Were a landlord's bundled after-hours HVAC charges taxable as commercial rent when the utility portion was not separately stated?

Plain-English summary

A commercial-office landlord charged tenants an hourly, per-zone amount for HVAC outside ordinary business hours. The charge included estimated electricity plus other costs, and the lease treated it as additional rent required to avoid default. The landlord said the utility portion was passed through without markup.

Florida found the entire charge taxable because the utility pass-through exception's requirements were not met. The landlord proved that it paid sales tax to the utility, but its invoices showed only a lump-sum after-hours charge. It neither separately stated the electricity component nor provided evidence that the tenant's utility charge was at the same or a lower price than the utility billed the landlord.

A detailed year-end reconciliation could potentially satisfy separate statement if it broke out the various cost components and specifically listed the electric utility cost. No such statement was being provided here, so a refund of tax previously paid was not appropriate.

What this means for you

Calling part of an additional-rent charge a utility reimbursement does not automatically make it exempt. Florida required proof of tax paid by the landlord, separate statement of the utility amount, and a pass-through price no greater than the landlord's cost.

Common questions

Why were the after-hours charges treated as rent? The lease required them as additional rent for continued occupancy and made nonpayment a default.

What three conditions applied to the utility exception? The landlord had to pay tax to the utility, separately state the tenant's utility charge, and bill it at the same or a lower price than the utility charged the landlord.

Which condition did the landlord satisfy? It documented that Florida sales tax had been paid to the utility provider.

Which conditions failed? The invoices did not separately state the electricity component, and the landlord did not prove that the tenant rate was no higher than the landlord's utility cost.

Could a year-end reconciliation work? Potentially, if it detailed the charge components and specifically broke out electric utility costs. The ruling says no such statement was provided here.

Citations and references

• Fla. Stat. § 212.031(1), (7) (commercial rent and utility pass-through exception)
• Fla. Stat. § 212.05(1)(e)1.c. (electrical power)
• Fla. Admin. Code r. 12A-1.070(4)(d), (e) (common-area and utility charges)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06A-043

Original ruling text

SUMMARY
QUESTION: Whether After Hours Usage Charges for utilities are subject to use and sales tax.
ANSWER - Based on Facts Below: Section 212.031(7), F.S., and Rule 12A-1.070(4)(e), F.A.C., provide that utility
charges paid for the right to occupy real property are subject to tax unless the following three requirements are met:
(1) the lessor must have already paid sales tax on the purchase of the utilities from the utility provider; (2) the utilities
billed by the lessor to the tenant must be separately stated on the lessor's invoice to the tenant; and (3) the utility
charges billed to the tenant must be at the same or lower price as that billed by the utility company to the lessor.
The Taxpayer has requested an advisement regarding the taxability of the utility portion of the After Hours Usage
Charges to provide electricity for heat, ventilation, and air conditioning ("HVAC"), where tax on such charges is paid by
the landlord to the utility provider and subsequently passed through to the tenants without a markup. The above
referenced exemption would apply to the After Hours Usage Charges if the three requirements are met. Under the
present circumstances, the requirements provided by Section 212.031(7), F.S., and Rule 12A-1.070(4)(e), F.A.C.,
have not been met. Although the Taxpayer provided a copy of a bill from its local utilities provider that demonstrated
that Florida sales tax had been paid, the monthly invoice that the Taxpayer provides to its tenants does not separately
state the portion of the After Hours Usage Charges that can be attributed to the utility charges. In addition, no
evidence has been provided to demonstrate that the utility charges passed through to the tenant are at the same or
lower rate than those charged to the Taxpayer by the utility provider. Consequently, the Taxpayer is not entitled to the
above referenced exemption.

