How did Florida's $5,000 surtax limitation apply to bulk building-product orders shipped on one or several invoices?

Plain-English summary

A building-products seller took phone, fax, and online orders that often contained multiple quantities and models. Some orders shipped in one lot and appeared on one invoice. Larger orders could ship and be invoiced in parts as materials became available, usually within four to six weeks but without a written delivery deadline.

Florida's detailed conclusion applied one $5,000 discretionary surtax limitation to complete orders shipped and billed on a single invoice. The seller's evidence also showed that it normally sold the products in bulk, satisfying the second aggregation test.

Partial shipments were different. Without a written purchase order or agreement specifying the delivery period, each delivery and invoice was a separate sale with its own $5,000 limitation. Adding a specific delivery date or period to the controlling written order could allow the limitation to apply once to the entire qualifying bulk sale.

What this means for you

Multiple items must satisfy both tests: a documented single sale and either normal bulk-sale or working-unit treatment. Customary fulfillment timing alone did not replace a written delivery period when an order shipped in stages.

Common questions

How did the cap apply when the whole order shipped together? Once to the entire qualifying invoice.

How did it apply to partial shipments without a written delivery period? Each delivery and invoice was treated as a separate sale with its own limitation.

Was a purchase order enough by itself? Not for staggered delivery. It had to specify quantity and the period within which all property would be delivered.

Did the products satisfy the bulk-sale test? Yes. The detailed conclusion found the exhibits showed the taxpayer's practice was to sell in bulk.

Citations and references

• Fla. Stat. § 212.054(2)(b)1. (surtax limitation and multiple-item aggregation)
• Fla. Admin. Code r. 12A-15.004(3) (single sale, bulk sale, and working unit tests)
• Fla. Stat. § 212.055 (authorized local surtaxes)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06A-029

Original ruling text

SUMMARY
QUESTION 1: The taxpayer provided an invoice which reflected that multiple items of tangible personal property were
purchased from a dealer at the same time; the quantity of each item purchased was listed on the invoice; all items
were delivered on the same date; the invoice total exceeded $5,000. The question is whether the invoice total
qualifies the sale for the $5,000 Discretionary Sales Surtax limitation.
ANSWER 1 - Based on Facts Below: Determination is made that the invoice total, being above $5,000, does qualify
for the $5,000 Discretionary Sales Surtax limitation as a single sale of multiple items; but the invoice did not meet the
bulk sale test, since the transaction is neither the sale of multiple quantities of a single item nor was there
documentation provided to support the fact that the items were sold as components of a working unit.
QUESTION 2: Using the same invoice as provided in Question 1, the taxpayer made additional statements that

1. these items are not normally sold as a set due to the many variations and particulars of each system;
2. the parts listed on the invoice may go into different systems and may not all be for the same system;
3. some of the items listed are not assembled directly with each other, but instead are assembled to other parts of the
   working unit.
   ANSWER 2 - Based on Facts Below: The statements made by the taxpayer, without any other evidence except the
   invoice, are not sufficient enough to clearly reflect that all items listed on the invoice provided were components of a
   working system. As such, the invoice does not qualify for the $5,000 Discretionary Sales Surtax limitation.
   QUESTION 3: The taxpayer provided an additional invoice which reflected that multiple single items (the largest
   quantity of the same single item totaled $3,3499.80) were sold on the same invoice. The invoice total exceeded
   $5,000. Two items listed on the invoice were tools sold for the installation of other items listed on the invoice. The
   taxpayer makes the statement in describing the invoice that, except for the two items, all other items are items that will
   become part of a working unit. The question is whether the $5,000 Discretionary Sales Surtax limitation applies to all
   items sold except the two that are tools rather than components of a working unit.
   ANSWER 3 - Based on Facts Below: Determination is made that the invoice does conform to the $5,000
   Discretionary Sales Surtax limitation on the total amount of the invoice, minus the cost of the tools sold on said
   invoice.

