How did Florida's comprehensive arena TAA tax tickets, service charges, concessions, and event-facility rent?

Plain-English summary

This 1999 TAA is a wide-ranging Florida sales-tax guide for arenas, civic centers, stadiums, convention halls, and similar event facilities. Its recurring rule is that tax follows what the customer is actually buying and what the contract requires—not merely the label placed on a charge.

For tickets, the total admission price generally included convenience, handling, Internet, and similar service charges. Tax was due when the admission was sold, even if the event occurred later or the proceeds were placed in escrow. The TAA also listed statutory exemptions, including qualifying events sponsored by 501(c)(3) organizations and specified school, arts, and sporting events.

For facility leases and licenses, mandatory reimbursements for ushers, security, cleaning, ticket sellers, and similar operating costs were taxable as rent when they were required as a condition of occupancy. Optional services chosen separately by the promoter were not rent. Percentage payments could also be rent, while a facility that hired and fully promoted the act itself was paying for services rather than receiving rent.

Concession arrangements required a facts-and-circumstances analysis. A true management agreement did not create rent because the facility remained the concessionaire; a lease or license of space generally did. Effective July 1, 1999, the TAA described an expanded exemption for leasing or licensing real property to food-and-drink concessionaires at specified facilities.

What this means for you

Arena and event-facility operators

Map each revenue stream to the controlling agreement. Ticket charges, mandatory pass-through expenses, concession percentages, advertising, deposits, and package deals can receive different treatment even when billed together.

Promoters and ticketing services

The party that initially collects an admission payment is responsible for collecting and remitting the tax. A ticketing service's convenience fee is part of the admission price unless the admission itself is exempt.

Accountants and tax professionals

This is historical 1999 guidance. It is unusually comprehensive, but many conclusions depend on the exact contract and the law effective on the transaction date. Verify current statutes and rules before applying it.

Common questions

Are ticket convenience and service fees taxable? Yes, when added to a taxable admission. The TAA treated them as part of the admission's sales price.

When is tax due on advance ticket sales? At the time the admission is sold, regardless of when the event occurs or where the proceeds are held.

Are a facility's required security and cleaning charges taxable? Yes, when the lease or license requires the promoter to pay them as a condition of using the property. Optional services were not treated as rent.

Is every concession agreement a taxable lease? No. A genuine management agreement did not create rent, but a lease or license of concession space generally did. The Department said the classification depends on control, possession, inventory, receipts, equipment ownership, and the parties' agreement.

Are trade-show booth subleases taxable? The TAA said the sponsor holding the prime lease paid tax on that lease, while subleased space in a convention or industry trade show was exempt under section 212.031(5).

Citations and references

• Fla. Stat. § 212.04
• Fla. Stat. § 212.031
• Fla. Stat. § 212.054
• Fla. Admin. Code R. 12A-1.005
• Fla. Admin. Code R. 12A-1.070
• Fla. Stat. § 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99A-033

Original ruling text

SUMMARY

This TAA is a comprehensive response to numerous questions
posed to the department regarding sales tax and how it
applies to the operation of arenas, civic centers, and
other facilities that hold concerts, shows, sporting
events, and other events. The main issues include real
property rentals under s. 212.031, F.S., as well as sales
of admissions under s. 212.04, F.S.

Jul 21, 1999

Re: Technical Assistance Advisement 99A-033
Sales and Use Tax - Admissions; Leases and License to Use
Real Property
Sections 212.031; 212.04, F.S.
Rules 12A-1.005; 12A-1.070, F.A.C.
XXX ("Association")

Dear :

As was discussed, the Department has agreed to consider this
response to your request for technical review and advice
expressed in your February 24, 1998 and August 21, 1998 letters
and in subsequent meetings on behalf of the Association to be a
Technical Assistance Advisement (TAA) pursuant to the provisions
of section 213.22, Florida Statutes, and Chapter 12-11, Florida
Administrative Code. As such, it is intended to provide
guidance to the facilities management industry in Florida with
reference to the specific questions presented and the specific
responses given. While the Department's responses contained in
this TAA will serve as precedent to facilities managers for the
specific transactions addressed and is binding on the Department
of Revenue until it is prospectively modified, this TAA is not
binding on any member of the Association or any other person.

FACTS

A facility receives a call from a booking agency, which has an
act/performer available for a particular date. The agency
selects a promoter. The promoter enters into a contract with
the facility where the event will be held.

The parties agree that the facility will be paid a certain
percentage of the net gate receipts, with a minimum and maximum.
Most of the facilities collect tax on a percentage of their cut
of the gate receipts, since they consider that amount "rent."
For example, one facility allocates 60% of its "cut" as "rent"
and 40% as "services/expenses," including ushers, guards, etc.

The facilities typically collect and remit tax on the 60%
figure, but not on the 40%.

The contract allows the promoter to determine the basic ticket
prices. In addition to selling tickets at its box office, the
facility may also have a contract with a third party ticketing
agent to sell tickets at other outlets.

Some ticketing agents charge $2 - $4 above the basic ticket
prices. Ticketing agents may also impose additional charges if
tickets are ordered over the phone or via the Internet. No tax
is being remitted on these charges.

The ticketing agent sends the basic ticket amounts that it
collects to the facility. The ticketing agents retain any
additional charges. The promoter receives any proceeds due
after the event is held. Depending on the size of the event,
the ticketing agent may pay the facility a small commission
(rebate) on every ticket sold, or may impose a fee on the
facility for providing the ticketing service.

The facility also contracts with concessionaires to sell
souvenirs, food and beverages, and other products at the events.
The questions below may include additional facts when required.

SECTION ONE: Ticket Sales

QUESTION #1 - Under what circumstances are admissions sold by a
facility box office or a ticketing service exempt from sales

tax?

ANSWER: There are several types of events for which the
admission price is exempt from sales tax.

A. Admissions to events sponsored by 501(c)(3) organizations
are exempt from tax.

DISCUSSION

Admission to events sponsored by not-for-profit organizations,
which have been granted 501(c)(3) status by the Internal Revenue
Service, are exempt provided the four criteria found in Rule
12A-1.005(3)(h), F.A.C., are met.

It must be noted that it does not matter what the proceeds of
the event are used for. The fact that the proceeds may be
donated to charity does not make the admissions exempt from tax.

Events co-promoted by a 501(c)(3) organization and a non501(c)(3) organization are not exempt under this section.

ANALYSIS

Section 212.04(2)(a)2.a., F.S., states that:

No tax shall be levied on dues, membership fees, and
admission charges imposed by not-for-profit sponsoring
organizations. To receive this exemption, the sponsoring
organization must qualify as a not-for-profit entity under
the provisions of s. 501(c)(3) of the Internal Revenue Code
of 1954, as amended.

Rule 12A-1.005(3), F.A.C., interprets this section:

(g) Dues, membership fees, and admission charges imposed by
not-for-profit sponsoring organizations or community or
recreational facilities are exempt. To receive this
exemption, the organization making any such charges must
qualify as a not-for-profit entity under the provisions of
s. 501(c)(3) of the United States Internal Revenue Code of

1986, as amended.

