How did Florida tax vehicle-consignment fees, repair and shipping charges, profit-sharing payments, and unsuccessful returns?

Plain-English summary

Florida applied different rules depending on the consignment contract and whether the vehicle sold.

For a successful flat-fee consignment, listing and success fees, repairs, detailing, fuel, and shipping were incorporated into the vehicle's taxable sales price. The dealer collected tax and surtax from the buyer. The dealer could buy qualifying reconditioning, repairs, and installed parts tax-free for resale with its Annual Resale Certificate.

If a flat-fee sale failed and the car returned to its owner, the dealer had to charge the consignor tax on taxable repairs, qualifying car-wash services, and separately stated unavoidable shipping. A registered corporate consignor could use a resale certificate for qualifying work if it intended to resell the vehicle.

Under profit sharing, the dealer's percentage-of-profit charge to the corporate sourcing partner was a nontaxable service after a successful sale. If no sale occurred and the dealer absorbed costs, no tax was due from the consignor, but the dealer owed use tax on taxable repair or wash services it had purchased for resale and then used.

Under the cost-plus backstop, base-price and fixed-profit payments were not taxable charges to the sourcing partner. If the dealer took title after a failed consignment and held the vehicle for resale, the acquisition was a sale for resale.

Common questions

Who paid tax on a successful retail sale? The buyer paid tax on the full vehicle sales price including incorporated dealer charges.

Were reimbursements from the consignor separately taxable after a successful sale? No. The ruling said that dealer-consignor accounting was not itself a sale.

What happened when a flat-fee consignment failed? Tax applied to taxable repairs, specified wash services, and unavoidable separately stated shipping billed to the consignor.

Did a failed profit-sharing consignment create consignor tax? No sale meant no consignor sales tax, though the dealer could owe use tax on consumed resale purchases.

Citations and references

• Fla. Stat. §§ 212.02, 212.05, 212.06, 212.07, and 212.054.
• Fla. Admin. Code rr. 12A-1.039, 12A-1.045, and 12A-1.066.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 23A-007

Original ruling text

6
FLORIDA

Florida Department of Revenue
Technical Assistance and Dispute Resolution

Jim Zingale
Executive Director

5050 West Tennessee Street, Tallahassee, FL 32399

SUMMARY:

floridarevenue.com

What are the sales and use tax implications for consigned motor vehicles and related fees charged by a third-party
Consignee (Taxpayer) when the motor vehicle is sold and/or not sold?

SUCCESSFUL SALES

TYPE OF CONSIGNOR

FEE

TAX IMPLICATION

Individual Consignor/
Corporate Sourcing
Partner — Flat Fee

Listing Fee

Success Fee commission
Repair/reconditioning
Interior detailing/ exterior
cleaning

Fuel

Shipping

Fees and charges are not taxable to Taxpayer when
incorporated into vehicle sales price Taxpayer must
collect and remit Florida sales tax, plus any
applicable discretionary sales surtax from the
buyer.

As a registered dealer, Taxpayer may purchase
reconditioning and repair services, as well as repair
parts that become a component part of the vehicle,
exempt from sales tax by extending a copy of its
Annual Resale Certificate to the selling dealer.

Corporate Sourcing
Partner — Profit Sharing

Seller’s share of profit
Seller’s share of
processing fee

Taxpayer’s charges to the Corporate Sourcing
Partner for the percentage of profits generated
from the sale of the vehicle would be deemed a
service, not taxable under Chapter 212, F.S.

Corporate Sourcing
Partner - Cost-Plus
(Backstop)

Agreed-upon base price
for the vehicle

Additional fixed dollar
amount in addition to the
base price for the vehicle

Taxpayer’s charges to the Corporate Sourcing
Partner for the agreed upon base price and the
additional fixed dollar amount of profits generated
from the vehicle sale, would not be subject to sales
tax, as these amounts do not constitute
consideration received for the transfer of title or
possession of tangible personal property.

UNSUCCESSFUL SALES

Individual
Consignor/Corporate
Sourcing Partner — Flat
Fee

Corporate Sourcing
Partner — Profit Sharing

Repair/reconditioning
Interior detailing/ exterior
cleaning

Fuel

Shipping

Under the Flat Fee agreement, if the vehicle is
returned to the Consignor after the performance of
taxable repairs or taxable car wash services
Taxpayer should charge the Consignor sales tax for
these services as well as any separately stated
shipping/transportation related charges which the
Consignor cannot elect to avoid.

If the Corporate Sourcing Partner, is a registered
dealer, the Corporate Sourcing Partner may extend
a copy of its Annual Resale Certificate to Taxpayer
to purchase any taxable repairs, reconditioning
services, and related charges tax-exempt if the

Technical Assistance Advisement
March 30, 2023
Page 2

Corporate Sourcing Partner intends to resale the
vehicle.

Under the Corporate Sourcing Partner — Profit
Sharing agreement — when Taxpayer returns a
vehicle, no sales tax is due as there is no sale.
Taxpayer would be liable for use tax on any taxable
repairs and taxable car wash services purchased for
resale, but instead, returned to the Corporate
Sourcing Partner, thus deemed to have been used
by Taxpayer.

Corporate Sourcing °
Partner - Profit Sharing |e

Seller’s share of profit
Seller’s share of
processing fee

Taxpayer’s charges to the Corporate Sourcing
Partner for the percentage of profits generated
from the sale of the vehicle would be deemed a
service, not taxable under Chapter 212, F.S.

Corporate Sourcing
Partner - Cost-Plus
(Backstop)

e Agreed-upon base _ price
for the vehicle

e Additional fixed dollar
amount in addition to the
base price for the vehicle

Taxpayer’s charges to the Corporate Sourcing
Partner for the vehicle would not be subject to
sales tax as a sale for resale if Taxpayer takes
ownership of the vehicle and holds the vehicle in its
inventory with the intention to relist and resell the
vehicle.