September 27, 2006

Re: Technical Assistance Advisement 06A-029
Sales and Use Tax

Discretionary Sales Surtax Limitation
xxx
Sections 212.054 and 212.055, F.S. ("Florida Statutes")
Rules 12A-15.003 and 12A-15.004, F.A.C. ("Florida Administrative Code")
Dear :
This is in response to your correspondence to the Department, dated July 6, 2006, requesting the Department's
issuance of a Technical Assistance Advisement ("TAA") pursuant to Section 213.22, F.S., and chapter 12-11, F.A.C.,
regarding the discretionary sales surtax limitation on sales of various building products. An examination of your letter
established that you complied with the statutory and regulatory requirements for issuance of a TAA. Therefore, the
Department is hereby granting your request for issuance of a TAA.
ISSUE
Whether the taxpayer should apply the $5,000, discretionary sales surtax limitation to individual line items on each
invoice, to each invoice as a whole, or, in those situations where multiple shipments and billings are made for the
same purchase order, to the purchase order as a whole.
The taxpayer further asks the Department if the Department's answer to the question above would change, for those
orders evidenced by a single order but shipped and billed on multiple invoices if the order acknowledgement form
were modified to provide a time period for delivery of the entire order.
FACTS
Your letter provides the following statement of facts:
Taxpayer is in the business of xxx, extruding standard and xxx shapes, xx and xxx to specialty contractors that xxx
and xxx enclosures, and xxx and xxx (collectively the "Products"). Taxpayer sells primarily to contractors who use the
Products in contracts to improve real property. Taxpayer collects and remits sales tax on its sales of Products unless a
valid resale or exemption certificate is furnished by the customer.
Taxpayer sells Products that are shipped to different counties within Florida. When Taxpayer collects sales tax on the
sale, the applicable county discretionary [sales] surtax is also collected.
Taxpayer receives orders from customers by telephone, facsimile transmission or over the [Internet].
When an [Internet] order is received, the [taxpayer's] software produces an order proof which is then converted into an
order acknowledgement and sent to the customer. Exhibit 1 contains the typical paperwork and full procedures for
orders received on the [World Wide Web].
When an order is received, the [taxpayer's] software produces an order proof[,] which is then converted into an order
acknowledgement and sent to the customer. Exhibit 1 contains the typical paperwork and full procedures for orders

received on the [World Wide Web].
When an order is received via [facsimile transmission] or over the telephone, an order acknowledgement is produced
and sent to the customer. Exhibit 2 has the paperwork and procedures for a typical order when received via [facsimile
transmission] or [the] telephone.
When a written [facsimile transmission] order is sufficiently detailed, no order acknowledgement is sent to the
customer. Exhibit 3 is a sample of the paperwork that would be generated in such situations.
Subsequently, the order is shipped to the customer and an invoice is prepared. Most orders involve multiple individual
items of tangible personal property.
In many cases, [taxpayer] is able to ship the customer's entire order in one lot and bill the entire order on a single
invoice. The invoices in Exhibits # 1, 2 and 3 evidence orders where the entire order was billed on a single invoice. In
other cases, [taxpayer] ships and invoices the order as the materials become available. Taxpayer's practice is to fill all
orders within four to six weeks but there is no written requirement that it do so. Exhibit # 4 is paperwork for a typical
situation where a larger order is received but the order is shipped and billed on separate invoices.
In each case, [the taxpayer] has collected the discretionary [sales] surtax on the entire invoice amount. Rarely, a
single line item on an order will exceed Five Thousand Dollars, in which case [the taxpayer] has collected [the]
discretionary [sales] surtax on the first Five Thousand Dollars of the single line item.
Included with your letter are the following items, relevant to the issue:
Exhibit # 1 includes a copy of the taxpayer's invoice, number xxx, dated 06/06/2006 and issued to xxx("Customer 1").
This invoice references [Customer 1's] order number xx, and is for various quantities and models of xxx. Also included
in Exhibit # 1, is a document styled "Ordering process for xxx via [the World Wide Web]," and a copy of an "Order
Proof" dated May 19, 2006, which also references the customer's Purchase Order number xx. In addition, included are
an order acknowledgement form likewise dated May 19, 2006, and referencing the customer's purchase order number
xx, and what appears to be a shipper's packing list, which indicates a shipping date of June 6, 2006, for the entire
order.
Exhibit # 2 contains a copy of the taxpayer's invoice, number xx dated 02/14/2006 and issued to xxx, Inc. - Main
("Customer 2"). This invoice refers to [Customer 2's] order number 06-02-01, is for a variety of xxx and xxx, and bears
a shipping date of February 14, 2006. Integrated into this exhibit, is a document styled "Ordering process for xxx via
fax," a copy [Customers 2's] purchase order, numbered 06-02-01, an Order Acknowledgement for the referenced
purchase order, which indicates a planned ship date of 02/14/06, and again, what appears to be a shipper's packing
list.
Exhibit # 3 comprises a copy of the taxpayer's invoice, number xxx, dated March 28, 2006, and issued to xxx, Inc.
("Customer 3"). This invoice references [Customer 3's] purchase order number xxx, and is for various components
utilized in the construction of xxx enclosures. Following the invoice is a copy of a document labeled Customer PO, and

