Sales and Use Tax TAA 17A-009 Amusement and Vending Machines
TAX: Sales and Use Tax
TAA NUMBER:
17A-009
ISSUE: Whether Taxpayer’s point of sale devices are amusement machines?
STATUTE CITE(S): Section(s) 212.02(24) and 212.05, F.S.
RULE CITE(S): Rule 12A-1.071, F.A.C.
QUESTION: Are Taxpayer’s point of sale devices used as an amusement machine?
ANSWER: No. Taxpayer’s charges are rental income. Since Taxpayer also uses
the machines, Taxpayer is considered to be a dual user.
March 7, 2017
Subject: Technical Assistance Advisement (“TAA”)
TAA 17A-009
Lease of tangible personal property; Amusement machines
Section(s) 212.02(24) and 212.05, Florida Statutes (“F.S.”)
Rule(s) 12A-1.071, Florida Administrative Code (“F.A.C.”)
XXXXXXXXXX (“Petitioner”) (“Taxpayer”)
XXXXXX XXXXXX
Dear XXXXXX:
This letter is a response to your petition dated October 22, 2016, for
the Department’s issuance of a Technical Assistance Advisement (“TAA”)
to Petitioner, regarding whether Taxpayer’s devices are considered
amusement machines. Your petition has been carefully examined, and the
Department finds it to be in compliance with the requisite criteria set
forth in Rule Chapter 12-11, F.A.C. This response to your request constitutes
a TAA and is issued to you under the authority of section 213.22, F.S.
Facts
Taxpayer is a XXXXXXXX of a mobile point of sale device XXXXXX XXXX enhance
the XXXXXX XXXXX customer’s satisfaction and increase XXXX sales
and XXXXXX efficiencies. The mobile point of sale device is a XXXXXXXXXX
XXXXXX XXXXXX XXXXXXX XXXXXXX XXXXXXXXXX. The mobile point of sale device
facilitates order placement, order add-ons, XXXXXXX information, check
out and payment, customer satisfaction surveys, and customer loyalty programs.
The mobile point of sale device provides detailed descriptions of certain
XXXX items, and in some cases pictures and even videos of XXXXX are available
for customer viewing. It permits customers to place orders for XXXXXXXXX
XXXXXXXX XXXX throughout the XXXXXX, XXXXXXXXXXXXX, XXXXXX, and to pay
their XXXX directly through the mobile point of sale device. The customer
is given the option to pay the check by credit card, debit card, or even
a gift card.
The XXXXXXXX receives the benefit of better customer education, increased
sales, quicker XXXXXXX turnover, increased customer satisfaction, and
greater guest loyalty. Guests have better control over the pace of the
XXXX and are able to keep their payment cards secure. An average XXXXXXX
will have 50 XXXXXXX XXXXXXXX mobile point of sale device at each XXXXX.
It is accessible only to the customer XXXXXXXXXX, and approximately 80%
of the customers will use it if paying by credit card. When the XXXXXX
paid using the mobile point of sale device, information is obtained regarding
the customer to promote loyalty programs and help XXXXXX management.
A customer may pay a “Premium License Fee” to access additional
software programs, including educational applications, puzzles, cartoons,
videos, and games. The customers may watch as many videos and cartoons
and play as many games as they like during their visit. Approximately
15% of the customers access premium content. Taxpayer charges the XXXXXXXX
a service fee for each mobile point of sale device used at the XXXXXX.
Requested Advisement
Taxpayer seeks guidance as to whether the mobile point of sale device
is a coin-operated amusement machine.
Taxpayer Position
Taxpayer maintains that the mobile point of sale devices are not coin-operated
amusement machines because they are not designed primarily for the purposes
of entertainment or amusement but for the restaurant industry.
Applicable Law
Section 212.05(1)(h), F.S., imposes sales tax on income earned from the
gross receipts taken from “coin-operated amusement machines.”
Section 212.05(1)(h)3.b., F.S., requires the operator of a machine to
pay a $30 fee per year for each machine.
