When did communications services sold to resort-condominium owners qualify for Florida's residential household exemption?

Plain-English summary

Permanent and seasonal condominium residents qualified for the residential household exemption, but units offered as public lodging did not. Communications services sold to owners living permanently in their units were exempt from the state tax imposed by section 202.12. The same applied to seasonal residents who lived in their units part of the year and left them vacant the rest of the year. Other applicable communications taxes remained due.

Owners who placed units in the on-site manager's Chapter 509 licensed rental program did not qualify, and the seller knew their public-lodging status, so it had to collect tax. Owners using unrelated real-estate professionals for public rentals also did not qualify. But unless those owners notified the seller of that status, the seller was not obligated to collect from them.

What this means for you

Actual residential use supported the exemption. Holding a unit out to the public as lodging defeated it, while the seller's collection duty also depended on what the seller had been told or otherwise knew.

Common questions

Q: Did permanent condominium residents qualify? Yes.

Q: Did seasonal residents lose the exemption while the unit sat vacant? No.

Q: Did short- or long-term public rental qualify? No.

Q: Did the seller always have to collect from owners using outside rental agents? No, not unless notified of their public-lodging status.

Citations and references

• Fla. Stat. §§ 202.12 and 202.125(1) — communications tax and residential household exemption
• Fla. Stat. §§ 509.013(4)(a), 509.241(2), and 509.242(1)(c) — public lodging establishments
• Fla. Admin. Code r. 12A-19.041(1)(a), (5)(a) — residential exemption and seller notice
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02A-023

Original ruling text

SUMMARY

QUESTION 1: Do sales of communications services to
customers within a complex of buildings who own a
condominium unit and reside permanently in the unit qualify
for the residential household exemption provided in s.
202.125(1), F.S.?

ANSWER 1 - Based on Facts Below: Yes. Purchases of
communications services qualify for the residential
household exemption and the seller of such services is not
required to collect and remit the communications services
tax imposed by s. 202.12, F.S., on those sales. Other
applicable taxes on communications services remain due.

QUESTION 2: Do sales of communications services to
customers within the complex who own a condominium unit and
reside during part of the year within the unit, and leave
the unit vacant during the remainder of the year, qualify
for the residential household exemption?

ANSWER 2 - Based on Facts Below: Yes. Purchases of
communications services qualify for the residential
household exemption and the seller of such services is not
required to collect and remit the communications services
tax imposed by s. 202.12, F.S., on those sales. Other
applicable taxes on communications services remain due.

QUESTION 3: Do sales of communications services to
customers within the complex who enter into arrangements
with the on-site property manager to hold their respective
units out for rental to the general public under a chapter
509 license, qualify for the residential exemption?

ANSWER 3 - Based on Facts Below: No. The seller of the
communications services has been informed that the on-site
manager holds a chapter 509 license for purchasers in this
category. Because the seller is on notice of the public
lodging establishment status of the units in this category,
the residential household exemption does not apply and the
seller of the communications services must collect and

remit communications services tax on those sales.

QUESTION 4: Do sales of communications services to
customers within the complex who enter into arrangements
with unrelated third party real estate professionals to
hold their respective units out for rental to the general
public pursuant to either short-term or long-term rentals
qualify for the residential exemption?

ANSWER 4 - Based on Facts Below: Customers in this category
do not qualify for the residential household exemption.
However, unless those customers notify the seller of their
status as a public lodging establishment, the seller of the
communications services is not obligated to collect and
remit communications services tax from those customers.

May 01, 2002

Re: Technical Assistance Advisement 02A-023
Communications Services Tax
Residential Exemption for Condominium Owners
Section: 202.125(1), F.S.
Rule 12A-19.041(1)(a), F.A.C.
Rule 12A-19.041(5)(a), F.A.C.
Section: 509.013(4)(a), F.S.
Section: 509.242, F.S.
Section: 509.242(1)(c), F.S.
Section: 509.241(2), F.S.

Dear :

This is a response to your letter dated April 9, 2002, in which
you have requested a Technical Assistance Advisement on the
residential household exemption from the state communications
services tax imposed under s. 202.12, F.S., with respect to
communications services sold by XXX (hereinafter "Taxpayer").

