When were rigging labor, point charges, and equipment-use charges services rather than taxable rentals?

Plain-English summary

A rigging provider charged for labor, rigging points, and use of its equipment at trade shows and other events. Florida distinguished nontaxable services from taxable equipment rentals by who operated and controlled the equipment.

Rigging labor and the related point charge were nontaxable services. Equipment use was also a service when the provider supplied an operator and did not pass control or direction to the customer. A taxable rental occurred when no operator was supplied or the customer was authorized to operate or control the equipment.

Installing an eye bolt that remained part of the building created use tax on the bolt's cost but did not change the other service charges. Taxable rentals and nontaxable services had to be separately stated and supported; otherwise, all charges labeled equipment rentals could become taxable.

What this means for you

For equipment-plus-operator arrangements, actual control matters more than the invoice label. Clear contracts, separate invoicing, and records should show who could operate and direct the equipment.

Common questions

Were rigging labor and point charges taxable? No. They measured the labor and effort used to perform a service.

When was an equipment charge a nontaxable service? When the provider furnished the operator and retained control and direction over the equipment.

When was it a taxable rental? When the customer had authorized use or control, or when the equipment was provided without an operator.

Did unauthorized customer use change the service treatment? No. Unauthorized use did not alter the status of otherwise nontaxable service charges.

Citations and references

• Fla. Stat. § 212.02(10), (15)-(16) (rentals, sales, and sales price)
• Fla. Stat. § 212.08(7)(v) (service transactions)
• Fla. Admin. Code r. 12A-1.071(1), (9) (equipment leases with operators)
• American Telephone & Telegraph Co. v. Florida Department of Revenue, 764 So. 2d 665 (Fla. 1st DCA 2000)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06A-012

Original ruling text

SUMMARY
QUESTION: Do the charges made by the Taxpayer, a provider of rigging services, constitute tax exempt services or a
taxable rental of tangible personal property?
ANSWER - Based on Facts Below: The charges for rigging labor and the related points charge represent tax exempt
services. The separate charge by the Taxpayer for use of Taxpayer-owned equipment where the customer never
operates or obtains control or use of the equipment would also be considered a charge for a service and would not be
subject to tax. The Taxpayer, in its billing records, would have to distinguish between rental charges qualifying as a
tax exempt services, and those rentals taxable because an operator was not provided or because the customer
controlled and/or operated the equipment.

July 19, 2006

Re: Technical Assistance Advisement 06A-012
XXX ["Taxpayer" or "Company"]
Sales Tax and Use Tax - Service vs. Rental
Sections 212.02(10),(15) and 212.08(7)(v), F.S.
Rule 12A-1.071(1),(9), F.A.C.
Dear
This response is in regard to your petition requesting the Department's issuance of a Technical Assistance
Advisement pursuant to s. 213.22, F.S., and Chapter 12-11, F.A.C., regarding the above referenced matter.
In your letter of March 2, 2006, you are seeking guidance on the sales tax applications for your client who provides
"rigging services," primarily in connection with trade shows, presentations, conventions and other events.
BACKGROUND INFORMATION
Your letter provides in pertinent part:
Taxpayer is the provider of rigging services (described below). Taxpayer's customers are primarily hotels who utilize
the services in connection with trade shows, presentations, conventions and other events ("Hotel").
When Taxpayer acquires a new Hotel customer, a contract is signed stipulating that Taxpayer will be the sole provider
of rigging services to customers of the Hotel ("Event Sponsor") who need such services for their trade show,
presentation, event, etc. Taxpayer invoices the Hotel for its services and the Hotel submits a marked up bill to the
Event Sponsor. Occasionally, a production company or supplier of lighting or AV equipment ("the Production
Company") who has a separate arrangement with the Event Sponsor will request that they pay Taxpayer's invoice

directly. On these occasions, Taxpayer will submit invoices to the Production Company making such request.
Taxpayer never sends an invoice directly to an Event Sponsor. A sample hotel contract is attached as Exhibit 4.
Rigging services consist of the use of labor (an operator) and a lifting system to place concentrated loads at
predetermined places at the Hotel ceiling according to an event design. These concentrated loads contain lighting
equipment and/or audio equipment. A list of specific services provided by Taxpayer includes the following:

• Review event spaces with Hotel engineers and/or structural engineers to confirm rigging load capacities of the
  "points" (described below)
• Create rigging standards and CAD plans of the Hotel meetings spaces where rigging can occur and provide same to
  guests of the Hotel (event designers)
• Consult with event designers regarding lighting design, audio design, seating layout and egress
• Generate or approve scaled CAD drawings displaying the completed show design
• Using the completed show design CAD files, calculate all collateral loads applied to the "points" and approve same
• Consult with the Hotel staff to confirm logistics and room set up
• Rigging operator pre-event to lift the lighting and audio equipment in place per the show design
• Supervisory services pre-event to direct the rigging operator’s activities and coordinate the activities of various
  providers of lighting and audio equipment
• Design and operation of the hoist and control systems that lift lighting, audio & video equipment overhead
• Post show breakdown of rigging systems
  Taxpayer does not provide any of the lighting or audio equipment used in a show. All such items are provided by other
  vendors. Taxpayer only provides the operator and the components of the lifting system. The lifting system
  components are described in the following paragraphs.
  The first component is called "points". They are a low cost assembly of eye bolts, lengths of threaded rod or lengths of
  Flemish eye aircraft cable and alloy shackles that attach to the structural frame of the ceiling of the Hotel where they
  may be left in place and concealed by ceiling tiles, covered with decorative caps, or painted to match the ceiling of the
  Hotel. In many eases, (about half of the Hotels) the Hotel already has these points installed during construction. For
  Hotels where the points are not already installed, Taxpayer puts points in the locations where it would like to provide
  rigging services. There is no charge to the Hotel or to anyone else for this service. Points are a necessary part of the
  lifting system that Taxpayer operates exclusively at the Hotel and considered a cost of the services provided. These
  preset points also enable rigging to occur in a more efficient and safe manner enhancing the marketability of the
  services Taxpayer provides. Points installed by the Hotel belong to the Hotel, and points installed by Taxpayer are the

property of Taxpayer.
During the pre-event setup and again at post-event breakdown, chain hoists are attached to the points. These are
used for hauling heavy lighting and sound equipment to the ceiling. Also used during setup and breakdown are scissor
lifts for lifting the operator to the ceiling where he can attach the chain hoists to the points. Finally, a variety of other
hand tools are used by the operator.
The chain hoists and scissor lifts are tools that are necessary for Taxpayer to perform its services. The customer has
the option of paying Taxpayer to supply these two tools or providing them from another vendor. In many cases, the
chain hoists and scissor lifts are provided by the Production Company, the Event Sponsor or other vendor as part of a
comprehensive lighting system. If the Event Sponsor does not have another source, Taxpayer provides the chain
hoists and scissor lifts.
In all cases, Taxpayer is the sole operator of chain hoists and the points system. No one, other than an employee of
Taxpayer, is allowed to operate the chain hoist or the points. Similarly, no one uses the scissor lifts provided by
Taxpayer while Taxpayer employees are performing their service. The scissor lifts are left on site until after the event
is broken down. Taxpayer has not been strict about restricting the use of the lifts by other vendors.
The invoice that Taxpayer submits to the Hotel or Production Company ("Customer") as a request for payment
includes three categories of charges. "Rigging Labor" is charged based on the hours worked. A "Point Charge" is
charged based on the number of points accessed during the show. Larger events that require attachments to a
greater number of points would be charged a higher Point Charge than would a smaller event with less point access.
The Points Charge is calculated the same regardless of whether the Customer is the Hotel or a Production Company,
and regardless of whether the points are owned by Taxpayer or by the Hotel. Finally, Taxpayer charges an
"Equipment Rental Charge" for any chain motors or scissor lifts that Taxpayer provides.
Each of the charges [is] listed separately on the invoice. In those cases where the Taxpayer bills through the Hotel,
Taxpayer submits a discounted invoice to the Hotel and the Hotel submits a marked up bill to the Event Sponsor. The
Hotel, in turn, bills the Event Sponsor for the cost of rigging based on the invoice it has received from Taxpayer. A
sample invoice is attached as Exhibit 5. Where Taxpayer bills the Production Company, a full retail invoice is
submitted to the Production Company.
ISSUES PRESENTED BY TAXPAYER
Your letter asks the following questions:

1. Are either the Point Charge or Rigging Labor charge subject to sales tax when billed to the Hotel, Production
   Company or Event Sponsor?
2. Is the Equipment Rental Charge billed to the Hotel, Production Company or Event Sponsor subject to sales tax
   when the charge is (i) for chain hoists; (ii) for scissor lifts in circumstances where no one other than the Taxpayer has
   the right to use the equipment; or (iii) for scissor lifts in circumstances where persons other than the Taxpayer have

the right to use the scissor lift equipment?