(h) For the purposes of this rule, sponsorship of an event
or program is determined by using the following criteria:

1. Active participation by the entity in the
   planning and conduct of the event or program;

2. Assumption by it of responsibility for the safety
   and success of the event or program, such that it
   will be subject to a suit for damages for alleged
   negligence in its conduct;

3. Entitlement by it to the gross proceeds from the
   event or program and to the net proceeds after
   payment of its costs; and

4. Responsibility by it for payment of costs of the
   event or program and for bearing any net loss if
   the costs exceed gross proceeds.

B. Admissions to live theater, live opera, or live ballet
productions sponsored by certain 501(c)(3) organizations
are exempt from tax.

DISCUSSION/ANALYSIS

Section 212.04(2)(a)6., F.S., provides an exemption for
admissions to live theater, live opera, or live ballet
productions in this state which are sponsored by s. 501(c)(3)
organizations, if the organization:

1. actively participates in planning and conducting the event,
   and is responsible for the safety and success of the event;

2. is organized for the purpose of sponsoring live theater,
   live opera, or live ballet productions in this state;

3. has more than 10,000 subscribing members and has among the
   stated purposes in its charter the promotion of arts
   education in the communities which it serves; and

4. will receive at least 20 percent of the net profits, if
any, of the events which the organization sponsors and will
bear the risk of at least 20 percent of the losses, if any,
from the events which it sponsors if the organization
employs other persons as agents to provide services in
connection with a sponsored event.

Organizations that wish to qualify for this exemption must apply
to the Department of Revenue by March 1 of each year for events
occurring in the immediately following state fiscal year (July
1-June 30). There is a cap on this ratio that is determined by
multiplying $1.5 million times the ratio of admission receipts
from a particular organization divided by the total of such
receipts of all organizations applying for the exemption in such
year. It should be noted that this exemption is only necessary
if a 501(c)(3) sponsoring organization does not receive 100% of
the net profits, and does not bear 100% of the risk of losses,
since if it did, it would qualify under the exemption described
in part A, above.

C. Events sponsored by various schools and other state
facilities are exempt from tax.

DISCUSSION/ANALYSIS

Section 212.04(2)(a)1., F.S., provides:

No tax shall be levied on admissions to athletic or other
events sponsored by elementary schools, junior high
schools, middle schools, high schools, community colleges,
public or private colleges and universities, deaf and blind
schools, facilities of the youth services programs of the
Department of Children and Family Services, and state
correctional institutions when only student, faculty, or
inmate talent is used. However, this exemption shall not
apply to admission to athletic events sponsored by an
institution within the State University System, and the
proceeds of the tax collected on such admissions shall be
retained and used by each institution to support women's
athletics as provided in s. 240.533(3)(c), F.S.

Note that this exemption does not apply to admissions to
athletic events sponsored by an institution within the State
University System when only student or faculty talent is used.
Such events are taxable, but the tax is not remitted to the
state; it is retained by the state universities and is earmarked
to support women's athletics.

D. Admissions to certain sporting events are exempt from tax.

DISCUSSION/ANALYSIS

Admission to the National Football League championship game
(Super Bowl) is exempt from sales tax. Additionally, effective
May 29, 1998, there is an exemption from Florida sales tax on
admissions to any semifinal game or championship game of a
national collegiate tournament; any postseason collegiate
football game sanctioned by the National Collegiate Athletic
Association (NCAA); and Major League Baseball all-star games.
This exemption will apply to admissions to all postseason bowl
games, such as the CompUSA Citrus Bowl, Toyota Gator Bowl, FedEx
Orange Bowl, CarQuest Bowl, and Outback Bowl. This exemption
will also apply to admissions to the 2000 Major League Baseball
All-Star Game at Pro Player Stadium in Miami.

QUESTION #2 - Who can be held responsible for taxes that were
not collected due to an erroneous determination that an event is
exempt from tax. For example, many promoters will claim to meet
the four requirements of sponsorship by a 501(c)(3), thus making
the event exempt. Is the facility which is holding the event,
or the ticketing agent, required to investigate whether the
event truly meets these criteria?

ANSWER: A dealer must retain, as part of its books and records,
sufficient documentation to establish the exempt status of a
particular transaction. See Section 212.12(6)(a), F.S. Failure
to take reasonable steps to document the exempt status of a
particular event, may result in the facility or ticketing agent
being assessed for the uncollected admissions tax.

For example, for purposes of the exemption for admissions

sponsored by a 501(c)(3), I.R.C., organization, relevant
documentation would include a copy of the I.R.S.
letter/certificate that establishes that the sponsor is a
501(c)(3) organization. Also, an affidavit from the 501(c)(3)
sponsoring organization, that attests that the four criteria of
sponsorship mandated by Rule 12A-1.005(3)(h), F.A.C., have been
met, would be considered persuasive documentation.
Alternatively, the contract between the facility and the sponsor
may contain a statement by the sponsor certifying that the four
criteria of sponsorship have been met. Whether an affidavit or
contractual provision is used, the sufficiency of the
documentation is best established when the four criteria of Rule
12A-1.005(3)(h), F.A.C., are spelled out separately. If a
facility or ticketing agent takes these steps, the Department
will not assess sales tax on a facility or ticketing agent
because of a later determination by the Department that a
certain event did not meet the four criteria for sponsorship.

QUESTION #3 - How should admission tax be shown/computed?

ANSWER: Each ticket should show on its face the price of the
admission. If the ticket does not contain the sales price, the
seller of the ticket must prominently display at the box office
a notice disclosing the price of the admission. Sales tax
should be collected on that amount. Sellers of admissions may
not "back into" the tax. If a box office wishes to sell a
ticket for a flat price, it should show the sales price and tax
on the ticket or on the prominent display. For example, if a
box office wishes to sell a ticket for $25, including tax, the
box office should include the following on the face of the
ticket, or on a prominent sign outside the box office: Sales
price = $23.58, 6% sales tax = $1.42, Total Price (including
sales tax) = $25.00. Without such language on the ticket or a
prominent sign, the sales price is $25, and the tax due from the
seller would be $1.50. See Section 212.04(1)(b), F.S.

The sales tax brackets should be used to make the computation of
tax on fractions of a dollar, as required by Section 212.12(9),
F.S. For a ticket that is sold for $25 at a six percent rate,
the sales price is computed as follows: Divide $25 by 1.06. The
result is $23.58. This is the sales price. The tax on $23.58

is computed as follows: Multiply $23 by .06. The result is
$1.38. The tax on $0.58, using the brackets is $.04. Thus, the
total tax due is $1.42.

QUESTION #4 - Is the convenience or service charge subject to
tax when added by an outside, contracted, "ticket distribution
service," or added in-house? If so, which party(s) will be
assessed for failing to collect and remit the tax?

