Are an interior designer's furniture markups, mover charges, and reimbursed expenses subject to Florida sales tax and discretionary surtax?

Plain-English summary

The Florida Department of Revenue ruled that an interior designer had to collect sales tax on mover services, storage, handling, and related markups passed through to a client as part of furnishing sales. The agreement tied those expenses and percentage fees directly to the tangible personal property being sold.

The designer's 10%–35% markups and reimbursable expenses were part of the sales price. When a documented single sale included furniture, markup, crating, and freight, those amounts were considered together when applying the $5,000 discretionary sales surtax limitation.

Separately billed delivery, installation, and freight did not join the furniture as one documented single sale for that limitation. Those charges were still taxable, but the ruling applied the full discretionary surtax to them rather than the tangible-property cap.

What this means for you

Interior designers selling furnishings

Design work can be nontaxable when no property is sold, but fees and expenses linked to furniture sales enter the taxable sales price. Contract wording and invoice structure matter.

Billing teams

Preserve documentation showing whether merchandise and related charges form one sale. Separately billed installation or delivery may receive different surtax-cap treatment even though the charge remains taxable.

Accountants and tax professionals

The $5,000 limitation is transaction- and documentation-specific. Verify current surtax law and whether multiple items meet the single-sale rules before aggregating them.

Common questions

Q: Were furniture markups taxable?
A: Yes. They were part of the amount charged for tangible personal property.

Q: Were mover storage and handling charges taxable?
A: Yes, when marked up and passed through as part of the furnishing sale.

Q: Did markups count toward the $5,000 discretionary-surtax limitation?
A: Yes, when included in a documented single sale.

Q: How were separately billed delivery and installation treated?
A: They did not qualify as part of the same single sale for the $5,000 limitation and were subject to the full surtax.

Citations and references

• Fla. Stat. §§ 212.02(16), 212.05, 212.06(1)(a), 212.054(2), 212.055, and 213.22
• Fla. Admin. Code rr. 12A-1.001, 12A-1.006, and 12A-15.004

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 19A-006

Original ruling text

Florida Department of Revenue
Technical Assistance and Dispute Resolution

5050 West Tennessee Street Tallahassee FL 32399

Jim Zingale
Executive Director

floridarevenue.com

QUESTION:
Should the Taxpayer should charge sales tax on the Mover’s services and associated markup,
when billing the Client?
ANSWER:
Yes. The Taxpayer should charge sales tax on the Mover’s services and associated markup,
when billing the Client. The charges for storage and handling imposed by the Mover, that are
marked up and passed on to the Client are part of the sales price subject to sales tax.
QUESTION:
Are the 10-35% markup and charges for reimbursable expresses considered to be part of the sales price
of the materials sold by the Taxpayer to the Client?

ANSWER:
Yes. The mark-up fees and charges for reimbursable expenses are part of the sales price of
tangible personal property and are subject to tax under sections 212.02(16) and 212.06(1)(a),
F.S.
QUESTION:
Should the 10-35% markup is to be included when determining the $5,000 discretionary sales
surtax limitation.
ANSWER:
The 10-35% markup is considered to be part of the sales amount of the materials sold to the
Client and should be included when determining the $5,000 discretionary sales surtax limitation
in cases where a single sale transaction is documented by a charge ticket, sales slip, invoice, or
other tangible evidence.
QUESTION:
Are the charges for delivery, installation, and freight imposed by XXXX that are passed on to the
Client are to be included when determining the $5,000 discretionary sales surtax limitation
when billed separately from the sale of tangible personal property.
ANSWER:

XXX
March 8, 2019
Florida Department of Revenue
Page 2

No. The charges for delivery, installation, and freight imposed by XXXX that are passed on to
the Client are not to be included when determining the $5,000 discretionary sales surtax
limitation of the tangible items sold to the Client. As provided, section 212.054(2)(b), F.S.,
requires that a single sale transaction must be documented by a charge ticket, sales slip,
invoice, or other tangible evidence in order for the $5,000 limitation to apply. Based on the
information provided, the charges for delivery, installation, and freight were not billed as a
single sale with the tangible items. The charges are subject to the full amount of discretionary
sales surtax.
March 8, 2019,
XX
Subject: Technical Assistance Advisement 19A-006
Sections 212.02, 212.05, 212.054, and 212.055, Florida Statutes (F.S.)
Rules 12A-1.001, 12A-1.006, and 12A-15.004, Florida Administrative Code (F.A.C.)
[The Taxpayer] Inc. ("Taxpayer")
FEIN XX
Dear XX:
This is in response to your letter dated December 14, 2018, 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 certain charges imposed by your
company. 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.
Facts and Requested Advisement
Your letter dated December 14, 2018, provides the following in part:
[The Taxpayer] designs interiors for our clients, [(the Client)] residence in XX Florida. We
then order items such as couches, rugs, mirrors etc. to execute our design. [The
Taxpayer] pays for the items, which often times includes discounts extended to us as
members of the trade and then we bill the client for the items with a 10-35% mark up
on each item. After we have received payment from our clients and the item is ready to
ship [The Taxpayer] has the items shipped to a receiving house in XX Florida called [(the
Mover)]. [The Mover] then receives, catalogues and stores all the items until [The
Taxpayer] is ready to install the items to the client’s home. When [the Taxpayer] is ready
to install, we organize and book [the Mover] to deliver the items to the client’s home

