Did percentage rent based on hotel room revenue enter taxable rent under a mixed-use hotel ground lease?

Plain-English summary

Florida included the hotel's room-revenue percentage rent in total rent under the ground lease. The lease defined payments as base rent, additional rent, and incentive rent, and section 212.031 treated percentage rent as part of total rent regardless of how the parties calculated it.

The hotel's mixed uses still mattered. Florida's allocation formula divided lease payments between exempt and nonexempt uses of the property, so tax applied only to the portion attributable to nonexempt areas.

The lessee argued that incentive rent came from guest-room revenue already taxed as transient accommodations. Florida rejected that argument because the guest transaction and the lessee's commercial lease payment were separate taxable events.

What this means for you

For historical mixed-use commercial leases, first identify every form of rent, including revenue-based amounts, and then apply the supported property-use allocation. Revenue source did not remove a payment from rent.

Common questions

Q: Was incentive rent excluded because it came from room revenue?
A: No.

Q: Was every dollar of total rent necessarily taxable?
A: No. The mixed-use formula allocated rent between exempt and nonexempt property uses.

Q: Did tax on guest rooms prevent lease tax?
A: No. Florida treated them as separate transactions.

Citations and references

• Fla. Stat. § 212.03 — historical transient accommodations tax
• Fla. Stat. § 212.031 — historical commercial real-property rental tax
• Fla. Admin. Code r. 12A-1.070 — historical commercial rental rule
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 03A-027

Original ruling text

SUMMARY

QUESTION: Whether rental payments are subject to sales tax
when the real property is a hotel and a portion of the
lease payment is based on room rental income exempt under
212.031(1)(a)2., F.S.?

ANSWER-Based on the Facts Below: Yes. Section 212.031(1),
F.S., levies tax the leasing of real property. Section
212.031, (1)(c), F.S. clarifies that this tax on the total
rent, which consists of base rents, percentage rents, or
similar charges. Lease payments based on a percentage of
room rental revenues are percentage rents. It is
irrelevant that the percentage rent was based on revenue,
which for other purposes qualifies for an exemption.

May 26, 2003

Subject: Technical Assistance Advisement 03A-027
Taxable Portion of a Hotel Lease
Sales and Use Tax
Section 212.031, F.S.
Rule 12A-1.070, F.A.C.
XXX (Lessor)
XXX (Lessee), Petitioner
Taxpayer Identification Number: XX

Dear :

This is in response, styled a Technical Assistance Advisement
(TAA), to your letter dated XX, in which you asked what portion,
if any, of the rental payments from Lessee to Lessor are subject
to sales or use tax when the real property of the subject lease
is a hotel and whether portions of the rental payments based on
room rental income are subject to sales or use tax? Along with
your letter, you provided a copy of the lease agreement (herein
Lease) that is the subject of this TAA request.

ISSUES

1. What portion, if any, of the rental payments from
   Lessee to Lessor is subject to sales or use tax when
   the real property of the subject lease is a hotel?

2. Whether portions of the rental payments based on room
   rental income are subject to sales or use tax under
   Section 212.031, F.S.?

FACTS

In your letter, you stated the facts relevant to the taxpayer's
situation as follows:

Lessee is a XXX (the Hotel) consisting of two hotel
buildings with ancillary improvements to the property
leased pursuant to Agreement of Lease (the Lease). The
Lease is a ground lease with the Lessee owning the
leasehold improvements while the Lessor retains title to
the property. Pursuant to the Lease, the Lessee agreed to
renovate and construct a first class convention center
hotel with related improvements on the property leased
pursuant to the Lease for a term of 99 years. Until the
expiration of the term of the Lease, the Lessee owns the
improvements. The Hotel is managed by a third party
management company. The Hotel provides guest
accommodations, together with related amenities.

Your letter asserts that the square footage of Hotel under
the Lease can be divided into three categories: 1) areas
used exclusively by its guests; 2) areas subleased by the
Lessee to unrelated third party commercial operators; and
3) areas used by the Lessee for the operation of its own
business and not open for access by its guests.

