TAA 19A-019 Exemptions, Non-manufacturing | Florida Sales Tax Attorney

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Sales and Use Tax TAA 19A-019 Exemptions, Non-Manufacturing

TAX: Sales and Use Tax

TAA NUMBER: 19A-019

Subject: Home for the Aged – Meals

STATUTE CITE(S): Section 212.08, Florida Statutes (F.S.)

RULE CITE: Rules 12A-1.0115, and 12A-1.038, Florida Administrative Code (F.A.C.)

QUESTION:

Does the Taxpayer qualify as a “home for the aged” as that phrase is used within s. 212.08(7)(i),

F.S?

ANSWER:

According to the license issued by the Florida Agency for Health Care Administration Division of

Health Quality Assurance the Taxpayer is licensed in part under chapter 429, F.S., and is

therefore a “home for the aged,” as defined in s. 212.08(7)(i), F.S.

QUESTION:

Does the Community collectively qualify as a “facility” as that term is used within s. 212.08(7)(i),

F.S?

ANSWER:

The term “facility” is not defined by s. 212.08(7)(i), F.S. The term is used within s. 212.08(7)(i),

F.S., as a general noun when referencing a “home for the aged.” The definition requires that

the “facility” to be licensed “in part or in whole” under chapter 429. As provided in the

response above, the Taxpayer’s facility qualifies as a “home for the aged,” as defined in s.

212.08(7)(i), F.S.

QUESTION:

Is the Taxpayer able to purchase exempt from Florida sales and use taxes the meals that it

provides to residents of the Community as part of the standard residency plan based upon the

exemption contained in s. 212.08(7)(i), F.S?

XXXX

ANSWER:

The exemption provided in s. 212.08(7)(i), F.S., and Rule 12A-1.0115, F.A.C., is based upon the

account of use of the tangible personal property. The meals are exempt because they are

“furnished to residents of homes for the aged.” The Taxpayer may purchase the meals, or

taxable components of the meals, exempt from sales tax by extending a copy of Form DR-97,

"The Suggested Format for Blanket Exemption Certificate Based on Property's Use." The

Taxpayer should cite the property’s exempt use to be “meals furnished to residents of a home

for the aged as provided in section 212.08(7)(i), F.S., and Rule 12A-1.0115, F.A.C.”

QUESTION:

Are the extra meals sold to the Community’s residents exempt from sales tax pursuant to s.

212.08(7)(i), F.S?

The exemption provided in s. 212.08(7)(i), F.S., includes meals furnished to all “residents of a

home for the aged.” Therefore, meals furnished to all of the “residents” are exempt from sales

tax.

Subject: Technical Assistance Advisement

STATUTE CITE(S): Section 212.08, Florida Statutes (F.S.)

RULE CITE: Rules 12A-1.0115, and 12A-1.038, Florida Administrative Code (F.A.C.)

XX (the Taxpayer)

D/B/A XX

EIN: XX

Dear XX:

This is in response to your letter dated April 1, 2019, 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 Owner Direct Purchase Program that is the subject of your request.

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.

Facts and Requested Advisement

Your letter provides the following in part:

[The Taxpayer] is a for-profit limited liability company with its primary Florida business

location at XX. At this address, [the Taxpayer] operates a senior living community (the

“Community”). Living units available at the Community include those for independent

living, assisted living, and memory care.

The Community is licensed in part under Chapter 429, Florida Statutes. More

specifically, the Community is comprised of 140 total units. Of these, 78 units of the

Community are licensed under Chapter 429 and are dedicated to assisted living and

memory care. The remaining 62 units are dedicated to independent living and are not

licensed under Chapter 429. . . .

While the assisted living, independent living, and memory care units are separately

arranged and situated, all units are a part of the Community. Amenities, such as

restaurant-style dining, fitness center, etc., are made available to all residents. One

unified staff is responsible for maintenance of the Community, the care of its residents,

the security thereof, etc.

Among other things, [the Taxpayer] provides meals to residents of the Community. [The

meal ingredients] are, in the first instance, purchased by [the Taxpayer] and are

subsequently provided to the residents. At present, [the Taxpayer] is self-assessing and

remitting Florida use tax on the cost of the food.

Assisted living and memory care residents of the Community are provided three meals

(3) meals per day as part of the standard residency plan. Independent living residents

are provided with a continental breakfast and one (1) additional meal per day. Further,

residents of the Community, their guests, and the Community employees are able to

purchase additional meals above and beyond the number of meals that are provided as

part of the standard residency plan. XX is currently remitting Florida sales tax on sales of

these additional meals when purchased by the independent living residents, guests, and

Community employees.

