Sales and Use Tax TAA 13A-018 - Registration
QUESTION: Is Taxpayer required to be registered as a dealer?
ANSWER: Yes. Upon review of the documents provided, it is clear that Taxpayer
is an independent contractor and not an agent of Related Company. As an
independent contractor, Taxpayer operates as a real property improvement
contractor performing improvements to real property, as well as providing
the necessary items of furniture and furnishings, tangible personal property,
that went into the projects. Based upon this determination, Taxpayer should
be registered as a dealer with the Department. Since Taxpayer is the ultimate
consumer of the supplies and materials used in the performance of a real
property contract, and is also engaged in purchasing tangible personal
property for resale, the appropriate use tax should be remitted to the
Department by Taxpayer on the cost of the supplies and materials used
in the performance of the contract. In addition, Taxpayer should collect
and remit the appropriate sales tax on the tangible personal property,
including the cost of labor involved in the installation of the tangible
personal property, sold to Related Company. Taxpayer may not look to Related
Company to determine and remit the sales and use tax on its behalf.
August 23, 2013
Re: Technical Assistance Advisement – TAA 13A-018
Sales and Use Tax – Registration Sections: 212.02 and 212.05, Florida Statutes (F.S.)
Rule: 12A-1.051, Florida Administrative Code (F.A.C.)
Petitioners: XXX (“Taxpayer”) XXX (“Parent Company”)
XXX (“Related Company”)
Dear XXX:
This letter is a response to your petition dated XXX, for the Department's
issuance of a Technical Assistance Advisement ("TAA") concerning
the above referenced party and matter. Your petition has been carefully
examined and the Department finds it to be in compliance with the requisite
criteria set forth in Chapter 12-11, Florida Administrative Code. This
response to your request constitutes a TAA and is issued to you under
the authority of Section 213.22, F.S.
Issue
Whether Taxpayer is required to be registered as a dealer.
Facts
Taxpayer was audited pursuant to Chapter 212, F.S., for the period XXX,
through XXX. Taxpayer protested the assessment, arguing that it was not
liable for the tax because it acted solely as an agent and was therefore
not required to register as a dealer. A Notice of Decision (“NOD”)
was issued on XXX, finding that Taxpayer was required to register as a
dealer because it operated as a contractor. Taxpayer then sought a reconsideration
of the NOD and a Notice of Reconsideration (“NOR”) was issued
on XXX, upholding the finding that Taxpayer was required to register.
A Closing Agreement compromising the assessed penalty was offered with
the NOR and accepted by Taxpayer. The terms of the Closing Agreement required
Taxpayer to request this TAA concerning the issue.
The current petition sets forth the following information:
A. [Taxpayer] and its Relationship with [Parent Company, Related Company],
and the Related XXX Entities
1. [Taxpayer] is a XXX limited liability company with its principal place
of business located [outside Florida. Taxpayer] registered to do business
with the State of Florida on or about XXX. In its application, [Taxpayer]
advised that it had been organized on or about XXX. . . .
2. [Taxpayer] is a wholly owned subsidiary of [Parent Company], a foreign
corporation . . . . [Parent Company’s] principal place of business
is also located [outside Florida].
3. [Taxpayer] functions as the contract administrator exclusively for
those XXX owned or operated by [Parent Company. Taxpayer] limits its services
to XXX operated by [Parent Company. Taxpayer] does not offer its services
to other XXX developers or to the public at large.
4. Each XXX served by [Taxpayer] is operated by [Parent Company], through
[Related Company. Parent Company] owns or operated XXX (XXX) XXX within
the State of Florida. [Related Company] manages the daily operations of each XXX.
5. . . . [Parent Company’s] operations are interrelated with the
operations of [Taxpayer] and [Related Company]. They share the same principle
place of business. They also share ownership, management, human resources
functions, and accounting functions.
6. Despite the name, [Taxpayer] is not a licensed general contractor in
Florida, and it does not provide general contracting services. All permitting
and real property construction is performed by independent contractors
who supply their own equipment and labor.
Rather, [Taxpayer] is a construction manager charged with the overall
responsibility for site renovation and improvements relating solely to
[Related Company] operated XXX.