Your letter then lists areas of the Hotel that would be
included within each of these categories as follows:

Areas exclusively for guests:
*

Guest rooms

*

Public restrooms

*

Corridors

*

Elevators

*

Stairwells

*

Courtyard

Areas subleased by the Lessee
*

First floor restaurant

*

Gift shop

*

Ballroom

*

Meeting rooms

*

Parking lot

*

Outdoor recreational facilities area for which a
separate fee is charged

Areas exclusively used by the Lessee
*

Reception lobbies

*

Front desk area

*

Concierge desk area

*

Laundry facilities

*

Housekeeping facilities

*

Storage areas

*

Kitchen facilities

*

Administrative offices

*

Lobby bar

*

Pool bar

*

Service elevators

For each lease year, the Lessee pays rent to the Lessor in
the form of Base Rent, Additional Rent, and Incentive Rent.
Both Base Rent and Additional Rent are set amounts paid
monthly and periodically adjusted for inflation. Incentive
Rent is an amount equal to 20% of annual hotel revenue in
excess of $17,900,000.00, but not to exceed $200,000.00, to
be paid annually and periodically adjusted for deflation.

TAXPAYER POSITION

It is your understanding that only improvements located on the
ground floor of the Hotel are considered when calculating the
portion of the rental payments subject to tax in a situation

where the improvements located on the leased realty are owned by
the lessee. Additionally, it is your understanding that an
acceptable formula for the apportionment of the rental payment
subject to sales tax is as follows: the total lease payment
multiplied by a fraction, the numerator of which is the
aggregate square footage of the areas used by the Lessee in the
administration of its business (to the extent not used by guests
or subleased to a third party) and the denominator of which is
the aggregate square footage of the entire area leased to the
Lessee under the Lease. This formula was derived from TAA 99A026.

It is your contention that when computing this formula the
computation of the total lease payment should not include the
Incentive Rent portion. According to your assertion, the
Incentive Rent is attributable to hotel revenues derived from
those portions of the hotel not located on the ground floor, but
located on the upper floors and classified as dwelling units.
Further, you reason that if, pursuant to Section 212.031(1)(a),
F.S., the Department takes the position that only the square
footage of the ground floor area used for non-exempt purposes
under the above formula is subject to sales tax, then the
Incentive Rent, which is derived from hotel revenues attributed
to floors other than the ground floor, is not related to the
leasing or licensing of the real property subject to tax. Thus,
it would not be equitable to include the Incentive Rent in
calculating the above formula for tax purposes.

In the alternative, you suggest that the Incentive Rent, which
is attributable to hotel revenues, should not be subject to tax
to the extent that these hotel revenues have already been taxed
under another statute of Florida law. In example you offer that
a portion of the hotel revenues, which consists of room rental
payments by hotel guests, is already subject to sales tax under
Section 212.03, F.S., which levies in general a tax on the
transient use of premises used exclusively as dwelling units.

APPLICABLE STATUTES AND RULES

The pertinent parts of Section 212.031, F.S., provide:

(1)(a) 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:

2. Used exclusively as dwelling units.

(b) When a lease involves multiple use of real property
wherein a part of the real property is subject to the tax
herein, and a part of the property would be excluded from
the tax under subparagraph (a)1., subparagraph (a)2.,
subparagraph (a)3., or subparagraph (a)5., the department
shall determine, from the lease or license and such other
information as may be available, that portion of the total
rental charge which is exempt from the tax imposed by this
section....

(c) 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. Such charges
shall be included in the total rent or license fee subject
to tax under this section whether or not they can be
attributed to the ability of the lessor's or licensor's
property as used or operated to attract customers. Payments
for intrinsically valuable personal property such as
franchises, trademarks, service marks, logos, or patents
are not subject to tax under this section. 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.

(2) (b) It is the further intent of this Legislature that
only one tax be collected on the rental or license fee

payable for the occupancy or use of any such property, that
the tax so collected shall not be pyramided by a
progression of transactions, and that the amount of the tax
due the state shall not be decreased by any such
progression of transactions.

The pertinent parts of Rule 12A-1.070, F.A.C., provide:

(1)(a) Every person who rents or leases any real property
or who grants a license to use, occupy, or enter upon any
real property is exercising a taxable privilege unless such
real property is:

2. Used exclusively as dwelling units.

(5) Only one tax on the rental or license fee payable from
the occupancy or use of any real property from which the
rental or license fee is subject to taxation under s.
212.031, F.S., shall be collected, and the tax shall not be
pyramided by a progression of transactions; however, the
amount of tax due the State of Florida shall not be
decreased by any such progression of transactions.

