TAA 21A-016 Real Property Rental
QUESTION: Whether certain areas of the Airport leased by Landlord to Taxpayer are subject to the tax rate imposed by s. 212.031, F.S., for real property commercial rentals or s. 212.03, F.S., for aircraft parking.
ANSWER: The tax imposed by s. 212.031, F.S., applies to the area used for free parking of military aircraft. The tax imposed by s. 212.03(6), F.S., applies to the area used for paid parking or tiedown of aircraft.
December 1, 2021
Technical Assistance Advisement (TAA)
TAA #: 21A-016
TAXPAYER NAME: XXXX (“Taxpayer”)
Business Partner Number: XXXX
FEIN Number: XXXX
XXXX (Landlord)
XXXX (“Airport”)
Sales & Use Tax – Real Property Rental
Sections: 212.03 and 212.031, Florida Statutes (F.S.)
Rules: 12A-1.070 and 12A-1.073, Florida Administrative Code (F.A.C.)
Dear XXXX:
This is in response to the letter dated April 26, 2021, requesting this Department’s issuance of a Technical Assistance Advisement (“TAA”) pursuant to s. 213.22, F.S., and Chapter 12-11, Florida Administrative Code (Fla. Admin. Code) regarding the lease of real property. Your request has been carefully examined, and the Department finds it to be in compliance with the requisite criteria set forth in Chapter 12-11, Fla. Admin. Code. This response to your request constitutes a TAA and is issued to you under the authority of s. 213.22, F.S.
REQUESTED ADVISEMENT
Whether certain areas of the Airport leased by Landlord to Taxpayer are subject to the tax rate imposed by s. 212.031, F.S., for real property commercial rentals, or s. 212.03, F.S., for aircraft parking.
FACTS
Taxpayer is a privately held corporation, which is a Fixed Base Operator (“FBO”) located at Airport. Taxpayer provides the following services: (i) aircraft refueling, (ii) greeting passengers, (iii) luggage assistance, (iv) transportation services, (v) special delivery pickup, and (vi) fulfilling special requests. Taxpayer operates under a FBO lease agreement with Landlord, including buildings, a hangar, land, and parking lot, including 783,800 square feet of aircraft apron space. Taxpayer does not charge for parking automobiles in the parking lot, or on any other portion of the leased premises.
Military aircraft is used at Airport for training purposes. Of the 783,800 square feet of aircraft apron space, 749,800 square feet are used for free parking of military aircraft when the aircraft is not in use for training. Taxpayer charges parking or tiedown (“tiedown” as used herein includes storage) and ramp fees for civilian aircraft utilizing the Airport. Taxpayer’s website provides that in some instances ramp fees are waived when fuel is purchased. The portion of aircraft apron space not used for military aircraft parking – 34,000 square feet – is used for paid parking for transient civilian aircraft. Unless a parking fee is waived as indicated above, Taxpayer charges customers the six percent (6%) tax imposed for aircraft parking under s. 212.03(6), F.S.
Landlord is currently collecting six (6) percent state sales tax pursuant to s. 212.03(6), F.S., on any parcel upon which an aircraft or automobile could be parked. Landlord collects the five and a half (5.5) percent tax due under s. 212.031, F.S., on leased parcels consisting of building spaces (buildings and hangars).
TAXPAYER POSITION
Taxpayer takes the position that the tax imposed by s. 212.03(6), F.S., only applies to areas actually utilized for paid parking or tiedown of aircraft or automobiles, and any other leased space is subject to tax under 212.031, F.S. Areas utilized only for free parking or tiedown (i.e., military aircraft parking) should be subject to tax on the prime lease under Rule 12A-1.073(3), F.A.C. Taxpayer further takes the position that the areas utilized for paid parking or tiedown are not also subject to tax on the prime lease pursuant to Rule 12A-1.073(2), F.A.C.
Finally, Taxpayer states that since the number of paying aircraft owners on their apron is small and their current agreement does not designate a specific parcel of parking apron for paid parking, they do not think an exemption from sales tax in the prime lease for that parcel would be warranted. Taxpayer notes that this may result in the pyramiding of taxes but that the amount would be negligible.
LAW
Section 212.03(6), F.S., provides in pertinent part:
The Legislature finds that every person . . . who leases or rents tie-down or storage space for aircraft at airports is engaging in a taxable privilege.
(a) For the exercise of this privilege, a tax is hereby levied at the rate of 6 percent on the total rental charged.
