How could a hotel document exempt room rentals when a government or exempt-organization employee paid and the funding source was unclear?

Subject

Exempt Organization Transactions

Plain-English summary

The hotel could support an exempt room rental with an employee affidavit certifying that payment came directly from the government or exempt organization. Rule 12A-1.001(2)(d)2. supplied the suggested form when the payment source was otherwise unclear.

An employee using an authorized Florida government purchasing card did not need the affidavit. The hotel retained the agency's exemption number, account number, and cardholder name; a separate certificate copy was optional.

Only the room rental belonged on the P Card. Meals, room service, in-room movies, and other personal charges were to be paid separately and were not exempt direct government sales.

What this means for you

The employee's status alone did not create the exemption. Direct entity payment and adequate records did.

Common questions

Q: Could an employee certify direct payment? Yes, using the suggested affidavit.

Q: What records supported a P Card transaction? The exemption number, account number, and cardholder name.

Q: Were hotel meals and movies exempt on the P Card? No.

Citations and references

• Fla. Stat. § 212.08(6) — governmental-unit exemption
• Fla. Stat. § 212.08(7)(m), (n), (o), and (p) — exempt organizations
• Fla. Admin. Code r. 12A-1.001(2)(d)2. — direct-payment affidavit and documentation
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 01A-044

Original ruling text

SUMMARY

QUESTION: How can Taxpayer properly document exempt sales
to government employees (other than United States
government employees) and employees of exempt organizations
when Taxpayer cannot determine from whom the payment is
issued?

ANSWER - Based on Facts Below: Taxpayer should obtain an
affidavit from the employee. A suggested format for the
affidavit is found in Rule 12A-1.001(2)(d)2., Florida
Administrative Code, which states that the payment is being
made directly by the exempt organization or governmental
unit.

Also, the State of Florida has begun issuing some of its
employees with state purchasing cards, popularly known as
"P Cards". If a government employee uses a P Card to make
authorized purchases, Taxpayer should retain the
certificate of exemption number, account number, and
cardholder name for its permanent records. The P Card
indicates on its face that it is a Florida government
purchasing card for official business only. Information
printed on the front of the card will include the agency's
name, the agency's consumer's certificate of exemption
number, the account number, the name of the cardholder
(employee), and the expiration date. The state employee
may also have a Consumer's Certificate of Exemption; the
selling dealer may also obtain a copy of the certificate
from the employee for its records, but it is not required.
In the case of a hotel, only room rental charges should be
charged to the P Card. Charges for other items, such as
meals, room service, or in-room movies, should not be
charged to the P Card; state employees should pay for these
items via other methods, and the transactions are not
exempt from tax as a direct sale to a government agency.

Aug 06, 2001

Re: Technical Assistance Advisement 01A-044
Sales and Use Tax - Exempt Organization Transactions
Section: 212.08, F.S.Rule: 12A-1.001, F.A.C.
Petitioner: XXX (herein "Taxpayer")

Dear :

This letter is a response to your petition dated June 20, 2001,
for the Department's issuance of a Technical Assistance
Advisement ("TAA") concerning the above referenced party and
matter. Your petition 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 s. 213.22, F.S.

FACTS

Taxpayer is a hotel that, from time to time, rents transient
accommodations to individuals who claim an exemption from tax as
employees or representatives of exempt organizations. These
organizations include state and local governments, as well as
other exempt organizations, such as churches.

REQUESTED ADVISEMENT

Advice is requested on properly documenting these exempt sales,
when taxpayer hotel cannot determine from whom the payment is
issued.

LAW AND DISCUSSION

According to your letter, you are already familiar with the
requirements and documentation required from Federal government
employees. This discussion pertains to employees of state and
local governments, as well as to employees or representatives of
exempt organizations.

Section 212.08(6), Florida Statutes, provides in pertinent part:

There are also exempt from the tax imposed by this chapter
sales made to the United States Government, a state, or any
county, municipality, or political subdivision of a state
when payment is made directly to the dealer by the
governmental entity. This exemption shall not inure to any
transaction otherwise taxable under this chapter when
payment is made by a government employee by any means,
including, but not limited to, cash, check, or credit card
when that employee is subsequently reimbursed by the
governmental entity....