(8) When a tenant (lessee) or other person occupying,
using, or entitled to use any real property (licensee)
sublets or assigns some portion of the leased or licensed
property, he may take credit on a pro rata basis for the
tax that he paid to his landlord or other such person on
the space that he subleases or assigns. Proration shall be
computed on square footage or some other basis acceptable
to the Executive Director or the Executive Director's
designee in the responsible program. For example, Tenant
leases 200 square feet of floor space for $400 and pays
Landlord $24 rental tax. Tenant subleases 100 square feet,
or one half, of the space to Subtenant for $300 and
collects $18 tax, which he remits to the State, less a
credit of $12 for tax that he paid to his landlord on the
space that he subleased to Subtenant. (One half of $400 is
$200 and 6 percent of this amount is $12.)

(9) If a tenant or other person sublets or assigns his
interest in all of the leased or licensed premises, or
retains only an incidental portion of the entire premises,
then such tenant or other person may elect not to pay tax
on the prime lease or license, provided that such tenant or
other person shall register as a dealer and collect and
remit tax due on the sub-rentals or assignments and pay the
tax due on the portion of the rental charges or license
fees pertaining to any taxable space which he retains. If
the tenant or licensee elects not to pay the tax to his
landlord, or other person granting the right to occupy or
use such real property, he should extend to his landlord or
such other person a resale certificate.

(14)(a) When a rental, lease, or license to use or occupy
real property involves multiple use of such real property
wherein a part of the real property is subject to tax, and
a part of the property is excluded from the tax, the
Executive Director or the Executive Director's designee in
the responsible program shall determine from the lease or
license and such other information as may be available,
that portion of the total rental charge or license fee
which is exempt from the tax. When, in the judgment of the
Executive Director or the Executive Director's designee in
the responsible program, the amount of rent or license fee
stated in the lease or license arrangement for the taxable
portion of the real property does not represent true value,
the Executive Director or the Executive Director's designee
in the responsible program shall make a determination of
the proper amount of rent or license fee applicable thereto
for the purpose of determining the amount of tax due from
such other information as is available.

(b) As an example, the portion of the premises leased or
rented by for profit entities, qualifying as homes for the
aged, or licensed as a nursing home or hospice under
Chapter 400, F.S., which is used as a dwelling unit is
taxable on a pro-rata basis. The pro-rata portion shall be
determined by the square footage of the portion of the
dwelling that is normally accessed and used by the
residents compared to the total square footage of the

nursing home premises.

1. The areas which are normally accessed and used by the
   nursing facility residents are exempt. These include:
   a. Front lobby
   b. Receptionist's office
   c. Bookkeeper's office (operates as a bank for the
   residents)
   d. Residents' rooms
   e. Hallways
   f. Public restrooms
   g. Social Service's office
   h. Residents' conference room/Party room
   i. Therapy rooms
   j. Dining rooms
   k. Activity rooms/Day rooms
   l. Treatment rooms
   m. Chapel
   n. Central bath/Whirlpool
   o. Residents' pantry/small kitchen area (usually have
   microwaves and cabinets for residents' use)
   p. Grounds which are improved and developed for the
   residents' use, including lawns, trails, sidewalks, patios,
   picnic areas
   q. Driveways and parking areas.

2. The areas which are not normally accessed and used by
   the facility's residents are taxable. These include:
   a. Kitchen
   b. Laundry room
   c. Employees' lounge
   d. Hallways connecting non-accessible rooms
   e. Linen closets
   f. Oxygen storage closets
   g. Nurses' stations
   h. Director of Nursing's office
   i. Administrator's office
   j. Director of Admission's office
   k. Housekeeping office
   l. Electrical room
   m. Pharmaceutical storage rooms

n. Storage rooms for facility's supplies
o. Sterilization rooms
p. Medical records office
q. Janitor's closet
r. Outside storage of facility's equipment
s. Areas used for commercial purposes (e.g., beauty shops)
t. Unimproved grounds

Section 213.22(1), F.S., provides:

