Could multiple colors of paint on one invoice be aggregated so Florida's $5,000 discretionary surtax cap applied once to the whole invoice?

Plain-English summary

The Florida Department of Revenue concluded that multiple colors of paint bought on one purchase order, invoice, and delivery could not be aggregated for a single application of the $5,000 discretionary sales surtax limitation.

White, yellow, and blue paint were separate items rather than one bulk item. They also did not form a working or integrated unit because the purchaser bought them for inventory rather than for a specific combined job.

The surtax cap therefore applied separately to each invoice line item, not once to the invoice total.

What this means for you

Bulk purchasers and contractors

One invoice or delivery does not make different products a single item. Product identity and integrated use control the cap analysis.

Accounts-payable teams

Review the vendor's line-item application of the surtax limitation rather than applying one cap automatically to the invoice total.

Common questions

Q: Did the single purchase order make the paint one bulk sale?
A: No.

Q: Where did the $5,000 limitation apply?
A: Separately to each line item.

Citations and references

• Fla. Stat. §§ 212.054 and 213.22
• Fla. Admin. Code r. 12A-15.004

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 13A-002

Original ruling text

Interim
Executive Director
Marshall Stranburg

TAX: Sales and Use
TAA NUMBER: TAA 13A-002
ISSUE: Discretionary Sales Surtax Limitation
STATUTE CITE: 212.054, Florida Statutes
RULE CITE: Rule 12A-15.004, Florida Administrative Code
QUESTION: Does the invoiced paint represent a bulk sale or working unit allowing application
of the $5,000 discretionary sales surtax limitation on the entire invoice amount or on each line
item?
ANSWER: The invoiced paint cannot be aggregated as a single item in a bulk sale or working
unit. Therefore, application of the $5,000 discretionary sales surtax limitation must be made on
each line item and not the entire invoice amount.

January 17, 2013

Re:

Technical Assistance Advisement – TAA 13A-002
Florida Sales and Use Tax
Discretionary Sales Surtax Limitation
Section: 212.054, Florida Statutes (F.S.)
Rule: 12A-15.004, Florida Administrative Code (F.A.C.)
Petitioner: (“Taxpayer”)

Dear XXX:
This letter is a response to your petition dated XXX, 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 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.

Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – James McAdams, Director  Information Services – Tony Powell, Director

www.myflorida.com/dor
Tallahassee, Florida 32399-0100

Technical Assistance Advisement
Page 2
Facts
Taxpayer is in the XXX industry and purchased XXX from vendor. Taxpayer’s business is
located in XXX, which has a XXX percent discretionary sales surtax. Taxpayer purchased paint
from vendor and was charged discretionary sales surtax on each line item up to the $5,000 cap.
Taxpayer stated that its purchase of paint from vendor was made using a single purchase order
and single invoice and that the paint was delivered in a single delivery. Taxpayer provided an
invoice from vendor dated XXX. The invoice does not reference a specific job or customer. The
invoice reflects the following:
Item number Description

Quantity

Unit

Price

Amt.

XXX

Premium White XXX
XXX
Batch#XXX
Florida St. Spec.XXX
BP 100/250
Premium Yellow XXX
XXX
Batch#XXX
Florida St. Speci.XXX
BP110/250

XXX

EA

XXX

XXX

XXX

EA

XXX

XXX

Handicap Blue 5gal pail Fast Dry
XXX
Batch#XXX
TTP-1952E, XXX
BP 130/05

XXX

EA

XXX

XXX

XXX

XXX

Sales balance

Misc. charges

XXX

XXX

Sales tax

Round-off

XXX

XXX

Total
XXX USD

Issue
Does the invoiced paint represent a bulk sale or working unit allowing application of the $XXX
discretionary sales surtax limitation on the entire invoice amount or on each line item?
Taxpayer’s Position
Taxpayer believes the three different colors of XXX paint should be treated as a single item in a
bulk sale allowing application of the $5,000 discretionary sales surtax limitation on the invoice
total.

