Could an off-airport parking operator use audited effective tax rates when it separately stated tax on receipts?

Plain-English summary

The Florida Department of Revenue concluded that an off-airport parking operator could not use an auditor-derived effective tax rate because it separately stated sales tax on each customer receipt.

For the 2014 transactions described, the operator was to apply 6 percent in Broward County and 7 percent in Miami-Dade County to whole-dollar parking charges. For a charge containing a fractional dollar, it could apply the whole-dollar rate and then the statutory bracket amount to the fractional portion.

The Department also said the operator did not have to use the higher 6.59 percent and 7.51 percent effective rates from an earlier audit. Effective-rate authority applies where industry practices make separate statement impracticable; this operator's receipts showed that it could and did state the tax separately.

What this means for you

Parking-lot operators

If tax is separately shown on the receipt, remit the tax collected and use the statutory rate and bracket rules. An effective-rate method is not available merely because an audit once calculated one.

Accountants and point-of-sale teams

Configure fractional-dollar transactions for the applicable bracket system and preserve receipts showing how tax was stated and collected.

Common questions

Q: Could the operator use the sampled 6.0056 percent effective rate?
A: No.

Q: Did it have to collect the earlier 6.59 and 7.51 percent rates?
A: No. The ruling directed it to the statutory county rates and the bracket treatment for fractional dollars.

Citations and references

• Fla. Stat. §§ 212.03(6), 212.07(2), 212.12(9)(h) and (i), and 213.22
• Fla. Admin. Code rr. 12A-1.080 and 12A-15.010

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 14A-018

Original ruling text

Executive Director
Marshall Stranburg

QUESTION: CAN THE TAXPAYER USE THE EFFECTIVE TAX RATES PROVIDED BY THE
DEPARTMENT’S AUDITOR TO CALCULATE THE AMOUNT OF TAX DUE ON THE PARKING
CHARGES?
ANSWER: THE USE OF AN EFFECTIVE RATE IS NOT AUTHORIZED IN CASES WHERE THE
TAXPAYER IS ABLE TO SEPARATELY STATE THE SALES TAX COLLECTED. THE
TAXPAYER HAS PROVIDED BOTH IN ITS REQUEST AND WITH SAMPLE INVOICES THAT IT
DOES SEPARATELY STATE THE SALES TAX DUE. BECAUSE OF THIS, THE TAXPAYER
SHOULD REMIT THE TAX COLLECTED AND NOT APPLY AN EFFECTIVE RATE TO
DETERMINE THE AMOUNT DUE.
BASED ON THE PROVISIONS OF SECTION 212.12(9), F.S., THE TAXPAYER SHOULD
CALCULATE THE SALES TAX DUE BY APPLYING 6% IN BROWARD COUNTY AND 7% IN
MIAMI-DADE COUNTY ON PARKING CHARGES IMPOSED IN WHOLE DOLLAR AMOUNTS.
IN CASES WHERE THE PARKING CHARGES INCLUDE FRACTIONS OF A DOLLAR THE
TAXPAYER CAN CALCULATE THE TAX DUE BY MULTIPLYING THE WHOLE DOLLAR
AMOUNTS BY 6% OR 7 % AND APPLYING THE APPLICABLE BRACKET RATE AMOUNT TO
THE PORTIONS OF THE CHARGE THAT ARE FRACTIONS OF A DOLLAR.
September 4, 2014
Re:

Subject: Technical Assistance Advisement – TAA 14A-018
Sales and Use Tax – Parking
Section 212.03, Florida Statutes (F.S.)
Rule 12A-1.073, Florida Administrative Code (F.A.C.)
XXXX (“Taxpayer”)
FEI # XXXX

Dear XXXX:
This is in response to your letter dated November 22, 2013, requesting this Department’s issuance of a
Technical Assistance Advisement (“TAA”) pursuant to section 213.22, F.S., and Rule Chapter 12-11,
F.A.C., concerning the taxability of parking charges imposed by the Taxpayer. An examination of your
letter has established you have complied with the statutory and regulatory requirements for issuance of a
TAA. Therefore, the Department is hereby granting your request for a TAA.

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 of 6

Facts
Your letter provides the following in part:
As of the date of this letter, Taxpayer operates off airport parking lots located in XXXX County
Florida (XXXX), and in XXXX County Florida (XXXX), whereby the general public can selfpark and valet-park at fixed parking rates in unassigned parking spaces. The parking rates are
subject to sales tax as license fee consideration paid for the use of real property at the rates
provided by Florida Statutes (F.S.) [212.03] (at the rate of 6 percent in XXXX County), plus
applicable surtax (7% in XXXX County).
On May 28, 2010, Taxpayer’s operations at parking lot located at XXXX, Florida were audited
by Florida Department of Revenue for the periods of 08/01/2006-07/31/2009, Audit #: XXXX;
and Taxpayer was found liable for additional sales tax and required to collect and remit sales tax
at the rate of 6.59 percent. . . .
Pursuant to Florida Administrative Code Rule 12A-15.010, and in compliance with the Audit #
XXXX determination and requirement, Taxpayer now collects from its customers and remits
to FL Department of Revenue sales tax at the amount of 6.59 percent in XXXX County Florida.