ANSWER: The convenience or service charge imposed in-house or by
a ticketing service is part of the sales price of the admission
and is taxable. The ticketing service that collects the service
charge will be liable if the tax is not paid to the Department.
If the sales tax is not collected and paid on such service
charges by the ticketing service, the Department will not assess
sales tax on a facility that does not in fact take custody of or
receive the proceeds from the service charge imposed by the
outside contracted ticketing service.

DISCUSSION/ANALYSIS

Section 212.04(1), F.S., provides, in part:

Admissions tax; rate, procedure, enforcement.--

(1)(a) It is hereby declared to be the legislative intent
that every person is exercising a taxable privilege who
sells or receives anything of value by way of admissions.

(b) For the exercise of such privilege, a tax is levied at
the rate of 6 percent of sales price, or the actual value
received from such admissions, which 6 percent shall be
added to and collected with all such admissions from the
purchaser thereof, and such tax shall be paid for the
exercise of the privilege as defined in the preceding
paragraph.... The sale price or actual value of admission
shall, for the purpose of this chapter, be that price
remaining after deduction of federal taxes, if any, imposed
upon such admission, and the rate of tax on each admission
shall be according to the brackets established by s.
212.12(9). (emphasis added)

Section 212.04(1)(b), F.S., imposes a 6 percent tax on the
"sales price, or the actual value received from admissions."
This same provision defines the sale price or actual value of
admission for purposes of chapter 212, F.S., as the "price
remaining after deduction of federal taxes, if any, imposed upon
such admission." That statute provides that the only permissible
deduction from the sale price or actual value of an admission is
one for federal taxes. Consequently, customer convenience
charges, handling charges, Internet charges, or any other
service charges added to the regular ticket price by the seller
are part of the sale price or actual value received for the
admission and are taxable.

Note that if the admission itself is exempt from tax, any
additional convenience or service charge applied to the ticket
would also be exempt from tax. (See Section 1, question 1, for
examples of exempt admissions)

It must be emphasized that every entity which initially collects
the payment for an admission is liable for collecting the
applicable tax on the sales price of the admission and for
remitting that sales tax directly to the Department. Section
212.04(3), F.S.; Rule 12A-1.005(4)(d), F.A.C. The ticketing
service, and not the facility, must report such sales on its
sales tax return, and remit the collected sales tax to the
Department. See the answer to question 7 for more information
regarding the collection and payment of admissions taxes.

QUESTION #5: What if the facility also charges a service fee or
convenience fee for ticket sales or, as with group sales,
facilities give discounts but also charge a service fee?

ANSWER: See answer to question 4. The total amount charged to
the purchaser is subject to sales tax. The sales price includes
any convenience fees. Sales price would be decreased by any
discounts given at the time of purchase. Unlike the situation
described above, however, when the facility itself collects the
convenience charge, the facility is required to collect and
remit tax on the amount of the additional charge.

QUESTION #6 - Is the $1 rebate per ticket paid by the ticketer
to the facility taxable?

The payment of a commission by the ticketer to the facility is
not subject to sales tax.

QUESTION #7 - Advanced ticket sales -- Assume a show/event is to
occur on September 30. Tickets go on sale on June 1. Money is
collected for each ticket and is placed "in escrow" until the
event has taken place. Industry representatives state that the
money placed "in escrow" is shown as a liability on books and
records. When is the tax due?

ANSWER: Tax is due at the time of the sale of the admission,
regardless of when the event is held.

DISCUSSION/ANALYSIS

Section 212.04(3), F.S., states that "[admissions] taxes shall
be paid and remitted at the same time and in the same manner as
provided for remitting taxes on sales of tangible personal
property...." Rule 12A-1.005(4)(d), F.A.C., states that "[t]ax
is due at the time of the sale of the admission regardless of
when the event is held and is to be collected on the full amount
charged for the admission whether the sale is a cash sale,
credit sale, installment sale, or a sale made on any kind of
deferred payment plan. The dealer collecting the tax on the
sale of an admission is required to remit the tax to the
Department in the same manner as sales tax on the sale of
tangible personal property, as provided in Rule 12A-1.056,
F.A.C...."

In this instance, the sale of the admission occurs when the
purchaser exchanges a certain sum of money for the right to be
admitted to a particular performance, at a particular time, with
some particular seats (or has a "general" admission). There has
been an offer, an acceptance, and consideration. Oftentimes the
purchaser receives the physical tickets to the event. However,
possession of the tickets cannot be dispositive when dealing
with admissions, because physical tickets may not be printed
until later, and may be picked up by the purchaser on the day of

the event. Once consideration has exchanged for the right to
attend a specified performance, the sale has occurred.

Whether a sale occurs does not depend upon where the proceeds
collected are deposited. Therefore, the fact that the money is
put in an escrow account is of no consequence.

Section 212.04(4), F.S., requires the person who charges
admissions taxes to remit the tax funds to the state before the
21st day of the succeeding month after the taxes are collected.
Pursuant to Rule 12A-1.005(4)(d), F.A.C., the dealer collecting
the tax on the sale of an admission must remit the tax funds
directly to the state. The person initially collecting the sales
tax must report the taxable sales on his or her sales tax return
for the month in which the admissions are sold, and the tax must
be remitted before the 21st day of the next month. A business
practice whereby the person who sells the admission and
initially collects the tax forwards such tax to the facility or
promoter is not consistent with above-cited law. The law does
not contemplate the remittance of collected sales tax to anyone
other than the state.

Furthermore, facilities that receive or take custody of proceeds
from sales of admissions by a third-party collector, without
proof that the tax on such proceeds has been paid to the state
by the collector, may be subject to assessment for the unpaid
tax on such proceeds, as well as penalty and interest. When a
facility receives or takes custody of proceeds from the sale of
admissions, documentation of the proof that the applicable tax
has been paid should be retained by the facility in case of an
audit.

QUESTION #8 - Deposits - Deposits are taken for season tickets,
with the balance due at a later date. When is the tax due on
the deposit? When is the tax due on the balance? Can it be
prorated.

ANSWER: In the case of a true "deposit," the tax is not due at
the time of the deposit, but is due when it is applied toward
payment for certain season tickets, when such tickets are
actually sold.

DISCUSSION/ANALYSIS

In order to establish that deposits are subject to sales tax, it
must be shown that such amounts are in substance the advance
payment for admission.

A true "deposit" is not considered an advance payment for
admission. A true "deposit" must be refundable, and it must be
recorded as a liability on the books and records of the selling
dealer. If the payment is, in substance, a "deposit," it is not
taxable. A "deposit" is simply an indication by a potential
purchaser that he or she is interested in making an offer to
purchase tickets, made in hope or with the agreement that the
deposit will ensure that the seller will hold the tickets. It
is in the nature of an "option." The deposit becomes taxable
when it is applied toward payment for certain season tickets,
when such tickets are actually sold.

