When are event staffing, security, cleanup, and similar charges taxable as rent for Florida arenas and other facilities?

Plain-English summary

Florida gave event facilities a practical dividing line for staffing, security, ticket-taking, cleanup, setup, and similar charges: if a promoter must pay the charge as a condition of occupying the venue, it is part of taxable rent. If the service is optional or the promoter may independently contract for it without affecting occupancy, it is not rent.

An all-inclusive facility contract generally made required services taxable because they were part of the total consideration for use of the property. Moving the facility's pass-through charges to a separate contract did not help when nonpayment would breach the lease or deny occupancy. Charges elected by the promoter, or direct contracts with outside service providers that were not occupancy conditions, remained outside rent.

For co-promoted events, the facility's share of proceeds was percentage rent. No tax was due when the event lost money and the facility received no consideration; tax applied to rental consideration received from profitable events, including required services. A facility self-promoting on its own property did not rent to itself because a lease or license requires two persons.

The ruling also rejected a general allocation of all-in charges. Under its reading of the statute, required service charges were rent, while reasonable allocation applied to separately stated payments for specified intrinsically valuable personal property such as trademarks or patents.

What this means for you

Venue contracts should clearly identify which services are mandatory, which are elective, who contracts with the provider, and what happens if a charge is not paid. Those contract rights—not simply a separate invoice—drive the rent analysis.

Common questions

Are separately billed facility services automatically nontaxable? No. Required pass-through charges can still be rent.

What if the promoter hires its own security or stagehands? A direct, nonrequired service contract is not consideration paid to rent the facility.

Does a self-promoted event create rent? No, because the facility is using its own property.

Citations and references

• Fla. Stat. §§ 212.02 and 212.031, and Fla. Admin. Code r. 12A-1.070, as quoted and discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 10A-014

Original ruling text

SUMMARY
This TAA is a comprehensive response to numerous questions posed to the Department
regarding sales tax and how it applies to charges for laborers, stagehands, ticket takers,
event staff, security personnel, cleaning staff, and other event-related personnel in
conjunction with the lease and license of real property by arenas, civic centers, and other
facilities that hold concerts, shows, sporting events, and other events.
April 7, 2010

Re:

Subject: Technical Assistance Advisement (TAA) 10A-014
Sales and Use Tax – Lease and License of Real Property
Section 212.031, Florida Statutes (F.S.)
Rule 12A-1.070, Florida Administrative Code (F.A.C.)
XX (“Association”)
FEI # XX

Dear XX:
The Department has agreed to consider this response to your request for technical review
and advice expressed in your letter dated January 12, 2010, to be a Technical Assistance
Advisement (TAA) pursuant to the provisions of section 213.22, Florida Statutes, and
Chapter 12-11, Florida Administrative Code. As such, it is intended to provide guidance
to the XX in Florida with reference to the specific questions presented and the specific
responses given. While the Department’s responses contained in this TAA will serve as
precedent to members of the Association for the specific transactions addressed and the
TAA is binding on the Department of Revenue until it is prospectively modified, this
TAA is not binding on any member of the Association or any other person.
Facts
The Association provided the following factual scenario in its request for Technical
Assistance. The Department will respond to the following circumstances involving an
agreement between a facility and a promoter:
For the purposes of this request for a TAA assume that the contracts used by the
member of [the Association] are all inclusive as to price charged to use the
facility. When a contract is entered into which is considered to be an “all in,”
contract, i.e., an all inclusive arrangement, it is generally understood that there is a
set fee for the use of the facility which includes staffing and other expense items not all of which are related to the use of the building, and in a co-promotion a
dollar amount or what percentage of the costs and proceeds will be borne by the
parties to the agreement. The amount to be paid to the talent may also be in the
agreement. Thus, the promoter of an event coming in to use a facility knows up
front what the total cost for putting on the event will be, regardless of whether the

