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Sales and Use Tax TAA 14A-018 - Parking, Docking and Tiedown

QUESTION: CAN THE TAXPAYER USE THE EFFECTIVE TAX RATES PROVIDED BY THE DEPARTMENT’S AUDITOR TO CALCULATE THE AMOUNT OF TAX DUE ON THE PARKING CHARGES?

ANSWER: THE USE OF AN EFFECTIVE RATE IS NOT AUTHORIZED IN CASES WHERE THE TAXPAYER IS ABLE TO SEPARATELY STATE THE SALES TAX COLLECTED. THE TAXPAYER HAS PROVIDED BOTH IN ITS REQUEST AND WITH SAMPLE INVOICES THAT IT DOES SEPARATELY STATE THE SALES TAX DUE. BECAUSE OF THIS, THE TAXPAYER SHOULD REMIT THE TAX COLLECTED AND NOT APPLY AN EFFECTIVE RATE TO DETERMINE THE AMOUNT DUE.

BASED ON THE PROVISIONS OF SECTION 212.12(9), F.S., THE TAXPAYER SHOULD CALCULATE THE SALES TAX DUE BY APPLYING 6% IN BROWARD COUNTY AND 7% IN MIAMI-DADE COUNTY ON PARKING CHARGES IMPOSED IN WHOLE DOLLAR AMOUNTS. IN CASES WHERE THE PARKING CHARGES INCLUDE FRACTIONS OF A DOLLAR THE TAXPAYER CAN CALCULATE THE TAX DUE BY MULTIPLYING THE WHOLE DOLLAR AMOUNTS BY 6% OR 7 % AND APPLYING THE APPLICABLE BRACKET RATE AMOUNT TO THE PORTIONS OF THE CHARGE THAT ARE FRACTIONS OF A DOLLAR.

September 4, 2014

Re: Subject: Technical Assistance Advisement – TAA 14A-018 Sales and Use Tax – Parking

Section 212.03, Florida Statutes (F.S.)
Rule 12A-1.073, Florida Administrative Code (F.A.C.) XXXX (“Taxpayer”)
FEI # XXXX

Dear XXXX:

This is in response to your letter dated November 22, 2013, requesting this Department’s issuance of a Technical Assistance Advisement (“TAA”) pursuant to section 213.22, F.S., and Rule Chapter 12-11, F.A.C., concerning the taxability of parking charges imposed by the Taxpayer. An examination of your letter has established you have complied with the statutory and regulatory requirements for issuance of a TAA. Therefore, the Department is hereby granting your request for a TAA.

Your letter provides the following in part:

Facts

As of the date of this letter, Taxpayer operates off airport parking lots located in XXXX County Florida (XXXX), and in XXXX County Florida (XXXX), whereby the general public can self- park and valet-park at fixed parking rates in unassigned parking spaces. The parking rates are subject to sales tax as license fee consideration paid for the use of real property at the rates provided by Florida Statutes (F.S.) [212.03] (at the rate of 6 percent in XXXX County), plus applicable surtax (7% in XXXX County).

On May 28, 2010, Taxpayer’s operations at parking lot located at XXXX, Florida were audited by Florida Department of Revenue for the periods of 08/01/2006-07/31/2009, Audit #: XXXX; and Taxpayer was found liable for additional sales tax and required to collect and remit sales tax at the rate of 6.59 percent. . . .

Pursuant to Florida Administrative Code Rule 12A-15.010, and in compliance with the Audit # XXXX determination and requirement, Taxpayer now collects from its customers and remits
to FL Department of Revenue sales tax at the amount of 6.59 percent in XXXX County Florida.

In February 2012, Taxpayer has opened and started to operate its off airport parking lot in XXXX County, and pursuant to Florida Administrative Code Rule 12A-15.010, and in compliance with the Audit # XXXX determination and requirement is collecting from its customers and remitting to Florida Department of Revenue sales tax at the amount of 7.51 percent (including 1% of XXXX County surtax).

