Are labor-only inspections and repairs of fire alarms, sprinklers, and extinguishers subject to Florida sales tax?

Plain-English summary

The Florida Department of Revenue reached different results for three fire-safety systems. Labor-only inspection or repair of a fire alarm was taxable because alarm monitoring and maintenance—including working-order inspections—were taxable protective services.

Fire-sprinkler work was not a taxable security service. Sprinklers were treated as real-property improvements under a nontaxable NAICS service category, so the contractor did not collect tax from the customer but owed tax on materials it consumed.

Labor-only fire-extinguisher service was also nontaxable when it was separate from the alarm system and the provider could prove no parts were added. If parts were used, Florida taxed the entire tangible-personal-property repair charge.

What this means for you

Fire-safety service companies

Separate alarm, sprinkler, and extinguisher work in service records and invoices. Similar safety purposes do not produce the same tax classification.

Facility managers

Ask whether an inspection touches the alarm system and whether extinguisher parts are replaced. Those facts change the tax result.

Accountants and tax professionals

Maintain proof for labor-only extinguisher jobs. The ruling puts the burden on the service provider to show that no parts were added.

Common questions

Q: Is labor-only fire-alarm inspection taxable?
A: Yes.

Q: Is labor-only sprinkler work taxable as a security service?
A: No, when it is not part of the fire-alarm system.

Q: Is labor-only extinguisher service taxable?
A: No, if no parts are added and the provider can prove it.

Q: What if extinguisher parts are installed?
A: The entire repair charge is taxable.

Citations and references

• Fla. Stat. §§ 212.05(1)(i)1.a. and 213.22
• Fla. Admin. Code rr. 12A-1.0092, 12A-1.006, 12A-1.016, and 12A-1.051
• NAICS 561621, 238220, and 423990

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 18A-008

Original ruling text

QUESTION: ARE “LABOR ONLY” SERVICES, WHERE NO MATERIALS OR PARTS ARE
INVOLVED, TO INSPECT AND/OR REPAIR FIRE ALARM SYSTEMS, FIRE SPRINKLER
SYSTEMS, AND FIRE EXTINGUISHERS, SUBJECT TO SALES TAX?
ANSWER: “LABOR ONLY” SERVICES PROVIDED TO INSPECT AND/OR REPAIR FIRE
ALARM SYSTEMS ARE SUBJECT TO SALES TAX. “LABOR ONLY” SERVICES PROVIDED TO
FIRE SPRINKLER SYSTEMS AND FIRE EXTINGUISHERS ARE NOT SUBJECT SALES TAX,
PROVIDED THESE SERVICES ARE NOT PART OF THE FIRE ALARM SYSTEM. TAXPAYER
MUST SHOW PROOF THAT NO PARTS WERE ADDED TO REPAIR THE FIRE
EXTINGUISHER.

May 16, 2018

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Re:

Technical Assistance Advisement
Florida Sales and Use Tax
Fire Alarm Systems, Fire Sprinkler Systems, and Fire Extinguisher Repairs and Inspections
Section 212.05(1)(i)1.a., Florida Statutes (F.S.), and
Rules 12A-1.0092(1), (2)(a), 12A-1.016, and 12A-1.051, Florida Administrative Code (F.A.C.)
XXXXXXXXXXXXXXXX
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XXXXXXXX
This letter is a response to your petition XXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX, for the Department of Revenue’s (“Department”) 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 requirements 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 Section (“s.”) 213.22, F.S.
STATED FACTS PRESENTED:
Taxpayer is in the business of providing fire safety and security services to its customers.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. Taxpayer also
has a location in Florida. Services performed by Taxpayer include fire alarm system inspections and
repairs, fire sprinkler system installation and repairs, and fire extinguisher inspections and repairs. The

