Were the listed facilities, equipment, machinery, materials, and chemicals used for pollution control in a Florida phosphate operation exempt from sales and use tax?

Plain-English summary

The Florida Department of Revenue concluded that the phosphate company's listed pollution-control facilities, equipment, machinery, materials, and chemicals were exempt from sales and use tax under section 212.051. The conclusion depended on the company's representation that the items were used primarily—meaning more than 50%—to control pollution as required by the Florida Department of Environmental Protection (DEP).

The company mined and processed phosphate rock and produced phosphatic chemicals and fertilizers. Its operations were subject to DEP air, water, waste, reclamation, and related environmental requirements. The submitted list covered equipment and materials used across mining and beneficiation, phosphoric-acid and granular-products plants, storage and shipping, settling and cooling ponds, monitoring, dust and odor suppression, wells, and reclamation.

Mining operations could qualify

Section 212.051 applied to pollution-control items used in manufacturing, processing, compounding, or producing tangible personal property for sale at a fixed location. The Department concluded that phosphate mining and processing could fall within those terms. It relied in part on the Legislature's 1999 removal of an express exclusion for phosphate and other mineral operations from the separate new-and-expanding-business exemption in section 212.08(5)(b).

The items had to be used primarily for required pollution control

DEP generally limited the amount of pollutants that could be discharged rather than mandating a particular device. The Revenue Department therefore treated equipment and materials used primarily to meet those limits as qualifying. For this advisement, "primarily" meant more than 50%.

The Department also rejected a reading that would confine the exemption to pollution-control items attached to a single production step. It treated qualifying items used throughout the fixed phosphate-production location as eligible when they controlled or abated pollution required by DEP law or permit conditions.

A certificate documented the exemption but did not create it

The company generally had to give the vendor an appropriate exemption certificate, using the format recommended in TIP 00A01-17. But the certificate itself did not establish eligibility. The actual use of the purchased item for the statutory pollution-control purpose established the exemption, and the company had to retain records proving that use. A company with self-accrual authority did not need to issue a certificate to itself but still needed supporting documentation.

What this means for you

Phosphate and other mineral operators

Under the law applied in this 2005 advisement, qualifying pollution-control property at a mining and processing site was not excluded merely because the operation involved mining. The property's actual environmental-control function remained decisive.

Manufacturers with environmental permits

An item may qualify even when the environmental regulator specifies an emissions or discharge limit rather than naming the exact equipment to install. You need evidence that the item is used primarily to meet the applicable law or permit condition.

Purchasing and tax teams

Match each claimed item to its use, the governing DEP requirement or permit, and the fixed production location. Keep the exemption certificate and the operational records that substantiate the claim.

Common questions

Q: What percentage of pollution-control use did the Department require?
A: More than 50% under the interpretation stated in this advisement.

Q: Did the exemption cover only equipment directly attached to a manufacturing line?
A: No. The Department applied it to qualifying pollution-control items used across activities at the fixed production location.

Q: Did every item on the company's Exhibit A qualify automatically?
A: The ruling accepted the company's assertion that the listed items were used primarily for required pollution control. Actual use and supporting records still determined exemption eligibility.

Q: Was giving a certificate to the vendor enough by itself?
A: No. The certificate documented why tax was not charged; statutory use of the item created the exemption.

Q: What if the company had self-accrual authority?
A: It did not have to issue a certificate to itself, but it still had to maintain documentation proving the exempt use.

Citations and references

• Fla. Stat. § 212.051 — exemption for qualifying pollution-control facilities, devices, fixtures, equipment, machinery, structures, specialty chemicals, and bioaugmentation products
• Fla. Stat. § 212.08(5)(b) — new and expanding business exemption discussed in the mining analysis
• Chapter 99-171, § 1, Laws of Florida — 1999 amendment removing the express mineral-operation exclusion discussed by the Department
• Fla. Admin. Code r. 62-673.200(6) — definition of "facility" used in the advisement's site-wide analysis
• State ex rel. Szabo Food Services, Inc. v. Dickinson, 286 So. 2d 529 (Fla. 1973) — strict construction of tax exemptions
• Alachua County v. Department of Revenue, 466 So. 2d 1186 (Fla. 1st DCA 1985) — strict construction should not force an unreasonable result
• TIP 00A01-17 (July 11, 2000) — certificate format recommended by the Department