(1) The department may issue informal technical assistance
advisements to persons, upon written request, as to the
position of the department on the tax consequences of a
stated transaction or event, under existing statutes,
rules, or policies. After the issuance of an assessment, a
technical assistance advisement may not be issued to a
taxpayer who requests an advisement relating to the tax or
liability for tax in respect to which the assessment has
been made, except that a technical assistance advisement
may be issued to a taxpayer who requests an advisement
relating to the exemptions in s. 212.08(1) or (2) at any
time. Technical assistance advisements shall have no
precedential value except to the taxpayer who requests the
advisement and then only for the specific transaction
addressed in the technical assistance advisement, unless
specifically stated otherwise in the advisement. Any
modification of an advisement shall be prospective only. A
technical assistance advisement is not an order issued
pursuant to s. 120.565 or s. 120.569 or a rule or policy of
general applicability under s. 120.54. The provisions of s.
120.53(1) are not applicable to technical assistance
advisements.

RESPONSE

What portion, if any, of the rental payments from Lessee to
Lessor is subject to sales or use tax when the real
property of the subject lease is a hotel?

Section 212.031(1)(a), F.S., imposes sales tax on the privilege
of engaging in the leasing of, or the granting of a license to

use, real property. Section 212.031(1)(c), F.S., imposes the
tax on the "... total rent or license fee charged for such real
property by the person charging or collecting the rental or
license fee." Subparagraph (c) elaborates that "... total
rent... shall include base rent, percentage rent, or similar
charges." However, as to real property used "exclusively as
dwelling units," Section 212.031(1)(a)2., F.S., excludes such
property from classification as "real property" subject to tax.
Section 212.031(1)(b), F.S., authorizes the Department to
determine the taxable portion of the total rent payment when, in
a lease of real property, there are multiple uses of such
property and a portion of the property is subject to the tax
while another portion is not subject to the tax because of the
applicability of an exemption, such as Section 212.031(1)(a)2.,
F.S.

The provisions in Section 212.031(1)(b), F.S., which provide the
intent of the legislature that only one tax be collected on the
rental or license fee, are interpreted in Rule 12A-1.070, F.A.C.
Subsection (5) describes the prohibitions against pyramiding of
taxes under Section 212.031, F.S., via a progression of
transactions. Also, this subsection provides that such
progression of transactions shall not decrease the amount of
taxes due the State of Florida. Subsections (8) and (9)
describe the manner of prorating the tax when the subject lessee
of real property sublets or assigns some portion of the leased
property. Subsection (14) provides that the Department will
determine through a review of pertinent documents what portion
of the rental or license payments is subject to tax in the
instance when a part of a multiple use property is excluded from
the tax. Additionally, Subsection (14)(b) provides an analogous
example based on nursing homes, which is merely persuasive in
application to hotels.

In your letter, you cited to two Technical Assistance
Advisements, (TAA) 99A-026 and (TAA) 00A-084 for your
understanding of "the correct formula for the apportionment of
the Ground Lease rental payment subject to sales tax." While
both of these TAAs outline methods useful in calculating the
taxable portion of a lease, neither apply to the fact patterns
involving ground leases. Furthermore, Section 213.22, F.S.

states that "Technical assistance advisements shall have no
precedential except to the taxpayer who requests the advisement
and then only for the specific transaction addressed.... Thus,
these technical assistance advisements can only be cited to as
persuasive authority.

Section 212.031(1)(b), F.S., provides that if there is a lease
of real property where multiple use of the property results in a
portion of the property being subject to tax and a portion of
the property being subject to an exemption, the Department is
authorized to determine the taxable portion. The following
equation is a reasonable method useful for calculating the
taxable portion of a lease payment under a ground lease for a
multiple use property such as this hotel. The equation
multiplies the total rent or license fee by a fraction, the
numerator of which is the square footage used by the lessee for
its own purposes, and the denominator of which is the entire
square footage of the land demised by the lease. This
calculation is described in detail in the following paragraphs.

Computing the Numerator

The numerator is comprised of the total square footage of the
premises that is used exclusively by the Lessee for its hotel
related purposes, plus any other square footage used by the
Lessee that is not guest rooms or common areas principally
provided for use of the guests, and for which either, (a) the
Lessee does not impose a charge for the use of such areas (e.g.,
a lounge providing complimentary food and drinks); or (b) the
Lessee imposes a separate charge for the use of an area and that
charge is subject to tax under a provision of Chapter 212, F.S.,
other than Section 212.031, F.S., (e.g., a health club requiring
an additional charge.) Furthermore, only the square footage
which physically comprises the ground level of the lease is
considered in the case of a ground lease. Thus, the numerator
would include the ground level of any leasehold improvements and
any land demised under the lease whether undeveloped or
developed used exclusively by the Lessee. This could include
areas of land demised by the lease, which can not be developed
(for example, lands subject to environmental restrictions (e.g.,
beach dunes) that cannot be used by the hotel guests, but are

still a percentage of the total square footage demised.)