B. [Taxpayer’s] Business Model
7. In a typical renovation project for a Florida operated XXX, the XXX
will contract with [Taxpayer] for construction management services, namely
to serve as a contract administrator for the renovation work, to hire,
manage and advise all third party providers, and to purchase those materials
needed on the project. For example, for the audit period resulting in
the Closing Agreement executed between [Taxpayer] and DOR, three XXX owned
and/or operated by [Parent Company] were renovated: [three Related XXX
Entities]. Copies of the respective construction management agreements
establishing [Taxpayer’s] duties are attached . . . . These contracts
are identical and representative of the types of agreements typically
executed between [Taxpayer] and each XXX.
8. At all times, [Taxpayer] functions solely as the agent for the XXX.
It does not purchase any materials, supplies or tangible personal property
for resale or for its own use. All materials are ordered on behalf of
the XXX consistent with the needs of each renovation project. They are
provided to the XXX at cost, without mark-up. Moreover, since the XXX
owns the materials, they are delivered directly to the property under
renovation. [Taxpayer] never takes either title or possession of the materials,
supplies or tangible personal property.
9. Each contract management agreement contains an addendum. Each addendum
provides in the fourth “whereas” clause that: “[the
XXX entity] desires to engage [Taxpayer] to perform Work on [the XXX entity’s]
behalf as Agent for [the XXX entity] and entered into the agreement.”
10. Paragraph 3 of the addendum provides as follows:
[Taxpayer] shall, for purposes of administrative efficiency and for purposes
of accurately monitoring purchases and engagements of other Work-related
professionals (“Third Parties”), purchase materials and goods,
engage Third Parties and otherwise incur costs and expenses on behalf
of [the XXX entity] (“Costs and Expenses”) and shall maintain
clear records of such Costs and Expenses made on [the XXX entity] as [the
XXX entity’s] agent for Property and Work.
11. Paragraph 4 of the addendum further provides:
[The XXX entity] agrees that [Taxpayer’s] purchase of goods and
materials and [Taxpayer’s] engagement of Third Parties is strictly
on behalf of, for the benefit of and as agent for [the XXX entity] and
not on behalf of or for the benefit of [Taxpayer], and that [the XXX entity]
shall remain liable for any and all Costs and Expenses incurred by [Taxpayer]
for [XXX entity’s] behalf for Work at Property. For purposes herein,
Costs and Expenses shall include, without limitation except as set forth
in the Agreement, the costs and expenses for all goods, materials, labor,
expert fees, Third Parties, sales and use taxes, permits and registrations
and the like.
12. [Taxpayer’s] role in connection with each renovation project
is to ensure both that the XXX entities that owned the project actually
received the materials, supplies, tangible personal property, and services
promised by third party vendors and contractors and; that the renovation
services provided by the independent contractors complied with the application
plans and specifications[.]
13. The nature and extent of each renovation project, including the selection
of third party vendors, is controlled by the XXX.
14. The third party vendors who provide the materials, supplies, tangible
personal property, and services for the XXX entities’ renovation
projects are paid in one of three ways:
(1) invoices are directed to and paid by [Taxpayer] with funds advanced
by the individual XXX entities from segregated bank accounts;
(2) invoices are directed to the individual XXX and paid directly by the XXX; or
(3) invoices are directed to [Taxpayer] then forwarded by [Taxpayer] to
the individual XXX entities for direct payment to the vendor.
15. Many of the vendor invoices are issued with appropriate Florida sales
tax included. Such invoices are paid in full, together with the stated
sales tax either by [Taxpayer], using the monies deposited for such purpose
by the individual XXX entities, or directly by the XXX entities.
16. When the vendor invoices did not include sales tax, the XXX pay the
use tax on such materials, supplies, tangible personal property, and services
directly to DOR.
Taxpayer’s Argument
Taxpayer acknowledges that dealers who are engaged in taxable activities
must register as dealers and states that taxable activities include the
sale of tangible personal property and certain enumerated services. However,
Taxpayer argues that it should not be required to register as a dealer
because it does not sell tangible personal property or provide taxable
services. Taxpayer argues that its sole function is to provide a nontaxable
service to Related Company, specifically that of an agent providing construction
management services. Taxpayer states that the NOD and NOR previously issued
failed to analyze its agency role in relation to Related Company and that
the Notices summarily concluded that it was required to register as a
dealer pursuant to Rule 12A-1.051, F.A.C. Taxpayer argues that it is not
engaged in any of the activities contemplated or delineated in that rule;
that it is not a “contractor” as defined by the rule; that
it is not the end user of any of the material purchased; that it did not
perform any real property improvements because it did not contract to
perform any improvements to land; and that it did not furnish any tangible
personal property to Related Company. Taxpayer cites Technical Assistance
Advisements (individually a “TAA”) 05A-011 and 09A-045 in
support of its argument.1
Law and Discussion
Two questions must be answered in determining whether Taxpayer is required
to register as a dealer. First, is Taxpayer an agent of Related Company?
