Could a boat yard refund tax on repairs to a commercial vessel using the captain's interstate-commerce affidavit and invoices?

Plain-English summary

Florida accepted the captain's affidavit as support for refunding tax on qualifying parts and repairs for the commercial vessel. The statement said the vessel exclusively transported persons or property in interstate or foreign commerce and would not operate on Florida canals, inland waterways, or territorial waters.

The exemption covered detailed repair items appropriate to the vessel's design and use. It did not cover undetailed “marine store purchases,” jet-ski repairs, telephone, fax, or electrical service for residential use.

After refunding the customer, the boat yard could apply to the Department or take a credit on its sales-and-use-tax return, retaining the affidavit, invoices, and proof of the customer refund. The ruling stated a five-year filing period for tax paid after September 30, 1994 but before July 1, 1999, and three years for tax paid on or after July 1, 1999.

What this means for you

An affidavit did not make every yard charge exempt. The invoice still had to identify qualifying vessel parts and repairs, and the dealer had to preserve the evidence supporting both the customer's exemption and the dealer's refund or credit.

Common questions

Q: Was the submitted affidavit acceptable? Yes.

Q: Did it cover every invoiced charge? No.

Q: Could the yard claim relief before refunding the customer? The ruling's credit instructions required documentation that the tax had been refunded to the purchaser.

Citations and references

• Fla. Admin. Code r. 12A-1.064(5)(c) — vessels used exclusively in interstate or foreign commerce
• Fla. Stat. § 215.26(2) — refund limitation periods stated in the 1999 ruling
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99A-066

Original ruling text

SUMMARY

QUESTION: Can the affidavit and invoices for items which
are appropriate to carry out the purpose for which a vessel
is designed, equipped and used (copies included) presented
by a customer claiming an exemption from Florida sales tax
be accepted for purposes of refunding the customer
previously paid taxes? If so, how may I receive a refund?

ANSWER - Based on Facts Below: The Department has
determined that the affidavit presented is acceptable for
purposes of refunding the purchaser the sales tax paid on
those items which are appropriate to carry out the purpose
for which the vessel is designed, equipped and used.

To receive a refund from the Department of Revenue for
taxes refunded to this customer, you must submit an
application within 5 years from the date the payment was
made if tax was paid after September 30, 1994, but before
July 1, 1999. If such tax was paid on or after July 1,
1999, such application must be submitted within 3 years
from the date of payment.

Dec 01, 1999

Re: Technical Assistance Advisement 99A-066
Sales and Use Tax - Vessel Repairs; Exemption; Refund
Section 215.26(2), F.S.
Rule 12A-1.064(5), F.A.C.
F.E.I. # XX

Dear :

This is in response to your letter dated XXX, for the
Department's issuance of a Technical Assistance Advisement
("TAA") concerning the above referenced party and matter. Your
letter 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 section
213.22, F.S.

Advisement Requested

You have requested our advisement concerning the acceptance of
an affidavit presented to you from a customer claiming an
exemption from Florida sales tax. You have supplied a copy of
the affidavit and the applicable invoices for our review.

Discussion of Facts

One of your customers docked a motor yacht named "XXX"
(hereafter "Vessel") at your boat yard from XXX, for repairs
involving the keel and shaft of the vessel. The home port of
the vessel is XXX. You charged and collected sales tax from the
customer on the repairs performed. You remitted the sales tax
collected to the Department of Revenue. The customer is
requesting a refund from you for the sales tax they paid. The
captain of the Vessel during the time of repairs has submitted
an affidavit attesting that the Vessel is a commercial vessel
and meets the provisions of Rule 12A-1.064(5), F.A.C.;
therefore, it is not required to pay Florida sales tax. You
have not refunded this customer the sales tax, pending whether
or not this affidavit is acceptable by the Florida Department of
Revenue for purposes of refunding the customer. If the
documentation submitted is acceptable for refund purposes, you
will then provide the customer the appropriate refund determined
to be due and either apply for a refund with the Florida
Department of Revenue on the appropriate refund form or take a
sales tax credit on your sales and use tax return.

Law and Analysis

Rule 12A-1.064(5)(c), F.A.C., provides:

(5) Vessels.