XXX
March 8, 2019
Florida Department of Revenue
Page 3

and install them into rooms per [the Taxpayer’s] direction and oversight. [The Mover]
then bills [The Taxpayer] the associated fees for the project and we in turn then bill the
client the fees that include, receiving, storage, delivery and installation with a 10-30%
markup for overseeing and organizing the process.

In an e-mail dated January 16, 2019, you provided the following in part:
[The Taxpayer uses] a receiving company to deliver and install non-permanent items
into the client’s house. The receiving company drives the goods in trucks loads from
various places to the client’s house and installs them into various rooms. They bill [the
Taxpayer] in lump sums for truck loads. They do not break out how much each item on
the truck costs but instead gives us a bid for the whole truck load/loads. [The Taxpayer]
then bills the client the same way the receiving company bills us, in lump sums. . . .

In response to the Department’s request for additional supporting documentation your
provided copies of the following:
•
•
•
•
•
•
•

Design Services Agreement (the Agreement), dated August 7, 2015, prepared by the
Taxpayer for the Client;
Invoice #300058, dated November 5, 2018, issued by your company to the Client;
Exhibit A, “Rates for Interior Design Services,” prepared for the Client;
A Contract for Services from the Mover listing your company as the Customer;
Invoice # 44281, dated September 15, 2018, from the Mover issued to the Taxpayer;
Order Receipt #4347883 dated March 28, 2018, from XXXX issued to the Taxpayer; and,
Invoice #300019, dated July 24, 2018, issued by the Taxpayer to the Client;

With your e-mail dated January 16, 2019, you included the following:
•

•

Invoice #32170, dated October 15, 2018, prepared by XX billing the Taxpayer $33,338.95
for “Long Distance Delivery and Installation Service” provided to the Taxpayer at the
Client jobsite.
Invoice #300099, dated December 17, 2018, prepared by the Taxpayer billing the Client
for various items including the “Art Installation for Oct 2018,” charges imposed by XX
on invoice #32170.

XXX
March 8, 2019
Florida Department of Revenue
Page 4

The Agreement, provides the following in part:
. . . 1.5 Furnishings Procurement Phase
Because an integral part of the entire Design Concept of the project is founded upon
[the Taxpayer’s] resources with the interior design trade, and as consideration and
inducement for [the Taxpayer] to enter into this agreement you agree that purchases,
such as furnishings, lighting, rugs and fabric etc. for the project shall be made only by
[the Taxpayer], unless expressly agreed to by both parties.
[The Taxpayer] represents and warrants that it will purchase furnishings for the project
at the maximum trade discount currently available to [the Taxpayer]. For the purposes
of this agreement, "Furnishings" shall mean all finished materials, furniture, fabric,
carpet, floor covering, decorative hardware, artwork, and accessories selected by [the
Taxpayer] and approved by you following consultation with [the Taxpayer]. . . .
1.6 Furnishings Procurement Protocol
[The Taxpayer] will arrange delivery, assembly, and installation of the Furnishings into
the project acting as your agent . . . .

Proposals will be processed as follows:
2.2 Furnishings Procurement Fees
[The Taxpayer] will act as your purchasing agent for all items needed to satisfy the
Furnishings requirements of the project. All purchasing for the project handled by [the
Taxpayer] on your behalf will be charged to you as follows:
Retail & Trade (net) Purchases

Investment Art
(net cost of $35,000 or more per item)

35% mark-up on the first $1,500,000.00
of FF&E purchases.
30% mark-up on all FF&E thereafter
15% mark-up ***

*** If [The Taxpayer] is acting as art consultant
Art below this amount per item is subject to FF&E
mark up rates
Shipping & Delivery
Reimbursable Expenses

10% mark-up
10% mark-up

XXX
March 8, 2019
Florida Department of Revenue
Page 5

The Contract for Services from the Mover provides the following in part:

Description of Services:
Receive and inspect new incoming furnishing and décor that we will hold in storage until
residential installation date provided by [the Client]. . . .

