Under a lump-sum sale-and-installation contract, were plantation shutters taxable to the customer as tangible property or to the installer as real-property materials?

Plain-English summary

A retailer measured windows, ordered custom plantation shutters, and installed them under one lump-sum price covering materials, labor, and installation. The shutter frames were permanently attached to the building's window jambs, although the shutter panels could later be removed temporarily.

Florida treated the installed shutters as improvements to real property. Unlike blinds or shades that merely rest in attached brackets, plantation shutters were directly screwed or bolted into the wall or window frame.

The installer therefore was the ultimate consumer of the shutters and supplies. It had to pay tax to its wholesale manufacturer and other suppliers, but did not charge sales tax to the customer on the lump-sum furnishing-and-installation contract.

What this means for you

Contract form and attachment method matter. This ruling addressed a lump-sum contract and permanently attached frames; a retail sale plus separate installation or a materially different mounting method requires its own analysis.

Common questions

Who paid sales tax? The installer paid tax on its material purchases.

Did the customer pay sales tax on the lump-sum invoice? No.

Why were shutters different from blinds and shades? The shutter frames were directly and permanently attached to the building.

Citations and references

• Fla. Stat. § 212.06(14) (real property and fixtures)
• Fla. Admin. Code r. 12A-1.051(4) and (18) (lump-sum contractors and blinds/shades distinction)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 08A-012

Original ruling text

SUMMARY

QUESTION:
Should Taxpayer pay sales tax to its wholesale manufacturer on the price of the shutters as they
are an improvement to real property or should Taxpayer charge sales tax to its customers for the
sale of tangible personal property?
ANSWER:
A lump sum contract for the sale and installation of plantation shutters is a contract for the
improvement to real property. Taxpayer should charge no tax to its customers for furnishing and
installing plantation shutters. Taxpayer should pay tax on its purchases of materials and supplies
used in furnishing and installing plantation shutters.

May 1, 2008

XXX

Re:

Technical Assistance Advisement 08A-012
Sales and Use Tax – Plantation Shutters
Section: 212.06, Florida Statutes (F.S.)
Rule: 12A-1.051, Florida Administrative Code (F.A.C.)
Petitioner: XXX

Dear XXX:
This letter is a response to your petition dated January 29, 2008, 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, F.A.C. This response to your request constitutes
a TAA and is issued to you under the authority of s. 213.22, F.S.
FACTS

Technical Assistance Advisement
Page 2

1.
2.

3.

4.
5.
6.

7.

Taxpayer is a retail seller and installer of decorative “Interior Light
Control Shutters”.
Taxpayer maintains showrooms where the customer may view displayed
shutters and sample books in order to select their desired internal light
control shutters.
Once the customer selects their style of shutters, Taxpayer visits the
building at which the customer wants the shutters installed. Taxpayer
takes measurements of the window jams where shutters will be installed.
Taxpayer and customer agree to a total price to include all materials, labor
and installation costs.
Taxpayer places an order for the shutters from its wholesale manufacturer.
The manufacturer invoices Taxpayer for its price of the shutters.
Taxpayer receives the shutters from the manufacturer and installs the
shutters to the customer’s building by attaching the shutter frames to the
interior window jams of the customer’s building. It should be noted that
the shutter frame is permanently attached to the building’s window jam,
but the shutters may be temporarily removed from their frame should the
customer desire.

Taxpayer invoices its customer for the total agreed upon price.
REQUESTED ADVISEMENTS

You have asked advice regarding the following:
Should Taxpayer pay sales tax to its wholesale manufacturer on [the] price of the
shutters as they are an improvement to real property or should Taxpayer charge sales
tax to its customers for the sale of tangible personal property?
ANALYSIS and DISCUSSION
Section 212.06(14), Florida Statutes, provides guidance in determining whether a person is
making improvements to real property by defining certain terms, and it states in pertinent part as
follows:
(a) "Real property" means the land and improvements thereto and fixtures and is
synonymous with the terms "realty" and "real estate."
(b) "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

Technical Assistance Advisement
Page 3

permanently attached to realty. However, the term does not include the following items,
whether or not such items are attached to real property in a permanent manner: property
of a type that is required to be registered, licensed, titled, or documented by this state or
by the United States Government, including, but not limited to, mobile homes, except
mobile homes assessed as real property, or industrial machinery or equipment. For
purposes of this paragraph, industrial machinery or equipment is not limited to machinery
and equipment used to manufacture, process, compound, or produce tangible personal
property. For an item to be considered a fixture, it is not necessary that the owner of the
item also own the real property to which it is attached. . . .
Rule 12A-1.051, Florida Administrative Code, provides guidance to persons making
improvements to real property. Rule 12A-1.051(18), Florida Administrative Code, specifically
excludes blinds and shades from being classed as improvements to real property. However,
blinds and shades differ from plantation shutters in one significant aspect: blinds and shades are
not attached in any manner to the real property. They rest in brackets; even though the brackets
are screwed or bolted into the wall or window frame, the minimal value of the bracket does not
make the blinds and shades into improvements to real property.
Plantation shutters, on the other hand, are directly screwed or bolted into the wall or window
frame, and they are properly classified as improvements to real property. Rule 12A-1.051(4),
Florida Administrative Code, outlines the tax requirements of lump sum and similar contracts for
the improvement to real property, such as those used by Taxpayer, and it states as follows:
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 [lump sum] contracts
. . . 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. 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. (Emphasis Supplied)
RESPONSE
A lump sum contract for the sale and installation of plantation shutters is a contract for the
improvement to real property. Taxpayer should charge no tax to its customers for furnishing and

Technical Assistance Advisement
Page 4

installing plantation shutters. Taxpayer should pay tax on its purchases of materials and supplies
used in furnishing and installing plantation shutters.
CONCLUDING STATEMENT
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 10 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 850-488-8026.
Kind Regards,

Alan R. Fulton
Tax Law Specialist
Technical Assistance & Dispute Resolution
ARF\bb
Record ID:

41370