Which separately stated charges in a turnkey Florida storm-restoration services contract are taxable?

Plain-English summary

The Florida Department of Revenue reached a split result on a turnkey storm-restoration contract. The underlying restoration service was not itself one of the taxable services listed in chapter 212, but performance required extensive tangible personal property and use of real property for crew staging, housing, meals, sanitation, offices, and equipment.

Separately itemizing a nominally nontaxable service did not remove it from tax when it was part of the overall sale. The Department also rejected the argument that any of the arrangements were exempt rentals of tangible personal property with an operator. It treated the property and related services as integrated components needed to perform the contract.

Two narrower exclusions applied. Separately stated potable drinking water was exempt under section 212.08(4)(a)1. Separately stated transportation charges applied solely at the taxpayer's option were outside the taxable sales price under the B&L Concepts rule. Mobilization and demobilization charges received the same treatment only to the extent they were strictly transportation; if they included other services, the broader taxable-sales-price analysis applied.

What this means for you

Utilities and storm-response buyers

Do not assume itemization alone makes a charge exempt. Review what each line item actually supplies and whether it is necessary to the bundled restoration arrangement.

Logistics and restoration contractors

Optional transportation charges should be separated from setup, teardown, site management, or other services if the contract and actual billing support that distinction. Mixed mobilization charges may remain taxable.

Accountants and tax professionals

The ruling distinguishes the taxability of the contract's components from the classification of the restoration service itself. It also emphasizes that exemptions are construed narrowly and that tangible personal property integral to performance can bring related services into the sales price.

Common questions

Q: Were separately itemized nontaxable services excluded from tax?
A: No. When the services were part of the sale under the restoration agreement, section 212.02(16) included them in the sales price.

Q: Did any property qualify as an exempt rental with an operator?
A: No. The Department found that none of the services under this agreement qualified for that treatment.

Q: Was potable water taxable?
A: Separately stated potable drinking water without artificial carbonation or flavoring was exempt.

Q: Were transportation charges taxable?
A: Separately stated transportation service applied solely at the taxpayer's option was not taxable. Mandatory or mixed charges may not qualify.

Q: What about mobilization and demobilization?
A: They were nontaxable only when strictly charges for transportation. Any other included services fall under the ruling's broader answer for bundled service charges.

Citations and references

• Fla. Stat. § 212.02(15)(a), (16), and (20)
• Fla. Stat. §§ 212.031, 212.05, and 212.06
• Fla. Stat. § 212.08(4)(a)1. and (13)
• Fla. Stat. § 213.22
• Department of Revenue v. B&L Concepts, 612 So. 2d 720 (Fla. 5th DCA 1993)
• Warning Safety Lights of Georgia, Inc. v. Florida, 678 So. 2d 1377 (Fla. 1996)
• American Telephone & Telegraph Co. v. Florida, 764 So. 2d 665 (Fla. 2000)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 19A-013

Original ruling text

QUESTIONS & ANSWERS:

1. Can separately itemized nontaxable service charges included under the single agreement
   be excluded from sales tax?
   No. Separately itemized nontaxable service charges included under a restoration of
   services agreement cannot be excluded from sales tax pursuant to the definition of
   sales price under s. s. 212.02(16), F.S., which includes services that are a part of the
   sale.
2. Do any of the services provided qualify as exempt rentals of tangible personal property
   with an operator?
   No. None of the services provided under the restoration of services agreement
   would qualify as exempt rentals of tangible personal property with an operator.
3. Are separately itemized charges for potable water exempt from sales tax?
   Yes. Separately itemized charges for potable water under a restoration of services
   agreement would be exempt from sales tax pursuant to s. 212.08(4)(a)1., F.S.
4. Are separately itemized transportation charges, mobilization charges, and demobilization
   charges exempt from sales tax?
   Separately itemized “service” charges for transportation under a restoration of
   services agreement that are applied at the sole option of Taxpayer pursuant to the
   holding in B&L Concepts would not be subject to tax. Mobilization and
   demobilization charges that are strictly charges for “transportation” would be
   included in the Department’s response to transportation charges not being subject
   to tax. However, should these latter charges contain services other than
   transportation, see the Response to Question No. 1.
   May 30, 2019

XXXX
XXXX
XXXX
XXXX

Technical Assistance Advisement
May 30, 2019
Florida Department of Revenue
Page 2

Re:

Technical Assistance Advisement 19A-013
Florida Sales and Use Tax
XXXX (“Taxpayer”)
BP#: XXXX
XXXX Storm Restoration Services
Sections 212.02(15)(a), (20), 212.031, 212.05, 212.06, 212.08(4)(a)1., (13), Florida
Statutes (F.S.)