Invoice # 44281, dated September 15, 2018, from the Mover, provides the following in part:
Warehouse handling services performed on 8/22/18:
Locate, prep & load client requested items for transport:
Merchandise designated by Designer, sidemarked TV Room
Origination: XXXX Warehouse Climatized Vault Storage

$240.00

Local moving services performed on 8/28/2018
Transportation, delivery & Installation of above referenced
acquisitions as directed onsite by Designer: Residential
destination: XXXX

$1,920.00

Valuation securing merchandise in transit
Rubbish disposal

$883.00
$225.00

Invoice #300058, dated November 5, 2018, issued by the Taxpayer to the Client in the amount
of $22,860.66, for various items of tangible personal property and reimbursable expenses. The
invoice includes the following charge:
1.00

Each [Mover] INVOICE 44281
Installation, Delivery, and Transportation 8/28/18 for
TV Room Installation which included lighting crates for
Living Room and various other consoles

$3,468.00

Order Receipt #4347883 from XX, provides the following:
. . . Architectural Wing Chair

List Price

$8,500.00

Net Price Discount

-$1,700.00

XXX
March 8, 2019
Florida Department of Revenue
Page 6

Your Price

$6,800.00

Shipping

$ 449.00

Total

$7,249.00

Invoice #300019, issued by the Taxpayer to the Client in the amount of $255,514.34, for various
items of tangible personal property, including a charge for the Architectural Wing in the
amount of $6,800.00. The subtotal for all the merchandise listed on Invoice #30019 is
$182,152.52. The invoice also includes a 30% “mark up,” totaling $54,645.76, a crating charge
of $319.00, freight charges in the amount of $1,687.70, and sales tax in the amount of
$16,709.36.

Issues
Whether the Taxpayer should charge sales tax on the Mover’s services and associated markup,
when billing the Client.
Whether the 10-35% markup and charges for reimbursable expresses are considered to be part of the
sales price of the materials sold by the Taxpayer to the Client.

Whether the 10-35% markup is to be included when determining the $5,000 discretionary sales
surtax limitation.
Whether the charges for delivery, installation, and freight imposed by XX that are passed on to
the Client are to be included when determining the $5,000 discretionary sales surtax limitation
when billed separately from the sale of tangible personal property.
Law and Discussion
Section 212.05, F.S., generally imposes tax on the sale of tangible personal property. The tax is
calculated on the "sales price," which term is defined by section 212.02(16), F.S., in part as ". . .
the total amount paid for tangible personal property, including any services that are a part of
the sale . . . without any deduction therefrom on account of the cost of the property sold, the
cost of materials used, labor or service cost, interest charged, losses, or any other expense
whatsoever. . . ."
Rule 12A-1.006(12), F.A.C., provides that charges by an interior decorator are not subject to
sales tax when no materials or supplies are provided by the interior decorator. Rule 12A1.001(2)(a)1., F.A.C., provides that interior decorator fees are taxable and cannot be exempted
as a professional or personal service charge when the transaction involves the sale of tangible

