Was a monthly easement fee for access to leased parking spaces taxable along with the parking fee?

Plain-English summary

The Florida Department of Revenue concluded that both a monthly parking-space fee and a separately stated monthly easement fee for garage access were subject to sales tax.

The garage owner operated a commercial parking garage and leased spaces to a condominium association. Although the recorded agreement created an easement, vehicle access through the garage entrance was an interdependent part of the right to use the parking spaces.

Florida taxes the total rental charged for parking in a garage. The Department therefore treated the parking and access charges as components of one taxable parking business rather than separating the easement fee as nontaxable.

What this means for you

Parking operators and associations

Separately naming an access charge does not remove it from the taxable parking price when access is necessary to use the leased spaces.

Accountants and lease reviewers

Analyze the whole parking arrangement and the function of each fee, not only the legal label attached to it.

Common questions

Q: Was the easement legally recognized?
A: Yes, but its fee was still part of the taxable parking charge.

Q: What amount was taxable?
A: The sum of the monthly parking fee and monthly easement fee.

Citations and references

• Fla. Stat. §§ 212.03(6) and 213.22
• Florida Revenue Commission v. Maas Brothers, Inc., 226 So. 2d 849 (Fla. 1st DCA 1969)
• Kirk v. Western Contracting Corp., 216 So. 2d 503 (Fla. 1st DCA 1968)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 13A-021

Original ruling text

Executive Director
Marshall Stranburg

QUESTION: Are charges for an easement for access to leased parking spaces subject to
tax?
ANSWER: The total rental charge imposed for the right to park in the parking garage
(the sum of the monthly parking fee and the monthly easement fee) is subject to sales tax
pursuant to Section 212.03(6), F.S. Garage Owner is correct to charge tax on the sum of
the monthly parking fee and the monthly easement fee.
October 1, 2013
Re:

Technical Assistance Advisement – TAA 13A-021
Sales and Use Tax – Parking Charges
Subsection: 212.02, 212.03, 212.031, Florida Statutes (F.S.)
Petitioner: XXX [hereinafter “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 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, Florida Administrative
Code. This response to your request constitutes a TAA and is issued to you under the
authority of Section 213.22, F.S.
Issue
Whether charges for an easement for access to leased parking spaces are subject to tax.
Presented Facts
Taxpayer is a XXX not-for-profit corporation operating a condominium homeowner’s
association.
Garage Owner owns and operates a multi-level parking garage in a XXX city’s
downtown district. The parking garage is a common element of a condominium
association that is made up of multi-story commercial and residential buildings on the
majority of the city block.

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

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

Technical Assistance Advisement
Page 2

The Taxpayer and the Garage Owner have entered into a “Parking Easement Agreement”
that primarily (for our purposes here): (1) allows residential condominium unit owners
and their visitors to park in a certain number (currently about 110 spaces) of non-reserved
parking spaces within the garage; and (2) grants an easement to the parking spaces. The
Taxpayer does not use or occupy all of the parking spaces in the parking garage.
The Garage Owner charges separate monthly fees for the parking spaces and for the
easement. The Garage Owner collects and remits XXX sales tax on the monthly charge
for the parking spaces. The only issue presented in the Taxpayer’s request for advice is
the treatment of the monthly “Access and Maintenance Fee” paid in return for the Access
Easement.
The Parking Easement Agreement has been recorded in the Official Records of the
county and has other indications of being an easement.
According to information available in the Official Records of the county (such as the
Articles of Incorporation of the condominium association, the Declaration of
Condominium, etc), there is a “public garage access area” leading to the parking garage
from a street open to the public. This area, however, is quite small in size (based on
diagrams of the property in the Official Records and on photographs of the parking
garage on Google Earth). The “public garage access area” is basically the cut-out of the
sidewalk leading into the parking garage (in other words, it is the entrance to the parking
garage).
Law and Discussion
Section 212.03(6), F.S., states as follows:
(6) It is the legislative intent that every person is engaging in a taxable privilege
who leases or rents parking or storage spaces for motor vehicles in parking lots or
garages, who leases or rents docking or storage spaces for boats in boat docks or
marinas, or who leases or rents tie-down or storage space for aircraft at airports.
For the exercise of this privilege, a tax is hereby levied at the rate of 6 percent on
the total rental charged.
The Department has issued (and the Taxpayer cites to) a previous Technical Assistance
Advisement regarding a canal easement. 1 In that TAA, one party owned upland docks
and land adjacent to a canal that was owned by another party. The upland owner used its
land to load and unload such things as petroleum from oceangoing vessels. It needed the
canal so that the vessels could gain access to and from open waters. The Department
opined that the canal easement was not subject to sales tax under Section 212.031, F.S.,
under the theory that the consideration was paid for an easement and not for a license to
use real property. The Department listed a number of factors that went into its conclusion.
1

TAA’s are of no precedential value and are applicable only to the requesting party and then to only the
specific transaction addressed. Section 213.22(1), F.S.

Technical Assistance Advisement
Page 3

Although the Department agrees that the Parking Easement Agreement is an “easement,”
the situation presented here is markedly different from the canal easement described
above.
First, it is clear that the Garage Owner is in the business of leasing parking spaces in a
parking garage (i.e., operating a parking garage). It is registered to collect and remit sales
tax and has been doing so on the monthly parking fees imposed on the residential
condominium association as well as other tenants and visitors parking their vehicles in
the parking garage.
Second, the Garage Owner here owns both the land burdened by the easement and the
“landlocked” land (i.e., the parking spaces within the parking garage). While this goes to
the question of the validity of the easement (the Department is agreeing that the easement
is valid), it also goes to the question of “being in the business” of leasing spaces for
parking within a parking garage.
Third, Florida courts have long recognized that sales tax is imposed on the privilege of
doing business and that being in a business may include a number of interdependent and
interrelated activities. Florida Revenue Commission v. Maas Brothers, Inc., 226 So.2d
849 (Fla. 1st DCA 1969). Here, it goes without saying that the leasing of parking spaces
in a parking garage requires the ability of the vehicle owner to get to the parking space.
The easement allowing ingress and egress to and from the Garage Owner’s parking
garage from the street is a component of it being in the business of leasing parking spaces
in a parking garage. That is why the total rental charge imposed for the right to park in
the parking garage (the sum of the monthly parking fee and the monthly easement fee) is
subject to sales tax.
Finally, pursuant to Section 212.03(6), F.S., sales tax is due on the total rental charged for
the privilege of engaging in the business of leasing parking spaces in a parking garage. It
has long been settled that sales tax is imposed “… for the privilege of engaging in certain
defined business within the State of Florida, and not upon the separate activities which
comprise the business in which the taxpayer is engaged. …” Kirk v. Western Contracting
Corporation, 216 So.2d 503,505 (Fla. 1st DCA, 1968). Here, the total rental charged is
made up of various components, namely the monthly parking fee and the monthly
easement fee. It should be noted that there is no carve-out in Section 212.03(6), F.S.,
which allows for treatment of taxable and non-taxable components of the total rental
charged. Compare for example, Sub-sections (1)(b) and (1)(c) of Section 212.031, F.S.
Conclusion
The total rental charge imposed for the right to park in the parking garage (the sum of the
monthly parking fee and the monthly easement fee) is subject to sales tax pursuant to
Section 212.03(6), F.S. Garage Owner is correct to charge tax on the sum of the monthly
parking fee and the monthly easement fee.

Technical Assistance Advisement
Page 4

Closing 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
upon 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 from that which is 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.

Sincerely,

Sara D. Faulkenberry
Senior Tax Specialist
Technical Assistance and Dispute Resolution
Control # 139324