Was a university's combined transportation and parking fee taxable, and could it allocate the fee between taxable parking access and nontaxable services?

Subject

Transportation Access Fee

Plain-English summary

The transportation access fee was taxable to the extent it paid for a license to use university parking. Students received a parking privilege even though a space was not guaranteed and many students did not claim decals. The exemption for school parking leases and rentals did not cover this separately defined license.

Transit service, bike lanes, bike paths, and similar alternatives were nontaxable. Because the university combined them with parking in one fee, it needed a reasonable allocation. The Department approved its approach and noted it could be simplified to available parking spaces divided by all students paying the fee.

What this means for you

A bundled fee containing a taxable real-property right can be taxed in full unless the provider can support a reasonable allocation to nontaxable components.

Common questions

Q: Did limited parking availability prevent a taxable license? No.

Q: Was the entire transportation program taxable? No.

Q: What simplified allocation did the Department accept? Available parking spaces divided by the number of students paying the fee.

Citations and references

• Fla. Stat. §§ 212.02(10)(i) and 212.031(1)(a), (c) — real-property licenses and rent allocation
• Fla. Stat. § 212.03(6) — school parking leases and rentals
• Fla. Stat. § 240.155 — campus transportation planning
• Pederson v. Green, 105 So. 2d 1 (Fla. 1958)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 01A-040

Original ruling text

SUMMARY

QUESTION 1: Is a transportation access fee, charged by an
educational institution to its students, subject to sales
tax when such fee includes both non-taxable transportation
service charges and taxable charges for the right to park
in certain designated areas?

ANSWER 1 - Based on Facts Below: Yes. The transportation
access fee is subject to sales tax, because it includes a
charge for a license to use real property.

QUESTION 2: If the transportation access fee is determined
to be subject to sales tax, may the educational institution
apply sales tax based upon a reasonable allocation method
it has proposed for determining the taxable and portion of
the fee?

ANSWER 2 - Based on Facts Below: Yes. The education
institution has proposed a reasonable allocation method
pursuant to s. 212.031(1)(c), F.S. Accordingly, it may use
its proposed allocation method in order to determine the
taxable portion of the transportation access fee payments.

Jul 12, 2001

Re: Technical Assistance Advisement 01A-040
Sales & Use Tax - Transportation Access Fee
Sections: 212.03(6); 212.031(1)(a)3.; 212.031(1)(c), F.S.
("University")
FEI# XX

Dear :

This is in response to your request, dated April 27, 2001,
received May 1, 2001, for the Department's issuance of a
Technical Assistance Advisement ("TAA") concerning the above
referenced party and matter. Your letter has been carefully

examined and the Department finds it to be in compliance with
the requisite criteria set forth in Chapter 12-11, F.A.C. This
response to your request constitutes a TAA and is issued to you
under the authority of section 213.22, F.S.

Facts

The 2000 Florida Legislature enacted CS/CS/HB 1567, Chapter
2000-215, L.O.F., which amended s. 240.209, F.S. Section
240.209, F.S., sets forth the duties and powers of the Board of
Regents. The bill expressly authorized the Board of Regents to
allow universities to adopt a number of new fees, including a
"transportation access fee."

Section 240.155(1), F.S., provides for the implementation of
campus master plans and campus development agreements in
recognition of the adverse impact campuses may have on the
public facilities, services, and natural resources of their host
governments. Campus master plans must include a transportation
element that addresses "reasonable transportation demand
techniques to minimize offsite impacts where possible." See s.
240.155(2), F.S. The current Comprehensive Campus Master Plan
adopted by University on November 2, 1995, and revised on June
24, 1996, provides a transportation element with the following
five goals:

(1) To provide and promote an efficient, safe, cost
effective and assessable [sic] transit system that enhances
the mission of the University;

(2) To provide and support safe and efficient campus and
context area transportation systems that meet the future
needs of the University;

(3) To provide and support safe, sufficient, cost-effective
and accessible parking facilities that meet the future
needs of the University;

(4) To provide adequate pedestrian and non-vehicular
circulation facilities on campus to meet future needs of
the University; and

(5) To coordinate the location of on-campus pedestrian and
non-vehicular circulation facilities with those planned by
the host community.

The Board of Regents filed for adoption amendments to Rule 6C7.003, F.A.C., on August 8, 2000. Effective August 28, 2000,
Rule 6C-7.003, F.A.C., authorized the universities to assess a
"transportation fee." The "transportation fee" is not included
within the definition of "tuition" under Rule 6C-7.001, F.A.C.
Effective August 17, 2000, Rule 6C2-2.009(3), F.A.C., imposed a
"'W' Student Transportation Access Fee," to be assessed as
described below, beginning with the 2000-2001 school year.
Neither rule nor statute defines the term "transportation access
fee." However, Rule 6C-7.003(34), F.A.C., describes the fee as
one "... to support the university's transportation
infrastructure and to increase student access to transportation
services." Rule 6C-7.003(33), F.A.C., also authorized
universities to "establish a charge for parking decals."