In the instant situation, the areas that may be included in the
numerator are listed in the category labeled, "areas exclusively
used by the Lessee." According to the facts of your letter, at
the Lessee's facilities such areas include reception lobbies,
front desk area, concierge desk area, laundry facilities,
housekeeping facilities, storage areas, kitchen facilities,
administrative offices, lobby bar, pool bar, and service
elevators. All of these areas are either being used for a
commercial purpose or are normally not accessible to the hotel
guests, except for perhaps the reception lobbies and the front
desk.

As to the reception lobbies and the front desk areas which your
letter listed with the areas used exclusively by the Lessee, the
analogous example of Rule 12A1.070(14)(b)1., F.A.C., includes
these areas as normally assessed and used by the equivalent of
hotel guests. Therefore these areas should be moved into the
category for areas exclusively for guests to the extent that
they are designed and utilized as common areas facilitating the
hotel guest's stay at the hotel. Therefore, these areas to the
extent they are accessed by the hotel guests would not be
included in the numerator.

Additionally, the areas that would not be included in the
numerator are listed in the category labeled, "areas exclusively
for guests." The numerator may not include these areas because
these areas can be considered as being used "... exclusively as
dwelling units," which are exempt from tax pursuant to Section
212.031(1)(c)2., F.S. According to the facts of your letter, at
the Lessee"s facilities such areas include guestrooms, public
restrooms in the common areas, corridors, elevators, stairwells,
and a courtyard.

Other areas that would not be included in the numerator are
listed in the category labeled, "areas subleased by the Lessee."
The numerator may not include these areas, because doing so
would cause them to be subject to the same tax, imposed by
Section 212.031, F.S., twice: once to the sublessees, and then
to the Lessee. Specifically, Section 212.031(2)(b), F.S.,

prohibits the pyramiding of the Section 212.031, F.S., tax.
Thus, areas subleased by the Lessee for which tax is paid by the
sublessee are not included in the numerator. According to the
facts of your letter, the Lessee has subleased the following
areas: first floor restaurant, gift shop, ballroom, meeting
rooms, parking lot, and outdoor recreational facilities for
which a separate fee is charged.

It should be noted that areas such as the recreational
facilities, if not leased to a third party in a sublease, would
be included in the numerator, because the Lessee would be using
the areas in a commercial activity. Furthermore, there would be
no pyramiding of a Section 212.031, F.S., tax because the
separate fee charged for use of the recreational facility is
taxable as an admission pursuant to Section 212.04, F.S.

Computing the Denominator

The denominator is the entire square footage of the physical
land area demised under the ground lease, which would
incorporate only the ground floors of the hotel structures in
this instance, not the multiple above-ground stories.

Computing Total Rent

The above fraction is multiplied by the total rent. Section
212.031(1)(c), F.S., imposes tax on the total rent, which
consists of "... base rent, percentage rents, or similar
charges." However, this section's concluding sentence states
that as to an agreement "... 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...." The
Department has construed this concluding sentence, which speaks
to the requirement of a "reasonable allocation" that must be
made between taxable and nontaxable payments to relate solely to
the enumerated properties identified as "intrinsically valuable
personal properties such as franchises, trademarks, service
marks, logos, or patents" in the preceding sentence. Thus, the
"reasonable allocation" required in the concluding sentence is
only to be applied when the value of "intrinsically valuable
personal property" is a component of the total rent, which

includes base rent, percentage rents, or similar charges.

In the instant situation, the Lease in Article 3, titled Rental
(Lease, pp. 17-19), enumerates three types of rent payments:
Base Rent, Additional Rent, and Incentive Rent. Both the Base
Rent and Additional Rent are set amounts charged on an annual
basis, paid monthly by the Lessee, and periodically adjusted
throughout the life of the Lease for inflation. The Incentive
Rent is a variable rate based on 20% of the Lessee's annual
Hotel Revenue that exceeds $17,900,000.00, or $200,000.00,
whichever is less; is paid annually; and is periodically
adjusted for inflation.