Via Email:

Re:

March 30, 2023

Technical Assistance Advisement — TAA #: 23A-007

(“Taxpayer”)?

Sales and Use Tax — Consignment Sales/Motor Vehicles
Sections 212.02, 212.05, 212.06, 212.07, 212.054, 320.27, 403.718, and 403.7185, Florida Statutes -

(“F.S.”)

Rules 12A-1.006, 12A-1.007, 12A-1.039, 12A-1.045, 12A-1.066, 12A-1.081, 12A-12.001, and 12A-12.0011,

Florida Administrative Code - (“F.A.C.”)

FC:
BP Hn

• According to the Department of State, ms website, on, Taxpayer filed a “Name Change Amendment.
  Taxpayer’s current name ‘Si.

Technical Assistance Advisement
March 30, 2023
Page 3

This is in response to your letter received on August 22, 2022, requesting this Department’s issuance of a Technical
Assistance Advisement (“TAA”) pursuant to Section(s.) 213.22, F.S., and Rule Chapter 12-11 F.A.C., Florida
Administrative Code, regarding the matter discussed below. Your request has been carefully examined, and the
Department finds it to be in compliance with the requisite criteria 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 s. 213.22, F.S.

REQUESTED ADVISEMENT

You pose several questions regarding the imposition of sales and use tax upon various aspects of Taxpayer’s motor
vehicle consignment services. The Department’s responses to your questions will be addressed in the conclusion
of this TAA.

FACTS

Your request provides in part, the following:

This letter constitutes a request for Technical Assistance Advisement (“TAA”) ... on behalf of [Taxpayer]

To the best of [Taxpayer’s] knowledge, the identical issues addressed in this TAA request are not
currently the subject of a Florida Department of Revenue ... audit of Taxpayer. Neither is an issue
pending in litigation in a case involving [Taxpayer]. The Department has not provided written guidance
on this issue to [Taxpayer] or its predecessor.

OVERVIEW

Taxpayer is a used car dealer that operates physical locations in several jurisdictions throughout the
United States. [Taxpayer] is similar to a “traditional” car dealership model in many respects, including
the purchase of inventory from sellers, however [Taxpayer] also inventories vehicles on consignment
from sellers. Specific to the consignment inventory, [Taxpayer] consigns cars from either individual
consumers (“Individuals”) or corporate partners, such as fleet management companies, rental car
companies, credit unions, banks, dealers, wholesalers and captive finance companies (“Corporate
Sourcing Partners”). [Taxpayer] lists those consigned cars for sale by listing vehicles on a web-based
platform, as well as physically displaying them at its various hub locations throughout the country,
including ... Florida. Each customer type is subject to unique contract terms and agreements with
[Taxpayer]. These transactions occur primarily using a consignment model, wherein [Taxpayer] will
showcase a vehicle at its physical locations while also listing the vehicle for sale on its web application.
[Taxpayer] controls the consignment vehicles while they are listed for sale and showcases them at the
physical hub. In the event that a buyer agrees to [Taxpayer’s] sales terms, the [Taxpayer] takes
ownership of the vehicle through execution of a “flash title” transaction, purchasing the vehicle from
the seller and then immediately reselling the vehicle to the end customer.

Technical Assistance Advisement
March 30, 2023
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Prior to listing, [Taxpayer] will arrange for any vehicle repairs (parts and labor), maintenance, and
interior/exterior cleaning charges (“reconditioning services”) deemed necessary for the vehicle to be
listed by [Taxpayer] for sale. The reconditioning services are done at facilities owned/managed by
[Taxpayer] or are contracted out to [third-] party vendors. The party responsible for reconditioning
service fees is contingent on the terms of the agreement and will be addressed by ensuing sections
herein. Once the reconditioning services have been rendered, the vehicle is listed for sale in [Taxpayer’s]
inventory.

Once listed in [Taxpayer’s] inventory, a vehicle has until the conclusion of a specified time-period
(typically 45-90 days) which it will be listed on [Taxpayer’s] platforms for sale, after which time the seller
would either need to relist the vehicle or reclaim possession of the vehicle. The structure of charges,
fees and commissions for successfully and unsuccessfully sold vehicles are dependent on the contract
terms between [Taxpayer] and individual or corporate seller. Further discussion of successful and
unsuccessful vehicle sale treatment for each contractual agreement is provided within the ensuing
FACTS section.

Summary

Below is a summary of the various consignment arrangements [Taxpayer] has with its Individual and
Corporate Sourcing Partners. ...

Type of Consignor Fee Paid Consignor Pays for Consignor Pays for
Repairs, Detail, Fuel Repairs, Detail, Fuel
and Transportation and Transportation

(Marked Up) Once Car | (Marked Up) If Car is
is Sold Not Sold

Individual - Flat Fee Listing Fee ($299) and Yes Yes

Success Fee Upon Sale

($899)
Corporate Sourcing Success Fee Upon Sale Yes Yes
Partner - Flat Fee ($1,100)
Corporate Sourcing None - certain amount of No No
Partner - Profit Sharing revenue is split
Corporate Sourcing None - [Taxpayer] pays for No No
Partner - Backstop the car for a price above an

agreed-upon wholesale

value after a certain number

of days ([i.e] 45 days)

Overview of the Sales Process

1. [Taxpayer] sells used cars ... using three different types of consignment terms — a fixed fee
   consignment model with Individuals and Corporate Sourcing Partners, a profit-sharing model with
   Corporate Sourcing Partners, and a cost-plus (backstop) consignment model with Corporate

Technical Assistance Advisement
March 30, 2023
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Sourcing Partners.