University's rules provide that the "transportation access fee"
is "assessed each semester to all registered students."
Commencing with the 2000-2001 school year, University's students
will be charged a "transportation access fee" of $2.85 per
credit hour. The fee will increase to $4.90 per credit hour the
second following school year. The fee is mandatory and applies
to students whether or not they own a vehicle or operate a
vehicle on campus. Payment of the fee entitles students to ride
the city and university bus systems free of charge. Payment of
the fee also provides the students with an annual parking
permit. "W" permits are provided for automobiles and "MC"
permits are provided for motorcycles. Students do not have the
option of purchasing decals in lieu of the "transportation
access fee." Instead, parking permits are provided to all
students who pay the transportation access fee, regardless of
whether the students have vehicles. The permits are not
transferable. The permits do not guarantee individual students
a parking place.

The Transportation Element of University's Comprehensive Campus
Master's Plan includes the development of perimeter parking,

inner and outer transit loops, fare-fee transit services, and
bicycle and pedestrian zones. University plans to use revenue
from the "transportation access fees" to fund the Transportation
Element of the plan. The revenue collected from the
"transportation access fees" will be deposited in a specific
trust fund pledged to support revenue bonds under control of the
Board of Regents. Of the $5.9 million of the total parking and
transportation budget, $2.3 million will be derived from the
"transportation access fee." "Transportation access fee"
revenues will be used to fund transit services, operating
expenses, university overhead, and garage and parking lot
construction.

Requested Rulings

I. University requests a ruling that Florida's sales and use tax
law does not apply to its "transportation access fee."

II. In the event that the Department rules that any portion of
the "transportation access fee" is taxable, University requests
that sales tax be applied based on a reasonable allocation
pursuant to s. 212.031(1)(c), F.S.

Applicable Statutes and Rules

Section 212.031(1)(a)3., F.S., provides in pertinent part:

It is declared to be the legislative intent that every
person is exercising a taxable

privilege who engages in

the business of renting, leasing, letting, or granting a
license for the use of any real property unless such
property is:

3. Property subject to tax on parking, docking, or storage
   spaces under s. 212.03(6).

Section 212.03(6), F.S., provides:

(6) It is the legislative intent that every person is
engaging in a taxable privilege who leases or rents parking
or storage spaces for motor vehicles in parking lots or

garages, who leases or rents docking or storage spaces for
boats in boat docks or marinas, or who leases or rents tiedown or storage space for aircraft at airports. For the
exercise of this privilege, a tax is hereby levied at the
rate of 6 percent on the total rental charged.

Section 212.031(1)(c), F.S., provides in pertinent part:

For the exercise of such privilege, a tax is levied in an
amount equal to 6 percent of and on the total rent or
license fee charged for such real property by the person
charging or collecting the rental or license fee. The total
rent or license fee charged for such real property shall
include payments for the granting of a privilege to use or
occupy real property for any purpose and shall include base
rent, percentage rents, or similar charges.... In the case
of a contractual arrangement that provides for both
payments taxable as total rent or license fee and payments
not subject to tax, the tax shall be based on a reasonable
allocation of such payments and shall not apply to that
portion which is for the nontaxable payments. (Emphasis
Supplied)

Discussion

Prior to 1986, licenses to use real property were not taxed
under Chapter 212, F.S. Effective July 1, 1986, the Florida
Legislature amended s. 212.031(a), F.S., to make licenses to use
real property taxable. The Florida Legislature did not,
however, amend s. 212.03(6), F.S., to include licenses. Section
212.03(6), F.S., currently provides that tax is levied at the
rate of 6 percent on the total rental charged for the "lease" or
"rental" of parking or storage spaces for vehicles in parking
lots or garages. The taxing provision in s. 212.03(6), F.S.,
only imposes tax on the "lease" or "rental" of such property.
The term "license" is not mentioned under s. 212.03(6), F.S.

If the terms "lease" and "rental" are given the meanings
ascribed to them by s. 212.02(10), F.S., the taxing provision
for parking spaces under s. 212.03(6), F.S., would effectively
have no meaning B a result that is always avoided if possible.