Technical Assistance Advisement
Page 3
Law and Discussion
Under section 212.054(2)(a), F.S., the basic principle in applying discretionary sales surtaxes is
that they piggyback the state sales and use tax. If a transaction is subject to sales tax and occurs
at a location where surtax is imposed, the surtax also applies. The surtax is imposed on all
transactions that are subject to sales tax. Section 212.054(2)(b), F.S., limits application of that
principle when there is a sale of an item of tangible personal property for over $5,000. The surtax
in that case applies only to the first $5,000. Subparagraph (b)1. of the statute then sets out very
specific circumstances in which more than one item can be aggregated for purposes of
application of the surtax. This provision reads in part:
... For purposes of administering the $5,000 limitation on an item of tangible
personal property, if two or more taxable items of tangible personal property are
sold to the same purchaser at the same time and, under generally accepted
business practice or industry standards or usage, are normally sold in bulk or are
items that, when assembled, comprise a working unit or part of a working unit,
such items must be considered a single item for purposes of the $5,000 limitation
when supported by a charge ticket, sales slip, invoice, or other tangible evidence
of a single sale or rental.
The statute requires application of the $5,000 limitation on an item-by-item basis, except for very
specific circumstances when multiple items will be viewed as a single item. In order for the
exception to apply, two tests must be satisfied. First, there must be a single sale, in which one
purchaser buys all the items at the same time with a purchase order, sales slip, invoice, or other
documentary evidence that there has been a single transaction. Second, the multiple items
reflected on that documentation will be aggregated for purposes of applying the $5,000 limitation
only if they are items that are normally sold in bulk or are items that will be assembled into a
working unit or part of a working unit.
Single Sale Test
Items that meet the bulk sale/working unit standard cannot be aggregated if they are not
purchased in a single sale. A roofing contractor may not aggregate shingles purchased in June
with shingles purchased in XXX, even if that contractor ordinarily purchases shingles in bulk.
The single sale requirement addresses the character of the transaction itself, whether there has
been one discrete transaction to which the limitation can be applied or multiple sales that are
separately subject to the limitation. Meeting this requirement is a matter of documenting that
there was one buyer, one seller, and that the agreement to buy and sell occurred at the same time
as to all of the items involved.
Rule 12A-15.004(3)(a), F.A.C., explains the single sale requirement. It provides in part the
following:
(3) When multiple items of tangible personal property are sold by a dealer to the
same purchaser at the same time, the $5,000 limitation applies when the sale or
purchase is a single sale that meets the requirements of paragraph (a) and is a sale

Technical Assistance Advisement
Page 4
of items normally sold in bulk or items that comprise a working unit, or a part of
a working unit, that meets the requirements of paragraph (b).
(a) SINGLE SALE. The sale or purchase of multiple items of tangible personal
property must be a single sale in which the purchaser buys all items of tangible
personal property from the dealer at the same time.

1. There must be an invoice, sales slip, charge ticket, written purchase order or
   agreement, or other tangible evidence of sale that establishes the items were sold
   in a single sale.
2. A single sale of items of tangible personal property that is documented by a
   written purchase order or written agreement executed between a purchaser and
   the selling dealer must:
   a. Provide for a specific quantity of tangible personal property; and
   b. If delivery of all items does not occur at the same time, provide for a specific
   time period within which delivery of the tangible personal property to the
   purchaser must be made.
3. Each delivery of items of tangible personal property, under the provisions of a
   written purchase order or written agreement that does not specify the quantity
   and the time period during which delivery of the property will occur, will be a
   single sale.
   The rule is intended to apply to situations where a total quantity of items that could otherwise be
   aggregated together is not delivered and invoiced at a single time, usually because of the nature
   of the property or the project for which it is needed. For example, a XXX knows that he will
   need a certain number of tons of XXX delivered over the next three months for a single project.
   He places an order for the total amount now to fix the price per ton and assure availability, with
   delivery to occur as needed to the location where his crew is operating at any given time and
   final delivery no later than a specified date. The rule would permit viewing the transaction as a
   single sale, so the separate deliveries of asphalt could be aggregated and surtax would be owed
   only on the first $5,000. The rule does not state that all the items on a qualifying purchase order
   will be aggregated, only that they will be treated as sold in a single sale. This provision of the
   rule does not address the types of items that can be aggregated and viewed as a single item.
   Vendor issued a single sales invoice to Taxpayer for the purchase of XXX paint. All items
   purchased pursuant to a single invoice, when a specific quantity of items are ordered, and which
   items are to be delivered by a specific time, qualify as a single sale. In the instant case, the sales
   invoice does not specify a delivery date. Taxpayer has stated the paint was delivered at the same
   time. Therefore, the single sales test has been met. Please note, however, that if items are
   delivered in installments or multiple deliveries, the sales invoice or purchase order should
   include a time certain by which all items ordered should be delivered in order to be in complete
   compliance with the single sale test.