Technical Assistance Advisement
Page 2 of 8
event is co-promoted and regardless of how many tickets are sold. This is so the
user(s), and in the case of co-promotions--the parties to the agreement, will know
what the total costs will be, regardless of how many tickets are sold, keeping in
mind that the more tickets that are sold the more personnel needed. As such, the
agreement may include, but is not limited to, references to rates (hourly per
person or in categories – “x” dollars if 60% of the tickets are sold or “y” dollars if
75% of the tickets are sold, etc., based on the type of service). This “all in”
arrangement generally includes the costs to be paid for service personnel,
security, ticket takers, a variety of other staffing, maintenance, setup, utilities
(which have already been taxed) and other items. At the end of the show a
settlement statement is prepared showing the amount due to be paid from the
proceeds collected. A portion of this statement relates to the cost agreed upon for
the use of the facility. Once these particular costs are calculated for this part of
the agreement the balance is treated as rent and sales tax is calculated on that
amount.
For the purposes of this TAA a “co-promotion” or “co-promoted event” is to be
treated as an event in which the facility has an interest in the outcome beyond the
simple collection of money for the use of the facility and related services. The
facility may assume responsibility for a certain percentage of the costs, may
receive a percentage of profit, or may have to pay a portion of a loss.
Association’s Position
The Association asserts that the Department must take into account the 2008 ruling in
US Cardiovascular, Inc. v. Florida Department of Revenue, 933 So. 2nd 81 (1st DCA
2008), when providing a response to the questions posed in the Association’s request for
technical assistance. The Association provides in part:
. . . the appellate court determined that DOR only has the authority to assess tax
on the rent, not on service fees and not on the expenses or the costs of opening
and operating the facility that are “rolled” into the base rent. The appellate court
went on to say that tax cannot be assessed on the total amount billed as rent even
if these rolled in costs are a condition of using the facility. . . .
Therefore, following the rationale of the appellate court in the USCARDIO case,
it is fair to assert that most, if not all, of the costs rolled into a base rent and
subsequently charged to the users of the facility ARE NOT subject to rental or use
tax under s. 212.031, F.S. . . .
Law and Discussion
In Florida, the renting, leasing, letting, or the granting of a license for the use of any real
property is subject to sales tax. See Section 212.031, F.S. A license is means “the
granting of a privilege to use or occupy a building or a parcel of real property for any
purpose.” See Section 212.02(10)(i), F.S. By definition, a lease or a granting of a license

Technical Assistance Advisement
Page 3 of 8
requires two separate “persons." One person must own or have the right to occupy the
real property, and that person must grant a right to occupy the real property to the second
person. The grant of occupancy, either via lease or license, is a taxable privilege in
Florida.
Section 212.031(1)(c), F.S., provides that “[f]or 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.” (e.s.)
The “total rent or license fee charged” is defined to 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.” See Section 212.031(1)(c), F.S. Furthermore, Rule
12A-1.070(4)(b), F.A.C., states that “[t]he tax shall be paid at the rate of . . . 6 percent . . .
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.”
Therefore, sales tax is due on the total consideration received to occupy the property.
The statute, rule and US Cardiovascular, supra, all expressly provide that certain costs or
expenses passed on to a tenant are subject to sales tax. These include, maintenance,
utilities, insurance, and property taxes. (maintenance see Rule 12A-1.070(4)(d), F.A.C.;
utilities see Section 212.031(7) and Rule 12A-1.070(4)(e), F.A.C.; insurance see Rule
12A-1.070(12), F.A.C.; property taxes see Rule 12A-1.070(4)(c), F.A.C.) The
Association misstates the holding in US Cardiovascular. The court did not say that sales
tax was not due “. . . on service fees and [] on the expenses or the costs of opening and
operating the facility that are “rolled” into the base rent.” The court only provided that
“[s]ome of the center expenses . . . are not subject to tax, such as salaries, benefits, and
insurance for the employees . . . .” (e.s.) The court then remanded the case to the lower
court.
In this case, the issue does not involve the taxability of expenses for the salaries, benefits,
and insurance of employees leased by the facility. The Association provides that charges
for laborers, stagehands, ticket takers, event staff, security personnel, cleaning staff, and
other event-related personnel are charged either by $X per person per hour, or $X if Y%
tickets sold. The charges here are distinguishable from the expenses for salaries, benefits,
and insurance in US Cardiovascular.
Effective July 1, 2000, the Legislature enacted an exemption for “[s]eparately stated
charges . . . including charges for laborers, stagehands, ticket takers, event staff, security
personnel, cleaning staff, and other event-related personnel, advertising, and credit card
processing . . . .” See Section 212.031(10), F.S. (2008). Prior to the imposition of the
exemption, these items were considered to be subject to the tax imposed by section
212.031, F.S. This exemption was initially scheduled to be repealed effective July 1,
2003. The exemption was repealed on July 1, 2009.
Once the specific exemption was repealed, convention halls, exhibition halls,
auditoriums, stadiums, theaters, arenas, civic centers, performing arts centers, or publicly-

Technical Assistance Advisement
Page 4 of 8
owned recreational facilities are now treated the same as any other person that leases or
grants a license to use its real property. If the lease or license requires certain charge in
order to occupy the property or a tenant or licensee’s failure to pay the charge results in a
default under the agreement, then that charge is part of the total taxable rental
consideration.
If a tenant or licensee’s failure to pay a charge results in a default under the agreement or
provides the tenant or licensee may no longer occupy the premises, then that charge is
required as a condition to occupy the real property.
The facts provided by the Association do not distinguish whether these services are
required under the agreements with the promoter. However, as an “all inclusive
arrangement” it appears the services are required to be purchased for the promoter to
occupy the real property. If required, the charges for ticket sellers, door guards, ushers,
security, cleaning, and other support services, lose their identity as charges for the
individual services and become part of the total taxable consideration paid to occupy the
real property.
If the agreement allows the promoter to elect to obtain its own services, including
security, ticket takers, etc., instead of requiring the promoter to use the facility's services,
then such charges are not a required payment for the privilege of occupying the premises.
Likewise, charges for additional, optional goods or services charged to the promoter are
not a condition of occupying the premises and are not rent. In conclusion, charges
incurred that are not required to be paid under the lease/license agreement are not subject
to sales tax as rent.
Questions and Responses
(renumbered for clarity)