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 05A-033

Original ruling text

SUMMARY
QUESTION: Whether the facilities, devices, fixtures, equipment, machinery, and chemicals, as presented by the
taxpayer in its Exhibit A to the request for a TAA are exempt from sales and use tax pursuant to s. 212.051, F.S.
ANSWER - Based on Facts Below: The facilities, devices, fixtures, equipment, machinery, and chemicals, as
presented in Exhibit A to the request for a TAA, are used primarily (greater than 50 percent) for the control of pollution
as required by the Department of Environmental Protection in the manufacturing, processing, compounding, or
production of phosphate products. Therefore, such facilities, devices, fixtures, equipment, machinery, and chemicals
are exempt from sales and use tax pursuant to s. 212.051, F.S., after the appropriate certificate has been submitted to
the vendor. It is recommended that the certificate format as presented in TIP 00A01-17, dated July 11, 2000, be
followed.

August 15, 2005

Re: Technical Assistance Advisement 05A-033
Sales and Use Tax
Pollution Control Equipment Used in Phosphate Production
Section 212.051, F.S.
Dear:
This is in response to your letter of July 13, 2005, which requests a Technical Assistance Advisement (TAA) to be
issued to your company (hereinafter "Phosphate Company") concerning the exemption provided by s. 212.051, F.S.,
for pollution control machinery, equipment, and materials.
Background
Phosphate Company is engaged in the mining and processing of phosphate rock and in the production of
phosphatic chemicals and fertilizers. These activities can be a significant source of air and water pollution.
Accordingly, the activities of Phosphate Company are regulated by the Florida Department of Environmental
Protection (DEP). These regulations generally do not mandate the use of any particular machinery and equipment or
systems for the control or abatement of pollutants. Instead, DEP specifies that a facility may not discharge specific
pollutants in excess of certain amounts into the air or water.
Phosphate Company's Position
Phosphate Company was previously a member of an association. On September 21, 2001, the Department of
Revenue (DOR) issued TAA 01A-058, to that association with respect to pollution control in various production areas
as enumerated in Exhibit A of the request for an advisement. Subsequent to the issuance of the TAA, the association

was dissolved. Phosphate Company now requests that a TAA be issued in its own name with respect to the same
production areas as were enumerated in Exhibit A of the TAA request. Specifically, it is Phosphate Company's request
that the Department find that the facilities, devices, fixtures, equipment, machinery, and chemicals, as presented in
Exhibit A, are used primarily (greater than 50 percent) for the control of pollution as required by DEP in the
manufacturing, processing, compounding, or production of phosphate products. Accordingly, after presentation to the
vendor of a certificate that is consistent with the format presented in Tax Information Publication (TIP) 98A01-28,
dated December 30, 1998, Phosphate Company may purchase such facilities, devices, fixtures, equipment,
machinery, and chemicals tax exempt from sales and use tax pursuant to s. 212.051, F.S.
Exhibit A Production Areas and Equipment
The following highlights the production areas, equipment, applicable governing chapters and rules from the Florida
Administrative Code (F.A.C.), and permits as presented in the above-mentioned Exhibit A of the 2001 advisement
request.
Mining & Beneficiation/Equipment Service
(Chapters 62-671, 62-672, and 62C-16, F.A.C.; air, water, and solid waste operation permits; reclamation approvals;
and, phosphatic clay dam construction and management approvals and permits.)
Pumps
Oil Storage
Antifreeze Recovery Unit
Refrigerant Recovery Unit
Water Treatment
Erosion Control Structures
Phosphatic Clay Management
Phosphoric Acid Plant
(Rule 62-296.403, F.A.C.; and, air operation permits.)
Ducts and Supports
Scrubbers
Spray Pond
Seal Tanks
Scrubber Water Sprays
Scrubber Fans
Scrubber Stacks
Process Flow
Granular Products
(Rule 62-296.403, F.A.C.; and, air and water operation permits.)
Ductwork
Stacks
Scrubbers

Venturies
De-misters
Seal Pots
Piping and Pumps
Crossflow Scrubber
Baghouses
Instrumentation
"BFL" (Ammonia Vaporizer)
Re-circulation Pots
Flow Meters
Fugitive Dust Collection
Storage & Shipping
(Rules 62-296.310(6) and 62-296.320, F.A.C.; and, air and water operation permits.)
Ductwork
Stacks
Scrubber
Baghouses
Seal Pot
Fans and Motors
Platforms
Instrumentation
Wastewater Polishing & Settling Ponds
(Rule 62-660.400 and Chapter 62-671, F.A.C.; and, water operation permits.)
All Materials and Equipment
Cooling Ponds
(Rule 62-660.400 and Chapter 62-673, F.A.C.; and, water operation permits.)
All Materials and Equipment
Aeration Ponds
(Rule 62-660.400, F.A.C.; and, water operation permits.)
All Materials
Outfall Monitor
(Rule 62-660.400, Chapters 62-312 and 62-671, F.A.C.; water operation permits; and, wetland resource management
permits.)
Wastewater Outfall Monitor Building and Equipment
Flow Control Valves and Piping
Flow Block Gate and Trench Sump Pump