Snively Groves, Inc. v. Mayo, 135 Fla. 300, 303 (Fla. 1938).
Section 212.02, F.S., provides that terms defined within it may
have a different meaning when the context clearly indicates a
different meaning. Clearly, the intent of the legislature in
this case was to tax the "lease" or "rental" of parking spaces
of the type described under s. 212.03(6), F.S. Therefore, the
definitions of the terms "lease" and "rental" must have
different meanings in their application under s. 212.03(6),
F.S., from those provided under s. 212.02(10), F.S. No other
statutory definitions are provided for the terms "lease" or
"rental." Therefore, it is necessary to look to the principles
of statutory construction to determine their meaning. Words of
common usage, when used in statutes, should be given their plain
and ordinary meaning. Pederson v. Green, 105 So.2d 1 (Fla.
1958).

Black's Law Dictionary 889 (6th ed. 1990) (hereinafter "Black's
Law"), defines the term "lease" as:

Any agreement which gives rise to relationship of landlord
and tenant (real property) or lessor and lessee (real or
personal property). Smith v. Royal Ins. Co., C.C.A.Cal.,
111 F.2d 667, 671. A contract for exclusive possession of
lands, tenements, or hereditaments for life, for term of
years, at will, or for any interest less than that of the
lessor, usually for a specified rent or compensation.
Feeley v. Michigan Ave. Nat. Bank, 1 Dist., 141 Ill.App.3d
187, 95 Ill.Dec. 542, 545, 490 N.E.2d 5, 18. Contract
wherein one lets to the other a certain space, property, or
building for specified unit of time, generally a week,
month, or year. Spiers v. Lake Shore Enterprises, Inc.,
La.App., 210 So.2d 901, 903....

Black's Law 1297 (6th ed. 1990) defines the term "rent" as:

Consideration paid for the use or occupation of property.
In a broader sense, it is the compensation or fee paid,
usually periodically, for the use of any rental property,
land, buildings, equipment, etc.

At common law, term referred to compensation or return of

value given at stated times for the possession of lands and
tenements corporeal. A sum of money or other
consideration, issuing yearly out of lands and other
tenements corporeal; something which a tenant renders out
of profits to the land which he enjoys; a compensation or
return, being in the nature of an acknowledgement or
recompense for the possession of some corporeal
inheritance. 2 Bl.Comm. 41. In re Terlmutter's Will, 156
Misc. 571, 282 N.Y.S. 282.

The definitions of "lease" and "rental" imply a possessory
interest in the property being rented or leased. Payment of the
"transportation access fee" would clearly constitute "lease" or
"rental" consideration if Taxpayer's students received exclusive
possession of a specified parking place. However, payment of
the "transportation access fee" (as well as granting the student
certain non-parking privileges) only grants the students access
to parking when a parking space is actually available. Payment
of the fee does not guarantee the student the right to use or
occupy a particular parking space, nor does it guarantee that an
unspecified space in a specified area will be available for the
student to park in at any given time.

The parking privileges granted to the students are not
consistent with a "lease" or "rental," because the students are
not granted a possessory interest in any real property.
Taxpayer permits individual students to park in whatever spaces
may be available in certain designated areas. Students would be
unable to park in these spaces without permission from the
university. The obligations running between Taxpayer and its
students are not consistent with a "rental" or "lease"
agreement. Therefore, the taxing provision on parking under s.
212.03(6), F.S., does not apply.

The obligations running between Taxpayer and its students appear
to constitute a license agreement. Section 212.02(10)(i), F.S.,
provides the following definition of the term "license":

"License," as used in this chapter with reference to the
use of real property, means the granting of a privilege to
use or occupy a building or a parcel of real property for

any purpose.

It is necessary to determine the meaning of the key terms used
in this statutory definition to fully determine whether the
arrangement between Taxpayer and its students constitutes a
license to use real property.

While s. 212.02(20) defines the noun "use," no statutory
definition is provided for the verb "use" under Chapter 212,
F.S. Additionally, no statutory definition is provided for the
term "privilege" under Chapter 212, F.S. Therefore, it is
necessary to look to the principles of statutory construction to
determine their meaning. Words of common usage, when used in
statutes, should be given their plain and ordinary meaning.
Pederson v. Green, 105 So.2d 1 (Fla. 1958).

Black's Law 1541 (6th ed. 1990), provides the following
definition of the word "use":

v. To make use of; to convert to one's service; to employ;
to avail oneself of; to utilize; to carry out a purpose or
action by means of; to put into action or service,
especially to attain an end....

Black's Law 1197 (6th ed. 1990), provides the following
definition of the term "privilege":

A particular and peculiar benefit or advantage enjoyed by a
person, company, or class, beyond the common advantages of
other citizens. An exceptional or extraordinary power or
exemption. A peculiar right, advantage, exemption, power,
franchise, or immunity held by a person or class, not
generally possessed by others....