5. “ . . . For the purposes of this question, the buildings that self promote do not enjoy tax
   exempt status. When they promote their own shows they don’t assess themselves rent,
   yet certain services have to be performed to conduct a safe and successful event. These
   are paid for from the proceeds. Is it acceptable for building which self promotes its own
   shows to not charge itself rent or otherwise not treat the proceeds as rent thereby negating
   the need to assess rental or use tax on the payment for necessary services? If not, under
   what scenario (s), if any, and based on what statutes and rules would 1) the services
   provided in operating the facility during a self promoted show, or 2) the proceeds/profit
   be taxable as rent?”
   Response:
   As provided above, a lease or license requires two persons. If the facility is using its own
   real property, sales tax under Section 212.031, F.S., does not apply.

Technical Assistance Advisement
Page 5 of 8

1. “Under s. 212.031, F.S., if a facility’s only interest in an event is providing a facility
   for the event to take place and facility shows that a reasonable amount of rent is a part of
   the overall arrangement it would only have to assess and collect tax on the amount that
   constitutes reasonable allocation to rent, correct?”
   Response:
   Section 212.031, F.S. and Rule 12A-1.070, F.A.C., are clear that sales tax applies to the
   total rent or license fee charged or consideration received.
   Section 212.031(1)(c), F.S., states, “[p]ayments for intrinsically valuable personal
   property such as franchises, trademarks, service marks, logos, or patents are not subject
   to tax under this section. In the case of a contractual arrangement that provides for both
   payments taxable as total rent or license fee and payments not subject to tax, the tax shall
   be based on a reasonable allocation of such payments and shall not apply to that portion
   which is for the nontaxable payments.”
   The Taxpayer appears to argue that these sentences should be read independently of one
   another, and their meaning ascertained independently. However, these two sentences
   were placed in statute at the same time and, as such, should be read together. It is a wellsettled principle that statutory phrases are not to be read in isolation, but rather within the
   context of the entire section. See e.g., Acosta v. Richter, 671 So. 2d 149, 153-154 (Fla.
   1996), Roberts v. State, 685 So. 2d 1277, 1279 (Fla. 1996) Furthermore, another general
   principle of statutory construction is that the mention of one thing implies the exclusion
   of another; expressio unius est exclusio alterius. Thayer v. State, 335 So. 2d 815, 817
   (Fla. 1976) Therefore, the only “payments” susceptible to being allocated are those that
   are “for intrinsically valuable personal property such as franchises, trademarks, service
   marks, logos, or patents” when such payments are “reasonable” and are separately stated
   in the contractual arrangement.
   In the factual scenario provided the agreement with the Facility does not provide for
   payments for intrinsically valuable personal property such as franchises, trademarks,
   service marks, logos, or patents. No allocation under Section 212.031(1)(c), F.S., is
   authorized. If the services are required under the lease as a condition of occupying the
   property, then the charges for the services are subject to tax.
2. “If no rent is charged as part of the agreement to hold an event that is co-promoted (the
   facility and promoter each has some interest in the show, which can result in the receipt
   of a profit or taking of a loss) where the private promoter does not enjoy any tax
   exemption on rent and the facility is tax exempt, would the proceeds be considered
   taxable as rent[?] If so, please clarify whether tax is assessed on all the proceeds or only
   on the promoter’s share[.] Similarly, if it is determined that rental tax is due on services,
   is that tax assessable on the total cost of services that are taxable or only on the share
   attributable to the private promoter? If tax is to be collected on all the proceeds rather
   than only that portion attributed to the promoter, please provide the statutory and/or FAC
   basis for the ability to assess a tax on such services.”

Technical Assistance Advisement
Page 6 of 8
Response:
Whether labeled as “rent” or not, the portion of proceeds given to the facility are
consideration to occupy the premises. Sales tax under Section 212.031, F.S., is due on
the total rental consideration received, including any percentage rents. Therefore, if the
event results in a loss, and the facility is not paid any consideration, no sales tax is due.
However, when the event results in a profit, and the facility is paid sales tax is due on the
total rental consideration received, including required services.