Technical Assistance Advisement
May 16, 2018
Florida Department of Revenue
Page #2

services performed by Taxpayer entail adding materials and parts necessary to repair the system, or
making repairs that consist of “labor only” services where no materials or parts are added. Repairs to
fire extinguishers may consists of only an inspection check with no materials or parts added other than a
“tag” that certifies the date of the inspection.
REQUESTED ADVISEMENTS
Taxpayer seeks an opinion from the Department on whether “labor only” services, where no materials or
parts are involved, to inspect and/or repair fire alarm systems, fire sprinkler systems, and fire
extinguishers are subject to sales tax.
LAW & DISCUSSION:
Section 212.05, F.S., provides every person is engaged in a taxable privilege when engaging in the
business of selling or leasing, at retail, tangible personal property in this State. In order to exercise
such a privilege, tax is levied at a rate of 6%. See s. 212.05(1)(a)l.a., F.S.
Section 212.05(1), F.S., enumerates transactions that are subject to sales and use tax. In relevant part, it
provides as follows:

(1) . . . [A] tax is levied on each taxable transaction or incident, which tax is due and payable as
follows: . . .
(i)1. At the rate of 6 percent on charges for all:
a. Detective, burglar protection, and other protection services (NAICS National Numbers
561611, 561612, 561613, and 561621). . ..

2. As used in this paragraph, “NAICS” means those classifications contained in the North
   American Industry Classification System, as published in 2007 by the Office of Management and
   Budget, Executive Office of the President.
   This U.S. industry code for establishments primarily engaged in selling security alarm systems, such as
   burglar and fire alarms, along with installation, repair, or monitoring services, are included under the
   NAICS National Number 561621. The following services are included under the 2007 NAICS National
   Number 561621:
   o
   o
   o
   o
   o
   o
   o
   o

Alarm system monitoring services
Alarm systems sales combined with installation, repair, or monitoring services
Burglar alarm monitoring services
Burglar alarm sales combined with installation, repair, or monitoring services
Fire alarm monitoring services
Fire alarm sales combined with installation, repair, or monitoring services
Security alarm systems sales combined with installation, repair, or monitoring services
Security system monitoring services

Rule 12A-1.0092, F.A.C., has been promulgated to administer and provide guidance on the scope of the
activities that are protection services taxable under s. 212.05(1)(i), F.S.

Technical Assistance Advisement
May 16, 2018
Florida Department of Revenue
Page #3

Rule 12A-1.0092(2)(a), F.A.C., provides in part:
(2)(a) Detective, burglar protection, and other protection services are those services which are
rendered to minimize or prevent loss or damage to life, limb, or property and are of a kind
typically performed by security or alarm system companies, or are those investigative services
which are rendered to obtain evidence or other information for legal, business, employment, or
personal purposes of a kind typically performed by detective or investigative agencies.
Illustrative examples of taxable services are:

3. Burglar or fire alarm or other security system devices monitoring and maintenance;
   a. The installation of alarm or security systems that remain tangible personal property is
   governed by the provisions of Rule 12A-1.016, F.A.C.
   b. The installation of alarm or security systems that become a part of real property is governed by
   the provisions of Rule 12A- 1.051, F.A.C. 1
   c. The monitoring or maintenance of alarm or security systems is a taxable service whether such
   systems are considered tangible personal property or a part of real property. The term
   maintenance includes any inspection of an alarm or security system to confirm its proper
   working order. The term maintenance does not include the expansion or upgrade of an existing
   system, but it does include the replacement of defective components.
   The law provides that charges for monitoring, maintenance, repairs, and inspections of an existing security
   system, which include burglar and fire alarm systems, are subject to sales tax based on the total charge to
   the customer. The taxability of these services applies regardless of whether the security system itself would
   be considered tangible personal property or a real property improvement. See Rule 12A-1.0092(2)(a)3.c.,
   F.A.C. Thus, taxable fire alarm system services include “labor only” charges for inspections and repairs.
   Regarding fire sprinkler systems, Rule 12A-1.051(17), F.A.C, provides a list of specific activities which
   are classified as real property. Paragraph (jj) of this rule section includes fire sprinkler systems as being
   improvement to real property. The basic components of a fire sprinkler system are the sprinklers
   (heads), the system piping, and a water source. Most systems also require various system control valves
   and an alarm. The alarm may be activated by a change in water pressure or by sensing water flow. The
   alarm component alerts building occupants and emergency forces (e.g., fire department) when a
   sprinkler system is expelling water. A contractor who installs, services, repairs or maintains a fire
   sprinkler system is generally considered to be a real property contractor, and the contractor must pay tax
   to its supplier on the purchase of all materials and supplies used to perform the work and charges no tax