The statutory language encompasses all of these payments as
total rent: the Base Rent because it is a base rent; Incentive
Rent because it is a percentage rent; and the Additional Rent
because it is a similar charge. None of these rents include a
component that would be considered "intrinsically valuable
personal property" under the statute or rule. Thus, the total
rent would be the sum of all these payments and any other
payment made by the Lessee that would be considered rent.

Computation of the Taxable Portion of the Rent Payments

The resultant fraction, comprised of the numerator divided by
the denominator, as calculated above, is multiplied by the total
rent payment, also as calculated above, with the resulting
product being the portion of the total rental charge subject to
the tax. The tax is due and payable at the time the Lessor
receives the rental payment from the Lessee, as mandated by
Section 212.031(3), F.S.

Whether the portion of the rental payments based on room
rental income, (i.e., the Incentive Rent), is subject to
sales or use tax under Section 212.031, F.S.?

Under the Section 212.031, F.S., percentage rent such as the
Incentive Rent described on page 19 of the Lease is taxable.
The contingent payment of percentage rent is not unusual in a
lease, where the parties wish to supplement a base rental rate
with a variable contingent on revenues. Merely basing a portion

of the rent on revenues derived from a tax exempt under Section
212.031(1)(a)2., F.S., facet of a retail business does not take
that portion of the rent outside of the tax levied under Section
212.031(1)(c), F.S. Paragraph (c) imposes tax on the total
rent, including base rent, percentage rent, or similar charges,
which the parties, through arms-length-transactions, as
evidenced in their leases, have designated as rent in their
lease. In the instant case, the Lease in Article 3, Rentals
(Lease, pp. 17-19), clearly enumerates the components of rent
payments as Base Rent, Additional Rent, and Incentive Rent.

In your letter, you assert that the Incentive Rent is
attributable to hotel revenues derived from those portions of
the hotel not located on the ground floor, but located on the
upper floors and classified as dwelling units. Further, you
reason that if, pursuant to Section 212.031(1)(a), F.S., the
Department takes the position that only the square footage of
the ground floor area used for non-exempt purposes under the
above formula are subject to tax, then the Incentive Rent, which
is derived from hotel revenues attributed to floors other than
the ground floor is not related to the leasing or licensing of
the real property subject to the tax. Thus, you argue, it would
not be equitable to include the Incentive Rent in calculating
the above formula for tax.

This argument misinterprets the purpose of the formula, which
was implemented by the Department to apportion the rent payment
of a multiple use property between taxable uses and tax exempt
uses. The tax under Section 212.031, F.S., is levied on the
total rent, defined in the statute to include base rent,
percentage rent, or similar charges, regardless of how the
parties choose to determine their rent. In this instance, the
total rent as determined by the Lease includes Base Rent,
Additional Rent and Incentive Rent. All of these are combined
to create the total rent taxable, but this tax is levied only
against that portion of the lease payment attributable to the
non-exempt uses of the real property.

In the alternative to the above argument, you suggest that the
Incentive Rent, which is attributable to hotel revenues, should
not be subject to tax to the extent that these hotel revenues

have already been taxed under another statute of Florida Law.
In that, you argue that a portion of the hotel revenues, which
consists of room rental payments by hotel guests, is already
subject to tax under Section 212.03, F.S., which levies in
general a sales tax on the transient use of the premises used
exclusively as dwelling units.

This argument fails to recognize that the same profits of a
business may be taxed so long as they are taxed in separate and
distinct transactions. In this instance, Section 212.03, F.S.,
levies a tax on the payments made by hotel guests for transient
accommodations while Section 212.031(1), F.S., levies a tax on
the lease payments made by the Lessee for the use of commercial
real property. Furthermore, if one were to take your argument
to its logical conclusion, then it would be impossible to ever
tax a retail lease, because all of the profits used to pay such
a lease will have already been taxed by some other section of
Chapter 212, F.S., when the original retail sale generating the
profit was made.

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 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 advise 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.

Sincerely,

Sebrina L. Wiggins
Attorney
Technical Assistance and Dispute Resolution
(850) 488-6386

SW/
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