including
labor, if the repair involves the addition of any tangible
personal property by the repairer. Taxpayer may purchase
items and materials that are incorporated into such a

repair exempt from sales tax as a sale for resale.

Salt used in water softeners is taxable because it is not a
purification agent. However, any purification agents or
chemicals, such as charcoal, chlorine, or germicides used
to purify drinking water are exempt. Manufactured water
filters are taxable, even if they are used to purify
drinking water; only the individual chemicals or minerals
would be exempt, if purchased for such use.

The sale of an extended warranty for the maintenance,
repair, or replacement of water conditioning system that
does not become a fixture, such as a leased system or the
counter top unit, would be subject to sales tax. The sale
of an extended warranty for the maintenance, repair, or
replacement of water conditioning system that becomes a
fixture would not be taxable.

The sale of drinking water in bottles, cans, or other
containers, including water that contains minerals or
carbonation in its natural state, or water to which
minerals have been added at a water treatment facility
regulated by the Department of Environmental Protection, is
exempt from sales tax. The sale of drinking water is not
exempt if carbonation, minerals, or flavorings are added
(except if added at a water treatment facility).

Jan 13, 1999

Re: Technical Assistance Advisement 99A-001
Sales and Use Tax - Tangible Personal Property versus Real
Property
Section 212.06(14), F.S. (Supp. 1998)
Rule 12A-1.051, F.A.C.
XXX ("Taxpayer")

Dear :

Your letter of July 7, 1998, requested a Technical Assistance
Advisement concerning the above referenced matter. This
response constitutes a Technical Assistance Advisement (TAA)
under Rule Chapter 12-11, Florida Administrative Code, and is
issued to you under the authority of s. 213.22, Florida
Statutes.

STATED FACTS

Taxpayer is engaged in the business of selling, renting,
leasing, installing, and repairing water conditioning systems,
reverse osmosis units, and similar equipment, as well as selling
bottled water and parts and supplies utilized in connection with
the equipment described above.

For purposes of this letter, water conditioning systems include,
but are not limited to, manually or automatically operated
softeners, brine tanks, exchange tanks, and filtration systems.

Additional facts are included in the requested advisements.

REQUESTED ADVISEMENTS

Taxpayer requests a determination regarding the taxability of
the following transactions:

(1) Sale of a water conditioner - the water conditioner is
sold at a contracted price which includes all materials and
labor for the installation. The unit is installed into and
becomes part of the plumbing system in the house. The
installing dealer normally offers a one to three year in
home labor warranty and the manufacturer offers a parts
warranty of various time periods.

(2) The sale of a water conditioner at a contracted price
which includes all materials necessary for the installation
but excludes the actual installation itself. The homeowner
normally installs the unit himself.

(3) The sale of a water conditioner at a contracted price
which separately states the charge for installation.

(4) The sale of a reverse osmosis drinking water unit.
(installed same as #1 above)

(5) Sale of a counter top reverse osmosis drinking water
unit. This unit is attached to a faucet instead of becoming
a permanent part of the plumbing system. This system may be
installed by the homeowner.

(6) Rental of the same equipment described in #1, #4, and

5 above.

(7) Lease of the same equipment described in #1, #4, and #5
above.

(8) Rental with option to buy of the same equipment
described in #1, #4, and #5 above.

(9) Lease with option to buy of the same equipment
described in #1, #4, and #5 above.

(10) Rental with option to convert to sale all rental
applied to purchase price of the same equipment described
in #1, #4, and #5 above.

(11) Installation charges on rentals and leases, separately
stated in contract, for items #6 through #10 above.

(12) General repair and service work.

(13) Sale of equipment parts, chemicals, salt, replacement
filters, and other miscellaneous items.

(14) Sale of an extended warranty.

(15) Sale of bottled water.