However, if the season ticket buyer signs a contract to purchase
season tickets, and the deposit is essentially the first payment
required under the contract, the sale will have taken place at
that time. In such a case, the purchaser has agreed to exchange
a certain sum of money for the right to be admitted to a certain
number of games, with some particular seats. There has been an
offer, an acceptance, and consideration. Possession of the
physical tickets cannot be dispositive when dealing with
admissions, as stated in the answer to the question above. Tax
would be due on the full price of the season tickets, since tax
is due on the sale of tangible personal property (and,
therefore, of admissions) at the time of sale, despite the fact
that there is a deferred payment plan. See Section
212.06(1)(a), F.S.

See TAA 94A-063 for further discussion on this issue.

QUESTION #9: What is the proper rate of tax to be collected when
admissions are sold in different counties for the same event?
Does the local option surtax apply based on where the event is
being held or where the ticket is sold?

ANSWER: The local option surtax applies based on where the event
is being held. The fact that the admissions are sold in
different counties would not make a difference.

DISCUSSION/ANALYSIS:

Section 212.054, F.S., provides that:

(3) For the purpose of this section, a transaction shall be
deemed to have occurred in a county imposing the surtax
when:

(b) The event for which an admission is charged is
located in the county.

QUESTION #10: When a city ordinance imposes a seat surcharge, is
a tax due on the amount of the seat surcharge? Is the treatment
of the surcharge different if it is statutorily supported?
Statutorily supported refers to passage of: 1.) a city
ordinance, 2.) a county ordinance, 3.) a referendum passed by
the citizens, 4.) a state statute authorizing city or county
government to pass such an ordinance or granting the citizens
the right to vote on such an ordinance.

In all four instances referred to in taxpayer's question, the
seat surcharge is part of the sales price of the admission, and
is subject to sales tax.

QUESTION #11: Are admissions/entrance fees/registration fees to
consumer and trade shows taxable? Who is responsible for
remitting the tax: the facility or the show manager?

ANSWER: The payment made by attendees to a consumer or trade
show is subject to sales tax. The definition of "admissions" in
Section 212.02(1), F.S., includes "other fees or receipts of
anything of value measured on an admission or entrance or length
of stay or seat box accommodations in any place where there is
any exhibition, amusement, sport, or recreation...." (emphasis
added) The term "exhibition" is defined in Webster's New World
Dictionary (1988) as "a public show or display, as of art,
industrial products, athletic feats, etc." Consumer and trade

shows fall under a commonly understood definition of
"exhibition." Therefore, registration and entrance fees to such
shows are taxable as the charge for an admission. See the
answer to question 7, above, regarding who is responsible for
remitting the tax.

SECTION TWO: ADVERTISING

Question #1: Facility provides full-service advertising services
and charges promoter a 15% commission (based on the cost of ads)
for placing ads. The facility will place these ads with
television, radio, and newspaper outlets on behalf of the
promoter. The facility pays the cost of advertising but passes
the cost on to the promoter, plus a commission. Is the
commission taxable?

ANSWER: The placement of newspaper, television, and radio
advertisements on behalf of the promoter is a service, and
charges for such service are not subject to tax. However, if a
facility with an in-house advertising or production unit creates
a television, radio, or newspaper ad for a promoter, and sells
the promoter tangible personal property as a result (i.e.,
photographs, printed layout, video tape, etc.), the transaction

• including the charge for creating the ad - would be subject to
  sales tax.

The new law enacted in 1999, which provides certain exemptions
to advertising agencies, does not apply to an in-house
advertising or production unit, since the law defines
"advertising agency" to mean any firm that is primarily engaged
in the business of providing advertising materials and services
to its clients. See ch. 99-269, L.O.F.

Question 2: What about the sale of advertising space (posters,
scoreboards) which is displayed in the facility, such as around
the hockey rink at the Civic Center?

ANSWER: These sales are not subject to tax.

DISCUSSION/ANALYSIS

In TAA 96A-041, it was stated that the sale of space by a
facility on two scoreboards, the press tables, and in the
concourse of the facility, to be used for advertising purposes
either by an advertising agency, or by a company which expects
to use the space for its own advertising benefit, is not subject
to sales or use tax because the payments made by such purchasers
are not given for a license to use the scoreboards or the other
spaces, nor for the right to lease the scoreboards and such
other spaces. This followed from the determination that the
purchaser did not have a right to occupy or have control of, or
sovereignty over, the advertising space.

SECTION THREE: CONCESSIONAIRES

QUESTION #1:

A performing group (not the promoter) provides t-shirts and
other souvenirs (buttons, posters, etc.) to the facility. In
some cases, the facility hires sales personnel (ABC) to sell the
products. ABC deducts tax on individual sales of items first,
then takes 30%, two thirds of which is returned to the facility,
leaving one-third for ABC. Therefore, in such an instance,
seventy percent of the proceeds, after deducting tax, goes to
the performing group, 20% goes to the facility and 10% goes to
ABC. Is the 20% which goes to the facility taxable?

Additionally, concessionaires sell food and beverage. After
taxes are deducted, 42% of net is given to the facility.

Concessions can be leased, licensed; in-house, or in-house with
management company. Is this a taxable transaction?

ANSWER: This question cannot be answered in a "Yes-No" format.
It depends on the facts and circumstances of each agreement.
The discussion below attempts to delineate the factors that the
Department will look at in determining what is subject to tax.

The first step is to determine whether a particular
concessionaire contract/agreement is a management agreement. If
the agreement is considered a management agreement, there is no
tax due on the receipts retained by the facility, and thus,

there is also no need to proceed to paragraph (2), below, which
distinguishes between leases and licenses.

DISCUSSION/ANALYSIS

(1) Management Agreement vs. Lease/License

The first inquiry is determining whether the arrangement
between the facility and ABC is a management agreement or a
lease/license agreement. If it is a management agreement,
then there is no tax on the proceeds retained by the
facility, since it is the facility that is deemed to be the
concessionaire, while ABC is simply an employee of the
facility, and no lease or license is being granted. If it
is a lease or license to use real property, then ABC is
deemed to be the concessionaire, and the facility is
leasing or licensing space to ABC to operate its
concession.

The determination whether a certain agreement constitutes a
management agreement or a lease/license agreement must be
made on a case-by-case basis, and the Department must look
at the concessionaire agreements to make this
determination. In TAA 91A-030, and TAA 88A-294, the
Department distinguished a lease/license agreement from a
"management contract."

Some of the relevant criteria that the Department looks at
in order to make this determination include:

(A) Intent of the parties, manifested in the agreement,
whether there is a lease or license to use real
property.

(B) Does the facility or ABC have the right of control or
access to the concessionaire? Can the facility or ABC
set prices, set hours of operation, mandate uniforms,
have access to the cash register? If it is the
facility, then it is more like a management agreement.
If it is ABC, then it is more like a lease/license
agreement.

(C) Are the receipts from the concession deposited in the
facility's or ABC's account? If the former, it is
more like a management agreement. If the latter, it
is more like a lease/license agreement.

(D) Is there sovereignty by ABC over a specific portion of
the premises, even against the facility? If so, it
indicates a lease.

