Could a distributor allocate a mandatory delivery fuel surcharge between taxable and exempt products on the same Florida invoice?

Plain-English summary

The taxpayer distributed food and related products, mostly for resale, and imposed a mandatory fuel surcharge on every delivery. The surcharge appeared as a separate line on customer invoices.

Florida treated the mandatory surcharge as part of the sales price because customers receiving delivery could not avoid it. If an invoice included both taxable and exempt products, the entire surcharge was taxable; the taxpayer could not allocate it according to the relative value of taxable and exempt items.

If every item on the invoice was exempt, the delivery surcharge was also exempt. Separately stating the fee did not change the result because it remained mandatory.

What this means for you

For Florida transportation charges, separate statement is not enough. Customer choice and the tax status of the delivered products matter. This ruling applied an invoice-level rule and rejected proportional allocation on a mixed invoice.

Common questions

Was a separately stated fuel surcharge taxable? Yes, when it was mandatory and the invoice contained a taxable item.

Could the seller allocate the surcharge between taxable and exempt goods? No.

What if every product on the invoice was exempt? The surcharge was exempt too.

Citations and references

• Fla. Stat. §§ 212.02(16), 212.05, and 212.055 and Fla. Admin. Code r. 12A-1.045, as listed or discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 11A-015

Original ruling text

SUMMARY
QUESTION: When an invoice submitted to a customer contains a mix or a blend of
both taxable and nontaxable items being sold by Taxpayer, will the separately stated fuel
surcharge fee contained on the invoice be allocated for Florida sales and use tax
purposes?
ANSWER: When an invoice submitted to a customer contains both taxable and
nontaxable items being sold by Taxpayer, the mandatory and separately stated fuel
surcharge fee stated on the customer’s invoice is taxable. The tax due on the fuel
surcharge fee imposed should not be allocated based on the sales price of taxable and
nontaxable products sold.

May 23, 2011

XXX
XXX
XXX
Re:

Technical Assistance Advisement 11A-015
Florida Sales and Use Tax
Delivery – Fuel Surcharge Fee
Sections 212.02(16), 212.05, 212.055, Florida Statute (F.S.)
Rule 12A-1.045, Florida Administrative Code (F.A.C.)
XXX (“Taxpayer”)

Dear
This letter is a response to your petition dated April 1, 2011, for the Department's
issuance of a Technical Assistance Advisement ("TAA") concerning the above
referenced petitioner 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 Section (s.) 213.22, F.S.
FACTS
Taxpayer is a distributor of food and related products, mainly to the foodservice industry.
Taxpayer’s customer base purchases mostly items for resale. Generally, less than ten
percent (10%) of Taxpayer’s sales are taxable. Most of Taxpayer’s invoices include no
taxable items or very few taxable items.
In response to the recent significant rise in the cost of fuel, Taxpayer notified its
customers that it was reinstituting a fuel surcharge fee on each delivery of its products.

The fuel surcharge fee is listed as a separate line item charge on the customer invoice.
Taxpayer asserts that this fuel surcharge is mandatory. It is not optional.
REQUESTED ADVISEMENTS
When an invoice submitted to a customer contains a mix or a blend of both taxable and
nontaxable items being sold by Taxpayer, will the separately stated fuel surcharge fee
contained on the invoice be allocated for Florida sales and use tax purposes?
ANALYSIS and DISCUSSION
Section 212.05, F.S., provides the legislative intent that every person is exercising a
taxable privilege who engages in the business of selling tangible personal property at
retail in Florida. For exercising such a privilege, a tax is levied on each taxable
transaction or incident. The tax is due and payable at the rate of 6 percent, plus any
applicable surtaxes imposed under s. 212.055, F.S., on the total consideration received for
each item or article of tangible personal property when sold at retail in this state.
Section 212.02(16), F.S., defines “sales price,” in part, as follows:
(16) "Sales price" means the total amount paid for tangible personal
property, including any services that are a part of the sale . . . .
Rule 12A-1.045, F.A.C., concerning transportation charges, provides in part, as follows:
(1) "Transportation charges" include carrying, delivery, freight, handling,
pickup, shipping, and other similar charges or fees. (Emphasis Supplied)

(3)(a) Where the seller agrees to deliver tangible personal property to
some designated place and the purchaser cannot elect to avoid the charge
for transportation services, the charge for the transportation service is
subject to tax, even if separately stated on an invoice or bill of sale.
The fuel surcharge fee is imposed on all sales transactions to customers who receive
delivery of Taxpayer’s products. It is a mandatory fee and it is separately stated on each
invoice issued to Taxpayer’s customers receiving delivery. Therefore, pursuant to
Section 212.02(16), F.S., and Rule 12A-1.045, F.A.C., the fuel surcharge fee is a part of
the total sales price and subject to tax, even if separately stated, when charged in
conjunction with the sale and delivery of tangible personal property.
Specifically, the fuel surcharge fee is taxable when charged in conjunction with the sale
and delivery of taxable items of tangible personal property. However, the fee is exempt
from tax if all items invoiced for sale and delivery are exempt from tax under Chapter
212, F.S. An allocation of the amount charged for the fuel surcharge fee based on an

invoiced sale of both taxable and nontaxable items, and thus the amount of the surcharge
subject to tax, is not permitted. There is no statutory provision within Chapter 212, F.S.,
or a promulgated administrative code rule which permits allocation of transportation
charges.
CONCLUDING STATEMENTS
When an invoice submitted to a customer contains both taxable and nontaxable items
being sold by Taxpayer, the mandatory and separately stated fuel surcharge fee stated on
the customer’s invoice is taxable. The tax due on the fuel surcharge fee imposed should
not be allocated based on the sales price of taxable and nontaxable products sold.
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 850-717-6735.
Kind Regards,

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

101108