APPLICABLE LAW AND ANALYSIS

A. Whether the Water Conditioning System Becomes a Fixture

As discussed in part B of this advisement, the taxation of sales
to or by contractors who repair, alter, improve, and construct
real property is governed by special provisions in Rule 12A1.051, F.A.C. Therefore, it is of first concern whether the
installation of a water softener is considered an improvement to
real property. Certain items, such as mirrors affixed to a
building, roadside billboards, central air conditioning systems,
and awnings, are specifically designated as fixtures in Rule
12A-1.051, F.A.C. Rule 12A-1.051, F.A.C., contains no such
designation regarding water conditioning systems.

When no such designation has been made by rule or statute, the
determination whether tangible personal property, once
installed, has achieved the status of an improvement to realty
must be made on a case-by-case basis, since various factors
enter into such a determination, none of which is determinative.

Section 212.06(14), F.S. (Supp. 1998), provides:

(14) For the purpose of determining whether a person is
improving real property, the term:

(a) "Real property" means the land and improvements thereto
and fixtures and is synonymous with the terms "realty" and
"real estate."

(b) "Fixtures" means items that are an accessory to a
building, other structure, or land and that do not lose
their identity as accessories when installed but that do
become permanently attached to realty. However, the term
does not include the following items, whether or not such
items are attached to real property in a permanent manner:
trade fixtures; property of a type that is required to be
registered, licensed, titled, or documented by this state
or by the United States Government, including, but not
limited to, mobile homes, except mobile homes assessed as
real property; or machinery or equipment. For an item to be
considered a fixture, it is not necessary that the owner of
the item also own the real property to which it is
attached.

(c) "Improvements to real property" includes the activities
of building, erecting, constructing, altering, improving,
repairing, or maintaining real property.

Pursuant to the new law, it is clear that the term "real
property" includes "fixtures." Section 212.06(14)(a), F.S.
(Supp. 1998). Therefore, the installation of an item of
tangible personal property that becomes a fixture is considered
an improvement to real property for purposes of Florida Sales
and Use Tax.

The term "fixtures" is defined in Section 212.06(14)(b), F.S.
(Supp. 1998). However, despite the new definition of
"fixtures," in Section 212.06(14)(b), F.S. (Supp. 1998), the
case-by-case determination whether an attachment to realty has
attained the status of a fixture sometimes remains a difficult
task.

Common law real property notions remain relevant in making the
case-by-case determination. Fla. Jur. 2d describes a fixture as
"an article which was once chattel, but which, by being
physically annexed or affixed to the realty by someone having an
interest in the soil, has become accessory to it and a part and
parcel of it...." Fla. Jur. 2d Fixtures Section 1. The
Department has examined a great deal of case law regarding the
topic. Commercial Finance Co. v. Brooksville Hotel Co., 123 So.
814, 816 (Fla. 1929), set forth a list of criteria that must be
satisfied in order for a particular item to be considered a
fixture. With respect to the item, there must be: "[f]irst,
actual annexation to the realty or something appurtenant
thereto; second, appropriateness to the use or purpose of that
part of the realty with which it is connected; and, third, the
intention of the party making the annexation that it shall be a
permanent accession to the freehold." Id.

The court expanded upon its third requirement, stating "[w]hat
that intention was in making the annexation is inferred from the
following facts: (a) The nature of the article annexed; (b) the
relation of the party making the annexation; (c) the structure
and mode of annexation; and (d) the purpose or use for which the
annexation has been made." Id. at 816.

A fourth factor has become part of the analysis, as a result of
Meena v. Drousiotis, 200 So. 362 (Fla. 1941). A chattel which
cannot be removed without material or substantial injury to the
freehold is a "fixture." See also Dependable Air Conditioning
and Appliances v. Office of Treasurer and Insurance Comm'r., 400
So.2d 117 (Fla. 4th DCA 1981).

It also must be noted that property that is considered a "trade
fixture" retains its status as personalty, and is not considered
an improvement to real property. Section 212.06(14)(b), F.S.
(Supp. 1998); see also Sweeting v. Hammons, 521 So.2d 226 (Fla.
3d DCA 1988). Machinery and equipment used by businesses to
manufacture, process, compound, or alter tangible personal
property, or to provide a service cannot be considered a
fixture. Section 212.06(14)(b), F.S. (Supp. 1998).