In February 2012, Taxpayer has opened and started to operate its off airport parking lot in
XXXX County, and pursuant to Florida Administrative Code Rule 12A-15.010, and in
compliance with the Audit # XXXX determination and requirement is collecting from its
customers and remitting to Florida Department of Revenue sales tax at the amount of 7.51
percent (including 1% of XXXX County surtax).

Taxpayer believes that the nature of parking industry, Taxpayer’s business practices, tax
calculation and collection methods allow Taxpayer to use an effective sales tax rate of 6 percent in
XXXX County and 7 percent in XXXX County:
A. The sales tax are collected at the time of sale, calculated and collected on each separate sales
transaction;
B. The sales tax are added to the sales price,
C. The amount of the sales tax is separately stated on each parking customer receipt;
D. The amount of sales tax collected at the time of sale is remitted to the Department of Revenue.

Technical Assistance Advisement
Page 3 of 6

Florida Department of Revenue has recently conducted and completed another audit of Taxpayer’s
records for the period from 4/1/2010 through and including 3/31/2013 . . . . During that audit,
Taxpayer has brought to [the Auditor’s] attention the issue of collecting sales tax at the rates of
6.59% and 7.51%, and requested the examination of Taxpayer’s records, receipts and accounting
methods to determine if Taxpayer shall be a subject to lesser sales tax rates; and if such lesser rates
of 6% in XXXX County and 7% in XXXX County will be accurate. In addition, the audit has
performed a sampling of detail transactions, including Taxpayer’s parking tickets and cash
register receipts of five full days within the audit period. Taxpayer has provided for such sampling
all the daily receipts, parking tickets and daily reports for 7/14/10, 11/16/10, 2/28/11, 6/11/11 and
2/5/2012. According to TAA 92A-068 a personal effective rate will be presumed to be correct
when an audit of taxpayer’s records “clearly demonstrate without exception” that Taxpayer’s
lesser rate is accurate.
According to [the Department’s Auditor’s] . . . email . . . , the records provided by Taxpayer for
review were deemed adequate and accurate to establish the effective sales tax rates, based on the
sampling data, of 6.0056%. In addition, in the oral conversations, [the Auditor] has advised that
the audit of Taxpayer’s records, and accounting methods indicated that the sales tax rate of 6% and
7% (with the discretionary surtax) will be accurate and Taxpayer may use such effective tax rates
instead of higher rates of 6.59% and 7.51%.

Along with the request for technical advice, the Taxpayer included a copy of the referenced e-mail from
the Department’s auditor dated October 24, 2013. The e-mail provides the following in part:
. . . The records made available for review included all the daily receipts, daily reports, monthly
reports and so on. These records were deemed adequate and accurate, so I was able to come up
with an effective rate just based off these 5 days. The rate that was calculated came out to be
6.0056, which was the total of all the effective rates for the 5 days divided by 5. . . . This was
strictly based off the records from [the current] audit period and not based off records or notes
from previous auditors or audit periods. Each auditor must approach the audit based off the
records they have for review . . . .
It should be noted that the Taxpayer is not currently under audit and withdrew its informal protest related
to this latest audit.
Requested Advisement
The Taxpayer requests that the Department issue a Technical Assistance Advisement that addresses the
following:

1. May Taxpayer, based on the documentation of the audit and sampling which has revealed that
   Taxpayer rate of sales tax is 6.0056, collect and remit sales tax at the rate of 6% (plus applicable
   discretionary sales tax)?

