Did a NASA contractor owe Florida sales or use tax on GSA vehicles assigned solely for official NASA contract work?

Plain-English summary

The NASA contractor owed no Florida sales or use tax on the assigned GSA vehicles. GSA remained the owner, maintained and self-insured the vehicles, could recall or reassign them, and granted no lease or license interest. The contractor could operate them only on NASA's behalf to perform its federal contract.

Although GSA invoiced the contractor and the contractor recovered those costs from NASA, payment alone did not create taxable use. The contractor had no ownership or lessee rights and no discretion to use the vehicles for non-government purposes.

What this means for you

The result depended on the federal agencies retaining ownership and control and on the contractor's strictly limited official use. A true lease, broader possession rights, private use, or an ownership interest could change the analysis.

The ruling unusually stated that the taxpayer, NASA, and other NASA contractors using GSA vehicles under the same terms and conditions could rely on its conclusion.

Common questions

Q: Why did GSA not have to collect Florida sales tax? The ruling said federal agencies were excluded from the Chapter 212 definitions of “person” and “dealer.”

Q: Did the contractor owe use tax because it paid GSA invoices? No. The payments supported contract cost accounting, but the contractor acquired no ownership or lease interest.

Q: What vehicle use was allowed? Only official use on NASA's behalf to perform the contractor's obligations.

Citations and references

• Fla. Stat. § 212.02(12), (20) — “person” and “use” definitions
• Fla. Stat. § 212.05(1)(b)-(c) — use tax and tangible-property rentals
• Fla. Stat. § 212.06(1), (2) — dealers and collection
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99A-046

Original ruling text

SUMMARY

Question: Does a contractor owe sales or use tax on motor
vehicles assigned by the General Services Administration
("GSA") of the federal government to the contractor
pursuant to and solely for use in the performance of a
contract for the National Aeronautics and Space
Administration ("NASA")?

Answer - Based on Facts Below: No sales or use tax is due
when the GSA assigns vehicles to a contractor who is
authorized to use those vehicles under the terms of a
contract with NASA where there is no lease agreement, and
the contractor is prohibited from any use of the vehicles
except on behalf of NASA to fulfill the contractor's
contractual obligations.

Sep 03, 1999

Re: Technical Assistance Advisement 99A-046
Sales and Use Tax - Government Vehicles
Sections 212.02, 212.05, F.S.

Dear :

This letter is a response to your letter of August 23, 1999, in
which you ask the Department to issue a Technical Assistance
Advisement ("TAA") concerning the use of vehicles owned by the
General Services Administration ("GSA") and used by XXX
("Taxpayer") in the course of performing contracts for the
National Aeronautics and Space Administration ("NASA"). This
response to your request constitutes a TAA and is issued to you
under the authority of s. 213.22, F.S.

FACTS

Both GSA and NASA are agencies of the United States government.
GSA maintains and operates a fleet of motor vehicles for use by

executive agencies of the United States. These vehicles can be
used only for official government purposes. GSA assigns
vehicles to user agencies, including NASA. For federal
budgeting purposes, GSA bills the costs attributable to assigned
vehicles so those costs are tracked and associated with the user
agency. Rates vary by region and may be stated as monthly
charges and mileage charges.

Pursuant to their contracts with NASA, Taxpayer and other
government contractors may be authorized or required to
requisition and operate GSA vehicles as necessary or appropriate
to fulfill their contractual obligations. Taxpayer is a party
to a contract with NASA that authorizes it to request and use
GSA vehicles in this manner. Taxpayer and NASA have no control
over which vehicles are assigned to Taxpayer to use on NASA's
behalf. GSA maintains the vehicles and self-insures them. On
conditions specified by GSA or by federal law, GSA can demand
their return and redirect them to other agencies.

GSA issues invoices to Taxpayer, although NASA is identified as
the user agency and remains liable at all times for the amounts
billed. Under its contract, Taxpayer pays GSA and then recovers
those payments from NASA. Neither Taxpayer nor NASA executes
any lease or license agreement with GSA in regard to the
vehicles, although the terms "lease" and "rental" are sometimes
used on invoices or in other records. GSA does not collect any
sales tax on the amounts it bills for the vehicles, whether the
party to whom the bill is directed is another federal agency
like NASA or a government contractor like Taxpayer.

