Could a customer use its Florida direct-pay permit to self-accrue tax on taxable security services?

Subject

Self-Accrual of Tax on Security Services

Plain-English summary

The security company could accept the customer's Florida direct-pay permit instead of collecting tax on the taxable security services. The title of the permit suggested tangible personal property, but the governing rule authorized self-accrual for "leases and purchases" without limiting purchases to property.

The rule separately listed transactions where a direct-pay permit could not be used. Taxable security services were not among those exclusions.

What this means for you

A valid direct-pay permit can shift the duty to accrue and remit tax from the seller to the customer, but only within the permit and rule's scope. The seller should confirm the permit rather than collecting tax while the customer also self-accrues it.

Common questions

Q: Were the security services taxable? Yes.

Q: Could the seller accept the direct-pay permit? Yes.

Q: Did the rule limit direct pay to tangible property? No.

Citations and references

• Fla. Admin. Code r. 12A-1.0911(1) and (4) — self-accrual authorization and excluded transactions
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 01A-007

Original ruling text

SUMMARY

QUESTION: Is a Customer's direct pay permit valid for the
self-accrual of tax for the security services provided by
Company.

ANSWER - Based on Facts Below: Although the title of the
direct pay permit gives the impression that it may only be
used for purchases of tangible personal property, there is
no prohibition in the statutes or rules against the holder
of the permit using the permit for the purchase of taxable
services.

Jan 23, 2001

Re: Technical Assistance Advisement 01A-007
Sales and Use Tax
Self-Accrual of Tax on Security Services
Rules 12A-1.0911, F.A.C.
XXX ("Company")
XXX ("Customer")

Dear :

This is a response to your letter of December 11, 2000,
requesting a Technical Assistance Advisement (TAA) regarding the
above-referenced matter. This response to your request
constitutes a TAA under Chapter 12-11, Florida Administrative
Code (F.A.C.), and is issued to you under the authority of
Section 213.22, Florida Statutes (F.S.).

FACTS

Company provides security services to Customer in XXX. The
security services provided are taxable in Florida. Customer has
presented Company with a direct pay permit issued by the Florida
Department of Revenue for the purchase of tangible personal
property. Customer states that they are currently paying sales

tax to the Department. Company is also charging sales tax and
remitting the sales tax to the Department for the sale of the
services to Customer.

REQUESTED ADVISEMENT

Whether Customer's direct pay permit is valid for the security
services provided by Company.

APPLICABLE LAW

Rule 12A-l .0911, F.A.C., relating to self-accrual
authorization, provides in pertinent part:

(1) A dealer registered under Chapter 212, F.S., may, under
particular circumstances, request in writing to the
Department and obtain written consent from the Department
to assume the obligation of self-accruing and remitting
directly to the state, the use tax due on leases and
purchases....

(4) The self-accrual authority does not cover and must not
be used:

(a) When the owner of real property is obligated to be
registered as a dealer engaged in the business of leasing
real property to persons other than the dealer extending
the direct payment exemption certificate. However, an
operator of an amusement or vending machine or a dealer who
is required to remit sales tax electronically and who
leases or is granted a license to use real property from a
number of independent real property owners or lessors may
extend its direct pay permit to any owner or lessor of real
property whether or not the owner or lessor is obligated to
be registered as a dealer engaged in the business of
leasing or granting a license to use real property.

(b) For sales or rental of any motor vehicle, aircraft,
vessel, mobile home, except in circumstances where the
dealer is engaged as a common carrier qualifying for the
proration under ss. 212.08(8) and (9) and 212.0598, F.S.

See Rule 12A-1.064, F.A.C.

(c) For leases of transient rental accommodations or
parking, storage, tie down, and docking spaces, except in
circumstances where air carriers qualify for the proration
under s. 212.0598, F.S. See Rule 12A-1.064, F.A.C.

(d) For purchases of admissions.

(e) For purchases of telecommunication services except
where required under s. 212.05 (1)(e)4., F.S., for
telecommunication services or s. 212.0598, F.S., for
apportionment by eligible air carriers.

DETERMINATION

Rule 12A-l.0911, F.A.C., has been promulgated by the Department
of Revenue to provide guidance in the matter of the self-accrual
of sales and use taxes. Subsection (1) of this rule states that
a dealer may request permission from the Department of Revenue
to self-accrue and remit the tax that is due on "leases and
purchases." The rule language does not specify that the
purchases must only be purchases of tangible personal property.
Subsection (4) of the rule specifies the types of transactions
where the self-accrual authority may not be used. None of these
disallowed transactions concerns the purchases of services.

Although the title of the direct pay permit gives the impression
that it may only be used for purchases of tangible personal
property, there is no prohibition against the holder of the
permit using the permit for the purchase of services.
Therefore, Company may accept Customer's direct pay permit in
lieu of charging and collecting sales tax on the sale of
security services.

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 requests
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 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,

M. Chris Lyon
Attorney
Technical Assistance & Dispute Resolution

MCL/
Control #: 43410