Was labor to replace a warranty-covered part on a bolted-down automotive lift subject to Florida sales tax?

Plain-English summary

Florida treated the automotive lift as tangible personal property and taxed the warranty repair charge. Bolting the lift to the garage floor did not turn it into real property because machinery and equipment were excluded from the statutory fixture definition.

The leaking cylinder was replaced under a warranty that covered the part but not labor. Florida's repair rule taxed the entire charge when the repairer furnished a part incorporated into tangible personal property, even if the customer paid no separate amount for that part.

What this means for you

Heavy equipment does not become real property merely because it is bolted down for stability. For a repair to tangible personal property, labor-only treatment requires records showing that the repairer furnished no incorporated or attached tangible personal property.

Common questions

Q: Why was the lift not a fixture? The Department classified automotive lifts as machinery and equipment, which the cited statute excluded from “fixtures” even when permanently attached.

Q: Did the free warranty part make the labor nontaxable? No. A part was furnished and installed, so the full repair charge was taxable even though the warranty covered the part's cost.

Q: Would a true labor-only repair be different? Potentially. The cited rule required the dealer's records to establish that no tangible personal property was furnished and incorporated or attached.

Citations and references

• Fla. Stat. § 212.06(14) — real property and fixture definitions
• Fla. Stat. §§ 212.05(1), 212.06(1) — transactions involving tangible personal property
• Fla. Admin. Code r. 12A-1.006(1)(a), (4) — repair charges
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99A-042

Original ruling text

SUMMARY

It is the Department's position that automotive type lifts
are in the nature of machinery and equipment, and thus
tangible personal property, and not real property. Although
machinery and equipment used in industrial activities are
often screwed or bolted in place or are of such great
weight that they cannot be moved without the use of other
equipment, various statutory provisions indicate that the
intent of the Florida legislature is to treat such items as
tangible personal property for sales and use tax purposes.

With regard to warranty repairs on the lift, where the
parts are used in the repair, the labor charge is taxable,
even when there is no charge for the parts provided.

Sep 03, 1999

Re: Technical Assistance Advisement (99A-042)
Sales and Use Tax
XXX ("Taxpayer")
Repairs to Automotive Lifts
Section 212.06(14), F.S.
Rule 12A-1.006, F.A.C.

Dear :

This is in response to your letter of July 9, 1999, requesting
the issuance of a Technical Assistance Advisement on the taxable
status of certain repairs made to an automotive lift which your
company owns. Your letter provides in part:

[Taxpayer] purchased a lift that has been permanently
bolted to the floor in the garage at our facility. We
received warranty coverage on this purchase, which included
the cost of parts but excluded repair labor. The warranty
was not purchased separately from the lift but was included
in the purchase price of the lift. On January 1, 1998 we

had a leaking lift cylinder replaced and paid for the
repair labor and service call. The part was covered under
our warranty. At the time of payment we did not pay sales
tax nor did we accrue it. We have since accrued the sales
tax on this invoice....

We are requesting a technical assistance advisement that
will clarify the following:

The status of the lift as real vs. tangible personal
property and
The tax status of the repair transaction.

Discussion

Response to Question #1:
It is the Department's position that automotive type lifts are
in the nature of machinery and equipment, and thus tangible
personal property, and not real property.

Section 212.06(14), F.S. (Supp. 1998), provides in part:

(14) For the purpose of determining whether a person is
improving real property, the term:

(a) "Real property" means the land and improvements thereto
and fixtures and is synonymous with the terms "realty" and
"real estate."

(b) "Fixtures" means items that are an accessory to a
building, other structure, or land and that do not lose
their identity as accessories when installed but that do
become permanently attached to realty. However, the term
does not include the following items, whether or not such
items are attached to real property in a permanent manner:
trade fixtures; property of a type that is required to be
registered, licensed, titled, or documented by this state
or by the United States Government, including, but not
limited to, mobile homes, except mobile homes assessed as
real property; or machinery or equipment. For an item to be
considered a fixture, it is not necessary that the owner of

the item also own the real property to which it is
attached. (emphasis supplied)

The definition of "Real property" found in section
212.06(14)(a), F.S., was added to the Florida Statutes by the
1998 Legislature as part of a package of legislation intended to
provide statutory clarifications. The legislation also added a
definition of "fixture," a term previously not defined in the
sales and use tax statutes, providing that a "fixture" is an
accessory that retains its character as an accessory upon
installation but which is permanently attached to realty.
Machinery and equipment are specifically excluded from the new
definition of "fixture."