XXX
March 8, 2019
Florida Department of Revenue
Page 7

personal property. Rule 12A-1.001(2)(a)2. and 3., F.A.C., provide that design fees imposed by
interior decorators are exempt only when they are not contingent on or part of the sale of
tangible personal property.
The Agreement provides that the Taxpayer will purchase all furnishings for the project which
will be subject to a “cost plus percentage fee” as stipulated by the Agreement. The Agreement
provides for a 30-35% “mark-up” for furnishings and a 15% “mark-up” for investment art. The
agreement also provides that shipping, delivery, and reimbursable expenses shall include a 10%
“mark-up” fee.
An expense incurred by the Taxpayer, such as the storage and handling fees imposed by the
Mover, that is later passed on to the customer with the sale of tangible personal property, is
part of the sales price, as it represents an expense of the Taxpayer. The Agreement clearly links
the mark-up fees and charges for reimbursable expenses directly to the tangible personal
property provided under the Agreement. The Agreement provides that “the associated fees for
the project . . . include, receiving, storage, delivery and installation with a 10-30% markup for
overseeing and organizing the process.” The mark-up fees and charges for reimbursable
expenses are part of the sales price of tangible personal property and are subject to tax under
sections 212.02(16) and 212.06(1)(a), F.S.
Invoice #30019, includes a charge for the Architectural Wing Chair in the amount of $6,800.00.
The invoice includes a 30% mark-up, crating charge, and freight charges for all of the items
included in the invoice. As proved, the mark-up fees and charges for reimbursable expenses
are part of the sales price, or sales amount of the tangible personal property sold to your
clients.
Section 212.055, F.S., authorizes the counties of Florida to levy a discretionary sales surtax.
Section 212.054(2)(a), F.S., provides that the discretionary surtax is imposed on "all transactions
occurring in the county which transactions are subject to the state tax imposed on sales, use,
services, rentals, admissions, and other, transactions. . . ." The basic principle in applying
discretionary surtax is that it piggybacks 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.
Section 212.054(2)(b)1., F.S., provides that the sales amount above $5,000 on any item of
tangible personal property shall not be subject to the surtax. If two or more taxable items of
tangible personal property are sold to the same purchaser at the same time, then the items
may qualify, under certain conditions, as a single sale of an item of tangible personal property
for purposes of the limitation.
The Department's interpretation of the limitation is provided in Rule 12A-15.004, F.A.C. In
order for the exception to apply, two tests must be satisfied. There must be a single sale in
which one purchaser buys all the items at the same time, with a purchase order or other

XXX
March 8, 2019
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documentary evidence that there has been such 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 fall into one of two categories. They must either be items that are
normally sold in bulk, or they must be items that will be assembled into a working unit or a part
of one.
All items sold to one purchaser at one time can meet the single sale test. There must be
tangible evidence of the sale, such as an invoice, sales slip, charge ticket, written purchase
order or agreement that specifies both a quantity certain of materials and a time certain by
which all the materials will be delivered (when multiple deliveries are made, and multiple
invoices are issued) in order to qualify as a single sale. This applies to all items purchased
pursuant to a single written contract or purchase order, when the written contract or purchase
order specifies a quantity certain of items being sold and a time certain by which the items
must be delivered. When the written contract or purchase order specifies the quantity and the
delivery date, the single sale test is met regardless how many deliveries are made or invoices
are issued. If the quantities and/or delivery time frame are not specified, then each
delivery/invoice constitutes a single sale.
The single sale requirement addresses the character of the transaction itself. This requirement
addresses whether there has been one discrete transaction to which the limitation can be
applied or multiple sales that are separately subject to the limitation. Invoice #300099, includes
charges for “Art Installation for Oct 2018,” and “XXXX Invoice #32170A and #32170B.” As
provided in your e-mail dated January 16, 2019, you bill the client for these charges “in lump
sums . . . [because you] cannot tell the cost of each item that is ship[ed] and installed.” The
charges for delivery and installation are billed separately from the items being installed.
Therefore, the single sale test, as discussed above, has not been met.
Conclusion
The Taxpayer should charge sales tax on the Mover’s services and associated markup, when
billing the Client. The mark-up fees and charges for reimbursable expenses are part of the sales
price of tangible personal property and are subject to tax under sections 212.02(16) and
212.06(1)(a), F.S. Specifically, the charges for storage and handling imposed by the Mover, that
are marked up and passed on to the Client, are part of the sales price subject to sales tax.
The 10-35% markup is considered to be part of the sales amount of the materials sold to the
Client and should be included when determining the $5,000 discretionary sales surtax limitation
in cases where a single sale transaction is documented by a charge ticket, sales slip, invoice, or
other tangible evidence. Invoice #300019, provides such evidence of a single sale transaction.
The invoice includes charges for the Architectural Wing in the amount of $6,800.00, includes
the 30% “mark up,” crating charges, and freight charges. The mark-up and charges for

XXX
March 8, 2019
Florida Department of Revenue
Page 9

reimbursable expenses are to be considered when determining the $5000 discretionary sales
surtax limitation since all are billed in a single sale transaction.
However, the charges for delivery, installation, and freight imposed by XX that are passed on to
the Client are not to be included when determining the $5,000 discretionary sales surtax
limitation. As provided, section 212.054(2)(b), F.S., requires that a single sale transaction must
be documented by a charge ticket, sales slip, invoice, or other tangible evidence in order for the
$5,000 limitation to apply. Based on the information provided, the installing services are billed
separately. The charges are subject to the full amount of discretionary sales surtax.
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
Brinton Hevey
Tax Law Specialist
Technical Assistance and Dispute Resolution
(850) 717-6839
Record ID: 142848