2. For consignment arrangements, ownership and title of the vehicle remains with the
   Individual/Corporate Sourcing Partner until a buyer is identified.

3. [Taxpayer] provides “reconditioning services” for the benefit of the individual/corporate seller,
   where vehicle improvements are made by [Taxpayer] or contracted to [third-] party vendors.
   Reconditioning services are typically performed prior to the vehicle being listed on [Taxpayer’s] web-
   based platform for sale. If the reconditioning services are completed by a [third-] party vendor, the
   vendor provides the services and subsequently invoices [Taxpayer] for the charges. Invoices do not
   include sales tax, as resale certificates are provided to the vendors.

4. The car is listed as inventory held for sale by [Taxpayer] for a pre-defined period ..., typically ranging
   between 45-90 days. As this is [a] consignment arrangement, [Taxpayer] does not hold title or take
   ownership of the vehicle during this time. Vehicles are typically listed at a price set at the seller’s
   discretion; however, [Taxpayer] and its sellers generally adhere to price floors or ranges that are in
   line with the current automobile sales market, taking into consideration any repairs or
   reconditioning services performed.

5. Costs to perform the reconditioning services are tracked and accounted for as they are incurred but
   are not charged nor collected from the consignor until the vehicle is sold/delisted. When a vehicle
   is successfully sold to a buyer, [Taxpayer] takes ownership of the vehicle through execution of a
   “flash title” transaction, purchasing the vehicle from the seller and then immediately reselling the
   vehicle to the end customer for the agreed-upon sales price. However, [Taxpayer] bears the sole risk
   of loss should a vehicle be damaged the entire time it is in [Taxpayer’s] possession.

6. A Bill of Sale is then provided to Individuals or Corporate Sourcing Partners which include the selling
   price of the vehicle less any applicable charges incurred, including, but not limited to the following:?

e Listing Fee for advertising of vehicle[.]

e Success Fee commission if vehicle is sold[.]

e Repair charges relating to reconditioning done by [Taxpayer] or [third-] party vendors
including, but not limited to, new parts (i.e. — windshield wipers, tires, headlights, etc.), oil
changes, fixing mechanical issues; charges include markups for repair/reconditioning
services.

e Interior detailing and exterior cleaning charges; charges include markups[.]

e Fuel charges incurred to top off gas tank; charges include markup for fueling services[.]

e Shipping charges for transportation of vehicle include markups[.]

2 Charges are typically presented as a single line item indicating “repairs” or “reconditioning” and are not itemized to include the detail or
parts and/or services included.

Technical Assistance Advisement
March 30, 2023
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7. Corporate Sourcing Partner Profit-Sharing Bill of Sales include the selling price of the vehicle less any
   applicable charges incurred, including, but not limited to the following:

e Seller’s share of profit due to Corporate Sourcing Partner; rates are pursuant to contract for
each individual corporate seller[.]

e Seller’s share of processing fee due to corporate seller; rates are pursuant to contract for
each individual corporate seller[.]

e Cost of reconditioning, parts, labor, and/or fuel are not detailed in corporate profit-sharing
Bill of Sale.

8. If the vehicle is listed by [Taxpayer], but not sold, [Taxpayer] will invoice the Individual or Corporate
   Sourcing Partner for the applicable charges listed in Paragraph 6.

Sales Agreements and Invoicing

1. Individual Flat Fee Agreement — Once the vehicle is sold, [Taxpayer] collects the selling price of the
   vehicle and any applicable taxes due from the end consumer, or the lienholder associated with
   financing the purchase. [Taxpayer] remits the proceeds of the sale to the vehicle seller, less listing
   fees, reconditioning service charges, delivery charges, refueling costs, commission/success fee, and
   any other fees incidental to the closing of the vehicle sale. Payments to sellers may occur before or
   after receiving lienholder funds and payment timing varies situationally.

2. Corporate Sourcing Partner Flat Fee Agreement — Once the vehicle is sold, [Taxpayer] collects the
   selling price of the vehicle and any applicable taxes due from the end consumer. [Taxpayer]
   subsequently remits the proceeds of the sale to the Corporate Sourcing Partner, less listing fees,
   reconditioning service charges, delivery charges, refueling costs, commission/success fee, and any
   other fees incidental to the closing of the vehicle sale.

3. Corporate Sourcing Partner Profit-Sharing Agreement — Once the vehicle is sold, [Taxpayer] collects
   the selling price of the vehicle and any applicable taxes due from the end consumer. [Taxpayer]
   subsequently remits to the Corporate Sourcing Partner an agreed upon base price, plus a percentage
   of the profits between the base price and selling price of the vehicle. Percentages applied to any
   profits are fixed, pursuant to the contractual agreement in place with each Corporate Sourcing
   Partner. Reconditioning and/or other costs incurred are not separately stated on a [B]ill of [S]ale or
   charged to the Corporate Sourcing Partner.

4. Corporate Sourcing Partner Cost-plus (Backstop) Agreement — Once the vehicle is sold, [Taxpayer]
   collects the selling price of the vehicle and any applicable taxes due from the end consumer.
   [Taxpayer] subsequently remits to the Corporate Sourcing Partners at an agreed upon base price,
   plus a fixed dollar amount. Reconditioning and/or other costs incurred are not separately stated on
   a bill of sale or charged to the Corporate Sourcing Partner.

Unsuccessful Sales?

3 An unsuccessful sale represents any instance in which [Taxpayer] cannot find a buyer for the vehicle through their marketplace.

Technical Assistance Advisement
March 30, 2023
Page 7

1. Individual Flat Fee Agreement — Individual consignment agreements typically run for 90-120 days.
   Any vehicle that has not successfully sold prior is returned to individual seller. The individual seller
   is invoiced for all reconditioning service charges, delivery charges, and any other incidental fees
   incurred (i.e., refueling costs). No commissions are assessed.