December 14, 2006

Re Technical Assistance Advisement 06A-043
XX (the "Taxpayer")
FEIN: XX
XX (the "Tenant")
FEIN: XX
After-Hours Utility Charges
Sales and Use Tax
Sections 212.031 and 212.05, Florida Statutes ("F.S.")
Rule 12A-1.070, Florida Administrative Code ("F.A.C.")
Dear:
This response is in reply to your letter dated XX, requesting the Department's issuance of a Technical Assistance
Advisement ("TAA") pursuant to Section 213.22, F.S., and Rule Chapter 12-11, F.A.C., regarding the Department's
position on the taxability of After Hours Usage Charges for utilities passed through by the Taxpayer to its tenants. The

initial request provided the following: (1) an expedited handling request, (2) an excerpt from a lease, (3) a sample
invoice that the Taxpayer provides to its tenants, (4) a power of attorney, and a deletions copy. However, the request
did not meet the requirements for issuance of a TAA, because all of the documents relevant to the transaction were
not provided.
On XX, the Department received the following additional documents: (1) a complete copy of the Tenant's lease and
(2) a copy of the Taxpayer’s bill from the utility provider. In addition, in a telephone conversation on XX, the
Taxpayer's representative clarified that the invoice from the Taxpayer to the Tenant was a sample, but it exemplified
what all such invoices provided would look like. Therefore, the contents of the actual invoices would be the same with
respect to the information provided and the level of itemization of the charges. With the additional documents and
information provided, you have 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 After Hour Usage Charges for utilities are subject to use and sales tax.
Facts
The pertinent parts of your letter dated XX, provides the following:
... Taxpayer, a XX limited liability company, duly qualified to do business in the State of Florida... owns... certain real
property... located in Florida (the "Leased Premises"). The Property Manager of the Leased Premises is... duly
qualified to do business in the State of Florida... (the "Property Manager").... The Property Manager acts through its
sole General Partner... duly qualified to do business in the State of Florida (the "General Partner")....
The Leased Premises consists of approximately XX square feet of commercial office space. There are currently over
XX tenants leasing space from Landlord with respect to the Leased Premises. Each lease provides that the Landlord
is to provide heat, ventilation, air conditioning service ("HVAC") to the Leased Premises during specified days and
hours, generally Monday through Friday from 7:00 am to 7:00 pm and Saturday from 7:00 am to noon (except on
regular holidays), which services are provided as part of the base rental charges under said leases. The Landlord
pays all HVAC utility charges incurred with respect to the Leased Premises directly to the utility provider. In addition,
each lease provides each tenant with the right for after hours HVAC service... at a rate of $XX per hour, per zone with
a minimum of XX hours per occurrence ("After Hours Usage Charges").... The Landlord currently charges Florida
Sales and Use Tax and... County Discretionary Surtax in the aggregate amount of XX% on the total After Hours
Usage Charges, with respect to the Leased Premises.
Several of the tenants of the Leased Premises have expressed to the Landlord the opinion that the charging of Sales
and Use Tax on any After Hours Usage Charges for HVAC is improper and have requested that the Landlord cease
charging Sales and Use Tax on all such After Hours Usage Charges. In addition, certain tenants have requested that
the Landlord seek refunds of any overpayments of Sales and Use Tax and return any such refunded amounts to the
tenants. Certain tenants have also refused to pay any After Hours Usage Charges until a determination is made with

respect to the applicability of Sales and Use Tax to said After Hours Usage Charges.
The After Hours Usage Charges charged by the Landlord for HVAC under the leases is intended to pass through to
the tenant the utility charges actually paid by Landlord to the utility provider, without any mark-up, based upon
Landlord's estimate of the actual cost to Landlord to provide such utility services. In addition to the utility costs, the
After Hour Usage Charges includes Landlord's estimate of the cost of XX XX, XX facilities, XX, XX and XX XX
incurred by Landlord to provide such after hours usage for the Leased Premises. Pursuant to the terms of Landlord's
leases with its tenants, Landlord has the right to adjust the After Hours Usage Charges if Landlord's actual cost to
provide the after hour usage to its tenants is higher than the per hour estimate provided in any lease.
The lease between the Landlord and Tenant, provides for the use of a portion of XX consisting of XX rentable square
feet of office space. The pertinent articles of the lease provide the following:

