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It is somewhat comical to think of tax attorneys, air combat training, and "dog fighting" in the same sentence, but in the world of sales tax we have learned to expect the unexpected. Further, as evidenced by a case filed against the Florida Department of Revenue in May 2011, no business is immune from tax issues.

Florida Statutes Section 212.04 makes "admissions" taxable in Florida. The Florida Administrative Code further clarifies what constitutes a taxable admission in Rule 12A-1.005. In this case, the DOR took the position that the Air Combat training/instruction was for "fun" because the students of the academy enjoyed and entertained themselves. The taxpayer countered by asserting that the flight school was a nontaxable service transaction under Florida Statutes Section 212.08(7)(v)1. Although the not specifically addressed in the Florida Statutes, TAA 93A-024 states that a flight instruction is a nontaxable service transaction. Ultimately the state and the taxpayer settled for undisclosed amount, which leads me to believe the taxpayer was able to show it was truly providing an educational service rather than a taxable admission to a place of entertainment.

This case reminds me of the day in early 2010 when I started working at Moffa, Gainor, & Sutton, P.A. I thought "sales tax—it's 6% how complicated could it be?" Since that day I have interacted with companies in such a wide variety of industries and realized there is quite a bit more to sales tax than its just 6%. Who would have ever guessed the tax attorney like the one in this case would ever have to learn about air combat school?

If your company (or your client's company) is in the business of training and the Florida Department of Revenue performs an audit and determines you should have been collecting 6% - 7% admissions tax for the last three years, then the taxes penalties and interest assessed could be substantial. If you are unsure whether your company (or your client's company) might be subject to an admissions tax, then contact us for a free evaluation.