Second, if Taxpayer is not an agent of Related Company, is Taxpayer’s
contract with Related Company a real property improvement contract or
a contract for the provision of tangible personal property?
Is Taxpayer an agent of Related Company?
Whether someone is an agent of another is not determined by statute, but
has instead been addressed by the courts on a case-by-case basis. The
courts have looked at a variety of factors to determine whether a relationship
between parties was one of agency or independent contractor.
In Cantor v. Cochran, 184 So.2d 173 (Fla.1966), the Florida Supreme Court approved the factors set out in Restatement (Second) of Agency, § 220 (1958) for making this determination. Those factors include:
• the extent of control that, by the agreement, the master exercises over the details of the work;
• whether or not the one employed is engaged in a distinct occupation or business;
• the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
• the skill required in the particular occupation;
• whether the employer or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work;
• the length of time for which the person is employed;
• the method of payment, whether by the time or by the job;
• whether or not the work is a part of the regular business of the employer;
• whether or not the parties believe they are creating the relation of master and servant;
• whether the principal is or is not in business.
The
Cantor Court found that the individual in question was an employee [i.e., agent]
and not an independent contractor because 1) the employer had the power
to set work hours, approve time off work and to fire the individual without
cause; 2) the individual was not engaged in a business separate and distinct
from that of the employer; 30 the individual needed no special knowledge,
training, or skills to perform work; 4) tools to perform the work were
provided by the employer; 5) the individual worked for the employer for
seven years; 6) the work was part of the regular business of the employer;
and 7) the employer was in business and the individual's work was
in furtherance of that business.2
The relationship of Taxpayer and Related Company is governed by a written
contract. This contract is titled “Standard Form of Agreement Between
Owner and Construction Manager where the Construction Manager is also
the Constructor, and where the Basis of Payment is the Cost of the Work
plus a Fee and there is no Guarantee of Cost” (hereafter referred
to as the “Standard Agreement”). This contract is document
number A131 CMc - 2003, promulgated by the American Institute of Architects
and the Associated General Contractors of America. Document number A201
– 1997, “General Conditions of the Contract for Construction,”
(hereafter referred to as the “General Conditions”) is incorporated
by reference under Section 1.2 of the Standard Agreement.3 Section 1.2 of the Standard Agreement specifically provides that the term
“contractor” as used in the General Conditions shall mean
the construction manager. The contract is between “Owner”
(Related Company) and “Construction Manager” (Taxpayer).4
Article 2 of the Standard Agreement sets out Taxpayer’s responsibilities
relevant to the preconstruction phase, including evaluation of Related
Company’s program, budget, and schedule requirements; consultation
with Related Company and the architect; preparation of a project schedule;
preparation of cost estimates; and the like. Taxpayer’s responsibilities
relevant to the construction phase are detailed in Article 3 of the General
Conditions, and include supervision and direction of the construction;
purchase and payment of labor, materials, equipment, tools, and other
facilities and services necessary for completion of the work; and securing
and paying for building and other permits. Payment from Related Company
to Taxpayer is addressed in Article 7 of the Standard Agreement and is
to be made in progress payments. Neither the Standard Agreement nor the
General Conditions contain any provision related to third-party invoices
being submitted to and paid directly by Related Company. Taxpayer is responsible
for the purchase and maintenance of both workers’ compensation and
employers’ liability insurance and commercial general liability
insurance, including coverage for explosion, collapse, and underground
hazards. Neither party can terminate the contract except for cause, as
provided in General Conditions Article 14. issue and not a general statement
as to what is “typical.” Since the facts of the 2009 TAA are
so far removed from those found here, the holding of the 2009 TAA can
have no bearing here. 2 The Cantor case has been cited and discussed dozens
of times by other Florida courts. However, no case involved facts substantially
similar to those herein. Therefore, in the interests of brevity, the Department
declines to cite and analyze those cases here. 3 Taxpayer did not provide
a copy of the General Conditions. All references to specific provisions
are based on a sample copy obtained from the American Institute of Architect’s
website. 4 Taxpayer provided a copy of a document titled “Addendum
to Agreement by and between Owner and Manager,” which specifically
states that “Manager is engaged by Owner as Agent for Owner to provide
professional services of management of Work as defined and set forth in
Agreement.” However, section 9.2.2 of the Standard Agreement provides
that the Agreement and other documents incorporated by reference represent
the entire agreement, and may only be amended by a written instrument
signed by both parties. The addendum is not mentioned in the Standard
Agreement and is not signed by either party; therefore, it cannot be considered
as part of the contract.