2. Corporate Sourcing Partner Flat Fee Agreement — Corporate consignor agreements typically run for
   90 days. Any vehicle that has not successfully sold prior is returned to corporate seller. The corporate
   seller is invoiced for all reconditioning service charges, delivery charges, any other incidental fees
   incurred (i.e., ] refueling costs). No commissions are assessed.

3. Corporate Sourcing Partner Profit-Sharing Agreement — Corporate Sourcing Partner profit-sharing
   agreements typically run for 90 days. Any vehicle that has not sold prior to the 90-day deadline is
   returned to the Corporate Sourcing Partner. The Corporate Sourcing Partner is not invoiced as there
   is no transaction. Reconditioning service charges and other fees not assigned to the corporate seller
   are absorbed by [Taxpayer].

4. Corporate Sourcing Partner Cost-Plus (Backstop) Agreement — Cost-plus agreements typically run
   for 45 days. Any vehicle that has not sold prior to the 45-day deadline is purchased from the
   consignor for the agreed upon base price plus a fixed dollar amount. Reconditioning and other costs
   are the sole responsibility of [Taxpayer].

TAXPAYER’S POSITION

Individual Consignor — Flat Fee

1. Upon the successful sale of vehicle all costs related to the reconditioning, listing, and selling of the
   vehicle are deemed to be incurred by [Taxpayer] (a registered dealer), to have brought the vehicle
   to market. Such costs are incorporated into the vehicle sale[s] price set by [Taxpayer]. The vehicle is
   presumed to be held in inventory by [Taxpayer] until the vehicle is sold. Accordingly, sales tax is
   collected by [Taxpayer] on the final vehicle sales price when sold to the buyer.

When repair parts (or parts used in the performance of other taxable services) are purchased by
[Taxpayer] (a registered dealer), and used to recondition the vehicle, such parts would be subject to
[the] resale exemption and sales tax will be collected from the buyer of the vehicle when sold. [GT-
400400: Tax Information for Motor Vehicle Dealers, Fla. Dept. of Rev., 02/2018]

When the vehicle is successfully sold, the reconditioning charges are deducted from the final vehicle
sales price on the [B]ill of [S]ale to the vehicle seller. These deductions are for the seller to reimburse
[Taxpayer] for the costs incurred by [Taxpayer] to bring the vehicle to market and successfully sell
the vehicle. Since sales tax was already collected [from the buyer] on the vehicle sale[s] price, the
deductions for the reconditioning services are not deemed to be a “sale” of such services to the
seller and no tax would apply on any of the related deductions to the seller.

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March 30, 2023
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2. In the event of an unsuccessful sale of the vehicle, in which the vehicle is returned to the seller, a
   sale is deemed to occur when [Taxpayer] provides the invoice to the seller containing charges for
   listing fees and reconditioning, repair, fuel and shipping services.

When the vehicle is returned to the customer after repairs have been completed, separately stated
charges for labor and repairs to the vehicle are subject to sales tax to the consignor.[GT-800010:
Sales and Use Tax on Repair of Tangible Personal Property, 12/1/2017]

Car washing services in which only water and detergent are applied to the vehicle are nontaxable.
However, to the extent that any wax, silicones, or any other substance is added that forms a
protective film or coating to the vehicle, the charge for these services is taxable to the consignor.
[Fla. Admin. Code Ann. § 12A-1.006(a) and (b)]

Charges for shipping, when applicable, are not taxable to the extent that the charges are separately
stated and are not required as part of the transaction but are available to the customer. [Fla. Admin.

Code Ann. § 12A-1.045(4)(a)]

Corporate Sourcing Partner — Flat Fee

3. Upon the successful sale of the vehicle, with the exception of ‘listing fees’ which do not apply to the
   Corporate Sourcing Partner — Flat Fee revenue stream, the taxability of success fee, repair parts and
   labor, interior detailing services and shipping charges are taxable/nontaxable as outlined in
   Individual Consignor — Flat Fee Conclusion for successful sales.

4. Inthe event of an unsuccessful sale of the vehicle, in which the vehicle is returned to the corporate
   party listing the vehicle, the taxability of repair parts and labor, interior detailing services and
   shipping charges are taxable/nontaxable as outlined in the Individual Consignor — Flat Fee
   Conclusion for unsuccessful sales.

If [Taxpayer] is unable to sell the vehicle, generally the Corporate Sourcing Partner will work with
other providers to have the car sold. As such, the Corporate Sourcing Partner typically furnishes a
properly executed exemption certificate to [Taxpayer]. [Fla. Admin. Code Ann. §12A-1.039(1)(b)] In
some limited circumstances, the Corporate Sourcing Partner may also send the vehicle to an auction
house for auction. An auction would ... constitute a separate resale by the Corporate Sourcing
Partner and would also be exempt from sales and use tax if a valid resale certificate is provided.

Corporate Sourcing Partner — Profit Sharing

5. Upon the successful sale of the vehicle, the charges by [Taxpayer] to the Corporate Sourcing Partner
   for the percentage of profits from the sale of the vehicle, as agreed to within the contract between
   the two parties, is not subject to sales tax as a non-enumerated service. [Fla. Stat. § 212.02(14)(a)]

6. In the event that the vehicle is not sold, there is no sales tax implications to the Corporate Sourcing
   Partner as there is no consideration paid when the vehicle is returned to the Corporate Sourcing
   Partner. [Fla. Stat. § 212.02(15)(a)]. Based on the services outlined in the Facts, [Taxpayer] would be
   liable for use tax on the following services performed to the vehicle:

Technical Assistance Advisement
March 30, 2023
Page 9

a. repair parts and labor [GT-800010: Sales and Use Tax on Repair of Tangible Personal Property,
12/1/2017]

b. car washes, to the exten[t] a protectant film is applied to the vehicle. [Fla. Admin. Code Ann. §
12A-1.006(a) and (b)]

Corporate Sourcing Partner — Cost Plus (Backstop)

7. Upon successful sale of the vehicle, the charges by [Taxpayer] to the Corporate Sourcing Partner for
   the percentage of profits from the sale of the vehicle, as agreed to within the contract between the
   two parties, is not subject to sales tax as a non-enumerated service.[Fla. Stat. § 212.02(14)(a)]

8. In the event of an unsuccessful sale, the agreed-upon base price charges and additional fixed dollar
   amount charges by [Taxpayer] to the Corporate Sourcing Partner for the vehicle would not be subject
   to sales tax as a sale for resale, at which time, [Taxpayer] would take ownership of the vehicle. [GT-
   800030: Sales and Use Tax on Motor Vehicle[s], 12/1/2017]

After taking ownership of the vehicle, [Taxpayer] will hold the vehicle in inventory with the intention
to relist and resell the vehicle to another customer. Accordingly, sales tax is collected by [Taxpayer]
on the final vehicle sales price when sold to the buyer.

At Conferee’s request, Taxpayer submitted for review, copies of the Vehicle Consignment Agreement - Exclusive
Listing with the Exclusive Right to Sell (Individual Consignor — Flat Fee); Multiple Vehicle Master Consignment -
Exclusive Listing with the Exclusive Right to Sell (Corporate Sourcing Partner - Flat Fee); Consignment Services
Agreement (Corporate Sourcing Partner - Backstop); Master Services Agreement (MSA) (Corporate Sourcing
Partner — Profit Sharing), and Bills of Sale for transactions between Taxpayer and Corporate Sourcing Partners
under the Flat Fee, Backstop; and Profit Sharing consignment terms.

It should be noted that GT-400400: Tax Information for Motor Vehicle Dealers, is obsolete. Additionally, GT-
800030: Sales and Use Tax on Motor Vehicles, and GT-800010: Sales and Use Tax on Repair of Tangible Personal
Property, have been revised as of 08/22. Lastly, the language in Rule 12A-1.006(4), F.A.C., was amended as of
08/15/21.

LAW AND DISCUSSION

Florida law provides for the imposition of sales tax upon the retail sale* of tangible personal property” in this state.
The tax is imposed on the “sales price’”® of each item or article of tangible personal property sold at retail, unless

4 The term “sale” is defined to include 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.” See s. 212.02(15)(a), F.S. The
terms “retail sales,” “sale at retail,” “use,” “storage,” and consumption” do not include “the sale of materials to a registered repair facility
for use in repairing a motor vehicle, airplane, or boat, when such materials are incorporated into and sold as part of the repair.” See s.
212.02(14)(c), F.S.

5 “Tangible personal property” means and includes “personal property which may be seen, weighed, measured, or touched or is in any
manner perceptible to the senses, including ... motor vehicles ....” See s. 212.02(19), F.S.

6 “Sales price” is defined as “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,

| vu vu
, 7

Technical Assistance Advisement
March 30, 2023
Page 10

specifically exempt. See s. 212.05(1)(a), F.S. Florida also levies a use tax on the “cost price”’ of each item or article

of tangible personal property, including motor vehicles, which are not resold, but instead, used, consumed,
distributed, or stored for use® or consumption in this state. See s. 212.05(1)(b), F.S. The tax is due and payable at
the rate of six percent (6%), plus any applicable discretionary surtax. See s. 212.054, F.S.

Section 212.06(2), F.S., provides in part:

(b) The term “dealer” is further defined to mean every person, as used in this chapter, who
imports, or causes to be imported, tangible personal property from any state or foreign country
for sale at retail; for use, consumption, or distribution; or for storage to be used or consumed in
this state.

(c) The term “dealer” is further defined to mean every person, as used in this chapter, who sells
at retail or who offers for sale at retail, or who has in his or her possession for sale at retail; or for
use, consumption, or distribution; or for storage to be used or consumed in this state, tangible
personal property as defined herein, including a retailer who transacts a substantial number of
remote sales or a marketplace provider that has a physical presence in this state or that makes or
facilitates through its marketplace a substantial number of remote sales.

(g) “Dealer” also means and includes every person who solicits business either by direct
representatives, indirect representatives, or manufacturers’ agents; by distribution of catalogs or
other advertising matter; or by any other means whatsoever, and by reason thereof receives
orders for tangible personal property from consumers for use, consumption, distribution, and
storage for use or consumption in the state; such dealer shall collect the tax imposed by this
chapter from the purchaser, and no action, either in law or in equity, on a sale or transaction as
provided by the terms of this chapter may be had in this state by any such dealer unless it is
affirmatively shown that the provisions of this chapter have been fully complied with.

(h) “Dealer” also means and includes every person who, as a representative, agent, or solicitor of
an out-of-state principal or principals, solicits, receives, and accepts orders from consumers in the
state for future delivery and whose principal refuses to register as a dealer.

Under the provisions of s. 212.06(3)(a), F.S., “ ... every dealer making sales, whether within or outside the state,
of tangible personal property for distribution, storage, or use or other consumption, in this state, shall, at the time

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. ...” See s. 212.02(16), F.S.

7 “Cost price” is defined as “the actual cost of articles of tangible personal property, without any deductions on account of the cost of
materials used, labor or service costs, transportation charges or any expenses whatsoever.” See s. 212.02(4), F.S.

8 Section 212.02(20), F.S., defines the term “use” to include “... the exercise of any right or power over tangible personal property incident
to the ownership thereof, or interest therein, except that it does not include the sale at retail of that property in the regular course of
business.”