a document marked "Packing List" indicating a shipping date of March 28, 2006.
Exhibit # 4 consists of a copy of the taxpayer's invoice, number 137713, dated 06/08/06, issued to xxx., Inc.
("Customer 4"). This invoice references [Customer 4's] purchase order xx, indicates a shipping date of June 8, 2006,
and is for 288 pieces of 1 X 4 Snap X 20' bronze and 288 pieces of 1 X 4 Snap X 20' white. A copy of a handwritten
document labeled "[Customer 4] - PO faxed to xxx", a copy of the taxpayer's Order Acknowledgement, for [Customer
4's] purchase order xxx, and a copy of a document styled "xxx Shipping Log," and labeled "Partial Shipment."
TAXPAYER'S POSITION
Your letter provides your analysis of the applicable statutes and rule:
The single sale rule of [Rule 12A-15.004(3), F.A.C.,] is met in this case when [the taxpayer] ships the entire order at
one time and bills it on a single invoice under procedures similar to those set forth in Exhibits, [#] 1, 2 and 3. In each of
those cases, there is a written purchase order, a specific quantity of tangible personal property and delivery occurs all
at the same time.
In those situations where there is a single order which is filled by more than one shipment (and consequently billed on
more than one invoice) the discretionary [sales] surtax [limitation] should also apply to the entire order. In such cases,
the [Florida] Administrative Rule requires the purchase order to specify the time period during which delivery of the
property will occur. While there is no date specified on the order acknowledgement, a shipment period of four to six
weeks is implied by custom.
If the Department of Revenue [determines] that [the taxpayer's] customs and internal policies do not provide a
sufficient shipment date to comply with the Administrative Rule, then the xx Dollar [discretionary sales surtax
limitation] should apply to each invoice rather than to the order as a whole. In such cases, the [discretionary sales
surtax limitation] should apply to the entire order if [taxpayer] were to place a written shipment date on the order
acknowledgement form.
In no event should the Five Thousand Dollar [discretionary sales surtax limitation] apply only to a single line item on
an invoice.
APPLICABLE STATUTES AND RULES
Subparagraph 212.054(2)(b)1., F.S., provides, in part:
The sales amount above $xx on any item of tangible personal property shall not be subject to the surtax. ... For
purposes of administering the $xx limitation on an item of tangible personal property, if two or more taxable items of
tangible personal property are sold to the same purchaser at the same time and, under generally accepted business
practice or industry standards or usage, are normally sold in bulk or are items that, when assembled, comprise a
working unit or part of a working unit, such items must be considered a single item for purposes of the $xx limitation
when supported by a charge ticket, sales slip, invoice, or other tangible evidence of a single sale or rental.

Rule paragraphs 12A-15.004(3)(a),(b), and (c), F.A.C., provide, in part:
(3) When multiple items of tangible personal property are sold by a dealer to the same purchaser at the same time,
the $xx limitation applies when the sale or purchase is a single sale that meets the requirements of paragraph (a) and
is a sale of items normally sold in bulk or items that comprise a working unit, or a part of a working unit, that meets the
requirements of paragraph (b).
(a) SINGLE SALE. The sale or purchase of multiple items of tangible personal property must be a single sale in which
the purchaser buys all items of tangible personal property from the dealer at the same time.

1. There must be an invoice, sales slip, charge ticket, written purchase order or agreement, or other tangible evidence
   of sale that establishes the items were sold in a single sale
2. A single sale of items of tangible personal property that is documented by a written purchase order or written
   agreement executed between a purchaser and the selling dealer must:
   a. Provide for a specific quantity of tangible personal property; and
   b. If delivery of all items does not occur at the same time, provide for a specific time period within which delivery of the
   tangible personal property to the purchaser must be made.

(b) ITEMS NORMALLY SOLD IN BULK OR ITEMS THAT COMPRISE A WORKING UNIT. A single sale must be a
sale of items of tangible personal property that meets at least one of the following conditions:
1. The items are multiple quantities of a single item that the dealer normally sells in multiple quantities in the normal
course of the dealer’s business or that the purchaser normally buys in multiple quantities in the normal course of the
purchaser’s business;
2. The items are normally sold as a set or a unit and the utility of each for its intended purposes is dependent on the
set being complete;
3. The items are normally sold in [a] single sale by the seller to the purchaser for use in the normal business practice
of the purchaser as an integrated unit; or
4. The items are component parts that have no utility unless assembled with each other to form a working unit or part
of a working unit.
(c) MULTIPLE ITEMS OF TANGIBLE PERSONAL PROPERTY IN A SINGLE SALE.
Multiple items of tangible personal property sold or purchased under a single sales transaction that are not normally
sold in bulk or that, when assembled, will not comprise a working unit, part of a working unit, or comprise an integrated