Guidelines for determining whether a particular item is a
fixture were identified by the Florida Supreme Court in
Commercial Finance Co. v. Brooksville Hotel Co., 123 So. 814
(Fla. 1929). The Court concluded that in order for a particular
item to be a fixture that becomes part of realty, three factors
must be met. First, there must be actual annexation to the
realty or something appurtenant thereto. Second, the item must
be appropriate to the use or purpose of that part of the realty
to which it is connected. Third, the intention of the party
making the annexation must be that the item shall be a permanent
accession to the freehold. The Court stated that the owner's
intention must be determined by considering not only the
declared intent but also the "character, relations, and purposes
of the property."

It is the Department's position that the fact that the lift is
bolted to the garage floor is not determinative of the character
of the item. If attachment were the sole criterion for status as
a fixture, the inquiry with respect to the item at issue would
stop at this point. There are many instances in which Florida
courts have held that property attached in a permanent manner
was not a fixture. See White v. County Mortgagee Corp., 211
So.2d 254 (Fla. 3rd DCA 1968) (elevator in a 10-story building
held to be tangible personal property); Zimring-McKenzie
Construction Co. v. City of Pinellas Park, 237 So.2d 576 (Fla.
2nd DCA 1970) (water and sewer system held to be personalty).

It is clear that being solidly attached to realty is not
sufficient in itself to support a determination that an item is
a fixture. The method of attachment must be indicative of an
intent that the item is intended as a permanent addition to the
real estate to warrant classification as a fixture. If there
are other reasons for attaching an item by bolts or welding or
similar methods, the item may retain its character as tangible
personal property despite the means of annexation. For example,
heavy machines and equipment may be attached for purposes of
stability or to facilitate efficient operation in conjunction
with other pieces of machinery in an overall manufacturing
process. This does not mean that if the plant owner were to
relocate to a different site, the machinery and equipment would
not be removed for reinstallation elsewhere. Under those
circumstances the attachment is intended to further a particular
activity carried on at a facility, not to permanently alter the
underlying realty.

Although machinery and equipment used in industrial activities
are often screwed or bolted in place or are of such great weight
that they cannot be moved without the use of other equipment,
various statutory provisions indicate that the intent of the
Florida legislature is to treat such items as tangible personal
property for sales and use tax purposes. Section 212.02(14)(c),
F.S. defines "retail sales" to include sales of machinery and
equipment or parts thereof, with no limitation as to size of the
equipment. Additionally, section 212.05(1)(f), F.S.,
specifically imposes tax on the "sale, rental, use, consumption
or storage for use in this state of machines and equipment, and
parts and accessories thereto, used in manufacturing,
processing, compounding, producing, mining, or quarrying
personal property for sale or to be used in furnishing
communications, transportation, or public utility services."
Again, there is no size limitation or indication that bolting a
machine down would remove it from this statutory provision.

Response to Question #2:

Florida sales and use taxes apply to the sale, use, lease,
repair, and other transactions involving tangible personal
property. See sections 212.05(1), 212.06(1), F.S.

Rule 12A-1.006, F.A.C., provides in part:

(1)(a) Where parts are furnished by the repairer, the
entire charge the repairer makes to a customer for
adjusting, applying, installing, maintaining, remodeling,
or repairing tangible personal property is taxable...

(4) ... [C]harges for repairs of tangible personal property
which require labor or service only are taxable unless the
repairer (dealer) can establish by evidence in the dealer's
records that the dealer furnished no tangible personal
property which was incorporated into or attached to the
repaired item. It is immaterial that the cost of the
material furnished is insignificant when compared to the
cost of the labor involved....

Though there is no additional charge for the parts, parts were
furnished by the repairman. Therefore the repair of the
automotive type lift would be taxable.

If you have further questions with regard to this matter and
wish to discuss them, you may contact me at (850) 922-4840.

This response constitutes a Technical Assistance Advisement
under s.213.22, F.S. which is binding on the department only
under 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 and our request 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 the confidentiality

of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Jonathan E. Swift
Tax Law Specialist
Technical Assistance and Dispute Resolution

Control No. 38328