Florida is known as the premium boating state in the United States. It is estimated that Florida’s main coastline stretches approximately 1,350 miles. So, it is no secret that Florida has become one of the top fishing destinations in the world and Florida has what is probably the largest number of charter fishing companies of any state in the county! From inshore charters for snook, redfish, trout, and tarpon to offshore charters catching everything from Grouper and Red Snapper to King Fish and Blue Marlin. There is no shortage of ways to get on the water with expert charter captains in Florida. However, would you believe some of these fishing charters are subject to Florida sales tax while some of them are not? This question is the topic of this article specifically with charter captains in mind.
For Florida sales tax purposes, there are two types of fishing charters, the “charter” and the “head boat.” From the charter company’s perspective, the question remains whether your business model closely resembles that of a charter boat or head boat, and second, what are the tax implications with choosing one over the other. This article covers topics for you to consider. But first let us take a look at some key differences between a charter boat and head boat.
Fishing Charter
A Fishing Charter boat is a full-service charter, which includes a captain (and often a deck hand) as well as all the fishing rods, reels, and bait you need. There is a single price for the charter, even if several customers split the fee. The important thing to note is that a fishing charter is exempt from sales tax as a non-taxable service. Most fishing charters entail a charter captain’s license that allows up to six fishing customers on the boat per charter. This exemption is provided by sec 212.08(7)(y), F.S., which provides “The charge for chartering any boat or vessel, with the crew furnished, solely for the purposes of fishing is exempt from [the sales tax on admissions].”
Fishing on a Head Boat
The biggest difference that sets a “Head Boat” apart is that each customer pays a separate price to go on the fishing charter as opposed to a Fishing Charter that has one price for the boat (that may be split by the customers). This is a distinction that leaves some people scratching their heads. To help explain, a tax exempt fishing charter may offer a price of $1,000 for a six-hour trip, while a taxable head boat offers a price of $150 per person plus sales tax for a six-hour charter for up to say 20 people. The head boat may or may not provide equipment for you to use. The crew on the head boat may even help bait your hook. Head Boats usually have licenses that allow much more than six people to fish on the charter, even though the statute providing that fishing charters are tax exempt really doesn’t draw a distinction on how many people are fishing. The statues are very specific on this topic in 212.08(7)(y), F.S., which provides “This [charter fishing] exemption does not apply to any charge to enter or stay upon any “head boat,” party boat, or other boat or vessel.” Florida rule 12A-1.005(3)(k)1, F.A.C., goes on to provide that “[w]hen the owner of a boat or vessel operated as a “head-boat” or “party boat” supplies the crew, which remains under the control and direction of the owner, and makes a charge measured on an admission or entrance or length of stay aboard the vessel for the privilege of participating in sightseeing, dinner cruises, sport, recreation, or similar activities including fishing, the charge is taxable as an admission.” So, charter captains, be careful how you word your pricing on your website. Make sure the prices are for the whole charter, not a per head price.
Fishing Tournament Fees
While we are on the topic of fishing, Florida has some of the most amazing fishing tournaments. There’s a King of the Beach tournament (king fish) on the west coast of Florida that has grown so large that the tournament fishing area goes from Naples all the way up to Cedar Key (just west of Gainesville)! So, the question before us today is whether the fishing tournament fees are subject to sales tax? The Florida legislature has spoken on this topic in sec. 212.04(2)(a)8, which provides “Entry fees for participation in freshwater fishing tournaments [are EXEMPT from sales tax].” Apparently, the freshwater fishing tournament industry has a better lobby than the saltwater tournament industry because the statutes do not specifically exempt “saltwater” fishing tournaments. While the statutes do not specifically mention that saltwater tournaments are taxable, rule 12A-1.005(3)(i) specifically provides that “Charges made for participation in saltwater fishing tournaments are subject to [sales] tax.” There is, however, an exemption from sales tax for admissions charges by events sponsored by 501(c)(3) not-for-profit organizations under sec. 212.04(2)(a)2, F.S. as well as an exemption for tournament participants if the spectators are taxed on their admissions under 212.04(2)(a)9, F.S.