The above legal criteria provide the framework for the case-bycase determination whether a particular attachment attains the
status of real property. The Department looks at certain
features and characteristics of a particular situation, derived
from the above cited law, to make this determination.

The manner in which property is attached to the land helps to
classify it. Property which is connected to the realty by
piping, wiring installed within the walls of a building, rods,
and other means of permanent attachment, and which cannot be
removed without damage to the freehold, is often considered
realty. Property that is easily removed and is not permanently
attached to the real property, such as a window air conditioner,
retains its status as tangible personal property.

Also, the function and purpose of the property and its
relationship to other items in a system help to classify it.
For example, a central air conditioning unit that is located
outside is considered realty, although it may not be attached to
a building. This is because it is an essential part of a system
which contains internal wiring, piping, and duct work that
comprises realty, and the unit can only function as a part of
that system.

Finally, in each case-by-case determination, the intention of
the parties to the transaction that the annexation shall be a
permanent accession to the freehold is relevant in classifying a
particular attachment as a fixture.

Applying these criteria, it is the Department's determination
that the water conditioning systems described in the
documentation supplied by Taxpayer, other than the counter top
model that is attached to the faucet, become fixtures. They are
installed in such a manner that they cannot be easily removed.
They are attached to the plumbing of a building. The reverse
osmosis system is attached to both the water supply and drainage
of a structure. The installation of Models 15 through 120, XXX,
XXX, XXX, and the XXX must comply with state and local plumbing
codes. When the water conditioning system is sold to
purchasers, it is the intention of the parties that the system
is to become a permanent annexation to the real property. The
water conditioning system is installed in a manner similar to
that of a hot water heater. The Department generally considers
hot water heaters to be fixtures.

Since it is the Department's determination that the water
conditioning systems become fixtures, a contract to sell and
install such systems is a real property improvement contract.
The taxation of contracts to improve real property is discussed
in part B of this advisement.

Pursuant to the new definition of "fixtures," in Section
212.06(14)(b), F.S., for purposes of Florida Sales and Use Tax
it is no longer mandatory that the owner of the attached item
also own the real property to which it is attached in order for
such attachment to be considered a fixture. Thus, a lessee of
real property may purchase a water softener, and the water
softener may become a fixture to the real property upon which it
is attached.

However, it remains relevant whether the water softener is being
leased or sold to the customer. If the water conditioning
systems are being leased or rented, title to the system does not
transfer to the customer. When a water conditioning system is
being leased or rented, the system retains its status as

personalty, because it is not intended to become a permanent
annexation to the real property.

B. Sales Tax Treatment of Real Property Contractors

Rule 12A-1.051, F.A.C., provides guidance regarding the
taxability of real property improvement contracts:

12A-1.051 Sales to or by Contractors Who Repair, Alter,
Improve and Construct Real Property.

(1) The method by which contractors or subcontractors
arrive at the total contract price charged for repair,
alteration, improvement and construction of real property
or for a combination of work on both real and personal
property must be determined for the purpose of ascertaining
whether the receipts from sales made to or by them are
taxable.

(2) Such contractors may include, among others, building,
electrical, plumbing, heating, painting, decorating,
ventilating, paper hanging, sheet metal, bridge, road,
landscape or roofing contractors and they may use one of
the following methods in arriving at the total contract
price:

(a) Contracts in which the contractor or subcontractor
agrees to furnish materials and supplies and necessary
services for a lump sum;

(b) Contracts in which the contractor or subcontractor
agrees to furnish the materials and supplies and necessary
services on a cost plus or fixed fee basis;

(c) Contracts in which the contractor or subcontractor
agrees to furnish materials and supplies and necessary
services with an upset or guaranteed price which may not be
exceeded; and

(d) Contracts in which the contractor or subcontractor
repairs, alters, improves or constructs real property and

wherein he agrees to sell specifically described and
itemized materials and supplies at an agreed price or at
the regular retail price and to complete the work either
for an additional agreed price or on the basis of time
consumed.