***

Taxpayer believes that the nature of parking industry, Taxpayer’s business practices, tax calculation and collection methods allow Taxpayer to use an effective sales tax rate of 6 percent in XXXX County and 7 percent in XXXX County:

A. The sales tax are collected at the time of sale, calculated and collected on each separate sales transaction;

B. The sales tax are added to the sales price,
C. The amount of the sales tax is separately stated on each parking customer receipt;
D. The amount of sales tax collected at the time of sale is remitted to the Department of Revenue.

Florida Department of Revenue has recently conducted and completed another audit of Taxpayer’s records for the period from 4/1/2010 through and including 3/31/2013 . . . . During that audit, Taxpayer has brought to [the Auditor’s] attention the issue of collecting sales tax at the rates of 6.59% and 7.51%, and requested the examination of Taxpayer’s records, receipts and accounting methods to determine if Taxpayer shall be a subject to lesser sales tax rates; and if such lesser rates of 6% in XXXX County and 7% in XXXX County will be accurate. In addition, the audit has performed a sampling of detail transactions, including Taxpayer’s parking tickets and cash

register receipts of five full days within the audit period. Taxpayer has provided for such sampling all the daily receipts, parking tickets and daily reports for 7/14/10, 11/16/10, 2/28/11, 6/11/11 and 2/5/2012. According to TAA 92A-068 a personal effective rate will be presumed to be correct when an audit of taxpayer’s records “clearly demonstrate without exception” that Taxpayer’s lesser rate is accurate.

According to [the Department’s Auditor’s] . . . email . . . , the records provided by Taxpayer for review were deemed adequate and accurate to establish the effective sales tax rates, based on the sampling data, of 6.0056%. In addition, in the oral conversations, [the Auditor] has advised that the audit of Taxpayer’s records, and accounting methods indicated that the sales tax rate of 6% and 7% (with the discretionary surtax) will be accurate and Taxpayer may use such effective tax rates instead of higher rates of 6.59% and 7.51%.

***

Along with the request for technical advice, the Taxpayer included a copy of the referenced e-mail from the Department’s auditor dated October 24, 2013. The e-mail provides the following in part:

. . . The records made available for review included all the daily receipts, daily reports, monthly reports and so on. These records were deemed adequate and accurate, so I was able to come up with an effective rate just based off these 5 days. The rate that was calculated came out to be 6.0056, which was the total of all the effective rates for the 5 days divided by 5. . . . This was strictly based off the records from [the current] audit period and not based off records or notes from previous auditors or audit periods. Each auditor must approach the audit based off the records they have for review . . . .

It should be noted that the Taxpayer is not currently under audit and withdrew its informal protest related

to this latest audit.

Requested Advisement

The Taxpayer requests that the Department issue a Technical Assistance Advisement that addresses the following:

1. May Taxpayer, based on the documentation of the audit and sampling which has revealed that Taxpayer rate of sales tax is 6.0056, collect and remit sales tax at the rate of 6% (plus applicable discretionary sales tax)?

2. Is the audit and sampling conducted by [the Auditor] during the audit sufficient to establish a lesser rate for Taxpayer, and the difference of 0.0056% between the tax rate of 6% and the rate determined by the sampling performed By [the Auditor], is not significant, and Taxpayer is not required to collect and remit sales tax at the higher rate of 6.59% and 7.51%?

3. [Is the Taxpayer required to collect and remit sales tax to Florida Department of Revenue at the tax rates of 6.59 and 7.51 percent and not at 6 and 7 percent when the tax is added to the sales price and separately shown on the customer’s receipt?]

Applicable Authority and Discussion

Section 212.03(6), F.S., states that “. . . every person is engaged in a taxable privilege who leases or rents parking or storage spaces for motor vehicles in parking lots or garages . . . .” The statute concludes with the following sentence: “For the exercise of this privilege, a tax is hereby levied at the rate of 6 percent on the total rental charged.” Section 212.03(6), F.S., mandates that the sales tax be imposed on the “total rental charged.”