Stated Facts

In your letter you state the following facts:

[Taxpayer] is a Florida general partnership which is
principally engaged in the business of selling
communications services to various categories of customers
within the [Florida] Resort, a complex of residential
buildings, located in [Community], Florida. The
communications services being sold are not subject to a
tariff schedule. [Taxpayer] seeks the Department of
Revenue's advice regarding the application of the
communications services tax to four types of transactions:

1. Sales of communications services to customers who own a
   condominium unit within the complex of buildings and reside
   permanently in the unit.

2. Sales of communications services to customers within the
   complex who own a condominium unit and reside during part
   of the year within the unit, and leave the unit vacant
   during the remainder of the year.

3. Sales of communications services to customers within the
   complex who enter into an arrangement with the on-site
   property manager that authorizes the property manager to
   hold the property out for short-term rental to the general
   public.

4. And, sale of communications services to customers within
   the complex who enter into arrangements with unrelated
   third party real estate professionals that authorize such
   third parties to hold the property out for rental to the
   general public. Such rentals may be short-term or longterm rentals. The details of these rental arrangements are
   between the owner and the real estate professionals and are
   not known to the on-site property manager or to [Taxpayer].

Taxpayer's Position

Taxpayer believes, consistent with the applicable statutes and
rules as to each of the four identified fact patterns, that:

1. Sales of communications services to customers within the
complex of buildings who own a condominium unit and reside
permanently in the unit qualify for the residential
household exemption, and [Taxpayer] is not required to
collect and remit communications services tax on those
sales.

2. Sales of communications services to customers within the
   complex who own a condominium unit and reside during part
   of the year within the unit, and leave the unit vacant
   during the remainder of the year, qualify for the
   residential household exemption, and [Taxpayer] is not
   required to collect and remit communications services tax
   on those sales.

3. Sales of communications services to customers within the
   complex who enter into arrangements with the on-site
   property manager to hold their respective units out for
   rental to the general public under a chapter 509 license,
   do not qualify for the exemption, and [Taxpayer] will be
   required to collect and remit tax from those customers.

4. Sales of communications services to customers within the
   complex who enter into arrangements with unrelated third
   party real estate professionals to hold their respective
   units out for rental to the general public pursuant to
   either short-term or long-term rentals, may or may not
   qualify for the exemption. However, unless the customers
   notify [Taxpayer] of their status as a public lodging
   establishment, [Taxpayer] is not obligated to collect and
   remit communications services tax from those customers.

Applicable Authority and Discussion

Section 202.125(1), F.S., provides the residential exemption
from the state communications services tax. Here, the law
provides:

The separately stated sales price of communications
services sold to residential households is exempt from the

tax imposed by s. 202.12. This exemption shall not apply
to any residence that constitutes all or part of a public
lodging establishment as defined in chapter 509, any mobile
communications service, any cable service, or any directto-home satellite service.

Rule 12A-19.041, F.A.C., provides administrative guidelines for
the residential exemption from the communications services tax.
Paragraph (1)(a) provides:

The sale of communications services, as defined in s.
202.11(3), F.S., is subject to the Florida communications
services tax and the local communications services tax,
unless specifically exempt.

Rule 12A-19.041(5)(a), F.A.C., provides:

(5) FACILITIES THAT ARE NOT EXEMPT. This exemption does
not apply to sales to the service address of any structure
or any unit within a structure licensed as a public lodging
establishment, as defined by s. 509.013(4)(a), F.S., with
the Division of Hotels and Restaurants of the Department of
Business and Professional Regulation.

(a) The purchaser is required to notify the communications
services provider when the services are used in a licensed
public lodging establishment. If the purchaser fails to
provide such notification, the Department will look to the
purchaser, rather than the provider, for any applicable
tax, penalty, or interest due when the services were
purchased for use in a public lodging establishment.

Chapter 509, F.S., provides the statutory guidance for public
lodging establishments in the State of Florida. Section
509.013(4)(a), F.S., provides the definition of public lodging
establishments as follows:

"Public lodging establishment" means any unit, group of
units, dwelling, building, or group of buildings within a
single complex of buildings, which is rented to guests more
than three times in a calendar year for periods of less

than 30 days or 1 calendar month, whichever is less, or
which is advertised or held out to the public as a place
regularly rented to guests. License classifications of
public lodging establishments, and the definitions
therefor, are set out in s. 509.242....

