Sales and Use Tax – TAA 15A-002 – Enterprise Zone Credits and Exemptions

QUESTION: DOES THE PROJECT ADDRESSED IN THE TAA MEET THE REFUND ELIGIBILITY REQUIREMENTS OF PARAGRAPH 212.08(5)(O), F.S.?

ANSWER: BASED ON THE INFORMATION PROVIDED IN THE TAA REQUEST, THE PROJECT ADDRESSED IN THE TAA MEETS THE REFUND ELIGIBILITY REQUIREMENTS IF ALL UNITS IN THE CONSTRUCTION PROJECT MEET THE DESIGNATION REQUIREMENTS AND THE TAXPAYER FILES A TIMELY REFUND APPLICATION AND PROVIDES THE REQUIRED DOCUMENTATION.

January 28, 2015

Re: Technical Assistance Advisement 15A-002 Sales and Use Tax

Building Materials in Redevelopment Projects Sections: 212.08(5)(o), F.S. XXXX(hereinafter “Taxpayer”) 
XXXX (hereinafter “Project”)

Dear XXXX:

This is in response to your request dated XXXX, for a Technical Assistance Advisement (TAA) pursuant to section 213.22, Florida Statutes (F.S.), and Rule Chapter 12-11, Florida Administrative Code (F.A.C.), regarding the Building Materials in Redevelopment Projects sales and use tax refund. An examination of your letter has established that you have complied with the statutory and regulatory requirements for issuance of a TAA. Therefore, the Florida Department of Revenue (hereinafter “the Department”) is hereby granting your request for a TAA.

ISSUE

Whether the Project is construction in a designated brownfield area of affordable housing for persons described in subsections 420.0004(9), (11), (12), or (17) or in s. 159.603(7), F.S., which is eligible for the sales tax refund under section 212.08(5)(o), F.S.?

FACTS PROVIDED BY THE TAXPAYER

The Taxpayer develops real property in Florida. The Taxpayer is the owner of property on which it intends to construct the Project. The Project is in a designated brownfield area on which Taxpayer is in the process of constructing low-income housing. Taxpayer received building permits for the Project on XXXX. Taxpayer will apply for a refund of sales tax paid on the building materials used in the construction project under the provisions of section 212.08(5)(o), F.S.

LEGAL AUTHORITY

Section 212.08(5)(o), F.S., states:

Building materials in redevelopment projects.— 
1. As used in this paragraph, the term: 

a. “Building materials” means tangible personal property that becomes a component part of a housing project or a mixed-use project. 

b. “Housing project” means the conversion of an existing manufacturing or industrial building to a housing unit which is in an urban high-crime area, an enterprise zone, an empowerment zone, a Front Porch Community, a designated brownfield site for which a rehabilitation agreement with the Department of Environmental Protection or a local government delegated by the Department of Environmental Protection has been executed under s. 376.80 and any abutting real property parcel within a brownfield area, or an urban infill area; and in which the developer agrees to set aside at least 20 percent of the housing units in the project for low-income and moderate-income persons or the construction in a designated brownfield area of affordable housing for persons described in s. 420.0004(9), (11), (12), or (17) or in s. 159.603(7). 

c. “Mixed-use project” means the conversion of an existing manufacturing or industrial building to mixed-use units that include artists’ studios, art and entertainment services, or other compatible uses. A mixed-use project must be located in an urban high-crime area, an enterprise zone, an empowerment zone, a Front Porch Community, a designated brownfield site for which a rehabilitation agreement with the Department of Environmental Protection or a local government delegated by the Department of Environmental Protection has been executed under s. 376.80 and any abutting real property parcel within a brownfield area, or an urban infill area; and the developer must agree to set aside at least 20 percent of the square footage of the project for low-income and moderate-income housing. 

d. “Substantially completed” has the same meaning as provided in s. 192.042(1). 

2. Building materials used in the construction of a housing project or mixed-use project are exempt from the tax imposed by this chapter upon an affirmative showing to the satisfaction of the department that the requirements of this paragraph have been met. This exemption inures to the owner through a refund of previously paid taxes. To receive this refund, the owner must file an application under oath with the department which includes: 

1. The name and address of the owner.
2. The address and assessment roll parcel number of the project for which a refund is sought. 
   c. A copy of the building permit issued for the project. 
   d. A certification by the local building code inspector that the project is substantially completed. 
   e. A sworn statement, under penalty of perjury, from the general contractor licensed in this state with whom the owner contracted to construct the project, which statement lists the building materials used in the construction of the project and the actual cost thereof, and the amount of sales tax paid on these materials. If a general contractor was not used, the owner shall provide this information in a sworn statement, under penalty of perjury. Copies of invoices evidencing payment of sales tax must be attached to the sworn statement. 
3. An application for a refund under this paragraph must be submitted to the department within 6 months after the date the project is deemed to be substantially completed by the local building code inspector. Within 30 working days after receipt of the application, the department shall determine if it meets the requirements of this paragraph. A refund approved pursuant to this paragraph shall be made within 30 days after formal approval of the application by the department. 
4. The department shall establish by rule an application form and criteria for establishing eligibility for exemption under this paragraph. 
5. The exemption shall apply to purchases of materials on or after July 1, 2000. (Emphasis Supplied)

DISCUSSION AND ANALYSIS

Section 212.08(5)(o), F.S., provides several requirements and a few different situations under which a refund of sales tax may be made. One of the alternatives provided in the definition of a housing project is for the construction in a designated brownfield area of affordable housing for extremely-low-income persons, low-income persons, moderate-income persons, and very-low-income persons, as defined in section 420.0004, F.S., or eligible persons, as defined in section 159.603, F.S.1

The Taxpayer states that its Project is in a designated brownfield area. The Taxpayer also states that the Project is construction of low income housing. If all of the housing untis are designated for persons described in s. 420.0004(9), (11), (12), or (17) or in s. 159.603(7), F.S., the Project will meet the definition of a “housing project” and be eligible for the sales tax refund under section 212.08(5)(o), F.S.

CONCLUSION

Based on the discussion above, assuming all of the housing units are designated for persons described in s. 420.0004(9), (11), (12), or (17) or in s. 159.603(7), F.S., and a timely application for refund is made with paperwork documenting the building materials purchased, and that the building materials were used in the Project, the Project is eligible for the sales tax refund under section 212.08(5)(o), F.S.

This response constitutes a Technical Assistance Advisement under s. 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 s. 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 documents are public records under chapter 119, F.S., which are subject to disclosure to the public under the conditions of s. 213.22, F.S. Your name, address, and any other details, which might lead to identification of the taxpayer, must be deleted before disclosure. In an effort to protect the confidentiality of such information, we request you provide the undersigned with an edited copy of your request for Technical Assistance Advisement, backup material and response within fifteen days of the date of this advisement.

Sincerely,

Suzanne C. Paul 
Tax Law Specialist 
Technical Assistance and Dispute Resolution (850) 717-6794

Record ID: 183907

End Notes:

1. Please note that even though the definition of a housing project was amended in 2013, the portion of the definition relating to the refund for new construction in a designated brownfield area of affordable housing for persons described in s. 420.0004(9), (11), (12), or (17) or in s. 159.603(7), F.S., was not changed.