Were an interstate carrier's tractor-mounted satellite units subject to Florida sales or use tax?

Subject

Partial Exemption for Common Carrier in Interstate Commerce

Plain-English summary

The tractor-mounted satellite units were motor-vehicle parts eligible for common-carrier proration, but the units in this ruling were not subject to Florida tax at all because they were purchased, delivered, and installed outside Florida. Later operation of the equipped tractors in Florida did not create tax on those out-of-state purchases.

The antenna was bolted to the tractor and the keyboard/display mounted in the cab, making the unit part of the vehicle's operation. If delivery had occurred in Florida, tax would have applied using the carrier's intrastate-to-interstate mileage ratio.

What this means for you

The ruling separately addressed what the equipment was and where the purchase was delivered. Qualifying as a prorated vehicle part did not mean Florida could tax an out-of-state delivery under the Department's continuing Atlantic Coast Line stipulation.

Common questions

Q: Was the satellite unit a motor-vehicle part? Yes.

Q: Did later Florida mileage create use tax on the out-of-state purchase? No.

Q: What if the seller delivered the unit in Florida? The purchase would have been subject to apportioned tax.

Citations and references

• Fla. Stat. § 212.08(9)(b) — interstate common-carrier motor vehicles and parts
• Fla. Admin. Code r. 12A-1.064(4)(a) — common-carrier proration
• Atlantic Coast Line Railroad v. State Revenue Commission, Fla. 2d Jud. Cir. Ct. stipulation dated March 25, 1965 — delivery limitation applied by the Department
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00A-016

Original ruling text

SUMMARY

QUESTION 1: Is the satellite communication unit a motor
vehicle "part" to which the provisions of section
212.08(9)(b), F.S., are applicable?

ANSWER - Based on Facts Below: Section 212.08(9)(b), F.S.,
and Rule 12A-1.064, F.A.C., provide for the proration of
purchases by common carriers of motor vehicles used in
interstate commerce and parts thereof. The satellite unit
is installed in each tractor; the antenna is bolted to the
outside of the tractor; and the keyboard/display unit is
installed in a bracket in the cab of the tractor. Because
the satellite unit becomes part of the total operation of
which the motor vehicle is the major part, the satellite
communication unit qualifies for payment of tax on a
prorated basis.

QUESTION 2: Is the taxpayer subject to Florida sales or use
tax on satellite communication units purchased and
installed outside the state of Florida even though the
motor vehicle on which the units is installed is
subsequently used in the state?

ANSWER - Based on Facts Below: The scope of section
212.08(9)(b), F.S., which purports to apply to total
purchases of motor vehicles and parts that are used in
Florida, was limited by the stipulation agreement entered
into by the Department in Atlantic Coast Line Railroad v.
State Revenue Commission, Circuit Court, 2d Judicial
District, Leon County, Florida, March 25, 1965. Under the
stipulation agreement, the Department agreed to interpret
the predecessor statute of section 212.08(9), F.S., so as
to levy sales or use tax only against rail cars and parts
thereof that were purchased or delivered to the purchaser
in Florida. The Department agreed to apply the statute in a
like manner to similarly situated taxpayers, including
interstate motor carriers. Although the single statutory
provision involved in the 1965 stipulation agreement
subsequently evolved into separate provisions for different
types of interstate carriers, the stipulation agreement

remains in effect. Therefore, the taxpayer would owe
apportioned sales or use tax on the purchases from the
seller that were delivered in Florida, but the taxpayer
would not be subject to Florida tax on purchases where
installation of the satellite unit occurred outside Florida
even though the motor vehicle was subsequently used in the
state.

Mar 31, 2000

Re: Technical Assistance Advisement 00A-016
Sales and Use Tax - Partial Exemption for Common Carrier in
Interstate Commerce
Section 212.08(9)(b), F.S.
Rule 12A-1.064(4)(a), F.A.C.

Dear :

This is in response to your letter to the Florida Department of
Revenue dated January 17, 2000, in which you asked for a
technical assistance advisement concerning the entitlement of
XXX to an exemption of Florida sales tax on certain purchases.

FACTS

XXX operates tractor-trailers as a common carrier engaged in
interstate commerce pursuant to authority issued by the United
States Department of Transportation. XXX motor vehicles are
dispatched and controlled by central operations personnel
located at XXX headquarters in XXX. The company's vehicles
operate throughout the contiguous forty-eight states, including
Florida, depending on the availability of freight. The
vehicles, however, do not have fixed routes or fixed schedules.

XXX tractors have satellite communication units, which are used
to determine the vehicle's location, and to transmit information
between the vehicle and XXX headquarters. The units are
purchased from XXX, located in XXX, and they are installed in

the company's tractors at a maintenance facility in XXX. None of
the units were purchased nor installed in Florida. At times,
some of the vehicles containing these units operate in and out
of Florida in connection with transporting freight in interstate
commerce.