Applying the Cantor factors to the present facts, we find the following:
1. Related Company has limited control over the details of the work, especially
on a day-today basis. Taxpayer, not Related Company, sets the work hours
and is responsible for work schedules of subcontractors and other hired
labor. Related Company cannot fire Taxpayer without cause. 2. Taxpayer’s
business (building construction and renovation) is separate and distinct
from Related Company’s business (XXX operations). 3. Building construction
and renovation is not normally done under the control and supervision
of the ultimate owner. Building construction and renovation requires special
knowledge, training and skills, as evidenced by the various building codes
and regulation of the industry by the state and local officials. 4. Related
Company has no responsibility to provide any tools, material, or equipment
needed for the work. 5. Taxpayer is employed only until the specific job
was finished and is paid by the job, not by time. 6. The construction
and renovation of the XXX is not part of the normal Related Company’s
regular business, that of operating a XXX.
Taken as a whole, the facts support a finding that relationship of Taxpayer
to Related Company is that of an independent contractor and not that of an agent.
Taxpayer states that TAA 05A-011, issued February 9, 2005, is squarely
on point with the facts here. First, it must be pointed out that a TAA
has no precedential value except to the taxpayer to whom the TAA was issued
and only for the specific transaction addressed. Second, Taxpayer’s
statement that the 2005 TAA is squarely on point is not supported by the
facts. In the 2005 TAA, the taxpayer procured goods and services, such
as landscaping services, washroom supplies, and elevator maintenance services,
under a property management service contract with the property owner.
The goods and services were provided by third-party vendors directly to
the property and were never held in the taxpayer’s inventory. The
taxpayer did not take title or possession of the goods. Upon approval
of the invoices by the owner, the owner would deposit money into a segregated
bank account from which the taxpayer could make payment. The taxpayer
had no liability for the goods or services in the event of nonpayment
by the property owner. The TAA held that the taxpayer was an agent of
the property owner, and that there was no resale from the taxpayer to
the owner because the goods were sold directly to and paid by the owner.
The facts in the 2005 TAA are fundamentally different from the facts at
issue. Section 3.4 of the General Conditions provides that Taxpayer will
purchase and pay for all material necessary for the job. Under section
9.6, Related Company has no liability to vendors for any materials purchased
by Taxpayer. Related Company is only required to make progress payments
to Taxpayer, which include a variety of costs incurred by Taxpayer, including
labor costs, subcontractor costs, machinery and equipment, and travel
and expense costs, in addition to material costs. Neither the Standard
Agreement nor the General Conditions contain any provision related to
third-party invoices being submitted to and paid directly by Related Company.
Unlike the 2005 TAA, the materials purchased from third-party vendors
can only be seen as being purchased by Taxpayer for use by Taxpayer or
for resale to Related Company.
If Taxpayer is not an agent, did Taxpayer sell tangible personal property
to Related Company?
Section 212.05, F.S., imposes tax on several privileges, including the
privilege of selling tangible personal property at retail in this state
and the privilege of furnishing any of the services taxable under Chapter
212. It is undisputed that Taxpayer is not engaged in the provision of
any of the taxable services enumerated in section 212.05, F.S. Since we
have already determined that Taxpayer is an independent contractor and
not an agent of Related Company, the only remaining issue is whether Taxpayer
engages in the sale of tangible personal property to Related Company.
Section 212.06(14), F.S., defines the terms “real property,”
“fixtures,” and “improvements to real property”
as follows: (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: 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 industrial machinery or equipment. For purposes of
this paragraph, industrial machinery or equipment is not limited to machinery
and equipment used to manufacture, process, compound, or produce tangible
personal property. 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.