Dear XXXX:
This letter is in response to your request dated March 21, 2019, and received in this office on
April 29, 2019, for issuance of a Technical Assistance Advisement (“TAA”) pursuant to Section
213.22, F.S., and Rule Chapter 12-11, F.A.C., concerning manufacturing exemptions. An
examination of your request has established you complied with the statutory and regulatory
requirements for issuance of a TAA. Therefore, the Department is hereby granting your request
for a TAA.
STATED FACTS
XXXX. Taxpayer understands when a storm impacts the state, logistical support is a critical
component in ensuring its customers experience a quick, low cost and effective restoration of
power. Therefore, Taxpayer has sought to enter into agreements with turn-key logistics providers
for storm restoration services. Taxpayer has provided a copy of the request for proposal of the
turnkey storm restoration services.
The service provider agrees to transport, stage, provide, manage, and teardown various types of
sites as required by Taxpayer in the event of a storm. Types of sites include:
•
•
•
•

Main turn-key sites — used for parking of vehicles, feeding, laundry, sanitation, and
potentially lodging of crews.
Pre-development sites — used for parking of vehicles prior to storm landfall allowing for
crews to be in Taxpayer system ready to deploy post landfall.
Processing sites — used for incoming crews.
Micro-sites — used to alleviate extra drive time for crews and get them closer to damaged
areas. Micro-Sites must be capable of serving breakfast, box lunches, and dinner that is
delivered from the main staging site. Micro-Sites are located within approximately 20
miles of a turn-key site.

The service provider agrees to mobilization immediately upon receipt of a notice to proceed from
Taxpayer. Service provider must provide all equipment on site within twelve hours after arrival.
Service manager will provide all employees, facilities, and power to provide crewmembers three

Technical Assistance Advisement
May 30, 2019
Florida Department of Revenue
Page 3

meals, showers, laundry, parking, and alternative housing. Additionally, Taxpayer has the option
to include modular offices at any site. Turn-key site pricing is based on the number of
crewmembers who will be present at the site.
A significant portion of the cost under the agreement is for the catering of meals for
crewmembers. The service provider must be prepared to serve the first catered meal within six
hours upon arrival. The service provider must provide all necessary means to provide meals
(refrigeration, food, water, waste water removal, etc.). Dining structures must be completely
erect with tables, chairs, flooring, lighting, and HVAC.
In addition to catering, the service provider will provide alternative housing, showering, and
laundry services. Alternative housing must be supplied with cots/roll-away beds, pillows, linens,
lights, HVAC with ability to maintain 70 degree to 78 degree temperatures. Alternative housing
must be capable of providing its own electrical generation. Adequate shower units/heads with a
minimum of 1 head per 10 people, must be provided to ensure sufficient hot shower time without
creating long waiting lines (based on 8-10 minute showers). Daily supplies (soap, shampoo,
towels) must be provided. Supplier shall maintain and sanitize all showers units daily. Service
provider must provide sturdy laundry bags, tags/tagging equipment and sufficient personnel to
provide the full-service laundry service. Laundry service includes a tracking mechanism and a
claims process for crewmembers.
Upon demobilization, service provider must leave the designated site clean and in like condition
as found. Supplier must document with photographs site conditions upon arrival at site to
establish site conditions prior set up. Taxpayer will conduct a site inspection after demobilization
prior to acceptance of the demobilized site. If site is found to be in an unacceptable condition,
service provider must clean and/or repair site location to return to like condition as found. If
supplier fails to clean and/or repair site, Taxpayer will deduct from any payments due the costs
incurred by Taxpayer to clean or repair site. Service provider must be completely off-site with 72
hours of notice of teardown.
Invoicing occurs in multiple forms. One service provider charges a flat fee per day with separately
itemized mobilization, demobilization, arrival transportation, and departure transportation
charges. Another service provider itemizes charges for meals, site equipment/logistics services,
and mobilization/demobilization. The third service provider separately itemizes additional items
and services.
TAXPAYER’S REQUESTED ADVISEMENTS
Based on the facts and analysis set forth above, Taxpayers request the following guidance:

1. Can separately itemized nontaxable service charges included under the single agreement
   be excluded from sales tax?

Technical Assistance Advisement
May 30, 2019
Florida Department of Revenue
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2. Do any of the services provided qualify as exempt rentals of tangible personal property
   with an operator?
3. Are separately itemized charges for potable water exempt from sales tax?
4. Are separately itemized transportation charges, mobilization charges, and demobilization
   charges exempt from sales tax?
   LAW & DISCUSSION
   Generally, services are not subject to tax under Chapter 212, F.S. Section 212.05(1)(i), F.S.,
   enumerates those transactions that are subject to sales and use tax. The restoration service
   contracted for by Taxpayer is not a taxable service. However, performance by the service
   provider under the contract requires usage of real property for staging, housing and parking as
   well as an extensive amount of reusable tangible personal property (tents, chairs, cots/beds,
   equipment, etc.) and property that is fully consumed (meals, soap, shampoo, etc.). The rental
   or license to use real property is subject to tax under s. 212.031, F.S., and the sale or use of
   tangible personal property is subject to tax under s. 212.05 and 212.06, F.S., on the retail sales
   price; unless specifically exempt from tax under Chapter 212, F.S.
   Section 212.02(15)(a), and (20), F.S., provides, in part, the following:
   (15) “Sale” means and includes:
   (a) Any transfer of title or possession, or both, exchange, barter, license, lease, or rental,
   conditional or otherwise, in any manner or by any means whatsoever, of tangible personal
   property for a consideration. (Emphasis Added)

(20) “Use” means and includes the exercise of any right or power over tangible personal
property incident to the ownership ….

The term “sales price” is defined under s. 212.02(16), F.S., and it provides in pertinent part that:
“Sales price” means the total amount paid for tangible personal property, including any
services that are a part of the sale, valued in money, whether paid in money or otherwise,
and includes any amount for which credit is given to the purchaser by the seller, 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. “Sales price” also includes the consideration for a transaction which requires
both labor and material to alter, remodel, maintain, adjust, or repair tangible personal
property….. (Emphasis Added)

Technical Assistance Advisement
May 30, 2019
Florida Department of Revenue
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No identifiable charge is made to Taxpayer for the rental or the license to use real property; nor
was an argument presented by Taxpayer indicative of a charge. Taxpayer concedes that charges
for meals for immediate consumption and required equipment under the agreement such as
portable toilets, offices, and campers used by Taxpayer and crewmembers are taxable.
However, Taxpayer set forth several arguments against taxation of various other items of tangible
personal property and services that are itemized for inclusion in its contracted restoration
services. Taxpayer asserts, (1) the holding under Warning Safety Lights of Georgia, Inc. v. Florida,
678 So.d 1377 (1996) for nontaxable use of tangible personal property with an operator is
applicable, (2) its service contracts are distinguishable from American Telephone and Telegraph
Co. v. Florida, 764 So.2d 665 (2000) which taxes tangible personal property that is inextricably
intertwined with the sale of engineering services and (3) certain charges for tangible personal
property and other identified services are exempt or not subject to tax, such as water and
transportation. At the core of Taxpayer’s arguments is itemization of various services contracted
for under the agreement and also sales or leases of tangible personal property.
Per Taxpayer, it enters into contracts with the service providers to deliver all services and
equipment necessary for the turn-key storm restoration sites. The service provider sets up and
controls complete turn-key sites XXXX specifications as to placement and function. Ultimately,
the service provider contracts to perform certain work under its direction, and XXXX does not
take possession or have any direction or control over the physical operation of the site logistics.
Therefore, in accordance with Warning Safety Lights of Georgia, Inc. v. Florida, Taxpayer asserts
stand-alone charges for electrical wiring, plumbing, parking, etc., would not be subject to tax.
A “sale” of tangible personal property includes any transfer of right to the property for
consideration and “use” includes having the right or power over tangible personal property that
has been sold; transfer of title is not a condition of use. As an initial matter, the “sales price”
upon which tax is computed upon for the sale of tangible personal property includes any services
that are a part of the sale. See s. 212.02(16), F.S. The electrical wiring, plumbing, and parking
referenced by Taxpayer constitute services and the use of real property. Therefore, these items
are subject to tax as a taxable component of the sales price under the described contracts.
Regarding Warning Safety Lights, irrespective of taxation based on the definition of sales price,
the facts and holding in that case would still be inapplicable. In that case, the court addressed
whether the use of temporary traffic control devices, permanent signs, and road markings in a
DOT subcontract by WSLG was a rental of tangible personal property. Again, at issue here are
services and the usage of real property; not the rental of tangible personal property.
Taxpayer also asserts the findings under American Telephone and Telegraph Co. v. Florida are not
applicable to its service contracts for separately itemized parking, power generation, plumbing,
dumpster, and forklift charges. These items are not related to the furnishing, cooling, preparing,
or serving of food or drinks.

