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TAA 20A-027 Security Monitoring

QUESTION: Is the additional charge for XXXXXXXXX subject to sales tax, whether billed on each monthly invoice as a lump sum or separately stated charge for basic security monitoring services and equipment.

ANSWER: The additional charge for XXXXXXXXXX is subject to sales tax, whether billed on each monthly invoice as a lump sum charge or separately stated from the charge for basic security monitoring services and equipment.

December 4, 2020

Technical Assistance Advisement (“TAA”) 20A-027

Sales and Use Tax – Burglar Protection and Monitor Services

Section 212.05(1)(i)1.a., Florida Statutes (F.S.), and

Rules 12A-1.0092(1), and (2)(a), Florida Administrative Code (F.A.C.)

Dear XXXXXXXXXXX:

This letter is a response to your petition received on XXXXXXXXXXXXXXX, for issuance of a Technical Assistance Advisement (“TAA”) pursuant to Section 213.22, F.S., and Rule Chapter 12- 11, F.A.C., concerning the taxability of a security device used to provide security services. An examination of your request has established you complied with the statutory and regulatory requirements for issuance of a TAA. Therefore, the Department is hereby granting your request for a TAA.

REQUESTED ADVISEMENT

Taxpayer is seeking a determination as to whether the charge for XXXX is subject to sales tax when billed with basic monitoring service and equipment as a monthly lump sum charge or billed as a separately stated charge with basic monitoring service and equipment.

STATED FACTS

XXXXXXXXXX (“Taxpayer”) is a security company XXXXXXXXXXXXXXXXXXXXXXXXX, which provides home security systems and monitoring services that are installed via wired and wireless connectivity to link the customer's premises with Taxpayer’s monitoring center. Taxpayer has a XXXXXX software product, XXXXX, which is a mobile application that allows customers to remotely access a variety of additional security features available XXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. XXXXX is an optional add-on feature to Taxpayer’s traditional monitoring service and customers pay an additional charge or fee to use the feature.

When customers purchase XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.

Devices and equipment XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX must be connected to Taxpayer’s monitoring center XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.

Pricing XXXXXXXXXXX is based on the system configuration XXXXXXXXXXXXXXXX. XXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXX, XXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXX. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. The quote for the configuration is provided by a security professional over the phone or during an onsite visit with the customer. Within the quote, the price of each piece of equipment to be used by the customer is separately stated.

LAW & DISCUSSION

In addition to sales tax imposed on tangible personal property,1 Section 212.05(1), F.S., enumerates certain services that are subject to sales and use tax in this state. One such service is detective, burglar protection, and other protection services (NAICS National Numbers 561611, 561612, 561613, and 561621). See s. 212.05(1)(i)1.a., F.S.2

Rule 12A-1.0092(2)(a), F.A.C., defines detective, burglar protection, and other protection services as those services which are “rendered to minimize or prevent loss or damage to life, limb, or property and are of a kind typically performed by security or alarm system companies, or are those investigative services which are rendered to obtain evidence or other information for legal, business, employment, or personal purposes of a kind typically performed by detective or investigative agencies.”

The U.S. industry code for establishments primarily engaged in selling security alarm systems, such as burglar and fire alarms, along with installation, repair, or monitoring services, are generally included under the NAICS National Number 561621. The following services are included under the 2007 NAICS National Number 561621:

Alarm system monitoring services
Alarm systems sales combined with installation, repair, or monitoring services
Burglar alarm monitoring services
Burglar alarm sales combined with installation, repair, or monitoring services
Fire alarm monitoring services
Fire alarm sales combined with installation, repair, or monitoring services
Security alarm systems sales combined with installation, repair, or monitoring services
Security system monitoring services

The law encompasses burglar protection services and a vast array of specific security activity provided by Taxpayer to protect life, limb, and property from theft, damage, destruction, etc. The question in this inquiry involves the XXXXXX add-on feature which enhances the monitoring service. According to the information provided, XXXXXX is not a separate standalone device or service from the security and monitoring services provided by Taxpayer. XXXXX works in conjunction with Taxpayer’s monitoring services XXXXXXXXXXXXXXXXX. Even if XXXXXX was a standalone App, the features of the XXXXX constitute taxable security services. As such, XXXX is a component part of taxable monitoring services provided by Taxpayer, thus, XXXXX constitutes a security service. Once the App is downloaded, XXXX is a part of the XXXXX of activities performed by Taxpayer to provide taxable security services.

CONCLUSION

The additional charge for XXXXX is subject to sales tax, whether billed on each monthly invoice as a lump sum charge or separately stated from the charge for basic security monitoring services and equipment.

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 15 days of the date of this letter.

Joseph D. Franklin III

Tax Law Specialist

Technical Assistance & Dispute Resolution

(1) Section 212.05, F.S., provides every person is engaged in a taxable privilege when engaging in the business of selling or leasing, at retail, tangible personal property in this State. In order to exercise such a privilege, tax is levied at a rate of 6%. See s. 212.05(1)(a)1.a., F.S. 2 “NAICS” means those classifications contained in the North American Industry Classification System, as published in 2007 by the Office of Management and Budget, Executive Office of the President. See s. 212.05(1)(i)2., F.S.

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