Which portions of an automotive processor's port-authority lease qualified for the cargo exemption?

Plain-English summary

An automotive processor leased mixed-use property at a port authority for receiving, storage, export preparation, customization, modification, logistics, offices, and other vehicle-related operations.

Florida narrowly limited the port exemption to real property used exclusively for short-term storage of cargo pending loading onto or unloading from an oceangoing vessel.

Areas used for vehicle servicing, accessories, export processing, parts, detailing, body work, distribution, offices, employees, or visitors were taxable. Storage remained taxable when vehicles awaited further processing, repair, modification, or later transport after that work.

What this means for you

Location at a port does not exempt all leased property. Actual exclusive use for vessel loading or unloading must be established from books, records, and the mixed-use allocation.

Common questions

Did all vehicle storage qualify? No. Only short-term cargo storage exclusively tied to vessel loading or unloading could qualify.

Were processing shops exempt? No. The exemption did not cover servicing, modification, export-processing, or similar operational areas.

How was mixed use handled? The cited rule required allocation between exempt and taxable portions of the leased property.

Citations and references

• Fla. Stat. § 212.031(1)(a)8. (port-authority property used for vessel loading and unloading)
• Fla. Admin. Code r. 12A-1.070(14) (mixed-use real-property allocation)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06A-005

Original ruling text

SUMMARY
QUESTION: Is real property leased at a port authority by an automotive processor exempt from tax pursuant to s.
212.031(1)(a)8., F.S.?
ANSWER - Based on Facts Below: The Department concludes that the exception from sales tax on the use of real
property provided in section 212.031(1)(a)8., F.S., does not extend to those portions of the property used for Car
Servicing, Accessory Shops, Export Processing, GM Two Tone, Parts Warehouse, Detail, Body Shop, Distribution,
Administrative Offices, Customer Offices, Corporate Offices, and Employee/Visitor Areas, since the property is not
used for the statutory purpose of loading or unloading passengers or cargo onto or from oceangoing vessels.
Of the 132.49 acres used for Storage Areas, if any portion of the storage space is devoted exclusively to the short
term storage of cargo, pending the loading or unloading of such cargo onto or from vessels, such space would be
eligible for the exemption. However, any space used for the storage of vehicles awaiting further processing, repair, or
modification, or any space used for the storage of vehicles awaiting subsequent transport upon completion of such
processing, repair, or modification, remains subject to tax.

April 17, 2006

Re: Technical Assistance Advisement 06A-005
Sales and Use Tax - Lease at Port Authority
Section 212.031(1)(a)8., F.S.
Rule 12A-1.070(14), F.A.C.
XXX("Lessee")
d/b/a XXX
FEI: XX
XXX ("Lessor")
Dear:
This is a response to your letter dated September 15, 2005, requesting the issuance of Technical Assistance
Advisement (TAA) concerning the above referenced parties and matter. Your letters and supporting documents have
been carefully examined, and the Department finds your request 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 section 213.22, Florida Statutes.
Issue
The issue is whether real property leased at a port authority by an automotive processor is exempt from tax pursuant
to s. 212.031(1)(a)8., F.S.

Facts
Your letter provides in part:
[Lessee] is a leading automotive processor based, primarily, in the USA.... In addition to port operations such as
receiving, inspection, storage and export preparation, [Lessee's] operations extend into high-level value-added
services such as customization, port modification and up fitting, and also the provision of logistics services....
All vehicles arrive by truck, rail or ship. Vehicles are then processed according to manufacturer guidelines and
instructions. Before and after processing, the units remain in [Lessee's] storage areas. Upon manufacturer['s] direction
the units will be removed from [Lessee's] property by truck, rail or ship.
At our request, you provided the following additional information in a letter dated November 18, 2005:
... Our storage areas are large paved lots in various locations on our property. Vehicles arrive by rail, ship or truck.
The vehicles are then temporarily stored to await further direction from the manufacturer as to what needs to be done
next. There are various directions that may come from the manufacturer: send the vehicle on to final destination by
rail, ship or truck or complete specific processes through our shops. If the vehicle is processed through our shops it
will either be immediately sent out by rail, ship or truck or return[ed] to our storage area to await instructions from the
manufacturer to send it to the final destination.
Your letter of September 15, 2005, provides the following information regarding office/production areas, square
footage, and acres at the facility:
Dept. 401 Car Servicing
XXX sq ft used for Car Service/Field Supervisor and Survey Supervisor offices
XXX total sq ft used for Car Servicing operations
Dept. 501 Accessory Shops
XXX sq ft used for Processing XXX chassis to be sold in the XXX United States
XXX sq ft used for the processing, up fit of vehicles, and mechanical repairs for XXX
XXX sq ft used for processing of XXX and XXX retail vehicles sold in the XXX United States
XXX sq ft used for office space for the Accessory Shop Supervisor
XXX sq ft used as a training room; used for customer training of technicians/installers for new accessories and
upgrades for all carlines serviced