unit to be used in the purchaser's normal business practice, cannot be aggregated into a single sale for purposes of
the surtax limitation.
DISCUSSION
Under section 212.054(2)(a), F.S., the basic principle in applying discretionary sales surtaxes is that they piggyback
the state sales and use tax. If a transaction is subject to sales tax and occurs at a location where surtax is imposed,
the surtax also applies. The surtax is imposed on all transactions that are subject to sales tax, and it is not limited to
sales of tangible personal property. Section 212.054(2)(b), F.S., limits application of that principle when there is a sale
of an item of tangible personal property for over $xx. The surtax in that case applies only to the first $xx.
Subparagraph (b)1. of the statute then sets out very specific circumstances in which more than one item can be
aggregated for purposes of application of the surtax.
The statute requires application of the $xx limitation on an item-by-item basis, except for very specific circumstances
when multiple items will be viewed as a single item. In order for the exception to apply, two tests must be satisfied.
There must be a single sale in which one purchaser buys all the items at the same time, with a purchase order or
other documentary evidence that there has been such a single transaction. Second, the multiple items reflected on
that documentation will be aggregated for purposes of applying the $xx limitation only if they fall into one of two
categories. They must either be items that are normally sold in bulk, or they must be items that will be assembled into
a working unit or a part of one.
I. Single Sale Test
Items that meet the bulk sale/working unit test cannot be aggregated if they are not purchased in a single sale. For
example, a xxx contractor may not aggregate a separate purchase of xxx, purchased in June with a separate
purchase of xxx purchased in July, even if that contractor ordinarily purchases xxx in bulk. Those purchases do not
meet the single sale test, as they were not ordered or purchased at the same time. The single sale requirement
addresses the character of the transaction itself, whether there has been one discrete transaction to which the
limitation can be applied or multiple sales that are separately subject to the limitation. Meeting this requirement is a
matter of documenting that there was one buyer, one seller, and that the agreement to buy and sell occurred at the
same time as to all of the items involved. Please note that when a purchase order/contract exists, it is controlling.
II. Bulk Sale/Working Unit Test
Items cannot be aggregated solely because they are purchased in a single sale. The bulk sale/working unit test must
also be met. This requirement addresses the character of the items purchased. Items may be viewed as a single item
only if they are items that fall within one of two categories. The category of items usually sold in bulk encompasses
multiple quantities of items ordinarily sold in such quantities rather than one at a time. This applies, for example, to
wall studs purchased by a carpenter or circuit breakers purchased by an electrician. The category of items usually
assembled into a working unit addresses items that are commonly purchased together because their utility is
dependent upon their assembly into some larger unit. An example of the working unit concept would be a purchase of
sheet metal, screws, tape, and sealant by an air conditioning contractor to construct a ductwork system. Multiple items

meeting the single sale test may not necessarily qualify for the $xx discretionary sales surtax limitation. They must
also meet the bulk sale/working unit test.
CONCLUSION
There are several factors to consider when determining where the discretionary sales surtax limitation applies. First,
we must determine if the items are sold in a "single sale." One of the specific indications of a "single sale" is the
existence of a written purchase order or other written evidence of a single sale. This written evidence must provide for
a specific quantity of tangible personal property and, if delivery of all items does not occur at the same time, provide
for a specific time period within which delivery of the tangible personal property to the purchaser must be made.
The taxpayer's paperwork is sufficient to meet the written evidence part of the single sales test. The written evidence
also meets the specific quantity requirement; however sales such as those demonstrated in Exhibit # 4, wherein
delivery of all of the items does not occur at the same time, do not meet the specific time period requirement. With
sales such as those evidenced in Exhibits # 1, 2, and 3, wherein the entire order is shipped and billed on a single
invoice, the discretionary sales surtax limitation will apply once to the entire invoice. As the paperwork for sales, as
demonstrated by Exhibit #4 to Customer 4, does not include a specific time period in which delivery occurs, it
therefore, fails to meet the single sale test. Each delivery and subsequent invoice will be treated as a separate sale
and the $5,000 limitation will apply to each invoice.
Next for consideration is the bulk sale or working unit test. Items cannot be aggregated solely because they are
purchased in a single sale. Items of tangible personal property may be viewed as a single item only if they are items
that fall within one of two categories; they must be items either usually sold in bulk or usually assembled into a
working unit. To meet the bulk sale test, there must be more than one item of tangible personal property sold. Clearly,
the evidence produced in all of the exhibits included with your request demonstrates that it is the taxpayers practice to
sell in bulk, thus meeting the requirement of a bulk sale.
If the taxpayer or the taxpayer's clients indicate on the purchase order, contract, or other written documentation of the
sale a specific delivery date within which delivery of the tangible personal property will be made, then that purchase
order, contract, or other written evidence becomes the controlling document, and the discretionary sales surtax
limitation would apply to the entire sale.
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 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,
Jimmy Kalfas
Senior Tax Specialist
Technical Assistance and Dispute Resolution
(850) 922-4845
Record ID# 22292