1. PRINCIPAL DEFINED TERMS.

Operating Expenses: "Base Year": XX
"Proportionate Share": XX%

5. RENT. As used herein, the term "Rent" shall mean Base Rent, plus Additional Rent to be paid in accordance with
   subsection b below and Lease Addendum Number One, plus all other amounts, is any, required to be paid by Tenant
   to Landlord under this Lease.
   a. Base Rent. Tenant shall pay to Landlord Base Rent, on or before the first day of each calendar month during the
   Term, without previous demand or notice therefor by Landlord and without set off or deduction, at the Rent Payment
   address set forth in Section 1, or at such other place as Landlord from time to time designates in writing.
   b. Additional Rent. In addition to Base Rent, Tenant shall pay Additional Rent in accordance with Lease Addendum
   Number One attached hereto.
   c. Sales and Use Tax. In addition to the Base Rent, Additional Rent and any other sums or charges provided herein,
   Tenant shall pay all applicable sales, rental or other excise taxes (but not net income tax) from time to time imposed
   on Landlord in connection with all Rent payable by Tenant.
6. SERVICES BY LANDLORD.
   a. Landlord's Rights and Obligations. Landlord shall cause to be furnished to the Building, or as applicable, the
   Premises, in common with other tenants, during business hours of 7:00 A.M. to 7:00 P.M. Monday through Friday, and
   Saturday from 7:00 A.M. to 12:00 noon... ("Ordinary Business Hours"), the following services: ... heating and air
   conditioning for the reasonably comfortable use and occupancy of the Premises.... Landlord shall furnish the Premises

with electricity for the maintenance of Building standard fluorescent lighting composed of 2' x 4' fixtures.... Landlord
shall also furnish the Premises with electricity for lighting for the Building standard fluorescent lighting and for the
operation of general office machines.... After hours heating and air conditioning is available at a charge of $XX per
hour, per zone, with a minimum of XX hours per occurrence. After hours charges are subject to change throughout the
Term based on actual increases in costs for materials, additional wear and tear on equipment, utilities costs and labor
(including fringe and overhead costs) as determined by Landlord's engineers.... All additional costs resulting from
Tenant's extraordinary usage of heating, air conditioning or electricity shall be paid by Tenant upon demand as
Additional Rent for each month or portion thereof.... If heat generating machines or other intensive activities shall be
used or carried on in the Premises by Tenant which affect the temperature otherwise maintained by the heating and
air conditioning system, Landlord shall have the right to install supplemental air conditioning units in the Premises and
the cost thereof, including the cost of engineering and installation, and the cost of operation and maintenance thereof,
shall be paid by Tenant upon demand by Landlord.... There shall be no abatement of reduction of Rent by reason of
any of the foregoing services not being continuously provided by Tenant.

14. DEFAULT.
    a. Tenant's Default. It shall be an event of default by Tenant ("Event of Default") if:
    i. Tenant fails to pay when due any Base Rent, Additional Rent, or any other sum of money which Tenant is obligated
    to pay, as provided in this Lease....

The pertinent articles of Lease Addendum Number One provide the following:
... In the event of any conflict between the terms and provisions of the Lease and the terms and provisions of this
Addendum, the terms and provisions of this Addendum shall control....

1. Additional Rent. All amounts payable pursuant to this Addendum Number One shall be paid as additional Rent
   ("Additional Rent") as herein provided.
2. Definitions. The Additional terms below have the following meanings in this Lease:
   a. "Base Operating Expenses" means an amount equal to the Operating Expenses for the calendar year identified as
   the Base Year in Section 1 of this Lease....

d. "Tenant's Proportionate Share" means the percentage set forth in Section 1 of this Lease....