(E) Who purchases and has title to the inventory being
sold? Who decides what food to serve? If it is ABC,
this indicates a lease/license agreement. If it is
the facility, this indicates a management agreement.

(F) Who has title to the property/equipment used to
provide the concession? If it is ABC, this indicates
a lease/license agreement. If it is the facility,
this indicates a management agreement.

If the determination is that ABC is employed by the
facility to operate the facility's concession, and thus, a
management agreement exists, no sales tax will be due on
the amounts received by the facility from the concession
sales. These are simply concessionaire revenues.

However, if it is determined that the arrangement between
the facility and either ABC or the performing group is a
lease or license, then any "cut" that the facility receives
for the merchandise or food and drink sold is a payment by
the concessionaire (ABC) or the act to the facility for the
right to occupy the space. This is a charge for either a
lease or a license to use real property, and is taxable as
such. See Section 212.031(1)(a), (c), F.S. The fact that
the amount paid is based on a percentage of sales is not
dispositive. Section 212.031(1)(c), F.S. The law is
settled that the Department of Revenue can collect tax on
separate taxable privileges. See Ryder Truck Rental, Inc.
v. Bryant, 170 So.2d 822, 825 (Fla. 1964); Fla. Hotel and
Motel Ass'n v. Dept. of Revenue, 635 So.2d 1044 (Fla. 1st
DCA 1994) The tax collected on the sale of tangible

personal property (souvenirs or food) is separate and
distinct from the tax on the lease or license to use real
property.

Once it is determined that the agreement between the
facility and ABC or the performing group is not a
management agreement, and the concession is for food and
drink, one needs to perform the analysis described below in
paragraph (2) for transactions occurring prior to July 1,
1999. The paragraph below distinguishes a lease from a
license.

(2) Lease vs. License

There is an exemption for the lease of real property to
persons providing food and drink concessionaire services on
the premises of certain facilities, pursuant to Section
212.031(1)(a)10., F.S. Prior to July 1, 1999, the
qualifying facilities included movie theaters, pari-mutuel
facilities, or any publicly owned arena, sports stadium,
convention hall, exhibition hall, auditorium, or
recreational facility. Also, prior to July 1, 1999, there
is no exemption for granting a license to use such
facilities for the purpose of providing food and drink
concessionaire services. See Rule 12A-1.070(1)(a)8., F.A.C.
Therefore, it is important, prior to July 1, 1999, to be
able to distinguish a lease from a license, when dealing
with food and drink concessionaires in publicly-owned
facilities.

Whether a particular agreement constitutes a lease or
license is a factual determination that must be determined
on a case-by-case basis. The criteria used to make the
determination are based on the definition in Section
212.02(10)(i), F.S., and on general property law.

Section 212.02(10)(i), F.S., defines "license":

(i) "License," as used in this chapter with reference to
the use of real property, means the granting of a privilege
to use or occupy a building or a parcel of real property

for any purpose.

A license to use real property is a personal privilege to
do one or more acts on the land of another without
possessing any interest in the land. A license to do the
act on such land involves the occupation of the land by the
one holding the license so far as it is necessary to do the
act by the licensee of the real property. See Devlin v. The
Phoenix, Inc., 471 So.2d 93, 95 (Fla. 5th DCA 1985). A
lease of real property contains in it the right of
exclusion by the lessee to such property of all others,
including the owner of the property. See Bodden v.
Carbonell, 354 So.2d 927, 928 (Fla. 2d DCA 1978).

It has been held that the lack of a right to occupy any
specific, fixed, or particular space which did not grant
exclusive possession to any such space did not convey a
lease of such space. Wash-Bowl Vending Co. v. No. 3
Condominium Association, Village Green, Inc., 485 So.2d
1307 (Fla. 3d DCA 1986); Sports Palace, Inc. v. Department
of Revenue, Case 72-1503 (Fla. 2d Cir. Ct. 1974) See also
TAA 97A-082 for further discussion regarding the general
concept of a "license to use" versus a "lease."

Effective July 1, 1999, the exemption for food and drink
concessionaires has been expanded. Sales and use tax does
not apply to the lease, sublease, license, or rental of
real property to anyone providing food and drink
concessionaire services within the premises of a convention
hall, exhibition hall, auditorium, stadium, theater, arena,
civic center, performing arts center, recreational
facility, or pari-mutuel facility. As alluded to in the
above paragraphs, prior to July 1, 1999, the exemption did
not apply to licenses. Therefore, the above-described
distinction between a lease and a license is no longer
relevant when dealing with food and drink concessionaires.
In addition, the previous requirement that the qualifying
facilities be publicly owned has been eliminated.

QUESTION #2: (a) Can a facility be held liable for unpaid sales
tax on sales that occur at a trade show or convention at

individual vendors, booths, or exhibitors?

The facility will not be held liable for unpaid sales tax on
sales that occur at a trade show or convention, provided the
facility maintains a written agreement with the exhibitors.

Rule 12A-1.060(1)(f), F.A.C., defines an "exhibitor" to mean a
person who enters into a written agreement authorizing the
display of tangible personal property or services at a
convention or trade show. Effective July 1, 1990, an exhibitor
who enters into an agreement with a person who conducts a
convention or trade show authorizing the display of property or
services must register as a dealer with the Department only if
he makes retail sales of goods or services in Florida or falls
under the provisions of Florida's sales and use tax mail order
law.

The person who conducts a convention or trade show is required
to maintain copies of the agreements as long as required by s.
213.35, F.S., and to make the agreements available to the
Department for inspection and copying.

(b) If items are given away at these shows, can the facility be
held liable for the vendors' failure to pay use tax on these
items?

The facility cannot be held liable for unpaid use tax by vendors
who give away complementary tangible personal property at a
trade show.

SECTION FOUR - CHARGES BY FACILITY TO PERFORMER/PROMOTER
TAXABLE AS RENT
Various Fees

The facility charges the promoter a fee for ushers, ticket
takers, etc. (40% detailed under "facts," above). The charge to
the promoter may also include a 2 1/2% to 3% box office fee.

Stage-Hand Companies

There are many stage-hand companies within the state. Promoter

will select one of the companies to set up the show. Promoter
either pays the company directly or directs the facility to pay
out of the receipts.

Security Guards

Outside security guards (crowd control) are hired and paid for
by the facility. The charge is marked up and passed along to
the promoter.

Credit Card Processing Fees

The facility also charges promoter the 2 1/2% processing fee for
credit cards accepted at the box office.

QUESTION #1 - When is the pass-through of these fees/expenses to
the promoter taxable as part of the rent?

