Were housekeeping workers supplied to a resort hotel under a revised staffing contract taxable nonresidential cleaning services?

Plain-English summary

Florida held that a resort hotel's revised contract for temporary housekeeping workers provided nontaxable staffing services, not taxable nonresidential cleaning services.

Housekeeping itself is a taxable cleaning service when a provider supplies and manages the cleaning work. Here, the contractor supplied employees on an as-needed basis, but the hotel controlled and supervised them. The hotel also supplied the equipment, tools, chemicals, uniforms, and other materials. The contractor had no on-site presence apart from the assigned workers and was paid from recorded hours and position-specific rates.

The TAA reached a different result from an earlier ruling involving the same parties because the contract and facts had changed. It expressly left that earlier ruling's conclusion intact for its own facts.

What this means for you

Hotels and resorts

The dividing line was operational control. Hotel-supervised temporary labor was staffing; contractor-managed housekeeping would be taxable cleaning.

Staffing and cleaning companies

Contract language should match actual practice on supervision, supplies, tools, billing, and control at the worksite.

Common questions

Were the temporary housekeepers taxable cleaning services? No, under the revised contract.

Who supervised the workers? The hotel.

Would contractor-managed housekeeping be treated the same way? The TAA indicates supervision and management are determining factors, so different facts could change the result.

Citations and references

• Fla. Stat. Sec. 212.05(1)(i)
• Fla. Admin. Code R. 12A-1.0091

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 22A-004

Original ruling text

QUESTION:
Does the revised contract between Taxpayer and Contractor involve taxable housekeeping services?
ANSWER:
The revised contract between Taxpayer and Contractor does not involve taxable housekeeping
services.

February 3, 2022
XXXXXXXXXXXXXXXXXXXX
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RE:

Technical Assistance Advisement 22A-004
XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
Sales and Use Tax
Taxability of Cleaning Services Performed by Cleaning and Staffing Contractor
Section: 212.05(1)(i), Florida Statutes (F.S.)
Rule: 12A-1.0091, Florida Administrative Code (F.A.C.)

Dear XXX XXXXXXXX:
This letter is in response to your request dated November 16, 2020, for 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 cleaning services provided to a resort hotel. 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.
On May 29, 2020, the Department issued TAA 20A-009 to Taxpayer regarding the issue
presented. After the issuance of TAA 20A-009, Taxpayer and Contractor revised their Contractual
relationship such that the facts presented here are different from those presented in TAA 20A009. Rather than withdrawing TAA 20A-009, the Department stands by the conclusion reached
in TAA 20A-009 based on those facts presented. Again, the facts presented in the present TAA
request differ and as such the conclusion reached below differs.

Technical Assistance Advisement
Page 2

STATEMENT OF FACTS
Taxpayer is a Delaware company and is incorporated in the State of Florida. Its business involves
providing sleeping accommodations to transient guests at a resort hotel located in Orlando,
Florida [hereinafter “Hotel”]. During peak occupancy periods, Taxpayer needs to augment its own
staff in order to maintain a high level of quality for all types of services expected by guests at the
resort hotel (not only housekeeping needs but also such things as golf course attendants, prep
cooks, and laundry washers). Taxpayer entered into a contractual agreement with XXXXXXXXXXX
XXXXXXXXXXXXXXXXXX (hereinafter “Contractor”) for additional staff during those periods.
Taxpayer believes the contract with Contractor achieves its intent to purchase temporary
employees or staff to supplement its workforce. Taxpayer does not believe the contract with
Contractor involves services (e.g., nonresidential cleaning services) subject to sales tax.
To provide evidence for its assertions, Taxpayer submitted a final drafted and fully executed
written contract between Taxpayer and Contractor. Pertinent excerpts from the contract read as
follows:
Recitals
A. [Taxpayer] . . . owns the [Hotel];
B. Given the seasonality of the Florida hospitality industry, fluctuating business levels,
and the efficiencies typically yielded from the use of trained outsourced labor, it is not
uncommon for hotels and resorts to engage staffing companies such as Contractor to
provide skilled hospitality labor on an as-requested basis;
C. [Taxpayer] desires to engage Contractor to assign employees, on an as-requested
basis, who are able to fulfill those positions described in Appendix “A” attached hereto
(the “Services”); and
D. Contractor has skilled and experienced employees that it can provide for [Taxpayer]
on the terms set forth herein.
Agreement

1. Term
   This Agreement shall commence January 1, 2021 and end December 31, 2021. In the
   event that [Taxpayer] continues to retain Contractor for Services and Contractor
   continues to provide such Services for [Taxpayer] beyond the initial period set forth
   above, the terms of this Agreement shall continue in effect until the Agreement is
   renewed on terms agreed by the Parties or terminated as set out below . . ..
2. Provision of Labor
   The Contractor shall, throughout the term of this Agreement and on an as-needed
   basis, provide employees who are able to fulfill the positions outlined in Appendix “A”
   attached hereto.

