Should a locksmith separately charge Florida sales tax for replacing and rekeying permanently installed door locks?

Plain-English summary

A locksmith replaced locks, rekeyed locks, installed a sliding-door lock, and charged sales tax as a separate line on the full invoice. Florida treated the work as an improvement to real property under the facts presented.

The invoice was a time-and-materials real-property contract. The contractor should have paid or accrued tax on the materials it used, but should not have separately charged sales tax to the customer. The material-tax cost could be included in the overall contract price.

What this means for you

For installed lock work classified as a real-property improvement, the contractor is the consumer of the materials. Itemizing hardware and labor does not turn the job into a retail sale plus installation.

Common questions

Was replacing and rekeying these door locks a taxable retail sale to the customer? No. The ruling classified the job as a real-property improvement.

Who owed tax on the lock materials? The contractor, on its purchase or use of the materials.

Could the contractor show tax as a separate invoice line? No, not for the contract described.

Citations and references

• Fla. Stat. § 212.05 (sales of tangible personal property)
• Fla. Stat. § 212.06(14)(b) (fixtures)
• Fla. Admin. Code r. 12A-1.051(3)(e), (4), and (17)(k) (time-and-materials contracts, contractor tax, and door installation or repair)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 07A-045

Original ruling text

SUMMARY
QUESTION: Is the installation of door locks subject to tax?
ANSWER: The replacement and rekeying of the door locks described in your correspondence are
properly classed as improvements to real property.

December 19, 2007

Re:

Technical Assistance Advisement 07A-045
Sales and Use Tax – Lock Installation
Sections: 212.05, 212.06, F.S.
Rules: 12A-1.051, F.A.C.
Petitioner: XXX (herein “Taxpayer”)
Vendor: XXX
FEI: XXX

Dear
This letter is a response to your petition for the Department’s issuance of a Technical Assistance
Advisement (“TAA”) concerning the above referenced party and matter. Your petition has been
carefully examined and the Department finds it to be in compliance with the requisite criteria set
forth in Chapter 12-11, Florida Administrative Code. This response to your request constitutes a
TAA and is issued to you under the authority of s. 213.22, Florida Statutes.
PRESENTED FACTS
Taxpayer’s correspondence sets forth the following information:
My friend was living in Spain for the summer. On the morning of July 2, 2007, she called
me from Spain asking for help. She believed that someone was living in her home, without
her knowledge or permission, and she wanted the locks to be changed. I contacted the []
Police Department for assistance in removing the suspected man and called a locksmith
listed in the Yellow Pages.
The company in question is [Vendor]. . . . Two of [its] employees changed the locks on the
door, rekeyed the locks and installed a slider lock on the sliding glass doors. Each lock was
itemized on the bill and sales tax was charged on the total amount.
1 deadbolt:
$125.00
1 knob set:
125.00
1 slider lock installed: 95.00
1 rekey:
25.00

Technical Assistance Advisement
Page 2

Service call:
Sub total:
Tax:
Total:

65.00
$435.00
28.28
$463.28
REQUESTED ADVISEMENT

Is the installation of door locks subject to tax?
APPLICABLE AUTHORITY
Section 212.05, Florida Statutes, imposes tax on the sale of tangible personal property.
Section 212.06(14), Florida Statutes, provides the pertinent definition to use in determining
whether a person is making improvements to real property, and it states in relevant part in
paragraph (b) as follows:
“Fixtures” means items that are an accessory to a building, other structure, or land and that
do not lose their identity as accessories when installed but that do become permanently
attached to realty. . . .
Rule 12A-1.051, Florida Administrative Code, provides in pertinent part as follows:
(3) Classification of contracts by pricing. The taxability of purchases and sales by real
property contractors is determined by the pricing arrangement in the contract. Contracts
generally fall into one of the following categories:

(e) Time and materials contracts. These are contracts in which the contractor or
subcontractor agrees to furnish materials and supplies and necessary services for a price that
will be calculated as the sum of the contractor's cost or a marked up cost for materials to be
used plus an amount for services to be based on the time spent performing the contract.
These contracts are similar to cost plus or fixed fee contracts, because the final price to the
property holder will be determined based on the cost of performance. A time and materials
contract may or may not also have a guaranteed or upset price clause. . . .
(4) General rule of taxability of real property contractors. Contractors are the ultimate
consumers of materials and supplies they use to perform real property contracts and must
pay tax on their costs of those materials and supplies, unless the contractor has entered a
retail sale plus installation contract. Contractors performing only contracts described in
paragraphs (3)(a), (b), (c), or (e) do not resell the tangible personal property used to the real
property owner but instead use the property themselves to provide the completed real
property improvement. Such contractors should pay tax to their suppliers on all purchases.
They should also pay tax on all materials they fabricate for their own use in performing
such contracts, as discussed in subsection (10). They should charge no tax to their
customers, regardless of whether they itemize charges for materials and labor in their
proposals or invoices, because they are not engaged in selling tangible personal property.

Technical Assistance Advisement
Page 3

Such contractors should not register as dealers unless they are required to remit tax on the
fabricated cost of items they fabricate to use in performing contracts.

(17) Specific activities classified as real property contracts. Contractors who are engaged in
the following activities are generally considered to be real property contractors, although
any particular job may be determined not to involve an improvement to real property:

(k) Door and window installation or on-site repair . . . . (Emphasis Supplied)
DISCUSSION AND RESPONSE
The replacement and rekeying of the door locks described in your correspondence are properly
classed as improvements to real property. The invoice provided with your correspondence
constitutes a time and materials contract. The contractor should not have charged tax as a separate
line item in any amount on the contract. Instead, it should have accrued tax on its purchases of the
materials that it used and installed in the performance of the contract. The tax should have been
included in the contract price, rather than separately stated.
This response constitutes a Technical Assistance Advisement under Section 213.22, Florida
Statutes, 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, Florida Statutes. Our response is
predicated upon 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, Florida Statutes, and are subject to disclosure to the public under the
conditions of s. 213.22, Florida Statutes. 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 10 days of the date of this
letter.
Sincerely,

Sara D. Faulkenberry
Senior Tax Specialist
Technical Assistance and Dispute Resolution
Control #37679