ANSWER:

The tax on rentals, leases, or licenses to use real property is
imposed by Section 212.031, F.S. Section 212.031(1)(c), states
that "[f]or the exercise of such privilege, [a] tax is levied in
an amount equal to 6 percent of and on the total rent or license
fee charged for such real property by the person charging or
collecting the rental or license fee." The "total rent or
license fee charged" is defined to include "payments for the
granting of a privilege to use or occupy real property for any
purpose, and shall include base rent, percentage rents, or
similar charges." See Section 212.031(1)(c), F.S. Furthermore,
Rule 12A-1.070(4)(b), F.A.C., states that "[t]he tax shall be
paid at the rate of... 6 percent... on all considerations due
and payable by the tenant or other person actually occupying,
using, or entitled to use any real property to his landlord or
other person for the privilege of use, occupancy, or the right
to use or occupy any real property for any purpose."

Cost reimbursements made by a lessee/licensee to a
lessor/licensor for the landlord's cost of maintaining,
improving, or operating a facility, when required to be paid as
a condition of a lease or license agreement, are taxable as part

of the "total rent or license fee" for the right to occupy the
facility.

For example, assume that a lease/license agreement requires that
the facility provide all services in support of the
lessee/licensee's activities, including ticket sellers, door
guards, ushers, security, cleaning, and others. The
lease/license agreement provides that the facility has sole
discretion to determine the amount of these services that are
necessary for the event in question. The lease/license
agreement requires that the lessee/licensee reimburse the
facility for these expenses. Finally, the lease/license
agreement states that the lessee/licensee is in default of the
lease/license agreement if he or she fails to pay any amount due
under the agreement. Under these facts, the charges for the
ticket sellers, door guards, ushers, security, and cleaning are
part of the "total rent or license fee," and are subject to
sales tax as rent.

The charges for the required security, cleaning, and other
support services, pursuant to such a lease/license agreement,
lose their identity as charges for the individual services when
passed through to a lessee/licensee. The lessee or licensee is
not paying for these individual services, but is paying for the
right to use the facility. The expenses at issue are incurred
by the lessor in order to provide a facility ready for use by
the act/promoter. The pass-through expenses that are subject to
tax have not been "elected" by the lessee, but are rather
"required" to be paid as a condition of occupying the property.
Both capital and operating expenses, including the expenses in
support of the lease/licensing activity, are factored into the
price that a facility charges for the license/lease of its
premises. Taxpayers have argued that these expenses are not a
"condition" of the event, but are rather a "result" of the
event. To date, this argument has not been persuasive. Nearly
all operating expenses incurred by a facility are incurred as a
"result" of events occurring in the facility.

Under the factual scenario described above, the facility is not
reselling the cleaning, security, or ticket taking services to
the act/promoter. The facility is the ultimate consumer of the

required services. These expenses are incurred by the facility
in order to provide a usable and operational place to hold an
event. Furthermore, the required services provide a distinct
benefit to the facility. For example, security services protect
the facility from lawsuits from concert goers. Cleaning
services generally restore the facility to its pre-event status,
and do not benefit the lessee. Finally, the facility, and not
the act/promoter, generally has control over the personnel who
provide these services. Therefore, the act/promoter is not
purchasing nontaxable services from the facility, but rather is
paying for a clean, safe, usable facility, which is habitable
for its ordinary purpose--to host concerts, shows, or
exhibitions.

The fact that the amount of the rental payment is directly
related to the facility's expenses does not change its status as
rent. It is a mere recognition by the parties that these costs
will be revealed to the lessee/licensee. The charges, although
they are separately stated, are merely a method of "keeping
score" by the facility, or of fully disclosing to the
lessee/licensee the basis for the amount of rent. The fact the
facility's expenses are itemized does not change the fact that
the act/promoter is making a required payment for the privilege
of occupying the premises.
xxx
CAVEAT: If the lease agreement allows the act/promoter to pay
the facility for the use of the facility's services, but also
allows the act/promoter to elect to obtain its own
security/ticket takers, etc., instead of using the facility's
own services, then there is not a required payment for the
privilege of occupying the premises. Also, charges for services
that are not required to be purchased by the act/promoter, but
are elected at the option of the act/promoter, are not
considered "rent." Charges for optional goods or services that
are incurred by an act/show are not paid as a condition of
occupying the premises under the lease and are not viewed as
"rent." Finally, charges incurred that are not required to be
paid under the lease/license agreement cannot be considered
"rent."

For example, the 2 or 3 percent charge that the facility charges

the promoter for credit card processing fees is not rent if the
payment of those fees is not required by the lease/license
agreement, but is only required in a separate optional contract
that details the ticketing arrangement and box office charges.
A charge by a facility to an act/promoter for stage hands may
not be considered rent, if the performing act has the discretion
to choose whether they are necessary, and, if so, how many are
necessary for their particular show. Finally, if a performing
act elects to purchase limousine service that is not required to
be purchased as a condition of occupancy, the charge for the
limousine service is not included in rent.

In sum, cost reimbursements made by a tenant to a landlord for
the landlord's cost of maintaining, improving, or operating its
facility, when required to be paid as a condition of a lease or
license agreement, are taxable as part of the "total rent or
license fee" for the right to occupy the facility. The "passthrough" charge for goods and/or services is considered "rent"
when: 1.) the goods/services are provided by the
lessor/licensor or those in its employ; 2.) the goods/services
are not "optional," or have not been "elected" by the lessee,
but are chosen at the discretion of the facility; and 3.) the
failure to pay the charge for the goods and/or services would
result in a breach of the facility lease or license agreement.

It must be noted that although this section generally uses the
term "services," it is also possible that a cost reimbursement
by a lessee/licensee for tangible personal property consumed by
a lessor/licensor will be considered rent.

QUESTION #2: Is there a difference in the tax treatment of
labor depending on who makes actual payment to the vendor?

No. Whether the tenant pays the vendor or the facility deducts
the amount from the proceeds is not determinative as to whether
such amounts constitute taxable rental consideration. This
issue was decided in Seaboard Coast Line Railroad Company v.
Askew, No. 72-15 (Fla. 2d Cir. Ct. 1972). In this case, the
court held:

The consideration paid by the tenant for the privilege

conferred by the lease is "rent." Rent may be payable in
cash, or in some commodity, or by rendering specified
services. Rent may be payable directly to the lessor or to
some other person either specified in the lease or directed
by the lessor.... Section 212.031 imposes a tax upon "the
total rent charged" for the "renting, leasing or letting of
real estate"... While taxes are not specifically
mentioned, this language clearly indicates a legislative
intent to tax the full benefits flowing to the landlord for
the use of leased premises.... The payment of these taxes
by the lessee is the payment of money for account of the
owner and for his benefit...

Assuming that the lessee in question is required to pay a
service provider as a condition of the lease, the lessee's
payment for services directly to the service provider is subject
to sales tax as a component, in the words of Rule 12A1.070(4)(b), F.A.C., of "all considerations due and payable by
the tenant or other person actually occupying, using, or
entitled to use any real property to his landlord or other
person for the privilege of use, occupancy, or the right to use
or occupy any real property for any purpose."

QUESTION #3: Does the answer to question 1 change if the event
is co-promoted by the facility and an outside promoter, where
the risk of loss is 50-50? Apparently, in this situation, the
facility does not charge a stated amount for rent, but it does
receive 50 percent of any proceeds after expenses.

