Executive Director Leon Biegalski QUESTION: WILL THE TAXPAYER S LEASE BE SUBJECT TO SALES AND USE TAX? ANSWER: NO. PROPERTY LEASED QUALIFIES FOR EXEMPTION. January 10, 2018 Subject: ( TAA ) TAA 18A-001 Sales and Use Tax Section 212.031, Florida Statutes (F.S.) (the Taxpayer) FEI Number: BP Number: Dear : This letter is a response to your petition dated November 2, 2017, for the Department s issuance of a (TAA) to Petitioner, regarding the taxability of a real property lease. Your petition has been carefully examined, and the Department finds it to be in compliance with the requisite criteria set forth in Rule Chapter 12-11, F.A.C. This response to your request constitutes a TAA and is issued to you under the authority of section 213.22, F.S. Issue The issue is whether a real property lease (the Lease) between the Taxpayer and, (Lessor) is subject to Florida s sales and use tax. Facts Your TAA request provides, in part, the following: Child Support Ann Coffin, Director General Tax Administration Maria Johnson, Director Property Tax Oversight Dr. Maurice Gogarty, Director Information Services Damu Kuttikrishnan, Director www.floridarevenue.com Florida Department of Revenue Tallahassee, Florida 32399-0100
Page 2 of 5 [The Taxpayer] is a global business wholly-owned by, which in turn is owned and controlled by. [The Taxpayer] is comprised of a U.S. national, a group of serving the major U.S. markets, a, the in the U.S., operation including and and an international arm that mostly worldwide to more than and in over. Through its and, [the Taxpayer] a high level of and aimed at and in the United States and worldwide, consisting of. More than and and or is and by [the Taxpayer]. [The Taxpayer] is headquartered in and conducts the majority of activities at its facilities in the. In, after an extensive multi-state search [the Taxpayer] committed to base its headquarters operations in. [The Taxpayer] selected a site of approximately upon which to construct a building consisting of approximately and (the Building ), located in. [The Taxpayer] intends to bring under one roof, multiple from several prior locations. A lease transaction was entered into pursuant to which would improve the property and construct the building. This lease (hereinafter called the Lease ) was entered into in, by and between [Lessor], as the landlord, and [The Taxpayer], as tenant. The lease has an initial term of years; however, [the Taxpayer] has the right, at its sole option, to extend the initial term of the Lease for additional successive period(s) of years. Substantially all of the property is essential to [the Taxpayer] s operations and is substantially used as part of the of its and. [The Taxpayer] will apply through the for the as a pursuant to [ 1 ], once the application window opens. [The Taxpayer] also intends to apply to the Department for at that time, pursuant to.... Article 2., labeled, USE, of the Agreement, provides in pertinent part: Tenant may use the Premises for general, executive and administrative offices and for and other related uses and uses incidental or ancillary thereto, including, without limitation, office space associated with the and, including broadcast, distribution, sales and marketing, of services in connection therewith and for ancillary uses connected to the foregoing (the Intended Use ). At the present time, it is 1 The Taxpayer has since received a (), dated, from the Department.
Page 3 of 5 anticipated that the following uses, without limitation, shall be deemed to be ancillary and permitted uses: (a) a cafeteria, dining room, kitchen, pantries and other reasonable food service and preparations installations, (b) vending machines, (c) libraries, (d) day care facilities, (e) health and recreation facilities, (f) board rooms, conference rooms and training rooms and facilities, (g) health care centers and first-aid rooms, (h) messenger and mail room facilities, (i) computer and communications systems, including without limitation, (j) employee lounges, (k) file rooms, (1), (m), and (n) security rooms. Landlord expressly acknowledges that Tenant will be running and is hereby authorized to run a at the Premises. Subject to Legal Requirements (as hereinafter defined), Tenant shall have access to and use of the Premises 7 days per week, 24 hours per day and 365 days per year. * * * Tenant may use the Premises for Tenant s Intended Use, but not otherwise. Applicable Law & Discussion Section 212.031, Florida Statutes provides in pertinent part: Tax on rental or license fee for use of real property. (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: * * * X XXX XX X XX XXX XX XX XX X XXX X XXX X XXX X X X X X X XXX XX X XXX XXX XX X XX X XXX X X X XXX XX XX XX XX XX X XXX XX X X
Page 4 of 5 X XXX XX XX XXX X XXX X XX XXX X XX XX Section, F.S., provides in pertinent part: X X XX XX XXX X XX XXX X X XXX X XXX X X X X X XX XXX XXX XXX XX XX XXX XX XX X XX XX The subject real property lease indicates the exempt purpose per sections 212.031(1)(a)X., F.S. and, F.S. Conclusion The Lease between the Taxpayer and the Lessor is not subject to Florida s sales and use tax. Accordingly, the Taxpayer should provide a copy of its () to the landlord. This response constitutes a 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, 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 10 days of the date of this letter.
Page 5 of 5 Respectfully, R. Clay Brower Technical Assistance & Dispute Resolution (850) 717-6306 Control No: 28978