Technical Assistance Advisement
Page 3

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Contractor agrees
that it, and each person assigned by it to perform Services at the Hotel, shall at all times
conduct themselves in a manner conforming with the image and quality of service,
cleanliness and professional standards of [Taxpayer], and shall comply with the Rules for
Contractors attached as Appendix “B.”
In addition to the foregoing, Contractor represents and warrants that it will comply
with the following requirements:
•

Contractor will ensure each of its employees is adequately trained, skilled, and
experienced to ensure they are suitable for assignment at the Hotel;

3. . . ..
4. Relationship Between Parties
   It is expressly agreed that neither Contractor nor any employee of Contractor is or
   shall be deemed an employee of [Taxpayer] for any purpose whatsoever, but instead
   Contractor is and shall be deemed an independent contractor. It is expressly agreed that
   Contractor will select, designate and assign all personnel who may perform the Services
   required under this Agreement. Each of Contractor’s employees shall sign an
   acknowledgement outlining Contractor’s role as his/her employer and recognizing that
   [Taxpayer] is not their employer, as set out in Appendix “F” attached hereto. [Taxpayer]
   may, from time to time, make available certain facilities and amenities (e.g., employee
   parking lot, dining area and staff meals, and access/security cards) for use by Contractor
   and Contractor’s employees. Regardless of whether such facilities and/or amenities are
   provided by [Taxpayer] for a fee or gratis, the provision of such facilities and/or amenities
   shall in no manner be construed to create an employee-employer relationship nor
   otherwise jeopardize the independent contractor relationship. . ..
   Contractor acknowledges that it has the sole responsibility for the payment of its
   employees’ compensation and the withholding and payment of all required taxes,
   including state unemployment insurance. Contractor shall maintain all employee records
   and is responsible for tax-related questions, unemployment inquiries and the production
   and mailing of all applicable tax forms.
5. . . .
6. Invoicing and Fees
   a. Contractor will invoice [Taxpayer] on a weekly basis for the Services performed by
   the employees its supplies to work at the Hotel. . . [Taxpayer] will approve the daily billing
   units using the Contractor’s XXXX system. [Taxpayer] shall designate one or more persons

Technical Assistance Advisement
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to serve as a “Hotel Authorized Representative” to approve and sign documentation of
the daily billing units through Contractor’s XXXX System.
b. The hourly rates for the Contractor’s employees are set forth by job categories
and scope of work on Appendix “A” attached hereto. [Taxpayer] acknowledges that
unforeseen events may require additional time to complete tasks, under the advance
approval of [Taxpayer], [Taxpayer] will be billed at premium rates.

e. Contractor shall be permitted, at its sole cost, to install a time capturing system at
the Hotel for the purpose of recording the worked time of Contractor’s employees.
Notwithstanding anything in this Agreement to the contrary, if such time capturing
system is implemented, the Parties agree it shall be the exclusive method of recording
the work time of the Contractor’s employees. Any other instruction on fees and billing
procedure are found either in this Section 6 or in Appendix “A” attached hereto, which is
incorporated herein by reference.

23. Non-Solicitation
    [Taxpayer] agrees that, during the Term of this Agreement and for a period of one
    year following the termination of this Agreement for any reason whatsoever, it shall not,
    either directly or indirectly, on its own behalf or on behalf of others, encourage or induce
    the voluntary termination of any of Contractor’s employees that performed any of the
    services hereunder (the Restricted Employees”) and shall not solicit any Restricted
    Employee to become an employee of the [Taxpayer] and/or an employee of any vendor
    other than Contractor. . ..
24. . . ..

The following excerpts taken from “Appendix A” attached to the contractual agreement read as
follows:
APPENDIX “A”

1. Contractor shall supply its employees (“Assigned Employees’”) to fulfil the positions
   outlined below at the Hotel (the “Services”) upon request by [Taxpayer].
2. . . ..
3. . . ..
4. The hourly rates set forth below shall be fixed through July 2021, but may be modified
   by Contractor thereafter. Contractor, with proper written notice, may adjust the rates
   on an annual basis if there is an increase in payroll taxes or a legislative mandated

Technical Assistance Advisement
Page 5

increase in worker’s compensation cost, or to respond to any increases as a result of
legislative, regulatory, taxes or judicial action.
. . . The Assigned Employees are not eligible to receive free meals or parking on any
days other than those in which they are scheduled to perform the Services hereunder.