Section 212.08(7)(m), (n), (o) and (p), Florida Statutes,
provide exemptions from tax on transactions involving sales or
leases directly to religious organizations, veterans
organizations, schools, and entities that the Internal Revenue
Service has ruled are exempt from tax as being qualified as
nonprofit under s. 501(c)(3) of the Internal Revenue Code of
1986, as amended when used in carrying on their customary
nonprofit or religious activities. There are quite a few other
entities that qualify for exempt status under Section 212.08(7),
Florida Statutes. Paying "directly" means that the entity must
pay the dealer for the transaction, and it does not include
reimbursing employees or representatives for transactions.
Section 212.08(7), Florida Statutes, states where relevant
(flush left language):

Exemptions provided to any entity by this subsection shall
not inure to any transaction otherwise taxable under this
chapter when payment is made by a representative or
employee of such entity by any means, including, but not
limited to, cash, check, or credit card when that
representative or employee is subsequently reimbursed by
such entity.

Rule 12A-1.001(2), Florida Administrative Code, provides
suggested formats of affidavits to be used by employees or
representatives of governmental agencies or exempt organizations
to secure the exemption:

(d) Vendors are required to document exempt sales. Federal
employees, other government employees, and employees of

nonprofit organizations described in subsection (3) of this
rule shall provide the vendor with proper documentation of
the exempt nature of the sale.

2. A suggested format of the document to be provided by
   other government employees or employees of nonprofit
   organizations to their vendors is the following:

EMPLOYER'S AUTHORIZATION TO MAKE PURCHASES ON BEHALF OF AN
EXEMPT GOVERNMENTAL OR NONPROFIT ORGANIZATION

DATE

TO: ____
SELLING DEALER'S NAME

SELLING DEALER'S ADDRESS

I, the undersigned, am a representative of the exempt
governmental or nonprofit organization identified below.
The purchase or lease of tangible personal property or
services or the rental of living accommodations made on
__ (DATE[S]) from the business identified above is
for use by the exempt governmental or nonprofit
organization identified below.

The charges for the purchase or lease of tangible personal
property or services or the rental of living accommodations
from the dealer identified above will be billed to and paid
directly by the exempt governmental or nonprofit
organization.

Under penalties of perjury, I declare that I have read the
foregoing and that the facts stated in it are true.

AUTHORIZED SIGNATURE ON BEHALF OF EXEMPT ENTITY

NAME OF EXEMPT ENTITY

ADDRESS OF EXEMPT ENTITY

CONSUMER'S CERTIFICATE OF EXEMPTION NUMBER

THIS CERTIFICATE MAY NOT BE USED TO MAKE PURCHASES OR
LEASES OF TANGIBLE PERSONAL PROPERTY OR SERVICES OR RENTAL
OF LIVING ACCOMMODATIONS FOR THE PERSONAL USE OF ANY
INDIVIDUAL REPRESENTING THE EXEMPT ENTITY IDENTIFIED ABOVE.

In order for employees of exempt organizations or governmental
units to rent hotel rooms exempt from tax, the payment must come
directly from the exempt organization or governmental unit.
Unless the payment is made with a check imprinted with the
agency's name, it is difficult to determine whether the payment
is directly from the agency or if the employee is receiving
reimbursement for the charges. However, the selling dealer may
accept a document from the employee that certifies that the
payment is being made directly by the exempt organization or
governmental unit. The suggested format of the document is
provided in Rule 12A-1.001(2)(d)2., Florida Administrative Code,
reprinted above.

It should be noted that the State of Florida may issue their
employees Purchasing or Procurement Cards (P Cards). A state
employee making a purchase with an authorized P Card is not
required to provide the documentation discussed previously to
the selling dealer. Purchases made with the P Card are exempt
from Florida tax. The selling dealer who accepts the P Card
should retain the certificate of exemption number, account
number, and cardholder name for its permanent records. However,
if upon examination the selling dealer did not retain this
information, the Department will verify the exempt nature of the
transaction. The P Card indicates on its face that it is a
Florida government purchasing card for official business only.
Information printed on the front of the card will include the
agency's name, the agency's consumer's certificate of exemption
number, the account number, the name of the cardholder
(employee), and the expiration date. The state employee may
also have a Consumer's Certificate of Exemption; the selling
dealer may also obtain a copy of the certificate from the
employee for its records, but it is not required. In the case
of a hotel, only room rental charges should be charged to the P
Card. Charges for other items, such as meals, room service, or

in-room movies, should not be charged to the P Card; state
employees should pay for these items via other methods, and the
transactions are not exempt from tax as a direct sale to a
government agency.

CONCLUSION

Taxpayer can properly document exempt room rentals to employees
of state and local governments, and to employees or
representatives of exempt organizations by using the suggested
format of the document provided in Rule 12A-1.001(2)(d)2.,
Florida Administrative Code, reprinted above. If the state
employee uses a P Card, the taxpayer should retain the
certificate of exemption number, account number, and cardholder
name for its permanent records.

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 upon 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 from that which is 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,

Sara D. Faulkenberry
Tax Law Specialist
Technical Assistance and Dispute Resolution
850/414-9838

Control #45742