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Section 212.031, F.S., provides on pertinent part:
(1)(a) It is declared to be the legislative intent that every person is exercising a taxable privilege who engages in the business of renting, leasing, letting, or granting a license for the use of any real property unless such property is:
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3. Property subject to tax on parking, docking, or storage spaces under s. 212.03(6).
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(c) For the exercise of such privilege, a tax is levied at the rate of 5.5 percent of and on the total rent or license fee charged for such real property by the person charging or collecting the rental or license fee. The total rent or license fee charged for such real property shall include payments for the granting of a privilege to use or occupy real property for any purpose and shall include base rent, percentage rents, or similar charges. . . .
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(2)(a) The tenant or person actually occupying, using, or entitled to the use of any property from which the rental or license fee is subject to taxation under this section shall pay the tax to his or her immediate landlord or other person granting the right to such tenant or person to occupy or use such real property.
(b) It is the further intent of this Legislature that only one tax be collected on the rental or license fee payable for the occupancy or use of any such property, that the tax so collected shall not be pyramided by a progression of transactions, and that the amount of the tax due the state shall not be decreased by any such progression of transactions.
(3) The tax imposed by this section shall be in addition to the total amount of the rental or license fee, shall be charged by the lessor or person receiving the rent or payment in and by a rental or license fee arrangement with the lessee or person paying the rental or license fee, and shall be due and payable at the time of the receipt of such rental or license fee payment by the lessor or other person who receives the rental or payment. . . .
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Rule 12A-1.073, F.A.C. [Motor Vehicle Parking Lots and Garages, Boat Docks and Marinas, and Aircraft Tie-down or Storage], provides in pertinent part:
(1)(a) The lease or rental of parking or storage spaces for motor vehicles in parking lots or garages is taxable.
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(c) The lease or rental of tie-down or storage space for aircraft at airports is taxable.
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(3) When the lease of real property includes areas which are used for free parking the entire consideration paid by the lessee to the lessor is taxable.
DISCUSSION
Section 212.03(6), F.S., indicates that “ . . . every person . . . who leases or rents tie-down or storage space for aircraft at airports is engaging in a taxable privilege.” The tax is imposed on the total rental charged. Section 212.031, F.S., imposes sales tax on the rental income received from leasing real property. Section 212.031(1)(a)3., F.S., provides an exemption for property subject to tax on parking, docking, or storage spaces under s. 212.03(6), F.S.
The facts presented are that Taxpayer only charges for aircraft tiedown or parking with respect to one area of the property. With respect to this area, Taxpayer is exercising the privilege subject to tax under s. 212.03(6)(a), F.S. Accordingly, this parcel is not subject to tax pursuant to s. 212.031(a)3., F.S.
No rental income is received by Taxpayer for the area used for free parking of military aircraft. Because there is no “rental charged” by taxpayer regarding this area, the tax imposed by s. 212.03(6), F.S., does not apply this area. See ss. 212.031(1)(a)3. and 212.03(6); Rule 12A-1.073(3), F.A.C. The tax imposed by s. 212.031, F.S., applies to the prime lease for the area in which the military aircraft are parked for no charge.
CONCLUSION
The tax imposed by s. 212.031, F.S., applies to the area used for free parking of military aircraft. The tax imposed by s. 212.03(6), F.S., applies to the area used for paid parking or tiedown of aircraft.
Taxpayer anticipates that it will continue paying the tax imposed by s. 212.031, F.S., regarding the area used for paid civilian aircraft parking or tiedown and that it will also collect and remit tax for parking or tiedown from civilian customers pursuant to s. 212.03(6), F.S.1 It is noted that s. 213.756(1), F.S., provides that “[f]unds collected from a purchaser under the representation that they are taxes provided for under the state revenue laws are state funds from the moment of collection . . . .” Accordingly, the amounts collected as tax by both Taxpayer and Landlord are state funds and must be properly remitted to the Department of Revenue.
This response constitutes a Technical Assistance Advisement under Section 213.22, Fla. Stat., 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, Fla. Stat. 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, Fla. Stat., and are subject to disclosure to the public under the conditions of Section 213.22, Fla. Stat. 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.
Leigh L. Ceci
Tax Law Specialist
Technical Assistance & Dispute Resolution
(1) It is noted that the taxes imposed by ss. 212,03(6) and 212.031, F.S., constitute separate and distinct taxable privileges and apply, respectively, to Taxpayer (for the rental of aircraft parking or tiedown) and Landlord (for the lease of real property). Accordingly, there is no duplication or pyramiding of tax in this instance. See, e.g. Florida Hotel & Motel Ass’n v. Department of Revenue, 635 So. 2d 1044, 1048 (Fla. 1st DCA 1994)