XXX total sq ft used for Accessory Shop operations
Dept. 521 Export Processing
XXX sq ft used for processing of XXX retail units to be sold as export units in the XXX
XXX sq ft used for automatic car wash
XXX sq ft used for the under coating processing of XXX export vehicles
XXX sq ft used for lift and XXX paint application for XXX trucks to be sold in the XXX
XXX sq ft used as on site parts storage for XXX homologation parts
XXX used for Export Processing Supervisor office
XXX total sq ft used for Export Processing Shop operations
Dept. 561 XXX
XXX sq ft used for processing of XXXX Vehicles for XXX export markets
XXX sq ft used for XXX Two Tone Manager office
XXX total sq ft used for XXX Two Tone Shop operations
Dept. 551 Parts Warehouse
XXX sq ft used for parts receiving, storage and issue for all carlines serviced
XXX sq ft used for additional parts storage and issue for XXX and XXX carlines
XXX sq. ft used as a loading dock for parts receiving and freight inspections
XXX total sq ft used for Parts Warehouse operations
Dept. 501/521/401 Detail
XXX sq ft used for detail and wash operations for all carlines serviced
XXX sq ft used for hand/acid wash operations for all carlines serviced
XXX sq ft used for automatic car wash for all carlines serviced

XXX total sq ft used for Detail Shop operations
Dept. 901 Body Shop
XXX sq ft used for body and paint repairs for all carlines serviced
XXX sq ft used for Body Shop Supervisor and clerks processing repair orders
XXX total sq ft used for Body Shop operations
Dept. 600 Distribution
XXX sq ft used for distribution logistics for all carlines serviced (this dept receives manufacturer directions as to which
units are to be received, processed or sent out and then relays this information to the field)
XXX total sq ft for Distribution operations
Dept. 600 Administrative Offices
XXX sq ft used for the General Manager
XXX sq ft used for the Operations Manager
XXX sq ft used for the Accessory Manager
XXX sq ft used for the Maintenance Manager
XXX sq ft used for the Quality Manager
XXX sq ft used for the Office Manager
XXX total sq ft for administrative offices
Customer Offices
sq ft used for XXX Port Manager and logistics staff
XXX sq ft used for XXX Port Manager and XXX Region Quality Manager
XXX sq ft used for XXX Port Manager
XXX sq ft used for XXX Port Manager

XXX sq ft used XXX Port Manager
XXX total sq ft used for Customer Office space
Corporate Offices
XXX sq ft used for the V.P. of Operations
XXX sq ft used for IT operations
XXX sq ft used for corporate offices and meeting spaces
XXX total sq ft used for Corporate office space
Employee/Visitor Parking Areas
XXX sq ft used for employee/visitor parking
XXX sq ft used for employee/visitor parking
XXX total sq ft used for Parking Areas
Storage Areas
XXX total acres used for Storage Areas
Law and Discussion
Section 212.03 1 (1)(a), Florida Statutes (F.S.), provides 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,
with certain enumerated exceptions. One such exception is provided in sub-subparagraph 8.a. for: "Property used at a
port authority as defined in s. 315.02(2), exclusively for the purpose of oceangoing vessels or tugs docking, or such
vessels mooring on property used by a port authority for the purpose of loading or unloading passengers or cargo
onto or from such a vessel ......"
Pursuant to your letter, the vehicles are temporarily stored pending instructions from the manufacturer. "[S]end the
vehicle on to final destination by rail, ship or truck, or complete specific processes through our shops." Only those
storage spaces devoted exclusively to the short term storage of cargo arriving or leaving the oceangoing vessel would
be deemed real property used in the loading or unloading of cargo. The exception provided under s. 212.031(1)(a)8.,
F. S., does not extend to real property used for the storage of vehicles awaiting further processing, repair, or
modification, nor to real property used for the storage of vehicles awaiting subsequent transport upon completion of
such processing, repair, or modification.

Rule 12A-1.070(14), F.A.C., provides in pertinent part:
(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.
Florida courts have consistently and unwaveringly held that exemptions must not be expanded beyond their express
terms and must be strictly and narrowly construed against the taxpayer. See Department of Revenue v. Anderson,
403 So.2d 397 (Fla. 1981); Housing by Vogue, Inc. v. Department of Revenue, 403 So.2d 478 (Fla. 1 DCA 198 1);
Pioneer Oil Co. v. Department of Revenue, 401 So.2d 1319 (Fla. 1981); State ex rel. Szabo Food Services, Inc. v.
Dickinson, 286 So.2d 529 (Fla. 1973). Consequently, under Florida law, the burden is upon the taxpayer, as the party
claiming the exemption, to establish from its actual books and records that it is clearly entitled to a particular
exemption.
Conclusion
The Department concludes that the exception from sales tax on the use of real property provided in section
212.031(1)(a)8., F.S., does not extend to those portions of the property used for Car Servicing, Accessory Shops,
Export Processing, XXX Two Tone, Parts Warehouse, Detail, Body Shop, Distribution, Administrative Offices,
Customer Offices, Corporate Offices, and Employee/Visitor Areas, since the property is not used for the statutory
purpose of loading or unloading passengers or cargo onto or from oceangoing vessels.
Of the XXX acres used for Storage Areas, if any portion of the storage space is devoted exclusively to the short term
storage of cargo, pending the loading or unloading of such cargo y onto or from vessels, such space would be eligible
for the exemption. However, any space used for the storage of vehicles awaiting further processing, repair, or
modification, or any space used for the storage of vehicles awaiting subsequent transport upon completion of such
processing, repair, or modification, remains subject to tax.
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 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 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,
Dee Overcash
Technical Assistance and Dispute Resolution
Control No. 18353