Were equipment-rental payments due after an out-of-state dealer removed the equipment from Florida for re-rental subject to Florida sales tax?

Plain-English summary

An out-of-state dealer picked up pumps and related equipment from a Florida rental dealer, transported the items outside Florida, and re-rented them to an out-of-state customer. The Florida dealer invoiced and received payment after removal.

Florida ruled that rental payments attributable to the period after the equipment left the state were not subject to Florida sales tax. The lessee had to give the Florida lessor a signed certificate identifying the property and the date it was or would be removed, and the equipment had to be transported outside Florida for resale or re-rental and no other purpose.

Any rental amount charged or paid while the property was in Florida remained taxable, even if the lessee moved it out immediately after taking possession.

What this means for you

The place and period of equipment use, not merely invoice timing, drive the result. Keep a contemporaneous removal certificate and evidence of out-of-state re-rental; without proper documentation, the Florida lessor can be liable for tax.

Common questions

Was rent due after removal taxable? No, if the certificate and out-of-state re-rental conditions were met.

Was rent for time in Florida taxable? Yes.

What documentation was required? A signed certificate identifying the property and its actual or planned removal date.

Citations and references

• Fla. Stat. §§ 212.05 and 212.07 and Fla. Admin. Code rr. 12A-1.0015(3) and 12A-1.071(4), as quoted or discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 11A-003

Original ruling text

SUMMARY
QUESTION: When equipment (tangible personal property) is rented from a Florida
dealer and removed from the State of Florida, are the rental payments made to the Florida
dealer subject to sales tax?
ANSWER: When equipment is rented from a Florida dealer and removed from the state, rental
payments made subsequent to the removal of the equipment from Florida are not subject to
Florida’s sales tax. Rental payments to the Florida dealer while the items are in Florida are
subject to Florida sales and use tax.
February 1, 2011
XXX
Re:

Technical Assistance Advisement 11A-003
Sales and Use Tax – Nonresident Dealer’s Re-rental of Tangible Personal
Property to an Out-of-State Customer
Sections: 212.05 and 212.07, Florida Statutes (F.S.)
Rules: 12A-1.0015(3) and 12A-1.071(4), Florida Administrative Code (F.A.C.)
Petitioner: XXX (herein Taxpayer)
FEI: XXX

Dear XXX:
This letter is a response to your petition dated December 12, 2010, 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 1211, 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
The Taxpayer, states that, as a XXX retail business with XXX sales tax # XXX, it from time to
time, as part of its ongoing and active business, rents equipment from a Florida dealer, XXX
(XXX) federal ID # XXX, for purpose of re-rental to end customers in XXX. This activity, on
occasion, requires the Taxpayer to receive the tangible personal property equipment within
Florida; however, payment for the rental is neither requested (invoiced) nor received (paid) until
after the equipment has been removed from the State of Florida. You provided as attachments
copies of documents showing the transactions under discussion as follows:
A1
Rental Receipt (Delivery Ticket # XXX) serving as the pick-up ticket for Product

XXX described as a “suction trash pump,” which was picked up by the Taxpayer at

Florida dealer’s location.

Technical Assistance Advisement
Page 2
B1
Rental Contract # XXX for product # XXX described as a “suction trash pump,”
which was mailed to the Taxpayer at its out-of-state location.
B2
Rental Contract # XXX for product # XXX described as a “submersible trash
pump” and product # XXX described as a “hydraulic drive unit,” which were picked up
by the Taxpayer at Florida dealer’s location and transported to Taxpayer’s out-of-state
location for re-rental.
C1
Rental Invoice # XXX in regards to contract # XXX. This invoice serves as
request for payment for use of product # XXX, which was mailed to Taxpayer’s out-ofstate location and paid by check # XXX.
C2
Rental Invoice # XXX in regards to Contract # XXX. This invoice serves as
request for payment for use of product # XXX and XXX, which was mailed to
Taxpayer’s out-of-state location and paid by check # XXX.
REQUESTED ADVISEMENT
Based on the facts provided, the Taxpayer has requested confirmation that when items of
tangible personal property are rented from a Florida dealer and removed from the State of
Florida, rental payments made subsequent to that removal are not subject to Florida’s
sales tax.
APPLICABLE LAW
Section 212.05, F.S., embodies the basic statement of legislative intent:
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. . . .
(1) For the exercise of such privilege, a tax is levied on each taxable transaction. . . .
The legislature has declared its intention in Section 212.21(2), Florida Statutes (F.S.), that each
and every sale, use, storage, or consumption of tangible personal property in Florida is taxable,
subject only to the exemptions and exclusions contained within Chapter 212, F.S. The threshold
legislatively created assumption, therefore, is that every sale, use, storage, or consumption of
tangible personal property in Florida is subject to tax, unless it is shown by the taxpayer that an
exemption or exclusion applies.
Section 212.07(1)(b), F.S., provides, in part:
A resale must be in strict compliance with s. 212.18 and the rules and regulations, and
any dealer who makes a sale for resale which is not in strict compliance with s. 212.18
and the rules and regulations shall himself or herself be liable for and pay the tax. Any
dealer who makes a sale for resale shall document the exempt nature of the transaction, as
established by rules promulgated by the department, by retaining a copy of the
purchaser's resale certificate. . . .