***
f. "Operating Expenses" means all operating expenses of any kind or nature which are in Landlord’s reasonable
judgment necessary, appropriate, or customarily incurred in connection with the operation and maintenance of the
Building and the Building Complex. Operating expenses include:...
iii. Costs of energy including... natural gas,... electricity....

4. Estimated Payments. During each Operating Expense Year beginning with the first month of the second
   Operating Expense Year and continuing each month thereafter throughout the Term, Tenant shall pay Landlord, at the
   same time as Base Rent is paid, an amount equal to XX of Landlord's estimate of Tenant's Proportionare Share of any
   projected increases in Operating Expenses for the particular Operating Expense Year in excess of Base Operating
   Expenses ("Estimated Payment").
5. Annual Adjustments.
   a. Following the end of each Operating Expense Year, including the first Operating Expense Year, Landlord shall
   submit to Tenant a statement setting forth the exact amount of Tenant's Proportionate Share of the increase, if any, of
   the Operating Expenses for the Operating Expense Year just completed over the Base Operating Expenses.
   Beginning with the statement for the second Operating Expenses Year, each statement shall set forth the difference, if
   any, between Tenant's actual Proportionate Share of the increase in Operating Expenses for the Operating Expense
   Year just completed and the estimated amount for such Operating Expense Year. Each statement shall also set forth
   the projected increase, if any, in Operating Expenses for the new Operating Expense Year over Base Operating
   Expenses and the corresponding increase or decrease in Tenant's monthly Rent for such new Operating Expense
   Year above or below the Rent paid by Tenant for the immediately preceding Operating Expense Year.
   b. To the extent that Tenant's Proportionate Share of the increase in Operating Expenses for the period covered by a
   statement is different from the Estimated Payment during the Operating Expense Year just completed, Tenant shall
   pay Landlord the difference within XX days following receipt by Tenant of the statement or receive a credit against the
   next due Rent, as the case may be. Until Tenant receives a statement, Tenant's Estimated Payment for the new
   Operating Expense Year shall continue to be paid at the prior Estimated Payment, but Tenant shall commence
   payment of Rent based on the new Estimated Payment beginning on the first day of the month following the month in
   which Tenant receives the statement. Tenant shall also pay Landlord or deduct from the Rent, as the case may be, on
   the date required for the first payment, as adjusted, the difference, if any, between the Estimated Payment for the new
   Operating Expense Year set forth in the statement and the Estimated Payment actually paid during the new Operating
   Expense Year. If, during any Operating Expense Year, there is a change in the information on which Tenant is then
   making its Estimated Payments so that the prior estimate is no longer accurate, Landlord may revise the estimate and
   there shall be such adjustments made in the monthly Rent on the first day of the month following notice to Tenant as
   shall be necessary by either increasing or decreasing, as the case may be, the amount of monthly Rent then being

