Could a hotel bill an airline late for its contractual room minimum and preserve the over-six-month lease exemption?

Plain-English summary

The hotel could bill the airline later for rooms that should have been included under the contract's nightly minimum. The one-year written agreement required payment for 29 reserved rooms each night, whether or not the airline actually occupied all of them, and the Department had already treated the agreement as a bona fide written lease longer than six months.

For the first few weeks, the hotel billed fewer than 29 rooms. Florida found no statutory rule requiring the rent to be billed or paid on a particular schedule for the long-term lease exemption, so later billing for the omitted rooms was not prohibited and could bring the agreement into compliance.

What this means for you

The result depended on an existing written lease longer than six months that imposed a real minimum-room obligation. The ruling addressed correcting missed billings under that agreement, not creating a long-term lease retroactively after transient stays occurred.

Common questions

Q: Did the airline have to occupy all 29 rooms? No. The contract required full payment for the reserved minimum whether or not every room was occupied.

Q: Did late billing automatically destroy the exemption? No. The Department found no payment-timing prohibition in the cited statute.

Q: Was the underlying agreement already treated as a qualifying lease? Yes. The ruling says the Department had previously determined that it was a bona fide written lease exceeding six months.

Citations and references

• Fla. Stat. § 212.03(1) — accommodation rentals under bona fide written leases longer than six months
• Fla. Stat. § 212.03(2) — timing of tax on taxable transient rentals
• Fla. Admin. Code r. 12A-1.061 — transient accommodations
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02A-043

Original ruling text

SUMMARY

QUESTION: If Airline is belatedly billed for the remaining
rooms in the minimum for those few weeks, will the
requirements be met for purposes of the bona fide written
lease in excess of six months duration requirement for
exemption from sales and use tax.?

ANSWER - Based on Facts Below: Section 212.03(1), Florida
Statutes, provides an exemption on rentals of living
accommodations when rented pursuant to the terms of a bona
fide written lease in excess of six months duration.
Section 212.03(2), Florida Statutes, requires that the tax
on taxable transient rentals is due at the time the rent is
paid. There is no specific statutory requirement
concerning the timing of the payment of the rental;
therefore, there is no prohibition against now billing the
airline for the remaining rooms to bring the agreement into
compliance with sales tax exemption requirements.

Oct 09, 2002

Re: Technical Assistance Advisement 02A-043
Sales and Use Tax - Bona Fide Written Leases
Section: 212.03, F.S.
Rule: 12A-1.061, F.A.C.
Petitioner: XXX (herein "Taxpayer")
FEI: XX

Dear :

This letter is a response to your petition dated September 4,
2002, 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

On September 9, 2000, Taxpayer, a hotel, entered into an
agreement with XXX (herein "Airline") for the use of 29 rooms
per night by Airline. The term of the agreement was for a oneyear period, with an option to renew for an additional one-year
period. Airline's employees began staying at the hotel under
the contract on October 1, 2000. Article III, section 4 of the
agreement states that "Airline shall be responsible for full
payment of 29 rooms that are reserved hereunder, but not
necessarily occupied".

The agreement constitutes a bona fide written lease in excess of
six months duration for purposes of the exemption for transient
rentals, as previously determined by the Department of Revenue.
However, Taxpayer has determined that Airline was not billed the
minimum number of 29 rooms per night for the first few weeks of
the agreement. Concern is expressed that this failure to bill
for the rooms may violate the requirements of the lease, thereby
voiding the lease and causing all rooms rented to be subject to
tax.

REQUESTED ADVISEMENT

Advice is requested, if Airline is now billed for the remaining
rooms in the minimum for those few weeks, whether the
requirements will be met for purposes of the bona fide written
lease in excess of six months duration requirement for exemption
from sales and use tax.

DETERMINATION

Section 212.03(1), Florida Statutes, provides an exemption on
rentals of living accommodations when rented pursuant to the
terms of a bona fide written lease in excess of six months
duration. Section 212.03(2), Florida Statutes, requires that the
tax on taxable transient rentals is due at the time the rent is
paid. There is no specific statutory requirement concerning the
timing of the payment of the rental; therefore, there is no

prohibition against now billing the airline for the remaining
rooms to bring the agreement into compliance with sales tax
exemption requirements.

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 #51714