(c) "Improvements to real property" includes the activities
of building, erecting, constructing, altering, improving, repairing, or
maintaining real property. Rule 12A-1.051, F.A.C., titled Sales to or
by Contractors Who Repair, Alter, Improve and Construct Real Property,
provides further information concerning real property improvements. Rule
12A-1.051, F.A.C., provides, in pertinent part:
(1) Scope of the rule. This rule governs the taxability of the purchase,
sale, or use of tangible personal property by contractors and subcontractors
who purchase, acquire, or manufacture materials and supplies for use in
the performance of real property contracts other than public works contracts
performed for governmental entities, which are governed by the provisions
of Rule 12A-1.094, F.A.C. If a real property project involves multiple
subcontractors, each subcontractor is responsible for paying, accruing,
collecting, and remitting tax on his subcontract in accordance with this rule.
(2) Definitions. For purposes of this rule, the following terms have the
following meanings:
* * * (h)1. "Real property contract" means an agreement, oral
or written, whether on a lump sum, time and materials, cost plus, guaranteed
price, or any other basis, to:
a. Erect, construct, alter, repair, or maintain any building, other structure,
road, project, development, or other real property improvement.
***
c. Furnish and install tangible personal property that becomes a part
of or is directly wired or plumbed into the central heating system, central
air conditioning system, electrical system, plumbing system, or other
structural system that requires installation of wires, ducts, conduits,
pipes, vents, or similar components that are embedded in or securely affixed
to the land or a structure thereon.
* * *
There can be no dispute that a XXX is a building affixed to land and is
therefore properly classified as real property. The question then becomes
whether Taxpayer’s contract with Related Company constitutes a “real
property contract” as defined in the rule or whether it is a contract
for nontaxable services.
As set out above, Taxpayer has responsibilities during both the preconstruction
and construction phases, including such items as evaluation of Related
Company’s program, budget, and schedule requirements; consultation
with Related Company and the architect; preparation of a project schedule;
preparation of cost estimates; supervision and direction of the construction;
purchase and payment of labor, materials, equipment, tools, and other
facilities and services necessary for completion of the work; and securing
and paying for building and other permits. These activities fall squarely
within the types of activities included within the definition of a “real
property contract” in Rule 12A-1.051(2)(h), F.A.C. The fact that
Taxpayer may not be a licensed contractor under Florida law is immaterial
to this conclusion.5 Taxpayer’s argument that it is engaged solely
in the provision of nontaxable services is not supported by the evidence.
Accordingly, the provisions of Rule 12A-1.051, F.A.C., related to the
potential taxability of the contract apply.
Rule 12A-1.051(3), F.A.C., states that the taxability of a real property
contract is determined by the pricing agreement. Subsection (4) of the
rule provides that contractors engaged in lump sum contracts, cost plus
or fixed fee contracts, upset or guaranteed price contracts, or time and
5 Contrary to Taxpayer’s assertion, the term “contractor”
is not defined under Chapter 212, F.S., or within Rule 12A1.051, and neither
the statutes nor rules given any indication that licensure is a condition
precedent to taxability. However, even if we accept that licensure should
be a factor in making our determination, it must be noted that Taxpayer
is licensed as a contractor in the state of Rhode Island.
materials contracts are the ultimate consumers of materials and supplies
used in performance of the contract and must pay tax on their costs of
those materials and supplies. Contractors performing these types of contracts
do not resell the tangible personal property used to the real property
owner but instead use the property themselves to provide the completed
real property improvement. Such contractors should pay tax to their suppliers
on all purchases. They should also pay tax on all materials they fabricate
for their own use in performing such contracts, as discussed in subsection
(10) of the rule. They should charge no tax to their customers, regardless
of whether they itemize charges for materials and labor in their proposals
or invoices, because they are not engaged in selling tangible personal
property. Such contractors should not register as dealers unless they
are required to remit tax on the fabricated cost of items they fabricate
to use in performing contracts.
However, contractors may also enter into “mixed contracts”
which are contracts that include both real property work and the sale
of tangible personal property. Rule 12A-1.051(8), F.A.C., provides regulatory
guidance on mixed contracts. A mixed contract is not the same as a retail
sale plus installation contract described in paragraph (3)(d) of this
rule. Paragraph (3)(d) deals with a real property contract in which the
contractor separately itemizes and prices all the materials that will
be incorporated as part of the real property. A mixed contract is one
that involves a real property improvement, maintenance, or repair and
also involves providing tangible personal property that remains tangible
personal property and does not become part of the real property. In the
case of a mixed contract, taxability depends upon the predominant nature
of the work performed under the contract and upon the contract terms,
or if the contract clearly allocates the contract price between the various
elements of the contract, then the taxability is in accordance with the
allocation.