paid by Tenant for the balance of the Operating Expense Year.
TAXPAYER'S POSITION
The pertinent portion of the Taxpayer's letter of XX, provides the following:
Landlord requests a ruling be made on the Florida Sales and Use Tax consequences of the After Hours Usage
Charges charged by Landlord to its tenants for the Leased Premises....
In support of this position, the Taxpayer cites the pertinent paragraphs of Section 212.031, F.S., providing that leasing
real property is subject to tax at a rate of 6 percent of the total rent or license fee; and, the provision of Rule 12A1.070, F.A.C., which provides an exemption for utility payments passed through by the landlord to the tenant if certain
requirements are met. In addition, the Taxpayer cites Omni International of Miami, Ltd. v. Department of Banking and
Finance, 444 So.2d 540 (Fla. 3rd DCA 1984). The Taxpayer further cites TAA 96A-030 (April 29, 1996), and
concludes that Rule 12A-1.070(4)(e), F.A.C., and Omni apply to utility charges passed through to the tenant as a
portion of common area maintenance charges under a lease if the landlord provides the tenant a year end statement
which details various cost components of the charge and which specifically breaks out as a line item the portion of the
charges resulting from the electric utility costs. The Taxpayer further provides that the same TAA cited allows the
landlord to charge its tenants based on the prior year’s cost estimate as long as a year end reconciliation statement is
provided, and that such a practice does not taint the non-taxable nature of the pass through electric utility charges.
The Taxpayer provides the following analysis in support of its position:
The intent of Landlord's After Hours Usage Charges is to pass through to the tenant the actual cost incurred by
Landlord to provide such after hours usage and services, a component of which consists of HVAC utility charges. The
After Hours Usage Charges are Landlord's estimate of the actual charges incurred by Landlord to provide said after
hour usage of the Leased Premises. Landlord is of the opinion that the methodology behind the After Hours Usage
Charges (i.e. the per hour per zone charge for after hours usage) would not taint or compromise the non-taxable
nature of the portion of the After Hours Usage Charge attributable to HVAC electric utility charges. However,
Landlord’s invoices for the After Hours Usage Charges do not itemize the HVAC utility costs, nor does Landlord
provide any tenant a year end statement reconciling the After Hours Usage Charges paid by each tenant with the
actual costs incurred by Landlord to provide the after hours usage of the Leased Premises, including the actual cost
for the HVAC utility charges.

APPLICABLE STATUTES AND RULES
Section 212.031, F.S., provides, in pertinent part, the following:
(1)(a) It is declared to be 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....

***
(c) For the exercise of such privilege, a tax is levied in an amount equal to 6 percent of and on the total rent or license
fee charged for such real property by the person charging or collecting the rental or license fee. The total rent or
license fee charged for such real property shall include payments for the granting of a privilege to use or occupy real
property for any purpose and shall include base rent, percentage rents, or similar charges....
(d) When the rental or license fee of any such real property is paid by ways of property, goods, wares, merchandise,
services, or other thing of value, the tax shall be at the rate of 6 percent of the value of the property, goods, wares,
merchandise, services, or other thing of value.

(7) Utility charges subject to sales tax which are paid by a tenant to the lessor and which are part of a payment for the
privilege or right to use or occupy real property are exempt from tax if the lessor has paid sales tax on the purchase of
such utilities and the charges billed by the lessor to the tenant are separately stated and at the same or a lower price
than those paid by the lessor.
Section 212.05(1)(e)1.c., F.S., provides, in pertinent part, the following:
It is hereby declared to be the legislative intent that every person is exercising a taxable privilege who engages in the
business of selling tangible personal property at retail in this state, including the business of making mail order sales,
or who rents or furnishes any of the things or services taxable under this chapter, or who stores for use or
consumption in this state any item or article of tangible personal property as defined herein and who leases or rents
such property within the state.
(1) For the exercise of such privilege, a tax is levied on each taxable transaction or incident, which tax is due and
payable as follows:
(e)1. At the rate of 6 percent on charges for:
c. Electrical power or energy, except that the tax rate for charges for electrical power or energy is 7 percent.
Rule 12A-1.070, F.A.C., provides, in pertinent part, the following:
(4)(a) The tenant or person actually occupying, using, or entitled to use any real property from which rental or license
fee is subject to taxation under Section 212.031, F.S., shall pay the tax to his immediate landlord or other person
granting the right to such tenant or person to occupy or use such real property.
(b) The tax shall be paid at the rate of 5 percent prior to February 1, 1988, and 6 percent on or after February 1, 1988,
on all considerations due and payable by the tenant or other person actually occupying, using, or entitled to use any
real property to his landlord or other person for the privilege of use, occupancy, or the right to use or occupy any real
property for any purpose.