Bare Boat Rental
While not the main topic of the article, it might be worth pointing out here that a bare boat rental (rental of the boat without a captain) is subject to sales tax as the rental of tangible personal property (just like a rental car).
Chater Boat when NOT Fishing
Also not the main topic of the article, but the “charter boat” exemption above is ONLY for fishing charters. The same charter boat taking the same passengers out for a cruise without fishing is most likely subject to sales tax as an admission. So, charter captains, if you plan to do sunset cruises, you better make sure to put a line and hook in the water while watching the sunset (and make sure your invoices reflect it was for fishing). Also, don’t forget that sales tax auditors know how to surf the internet just like anyone else. If you offer non-fishing charters on your website, then it will be a long, nasty uphill battle defending yourself in a sales tax audit.
Charter Captains Be Aware of the Tax Rules
Charter captains should make sure they are aware of the sales tax rules for head boats versus fishing charters, especially when designing their website. Also remember that Florida sales tax auditors could be your customers any day of the year, so be careful what you put into writing (text or email) as well. If you do get audited, the Department of Revenue can come after you for tax, penalties and interest. Penalties may range anywhere from twenty-five percent (25%) to fifty percent (50%) and at the time this article was written, the Florida Department of Revenue charges 12% interest! Sales tax audits normally go back 3 years, which is painful enough. However, if you do get audited and your company never filed a sales tax return, there is NO STATUTE OF LIMITATIONS, and the audit can go back to the beginning of your company! Making this even worse is the fact that the charter fishing provisions are an exemption, which means the burden to prove you qualify for the exemption is on the charter captain. All the Department of Revenue auditor has to do is accuse the charter captain of having taxable admissions and the charter captain is responsible for providing records proving the exemption applies. Make no mistake, the Florida Department of Revenue can and does put businesses out of business this way. So be proactive and make sure your charter business complies with the law!
About the authors: 
James Sutton is a Florida licensed CPA and attorney as well as a partner in Moffa, Sutton, & Donnini, PA. Mr. Sutton is charge of the Tampa office of the firm and practices almost exclusively in the area of Florida Sales & Use Tax Controversy. Mr. Sutton handles audits, protest, litigation, criminal cases, revocations, collections, and consulting engagements all in the area of sales tax. Mr. Sutton is an active member in the FICPA, AICPA, AAA-CPA, and FIADA. Mr. Sutton is also the State and Local Tax Chairman for the AAA-CPA and past president of the Florida AAA-CPA. For 2022 to 2024, Mr Sutton was the Chairman for the State Tax Committee for the FICPA. Otherwise, you can learn more about Mr. Sutton in his firm bio HERE and you call call him directly at 813-775-2131.
Andrea Arauz is an associate attorney who joined the Law Offices of Moffa, Sutton, & Donnini, P.A. in 2024. Andrea focuses her practice on Florida state and local tax, with an emphasis on sales and use tax. Andrea joined the firm after spending 5 1/2 years at KPMG, LLP, a public accounting firm handling a wide variety of state tax consulting and compliance work for Fortune 500 companies. In addition to working at the Law Offices of Moffa, Sutton, & Donnini, P.A., Andrea currently serves as a Trial Defense Judge Advocate in the Florida National Guard. You can learn more about Andrea in her bio HERE.
About the firm: At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is Florida taxes, with a very heavy emphasis in Florida sales and use tax. We have defended Florida businesses against the Florida Department of Revenue since 1991 and have over 100 years of cumulative sales tax experience within our firm. Our partners are both CPAs/Accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. We represent taxpayers and business owners from the entire state of Florida. Contact us for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
AUTHORITY
ADDITIONAL RESOURCES
DON’T HIRE AN IRS ATTORNEY FOR SALES TAX PROBLEMS, published July 17, 2024, by James Sutton, CPA, Esq.
FL SALES TAX AUDIT – FROM AUDIT NOTICE (DR-840) TO NOPA, published September 7, 2023, by Matthew Parker, Esq.
FL SALES TAX: BOAT DEALER GUIDE, published May 7, 2023, by David Brennan, Esq.
ARE GRATUITIES SUBJECT TO FLORIDA SALES TAX, published November 9, 2020, by Michael Moffa, Esq.