(c) Persons operating vessels which transport persons or
property exclusively in interstate or foreign commerce may,

in lieu of registering as a dealer, furnish vendors with a
signed statement that they do not operate on or in the
canals or inland waterways of Florida. Mileage of vessels
from the territorial limit to port dockside and return into
international waters is not considered to be mileage in
Florida.

In reviewing the affidavit attached to your letter, the customer
has supplied you, the selling dealer, with a signed statement
attesting to the fact that the items purchased are to be used
only by Vessel to transport persons or property in interstate or
foreign commerce and such items are appropriate to carry out the
purpose for which the Vessel is designed. The purchaser has
also checked the appropriate item identifying that the Vessel
has not and will not operate on the canals, inland waterways or
within the territorial waters of Florida.

In reviewing the invoices included, the majority of the items
are charges for parts and repairs that are appropriate to carry
out the purpose for which the Vessel is designed or equipped and
used. The invoice charges described as "marine store purchases"
which are not detailed will not meet the provisions of Rule 12A.064(5), F.A.C., since such items do not allow the Department of
Revenue to determine a nontaxable purchase. Jet ski repairs,
telephone, fax and electrical service for residential use would
not qualify for this exemption. Therefore, the basis for your
refund request must include only those items that are detailed
on each invoice which represent parts and repairs that are
appropriate to carry out the purpose for which the vessel is
designed or equipped and used.

The Department has determined that the affidavit presented is
acceptable for purposes of refunding the purchaser the sales tax
paid on those items which are appropriate to carry out the
purpose for which the vessel is designed, equipped and used.
However, this affidavit, along with the associated invoices,
must be kept for auditing purposes. The purchaser claiming the
exemption must support the exemption claimed with additional
documentation as deemed necessary in the Florida Administrative
Code for auditing purposes.

Section 215.26(2), F.S., provides:

(2) Application for refunds as provided by this section
must be filed with the Comptroller, except as otherwise
provided in this subsection, within 3 years after the right
to the refund has accrued or else the right is barred.
Except as provided in chapter 198 and s. 220.23, an
application for a refund of a tax enumerated in s. 72.011,
which tax was paid after September 30, 1994, and before
July 1, 1999, must be filed with the Comptroller within 5
years after the date the tax is paid, and within 3 years
after the date the tax was paid for taxes paid on or after
July 1, 1999. The Comptroller may delegate the authority
to accept an application for refund to any state agency, or
the judicial branch, vested by law with the responsibility
for the collection of any tax, license, or account due.
The application for refund must be on a form approved by
the Comptroller and must be supplemented with additional
proof the Comptroller deems necessary to establish the
claim; provided, the claim is not otherwise barred under
the laws of this state. Upon receipt of an application for
refund, the judicial branch or the state agency to which
the funds were paid shall made a determination of the
amount due. If an application for refund is denied, in
whole or in part, the judicial branch or such state agency
shall notify the applicant stating the reasons therefor.
Upon approval of an application for refund, the judicial
branch or such state agency shall furnish the Comptroller
with a properly executed voucher authorizing payment.

Enclosed is a refund application for your convenience. Such
application must be submitted within 5 years from the date the
payment was made to the Florida Department of Revenue if the tax
was paid after September 30, 1994, but before July 1, 1999. If
such tax was paid on or after July 1, 1999, such application
must be submitted within 3 years from the date of payment. In
lieu of completing this application, you may take a credit on
your sales and use tax return. Appropriate schedules attached
to the tax report would include a copy of the affidavit
presented by the purchaser along with documentation supporting
the taxes were refunded to the purchaser.

This response constitutes a Technical Assistance Advisement
under section 213.22, F.S., which is binding on the Department
only under the facts and circumstances described in the request
for this advise, as specified in section 213.22, F.S. Our
response is predicated upon 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 from that which is 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 section 213.22, F.S. Confidential information
must be deleted before public disclosure. In an effort to
protect confidentiality, we request you provide the undersigned
with an edited copy of your request for Technical Assistance
Advisement, the backup material and this response, deleting
names, addresses and any other details which might lead to
identification of the taxpayer. Your response should be
received by the Department within 15 days of the date of this
letter.

Sincerely,

Janet Cumbie
Tax Law Specialist
Technical Assistance & Dispute Resolution
(850) 922-4847

JCC\ Control #39303