The purpose of the proposed amendments to Rule 12A-1.070, F.A.C. (Leases and Licenses of Real Property) is to update, consistent with current statutory provisions, the tax imposed on the rental, lease, or license to use, occupy, or enter upon any ...

 

DEPARTMENT OF REVENUE
Sales and Use Tax

RULE NO.: RULE TITLE:
12A-1.070: Leases and Licenses of Real Property; Storage of Boats and Aircraft

PURPOSE AND EFFECT: The purpose of the proposed amendments to Rule 12A-1.070, F.A.C. (Leases and Licenses of Real Property) is to update, consistent with current statutory provisions, the tax imposed on the rental, lease, or license to use, occupy, or enter upon any real property. When in effect, the proposed amendments will:

– Update the exclusion from the tax on the use of real property at a port authority. (Section 212.031(1)(a)8., F.S., as amended by Chapter 97-221, L.O.F.)

– Update the exclusion from the tax on real property for poles, conduits, fixtures, and similar improvements located on streets or rights-of-ways occupied by a utility or provider of communications services. (Section 212.031(1)(a)5., F.S., as amended by Section 1, Chapter 99-363, L.O.F., Section 53, Chapter 2000-260, L.O.F., and Section 27, Chapter 2001-140, L.O.F.)

– Remove provisions stating that for jetways and baggage conveyors to be deemed real property, the land upon which they are attached must be owned by the owner of the jetways and baggage conveyors. This provision was rendered obsolete when the term “real property” was defined to include land and improvements and fixtures. (Section 212.06(14), F.S., as created by Section 5, Chapter 98-141, L.O.F.)

– Update the exclusion from tax on real property for persons providing food and drink retail concessionaire services expanded to include publicly-owned facilities, and update the definition of the term “retail concessionaire” for purposes of the rule. (Section 212.031(1)(a)10., F.S., as amended by Section 1, Chapter 99-270, L.O.F.)

– Add the exclusion from tax on the lease of real property for property used or occupied predominantly for space flight business purposes. (Section 212.031(1)(a)12., as created by Chapter 2000-183, L.O.F.)

– Add the exemption for real property rented, leased, or licensed by a postsecondary educational institute to a person operating a bookstore on the property. (Section 212.08(7)(eee), F.S., as created by Chapter 2007-53, L.O.F.)

– Add the exclusion from tax on the lease of real property to a person providing telecommunications, data systems management, or Internet services at a convention hall, civic hall, or meeting space at public lodgings. (Section 212.031(1)(a)13., F.S., as created by Section 5, Chapter 2010-147, L.O.F.)

– Remove obsolete provisions regarding the taxability of the rental of premises within an airport by a person providing retail concessionaire services effective prior to July 1, 1987. (Section 10, Chapter 87-101, L.O.F.)

– Update provisions regarding the exclusion from tax on the lease of real property by a qualified production company that holds a Certificate of Exemption for Entertainment Industry Qualified Production Company issued by the Department, as provided in Rule 12A-1.085, F.A.C. Changes are made to remove the obsolete suggested certificate of exemption and to remove the unnecessary recitation of statutory provisions. (Section 212.031(1)(a)9., F.S., as amended by Section 2, Chapter 2000-182, L.O.F.)

– Remove obsolete reference to definitions that are no longer included in Rule 12A-1.044, F.A.C.

– Remove the unnecessary restatement of the statutory sales tax rate.

– Remove provisions regarding the storage of aircraft or boats redundant of Rule 12A-1.073, F.A.C., and remove “Storage of Boats and Aircraft” from the rule title to reflect this change.

– Update provisions providing that privilege, franchise, or concession fees paid to an airport are not payments for a lease or license for the use of real property. (Section 212.02(10)(j), F.S., as amended by Section 1, Chapter 95-391, L.O.F.)

– Update examples on the taxability of utility charges paid by a tenant to the lessor for the use of real property.

– Include provisions regarding when tax collected on the rental, lease, or license for the use of specified public facilities to hold an event of not more than seven days is due to the Department. (Section 212.031(3), F.S., as amended by Section 1, Chapter 2000-345, L.O.F.)

– Provide that the lessee who records a cancellation or termination fee as rental income, and who does not pay the tax to the lessor, is required to remit the tax directly to the Department.

– Provide when tax is due on the cost price of real property improvements completed or funded by a tenant, as provided in Department of Revenue v. Seminole Clubs, Inc., 745 So.2d 473 (Fla. 5th DCA 1999) and Department of Revenue v. Ruehl No. 925, LLC, 76 So.3d 389 (Fla. 1st DCA 2011).

– Include the exemption for the rental, license, or lease of real property from the turnpike enterprise as provided in Section 338.234, F.S. (Amended by Section 52, Chapter 2007-196, L.O.F.)

– Provide that, consistent with Section 212.031(2)(b), F.S., the amount of tax due on consideration paid for the use of real property is not decreased by a progression of transactions.

– Provide that the calculation of the pro rata portion of premises leased or rented by for-profit entities that provide a residential facility for the aged uses a proration method based on square footage. (Section 212.031(1)(b), F.S., as amended by Section 3, Chapter 98-140, L.O.F.)

– Provide that the calculation of the pro rata portion of leased or rented hotel premises providing dwelling accommodations is prorated based on square footage. Department of Revenue v. Vanjaria Enterprises, Inc., 675 So. 2d 252 (Fla. 5th DCA 1996), provides that the Department would be required to promulgate a rule to require a proration method based on square footage.

– Consolidate provisions regarding advertising displays into a single subsection.

– Remove provisions regarding bailment agreements that are not the rental, lease, or license to use real property.

SUBJECT AREA TO BE ADDRESSED: The subject area of the rule development workshop is the development of updated procedures regarding the tax imposed on the rental, lease, or license to use, occupy, or enter upon any real property.

RULEMAKING AUTHORITY: 212.17(6), 212.18(2), 213.06(1) FS.
LAW IMPLEMENTED: 212.02(10)(g), (h), (i), (j), (12), (13), 212.03(6), 212.031, 212.06(1)(b), (2)(j), (14), 338.234(2) FS.

A RULE DEVELOPMENT WORKSHOP WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:

DATE AND TIME: September 6, 2012, 10:00 a.m.

PLACE: 2450 Shumard Oak Boulevard, Building One, Room 1220, Tallahassee, Florida. The public can also participate in this rule development workshop through a simultaneous electronic broadcast of this event by the Department of Revenue using WebEx, and conference calling technology. The requirements to participate are access to the Internet and a telephone. The public can participate in this electronic workshop by accessing the broadcast from their home or office. Specific information about how to participate in this electronic meeting from your home or office will be included in the Agenda for this workshop posted on the Department’s Proposed Rule site at www.myflorida.com/dor/rules.

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Tammy Miller at [phone]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE DEVELOPMENT AND A COPY OF THE PRELIMINARY DRAFT, IF AVAILABLE, IS: French Brown, Deputy Director, Technical Assistance and Dispute Resolution, Department of Revenue, P. O. Box 7443, Tallahassee, Florida 32314-7443, telephone [phone]

THE PRELIMINARY TEXT OF THE PROPOSED RULE DEVELOPMENT IS PUBLISHED ON THE DEPARTMENT’S INTERNET SITE AT: myflorida.com/dor/rules.