3. “The question remains the same as in #2, above, however an amount is identified as
   rent. In this scenario, since each of the co-promoters has an obligation to cover rent, will
   tax only be charged on the portion of rent attributed/borne by the private non tax exempt
   promoter?”
   Response:
   See the response to question 2.
4. “In TAA 99A-033 the DOR stated, in its response to Section 4, Q 3, that even when no
   rent is charged in a co-promoted event (where a public building is one of the
   copromoters) that the share of the proceeds received by the building are to be treated as
   rent and taxed accordingly. . . . [W]hat is the basis in law for being able to assess rental
   or use tax on any excess proceeds when there is a profit but not be able to assess rental or
   use tax when there is not profit? And/or is there a provision for apportioning the rent in
   as much as most facilities are tax exempt?”
   Response:
   See the response to question 2. Exemptions such as Section 212.08(7)(m), F.S. (religious
   institutions), Section 212.08(7)(o), F.S. (state supported schools), and Section
   212.08(7)(p), F.S. (501(c)(3) organizations), allow those entities to lease real property
   owned by other persons exempt from the sales tax under Section 212.031, F.S. However,
   if an exempt entity leases or licenses its own real property (or subleases or sublicenses) to
   another, non exempt entity, then sales tax is due.
5. “TAA 99A-033 made reference to the fact that contracts entered into separately by the
   promoter with a company to provide various services were not taxable as rent. What is
   the statutory authority for and reasoning behind not taxing items needed to occupy the
   building when contracted for directly by the vendor with the service provider, but taxing
   these same services when embodied in a single contract between the promoter and the
   facility?”
   Response:
   As provided above, when a promoter is required to purchase services from the facility as
   a condition of occupying the premises, those services become part of the total
   consideration paid to use the real property. If a promoter is allowed to contract directly
   with the service provider, and that contract is not a condition of using the facility, then
   those separate services are not part of the consideration paid to rent the real property.

Technical Assistance Advisement
Page 7 of 8

7. “What is the taxable status on services if the building/facility contracts directly with a
   source to provide certain services, including stage and lighting setup, security, ticket
   taking, clean up, etc.[,] which are necessary to safely conduct a show or hold a
   performance[,] and then charges the promoter for the services by passing them on in a
   separate contract rather than including them in an all in agreement?”
   Response:
   Cost reimbursements made by a tenant to a landlord for the landlord’s cost of
   maintaining, improving, or operating its facility, when required to be paid as a condition
   of a lease or license agreement, are taxable as part of the “total rent or license fee” for the
   right to occupy the facility. The “pass-through” charge for goods and/or services is
   “rent” when the goods/services are provided by the lessor/licensor or those in its employ;
   the goods/services are not optional, or have not been elected by the lessee, but are
   required by the facility; and the failure to pay the charge for the goods and/or services
   would result in a breach of the facility lease or license agreement.
8. “What rental or use tax is owed for services if a) the promoter, b) the co-promoters, or
   c) a facility which self promotes, contracts directly (i.e., not part of an “all in” agreement)
   with a source(s) to provide various services including stage and lighting setup, security,
   ticket taking, clean up, etc.[,] which are necessary to safely conduct a show or hold a
   performance?”
   Response:
   a) promoter contracts with provider:
   See response to Question 6.
   b) co-promoters contract with provider:
   See response to Question 2.
   c) facility that self promotes contracts with a provider:
   See response to Question 5.
9. “Why should a facility not impose a rental or use tax on the payment of costs and
   expenses made directly to a vendor by an entity using a facility but impose and collect a
   rental or use tax if the facility provides or arranges for the provision of the same such
   services and simply passes through these charges to the entity using the facility?”
   Response:
   Charges incurred that are not required to be made under the lease/license agreement are
   not rent and are not subject to sales tax. If a lease agreement allows the promoter to pay
   the facility for the use of the facility’s services, but also allows the promoter to elect to
   obtain its own security, ticket takers, etc., instead of using the facility’s own services,
   then there is not a required payment for the privilege of occupying the premises.

Technical Assistance Advisement
Page 8 of 8

10. In an all in agreement which may contain required items and elective items, what
    approach would the department employ in determining what portion of the total amount
    of the agreement, if any, is taxable as rent and what portion is not taxable as rent?
    Response:
    This is reviewed on a case-by-case scenario. Inasmuch as the payment is required to be
    paid to the facility as a condition of occupying the real property, pursuant to the terms of
    the lease or license agreement, the payment is taxable as rent. Factors include whether
    the failure to make the payment constitutes a default of the agreement or allows for denial
    of occupancy. Charges incurred that are not required to be paid under the lease/license
    agreement are not rent and are not subject to sales tax.
    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 that 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 Association. Your response should be received
    by the Department within 15 days of the date of this letter.

Sincerely,

Brinton Hevey
Tax Law Specialist
Technical Assistance and Dispute Resolution
850/488-7157
Record ID: 77757