Environmental Operations
(Rules 62-296.320, 62-297.310(6), 62-297.401, 62-660.400, and Chapter 62-671, F.A.C.)
Monitoring Equipment
Laboratories
Dust & Odor Suppression
Two Stage Lime Stations
(Rule 62-660.400, F.A.C.; and, water operation permits.)
All Materials and Supplies
Monitor Wells
(Chapters 62-273, 62-312, 62-520, 62-522, F.A.C.; water operation permits; and, reclamation approvals and wetland
resource management permits.)
All Parts and Supplies
Well Point System
(Chapters 62-312 and 62C-16, F.A.C.; water operation permits; reclamation approvals; and, wetland resource
management permits.)
All Parts and Supplies
Reclamation and Mitigation
(Chapters 62-312 and 62C-16, F.A.C.; water operation permits; reclamation approvals; and, wetland resource
management permits.)
All Equipment, Materials, and Supplies
Relevant Authority
The following passage from the Florida Statutes (F.S.) is pertinent to your request for a Technical Assistance
Advisement.
Section 212.051, F.S., provides in part:
212.051 Equipment, machinery, and other materials for pollution control; not subject to sales or use tax.(1) Notwithstanding any provision to the contrary, sales, use, or privilege taxes shall not be collected with respect to
any facility, device, fixture, equipment, machinery, specialty chemical, or bioaugmentation product used primarily for
the control or abatement of pollution or contaminants in manufacturing, processing, compounding, or producing for
sale items of tangible personal property at a fixed location, or any structure, machinery, or equipment installed in the
reconstruction or replacement of such facility, device, fixture, equipment, or machinery. To qualify, such facility,
device, fixture, equipment, structure, specialty chemical, or bioaugmentation product must be used, installed, or
constructed to meet a law implemented by, or a condition of a permit issued by, the Department of Environmental
Protection; however, such exemption shall not be allowed unless the purchaser signs a certificate stating that the

facility, device, fixture, equipment, structure, specialty chemical, or bioaugmentation product to be exempted is
required to meet such law or condition....
(3) For the purposes of this section, "specialty chemicals" means those chemicals used to enhance or further treat
wastewater, including, but not limited to, defoamers, nutrients, and polymers, and "bioaugmentation products" means
the microorganisms used in waste treatment plants to break down solids and consume organic matter.
The following rule chapters from the Florida Administrative Code (F.A.C.) are applicable to activities within the
Phosphate Industry.
Ch. 62-273, F.A.C. Air Pollution Episodes
Ch. 62-296, F.A.C. Stationary Sources - Emission Standards
Ch. 62-297, F.A.C. Stationary Sources - Emissions Monitoring
Ch. 62-312, F.A.C. Dredge And Fill Activities
Ch. 62-520, F.A.C. Ground Water Classes, Standards,AndExemptions
Ch. 62-522, F.A.C. Ground Water Permitting And Monitoring Requirements
Ch. 62-660, F.A.C. Industrial Wastewater Facilities
Ch. 62-671, F.A.C. Phosphate Mining Waste Treatment Requirements
Ch. 62-672, F.A.C. Minimum Requirements For Earthen Dams Used In Phosphate Mining And Beneficiation
Operations And For Dikes Used In Phosphogypsum Stack System Impoundments
Ch. 62-673, F.A.C. Phosphogypsum Management
Ch. 62C-16, F.A.C. Bureau Of Mine Reclamation - Mandatory