* * *

In an e-mail dated July 29, 2019, you confirmed that the Taxpayer “prepare[s] all meals from

scratch. The only prepared meals are emergency food supplies.”

* * *

Documentation included with your request included the following:

XXXX

• A license issued by the Florida Agency for Health Care Administration Division of Health

Quality Assurance. The license has an effective date of October 2, 2018, and confirms

that the Taxpayer “has complied with Chapter 429, Part 1 . . . and is authorized to

operate . . . .”

• A copy of Technical Assistance Advisement 93A-008.

You provided the following in response to the Department’s request for additional

documentation:

• A sample resident invoice.

• A sample copy of an Independent Living Residency Agreement Contract.

• A sample copy of an Assisted Living Residency Agreement Contract.

* * *

The Assisted Living Residency Agreement Contract provides the following in part:

You have applied for residence and services at the Community, and the Community

has accepted your application. This Agreement describes the services that will be

provided to you and the other legal obligations we will assume. This Agreement sets

forth your financial and non-financial legal obligations.

* * *

II. SERVICES

The Resident will be entitled to the following services which are included in the

Monthly Accommodation Fee, subject to the terms of this Agreement. The Resident

may also receive Care Level Services as described in Section III and other additional

services as described in Section III.I. which are subject to additional fees as set forth

in the Schedule of Fees.

A. Care Services. Included in your Monthly Accommodation Fee is up to thirty (30)

minutes per day in traditional assisted living for one resident and all-inclusive personal

care in memory care including assistance with activities of daily living (such as bathing,

dressing, grooming, oral hygiene, toileting, ambulating, transferring and dining) and

medication management for one resident. . . .

B. Meals.

XXXX

1. Dining Room. Three nutritionally well-balanced meals are served restaurant style daily

in the Community dining room and between-meal snacks are provided daily. . . .

2. Tray Service. We will provide tray service to your Apartment during a temporary

illness at no extra charge. . . .

3. Guest Meals. We encourage family and friends to dine with residents. . . . You will be

charged an extra fee for guest meals as listed in the Schedule of Fees.

* * *

Guest Meals:

Breakfast (per meal) $6.00

Lunch (per meal) $9.00

Dinner (per meal) $12.00

Children Menu (ages 10 and under) (per meal) ½ of regular guest price

* * *

The Independent Living Residency Agreement Contract provides the following in part:

LEASE AGREEMENT

. . . In consideration of the mutual undertakings, covenants and acts to be performed

hereunder, Lessor and Lessee agree as follows:

. . . 3. Fees. The following fees shall be paid under this Agreement:

. . . 3.2 Monthly Rental Fee. . . . The Monthly Rental Fee includes the Included Services

described in Section 4 as the same may change from time to time. The Included Services

are an integral part of residency at XX at XX and are designed for the benefit of all

residents. There will be no reduction in the Monthly Rental Fee if you elect to not avail

yourself of any of the Included Services.

. . . 4. Included Services. During the term of this Agreement, the following services (the

“Included Services”) are included in your Monthly Rental Fee:

4.1 Continental breakfast daily in the XX Dining Room per Resident.

4.2 Breakfast, lunch or dinner daily in the XX Dining Room per Resident up to a total of

thirty (30) meals (in addition to continental breakfast) per month per Resident.

* * *

XXXX

Requested Advisement

You request an advisement that addresses the following:

(1) Whether [the Taxpayer] qualifies as a “home for the aged” as that phrase is used

within Fla. Stat. § 212.08(7)(i).

(2) Whether [the Taxpayer’s] Community collectively qualifies as a “facility” as that term

is used within Fla. Stat. § 212.08(7)(i).

(3) Whether [the Taxpayer] is able to purchase exempt from Florida sales and use taxes

the meals that it provides to residents of the Community as part of the standard

residency plan based upon the exemption contained in Fla. Stat. § 212.08(7)(i).

(4) Whether the extra meals sold to the Community’s residents are exempt from sales

tax pursuant to Fla. Stat. § 212.08(7)(i).

Law and Discussion

Section 212.05, F.S., provides that the sale of tangible personal property is subject to tax. All

sales of tangible personal property in the State of Florida are subject to tax, unless specifically

exempt by Chapter 212, F.S. The term "sale" is defined in s. 212.02(15)(a), F.S., to mean "[a]ny

transfer of title or possession, or both ... of tangible personal property for a consideration." All

sales of tangible personal property in the State of Florida are subject to tax, unless specifically

exempt by Chapter 212, F.S.

