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.