5. Notwithstanding any other provision of this Agreement, if [Taxpayer] terminates this
   Agreement or notifies Contractor of its intent to terminate this Agreement and
   [Taxpayer] desires to have all or some of the Assigned Employees continue to work at
   the Hotel’s facilities, [Taxpayer] shall have the following options:
   a. To pay Contractor a XXXXXX per employee flat fee in exchange for [Taxpayer]
   directly hiring the employee during the restricted period mentioned in Section
   23 of the Agreement; or
   b. To continue to pay Contractor for such Assigned Employee’s services at
   Contractor’s then current billing rate for as long as the Assignment
   Employee(s) continue to perform services for [Taxpayer].

6. Pricing by Available Position:

REQUESTED ADVISEMENT
[Taxpayer] asks whether housekeeping services performed by Contractor’s employees are
subject to sales tax.
APPLICABLE LAW AND DISCUSSION
Section 212.05(1)(i)1.b., F.S., and Rule 12A-1.0091(1)(a), F.A.C., provide that nonresidential
cleaning services, as enumerated in NAICS National Number 561720 of the North American
Industry Classification System published in 2007, are subject to tax. Nonresidential cleaning
services are those services rendered to maintain the clean and sanitary appearance and
operating condition of nonresidential building interiors. NAICS National Number 561720,
janitorial services, includes cleaning offices, shopping centers, and restrooms.

Rule 12A-1.0091(1)(a), F.A.C., provides the following illustrative examples of taxable services:

1. Acoustical tile cleaning services;
2. Building cleaning services, interior;
3. Custodial services;
4. Deodorant servicing of restrooms;
5. Disinfecting services;
6. Floor waxing services;

Technical Assistance Advisement
Page 6

7. Housekeeping (cleaning services);
8. Janitorial services;
9. Maid services;
10. Maintenance of buildings (except repairs);
11. Office cleaning services;
12. Restroom cleaning services;
13. Service station cleaning and degreasing services;
14. Venetian blind cleaning;
15. Washroom sanitation service; and
16. Window cleaning (interior or exterior).
    The NAICS Industry Code No. 561320 provides the following description for Temporary Help
    Services:
    This industry comprises establishments primarily engaged in supplying workers to client’s
    businesses for limited periods of time to supplement the working force of the client. The
    individuals provided are employees of the temporary help service establishment.
    However, these establishments do not provide supervision of their employees at the
    client’s work sites. [emphasis supplied]
    Section 212.05(1)(i)4., F.S., requires a separate identification of taxable services from nontaxable
    services, and other items that are not taxable, if the seller or service provider intends to avoid
    collecting and remitting sales or use tax on the nontaxable portion of the total invoice amount.
    ANALYSIS
    Taxpayer utilizes Contractor for temporary employment services to secure additional
    housekeeping staff needed to supplement Taxpayer’s workforce, all of which are engaged for a
    limited duration. As clarified in Rule 12A-1.0091(1)(a), F.A.C., housekeeping services are
    considered taxable cleaning services when performed on a nonresidential building, such as a
    Hotel.
    Charges for nonresidential cleaning services are subject to sales tax. Typically, cleaning service
    providers supply the labor and personnel, supplies, and the supervision or management over the
    activities that are being performed when providing this service.
    Charges for staffing services are not subject to sales tax. The NAICS code number 561320,
    entitled, Temporary Help Services is not included under the taxable NAICS codes. However,
    temporary help service providers do not provide direct supervision of the employees at the
    client’s work site(s). Therefore, nontaxable staffing services are those services provided as
    temporary or continued help provided to another business on a contract or fee basis, and does
    not include direct supervision or management of a service taxable under s. 212.05(1)(i), F.S.
    The contract between Taxpayer and Contractor does not involve management and supervision
    over the temporary employees or staff provided by Contractor. A determining factor for the
    nature of the services performed by Contractor rest with whether management/supervision is

Technical Assistance Advisement
Page 7

provided. Contractor does not have any physical presence at the Hotel other than the temporary
employees or staff. As demonstrated in the above excerpts from the contract, Taxpayer engages
Contractor’s employees to supplement the labor force of the Hotel and the employees are paid
based on hourly wages. Appendix “A” of the contract lists various positions which are filled by
Contractor’s employees. Each position has a job description and a pre-determined hourly rate.
There is a time capturing system to record the time worked by the employees, and Contractor is
paid based on the hourly rate and hours worked by each employee. Moreover, Contractor is not
responsible for any equipment, tools, supplies, chemicals, uniforms, or any other items necessary
to perform the duties at the resort/hotel. Taxpayer provides all essential tools and supplies
necessary for the employees to perform their duties. The terms and conditions stated in the
contract supports that Taxpayer provides the management and control over each employee.
CONCLUSION
Based on the terms and conditions of the contract between Taxpayer and Contractor,
housekeeping services performed by temporary employees and staff are not subject to sales tax.
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.
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,

Joseph D. Franklin III
Joseph D. Franklin III
Tax Law Specialist
Technical Assistance and Dispute Resolution
JDF3/
Control #: 447473