Section 212.02(24), Florida Statutes, provides:
(24) “Coin-operated amusement machine” means any machine operated
by coin, slug, token, coupon, or similar device for the purposes of entertainment
or amusement. The term includes, but is not limited to, coin-operated
pinball machines, music machines, juke boxes, mechanical games, video
games, arcade games, billiard tables, moving picture viewers, shooting
galleries, and all other similar amusement devices.
Section 212.05, F.S., provides that any person who leases or rents tangible
personal property in Florida is exercising a taxable privilege. Section
212.02(15)(a), F.S., provides that a "sale" of tangible personal
property includes the lease or rental of tangible personal property. Section
212.05(l)(c), F.S., imposes tax on the gross proceeds derived from the
lease or rental of tangible personal property. The terms "lease"
and "rental" are defined by s. 212.02(10)(g), F.S., to include
the lease or rental of tangible personal property and the possession or
use thereof by the lessee for a consideration, without transfer of title
to the property. Rule 12A-1.071(l)(a), F.A.C, provides that a lease includes
a transaction under which a person secures for a consideration the temporary
use of tangible personal property which is operated by or under the direction
or control of the person or his employees.
The XXXXXX are using the mobile point of sale device as a dual use, because
it is being used by both the XXXXXXXXX and the XXXXXXXX’s customer.
Therefore, the charge to the XXX by Taxpayer and the charge made to the
XXXXXXX’s customer for the “Premium License Fee” are
both subject to sales tax. See Rule 12A-1.071(2)(b), F.A.C, which provides
that the resale exemption does not apply to purchases of tangible personal
property by a dealer for the "dual purpose of leasing it to others
and also for his own use."
Response
The mobile point of sale device is not considered to be a "coin operated
amusement machine," as defined in s. 212.02(24), F.S. This is because
the predominant use is by the XXXXXXXX without the premium content. This
assumes that the primary revenue stream to Taxpayer is from the payment
by the XXXXXX to Taxpayer and that the XXXXXXX retains most of the income
from the “Premium License Fee.” Also, typically, amusement
machines do not have a dual use. Accordingly, these devices need not be
registered with a fee paid and tax collected on gross receipts.
Although the devices are not taxed as amusement machines, mobile point
of sale devices are tangible personal property. The lease of tangible
personal property is subject to sales tax. Based on the facts, Taxpayer’s
primary income is from leasing the mobile point of sale device to the
XXXXXX. The XXXXXXXXX is then using it for the "dual purpose of leasing
it to others and for its own use."
Taxpayer is doing business in Florida and is therefore required to register
with the Florida Department of Revenue to collect and remit the sales
tax on the lease payments received from its customers, such as XXXXXXXXs.1 The lease of the mobile point of sale device by Taxpayer to the XXXXXXX
is not exempt for resale purposes. The XXXXXXXXX uses the mobile point
of sale device to facilitate order placement, order add-ons, XXXXXXXXXXXX,
and customer satisfaction surveys. When the patron of the XXXXXXX makes
the payment of the “Premium License Fee” for "premium
content" for the use of the mobile point of sale device, then sales
tax must be collected on that charge also. The patron is taking "possession
or use" of the mobile point of sale device, as it is "operated
by or under the direction or control" of the patron. The “Premium
License Fees” are subject to sales tax as a license to use tangible
personal property. The XXXXXXXX leases the mobile point of sale device
for the "dual purpose of leasing it to others and also for its own
use." Both rental revenue streams are subject to sales tax, as provided
in Rule 12A-1.071(2)(b), F.A.C.
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 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.
Respectfully,
Chuck Wallace
Technical Assistance & Dispute Resolution
850-717-7541
End Notes:
1 The sample lease provided with Taxpayer’s request for advice provides
that the lessee is responsible for payment for all taxes due on fees charged
under the contract. Taxpayer should note that the lessor and lessee are
jointly and severally liable for taxes due on these fees.
Record ID: 212108