Were patient and family accommodations provided by nonprofit healthcare organizations subject to Florida transient-rental tax?

Plain-English summary

Florida exempted the qualifying patient and family accommodations from transient-rental tax. On-site and off-site facilities were designed and operated primarily for patients who needed special care, treatment, sterile conditions, counseling, or family post-care training.

Hotel rooms were also exempt when the nonprofit charitable organizations held current exemption certificates, the hotels billed them directly, and they paid directly for rooms used in their customary charitable activity. If the organizations began stating a hotel-room charge payable by the patient or family, they would make a taxable sale.

What this means for you

The exemption depended on who provided or purchased the lodging, its care-related purpose, direct payment, documentation, and whether the patient or family was charged. Ordinary lodging near a healthcare facility does not automatically receive the same treatment.

Common questions

Q: Were rooms inside the hospital exempt? Yes, because the stated facilities were operated primarily for persons dependent on special care or attention.

Q: Were specialized off-site facilities exempt? Yes, on the described facts, including their patient-care design, cleaning, isolation, and treatment use.

Q: Were local hotel rooms exempt? Yes, when the exempt organizations were directly billed and paid the hotels for their charitable patient-care purpose.

Q: What if the organization separately charged the patient? The ruling said a specified patient or family charge would be taxable.

Citations and references

• Fla. Stat. § 212.03(1), (4) — transient accommodations
• Fla. Stat. § 212.08(7)(i), (o) — care-facility and charitable exemptions
• Fla. Admin. Code r. 12A-1.061(13)(b) — exempt-organization lodging
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99A-034

Original ruling text

SUMMARY

Charges for accommodations that are provided in certain onsite or off-site facilities that are designed and operated
primarily for the care of persons who are aged, infirm, or
otherwise dependent on special care or attention under the
requirements of s. 212.08(7)(i), F.S., are not subject to
tax imposed on transient accommodations under s. 212.03,
F.S. Charges for hotel accommodations that are paid
directly by such institutions that hold a current Florida
Consumer's Certificate of Exemption and used for this same
purpose are also not subject to the taxes imposed under s.
212.03, F.S.

Aug 02, 1999

Re: Technical Assistance Advisement 99(A)-034
Assisted Living Facilities and Hotel Rooms Purchased by
Exempt Organizations
Sections 212.03(1) and 212.08(7)(i) and (o), F.S. Rules
12A-1.001(11) and 12A-1.061(13)(b), F.A.C.
Taxpayer: XXX ("Parent")
FEI No.: XX
Taxpayer's Subsidiary: XXX ("Subsidiary")
FEI No.: XX

Dear:

This response is to your petition of February 10, 1999,
requesting the Department's issuance of a Technical Assistance
Advisement (TAA) pursuant to s. 213.22, Florida Statutes (F.S.),
and Chapter 12-11, Florida Administrative Code (F.A.C.),
regarding the referenced Taxpayers and matters. The Department
has carefully examined your request and supporting documents and
finds them to be in order.

BACKGROUND

Parent and Subsidiary (hereinafter the "Taxpayers") XXX.

The Taxpayers provide many different services and procedures
that require extended patient stays following the procedure.
During these extended patient stays, the patients are monitored,
receive certain therapies and treatments, and receive counseling
and training. Usually, the patient's family must be at the
Taxpayer for extended periods of time to help promote the
patient's recovery, and to receive counseling and post-care
training and instructions. The post-care training and
instruction will include how to administer and monitor
medications in the event the patient is too weak or otherwise
incapable of this task, and how to recognize and react to
changes in the patient's condition. Therefore, the Taxpayers
provide, as a part of the treatment of their patients, several
housing options to patients and their families, including
on-site facilities, off-site facilities, and hotel rooms.

A discussion of the pertinent facts regarding each of these
housing options, the "On-Site Facilities," the "Off-Site
Facilities," and the "Hotel Rooms," will be provided as a basis
for our discussion of each of your requested advisements.
However, prior to a discussion of the issues at hand, a
presentation of the relevant statutory and administrative
authority is necessary.

APPLICABLE STATUTORY AND ADMINISTRATIVE AUTHORITY

Section 212.03(1) and (4), F.S., provides in pertinent part:

(1) It is hereby 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 any living quarters or sleeping or
housekeeping accommodations in, from, or a part of, or in
connection with any hotel, apartment house, roominghouse,
or tourist or trailer camp.... For the exercise of such
taxable privilege, a tax is hereby levied in an amount
equal to 6 percent of and on the total rental charged for
such living quarters or sleeping or housekeeping
accommodations by the person charging or collecting the

rental....

(4) ... Notwithstanding other provisions of this chapter,
no tax shall be imposed upon rooms provided to guests when
there is no consideration involved between the guest and
the public lodging establishment....

