Were port-authority lease payments, ad valorem taxes, and pass-through utilities exempt for refrigerated and non-refrigerated transient-cargo storage?

Subject

Real Property Lease with Port Authority

Plain-English summary

Lease payments and ad valorem taxes paid for the port-authority space were exempt while the space was used exclusively to store transient cargo. The ruling covered refrigerated and non-refrigerated temporary storage used in loading and unloading cargo.

The revised advisement clarified that pass-through utility charges qualified only when the port authority paid sales tax to the utility provider, stated the utilities separately on the tenant's invoice, and charged the tenant the same or a lower amount than the provider charged the authority.

What this means for you

The cargo-storage exemption depended on exclusive transient-cargo use. Utility charges also needed tax-paid cost, separate invoicing, and no markup.

Common questions

Q: Were the lease payments exempt? Yes, under the exclusive transient-cargo-storage facts.

Q: Did the exemption include ad valorem taxes paid for the authority? Yes.

Q: Were all pass-through utility charges exempt? No. The three stated tax-payment, separate-billing, and pricing conditions had to be met.

Citations and references

• Fla. Stat. § 212.031(1)(a)8.a. — port-authority transient-cargo lease exemption
• Fla. Stat. § 315.02(2) — port authority definition
• Fla. Admin. Code r. 12A-1.070(1)(a)7. — real-property rentals
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 01A-050R

Original ruling text

SUMMARY

QUESTION: Are payments made to a Port Authority for space
used for refrigerated and non-refrigerated cargo exempt
from tax pursuant to s. 212.031(1)(a)8., F.S.?

ANSWER - Based on Facts Below: If the space is used
exclusively for the storage of transient cargo, the
exemption will apply to lease payments and ad valorem taxes
paid on behalf of the Authority. Pass-through utility
charges would only be exempt if: (1) the Port Authority has
paid sales tax to the utility provider on the purchase of
the utilities; (2) the utilities are separately stated on
the invoice to the tenant; and (3) the utilities separately
stated are at the same or lower price than that billed by
the utility provider to the Port Authority.

Oct 05, 2001

Re: Technical Assistance Advisement (TAA) Revised 01A-050R
Sales and Use Tax - Real Property Lease with Port Authority
Section 212.03 1(1)(a)8., F.S.
Rule 12A-1.070(1)(a)7., F.A.C.
XXX (Company)
XXX (Authority)

Dear :

In response to your requests dated April 18, 2001, and June 5,
2001, the Department issued to you a Technical Assistance
Advisement (TAA No. 01A-050), pursuant to Chapter 12-11, F.A.C.,
and Section 213.22, F.S., regarding the referenced parties and
matter. This letter is written to clarify the exemption from
tax for pass-through utility charges, which were discussed in
TAA No. 01A-050.

TAA 01A-050 stated the following:

The Department finds that Authority is a "port authority"

within the meaning and intent of s. 315.02(2), F.S., and
that the leased facilities are located at the port
authority. The refrigerated and non-refrigerated space,
which is a temporary storage facility, is used for the
purpose of loading and [un]loading cargo. As such, the
Department concludes that the exemption provided in s.
212.031(1)(a)8.a., F.S., is applicable to consideration
paid by Company on the condition that the space is used
exclusively for the storage of transient cargo. This would
include lease payments, and ad valorem taxes paid on behalf
of Authority. Pass-through utility charges would also be
exempt. (e.s.)

Please be advised, however, that pass-through utility charges
would only be exempt from tax under the following conditions:
(1) the lessor has paid sales tax to the utility provider on the
purchase of such utilities; (2) the utilities are separately
stated on the lessor's invoice to the tenant; and (3) the
utilities separately stated are at the same or lower price than
that billed by the utility provider to the lessor.

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 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,

Dee Overcash
Senior Tax Specialist

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