(e) When a contractor or subcontractor uses materials and
supplies in fulfilling either a lump sum, cost plus, fixed
fee, guaranteed price or any kind of contract except one
falling in class (d) above, he becomes the ultimate
consumer thereof. The person or dealer who sells such
materials and supplies to such contractor or subcontractor
is making sales at retail and is required to collect the
tax from him based upon the receipts from such sales.

(f) In cases falling in class (d) above, the contractor or
subcontractor is deemed to be selling tangible personal
property at an agreed retail price and shall collect tax
from his purchaser based upon the amount of the receipts
from such sales, excluding installation charges if
separately stated. A dealer selling to such contractor or
subcontractor must obtain a resale certificate in lieu of
tax.

(g) Contractors, manufacturers or dealers who sell and
install items of tangible personal property enumerated in
Rule 12A-1.016 must collect tax on the full selling price,
including any installation or other charges, even though
such charges may be separately stated.

A real property improvement contract that falls under Rule 12A1.051(2)(a)-(c), F.A.C., is one in which the contractor
furnishes materials, supplies, and necessary services for a lump
sum, on a cost plus or fixed fee basis, or for an upset or
guaranteed price that cannot be exceeded. For these types of
contracts, the contractor is deemed to be the ultimate consumer
of any tangible personal property used in the performance of the
improvement contract, and the contractor is responsible for tax
on the cost of the materials and supplies so used. Rule 12A1.051(2)(e), F.A.C.

Alternatively, a contract that falls under Rule 12A-1.051(2)(d),
F.A.C., (sometimes referred to as a class (2)(d) contract) is
one in which the contractor agrees to repair, alter, improve, or
construct real property and, in addition to the labor, agrees to
sell specifically itemized and described materials or supplies
at an agreed price or at the regular retail price. In other
words, every material without exception must be identified and
priced to the customer in the contract up front before the
commencement of any work in order to qualify under this section.
See Sears, Roebuck & Company v. Dept. of Revenue, Case No. 921080 (Fla. 2nd Cir. Ct. 1994). If a contract meets these
requirements and is correctly classified as a class (2)(d)
contract, the contractor is deemed to be selling tangible
personal property at an agreed retail price, and the contractor
is required to collect tax from his purchaser based on the
selling price, excluding installation. Rule 12A-1.051(2)(f),
F.A.C. In such a case, the contractor does not have to pay use
tax on the cost of the item, but rather must collect sales tax
from the purchaser pursuant to section 212.06(1)(a), F.S.
Subsequent to the Sears decision, it is very difficult to create
a valid class (2)(d) contract. Based on the information
available, Taxpayer's real property contracts are not class
(2)(d) contracts, but rather are class (2)(a) lump-sum
contracts.

DETERMINATIONS

The following determinations are based upon the preceding
discussion and analysis.

(1) Sale of a water conditioner

Since the water conditioner is sold at a contracted price which
includes all materials and labor for the installation, and the
unit is installed into and becomes part of the plumbing system
in the house, the contract is a lump sum real property
improvement contract. Pursuant to Rule 12A-1.051(2)(e), F.A.C.,
Taxpayer is deemed to be the ultimate consumer, and is thus
responsible for tax on the cost of the water softener, as well
as all other materials and supplies used to perform the
installation. Rule 12A-1.051(2)(e), F.A.C. Taxpayer should pay

this tax to seller of the materials and supplies used, or accrue
use tax on the cost price if it purchased such materials and
supplies exempt with a resale certificate. No sales tax should
be added to the customer's invoice for such a contract.

(2) The sale of a water conditioner at a contracted price which
includes all materials necessary for the installation but
excludes the actual installation itself. The homeowner normally
installs the unit himself.

In this case, Taxpayer is merely selling tangible personal
property, and is not performing a repair, alteration,
improvement, or construction of real property. Rule 12A-1.051,
F.A.C., is therefore not applicable. Sales tax must be
collected from the purchaser on the total price charged for the
conditioner and materials sold. Section 212.05(1)(a), F.S.
Taxpayer may purchase the water conditioner and other materials
that are resold exempt from sales tax as a sale for resale, and
does not need to accrue use tax on the cost price of such items.