REQUESTED ADVISEMENT

Taxpayer requests confirmation that its use of GSA vehicles is
not subject to Florida sales or use tax under Chapter 212, F.S.

DISCUSSION, ANALYSIS, AND CONCLUSION

Section 212.05(1), F.S., provides as follows:

It is hereby declared to be the legislative intent that
every person is exercising a taxable privilege who engages

in the business of selling tangible personal property at
retail in this state, including the business of making mail
order sales, or who rents or furnishes any of the things or
services taxable under this chapter, or who stores for use
or consumption in this state any item or article of
tangible personal property as defined herein and who leases
or rents such property within the state.

(1) For the exercise of such privilege, a tax is levied on
each taxable transaction or incident, which tax is due and
payable as follows:
....
(b) At the rate of 6 percent of the cost price of each item
or article of tangible personal property when the same is
not sold but is used, consumed, distributed, or stored for
use or consumption in this state;....

(c) At the rate of 6 percent of the gross proceeds derived
from the lease or rental of tangible personal property, as
defined herein;....

"Person" is defined in section 212.02(12), F.S., as "any
individual, firm, copartnership, joint adventure, association,
corporation, estate, trust, business trust, receiver, syndicate,
or other group or combination acting as a unit and also includes
any political subdivision, municipality, state agency, bureau,
or department..." The term does not include the federal
government or any agency thereof. Section 212.06(1), F.S.,
provides that tax is collectible from "dealers" as of the time a
taxable sale or use occurs. Section 212.06(2), F.S., defines
the term "dealer" as any person who engages in various described
activities or as "the state, county, municipality, any political
subdivision, agency, bureau or department, or other state or
local governmental instrumentality." The federal government and
its agencies are not included within the definition of "dealer"
for sales tax purposes.

Based on the foregoing statutes, GSA is not engaged in a taxable
privilege when it provides vehicles to Taxpayer to use on NASA's
behalf, because GSA is not a "person" within the meaning of the
Florida statutes. This result is confirmed by the exclusion of

federal agencies from the definition of "dealer." Only dealers
are obligated to register, collect, report, and remit sales
taxes under Chapter 212.

A second issue is whether, regardless of whether GSA could be
required to collect and remit sales tax on its vehicles that are
assigned to Taxpayer to use in NASA's behalf, Taxpayer is
required to accrue and remit use tax on its payments to GSA.
"Use" is defined in section 212.02(20), F.S., as the "exercise
of any right or power over tangible personal property incident
to ownership thereof, or interest therein...." The basic
purpose of the use tax, stated in general terms, is to impose
tax on the purchaser or lessee of tangible personal property
when for any reason the seller or lessor is not required to or
fails to collect sales tax on a transaction that is otherwise
taxable under Chapter 212.

Taxpayer acquires no ownership interest in the GSA vehicles.
There is no lease agreement granting Taxpayer any interest as a
lessee of those vehicles. Taxpayer's operation of the vehicles
is restricted to use on NASA's behalf performing obligations to
NASA under its contract. At all times the vehicles remain the
property of and under the control of GSA, subject to recall and
reassignment based on GSA's determination of the relative needs
of the many federal agencies it serves. Under these
circumstances, there is no taxable use of the vehicles to
Taxpayer. Taxpayer is billed and recoups the cost from NASA to
facilitate accurate cost accounting on a contract basis, just as
GSA bills other federal agencies to facilitate accurate peragency budgeting within the federal government. Payment by
Taxpayer to GSA in and of itself is not sufficient to establish
a taxable use by Taxpayer when Taxpayer does not receive any
legal interest as owner or lessee and has no discretion to use
the vehicles other than for official government purposes.

In summary, the use of GSA vehicles by a NASA contractor under
the terms and conditions described in this advisement is not
subject to tax under Chapter 212 of the Florida Statutes.
Taxpayer, NASA, and other NASA contractors using GSA vehicles
under those same terms and conditions may rely on this
conclusion.

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 request
for this advice, as specified in Section 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, 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 before disclosure. In an effort to protect the
confidentiality of such information, we request you provide the
undersigned with an edited copy of your request for Technical
Assistance Advisement, backup material and response within
fifteen days of the date of this advisement.

Sincerely,

Linda W. Bridges, Tax Law Specialist
Technical Assistance & Dispute Resolution

Control #38776