Which parts of a Florida airport ground lease are taxed as real-property rent, and how does a tenant recover overpaid tax?

Plain-English summary

The Florida Department of Revenue allocated a fixed-base operator's airport ground lease between taxable real-property rent and areas excluded from section 212.031. Hangars used to store aircraft and ramp areas used for aircraft landing or taxiing were excluded from that rent-tax provision.

The submitted lease covered 1,416,009 square feet. The Department identified 592,710 square feet of hangar and ramp space as excluded and calculated that approximately 58% of the prime lease payments remained taxable. The result assumed the subleased hangar continued to be used exclusively for aircraft storage for consideration.

If the tenant had overpaid tax to the lessor, it had to obtain the refund from the lessor rather than directly from the Department.

What this means for you

Airport tenants and fixed-base operators

Map leased areas by actual use. Storage, landing, and taxiing areas may fall under different tax provisions than terminal, office, or other commercial space.

Airport landlords

Keep square-footage and exclusive-use documentation supporting the allocation, and handle tenant refund claims for tax collected in error.

Accountants and tax professionals

The ruling distinguishes exclusion from section 212.031 from exemption from all tax: aircraft storage privileges are addressed under section 212.03(6). Verify the applicable tax treatment for each use.

Common questions

Q: Were aircraft hangars included in taxable real-property rent?
A: Not when used for aircraft storage for consideration under the stated facts.

Q: Were ramp areas taxable under section 212.031?
A: Areas used exclusively for aircraft landing or taxiing were excluded.

Q: What percentage of this lease remained taxable?
A: Approximately 58% based on the submitted square footage.

Q: Who refunds overpaid tax?
A: The lessor that collected it, not the Department directly.

Citations and references

• Fla. Stat. §§ 212.031(1)(a)3. and 7., 212.03(6), and 213.22
• Fla. Admin. Code r. 12A-1.014(4)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 18A-017

Original ruling text

QUESTION: THE TAXPAYER HAS REQUESTED THAT THE DEPARTMENT
INDICATE WHICH PORTIONS OF A GROUND LEASE ARE SUBJECT TO SALES AND
USE TAX. IT IS FURTHER REQUESTED THAT GUIDANCE BE PROVIDED
CONCERNING THE REFUND PROCESS.

ANSWER: THE TAXABLE PORTION OF THE LEASE EXCLUDES PROPERTY USED
FOR STORAGE OF AIRCRAFT AND PROPERTY USED EXCLUSIVELY FOR THE
PURPOSE OF AIRCRAFT LANDING OR AIRCRAFT TAXIING. ANY POTENTIAL
REFUND TO THE TAXPAYER MUST BE SECURED FROM THE LESSOR.
November 29, 2018
XXX

Technical Assistance Advisement 18A-017 (Revised)
Sales & Use Tax – License to Use Real Property
Sections 212.031 & 212.03, Florida Statutes (F.S.)
XXX (the Taxpayer)
FEI#: XXX
Dear XXX:
This is in response to the letter dated June 21, 2018, from XXXXX XXX, XXX, requesting this
Department’s issuance of a Technical Assistance Advisement (“TAA”) pursuant to Section
213.22, F.S., and Rule Chapter 12-11, Florida Administrative Code (F.A.C.), regarding the
taxability of portions of a certain airport lease for sales and use tax. Your petition has been
carefully examined, and the Department finds it to be in compliance with the requisite criteria set
forth in Rule Chapter 12-11, F.A.C. This response to your request constitutes a TAA and is
issued to you under the authority of section 213.22, F.S.
Issue
The Taxpayer is requesting that the Department indicate which portions of a ground lease are
subject to sales and use tax, pursuant to s. 212.031, F.S., as a lease or license to use real property.
It is further requested that guidance be provided concerning the refund process.

XXX
November 29, 2018
Florida Department of Revenue

Page 2

Facts Provided by Taxpayer
The Taxpayer, a fixed-base operator, provides fueling, aircraft storage, catering and other
accommodations to private and commercial customers. The Taxpayer entered into a 20-year
land lease with three 5-year extensions with XXX (the Lessor).
You have indicated the following concerning the square footage and usage of the subject real
property:
Building 1625 D & E; 36,724 sq. ft.; Hangar D & E – Storing of aircraft.

Ground Rent – East Tract S-9; 470,471 sq. ft.; 3 hangars (A,B,C) @ 30,000 sq. ft. each. Plus
main terminal @ 11,525 sq. ft.
Ground Rent – West Tract S-1B; 384,963 sq. ft.; 2 hangars (G,H) @30,000 sq. ft. each. You
have indicated that 139,417 sq. ft. on a 3rd hangar is subleased.
Ground Rent – Parcel S-5; 327,282 sq. ft. – Hangar India; 70,000 sq. ft. - storing of aircraft.
Ground Rent – GA Parking Apron A & B; 86,244 sq. ft.; Ramp space – parking of aircraft.
Ground Rent – Parcel S1 – D; 17,997 sq. ft.; Ramp space in front of hangar.
Ground Rent – Parcel S1-E; 19,177 sq. ft.; Ramp space in front of hangar.
Ground Rent – Option Area; 73,151 sq. ft.; Ramp space in front of hangar.
You indicated that all of the hangars are used for storing of aircraft for a consideration. In
addition, based on the schematic submitted, the ramp spaces adjoin to the taxiing areas.
Applicable Law & Discussion
Section 212.031(1)(a)3. & 7., F.S., provide:
It is declared to be the legislative intent that every person is exercising a taxable privilege
who engages in the business of renting, leasing, letting, or granting a license for the use
of any real property unless such property is:

3. Property subject to tax on parking, docking, or storage spaces under s.
   212.03(6).

XXX
November 29, 2018
Florida Department of Revenue

Page 3

7. Property used at an airport exclusively for the purpose of aircraft landing or
   aircraft taxiing or property used by an airline for the purpose of loading or
   unloading passengers or property onto or from aircraft or for fueling aircraft.
   Section 212.03(6), provides in part:
   The Legislature finds that every person . . . who leases or rents tie-down or storage space
   for aircraft at airports is engaging in a taxable privilege.
   Property used for storage of aircraft and property used exclusively for the purpose of aircraft
   landing or aircraft taxiing are not subject to tax under s. 212.031, F.S. These privileges are
   taxable under s. 212.03(6), F.S.
   Based on the information submitted, the lease is not taxable with regard to the square footage
   related to hangar and ramp space; which amounts to 592,710 sq. ft. As the total square footage
   of the subject property is 1,416,009 sq. ft., the taxable percentage
   on the prime lease is approximately 58 percent of the rental payments made.1
   Regarding any refund potentially due the Taxpayer, please be advised that any overpayments of
   sales and use tax (paid to a lessor) must be refunded by the lessor. Rule 12A-1.014(4), F.A.C.,
   provides:
   A taxpayer who has overpaid tax to a dealer, or who has paid tax to a dealer when no tax
   is due, must secure a refund of the tax from the dealer and not from the Department of
   Revenue.
   Concluding Statement
   The taxable portion of the lease is as provided above. Any potential refund to the Taxpayer
   must be secured from the Lessor.
   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.

1

This is provided that the subleased hangar continues to be used exclusively for the storage of aircraft for a
consideration.

XXX
November 29, 2018
Florida Department of Revenue

Page 4

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.
Respectfully,

R. Clay Brower
R. Clay Brower
Technical Assistance & Dispute Resolution
(850) 717-6306
Control No: 101068