This response is based on the general information available at
this time. The facility should collect sales tax when it
charges someone for the use of real property. Total rent
includes "payments for the granting of a privilege to use or
occupy real property for any purpose and shall include base
rent, percentage rents, or similar charges." Section
212.031(1)(c), F.S. In the circumstance generally described,
the facility is offering the use of its real property to another
entity. The facility is receiving a percentage of gate receipts
after payment of its "out-of-pocket" costs in exchange for
permitting another entity to use the facility. Such a payment
appears to meet the statutory definition of rent. The

Department is sensitive to situations where the amount
determined to constitute rent under this statutory
interpretation might be seen as disproportionate to the amount
of rent paid by promoters to stage similar events and intends to
seek to avoid an unreasonable result.

QUESTION #4: Along the same lines, if the contract is
structured as a joint venture rather than a lease, are the
proceeds retained by the facility taxable as rent? Does it
change the answer if the facility is jointly and severally
liable for the losses in the joint venture, and thus may be
liable for 100% of the losses?

See response to question 3 above.

QUESTION #5: Does the answer to question 1 change if the event
is entirely promoted by the facility (show is booked in-house),
and the facility retains 100% of the risk of loss? The contract
between the facility and the performing act is a "personal
service performance contract," and is not termed a "lease" or
"license" agreement.

ANSWER: In this case the facility is hiring the performing act.
Therefore, there is no rent. The facility is paying the
performing act for its services, which are not subject to tax.
The proceeds from the admissions are the proceeds of the
facility and, as no rent is being paid by the promoter or
performing act, no tax is due.

QUESTION #6: If a deposit is accepted to reserve a facility for
an event to be held a year from now, when should tax be
remitted? Most of the time, the deposit is not refundable if the
event is canceled, but the deposit is booked as a liability on
the facility's books and records. If it is not subject to tax
at the time of the deposit, is a deposit that is kept when an
event is canceled subject to tax as rent?

ANSWER: Similar to the answer to question 8 in part I, in order
to establish that deposits are subject to sales tax, it must be
shown that such amounts are in substance the advance payment of
rent. Sales tax on the rental of real property is due when the

rental payment is received. Section 212.031(3), F.S. Thus, an
advance payment of rent is taxable at the time it is received.

A true "deposit" is not considered an advance payment of rent.
A true "deposit" must be refundable, and it must be recorded as
a liability on the books and records of the selling dealer. If
the payment is, in substance, a "deposit," it would not be
taxable.

Also, an advance payment of rent must be made pursuant to a
contract to lease, rent, or license real property in order to be
taxable as rent. Thus, if a nonrefundable deposit or other
advance payment is paid by a lessee to reserve a facility, the
deposit or advance payment does not constitute rental
consideration unless the lessee receives a contractual right to
occupy the facility for the date in question.

For example, a nonrefundable deposit, that is not considered
rental consideration at the time of payment because it is not
made concurrent with a contract to lease/license the facility,
will not be considered rental consideration if the event is
canceled, because the payment was not made for the right to
occupy the real property. Such a payment is to reserve the
right to enter into a contract to rent the facility; it is an
"option," so to speak. The payment, in and of itself, does not
give the lessee the right to occupy the real property. However,
in the instance where there is a binding contract or agreement
to lease/license a facility one year hence, a nonrefundable
deposit would be considered a prepayment or advance payment of
rent, and would be taxable at the time the payment is received.

It must be noted that s. 212.031(8), F.S., provides that
"[c]harges by lessors to a lessee to cancel or terminate a lease
agreement are presumed taxable if the lessor records such
charges as rental income in its books and records. This
presumption can be overcome by the provision of sufficient
documentation by either the lessor or the lessee that such
charges were other than for the rental of real property."
Therefore, if a facility keeps a deposit when an event is
canceled, and records the deposit as rental income on its books
and records, Section 212.031(8), F.S., authorizes the Department

to assess tax on the payment as rental consideration.

QUESTION #7: In a trade show, a promoter pays the facility to
lease the entire facility, and subleases space to the individual
exhibitors. Is the sublease taxable? If so, who is responsible
for collecting and remitting the tax when the promoter charges
and collects the sublease amount?

ANSWER: Section 212.031(5), F.S., states that "[w]hen space is
subleased to a convention or industry trade show in a convention
hall, exhibition hall, or auditorium, whether publicly or
privately owned, the sponsor who holds the prime lease is
subject to tax on the prime lease and the sublease is exempt."
Therefore, the facility will charge the promoter sales tax on
the rent paid, and the promoter does not need to charge sales
tax to the individual exhibitors or booths.

QUESTION #8: Are there any use tax consequences when a facility
owner gives away space to a vendor in a convention or trade show
(complementary rent)?

ANSWER: There are no use tax consequences when the facility
owner who self-promotes a convention or trade show gives away
space for no consideration to a vendor in a convention or trade
show. Additionally, since the prime lease is subject to sales
tax (see question 7, above), when a promoter/licensee of a
facility gives away space to a vendor in a convention or trade
show, there are no use tax consequences.

QUESTION #9: Is the percentage processing fee charged to the
promoter for ticket sales made by credit card taxable? If so,
is it collectable from the credit card company or the facility?

ANSWER: The 2% or 3% charge that the facility makes to the
promoter for credit card processing fees is not rent, if the
payment of those fees is not required for the right to occupy
the premises in the lease agreements. The Department will not
assess tax on payments made pursuant to an optional side
agreement which details the ticketing and box office
arrangement. It is only when the credit card services or the
side agreement itself are required as a condition of the lease

or license of the facility that the Department would consider
the charges to be "rent."

QUESTION #10: Assume a team that uses a facility owns the
scoreboard. Advertisements are placed upon the scoreboards, and
payment is made to the team for this. The facility receives a
cut of these advertising proceeds. Is the share of advertising
fees paid by the team to the facility subject to tax?

ANSWER: Inasmuch as the payment is required to be paid to the
facility as a condition of occupying the real property, pursuant
to the terms of the lease or license agreement, the payment is
taxable as rent.

QUESTION #11: Are there any tax consequences when a
lease/license agreement requires that the lessee purchase and
install improvements to the lessor's facility, such as a
scoreboard, and such improvements become the property of the
lessor at the end of the lease term.

Pursuant to Section 212.031, F.S., and Rule 12A-1.070, F.A.C.,
tax is due on all consideration paid by a lessee to a lessor for
the right to occupy the real property. Consideration may be in
a form other than money. In this case, if a lease requires, as
a condition of occupying the real property, that an improvement
to the lessor's real property be purchased by the lessee, and
such improvement becomes the property of the lessor at the end
of the lease term, the fair market value of the improvement is
part of the "total rent or license fee," and is taxable as
"rent" at the end of the lease term. The tax is due at the time
the improvement becomes the property of the lessor, as indicated
in the lease agreement, and is based upon the fair market value
of the property at that time.