Technical Assistance Advisement
Page 4 of 6

2. Is the audit and sampling conducted by [the Auditor] during the audit sufficient to establish a
   lesser rate for Taxpayer, and the difference of 0.0056% between the tax rate of 6% and the rate
   determined by the sampling performed By [the Auditor], is not significant, and Taxpayer is not
   required to collect and remit sales tax at the higher rate of 6.59% and 7.51%?
3. [Is the Taxpayer required to collect and remit sales tax to Florida Department of Revenue at
   the tax rates of 6.59 and 7.51 percent and not at 6 and 7 percent when the tax is added to the sales
   price and separately shown on the customer’s receipt?]
   Applicable Authority and Discussion
   Section 212.03(6), F.S., states that “. . . every person is engaged in a taxable privilege who leases or rents
   parking or storage spaces for motor vehicles in parking lots or garages . . . .” The statute concludes with
   the following sentence: “For the exercise of this privilege, a tax is hereby levied at the rate of 6 percent on
   the total rental charged.” Section 212.03(6), F.S., mandates that the sales tax be imposed on the “total
   rental charged.”
   Section 212.12(9), F.S., authorizes the use of brackets on sales involving any fractional part of a dollar.
   The bracket system applies to all taxable license fees and rental charges. Section 212.12(9)(h), F.S.,
   provides that for sales in amounts of more than $1, that occur in counties that do not impose a
   discretionary surtax, 6 percent shall be charged upon each whole dollar amount of the sales price, and the
   bracket system applies to any fractional part of a dollar. Section 212.12(9)(i), F.S., provides that for sales
   in amounts of more than $1, that occur in a county imposing a 1 percent discretionary surtax, 7 percent
   shall be charged upon each whole dollar amount of the sales price, and the bracket system applies to any
   fractional part of a dollar.
   Section 212.07(2), F.S., provides the following in part:
   . . . Where it is impracticable, due to the nature of the business practices within an industry,
   to separately state Florida tax on any charge ticket, sales slip, invoice, or other tangible evidence
   of sale, the department may establish an effective tax rate for such industry. . . .
   Rules 12A-1.080 and 12A-15.010, F.A.C., address sales by concessionaires at various venues and
   authorize the use of a divisor to calculate the tax due in cases where it is “impracticable to separately
   state” sales tax on a sales slip or invoice. However, both rules provide that such dealers are required to
   remit to the amount of tax collected when they do separately state the tax on an invoice.
   Taxpayer cites Technical Assistance Advisements (TAA) 92A-068 to support its position that its
   “business practices, tax calculation and collection methods allow Taxpayer to use an effective sales tax
   rate.” Section 213.22(1), F.S., provides that “[t]echnical assistance advisements shall have no
   precedential value except to the taxpayer who requests the advisement.” Further the Taxpayer’s business
   model is distinguishable from the subject taxpayer of TAA 92A-068. In the cited TAA, the Department

Technical Assistance Advisement
Page 5 of 6

determined the taxpayer’s operations to be “most closely comparable to the activities of a concession
stand.” The Department determined that the subject taxpayer was authorized to use an effective tax rate
because it was impracticable to separately state sales tax.
In this case, the Taxpayer has provided in its request for assistance that “[t]he amount of the sales tax is
separately stated on each parking customer receipt.” This is supported by copies of customer receipts
included with the Taxpayer’s request. Because of this, the use of an effective tax rate, as authorized by s.
212.07(2), F.S., is not applicable to the Taxpayer.
Conclusion
Question 1: 1. May Taxpayer, based on the documentation of the audit and sampling which has
revealed that Taxpayer rate of sales tax is 6.0056, collect and remit sales tax at the rate of 6% (plus
applicable discretionary sales tax)?
Response: Based on the provisions of section 212.12(9), F.S., the Taxpayer should calculate the sales tax
due by applying 6% in XXXX County and 7% in XXXX County on parking charges imposed in whole
dollar amounts. In cases where the parking charges include fractions of a dollar, the Taxpayer can
calculate the tax due by multiplying the whole dollar amounts by 6 or 7 % and applying the applicable
bracket rate amount to the portions of the charge that are fractions of a dollar.
Question 2. Is the audit and sampling conducted by [the Auditor] during the audit sufficient to
establish a lesser rate for Taxpayer, and the difference of 0.0056% between the tax rate of 6% and
the rate determined by the sampling performed by[the Auditor], is not significant, and Taxpayer is
not required to collect and remit sales tax at the higher rate of 6.59% and 7.51%?
The use of an effective rate is not authorized in cases where the Taxpayer is able to separately state the
sales tax collected. The Taxpayer has provided both in its request and with sample invoices that it does
separately state the sales tax due. Because of this, the Taxpayer should remit the tax collected and not
apply an effective rate to determine the amount due.
Question 3. [Is the Taxpayer required to collect and remit sales tax to Florida Department
of Revenue at the tax rates of 6.59 and 7.51 percent and not at 6 and 7 percent when the tax is
added to the sales price and separately shown on the customer’s receipt?]
Response: No, the Taxpayer is not required to collect sales tax at the rates of 6.59 and 7.51 percent. The
Taxpayer should calculate the sales tax due by applying 6% in XXXX County and 7% in XXXX County
on parking charges imposed in whole dollar amounts. In cases where the parking charges include
fractions of a dollar, the Taxpayer can calculate the tax due by multiplying the whole dollar amounts by 6
or 7 % and applying the applicable bracket rate amount to the portions of the charge that are fractions of a
dollar.

Technical Assistance Advisement
Page 6 of 6

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 taxpayer. 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
850/717-6839
Record ID: 165972