Section 212.08(7)(i), F.S., provides, in pertinent part:

(i) Hospital meals and rooms.-- Also exempt from payment of
the tax imposed by this chapter on rentals and meals are
patients and inmates of any hospital or other physical
plant or facility designed and operated primarily for the
care of persons who are ill, aged, infirm, mentally or
physically incapacitated, or otherwise dependent on special
care or attention....

Section 212.08(7)(o)1.b., F.S., provides:

(o) Religious, charitable, scientific, educational, and
veterans' institutions and organizations.1. There are exempt from the tax imposed by this chapter
transactions involving:...

b. Sales or leases to nonprofit religious, nonprofit
charitable, nonprofit scientific, or nonprofit educational
institutions when used in carrying on their customary
nonprofit religious, nonprofit charitable, nonprofit
scientific, or nonprofit educational activities .....

Rule 12A-1.061(13)(b), F.A.C., provides that authorized
representatives of organizations exempt from tax under s.
212.08(7)(m) or (o), F.S., are exempt from the taxes imposed on
rental charges or room rates for transient accommodations only
when:

(1) the rental charges or room rates are billed directly
to and paid directly by the governmental unit or the
exempt organization;
(2) the employee or representative does not use the
transient accommodations for personal purposes; and

(3) the employee or representative provides the owner or
the owner's representative of the transient
accommodations with proper documentation. (See Rule
12A-1.001(9)(d)2., F.A.C., for the information and
suggested format of the proper documentation to be
provided by the employee or representative.)

ON-SITE FACILITIES

The first type of housing option that the Taxpayers provide to
patients and family members of patients are specially designed
rooms in its hospital, referred to as "On-Site Facilities."
These rooms are physically located in the hospital, but are no
longer classified as staffed beds. The rooms may not have the
same equipment as traditional acute care rooms. If the patient's
condition permits, the patient may also stay in these rooms with
his or her family.

Requested Ruling

You request a determination that any charges made by the
Taxpayers to patients' families for the On-Site Facilities are
exempt from sales tax in accordance with s. 212.08(7)(i), F.S.,
and Rules 12A- 1.001(11) and 12A-1.061(l)(c), and TAA 92A-034.

Taxpayers' Position

It is your position that the situation at issue in TAA 92A-034
is similar to the issue at hand. In TAA 92A-034, the hospital
owned and operated a facility that provided counseling and
emotional support, and medical discharge training needed by
patient families to allow life-sustaining treatment of the
patient. In that advisement, the Department held that, because
the facility was designed and operated primarily for the care of
persons who are dependent on special care or attention, the
charges were exempt from sales tax under the provisions of s.
212.08(7)(i), F.S. Likewise, the patient families at the
Taxpayers will receive counseling and post-care training and
instructions while staying in the On-Site Facilities. Therefore,
any charges made by the Taxpayers to patient families that are
related to the On-Site Facilities should be exempt from sales

tax under the same statutory and administrative procedures.

Discussion and Determination

As provided in TAA 92A-034, the key question is whether the
On-Site Facilities are designed and operated primarily for the
care of persons who are aged, infirm, or otherwise dependent on
special care or attention under the requirements of s.
212.08(7)(i), F.S. Based on the facts presented, the charges for
accommodations at the On-Site Facility located in the Taxpayers'
hospital are not subject to the taxes imposed on transient
accommodations under s. 212.03, F.S.

OFF-SITE FACILITIES

The second type of housing option that the Taxpayers provides to
patients and family members of patients are Off-Site Facilities
in close proximity to its location in leased facilities. Housing
is provided in these Off-Site Facilities to patients and/or
their families while the patients are undergoing treatment at
the Taxpayers. The Off-Site Facilities are generally used for
extended patient and/or patient family stays, and are specially
designed and operated to meet the needs of certain patients with
compromised immune systems. As such, the Off-Site Facilities are
specially furnished, treated, and cleaned by the Taxpayers to
create a sterile environment to reduce the risk of illness or
infection. As a very important factor in the treatment of
patients with compromised immune systems, the Off-Site
Facilities are isolated from the general hospital population.
Generally, patients staying in an Off-Site Facility visit the
Taxpayers on an outpatient basis to receive treatment. Treatment
is also provided for the patient at the Off-Site Facilities by
nurses or other health care professionals.

Requested Ruling

You request a determination that:

(1) The Taxpayers may lease the Off-Site Facilities to be
used by patients or their families free of sales tax
in accordance with s. 212.08(7)(o), F.S., and Rule

12A-1.061(13)(b)l., F.A.C.;

(2) Any subsequent charges made by the Taxpayers to
patients for the Off-Site Facilities are exempt from
sales tax in accordance with s. 212.08(7)(i), F.S.,
and Rules 12A-1.001(11) and 12A-1.061(l)(c), F.A.C.;
and

(3) Any subsequent charges made by the Taxpayers to
patients' families for the Off-Site Facilities are
exempt from tax in accordance with s. 212.08(7)(i),
F.S., Rules 12A-1.001(11) and 12A-1.061(l)(c), F.A.C.,
and TAA 92A-034.