SECTION FIVE - MISCELLANEOUS

QUESTION #1: The city has a contract with a catering company
which provides food and beverages to a performing act. The
facility gets a fee from the caterer. Is this fee taxable?

ANSWER: Based on our understanding of this arrangement, a

"kickback" by a caterer, or a charge by the facility to the
caterer for the right to cater an event will not be taxable,
since the caterer is not being given a license to use real
property. See the discussion in section three above regarding
what constitutes a license to use real property.

Payments made by the facility to the caterer will not be taxable
if the facility extends a resale certificate to the caterer, and
collects sales tax on the charges to the performer for the food
provided.

QUESTION #2: Limousine Service -- The act requires a limo to
take the performers to and from the facility. The facility pays
for the limo. Is the repayment made by the performer to the
facility for this limo taxable?

ANSWER: As long as the payment is not required to be made under
the lease agreement, the payment by the performer to the
facility is not rent. Optional services that are paid for by
the facility, and billed to the performer, are not taxable as
rent. Since charges for limousine service with a driver
provided are not taxable, no tax should be due on this
transaction.

QUESTION #3: When are equipment rental and items purchased for
use in an event taxable? For example, facility rents a forklift or spotlight to a performer, or, for example, buys towels
for resale to the performer and charges back the promoter's
account. Are these taxable?

ANSWER: The treatment depends on the particular facts.

DISCUSSION/ANALYSIS

If a facility purchases towels or rents a fork-lift, and such
item(s) are going to be resold or leased to the promoter, the
facility should purchase or lease the items with a resale
certificate, and should not pay any tax on their acquisition.
It should then collect sales tax on the price it charges the
promoter for such items.

There is one exception to this general rule. If the facility
retains full control over the fork-lift or spotlight at all
times, then the charges are not for the lease of tangible
personal property, but rather are charges for a service. Rule
12A-1.071(10), F.A.C., provides that when the owner/lessor of
equipment furnishes the operator and contracts to perform
certain work under his direction and according to his customer's
specifications, and the customer does not take possession or
have any direction or control over the physical operation, the
contract constitutes a service transaction and not the rental of
tangible personal property, and no tax is due on the
transaction. In such a case, the facility should not collect
sales tax on the charge to the promoter for the services it
provides, but should pay tax to the vendor which rents the
forklift to the facility. However, keep in mind that if the
spotlight service is required as a condition of occupancy, the
charge may be considered "rent", as discussed in Section Three,
above.

QUESTION #4: Is there a such thing as a re-rent certificate, or
does a resale certificate cover re-renting an item?

ANSWER: A resale certificate is used whether the property is to
be resold or re-rented. However, in order to properly use a
resale certificate to purchase or lease an item to be used for
re-rental, you must use the item exclusively for re-rental. For
example, if a facility rents a forklift which it rents out to a
performing act, but also uses it for its own lifting and moving,
a resale certificate should not be extended on the initial
rental/lease, but rather the facility should pay tax to the
lessor of the forklift. The facility should also collect tax on
any subsequent rental of that forklift.

QUESTION #5: If a package deal is set up where a person is
charged a lump sum fee, which includes admission to the event,
dinner, limousine, and back stage passes, what amount is subject
to tax? What if the admission component is exempt, because it is
sponsored by a 501(c)(3) organization?

ANSWER:

A. Nonexempt, non 501(c)(3) entities

Subpart A refers to entities that are not s. 501(c)(3), I.R.C.,
organizations, and do not hold a Florida Consumer's Certificate
of Exemption.

The charge for an event "package-deal" is considered to be a
charge for an admission, and does not constitute the resale of
the components. The entity selling such a package must collect
admissions tax on the entire price charged for the package.
Also, in addition to collecting admissions tax on the full
package price, the entity must also pay applicable use tax on
the cost price of tangible personal property, such as prepared
meals, that are used and consumed in providing the taxable
admission.

Only by separately stating the price for each of the components,
AND providing the customer with a choice whether particular
components, such as the dinner, will be included, can the entity
be said to have sold the dinner to the customer and thereby
avoid a use tax obligation. In this case, the entity would
collect applicable sales tax on the separate charge for the
taxable components.

B. Nonexempt, 501(c)(3) entities

Subpart B refers to entities that are s. 501(c)(3), I.R.C.,
organizations, but nevertheless do not hold a Florida Consumer's
Certificate of Exemption.

As stated in subpart A, above, the charge for an event package
is considered to be a charge for an admission. Therefore, if
the entity imposing the lump-sum charge is a s. 501(c)(3)
organization, the entire charge for the package is exempt from
sales tax. Section 212.04(2)(a)1., F.S. Additionally, since the
entity imposing the charge does not hold a Florida Consumer's
Certificate of Exemption, the entity must also pay applicable
use tax on the cost price of tangible personal property, such as
prepared meals, that are used and consumed in providing the
taxable admission.

C. Exempt, 501(c)(3) entities

Subpart C refers to entities that 1.) are s. 501(c)(3), I.R.C.,
organizations, and 2.) hold a Florida Consumer's Certificate of
Exemption.

In this case, there will be no sales or use tax due. As stated
in subpart A, above, the charge for an event package is
considered to be a charge for an admission. If the entity
imposing the lump-sum charge is a s. 501(c)(3) organization, the
entire charge for the package is exempt from sales tax. Section
212.04(2)(a)1., F.S. Additionally, since the entity imposing the
charge holds a Florida Consumer's Certificate of Exemption, it
is also exempt from use tax on the tangible personal property
that is used and consumed in providing the taxable admission.

Question #6: Can an exempt organization sell taxable items
without collecting sales tax?

No. In general, entities that hold a Florida Consumer's
Certificate of Exemption, as well as 501(c)(3) organizations,
may not engage in making sales without collecting Florida tax
(except for sales of admissions by 501(c)(3) organizations, as
discussed in section 1, question 1). An entity that holds a
Florida Consumer's Certificate of Exemption may purchase or rent
property for use in its nonprofit activities without paying any
sales tax, but it still must collect sales tax when it makes
sales to others (except for sales of admissions by 501(c)(3)
organizations). Thus, sales of tee shirts or other tangible
personal property made by nonprofit entities at their events are
taxable, and the nonprofit concessionaire is responsible for
collecting and remitting tax on such sales. An exception to
this general rule exists for churches. A church that holds an
event at a facility may make sales of tangible personal property
to others without collecting sales tax. See Section
212.08(7)(o)1.a., F.S.

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.

You are further advised that this response, your request, and
related backup documents are public records under Chapter 119,
F.S., which are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Your name, address, and any other
details which might lead to identification of the taxpayer must
be deleted by the Department before disclosure. In an effort to
protect confidential information, we request you notify the
undersigned in writing within 15 days of any deletions you wish
made to the request or this response.

Sincerely,

Ralph G. Pepe
Tax Law Specialist
Technical Assistance and Dispute Resolution
(850) 922-4802

Control No. 38402