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Sales and Use Tax TAA 13A-021 - Parking Charges

QUESTION: Are charges for an easement for access to leased parking spaces subject to tax?

ANSWER: The total rental charge imposed for the right to park in the parking garage (the sum of the monthly parking fee and the monthly easement fee) is subject to sales tax pursuant to Section 212.03(6), F.S. Garage Owner is correct to charge tax on the sum of the monthly parking fee and the monthly easement fee.

October 1, 2013

Re: Technical Assistance Advisement – TAA 13A-021

Sales and Use Tax – Parking Charges

Subsection: 212.02, 212.03, 212.031, Florida Statutes (F.S.)

Petitioner: XXX [hereinafter “Taxpayer”]

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 charges for an easement for access to leased parking spaces are subject to tax.

Presented Facts

Taxpayer is a XXX not-for-profit corporation operating a condominium homeowner’s association.

Garage Owner owns and operates a multi-level parking garage in a XXX city’s downtown district. The parking garage is a common element of a condominium association that is made up of multi-story commercial and residential buildings on the majority of the city block.

The Taxpayer and the Garage Owner have entered into a “Parking Easement Agreement” that primarily (for our purposes here): (1) allows residential condominium unit owners and their visitors to park in a certain number (currently about 110 spaces) of non-reserved parking spaces within the garage; and (2) grants an easement to the parking spaces. The Taxpayer does not use or occupy all of the parking spaces in the parking garage.

The Garage Owner charges separate monthly fees for the parking spaces and for the easement. The Garage Owner collects and remits XXX sales tax on the monthly charge for the parking spaces. The only issue presented in the Taxpayer’s request for advice is the treatment of the monthly “Access and Maintenance Fee” paid in return for the Access Easement.

The Parking Easement Agreement has been recorded in the Official Records of the county and has other indications of being an easement.

According to information available in the Official Records of the county (such as the Articles of Incorporation of the condominium association, the Declaration of Condominium, etc), there is a “public garage access area” leading to the parking garage from a street open to the public. This area, however, is quite small in size (based on diagrams of the property in the Official Records and on photographs of the parking garage on Google Earth). The “public garage access area” is basically the cut-out of the sidewalk leading into the parking garage (in other words, it is the entrance to the parking garage).

Law and Discussion

Section 212.03(6), F.S., states as follows:

(6) It is the legislative intent that every person is engaging in a taxable privilege who leases or rents parking or storage spaces for motor vehicles in parking lots or garages, who leases or rents docking or storage spaces for boats in boat docks or marinas, or who leases or rents tie-down or storage space for aircraft at airports. For the exercise of this privilege, a tax is hereby levied at the rate of 6 percent on the total rental charged.

The Department has issued (and the Taxpayer cites to) a previous Technical Assistance Advisement regarding a canal easement.1 In that TAA, one party owned upland docks and land adjacent to a canal that was owned by another party. The upland owner used its land to load and unload such things as petroleum from oceangoing vessels. It needed the canal so that the vessels could gain access to and from open waters. The Department opined that the canal easement was not subject to sales tax under Section 212.031, F.S., under the theory that the consideration was paid for an easement and not for a license to use real property. The Department listed a number of factors that went into its conclusion.

Although the Department agrees that the Parking Easement Agreement is an “easement,” the situation presented here is markedly different from the canal easement described above.

First, it is clear that the Garage Owner is in the business of leasing parking spaces in a parking garage (i.e., operating a parking garage). It is registered to collect and remit sales tax and has been doing so on the monthly parking fees imposed on the residential condominium association as well as other tenants and visitors parking their vehicles in the parking garage.

Second, the Garage Owner here owns both the land burdened by the easement and the “landlocked” land (i.e., the parking spaces within the parking garage). While this goes to the question of the validity of the easement (the Department is agreeing that the easement is valid), it also goes to the question of “being in the business” of leasing spaces for parking within a parking garage.

Third, Florida courts have long recognized that sales tax is imposed on the privilege of doing business and that being in a business may include a number of interdependent and interrelated activities. Florida Revenue Commission v. Maas Brothers, Inc., 226 So.2d 849 (Fla. 1st DCA 1969). Here, it goes without saying that the leasing of parking spaces in a parking garage requires the ability of the vehicle owner to get to the parking space. The easement allowing ingress and egress to and from the Garage Owner’s parking garage from the street is a component of it being in the business of leasing parking spaces in a parking garage. That is why the total rental charge imposed for the right to park in the parking garage (the sum of the monthly parking fee and the monthly easement fee) is subject to sales tax.

Finally, pursuant to Section 212.03(6), F.S., sales tax is due on the total rental charged for the privilege of engaging in the business of leasing parking spaces in a parking garage. It has long been settled that sales tax is imposed “… for the privilege of engaging in certain defined business within the State of Florida, and not upon the separate activities which comprise the business in which the taxpayer is engaged. …” Kirk v. Western Contracting Corporation, 216 So.2d 503,505 (Fla. 1st DCA, 1968). Here, the total rental charged is made up of various components, namely the monthly parking fee and the monthly easement fee. It should be noted that there is no carve-out in Section 212.03(6), F.S., which allows for treatment of taxable and non-taxable components of the total rental charged. Compare for example, Sub-sections (1)(b) and (1)(c) of Section 212.031, F.S.

Conclusion

The total rental charge imposed for the right to park in the parking garage (the sum of the monthly parking fee and the monthly easement fee) is subject to sales tax pursuant to Section 212.03(6), F.S. Garage Owner is correct to charge tax on the sum of the monthly parking fee and the monthly easement fee.

Closing Statement

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 advice, 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., and 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 10 days of the date of this letter.


Sincerely,

Sara D. Faulkenberry

Senior Tax Specialist

Technical Assistance and Dispute Resolution

Control # 139324

End Notes:

1 TAA’s are of no precedential value and are applicable only to the requesting party and then to only the specific transaction addressed. Section 213.22(1), F.S.

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