NURSING HOME SALES TAX REFUND ON ELECTRICITY
When thinking of assisted living facilities, skilled nursing facilities, and the like, memories of friends and loved ones living there are brought to mind. These warm feelings elicit thoughts of these loved ones surrounded by laughter of “do you remember the time she…” or perhaps “I can’t believe he….” This is what comes to mind for me when I think of family members in such a place.
These facilities are called “home” by the residents living there. They live in community with one another as they go through life together. Caring for the residents is a great responsibility for the medical and administrative staff of the facility. There are so many aspects to consider that it makes keeping up with running the facility a daily challenge. Staff will work late or on weekends just to get the job done, because they genuinely care about the residents at their facility. They want to provide the resident the best quality care possible.
As part of providing the best quality care, budget issues are always a real concern. What if there was a way to not only get money back but also save money in the future to put towards the residents, their home, and the care the facility provides? Such a way is possible. It is called the “residential fuel exemption.”
Generally, electricity and fuel (e.g., liquid propane) are subject to tax at a rate of 4.35%.[1] See ss. 212.02(19) and 212.05(1)(e)1.c., Florida Statutes (“F.S.”). For example, if I were to look at the electricity bill for an office building, I would see charges for sales tax. However, there are certain cases, called exemptions, where sales tax does not have to be charged on the electric and fuel bill. One of these instances involves households (or “residences”). See s. 212.08(7)(j), F.S. If you look at your utility bill for your house, regardless of whether it is a single-family dwelling, condo, townhome, mobile home, etc., there should be no sales tax on the bill for the electricity or other fuel you use to power your home. The reason for no tax is because the law provides for this tax savings!
Should assisted living facilities, skilled nursing facilities, and the like be treated differently because they are not considered an apartment, condo, or single-family dwelling? Absolutely NOT! In fact, a nursing home may be eligible for not paying tax going forward but also receiving a refund of the sales tax it has paid on its utility bill for electricity or other power, if the home meets certain criteria.
All of the electricity or fuel, through a single meter, must be used strictly for residential purposes. This means, and for example, commercial uses cannot be used through the meter. If any commercial use occurs through the meter, then all of the charges through that meter are subject to tax. But what is commercial use?
The best example of commercial use would be a restaurant or café open to the public. It is possible to have the restaurant or café on its own meter from the rest of the facility. If that is the case, then the restaurant or café utility charges would be subject to sales tax, but the rest of the facility, assuming no other commercial activities, would be sales tax free, since the rest of the facility is on its own meter! Distinguishable from the restaurant or café would be a dining facility for the residents. If the dining facility was for the residents and through the same meter as the rest of the nursing home with no commercial activities, then all of the electric and fuel charges would be tax free!
You just found out you meet these criteria and can get a refund. Now what? Apply for a refund immediately! For refund claims, you only can go back three years from when the sales tax was paid. Every month you do not apply for the refund, you lose out on money due to the statute of limitations (technically, it is called the statue of nonclaim). See s. 215.26, F.S.
Sometimes, administrative staff are too overwhelmed with running the facility to have time to apply for this refund, even though the extra money would be incredibly helpful. In these instances, the facility may wish to consider hiring professional assistance. Having professional assistance can not only help to ease the burden carried by the staff, but also have the right people in place to fight for the refund the facility and residents deserve. Carefully review the qualifications of any individual before hiring him or her. Be wary of claims by individuals that appear to be “too good to be true.”
In conclusion, a residential facility may be eligible for a sales tax refund on the electricity or fuel it paid to the utility company. The facility should apply for a refund immediately, or it may lose out on parts of their refund claim for forever.
About the author: David Brennan is an associate attorney with Moffa, Sutton, & Donnini, P.A. His primary practice area is Florida tax controversy. David received a B.S. in Accounting and Finance, with a minor in Computer Science, from Florida State University. He worked as an accountant for a CPA firm before attending law school at Regent University. He received his Juris Doctorate in 2013 and was licensed to practice law in Florida in the same year. In 2015, David earned his Masters of Laws in Taxation from Boston University. As a former senior attorney for the Florida Department of Revenue, he handled informal protest appeals for nursing home refund claims, among other types of appeals. You may contact David via email at DavidBrennan@FloridaSalesTax.com or 850-250-3830. You can read his BIO HERE.
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[1] An additional “county tax” might be imposed at a rate of up to 1.5%. See ss. 212.054 and 212.055, F.S.