Technical Assistance Advisement
Page 3

Rule 12A-1.071(4), F.A.C., provides, in part:
If the lessee of tangible personal property removes the property from the State of Florida,
the consideration contracted to be paid subsequent to such removal is not taxable,
provided the lessee furnishes the lessor with a signed certificate identifying the property,
and the date the property was or will be removed from this state. If the lessee has
obtained self-accrual authority from the Department of Revenue, as provided in Rule
12A-1.0911, F.A.C., then the lessee’s records must substantiate when the property was
removed from this state. Rental amounts charged or paid while the property is in Florida
are taxable, even though the property is moved from the state immediately after the lessee
takes possession of it. . . .
Rule 12A-1.0015(3), F.A.C, provides in part:
(3) Sales to Nonresident Dealers
(a) The sale of taxable tangible personal property to a nonresident dealer is exempt when
the selling dealer obtains a statement from the nonresident dealer declaring that the
tangible personal property will be transported outside Florida by the nonresident dealer
for resale and for no other purpose. The statement executed b y the nonresident dealer
must include the declaration and all of the following information:

1. The nonresident dealer’s name and address;
2. Evidence of authority to do business in the dealer’s home state or country, such as the
   nonresident’s business name and address, sales tax registration number, occupational
   license number, or any other evidence of transacting business in that state or country;
3. For nonresident dealers who are not residents of the United States, the dealer’s
   passport or visa number and arrival-departure card number;
4. The following provision: “Under penalties of perjury, I declare that I have read the
   foregoing, and the facts alleged are true to the best of my knowledge and belief”; and
5. The signature of the purchaser executing the statement.
   (b) For purposes of this rule, a “nonresident dealer” is any person who does not hold a
   valid Florida sales tax certificate of registration and who is authorized in another state or
   country to make sales of tangible personal property in that state or country.
   (c) A selling dealer who makes a sale of taxable tangible personal property to a
   nonresident dealer is required to obtain the required statement or collect the applicable
   tax on the sale.

Technical Assistance Advisement
Page 4
RESPONSE
When tangible personal property is rented from a Florida dealer and removed from the state,
rental payments made subsequent to the removal are not subject to Florida’s sales tax. The
following suggested format example should be given to the Florida dealer to support the exempt
nature of the transaction:
TANGIBLE PERSONAL PROPERTY
FOR RESALE BY A NONRESIDENT DEALER

This is to certify that the tangible personal property described below will be transported
outside Florida for resale/re-rental and for no other purpose.
NAME OF SELLING DEALER: ______
DEALER'S ADDRESS: ______
DEALER'S SALES TAX NO.: ______
NAME OF NONRESIDENT DEALER: _____
ADDRESS OF NONRESIDENT DEALER: ____
HOME STATE'S SALES TAX NO.: _____
The tangible personal property rented or leased in Florida on INVOICE NUMBER(S)
___, or described as follows, is solely for re-rental outside Florida.
Description of Property: _____
Under penalties of perjury, I declare that I have read the foregoing, and the facts alleged
are true to the best of my knowledge and belief.

Signature of Purchasing Nonresident Dealer

Date

CONCLUSION
In the instant case, Taxpayer, a XXX retail business, rented various items from a Florida dealer.
The items were picked up at the Florida dealer’s location in Florida. The items were removed
from Florida for re-rental to Taxpayer’s customer in XXX. The question posed is whether
Taxpayer’s rental of the items from the Florida dealer is subject to Florida sales and use tax.
Pursuant to Rules 12A-1.0015(3) and 12A-1.071(4), F.A.C., Taxpayer’s rental of the items is
exempt from Florida sales and use tax providing it extends a signed certificate to the Florida
dealer identifying the items and the date the items were removed or will be removed from

Technical Assistance Advisement
Page 5
Florida. Taxpayer may use the suggested format of the certificate provided above for this
purpose. Taxpayer’s rental payments to the Florida dealer while the items are in Florida are
subject to Florida sales and use 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 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) 717-7289.
Sincerely,

Horace Royals
Tax Law Specialist
Technical Assistance & Dispute Resolution
HR\lp
Record ID:

94193