Technical Assistance Advisement
Page 5
Bulk Sale/Working Unit Test
Items cannot be aggregated solely because they are purchased in a single sale. The bulk
sale/working unit test must also be met. This requirement addresses the character of the items
purchased. The category of items usually sold in bulk encompasses multiple quantities of a
single item that are ordinarily sold in such quantities rather than one at a time. This applies, for
example, to 2x4x8 wall studs purchased by a carpenter or 15 amp circuit breakers purchased by
an electrician.
The category of items usually assembled into a working unit addresses the items that are
commonly purchased together because their utility is dependent upon their assembly into some
larger unit. An example of the working unit concept would be a purchase of sheet metal, screws,
tape, and sealant by an air conditioning contractor to construct a ductwork system. In
Taxpayer’s case, all the paint required for a single XXX contract could be considered a working
unit.
The relevant provision for guidance in application of the bulk sale/working unit standard is Rule
12A-15.004(3)(b) and (c), F.A.C., which provides in part the following:
(b) ITEMS NORMALLY SOLD IN BULK OR ITEMS THAT COMPRISE A
WORKING UNIT. A single sale must be a sale of items of tangible personal
property that meets at least one of the following conditions:

1. The items are multiple quantities of a single item that the dealer normally sells
   in multiple quantities in the normal course of the dealer's business or that the
   purchaser normally buys in multiple quantities in the normal course of the
   purchaser's business;
2. The items are normally sold as a set or a unit and the utility of each for its
   intended purposes is dependent on the set being complete;
3. The items are normally sold in single sale by the seller to the purchaser for use
   in the normal business practice of the purchaser as an integrated unit; or
4. The items are component parts that have no utility unless assembled with each
   other to form a working unit or part of a working unit.
   (c) MULTIPLE ITEMS OF TANGIBLE PERSONAL PROPERTY IN A
   SINGLE SALE. Multiple items of tangible personal property sold or purchased
   under a single sales transaction that are not normally sold in bulk or that, when
   assembled, will not comprise a working unit, part of a working unit, or comprise
   an integrated unit to be used in the purchaser's normal business practice, cannot
   be aggregated into a single sale for purposes of the surtax limitation. (emphasis
   supplied)

Technical Assistance Advisement
Page 6
Taxpayer purchased multiple quantities of three separate items – white paint, yellow paint, and
blue paint. In this case, the items cannot be considered a single item and cannot be aggregated
together as a single item because they are not the same color of paint. The same ruling would
apply to a carpenter purchasing different lengths of wall studs or different types of nails or an
electrician purchasing different amperage circuit breakers. Additionally, the various colors of
paint cannot be considered items comprising a working unit since the paint is purchased for
inventory purposes rather than for a specific job. The same would apply to a contractor
purchasing materials for multiple jobs at one time.
Conclusion
The invoiced paint cannot be aggregated as a single item in a bulk sale or working unit.
Therefore, application of the $5,000 discretionary sales surtax limitation must be made on each
line item and not the entire invoice amount.
This response constitutes a Technical Assistance Advisement under s. 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 s. 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 s. 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 850-717-6363.
Sincerely,

Leigh L. Ceci
Tax Law Specialist
Technical Assistance & Dispute Resolution
Record ID: 128335