Applying the definitions above to s. 212.02(10)(i), F.S.,
"license," may be construed as the granting of a particular or
peculiar benefit or advantage to a person to make use or avail
themselves of (or occupy) a building or a parcel of real
property for any purpose.

Upon payment of the transportation access fee, Taxpayer's

students receive the right to use designated parcels of property
owned by the university for parking. Although the students may
only exercise their rights to use the property under certain
conditions (when a space is actually available), payment of the
"transportation access fee" does grant them a privilege to use
real property. No language in Chapter 212, F.S., indicates that
a license to use real property cannot be granted with
restrictions or limitations. Therefore, the obligations running
between Taxpayer and its students constitute a license to use
real property.

The taxing provision of s. 212.031, F.S., was amended to include
licenses to use real property. However, s. 212.03(6), F.S., was
not amended to include "licenses." Following the amendment to
s. 212.031, F.S., the Department issued Tax Information
Publication 87A01-13, which stated, "[e]ffective July 1, 1986,
the charge a school makes for the privilege to use campus
streets and to park in certain areas when space is available
became taxable as a license to use real property pursuant to the
provisions of s. 212.031, F.S." This is correct. The leasing,
letting, or granting of a license to use real property is
taxable unless the property qualifies for one of the thirteen
exemptions provided under s. 212.031(1)(a), F.S. Of these, the
only exemption that might possibly apply here is s. 212.03(6),
F.S. However, s. 212.03(6), F.S., applies strictly to the
"lease" or "rental" of parking spaces, not to "licenses."
Because the property in the instant case is not taxable under s.
212.03(6), F.S., it is subject to the taxing provision of s.
212.031(1)(a), F.S. Therefore, payment of the "transportation
access fee" is taxable as consideration paid in exchange for a
license to use real property.

In your letter, you indicate that payment for parking and
transportation privileges are made together in a single
"transportation access fee." Transportation services are
generally not subject to tax. However, where the services are
not separately itemized or where the purchaser has no choice but
to accept the service with the payment to use the real property,
sales tax is imposed on the entire amount, including the portion
attributable to the service. However, pursuant to s.
212.031(1)(c), F.S., if a contractual arrangement provides for

payments taxable as rent as well as nontaxable payments, tax
should be based on a reasonable allocation of such payments and
shall not apply to the nontaxable portion. Therefore, if
University can provide a reasonable method for allocating
taxable and nontaxable portions of the charge for the
"transportation access fee," tax need only be collected and
remitted based on the taxable portion of the charge.

University's letter indicates that roughly one-third of the
students who were required to pay the transportation access fee
did not even claim the parking decals they were entitled to.
University argues that as a result, one-third of the fee
revenues had no relationship whatsoever to charges for parking.
University also points out that the approximately 22,000
students who claimed their decals had to compete for only 5,613
parking spaces. University contends that, although a portion of
the "transportation access fee" constitutes a taxable parking
payment, a major portion of the fee is actually imposed to fund
bus services, bike lanes, bike paths, and similar services and
infrastructure geared toward providing alternatives to
automobile transportation.

University proposes an allocation formula that accounts for nonparking uses of the "transportation access fee," which is based
on data reasonably accessible to XXXXXX and verifiable by the
Department. University proposes applying a percentage factor to
total fees in lieu of tracking fees paid by individual students.
University proposes to eliminate from the potentially taxable
base amount those fees attributable to students who do not claim
their parking decals. This would be accomplished by applying a
factor based on the number of students claiming decals as a
percentage of the total number of students paying the
"transportation access fee." University proposes using a second
factor to approximate the relationship between the fees paid and
actual access to parking. This factor would be based on the
total number of parking spaces available as a percentage of the
total number of students with decals who must compete for those
spaces. University contends that the amount of the fees
remaining after applying these two factors would be the portion
allocated to taxable parking fees.

Conclusion

I. The charge for the "student access fee" is taxable, because
it is consideration paid in exchange for a license to use real
property. University should collect and remit sales tax and any
applicable surtax on the amount charged to its students.

II. The allocation method proposed by University is reasonable.
University may use the proposed allocation method in order to
determine the taxable portion of the "transportation access fee"
payments. It should be noted that the formula for the
allocation method might be simplified to a ratio of the number
of available spaces divided by the number of the students paying
the fee. The number of students with decals present in both
factors would cancel out. This simplified formula is also a
reasonable allocation method.

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 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
that 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 may lead to identification of the taxpayer. Your
response should be received by the Department within 15 days of
the date of this letter.

Should you have any further questions concerning this matter,

please do not hesitate to contact me.

Sincerely,

Case A. Bodiford
Attorney
Technical Assistance & Dispute Resolution
850-922-4714

Control #: 45112