***
(d) Common area maintenance charges paid by a tenant to the lessor for the privilege or right to use or occupy real
property are taxable.
(e) Utility charges paid by a tenant to the lessor for the privilege or right to use or occupy real property are taxable,
unless the lessor has paid the sales tax to the utility company on such utilities consumed by the tenant, and the
utilities billed by the lessor to the tenant are separately stated on the lessor's invoice to the tenant at the same or
lower price as that billed by the utility company to the lessor....
DISCUSSION
You have requested an advisement regarding the taxability of After Hours Usage Charges to provide electricity for
heat, ventilation, and air conditioning ("HVAC"), where tax on such charges is paid by the landlord to the utility
provider and subsequently passed through to the tenants without a markup.
Every person who engages in the business of selling tangible personal property at retail in this state is exercising a
taxable privilege. See generally Section 212.05, F.S. The sale of electrical power or energy is subject to tax at a rate
of 7 percent. See Section 212.05(1)(e)1.c., F.S. The initial purchase of electrical power by the landlord from the utility
company constitutes such a purchase. When such charges and the appropriate sales tax, paid by the landlord, are
passed through to the tenant and are required to be paid as "additional rent" in a lease, the nature of the transaction
changes from a sale of tangible personal property to a lease requirement that must be complied with for the right to
use or occupy real property. The taxable consequences of leasing real property are addressed in Section 212.031,
F.S. This Section is further interpreted by Rule 12A-1.070, F.A.C.
The Florida Statutes generally provide that every person engaging in the business of renting, leasing, letting, or
granting a license to use real property is exercising a taxable privilege. See Section 212.031(1)(a), F.S. This privilege
is taxable at a rate of 6 percent of the total rent charged for the use of the property, which may include base rent,
percentage rents, or similar charges. See Section 212.031(1)(c), F.S. This tax rate is applicable to "all considerations
due and payable by the tenant" as a requirement of occupancy. See Rule 12A-1.070(4)(b), F.A.C.
As a general rule, charges for utilities or common area maintenance that must be paid as "additional rent" by the
tenant to the landlord for the right or privilege to use or occupy real property are subject to tax. See Rule 12A1.070(4)(d) and (e), F.A.C. However, Section 212.031(7), F.S., and Rule 12A-1.070(4)(e), F.A.C., provide an
exemption for such charges under certain circumstances. In order for pass through charges for electricity to be
exempt, the following three requirements must be met: (1) the lessor must have already paid sales tax on the
purchase of the utilities from the utility provider, (2) the utilities billed by the lessor to the tenant must be separately
stated on the lessor's invoice to the tenant, and (3) the utility charges billed to the tenant must be at the same or lower
price as that billed by the utility company to the lessor. See Section 212.031(7), F.S., and Rule 12A-1.070(4)(e),
F.A.C.
Although Rule 12A-1.070(4)(d), F.A.C., provides that common area maintenance charges ("CAM" charges) paid by
the tenant for the right or privilege to use or occupy real property are subject to tax, it has been determined by the