(3) The sale of a water conditioner at a contracted price which
separately states the charge for installation.

Same as answer to question 1. Since no sales tax is charged to
a customer in a real property improvement contract, whether or
not there is a separate charge for installation is irrelevant.

(4) The sale of a reverse osmosis drinking water unit.
(installed same as #1 above)

Same as answer to question 1.

(5) Sale of a counter top reverse osmosis drinking water unit.
This unit is attached to a faucet instead of becoming a
permanent part of the plumbing system. This system may be
installed by the homeowner.

In this case, the unit is easily removable, and does not become
attached to the plumbing system. It is therefore not considered
a permanent attachment to realty, and is not a fixture. Since
the unit retains its status as personalty, the sale of the unit,

with or without installation, is a sale of tangible personal
property. Taxpayer should collect sales tax from the purchaser
on the charge for the unit, including any installation charge,
even if the installation charge is separately stated. See Rule
12A-1.016(3)(a), Rule 12A-1.051(2)(g), F.A.C. Taxpayer may
purchase the unit exempt from tax as a sale for resale, and it
does not need to accrue use tax on the cost price of the unit.

(6) Rental of the same equipment described in #1, #4, and #5
above.

As stated in the "Applicable Law and Analysis," supra, when a
water conditioning system is being leased or rented to a
customer, the system retains its status as personalty, because
it is not intended to become a permanent annexation to the real
property. Thus, sales tax is due on the entire charge for the
lease of the tangible personal property, pursuant to Section
212.05(1)(c), F.S., including installation, even if the
installation charge is separately stated. See Rule 12A1.016(3)(a), F.A.C.

(7) Lease of the same equipment described in #1, #4, and #5
above.

Same as answer to question 6.

(8) Rental with option to buy of the same equipment described in

1, #4, and #5 above.

The answer is the same as the answer to questions 6 and 7,
unless the rental or lease agreement is, in substance, a
conditional sale contract. With respect to conditional sale
contracts, Rule 12A-1.071(1), F.A.C., provides:

(d) Where a contract designated as a lease transfers
substantially all the benefits, including depreciation, and
risks inherent in the ownership of tangible personal
property to the lessee, and ownership of the property
transfers to the lessee at the end of the lease term, or
the contract contains a purchase option for a nominal
amount, the contract shall be regarded as a sale of

tangible personal property under a security agreement
(commonly referred to as a conditional-sale type lease)
from its inception. The purchase option shall be regarded
as a nominal amount if it does not exceed $100 or 1 percent
of the total contract price, whichever is the lesser
amount.

(e) Whether a lease is a conditional sale-type lease or an
operating lease shall be determined in accordance with the
provisions of the agreement, read in light of the facts and
circumstances existing at the time the agreement was
executed....

Since the Department has not been provided a copy of the lease
or rental contract, it cannot make a determination at this time
whether the lease would be considered a conditional sale
contract. It can be stated, however, that a conditional sale
contract for the improvement of real property would be treated
in the same manner as any other real property improvement
contract, and the taxation would be governed in the same manner
as described in the answer to questions 1 and 3. Otherwise, the
taxation of the lease or rental contract should be treated in
the same manner as described in the answer to questions 6 and 7.

(9) Lease with option to buy of the same equipment described in

1, #4, and #5 above.

Same as answer to question 8.

(10) Rental with option to convert to sale all rental applied to
purchase price of the same equipment described in #1, #4, and #5
above.

Same as answer to question 8.

(11) Installation charges on rentals and leases, separately
stated in contract, for items #6 through #10 above.

Installation charges for rentals or leases of tangible personal
property are taxed in the same manner as installation charges
for the sale of tangible personal property. The installation

charge is part of the sales price, and is taxable regardless of
whether the charge is separately stated. See Rule 12A1.016(3)(a), F.A.C. This is so because the definition of "sale"
includes the term "lease," and thus leases are generally treated
in the same manner as sales, for purposes of Florida Sales and
Use Tax. Section 212.02(15), F.S.

