Did a Florida city's sale of fill material to a developer qualify as an exempt occasional sale?

Plain-English summary

The city's sale of fill material was taxable and did not qualify as an exempt occasional sale. The agreement covered 1,388,403 cubic yards of blasted fill remaining in the ground at a city-owned lake site. The purchaser was a developer, and the city had arranged for other parties to excavate the fill.

The Department gave three reasons for rejecting occasional-sale treatment:

1. Section 212.06(15)(b) specifically required a contractor obtaining fill dirt from land it did not own or lease to pay tax on the purchase price plus the costs of clearing, excavating, and removing the fill. The Department said this essentially precluded treating this contractor fill purchase as an occasional sale.
2. The city disclosed a preexisting contractual obligation to sell fill, but supplied too little information for the Department to tell whether it was one sale or an ongoing series.
3. The city held at least two sales-tax accounts, in addition to its governmental exemption certificate, indicating it was engaged in selling tangible personal property.

The contract itself anticipated either result: its price included any Florida sales tax found due, and the city agreed to remit tax if the Department ruled the transaction taxable.

What this means for you

An unusual or infrequent asset sale is not automatically an exempt occasional sale. For fill dirt, the contractor-specific statute and the seller's other sales activity mattered. Sellers seeking occasional-sale treatment should disclose and document related transactions and registrations rather than relying only on an intention not to make more sales.

Common questions

Q: Did the city's governmental exemption certificate make its sale exempt?
A: No. The Department still treated the city as engaged in sales of tangible personal property and denied occasional-sale treatment.

Q: What costs entered the contractor's taxable fill purchase?
A: The fill's purchase price plus clearing, excavation, and removal costs under the cited statute.

Q: Did the Department decide whether the earlier fill contract was one sale or a series?
A: No. The city did not provide enough information for that determination.

Citations and references

• Fla. Stat. § 212.05 — tax on sales of tangible personal property
• Fla. Stat. § 212.06(15)(b) — contractor purchases of fill dirt

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 05A-007

Original ruling text

SUMMARY
QUESTION: Does a contract for the sale of fill material qualify as an exempt occasional sale?
ANSWER: No. Seller has a previous obligation for the sale of fill material about which no information was provided.
Additionally, Seller has additional sales and use tax registrations indicating that it is in the business of making sales of
tangible personal property.

January 26, 2005

Re: Technical Assistance Advisement 05A-007
Sales and Use Tax - Fill Material - Occasional Sale
Sections 212.05 and 212.06, F.S.
Petitioner: XXX (herein "City")
FEI: XX
Dear:
This letter is a response to your petition dated October 28, 2004, 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, Florida
Administrative Code. This response to your request constitutes a TAA and is issued to you under the authority of s.
213.22, Florida Statutes.
FACTS
The petition sets forth the following facts:
[City] and [Purchaser, who is a developer,] entered into an agreement dated October 21, 2004 (the "Agreement") for
the sale of 1,388,403 cubic yards of fill owned by the City.... The fill has been blasted and remains in the ground on a
60-acre (+/-) lake site owned by the City. As indicated in the Agreement, the City has contracted with other parties for
the excavation of said fill. The City is not engaged in the business of selling fill material, and absent a single preexisting contractual obligation, the City does not intend to enter into any subsequent agreement(s) within the next
twelve (12) months for the sale of fill material. Pursuant to the terms of the Agreement, the purchase price of the fill
material includes any Florida sales tax which may be due on the agreed upon purchase price. Section 4.3 of the
Agreement specifically provides that if the Department of Revenue (the "DOR") make a determination that sales tax is
owed on this transaction[, then] the City will remit the appropriate amount to the DOR, and if it is determined that the
sale is an occasional sale, exempt from the sale tax requirements, the City will retain the entire purchase price.
A copy of the Agreement was provided.

REQUESTED ADVISEMENT
Advice is requested whether the Agreement for the sale of the fill material qualifies as an exempt occasional sale.
LAW AND DISCUSSION
Section 212.05, Florida Statutes, generally imposes tax on the sale of tangible personal property, such as fill dirt.
Section 212.06(15)(b), Florida Statutes, specifically requires a contractor that secures fill dirt from land that it does not
own or lease to pay tax on the purchase price of the fill, plus "all costs of clearing, excavating, and removing" said fill.
This section essentially precludes a sale of fill material to a contractor, such as the Purchaser identified in the petition
and contract, from being an occasional sale.
The petition also refers to a pre-existing contractual obligation for the sale of fill material. However, no additional
information was provided concerning this contract, and therefore, it cannot be determined whether the contract
represents a single sale of fill material or if it represents an ongoing series of sales.
Furthermore, City is the owner of at least two sales tax accounts in the Department's SAP/Suntax system (in addition
to its Consumer's Certificate of Exemption as a governmental unit), indicating that City is engaged in the business of
making sales of tangible personal property. Since City is in the business of making sales of tangible personal property,
its sale of fill dirt does not qualify as an occasional sale.
CONCLUSION
City's sale of fill material to Purchaser does not qualify as an occasional sale.
This response constitutes a Technical Assistance Advisement under Section 213.22, Florida Statutes, 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, Florida Statutes. 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, Florida Statutes, and are subject to disclosure to the public under the conditions of s. 213.22, Florida
Statutes. 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
Control #61986