Section 212.12(9), F.S., authorizes the use of brackets on sales involving any fractional part of a dollar. The bracket system applies to all taxable license fees and rental charges. Section 212.12(9)(h), F.S., provides that for sales in amounts of more than $1, that occur in counties that do not impose a discretionary surtax, 6 percent shall be charged upon each whole dollar amount of the sales price, and the bracket system applies to any fractional part of a dollar. Section 212.12(9)(i), F.S., provides that for sales in amounts of more than $1, that occur in a county imposing a 1 percent discretionary surtax, 7 percent shall be charged upon each whole dollar amount of the sales price, and the bracket system applies to any fractional part of a dollar.

Section 212.07(2), F.S., provides the following in part:

. . . Where it is impracticable, due to the nature of the business practices within an industry,
to separately state Florida tax on any charge ticket, sales slip, invoice, or other tangible evidence of sale, the department may establish an effective tax rate for such industry. . . .

Rules 12A-1.080 and 12A-15.010, F.A.C., address sales by concessionaires at various venues and authorize the use of a divisor to calculate the tax due in cases where it is “impracticable to separately state” sales tax on a sales slip or invoice. However, both rules provide that such dealers are required to remit to the amount of tax collected when they do separately state the tax on an invoice.

Taxpayer cites Technical Assistance Advisements (TAA) 92A-068 to support its position that its “business practices, tax calculation and collection methods allow Taxpayer to use an effective sales tax rate.” Section 213.22(1), F.S., provides that “[t]echnical assistance advisements shall have no precedential value except to the taxpayer who requests the advisement.” Further the Taxpayer’s business model is distinguishable from the subject taxpayer of TAA 92A-068. In the cited TAA, the Department

determined the taxpayer’s operations to be “most closely comparable to the activities of a concession stand.” The Department determined that the subject taxpayer was authorized to use an effective tax rate because it was impracticable to separately state sales tax.

In this case, the Taxpayer has provided in its request for assistance that “[t]he amount of the sales tax is separately stated on each parking customer receipt.” This is supported by copies of customer receipts included with the Taxpayer’s request. Because of this, the use of an effective tax rate, as authorized by s. 212.07(2), F.S., is not applicable to the Taxpayer.

Conclusion

Question 1: 1. May Taxpayer, based on the documentation of the audit and sampling which has revealed that Taxpayer rate of sales tax is 6.0056, collect and remit sales tax at the rate of 6% (plus applicable discretionary sales tax)?

Response: Based on the provisions of section 212.12(9), F.S., the Taxpayer should calculate the sales tax due by applying 6% in XXXX County and 7% in XXXX County on parking charges imposed in whole dollar amounts. In cases where the parking charges include fractions of a dollar, the Taxpayer can calculate the tax due by multiplying the whole dollar amounts by 6 or 7 % and applying the applicable bracket rate amount to the portions of the charge that are fractions of a dollar.

Question 2. Is the audit and sampling conducted by [the Auditor] during the audit sufficient to establish a lesser rate for Taxpayer, and the difference of 0.0056% between the tax rate of 6% and the rate determined by the sampling performed by[the Auditor], is not significant, and Taxpayer is not required to collect and remit sales tax at the higher rate of 6.59% and 7.51%?

The use of an effective rate is not authorized in cases where the Taxpayer is able to separately state the sales tax collected. The Taxpayer has provided both in its request and with sample invoices that it does separately state the sales tax due. Because of this, the Taxpayer should remit the tax collected and not apply an effective rate to determine the amount due.

Question 3. [Is the Taxpayer required to collect and remit sales tax to Florida Department
of Revenue at the tax rates of 6.59 and 7.51 percent and not at 6 and 7 percent when the tax is added to the sales price and separately shown on the customer’s receipt?]

Response: No, the Taxpayer is not required to collect sales tax at the rates of 6.59 and 7.51 percent. The Taxpayer should calculate the sales tax due by applying 6% in XXXX County and 7% in XXXX County on parking charges imposed in whole dollar amounts. In cases where the parking charges include fractions of a dollar, the Taxpayer can calculate the tax due by multiplying the whole dollar amounts by 6 or 7 % and applying the applicable bracket rate amount to the portions of the charge that are fractions of a dollar.

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 on 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 than that 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 15 days of the date of this letter.

Sincerely,

Brinton Hevey
Tax Law Specialist
Technical Assistance and Dispute Resolution 850/717-6839

Record ID: 165972

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