1 Rule 12A-1.051(4), F.A.C., provides:

(4) General rule of taxability of real property contractors. Contractors are the ultimate consumers of materials and supplies they
use to perform real property contracts and must pay tax on their costs of those materials and supplies, unless the contractor has
entered a retail sale plus installation contract. Contractors performing only contracts described in paragraphs (3)(a), (b), (c), or (e)
do not resell the tangible personal property used to the real property owner but instead use the property themselves to provide the
completed real property improvement. Such contractors should pay tax to their suppliers on all purchases. They should also pay
tax on all materials they fabricate for their own use in performing such contracts, as discussed in subsection (10). They should
charge no tax to their customers, regardless of whether they itemize charges for materials and labor in their proposals or invoices,
because they are not engaged in selling tangible personal property. Such contractors should not register as dealers unless they are
required to remit tax on the fabricated cost of items they fabricate to use in performing contracts.

Technical Assistance Advisement
May 16, 2018
Florida Department of Revenue
Page #4

to the customer. As real property improvements, such activities are taxable, as provided under Rule
12A-1.051, F.A.C. Thus, repairs to a fire sprinkler system are not taxable as a security service.
Moreover, the protection services that are subject to tax are those that are enumerated in NAICS
National Numbers 561611, 561612, 561613, and 561621. Fire sprinkler systems are not expressly listed
as an activity under any of these code numbers. The installation of sprinkler systems is specifically listed
under NAICS code 238220, "Plumbing, Heating and Air-Conditioning Contractors" which is an industry
number that is not subject to tax. The NAICS code (238220) expressly provides that the work performed
by contractors under this classification number "may include new work, additions, alterations,
maintenance, and repairs." Therefore, repairs to fire sprinkler systems are not considered to be services
that are "other protection services" or "other security system devices," as provided in Rule 12A1.0092(2)(a), F.A.C. Accordingly, repairs and maintenance provided to fire sprinkler systems are not
taxable security services under s. 212.05(l)(i)l.a., F.S., or Rule 12A-1.0092, F.A.C., including “labor
only” repairs or inspections of a sprinkler system.
Regarding fire extinguishers, in any case where a fire extinguisher is serviced, and the service provided
is not related to or a part of the fire alarm system, such service is not subject to sales tax as a taxable
security service. Under NAICS code 423990, fire extinguisher sales combined with rentals and/or
service are an included activity for this classification code. However, the exclusion from sales tax on
repairs to fire extinguishers as a taxable security service does not apply to taxation of fire extinguishers
as a repair of tangible personal property. Rule 12A-1.006, F.A.C., provides that the entire charge for
repairing tangible personal property, which also includes adjusting, applying, installing, maintaining,
and remodeling, is subject to sales tax when parts are included in the repair(s) made by the repairer.
Sales tax is due on the entire charge for the repair of fire extinguishers where parts are added to the
repair. Where parts are not added to the repair (i.e., “labor only”), and the repairman can prove no parts
were added, the repair is not subject to sales tax.
CONCLUSION:
The Department concludes the charge for “labor only” services provided to inspect and/or repair fire
alarm systems are subject to sales tax. “Labor only” services provided to fire sprinkler systems and fire
extinguishers, are not subject sales tax provided these services are not part of the fire alarm system.
Taxpayer must show proof that no parts were added to repair the fire extinguisher.
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.

Technical Assistance Advisement
May 16, 2018
Florida Department of Revenue
Page #5

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.
Sincerely,

Joseph D. Franklin III
Tax Law Specialist
Technical Assistance & Dispute Resolution
(850)717-6729
Record ID: 59705