Taxpayers' Position

It is your position that the lease of the Off-Site Facilities by
the Taxpayers should be specifically exempt from sales tax.
Section 212.08(7)(o), F.S., specifically grants an exemption
from sales tax for all "leases to... nonprofit charitable...
institutions when used in carrying on their customary...
nonprofit charitable... activities." One of the Taxpayers'
customary nonprofit charitable activities is to treat and
promote the recovery of patients. The lease of the Off-Site
Facilities by the Taxpayers should be exempt from sales tax,
because the use of the off-Site facilities fulfills one of the
Taxpayers' customary nonprofit charitable activities by
promoting the treatment and recovery of patients.

It is your position that charges for use of the Off-Site
Facilities to patients and/or their families by the Taxpayers
should be exempt from sales tax pursuant to s. 212.08(7)(i),
F.S., and Rules 12A-1.001(11) and 12A-1.061(l)(c), F.A.C. The
Off-Site Facilities are specially designed and operated
primarily for the care of persons who are dependent on special
care or attention. Therefore, as held in TAA 92A-034, any
charges to patients or to patient families that are related to
the Off-Site Facilities should be exempt from sales tax.

Discussion and Determination

Again, the key question is whether the off-Site Facilities are
designed and operated primarily for the care of persons who are
aged, infirm, or otherwise dependent on special care or
attention under the requirements of s. 212.08(7)(i), F.S. Based
on the facts presented, the Off-Site Facility is leased for the
primary purpose of designing and operating a facility for the
care of persons who are ill and dependent on special care or
attention. Therefore, the lease of the Off-Site Facilities by
the Taxpayer is exempt under the provisions of s.
212.08(7)(o)i.b., F.S. Charges by the Taxpayers for
accommodations at the Off-Site Facilities are not subject to the
taxes imposed on transient accommodations under s. 212.03, F.S.

HOTEL ROOMS

The Taxpayers also contract with several local hotels to
guarantee Hotel Rooms at competitive rates. The Hotel Rooms are
offered by the Taxpayers for patients and/or their families. The
Taxpayers give vouchers to the patients and/or their families.
The vouchers are then given to the local hotels to reserve the
Hotel Rooms at the guaranteed rates. The local hotels, using the
vouchers, bill the Taxpayers directly for the patient's and/or
his or her family's stay. After receiving the vouchers from a
local hotel, the Taxpayers had paid the hotel the agreed upon
rate and then attempted to collect the cost of the Hotel Rooms
from the patient, the patient's family, or from not-for-profit
sources. The Taxpayers did generally reduce or eliminate the
amount they attempted to collect from the patient or the
patient's family based on their ability to pay. Currently,
however, the Taxpayers have greatly reduced their use of the
Hotel Rooms, and now only give vouchers for the Hotel Rooms to
patients and/or their families who are considered indigent. The
Taxpayers make no attempt to collect the cost of the Hotel Rooms
from such patients or their families, but may attempt to collect
such costs from not-for-profit sources.

Requested Ruling

You request a determination that the Taxpayers may rent Hotel
Rooms to be used by patients or their families free of sales tax
in accordance with Section 212.08(7)(o), F.S., and Rule 12A-

1.061(13)(b)l., F.A.C.

Taxpayers' Position

It is your position that the rental or lease of the Hotel Rooms
by the Taxpayers should be specifically exempt from sales tax.
The rental of the Hotel Rooms by the Taxpayers aids in the
patient's recovery by allowing the patient's family to stay
close to get the necessary counseling and post-care training and
instructions from the Taxpayers. Therefore, the rental of Hotel
Rooms by the Taxpayers should be exempt f rom sales tax because
the rental of the rooms furthers one of the Taxpayers' customary
nonprofit charitable activities by promoting the successful
treatment and recovery of patients.

Discussion and Determination

The key question here is whether the rental of the Hotel Rooms
for use by patients and/or their families qualifies under s.
212.08(7)(o), F.S., as a customary nonprofit charitable
activity. Based on the facts presented, the rental of Hotel
Rooms that are paid for directly to the local hotels by the
Taxpayers, which each currently hold a Florida Consumer's
Certificate of Exemption as a nonprofit charitable institution,
is not subject to the taxes imposed on transient accommodations
under s. 212.03, F.S. Should the Taxpayers start specifying a
charge for the hotel rooms that is to be paid by the patient or
the patient's family, then the Taxpayers would be considered to
be making taxable sales.

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, your request and
related backup documents 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, your backup materials or the response.

Sincerely,

Janet L. Young

Tax Law Specialist

JLY/pb
Control No. 36638