3. Assuming a negative response on questions 1 and 2(i), & (ii), and an affirmative response on question 2.(iii), does
   the use of scissor lift equipment on some jobs by persons other than the Taxpayer change the response to questions
   1 or 2(i) as to those jobs?
   TAXPAYER'S ANALYSIS
   Your letter further provides:
   In this particular case, neither the Points Charge, the Rigging Labor, nor the Equipment Rental Charge should be
   considered to be a taxable charge.
   The Points Charge is not a charge for the use of property. The charge is imposed under the same methodology
   regardless of whether the Hotel or taxpayer owns the points. Further, the charge is the same whether the Hotel or the
   Production Company is the Customer. Thus, in many cases the Hotel pays a Points Charge even though it owns the
   points. The number of points involved in a particular project is nothing more than a measure of the value of the overall
   rigging service, in that the more points used, the more complicated the project. Finally, there is no use of the points by
   the Customer. The points are used by Taxpayer to perform its rigging services. Thus, there is no lease of points within
   the meaning of [Section] 212.02(10)(g), F.S.
   Chain hoists and points are an integrated system used by Taxpayer to perform the services of raising and setting
   lights and audio equipment. This equipment is at all times controlled by and used exclusively by Taxpayer. Control is
   never relinquished to the Customer. Thus, pursuant to the provisions of s. 212.02(l0)(g), F.S. and FAC Rule 12A1.071(9), there is no lease.
   Taxpayer cannot exclude the possibility that other parties present at an event may use the scissor lift, it is provided
   with the sole intent that it also be used by Taxpayer to perform its rigging services and should also be deemed to fall
   under Rule 12A-1.071(9), [F.A.C.]
   The rigging services do not fall within any category of services that are specifically taxable. Hence, the rigging
   services would be taxable only if they were an installation charge or otherwise "inextricably intertwined" with the
   taxable sale of tangible personal property. Pursuant to the foregoing analysis, as there is no sale of tangible personal
   property, the rigging services cannot be considered an installation charge, nor can they be considered to be
   inextricably intertwined with any sale of tangible personal property.
   If the Department of Revenue were to determine that the Equipment Rental Charge for the scissorlift is taxable in
   those cases where the event sponsor has use of the scissorlift, the other charges are not inextricably intertwined with
   the lease of such property. In all cases, the labor charges are separately stated on the invoice to the Customer.
   Further, the primary object of the engagement is to secure services, not to rent property. Rigging labor charges are
   imposed on each and every invoice regardless of whether there is an Equipment Rental Charge. The Customer is free
   to provide its own equipment, lease equipment from a third party, or use the equipment provided by Taxpayer at its

option. The equipment is used as a means to perform the services. Taxpayer provides equipment in some cases but
not others. While the use of this equipment is required to perform the services, the rental of such equipment is not
inextricably intertwined with the services and such services should be considered incidental to, any lease of tangible
personal property.
LAW
Section 212.02, F.S., provides in part:
(10)(g) "Lease," "let," or "rental" also means the leasing or rental of tangible personal property and the possession or
use thereof by the lessee or rentee for a consideration, without transfer of the title of such property, except as
expressly provided to the contrary herein....
(15) "Sale" means and includes:
(a) Any transfer of title or possession, or both, exchange, barter, license, lease, or rental, conditional or otherwise, in
any manner or by any means whatsoever, of tangible personal property for a consideration.
Section 212.08(7)(v), F.S., provides in part:

1. Also exempted are professional, insurance, or personal service transactions that involve sales as inconsequential
   elements for which no separate charges are made....
   Rule 12A-1.071, F.A.C., provides in part:
   (1)(a) For the purpose of this rule, the term "lease" includes any rental or license to use tangible personal property,
   unless a different meaning is clearly indicated by the context in which it is used. The term refers to all transactions that
   are not bailments in which there is a transfer of possession of tangible personal property, without regard to limitations
   upon the use, for a consideration, without a transfer of title to the property. It is not essential for a transfer of
   possession of tangible personal property to include the right to move the tangible personal property. It includes a
   transaction under which a person secures for a consideration the temporary use of tangible personal property which,
   although not on his premises, is operated by or under the direction or control of the person or his employees. All
   leases of tangible personal property other than conditional-sale type leases as described in paragraph (1)(d) of this
   Rule, are operating leases. Whether a transaction is a "sale" or a "rental, lease, or license to use" shall be determined
   in accordance with the provisions of the agreement.
   (b) Transfer of possession with respect to an operating lease means that one of the following attributes of tangible
   personal property ownership has been transferred:
2. Custody or possession of the property, actual or constructive;
3. The right to custody or possession of the property; or,

3. The right to use and control or direct the use of the property....
...
(9)(a) A transaction involving the use of equipment with an operator supplied by the owner of the equipment is a lease
if control or direction over the use of the equipment passes to the customer.
(b) When the operator of the equipment is on the payroll of the lessee, the contract constitutes a rental of tangible
personal property and is subject to the tax.
(c) A transaction is not a lease if it is for the performance of a specific job in a manner to be determined by the owner
or his operator.
(d) When the owner of equipment furnishes the operator and all operating supplies, and contracts for their use to
perform certain work under his direction and according to his customer's specifications, and the customer does not
take possession or have any direction or control over the physical operation, the contract constitutes a service
transaction and not the rental of tangible personal property, and no tax is due on the transaction.
DISCUSSION AND DETERMINATION
Rigging Labor:
Under the above described conditions, the charge for rigging labor is a charge for a service. No tangible personal
property is being sold or rented, and the rigging labor charge would not be taxable.
Point Charge:
The point charge relates to how much labor and effort will have to be expended in performing the rigging services.
Since rigging services are not taxable, the point charge is also not taxable. When no eye bolt (point) is already in
place, the Taxpayer puts one in. The attachment of an eye bolt (point) to a ceiling beam, with the intention that the eye
bolt be left as part of the realty, would be considered a real property improvement transaction and use tax would be
due on the cost of the eye bolt (point). The necessity of attaching an eye bolt would not change the taxable status of
the other charges being made.
Equipment Rental Charge:
The charge by the Taxpayer for use of Taxpayer-owned equipment where the customer never operates or obtains
control or use of the equipment would be considered a charge for a service and would not be subject to tax. If
equipment (such as a lift) is left on the premises and permission is given for the customer or the customer’s agents to
operate and/or use the equipment, then the above advice would not apply. A taxable rental would occur. An
unauthorized use of the equipment by the customer would not affect the taxable status of other charges deemed to be
tax exempt services. When the customer is authorized to use the equipment, then any charges labeled as equipment
rental would become taxable.

In such cases where the Taxpayer decides to rent equipment to the customer, the charge would be subject to tax
when the Taxpayer does not provide an operator of the equipment. In situations labeled as equipment rental and in
which the Taxpayer provides an operator, and does not pass control or direction over the use of the equipment to the
customer, the transaction represents a service transaction and is not subject to tax.
The Taxpayer, in its billing records, would have to distinguish between rental charges qualifying as a tax exempt
service, and those rentals taxable because an operator was not provided or because the customer controlled and/or
operated the equipment. Failure to so distinguish between the two types of rentals could result in the Taxpayer being
liable for tax on all transactions labeled "equipment rentals." In addition, Taxpayer should have adequate
documentation or support to show that non taxable rigging labor and points charges as noted on the invoice or billing
are not provided in connection with charges for taxable rentals or considered part of the "sales price" of such taxable
rentals. See Section 212.02(16), F.S., and American Telephone and Telegraph v. Florida Department of Revenue,
764 So.2d 665 (Fla. 1st DCA 2000). Under the specific facts of your case, any taxable equipment rentals would not
affect the taxable status of the rigging labor and points charge as long as the charges for taxable rentals and tax
exempt rigging services are separately itemized and distinguishable on the invoice or billing.
Use Tax:
With regard to the initial purchase (or rental) of the equipment and material used to perform the above described
services, tax would be due. The only exception would be where equipment is going to be exclusively re-rented without
an operator.
CLOSING STATMENT
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 advisement 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.
If you have any further questions with regard to this matter and wish to discuss them, you may contact me directly at
850-922-4840.
Sincerely,

Jonathan E. Swift
Tax Law Specialist
Technical Assistance and Dispute Resolution
Control No. 20021