Section 509.242, F.S., provides the various classifications of
public lodging establishments, which include hotels, motels,
resort condominiums, nontransient apartments, transient
apartments, roominghouses, bed and breakfast inns, or resort
dwellings. Section 509.242(1)(c), F.S., provides the following
definition for "resort condominium:"

(c) Resort condominium.-A resort condominium is any unit or
group of units in a condominium, cooperative, or timeshare
plan which is rented more than three times in a calendar
year for periods of less than 30 days or 1 calendar month,
whichever is less, or which is advertised or held out to
the public as a place regularly rented for periods of less
than 30 days or 1 calendar month, whichever is less.

The requirement to apply for a public lodging establishment
license is provided in s. 509.241(2), F.S. Here, the law states
in pertinent part:

(2) APPLICATION FOR LICENSE.-Each person who plans to open
a public lodging establishment or a public food service
establishment shall apply for and receive a license from
the division prior to the commencement of operation. . . .

Under the public lodging licensing laws, multiple licensees may
hold licenses for units in a resort condominium. Those
licensees are each responsible for chapter 509, F.S., compliance
only with respect to the units covered by their respective
separate license.

Under Rule 12A-19.041, F.A.C., the purchaser of a communications
service is responsible for notifying his or her communications
services provider when the service will be used in a public
lodging establishment and will not qualify for the residential
exemption. If the purchaser fails to notify his or her provider,

the Department will hold the purchaser responsible for any
applicable communications services tax, penalty, or interest.
Therefore, the communications services provider is entitled to
assume that the residential exemption applies unless the owner
of the property advises the communications service provider that
the unit is the subject of a chapter 509 license.

The residential household exemption does not apply to mobile,
cable, or satellite service, pursuant to s. 202.125(1), F.S.
Furthermore, the residential household exemption does not apply
to the gross receipts tax portion of the state communications
services tax or to the local communications services tax.

Advisements

Based on the foregoing discussion and analysis, Taxpayer is
advised as follows in regard to the four categories of customers
under consideration:

Question 1: Do sales of communications services to
customers within a complex of buildings who own a
condominium unit and reside permanently in the unit qualify
for the residential household exemption provided in s.
202.125(1), F.S.?

Answer 1: Yes. Purchases of communications services qualify
for the residential household exemption and the seller of
such services is not required to collect and remit the
communications services tax imposed by s. 202.12, F.S., on
those sales. Other applicable taxes on communications
services remain due.

Question 2: Do sales of communications services to
customers within the complex who own a condominium unit and
reside during part of the year within the unit, and leave
the unit vacant during the remainder of the year, qualify
for the residential household exemption?

Answer 2: Yes. Purchases of communications services
qualify for the residential household exemption and the
seller of such services is not required to collect and

remit the communications services tax imposed by s. 202.12,
F.S., on those sales. Other applicable taxes on
communications services remain due.

Question 3: Do sales of communications services to
customers within the complex who enter into arrangements
with the on-site property manager to hold their respective
units out for rental to the general public under a chapter
509 license, qualify for the residential exemption?

Answer 3: No. The seller of the communications services
has been informed that the on-site manager holds a chapter
509 license for purchasers in this category. Because the
seller is on notice of the public lodging establishment
status of the units in this category, the residential
household exemption does not apply and the seller of the
communications services must collect and remit
communications services tax on those sales.

Question 4: Do sales of communications services to
customers within the complex who enter into arrangements
with unrelated third party real estate professionals to
hold their respective units out for rental to the general
public pursuant to either short-term or long-term rentals
qualify for the residential exemption?

Answer 4: Customers in this category do not qualify for the
residential household exemption. However, unless those
customers notify the seller of their status as a public
lodging establishment, the seller of the communications
services is not obligated to collect and remit
communications services tax from those customers.

Closing Statement

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, 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.

If you have any further questions with regard to this matter and
wish to discuss them, you may contact me directly at (850)9224729.

Sincerely,

Gary L. Gray
Tax Law Specialist
Technical Assistance & Dispute Resolution

GLG\
Control No: 49696