Technical Assistance Advisement
March 30, 2023
Page 11

of making sales, collect the tax imposed by this chapter from the purchaser.”

Section 212.07(8), F.S., provides in part, “[a]Jny person who has purchased at retail, used, consumed, distributed,
or stored for use or consumption in this state tangible personal property ... taxable under this chapter ... and
cannot prove that the tax levied by this chapter has been paid ... is directly liable to the state for any tax, interest,
or penalty due on any such taxable transactions.”

With regard to sales of motor vehicles, Rule 12A-1.007(1)(a), F.A.C., provides in part:

The sale, including occasional or isolated sales, the use, consumption, or storage for use in this
state of any ... motor vehicle, or other vehicle of a class or type required to be registered, licensed,
titled, or documented in this state or by the United States Government is taxable on the full sales
price without any deduction for freight, handling, delivery, commission, repossessions,
advertising, future free service, or any other expense or cost whatsoever. ...

Separately stated fees required to title, license, register, transfer ownership, record a lien, or operate any motor
vehicle in Florida, its subdivisions, or any state or licensed tag agency or office, are not included in the sales price
and are not subject to tax. However, if fees which are required for the registration, licensing, or titling of a motor
vehicle in Florida are not separately stated the charges are part of the sales price and subject to tax. Separately
stated fees that are discretionary charges, not mandated pursuant to Rule 12A-1.007(1), F.A.C., are taxable as part
of the sales price.

The term “motor vehicle dealer” is defined in s. 320.27(1)(c), F.S., to include “... any person engaged in the business
of buying, selling, or dealing in motor vehicles or offering or displaying motor vehicles for sale at wholesale or
retail, or who may service and repair motor vehicles pursuant to an agreement as defined in s. 320.60(1). Any
person who buys, sells, or deals in three or more motor vehicles in any 12-month period or who offers or displays
for sale three or more motor vehicles in any 12-month period shall be prima facie presumed to be engaged in such
business.”

Auctioneers, Agents, Brokers, and Factors/Consignment Sales

Rule 12A-1.066(1)(a), F.A.C., provides in part, “[e]very agent, auctioneer, broker, or other person who is engaged
in any business activity of making sales of tangible personal property with the object of private or public gain,
benefit or advantage, either direct or indirect, who sells at retail, or who offers for sale at retail, or who has in his
possession for sale at retail, is required to register as a dealer under Chapter 212, F.S., and collect and remit any
applicable tax on the total retail sales price of any taxable item of tangible personal property without any
deduction for any expense, such as storage, commission, or repairs. ...”

Rule 12A-1.066(1)(c), F.A.C., provides in part:

1. “Agent” is a person appointed by a principal or authorized to act for a principal in a transaction
   involving the sale of an item of tangible personal property.

4. “Factor” is a person who sells on consignment an item of tangible personal property belonging
   to a principal.

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5. “Principal” is a person who employs an agent, auctioneer, broker, factor, or other person to act
   in his or her behalf in negotiating with a purchaser for the sale of tangible personal property.

Rule 12A-1.066(6), F.A.C., further provides that “[s]ales of tangible personal property consigned, delivered, or
entrusted to a person registered or required to be registered as a dealer under Chapter 212, F.S., for the purpose
of sale are taxable on the total retail sales price without deduction for any expense such as storage, rental,
commission, repairs, etc.”

With regard to consignment sales, Rule 12A-1.081, F.A.C., provides, “[w]here merchandise is delivered to a dealer
ona consignment basis, the tax shall be collected and remitted by the consignee, not the consignor.”

Sales for Resale

Section 212.07(1)(b), F.S., and Rule 12A-1.039(1)(b), F.A.C., provide that a sale for resale is exempt from the sales
and use tax, only when the sale for resale is in strict compliance with the provisions of the resale rule. For purposes
of the rule, a “sale for resale” includes the sale of tangible personal property to a dealer, who is an active registered
dealer? when such property will be resold to the dealer’s customers, and the purchasing dealer issues the selling
dealer a valid Annual Resale Certificate (Form DR-13).

Rule 12A-1.039(1)(b)1. and 9., F.A.C., provide an exemption for the sale of tangible personal property to a dealer
when the property will be resold to the dealer’s customers, or the alteration, remodeling, maintenance,
adjustment, or repair of tangible personal property that is held in inventory for resale purposes by a dealer.

Rule 12A-1.039(7)(g), F.A.C., provides in part “[a] person who complied with the provisions of this rule when
making a purchase ... of tangible personal property that is intended for resale, but then uses, consumes,
distributes, or stores for use or consumption in this state, the tangible personal property in a manner inconsistent
with the purposes described in paragraph (1)(b) of this rule, is required to pay use tax as provided in s.
212.05(1)(b), F.S.”

Repair of Tangible Personal Property

The consideration received for a transaction requiring labor and material to alter, remodel, maintain, adjust, or
repair property is taxable. The tax applies to the entire charge when a repair person furnishes parts. Labor, parts,
and materials incorporated into, and which become part of tangible personal property repaired, or reconditioned
for resale are exempt when purchased by the repair person. However, materials and supplies used by the repair
person to make repairs, such as tools, sandpaper, and flux, but which do not become part of the item repaired are
taxable to the repairer as overhead items. Charges for repairs of tangible personal property involving labor or
service only are taxable unless the repair person’s records establish that no tangible personal property was
attached to the repaired item. See s. 212.02(16), F.S. and Rule 12A-1.006, F.A.C.

9 “Active registered dealer” means “a person who is registered with the Department as a dealer for sales tax purposes and who is required
to file a sales and use tax return during each applicable reporting period, as provided in Section 212.11(1), F.S.” See Rule 12A1.039(1)(c),
F.A.C.