Phosphate Mine Reclamation

Determination
The exemption provided by s. 212.051, F.S., is generally applicable to manufacturers, but the exemption is
available to mining operations. Support for this position can be found in the current exemption provisions of s.
212.08(5)(b), F.S., for new and expanding businesses. That exemption is also available to businesses that
"manufacture, process, compound, or produce" tangible personal property for sale. Effective July 1, 1999, s. 1,
Chapter 99-171, L.O.F., amended the new and expanding business exemption by removing the express prohibition of
"phosphate or other solid minerals severance, mining, or processing operations" from eligibility for that exemption.
Since the terms "manufacture, process, compound, or produce" within s. 212.08(5)(b), F.S., were not amended to
expressly include "mining," it can be reasonably concluded that the terms manufacture, process, compound, or
produce encompass the term of mining. Accordingly, phosphate mining operations would be includable and eligible for
the exemption provided by s. 212.051, F.S.
An important exemption criterion of s. 212.051, F.S., is that the facility, device, fixture, equipment, machinery,
specialty chemical, or bioaugmentation product must be used primarily "to meet a law implemented by, or any
condition of a permit issued by, the Department of Environmental Protection." DEP does not specify the devices or
materials that must be used to control pollution. Instead, DEP specifies that a facility may not discharge specific
pollutants in excess of certain amounts into the air or water. Therefore, in the administration of the exemption, the
Department of Revenue (DOR) considers those devices or materials used primarily to meet, or not exceed, the stated

pollution limits as qualifying for the exemption. Within this context, "primarily" is considered to be an amount in excess
of 50 percent.
The exemption provisions of s. 212.051, F.S., could be narrowly construed to only apply to those pollution control
items that are directly associated with manufacturing, processing, compounding, or production operations. Such a
reading would be consistent with the judicially mandated narrow interpretation of exemptions as found in State ex rel.
Szabo Food Services, Inc. v. Dickinson, 286 So.2d 529, 530, (Fla. 1973). However, within the subject exemption
statute, such a narrow construction would allow an exemption to some pollution control items at a fixed location, while
denying the exemption to other pollution control items that control or abate the same pollutant at the same fixed
location. In the matter of Alachua County v. Department of Revenue, 466 So.2d 1186 (Fla. 1st DCA 1985), the court
stated that "[a]lthough an exemption in a taxing statute should be strictly construed against the person claiming it, the
construction must not be so strained that it forces a conclusion that is unreasonable...." Therefore, the strictest
construction of the exemption statute at issue would reach an unreasonable conclusion.
The appropriate construction would be that the exemption is not limited to pollution control items used in a single
operation or activity. Instead, the exemption applies to such items used in all activities occurring at the fixed location
where manufacturing, processing, compounding, or production takes place. Although the exemption statute provides
definitions for specialty chemicals and bioaugmentation products, it does not provide definitions for facility, device,
fixture, equipment, or machinery. There is a definition for "facility" found in Chapter 62-673, F.A.C., governing
phosphogypsum management. Rule 62-673.200(6), F.A.C., defines "facility" as meaning "all contiguous land and
structures, other appurtenances and improvements on the phosphate fertilizer manufacturing complex." Since the crux
of the exemption is that the "facility, device, fixture, equipment, structure, specialty chemical, or bioaugmentation
product must be used, installed, or constructed to meet a law implemented by, or a condition of a permit issued by,
the Department of Environmental Protection," it is appropriate to use a rule promulgated by DEP in the administration
of the tax exemption. This would preclude the above-mentioned exemption dichotomy.
Therefore, based on Phosphate Company's assertion that the facilities, devices, fixtures, equipment, machinery,
and chemicals, as enumerated in the above description of Exhibit A, are used primarily for the control of pollution as
required by DEP in the manufacturing, processing, compounding, or production of phosphate products, such facilities,
devices, fixtures, equipment, machinery, and chemicals are exempt from sales and use tax pursuant to s. 212.051,
F.S., after the appropriate certificate has been submitted to the vendor. It is recommended that the certificate format
as presented in TIP 00A01-17, dated July 11, 2000, be followed. A sample of that certificate format is attached. It is
important to understand that the exemption is not established by the issuance of the certificate to the vendor. The
exemption is established when the item or items are used for the express purposes designated by the exemption
statute. The certificate simply provides documentation to the vendor as support for the reason why tax was not
charged on a particular transaction. If Phosphate Company has self-accrual authority, then the company will not have
to issue a certificate to itself. However, the company must maintain all documentation necessary to prove the exempt
status of the purchases.
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 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 documents are public records under Chapter
119, F.S., which are subject to disclosure to the public under the conditions of Section 213.22, F.S. Your name,
address, and any other details, which might lead to identification of the taxpayer, must be deleted before disclosure. In
an effort to protect the confidentiality of such information, we request you provide the undersigned with an edited copy
of your request for Technical Assistance Advisement, backup material and response within fifteen days of the date of
this advisement.
Sincerely,
Jeffery L. Soff
Tax Law Specialist
Technical Assistance and
Dispute Resolution
ID # 15357
Attachment