Was all electricity at an RV park exempt because more than half its spaces were treated as permanent residences for rental tax?

Plain-English summary

The park's rental-tax status did not make all electricity residential and exempt. Florida analyzed each line's actual users and uses under the separate utility statute.

Dedicated lines serving residents with bona fide leases longer than six months were exempt because the electricity was used solely in their living units. Lines serving residents with terms of six months or less were taxable as transient or commercial use.

Mixed lines were also taxable if any electricity served a nonexempt purpose. Common-area electricity became taxable when it also benefited transient renters or served offices, vending, paid recreation, coin laundry, or other commercial activity. Separate metering was required to isolate nonexempt consumption.

What this means for you

Track electricity by meter or dedicated line, lease duration, and actual use. A park-level rental exemption did not replace this utility-by-utility analysis.

Common questions

Q: Was the entire park one residential household? No.

Q: Were dedicated lines to long-term residents exempt? Yes.

Q: What happened when one line served both exempt and nonexempt uses? The entire metered sale was taxable.

Citations and references

• Fla. Stat. § 212.03(7)(c) — RV-park rental treatment
• Fla. Stat. §§ 212.05(1)(e)1.d. and 212.08(7)(j) — electricity tax and residential-household exemption
• Fla. Admin. Code r. 12A-1.053 — utility sales
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99A-069

Original ruling text

SUMMARY

QUESTION: Does s. 212.03(7), F.S., which exempts, as a
principal place of residence, the entire recreational
vehicle park from rental tax, control 212.08(7)(j), F.S.,
which taxes under certain conditions the sale of
electricity to residential households?

ANSWER - Based on Facts Below: Although s. 212.03(7), F.S.,
exempts the entire park from tax on transient rental when
one-half of the units are occupied for over three months,
there is no statutory authority for superimposing the
rental tax statute which is s. 212.03(7), F.S., on a
different statute s. 212.08(7)(j), F.S., which relates to
utilities sold to residential households. Thus, an exempt
recreational vehicle park may not be viewed as a unit and
classed as a residential household for purpose of gaining
the exemption granted to the sale of electricity to
residential households under s. 212.08(7)(j), F.S.

Dec 10, 1999

Re: Technical Assistance Advisement No. 99A-069
XXX (herein Park)
Electricity Consumed Within a Recreational Vehicle Park
Sections 212.03(7)(c), 212.05(1)(e)1.d., 212.08(7)(j), F.S.
Rule 12A-1.053, F.S.

Dear :

This is a response, styled a Technical Assistance Advisement, to
your letter dated XX. You identify XXX as a client of your firm
which operates a recreational vehicle park. You question the
taxability of electricity consumed at the Park.

You also ask for a clarifying statement as to electricity used
at the Park in the common areas which you described as "...
parking lots, swimming pools, hallways, street lights, club

houses, recreational centers, laundry rooms, vending machines,
and stores."

You assert initially that electricity sold for use in the Park
is not subject to sales or use tax when such a park is, under
the provisions of s. 212.03(7)(b), F.S., determined to be a "...
principal or permanent place of residence...."

As to this statute, you state your opinion that:

... an RV park, which has more than one-half of its
residents in continuous residence for [in] excess of three
months is deemed to be a permanent place of residence,
[which means] the legislature essentially stated that such
a park, as a single entity, constitutes a permanent place
of residence and is not transient.

You then conclude: "Therefore, all the units in such a park
should qualify individually as `residential households' because
the park, as a whole, has lost its transient status or
characterization." You note that s. 212.08(7)(j), F.S., and Rule
12A-1.053, F.A.C., which interprets the statute, provide that
electricity is exempt when sold to a residential household.

You reason that :

... where a park has greater than fifty percent (50%) of
its units occupied for over three months and less than
fifty percent (50%) occupied on a transient basis, the park
is treated as one entity and the entire park is found not
to be subject to rental sales tax, i.e. the RV park will
not be evaluated unit-by-unit... Under this statute even an
RV park with forty-nine percent (49%) of its residents
occupying units on a transient basis would still, as a
whole, be exempt from rental sales tax, and each unit at
the park would be exempt from sales tax on the rent.

You state that the lessees of Park can be classed in three
categories. You give the following description of the three
categories:

(1) those who have entered into a bona fide lease for
greater than six months; (2) those who have entered into a
bona fide written (as defined by statute and administrative
rule) lease greater than or equal to three months but less
than six months; and (3) those who have entered into a
lease [for] less than three months, which includes
overnight guests.

You then describe the Category 1 residents as having a "...
devoted line to their unit/lot, which line serves only their
unit." You state that either the resident individually will be
billed directly, or should Park be billed by the utility, the
bill is then "... passed on to the resident."

You describe Category 2 users as sharing a single line with
other Category 2 residents, or a variety of other combinations
which include sharing of a single line with Category 3 residents
or sharing of a single line with the office; vending areas;
lighting of the parking lot or streets; swimming pool; or club
house.

You state that Category 3 residents are those who share a single
line with only Category 3 residents, or share a single line to
the office; vending areas; parking lot or street lights;
swimming pool; or club house.

You assert that all Category 1 consumers are exempt because each
of the lessees has executed leases of greater than 6 months
terms of occupancy. You also state that, since the Park is
exempt from transient tax, as imposed by s. 212.03, F.S., the
category 2 and Category 3 lessees should all be classed as
permanent residences or permanent households as described in s.
212.08(7)(j), Florida Statutes.