The satellite communication units consist of two main
components: 1. An antenna bolted to the outside of the tractor,
which transmits and receives data via satellite; and 2. A
keyboard/display unit installed in a bracket in the cab of the
tractor, which allows the vehicle driver to communicate with
headquarters. Specifically, the device communicates dispatch
information to the driver; it allows the vehicle driver to
communicate with the operations department; it provides arrival
and departure information required by XXX customers; it provides
information used to determine the number of miles operated in a
state for fuel tax reporting purposes; and it provides a means
of communicating with the vehicle in case of an emergency. In
addition, these units are used to determine the vehicle's
location and to monitor the drivers' compliance with the United
States Department of Transportation hours of service
requirements. Drivers are required to use these devices on a
daily basis.

Requested Advisement

XXX requests advice on the following issues:

1. Is the satellite communication unit a motor vehicle "part"
   to which the provisions of section 212.08(9)(b) are
   applicable?

2. Is XXX subject to Florida sales or use tax on satellite
   communication units purchased and installed outside the
   state of Florida even though the motor vehicle on which the
   units is installed is subsequently used in the state?

Law, Discussion and Analysis

Section 212.08(9)(b), F.S., provides a partial exemption for
motor vehicles used in interstate commerce. It reads as

follows:

(b) Motor vehicles which are engaged in interstate commerce
as common carriers, and parts thereof, used to transport
persons or property in interstate or foreign commerce are
subject to tax imposed in this chapter only to the extent
provided herein. The basis of the tax shall be the ratio
of intrastate mileage to interstate or foreign mileage
traveled by the carrier's motor vehicles which were used in
interstate or foreign commerce and which had at least some
Florida mileage during the previous fiscal year of the
carrier. Such ratio is to be determined at the close of
the carrier's fiscal year....

It should be noted that section 212.08(9)(b), F.S., constitutes
a statutory exemption. As such, the Department must adhere to
and be guided by the long-standing and fundamental precept of
statutory construction, established by the Florida Supreme
Court, which mandates that exemptions from or exceptions to
taxing statutes must be strictly construed against the taxpayer.
See Asphalt Pavers Inc. v. Department of Revenue, 584 So.2d 55,
57 (Fla. 1st DCA 1991); Dade Cty. Taxing Auth. v. Cedars of
Lebanon, 355 So.2d 1202, 1205 (Fla. 1978), reh'g den., Apr. 5,
1978; Williams v. Jones, 326 So.2d 425, 432 (Fla. 1975), reh'g
den., Mar. 4, 1976; Straughn v. Camp, 293 So.2d 689, 695 (Fla.
1974).

Section 212.08(9)(b), F.S., and Rule 12A-1.064, F.A.C., provide
for the proration of purchases by common carriers of motor
vehicles used in interstate commerce and parts thereof.
Clearly, the legislative intent was to collect tax fairly on the
parts that become an integral component of the motor vehicle.
Here, the satellite device is installed in each tractor.

The antenna is bolted to the outside of the tractor and the
keyboard/display unit is installed in a bracket in the cab of
the tractor. This satellite unit becomes part of the total
operation of which the motor vehicle is the major part. These
units, therefore, qualify for payment of tax on a prorated
basis.

In applying section 212.08(9)(b), F.S., to XXX situation,
certain judicial and regulatory interpretations should be
considered. By its terms, the statute purports to apply to
total purchases of motor vehicles and parts that are used in
Florida. The scope was limited, however, by the stipulation
agreement entered into by the Department in Atlantic Coast Line
Railroad v. State Revenue Commission, Circuit Court, 2d Judicial
District, Leon County, Florida, March 25, 1965. Under that
stipulation agreement, the Department agreed to interpret the
predecessor statute of section 212.08(9), F.S., so as to levy
sales or use tax only against rail cars and parts thereof that
were purchased or delivered to the purchaser in Florida.
Moreover, the Department agreed to apply the statute in like
manner to similarly situated taxpayers, including interstate
motor carriers. Although the single statutory provision
involved in the 1965 stipulation agreement subsequently evolved
into separate provisions for different types of interstate
carriers, the stipulation agreement remains in effect.
Therefore, XXX would owe apportioned sales or use tax on the
purchases from XXX that were delivered in Florida, but the
company would not be subject to Florida tax on purchases where
delivery occurred outside Florida just because the motor vehicle
was subsequently used in the state.

Conclusion

The satellite communication units are considered to be a part of
the motor vehicle, thereby, the provisions of section
212.08(9)(b), F.S., are applicable. However, because these
units were purchased, delivered and installed outside the state
of Florida, they are not subject to Florida sales or use tax
pursuant to the stipulation agreement entered into between the
Department and Atlantic Coast Line Railroad.

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 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., and are subject to disclosure to the public under the
conditions of section 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,

Isabel Nogues
Attorney
Technical Assistance and
Dispute Resolution
(850) 488-9669

Control # 40074