Department that the portion of CAM charges attributable to the landlord’s pass through of electric utility costs may be
exempt if the requirements set out by Section 212.031(7), F.S., and Rule 12A-1.070(4)(e), F.A.C., are met.
In the present case, the After Hours Usage Charges are similar to CAM charges because they include the cost of
electricity for after hour HVAC as well as charges "such as the landlord's estimate of the cost of common areas,
parking facilities, security, depreciation and general administration incurred by landlord to provide such after hour
usage for the Leased Premises." In other words, the After Hours Usage Charges consist of utility charges relating to
HVAC, as well as other common area maintenance charges that do not relate to utilities. Of the different components
that make up the After Hour Usage Charges, only the electricity charges for HVAC are subject to the statutory
exemption.
Article 5 of the Lease provides that "rent" includes base rent and additional rent. Article 6 provides, "[a]ll additional
costs resulting from tenant's extraordinary usage of heating, air conditioning, or electricity shall be paid by tenant upon
demand as [a]dditional [r]ent for each month or portion thereof...." Article 14.a.i. provides that the tenant is in default if
the tenant fails to pay when due any base rent, additional rent, or any other sum of money which the tenant is
obligated to pay under the lease. Consequently, the After Hours Usage Charges, including the utility charges, are
required to be paid by the tenant as a condition of occupancy under the lease; otherwise, the tenant would be in
default under Article 14.
It has already been established that the utility charges passed through to the tenant as part of the After Hours Usage
Charges are subject to tax as additional rent under Articles 5 and 6 of the lease. In order to determine whether these
utility charges are exempt from sales tax, it is necessary to apply the three provisions referenced in Section 212.031,
F.S., and Rule 12A-1.070, F.A.C. The first requirement that must be established is that the lessor has paid the sales
tax to the utility provider on such utilities consumed by the tenant. The Taxpayer has provided a copy of its XX bill
from its local utilities provider. Page 2 of the bill demonstrates that Florida sales tax was paid by the Taxpayer to the
utilities provider.
The second requirement that must be established is that the utilities billed by the lessor to the tenant, in this case as
part of the After Hours Usage Charges, are separately stated on the lessor's invoice to the tenant. Exhibit B of the
Technical Assistance Advisement Request provides a sample of an invoice that the Taxpayer provides to its tenants.
The invoice does not separately state the portion of the After Hours Usage Charges that can be attributed to the utility
charges. The invoice simply states a lump sum total for the After Hours Usage Charges for a two-month period, and
the applicable sales tax based on that lump sum.
Instead of separately stating the pass through utility charges in the monthly statement to the tenant, the second
requirement can also be satisfied by providing a year end reconciliation statement to the tenant. The tenant's After
Hours Usage Charges can be based on an estimate that is determined based on the prior year’s expenses. A year
end statement must be provided to reconcile any difference between the estimated costs on which the tenant's
periodic payments are based and the actual cost paid by the Taxpayer for the tenant's after hours usage. However, in
order for this reconciliation statement to satisfy the "separately stated" requirement for the utilities exemption, the
statement must detail the various cost components of the After Hours Usage Charges and specifically break out as a
line item the portion of the After Hours Usage Charges resulting from electric utility costs incurred by the Taxpayer. In

the present case, Article 4 of Addendum Number One requires the tenant to pay to the Taxpayer an estimated amount
of the tenant's proportionate share of the operating expenses on a monthly basis. Article 5a proposes to provide the
tenant with a year end statement reconciling the tenant's actual proportionate share with the estimated amount that
was paid throughout the year. The reconciliation statement to be provided in accordance with this provision has not
been provided by the Taxpayer. The commencement date of the lease is in XX; therefore, the base year has not come
to an end. Presumably, since the operating expenses for the base year have not been fully assessed, the year end
statement has not yet been provided to the tenants. Therefore, a conclusive determination cannot be made as to this
requirement of the exemption until such a statement is provided, and the Department is able to assess whether the
"separately stated" requirement has been met. However, according to the Taxpayer's letter, a year end statement is
not being provided to the tenants. In this case, based on the periodic invoices from the Taxpayer to the tenant, the
"separately stated" requirement has not been met.
The final requirement provides that the utility charges billed to the tenant must be at the same or lower price as that
billed by the utility company to the landlord. The Taxpayer is charging the tenant for the After Hours Usage Charges at
a rate of $XX per hour per zone (with a XX hour minimum). However, because the Taxpayer does not separately state
the utility charges passed through to the tenant on the tenant's invoice, it is not possible to assess which portion of the
After Hours Usage Charges pertains to utilities. Therefore, there is no way of determining whether the charges billed
to the tenant are at the same or lower price as that billed by the utility company to the landlord.
CONCLUSION
In conclusion, based on the facts provided, the After Hours Usage Charges, including the utility charges, would be
subject to tax, since the requirements for the exemption under Section 212.031, F.S., and Rule 12A-1.070, F.A.C.,
have not been met. Therefore, a refund of tax previously paid would not be appropriate.
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 Section 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) 922-4839.
Sincerely,

Melissa Soriano
Attorney
Technical Assistance & Dispute Resolution
Record ID: 24281