Was separately metered natural gas used exclusively to heat condominium-association pools and spas exempt from Florida sales tax?

Plain-English summary

Florida exempted natural gas used exclusively to heat the condominium association's common-area pools and spas. The supplier delivered gas to nine locations, each with a separate meter, and the pools were reserved for residents and their guests.

The exemption covered both state sales tax and discretionary sales surtax on the deliveries represented by the nine reviewed invoices.

Condominium pools counted as residential common areas

Rule 12A-1.059 exempted separately metered natural or manufactured gas sold for use in residential households. It extended that treatment to utilities and fuels used in common areas of apartments, cooperatives, and condominiums.

Florida treated a condominium-association pool used exclusively by residents and their guests as a common area of the overall residential facility. Heating that pool or spa therefore fit the common-area exemption.

Separate metering and exclusive use were essential

Each delivery location had its own meter. The ruling tied the exemption to gas used only for the qualifying pool and spa heating.

The quoted rule warned that if any part of a utility or fuel sale served a nonexempt purpose, the entire sale became taxable. It specifically excluded utility use in a residential model home used as a sales office or for another nonexempt purpose.

What this means for you

Condominium associations and resort managers

Keep exempt residential common-area loads on separate meters from restaurants, sales offices, public facilities, and other commercial uses. Confirm who may use the pool or spa.

Property managers

Maintain meter schedules, invoices, facility maps, and use restrictions showing that the fuel serves only resident-and-guest common areas.

Accountants and tax professionals

Review the entire load behind each meter. A small nonexempt use can affect the tax treatment of the full metered sale under the rule quoted in the TAA.

Common questions

Q: Were the pools available to the general public?
A: No. The ruling described association-owned pools for residents and their guests.

Q: Did the association have separate meters?
A: Yes, one for each of the nine locations reviewed.

Q: Did the exemption include local discretionary surtax?
A: Yes. The conclusion covered sales tax and discretionary sales surtaxes.

Q: What if one meter also served a nonexempt area?
A: The cited rule stated that any nonexempt use made the entire sale taxable.

Citations and references

• Fla. Stat. § 203.01 — gross receipts tax referenced in the utility rule's supplier condition
• Fla. Admin. Code r. 12A-1.059(1)(a) — separately metered residential gas and condominium common-area exemption

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-035

Original ruling text

SUMMARY

QUESTION: Is the purchase of boiler fuel, used to maintain
heat pools and spas operated by a condominium association
exempt from sales tax?

ANSWER - Based on Facts Below: Yes. The taxpayer is a
condominium association which purchases natural gas to heat
the pools and spas located nine different locations.
Natural gas is delivered by supplier to each location
operated by the taxpayer, and each location has a separate
meter which measures gas consumption. Rule 12-1.059(1)(a),
F.A.C., provides that natural and manufactured gas is
exempt when separately metered and sold for use in
residential households .... This exemption shall also apply
to the sale of utilities and fuels used in residential
model homes or common areas of apartments, cooperatives,
and condominiums provided that none of the utilities or
fuels are used in residential model homes which are used as
sales offices or for other non-exempt purposes....

Jun 02, 2004

Re: Technical Assistance Advisement No. 04A-035
XXX (hereinafter referred to as Taxpayer)
XXX (hereinafter referred to as Supplier)
Sales and Use Tax
Natural Gas Used in Common Areas of a Resort

Invoices Provided by Taxpayer
Meter Number XX1 (hereinafter referred to as Invoice #1)
Meter Number XX2 (hereinafter referred to as Invoice #2)
Meter Number XX3 (hereinafter referred to as Invoice #3)
Meter Number XX4 (hereinafter referred to as Invoice #4)
Meter Number XX5 (hereinafter referred to as Invoice #5)
Meter Number XX6 (hereinafter referred to as Invoice #6)
Meter Number XX7 (hereinafter referred to as Invoice #7)
Meter Number XX8 (hereinafter referred to as Invoice #8)

Meter Number XX9 (hereinafter referred to as Invoice #9)

Meter Location On Schedule
XX 1
XX 2
XX 3
XX 4
XX 5
XX 6
XX 7
XX 8
XX 9

Dear :

This is in response to your letters dated March 29, 2004, and
April 19, 2004, in which you request advice on whether natural
gas purchased by your association is exempt from sales tax when
used to heat swimming pools.

With your letter of April 19, 2004, you provided a schedule
which identifies the locations to which natural gas was
delivered by Supplier. You also provided copies of Supplier's
invoices representing deliveries of natural gas by Supplier to
Taxpayer during the month of March 2004. The meter numbers
listed on the invoices correspond to delivery locations as are
represented by the Taxpayer on the schedule provided. The
invoices, for the billing cycle to March 10, 2004, reflect the
following:

Invoice #1 - 1947.0 BTUs natural gas billed
$155.96 State Tax charged
Invoice #2 - 1994.0 BTUs natural gas billed
$159.67 State Tax charged
Invoice #3 - 1467.4 BTUs natural gas billed
$118.04 State Tax charged
Invoice #4 - 1841.2 BTUs natural gas billed
$147.59 State Tax charged
Invoice #5 - 1539.0 BTUs natural gas billed
$123.70 State Tax charged
Invoice #6 - 832.0 BTUs natural gas billed

$67.83 State Tax charged
Invoice #7 _ 2232.1 BTUs natural gas billed
$175.98 State Tax charged
Invoice #8 - 1940.6 BTUs natural gas billed
$153.31 State Tax charged
Invoice #9 - 1231.4 BTUs natural gas billed
$99.39 State Tax charged

LAW AND DISCUSSION

Rule 12A-1.059(1)(a), F.S., provides guidance regarding whether
sales of natural gas are taxable or exempt when purchased for
the exclusive use to heat pools or spas in common areas of
condominium associations. Rule 12A-1.059, F.A.C., states in
pertinent part:

(1)(a) ... Natural and manufactured gas is exempt when
separately metered and sold for use in residential
households (including trailer lots) directly to the actual
consumer by utilities who are required to pay the gross
receipts tax imposed by Section 203.01, Florida
Statutes.... Such sales of utilities and fuels are exempt
regardless of whether such sales are billed to the
landlord; provided, however, that if any part of the
utility or fuel is used for a non-exempt purpose, the
entire sale is taxable.... This exemption shall also apply
to the sale of utilities and fuels used in residential
model homes or common areas of apartments, cooperatives,
and condominiums provided that none of the utilities or
fuels are used in residential model homes which are used as
sales offices or for other non-exempt purposes....

For taxing purposes, a pool owned by a condominium association,
for exclusive use by residents and their guests, is considered
an area common to all residents of the overall facility

CONCLUSION

Deliveries of natural gas by the Supplier to the Taxpayer at the
locations represented by the meter numbers listed on the
Supplier's invoices are exempt from sales tax and discretionary

sales surtaxes.

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
based 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., which 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,

Lynwood Taylor
Tax Law Specialist
Technical Assistance
and Dispute Resolution

LNT/lt
Control No. 59850