(12) General repair and service work.

Repairs to real property are governed by Rule 12A-1.051, F.A.C.
Thus, the repair to a water softener that is considered a
fixture would not be subject to sales tax. Taxpayer, in such an
instance, would owe tax on the cost price of any materials and
supplies used in performing the real property repair. Rule 12A1.051(2)(e), F.A.C.

Charges for both labor and materials to repair tangible personal
property are taxable when any tangible personal property is
incorporated into the repair. See Section 212.02(16), F.S.,
which states that "[s]ales price" also includes "the
consideration for a transaction which requires both labor and
material to alter, remodel, maintain, adjust, or repair tangible
personal property...." See also Rule 12A-1.006(1), F.A.C.; Rule
12A-1.016(2), F.A.C. Taxpayer must collect sales tax from the
customer on the total charge for the repair, including labor.
Taxpayer may purchase items and materials that are incorporated
into the repair exempt from sales tax as a sale for resale.
Section 212.02(14)(c), F.S.

(13) Sale of equipment parts, chemicals, salt, replacement
filters, and other miscellaneous items.

When making this determination, one must begin with the
assumption that the sale of these items is normally taxable as a
sale of tangible personal property, pursuant to Section
212.05(1)(a). Sales tax should be collected from the purchaser
for such items. Taxpayer may purchase such items exempt from
sales tax as a sale for resale. However, Rule 12A-1.020(15),
provides:

(15)(a) Germicides, including chlorine, are taxable when

used for the treatment of water in swimming pools.

(b) Germicides, including chlorine, used elsewhere are
taxable except when used in connection with the treatment
of drinking water, sewage, or when used directly upon
bodies of humans, animals, or poultry as disinfectant.

(c) Sodium silicate, activated charcoal and similar
purification agents are taxable, except when used in the
treatment of drinking water or for medicinal purposes.

(d) Acids, alkalies and other additives used for pH control
or as detergents are taxable.

(e) Algaecide is taxable.

(f) Salt put in water softeners to regenerate the minerals
required for softening water is not a purification agent
used in the treatment of drinking water and is taxable.

(g) Fluoride when placed in drinking water is exempt.

Thus, salt used in water softeners is taxable because it is not
a purification agent. However, any purification agents or
chemicals, such as charcoal, chlorine, or germicides used to
purify drinking water are exempt. Manufactured water filters
are taxable, even if they are used to purify drinking water;
only the individual chemicals or minerals would be exempt, if
purchased for such use.

(14) Sale of an extended warranty.

Section 212.0506(1), F.S., imposes sales tax at a rate of six
percent on service warranties. Section 212.0506(3), F.S.,
defines a "service warranty," as "any contract or agreement
which indemnifies the holder of the contract or agreement for
the cost of maintaining, repairing, or replacing tangible
personal property." (emphasis added). The section further
states that the term "service warranty" does not include
contracts or agreements covering tangible personal property
which becomes a part of real property. Thus, the sale of an

extended warranty for the maintenance, repair, or replacement of
water conditioning system that does not become a fixture, such
as a leased system or the counter top unit, would be subject to
sales tax. The sale of an extended warranty for the
maintenance, repair, or replacement of water conditioning system
that becomes a fixture would not be
taxable.

(15) Sale of bottled water.

Pursuant to Section 212.08(4)(a)1., F.S. (Supp. 1998), the sale
of drinking water in bottles, cans, or other containers,
including water that contains minerals or carbonation in its
natural state, or water to which minerals have been added at a
water treatment facility regulated by the Department of
Environmental Protection, is exempt from sales tax. The sale of
drinking water is not exempt if carbonation, minerals, or
flavorings are added (except if added at a water treatment
facility).

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,

Ralph G. Pepe
Tax Law Specialist
Technical Assistance &
Dispute Resolution

Control #: 34730