The contracts provided by Taxpayer include itemized budgets. These reveal
that costs of real property improvements, such as carpentry contractor,
custom cabinet, interior paints, mechanical contractor, plumbing contractor,
electrical contractor, ceiling mounted lighting, wood base and shoe molding,
elastomeric membrane roofing, modified bituminous pavement, drywall contractor,
packaged air conditioners, etc., were paid by Related Company to Taxpayer
for the work performed on the XXX property project. In addition, payments
were made to Taxpayer for the purchase of tangible personal property,
such as art work, floor lamps, night stands, bed linen, coffee pot, hangers,
pillows, etc. These items remain tangible personal property and must be
viewed as being resold to Related Company. Since the contracts provide
for both real property work and the sale of tangible personal property,
the contracts are mixed contracts and should be taxed in accordance with
the allocation. Taxpayer should either pay tax to its suppliers or accrue
tax on any materials that become improvements to real property upon installation.
For any furniture and other items that remain tangible personal property,
Taxpayer must collect tax from the Related Company on the sales price
of these items. Because Taxpayer is engaged in the sale of tangible personal
property on which sales tax must be collected and remitted, Taxpayer must
register as a dealer.
Finally, Taxpayer cannot disregard statutory requirements for registration
and remittance of sales and use tax by contractually obligating another
party to assume these responsibilities. It is a business operating in
Florida and making sales of tangible personal property. It cannot avoid
its requirement to register as a dealer and to collect and remit the tax
due on the sale of that property by transferring the responsibility for
remittance of the tax to the end user.
Conclusion
Upon review of the documents provided, it is clear that Taxpayer is an
independent contractor and not an agent of Related Company. As an independent
contractor, Taxpayer operates as a real property improvement contractor
performing improvements to real property, as well as providing the necessary
items of furniture and furnishings, tangible personal property, that went
into the projects. Based upon this determination, Taxpayer should be registered
as a dealer with the Department. Since Taxpayer is the ultimate consumer
of the supplies and materials used in the performance of a real property
contract, and is also engaged in purchasing tangible personal property
for resale, the appropriate use tax should be remitted to the Department
by Taxpayer on the cost of the supplies and materials used in the performance
of the contract. In addition, Taxpayer should collect and remit the appropriate
sales tax on the tangible personal property, including the cost of labor
involved in the installation of the tangible personal property, sold to
Related Company. Taxpayer may not look to Related Company to determine
and remit the sales and use tax on its behalf.
Closing Statement
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 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., 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 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 10 days of the date of this letter.
Sincerely,
Sara D. Faulkenberry Senior Tax Specialist Technical Assistance and Dispute
Resolution
Control # 138259
End Notes:
1 The issue addressed in TAA 09A-045 involved whether the contract between a utility company and a management company created a taxable license to use real property. Taxpayer cites a statement made in the TAA to the effect that “[a] management agreement is typically in the nature of an employment contract, under which the [m]anager would be considered as in the nature of an agent or employee….” However, Taxpayer also states that the contractual intent of the parties governs. Therefore, the proper focus of this TAA should be on the specific facts at issue and not a general statement as to what is “typical.” Since the facts of the 2009 TAA are so far removed from those found here, the holding of the 2009 TAA can have no bearing here.
2 The Cantor case has been cited and discussed dozens of times by other Florida courts. However, no case involved facts substantially similar to those herein. Therefore, in the interests of brevity, the Department declines to cite and analyze those cases here.
3 Taxpayer did not provide a copy of the General Conditions. All references to specific provisions are based on a sample copy obtained from the American Institute of Architect’s website.
4 Taxpayer provided a copy of a document titled “Addendum to Agreement by and between Owner and Manager,” which specifically states that “Manager is engaged by Owner as Agent for Owner to provide professional services of management of Work as defined and set forth in Agreement.” However, section 9.2.2 of the Standard Agreement provides that the Agreement and other documents incorporated by reference represent the entire agreement, and may only be amended by a written instrument signed by both parties. The addendum is not mentioned in the Standard Agreement and is not signed by either party; therefore, it cannot be considered as part of the contract.