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Transportation/Delivery Charges
Rule 12A-1.045, F.A.C., provides in part:

(1) “Transportation charges” include carrying, delivery, freight, handling, pickup, shipping, and
other similar charges or fees.

(2) Transportation charges which are not separately stated on an invoice or bill of sale but are
included in the sales price of taxable tangible personal property, are subject to tax.

(3)(a) Where the seller agrees to deliver tangible personal property to some designated place and
the purchaser cannot elect to avoid the charge for transportation services, the charge for the
transportation service is subject to tax, even if separately stated on an invoice or bill of sale.

(4)(a) The charge for transportation services is not subject to tax when both of the following
conditions have been met:

1. The charge is separately stated on an invoice or bill of sale; and,

2. The charge can be avoided by a decision or action solely on the part of the purchaser.

Solid Waste Fees - New Tire Fees

Section 403.718, F.S., provides that a fee is imposed on any person engaging in the business of making retail sales
of new motor vehicle tires within Florida. The fee imposed shall be stated separately on the invoice to the
purchaser and shall be imposed at the rate of $1.00 for each new tire sold and is subject to tax. Rule 12A-12.001(4),
F.A.C., further provides:

(a) A motor vehicle dealer can purchase tires exempt from the fee as a sale for resale by presenting a
sales tax resale certificate to the seller of the tires. If the motor vehicle dealer subsequently withdraws
any such tire from inventory to use on the dealer’s own vehicle, to give away, or for any purpose except
for resale, the motor vehicle dealer will owe the fee at the time the tire is withdrawn from inventory. If
the motor vehicle dealer sells the tire at retail, whether separately or installed on a motor vehicle, that
sale will be subject to the fee. If the motor vehicle dealer resells the tire to a dealer who presents a sales
tax resale certificate, no fee will be due on that transaction.

(b) Motor vehicle dealers that exclusively sell used motor vehicles may elect to pay the fee to the tire
wholesaler on the purchase of tires instead of purchasing tires exempt from the tire fee. If the used
motor vehicle dealer elects to do so, the dealer must pay the tire fee to the tire wholesaler on all its
purchases of tires. For the purpose of the tire fee only, the wholesale tire dealer is to treat the sale as a
retail sale and must separately state the tire fee on the sales invoice to the used motor vehicle dealer.
On subsequent retail sales by the used motor vehicle dealer, the dealer must state in the contract or on
the sales invoice to the purchaser that the applicable tire fee has been previously paid.

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Based on the facts presented, Taxpayer is engaged in the business of making sales of motor vehicles on
consignment from its customers who include, individual consumers and corporate sourcing partners. Taxpayer is
a registered dealer and should collect and remit tax on its retail sales of consigned motor vehicles without
deduction for commissions, regardless of whether it has possession of the vehicles or title to the vehicles cannot
be transferred without action by the customer. Taxpayer must collect and remit tax when title or possession is
transferred within Florida even if the tangible personal property belongs to an out-of-state Consignor.

After executing the applicable consignment agreement, Taxpayer arranges for the reconditioning and repair of
the consigned vehicle prior to listing the vehicle for sale on its web-based platform or displaying the vehicle at one
of its hub locations. The reconditioning and repair services are performed by facilities owned/managed by
Taxpayer or contracted to a third-party vendor. You state that the reconditioning services are provided as a benefit
to the Consignor. The party responsible for charges, fees and commissions is based on the terms of the specific
consignment agreement

CONCLUSIONS

Individual Consignor and Corporate Sourcing Partner — Flat Fee
Questions 1 and 3, and questions 2 and 4, as well as the Department’s responses to same, have been combined.

Questions 1 and 3:

1. What are the sales and use tax implications for successful sales, including but not limited to the following
   separately stated charges to the third-party seller:

a. Listing Fee for advertising of vehicle.
b. | Success Fee commission if vehicle is sold.
C. Repair Charges relating to reconditioning done by [Taxpayer] or 3rd party vendors including, but
not limited to, new parts (i.e. — windshield wipers, tires, headlights, etc.), oil changes, fixing
mechanical issues; charges include markups for repair/reconditioning services.
d. Interior detailing and exterior cleaning charges; charges include markups.
e. Fuel charges incurred to top off gas tank; charges include markups for fueling services.
f. Shipping charges for transportation of vehicle include markups.
Responses 1 and 3:
As provided in Rule 12A-1.039(1)(b)1. and 9., F.A.C., as a registered dealer, when intended for resale purposes,

Taxpayer may purchase exempt from sales tax, reconditioning and repair services, as well as repair parts that
become a component part of the vehicle, by extending a copy of its Annual Resale Certificate to the selling dealer.

Upon the successful sale of the Consignor’s vehicle, the listing fees (not applicable under the Corporate Sourcing
Partner — Flat Fee agreement), success fee commission, repair charges, detailing and cleaning charges, fuel
charges, and shipping charges are incorporated into the vehicle sales price. Taxpayer must collect and remit
Florida sales tax plus any applicable discretionary sales surtax from the buyer. In the event Taxpayer makes a retail

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sale of new motor vehicle tires, as a used car dealer, Taxpayer may elect to separately state on its customer’s
invoice, the required $1.00 fee for each new tire sold, in which case the new tire fee must be included in the sales
price of the vehicle. On the other hand, Taxpayer may pay the fee to the wholesaler on its purchase of the tires —
in this case, when the new tire is sold at retail, Taxpayer must indicate on its customer’s sales invoice that the
applicable tire fee has been previously paid.

After the sale is completed, Taxpayer issues the Consignor a “Bill of Sale” reflecting the final selling price of the
vehicle as well as deductions for the Consignor to reimburse Taxpayer for the charges incurred to market and sell
the vehicle. The transaction between Taxpayer and the Consignor is not a “sale” as defined by s. 212.02(15), F.S.;
therefore, any amounts Taxpayer receives from the Consignor for any separately stated charges, are not subject
to Florida sales tax.