However, you do acknowledge that s. 212.08(7)(j), F. S., also
distinguishes between exempt and nonexempt uses of utilities.
Therefore, while you continue to assert that the Park is, as a
unit, a permanent residence or residential household, you do
concede that sales or use tax should be imposed on nonexempt
uses of electricity serving the Park.

Accordingly, you conclude that electricity is exempt from the
tax as to all of the users in Category 1; and that, within
Category 2 and Category 3, all uses are also exempt except in
the two instances within each category when the electricity is
consumed in the office and the vending areas.

Department Response

The charge for electricity is subject to sales tax as provided
in s. 212.05(1)(e)1.d., Florida Statutes. Rule 12A-1.053,
F.A.C., interprets the statute.

However, electricity sold to residential households by
utilities, as described in s. 212.08(7)(j), F.S., is exempt from
the tax.

The statute provides in part that:

... sales of utilities to residential households [are
exempt]... regardless of whether such sales of utilities...
are separately metered and billed direct to the residents
or are metered and billed to the landlord. If any part of
the utility... is used for a nonexempt purpose, the entire
sale is taxable. The landlord shall provide a separate
meter for nonexempt utility... consumption....

Rule 12A-1.053(1)(a), F.A.C., interprets the statute.

The term, "nonexempt purpose," which appears in s. 212.08(7)(j),
F.S., has been interpreted to mean the consumption of
electricity in a part of the facility which is used for
conducting activities of a commercial nature not directly
related to the care and daily living needs of the residents.
Examples of a "nonexempt use" or "nonexempt purpose" would
include a portion of the Park that is used as a bank or travel
office; beauty salon; transient living quarters; coin operated
laundry; exercise facilities, game rooms, swimming pools and
other recreational areas used by tenants who are required to pay
a fee for the use; or, to the Park sales or rental office.

If there is any commercial use of the Park's premises, then all

of the electricity billed through a single meter, which serves
the premises of the Park, would be subject to tax as required by
s. 212.08(7)(j), Florida Statutes.

Conversely, electric service for residential household use is
not taxable when billed directly to the resident, or to the
landlord of such user, provided that the electricity is served
through a single meter, and none of the electricity is used for
a nonexempt purpose.

In the instances when the electricity flows through a master
meter of the facility, all of the electricity measured through
such a meter is subject to tax if any portion is used for
nonexempt purposes. To avoid the taxability of all of the
electricity in such an instance, a separate line must be
provided direct from the utility to the nonexempt usage as
specified in s. 212.08(7)(j), Florida Statutes, which is cited
above.

However, in the fact pattern provided by you, note is made that
during a telephone conversation on November 23, 1999, the
Department learned that the Park is not served by a master
meter. Rather, in reply to repeated questions, it was asserted
that each of the uses you have described, in all three
categories, is served by a single line direct from the utility
provider. Relevant to such service connection, s 212.08(7)(j),
F.S., requires that, as cited above, "[t]he landlord shall
provide a separate meter for nonexempt utility...
consumption...."

In reply to your central question, the Department does not
agree, in applying s. 212.08(7)(j), F.S., that the Park is, as
you assert, "... a single entity, [which] constitutes a
permanent place of residence and is not transient." Nor does the
Department concede that, for the purposes of the same statute,
as you argue, that "... all the units in such a park should
qualify individually as 'residential households' because the
[Park], as a whole, has lost its transient status or
characterization."

There is no statutory basis for superimposing the provisions in

s. 212.03(7)(c), F.S., which classify a recreational vehicle
park under certain conditions as "... intended primarily for
rental as a principal or permanent place of residence..." on a
different statute, s. 212.08(7)(j), F.S., which allows an
exemption for electricity used in a "residential household." The
exemption provided by s. 212.03(7)(c), F.S., does not include
the sale of tangible personal property to the Park. There is no
denial that the statute operates to exempt tax on the rental of
such facilities, but the Department does not agree that the
statute reaches the sale of electricity, which is tangible
personal property, to the Park. The exemption sought by the
Park is that contained in s. 212.08(7)(j), F.S., not in s.
212.03(7)(c), Florida Statutes.

Thus, the rental of certain units of the Park that you described
as lessees in "Category 2" and "Category 3," who have executed
agreements with the Park for a term of 6 months or less, are
transient rentals. Such a use, when interpreting s.
212.08(7)(j), F.S., is a commercial or "nonexempt purpose."
Consequently, all of the electricity measured through the
meters, that serve Category 2 and Category 3 are taxable in
every instance as you described such usage on pages 1 and 2 of
your letter.

The taxability of the electricity includes the service to the
common areas. All the instances that you identify under
Category 3, which are those who share their line with parking
lots, street lights, swimming pool, or club house, are subject
to tax because a portion of the electricity which serves each of
these uses directly benefits renters who are in Category 2 and
Category 3. Electricity used in such common areas is for an
exempt purpose when no portion of the electricity is used for a
commercial purpose. A commercial purpose occurs when the
electricity serving the common areas is used also to benefit the
transient renters in Category 2 and Category 3.

As to Category 1 users, the electricity serving such lessees is
not subject to tax, because the energy is used solely within
their living units. Each unit has, as you state, a dedicated
"... line to their unit/lot." Based on the information available
to the Department, the electricity serving all of Category 1

users is used for exempt purposes described in s. 212.08(7)(j),
Florida Statutes.

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 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. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of 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,

Robert G. Parsons
Tax Law Specialist
Technical Assistance and Dispute Resolution

Ctrl. No. 39082
Enclosure