Section 212.08, F.S, provides several specific exemptions of items of tangible personal property

for which the “sale at retail, the rental, the use, the consumption, the distribution, and the

storage to be used or consumed in [Florida] . . . .” Section 212.08(7), F.S., provides several

“miscellaneous exemptions.” The miscellaneous exemptions do not "inure to any transaction

that is otherwise taxable . . . unless the entity [claiming the exemption] has obtained a sales tax

exemption certificate from the Department or the entity obtains or provides other

documentation as required by the Department."

The subject exemption in this case is s. 212.08(7)(i), F.S. Prior to June 9, 1995, the exemption

provided in s. 212.08(7)(i), F.S., was limited to charges for rentals and meals for “patients and

inmates of any hospital or other physical plant or facility designed and operated primarily for

the care of persons who are ill, aged, infirm, mentally or physically incapacitated, or otherwise

dependent on special care or attention.”

Effective June 9, 1995, 95-232 Laws of Florida, amended the exemption and provided that

“[r]esidents of a home for the aged are exempt from payment of taxes on meals provided

through the facility.” The amendment also provided the definition of “a home for the aged” to

include “a facility that is licensed or certified in part or in whole under chapter 400 . . . .” The

exemption was amended again in 2006, by Chapter 2006-197, Laws of Florida, to provide that

“a home for the aged” includes a facility “licensed or certified in part or in whole under chapter

429.” Rule 12A-1.0115(11)(a), F.A.C., addresses the subject exemption and provides that

“[m]eals furnished to residents of homes for the aged, as defined in Section 212.08(7)(i), F.S.,

are exempt.”

The exemption provided in s. 212.08(7)(i), F.S., and Rule 12A-1.0115, F.A.C., is based upon the

account of use of the tangible personal property (the meals). Rule 12A-1.038(5)(b), F.A.C.,

provides that a person who is purchasing, renting, leasing, or licensing tangible personal

property or services that qualify for an exemption from tax imposed under Chapter 212, F.S.,

based on the use of the property or service, must extend an exemption certificate to a selling

dealer indicating the specific exemption that is applicable to the purchase, in lieu of paying

sales tax to the dealer. While the Department does not provide a blanket certificate of

exemption form, Rule 12A-1.038(5)(d), F.A.C., provides a suggested format for the exemption

certificate to be presented to the selling dealer. The Department also provides Form DR-97,

"The Suggested Format for Blanket Exemption Certificate Based on Property's Use."

Section 212.07(1)(b), F.S., provides an exemption from tax for sales of tangible personal

property made for resale. Sales of tangible personal property to a dealer when such property

will be resold to an ultimate customer are exempt from sales tax. Rule 12A-1.039, F.A.C.,

provides guidance regarding sales for resale under Chapter 212, F.S., and provides that a sale

for resale is exempt from tax when the sale is of tangible personal property sold to an active

registered dealer when such property will be resold to the dealer's customers. A dealer who

makes tax-exempt sales for resale is required to document the exempt sale by choosing one of

the following three methods: 1) obtain a copy of the customer's annual resale certificate; 2)

obtain a transaction resale authorization number from the Department; or 3) obtain a vendor

resale authorization number from the Department for regular customers who have previously

submitted documentation.

Determination

Whether [the Taxpayer] qualifies as a “home for the aged” as that phrase is used within

Fla. Stat. § 212.08(7)(i).

Response: According to the license issued by the Florida Agency for Health Care Administration

Division of Health Quality Assurance the Taxpayer is licensed in part under chapter 429, F.S.,

and is therefore a “home for the aged,” as defined in s. 212.08(7)(i), F.S.

Whether [the Taxpayer’s] Community collectively qualifies as a “facility” as that term is

used within Fla. Stat. § 212.08(7)(i).

Response: The term “facility” is not defined by s. 212.08(7)(i), F.S. The term is used within s.

212.08(7)(i), F.S., as a general noun when referencing a “home for the aged.” The definition

requires that the “facility” to be licensed “in part or in whole” under chapter 429. As provided

in the response above, the Taxpayer’s facility qualifies as a “home for the aged,” as defined in s.

212.08(7)(i), F.S.

Whether [the Taxpayer] is able to purchase exempt from Florida sales and use taxes the

meals that it provides to residents of the Community as part of the standard residency

plan based upon the exemption contained in Fla. Stat. § 212.08(7)(i).