Questions 2 and 4:
What are the sales and use tax implications for unsuccessful sales, including, but not limited to the following
separately stated charges to the third-party seller:

a. Repair charges relating to reconditioning done by [Taxpayer] or 3rd party vendors including, but not
limited to new parts (i.e. — windshield wipers, tires, headlights, etc.), oil changes, fixing mechanical
issues; charges include markups for repair/reconditioning services.

b. Interior detailing and exterior cleaning charges; charges include markups.
c. Fuel charges incurred to top off gas tank; charges include markups for fueling services.
d. Shipping charges for transportation of vehicle include markups.

Responses 2 and 4:

In the case of an unsuccessful sale of the Consignor’s vehicle, Taxpayer returns the vehicle to the Consignor and
invoices the Consignor for listing fees, reconditioning, repair, fuel and shipping services. If the vehicle is returned
to the Consignor after taxable repairs that include installation of tangible personal property or taxable car wash
services that include the addition of wax, silicones, or any other substance that forms a protective film or coating
on the vehicle, Taxpayer should charge the Consignor sales tax for these services as well as any separately stated
shipping/transportation related charges which the Individual Consignor cannot elect to avoid.

However, if Taxpayer returns the vehicle and the Corporate Sourcing Partner, is a registered dealer, the Corporate
Sourcing Partner may extend a copy of its Annual Resale Certificate to Taxpayer to purchase any taxable repairs,
reconditioning services, and related charges tax-exempt if the Corporate Sourcing Partner intends to sell the
vehicle.

Corporate Sourcing Partner — Profit Sharing

Question 5:

What are the sales and use tax implications for successful sales, including but not limited to the following
separately stated charges to the third-party seller:

i. Seller’s share of profit due to Corporate Sourcing Partner; rates are pursuant to contact for
each individual corporate seller.

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ii. Seller’s share of processing fee due to corporate seller; rates are pursuant to contract for each
individual corporate seller.
Response 5:
Under the Corporate Sourcing Partner - Profit Sharing agreement, in the event of a successful sale of a vehicle,
Taxpayer’s charges to the Corporate Sourcing Partner for the percentage of profits generated from the sale of the
vehicle would be deemed a service, not taxable under Chapter 212, F.S.

Question 6:
What are the sales and use tax implications for unsuccessful sales in which there is no invoice to the Corporate
Sourcing Partner and [Taxpayer] absorbs the costs incurred, including but not limited to:

a. Repair charges relating to reconditioning done by [Taxpayer] or 3rd party vendors including, but not
limited to, new parts (i.e. — windshield wipers, tires, headlights, etc.), oil changes, fixing mechanical
issues; charges include markups for repair/reconditioning services.

b. Interior detailing and exterior cleaning charges; charges include markups.
c. Fuel charges incurred to top off gas tank; charges include markups for fueling services.

d. Shipping charges for transportation of vehicle include markups.

Response 6:
In the case of an unsuccessful sale under the Corporate Sourcing Partner — Profit Sharing agreement, when

Taxpayer returns a vehicle to the Corporate Sourcing Partner, no sales tax is due from the Consignor, since there
is no sale. However, Taxpayer would be liable for use tax on any taxable repairs and taxable car wash services
purchased for resale, but instead, returned to the Corporate Sourcing Partner, thus deemed to have been used by
Taxpayer.

Corporate Sourcing Partner — Cost Plus (Backstop)

Question 7:
What are the sales and use tax implications for successful sales, including, but not limited to the following
separately stated charges to the third-party seller:

iii. An agreed-upon base price for the vehicle.

iv. An additional fixed dollar amount in addition to the base price for the vehicle.

Response 7:
Upon the successful sale of the Corporate Sourcing Partner’s vehicle, Taxpayer’s charges to the Corporate Sourcing

Partner for the agreed upon base price and the additional fixed dollar amount of profits generated from the
vehicle sale, would not be subject to sales tax, as these amounts do not constitute consideration received for the
transfer of title or possession of tangible personal property.

Question 8:
What are the sales and use tax implications for unsuccessful sales, whereby [Taxpayer] is purchasing the vehicle
for the following:

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Vv. An agreed-upon base price for the vehicle.

vi. An additional fixed dollar amount in addition to the base price for the vehicle.

Response 8:
In the event of an unsuccessful sale the agreed-upon base price and the additional fixed dollar Taxpayer charges

the Corporate Sourcing Partner for the vehicle would not be subject to sales tax as a sale for resale if Taxpayer
takes ownership of the vehicle and holds the vehicle in its inventory with the intention to relist and resell the
vehicle.

This response constitutes a TAA 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.

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 TAA, 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 ten (10) days of the date of this letter.

If you have any further questions with regard to this matter and wish to discuss them, you may contact me directly
at (850)717-6701.

Sincerely,

Shundva McClean

Shundra McClean

Tax Law Specialist

Technical Assistance & Dispute Resolution
Record ID: 7000784374

cc:

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March 30, 2023
Page 18

TADR Satisfaction Survey

The Florida Department of Revenue invites you to complete the online TADR Satisfaction Survey to help us identify
ways to improve our service to taxpayers. The survey is an opportunity to provide feedback on your recent
experience with the Department’s office of Technical Assistance and Dispute Resolution (TADR). To access the
survey, place the following address in your browser’s access bar:

https://tadr.questionpro.com

When you open the survey, you’ll be asked to enter the following information. This information will enable you
to complete and submit the survey.

Notification number: 7000784374
Respondent code: 44

Tax type: Sales and Use Tax
Correspondence type: Technical Assistance

If you need technical assistance accessing the survey, please email Douglas Charity at
[email protected].

Thank you.