Could Lake Belt miners calculate and remit the mitigation fee at the first transfer after extraction?

Plain-English summary

The miners could collect and remit the Lake Belt mitigation fee on the first transfer after extraction, even when that transfer was to an internal division. Because the fee was based on tons extracted and sold, the method avoided product-mix and intercompany-pricing complications.

The miner had to create and retain invoices or other evidence of the transfer and sale, separately itemize the fee, and include the itemized fee in the taxable base when making a retail sale subject to sales tax.

What this means for you

The approved method focused on physical tonnage at the first transfer rather than tracing Lake Belt material through thousands of processed products. It still required auditable transfer records and statutory itemization.

Common questions

Q: Could the first transfer be within the same company? Yes. The ruling expressly approved an internal-division transfer.

Q: Did intercompany pricing affect the fee? No. The fee was weight-based rather than price-based.

Q: Was the separately stated fee excluded from retail sales tax? No. The ruling included it in the taxable base for taxable retail sales.

Citations and references

• Fla. Stat. § 373.41492(2) — Lake Belt mitigation fee
• Chapter 99-298, Laws of Florida — fee legislation cited
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99A-050

Original ruling text

SUMMARY

Question: How is the Miami Dade County Lake Belt Mitigation
Fee to be calculated and remitted?

Answer - Based on Facts Below: The Department is of the
opinion that collecting and remitting the fee on the first
transfer after extraction is acceptable, even in those
cases where the first transfer is to an internal
subdivision of the same company. Since the fee is based on
the per ton weight of material extracted and sold, problems
with intercompany pricing, and retail versus wholesale
pricing, are not an issue. The miner/taxpayer would be
required to create and retain invoices and/or other
evidences of transfer and sale of the extracted material.
As required by the statute, the fee is to be separately
itemized. In cases where there are retail sales, with sales
tax being collected, the taxable base would include the
separately itemized mitigation fee.

Sep 17, 1999

Re: Technical Assistance Advisement (99A-050)
Miami-Dade County Lake Belt Mitigation Fee
Section 373.41492, F.S. (1999)

Dear :

This is in response to your letter of August 13, 1999,
requesting the issuance of a Technical Assistance Advisement on
the mechanism by which the subject fee is to be calculated and
remitted by your clients, members of the XXX.

Background

Section 373.41492(2), F.S. (1999), as created by Chapter 99-298,
Laws of Florida, imposes a mitigation fee upon each ton of
limerock and sand extracted from the Miami-Dade County Lake Belt

Area (the "Area"), and provides in part:

..., effective October 1, 1999, a mitigation fee is imposed
on each ton of limerock and sand extracted by any person
who engages in the business of extracting limerock or sand
from within the Miami-Dade County Lake Belt Area.... The
mitigation fee is at the rate of 5 cents for each ton of
limerock and sand sold from within the properties where the
fee applies in raw, processed, or manufactured form,
including, but not limited to, sized aggregate, asphalt,
cement, concrete, and other limerock and concrete products.
Any limerock or sand that is used within the mine from
which the limerock or sand is extracted is exempt from the
fee. The amount of the mitigation fee imposed under this
section must be stated separately on the invoice provided
to the purchaser of the limerock or sand product from the
limerock or sand miner, or its subsidiary or affiliate, for
which the mitigation fee applies....

Taxpayer Position

Your letter provides in part:

The issue is the mechanism by which the fee is to be
collected. Section 373.41492, Florida Statutes, fails to give
any direction on the method for calculating the fee once the
limerock or sand has been processed into a manufactured product.
The XXX ("Taxpayers") which currently mine the Area,
manufacture, process and sell over 1,000 separate mixed concrete
products, over 200 concrete block products, and over 300
specialty block products which contain a percentage of sand and
limerock. Allowing for eight source variations, there is the
potential for approximately 8,000 mixed concrete, 1,600 concrete
block and 2,400 specialty block fee calculations. Further, there
is no single defined mix. Depending upon the cement type and the
chemical consistency of the raw materials, which vary from
deposit to deposit, it may be necessary to use varying amounts
of aggregate, sand and cement to produce essentially the same
concrete product. Additionally, portions of the raw materials
can be substituted with other raw materials. For example, fly
ash can be substituted for cement within most concrete mixes.

Likewise, natural sand can be interchanged with manufactured
sand, a situation very common in South Florida where natural
sand is not readily and economically available.

The voluminous number of limestone products and multitude
of limestone raw material sources makes any attempt to precisely
measure the limerock and sand, and the applicable fee, in each
processed product, unreasonable. Therefore, approval of the use
of a simplified method of collecting the fee is requested. The
Taxpayers are proposing to collect the fee prior to processing.
In other words, the Taxpayers would propose to collect the fee
at the initial transfer which would include both intra-company
sales and outside sales. The fee collection would occur
regardless of whether the initial intra-company "sale" is to an
internal subdivision, or to a separate, independent, but
affiliated company. This matter of collection eliminates the
complications discussed above and provides a simple,
straightforward approach which will facilitate auditing of the
collection process.

Discussion and Conclusion

The Department is of the opinion that collecting and remitting
the fee on the first transfer after extraction is acceptable,
even in those cases where the first transfer is to an internal
subdivision of the same company. Since the fee is based on the
per ton weight of material extracted and sold, problems with
intercompany pricing, and retail versus wholesale pricing, are
not an issue. The miner/taxpayer would be required to create and
retain invoices and/or other evidences of transfer and sale of
the extracted material. As required by the statute, the fee is
to be separately itemized. In cases where there are retail
sales, with sales tax being collected, the taxable base would
include the separately itemized mitigation fee.

If you have further questions with regard to this matter and
wish to discuss them, you may contact me at (850) 922-4840.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S. which is binding on the department only
under 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 our 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.
Confidential information must be deleted before public
disclosure. In an effort to protect the confidentiality, we
request you provide the undersigned with an edited copy your
request for Technical Assistance Advisement, the backup material
and this response, deleting names, addresses and any other
details which might lead to identification of the taxpayer.
Your response should be received by the Department within 15
days of the date of this letter.

Sincerely,

Jonathan E. Swift
Tax Law Specialist
Technical Assistance and Dispute Resolution

Control No. 38633