Technical Assistance Advisement
May 30, 2019
Florida Department of Revenue
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Although restoration services performed by the service providers are not taxable under s.
212.05(1)(i)1., F.S., they do require extensive consumption of various types of tangible personal
property. Without these items of tangible personal property, the services specifically contracted
for by Taxpayer could not be performed. Accordingly, all tangible personal property comprising
the service contracts are inextricably intertwined for purposes of effecting full performance
under the contract as specified by Taxpayer in terms of its needs. It is illogical that the holding
under American Telephone and Telegraph Co. v. Florida would only be applicable to select items
of tangible personal property as they relate to each other under the contract as opposed to the
demands of the entire contract.
In regard to purchases of potable (drinking) water, s. 212.08(13), F.S., states that no transactions
shall be exempt from the sales and use tax except those expressly exempted. Florida courts have
consistently held that exemptions must not be expanded beyond their express terms and must
be strictly and narrowly construed against the taxpayer.1 The sale of potable water, which
contains no artificial carbonation or flavoring, is specifically exempt from tax under s.
212.08(4)(a)1., F.S. Thus, separately stated sales of drinking water, as described per the
referenced statute, would not be subject to tax under a restoration service contract.
In Department of Revenue v. B&L Concepts, 612 So.2d 720 (Fla. 5th DCA 1993), the court
addressed the application of “services” provided by a furniture lessor. The lessor charged: (1) a
late fee for the return of rented property after the expiration of the agreed rental term; (2) an
order processing fee to recoup the cost of verifying credit information; and (3) a delivery fee for
delivery of the rental property. The Department contended that all three items constituted
charges for “services that are a part of the sale” under the statutory definition of “sales price.”
However, the Fifth District Court of Appeal held that separately stated service charges required
by the lessor are part of the sales price, and that separately stated incidental service charges
optional to the lessee or buyer are not part of the sales price. As such, the decision in B&L
Concepts indicates that service charges or fees are incidental to the sale and not included in the
taxable “sales price” when they are separately stated and either: (i) applied at the sole option or
election of the purchaser; or (ii) can be avoided by a decision or action on the part of the
purchaser alone. In accordance with B&L Concepts, and charges for delivery fees, separately
stated “service” charges for transportation of equipment that is applied at the sole option of
Taxpayer, under a contract with a service restoration provider, would not be subject to tax.
1

See Asphalt Pavers v. Dept. of Revenue, 584 So.2d 55 (Fla. 1st DCA 1991), at 57 (citing the rule that exemptions
from tax are strictly construed against the taxpayer, with any ambiguity resolved in favor of the administrative
agency); State ex rel. Szabo Food Services Inc. v. Dickinson, 286 So.2d 529 (Fla. 1973) (“Exemptions to taxing
statutes are special favors granted by the Legislature and are to be strictly construed against the taxpayer.”). See
also, United States Gypsum Co. v. Green, 110 So.2d 409 (Fla. 1959) (also stating that exemptions from tax are
strictly construed against the taxpayer) and Wanda Marine Corp. v. Dep’t of Revenue, 305 So.2d 65, 69 (Fla. 1st
DCA 1975).

Technical Assistance Advisement
May 30, 2019
Florida Department of Revenue
Page 7

5. Can separately itemized nontaxable service charges included under the single agreement
   be excluded from sales tax?
   No. Separately itemized nontaxable service charges included under a restoration of
   services agreement cannot be excluded from sales tax pursuant to the definition of
   sales price under s. s. 212.02(16), F.S., which includes services that are a part of the sale.
6. Do any of the services provided qualify as exempt rentals of tangible personal property
   with an operator?
   No. None of the services provided under the restoration of services agreement would
   qualify as exempt rentals of tangible personal property with an operator.
7. Are separately itemized charges for potable water exempt from sales tax?
   Yes. Separately itemized charges for potable water under a restoration of services
   agreement would be exempt from sales tax pursuant to s. 212.08(4)(a)1., F.S.
8. Are separately itemized transportation charges, mobilization charges, and demobilization
   charges exempt from sales tax?
   Separately itemized “service” charges for transportation under a restoration of services
   agreement that are applied at the sole option of Taxpayer pursuant to the holding in
   B&L Concepts would not be subject to tax. Mobilization and demobilization charges
   that are strictly charges for “transportation” would be included in the Department’s
   response to transportation charges not being subject to tax. However, should these
   latter charges contain services other than transportation, see the Response to Question
   No. 1.

For more information concerning all the taxes administered by the Department of Revenue,
please refer to the Department’s Internet site at:
http://floridarevenue.com
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 30, 2019
Florida Department of Revenue
Page 8

You are further advised that this response and 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 15 days of the date of this
letter.
Kind Regards,
Alan R. Fulton
Alan R. Fulton
Tax Law Specialist
Technical Assistance & Dispute Resolution
850-717-6735
ARF\tadrstaff
Record ID: 201275