SUMMARY QUESTION: Is a motor vehicle dealership responsible for collecting and remitting: 1) Florida sales tax applicable to a down payment made under a motor vehicle lease; 2) Florida sales tax applicable to the first month s lease payment; and 3) the rental car surcharge imposed pursuant to Section 212.0606(1), F.S., when the down payment and first month's lease payment are collected by the dealership at the time a customer signs a motor vehicle lease. ANSWER - Based on Facts Below: When a dealership accepts a down payment and payment for the first month's rent when a customer signs a motor vehicle lease, the dealership must collect and remit the applicable Florida sales tax on these payments to the Department. Additionally, the dealer must collect and remit the applicable rental car surcharge to the Department. July 24, 2006 Re: Technical Assistance Advisement 06A-019 Sales and Use Tax - Vehicle lease - Collection and remittal of sales tax and rental car surcharge Section 212.02(15)(a), Florida Statutes (F.S.) Section 212.05(2), F.S. Section 212.15(1), F.S. Section 212.0606(1), F.S. Rule 12A-16.001, Florida Administrative Code (F.A.C.) Rule 12A-16.002, F.A.C. XXX [the Assignee] FEIN: XX XXX [the Administrator] FEIN: XX Dear : This is a response to your letter of June 1, 2006, requesting a Technical Assistance Advisement (TAA) regarding the above-referenced matter. This response to your request constitutes a TAA under Chapter 12-11, Florida Administrative Code (F.A.C.), and is issued to you under the authority of Section 213.22, Florida Statutes (F.S.). FACTS The Assignee is in the business of leasing or renting motor vehicles to persons throughout the United States. Various dealerships are also engaged in the business of leasing or renting motor vehicles, including for hire passenger motor vehicles. Your letter states that when a customer leases a motor vehicle from a dealership, the dealership enters into a closed-end vehicle lease agreement with the customer for a specified term not less than twelve months. You state that at the time the customer signs the lease, the customer makes a payment to the dealership which includes: 1) a
down payment, including the sales tax thereon; 2) a payment for the first month of rent under the lease, including the sales tax thereon; and 3) a rental car surcharge imposed pursuant to Section 212.0606(1), F.S. The lease agreement provides that the lease will be assigned to the Assignee. Your letter states that as a practical matter, this assignment generally takes place on the same day as the actual lease signing. You state that the lease agreement also provides that the Administrator shall act as the administrator of the lease. In this capacity, the Administrator has the power to administer, enforce, and defend the lease, including the collection of the lease payments and the applicable sales tax on behalf of the Assignee. ISSUE Whether the dealerships or the Assignee and the Administrator are responsible for collecting and remitting: 1) Florida sales tax applicable to down payments made under the motor vehicle leases; 2) Florida sales tax applicable to the first month's lease payments; and 3) the rental car surcharges imposed pursuant to Section 212.0606(1), F.S. REQUESTED ADVISEMENT The taxpayer requests that the Department issue a TAA stating the automobile dealership is solely responsible for collecting and remitting: 1) Florida sales tax applicable to down payments made under the automobile leases; 2) Florida sales tax applicable to the first month s lease payments; and 3) the rental car surcharges imposed pursuant to Section 212.0606(1), F.S. TAXPAYER'S POSITION The Assignee and the Administrator state that the dealership is obligated to collect and remit sales tax with respect to the lease down payments and first month's lease payments as soon as it receives them from the purchaser. The Assignee and the Administrator cite s. 212.15(1), F.S., which states that "[t]he taxes imposed by this chapter shall... become state funds at the moment of collection..." The Assignee states that it acquires the lease almost immediately after it is entered into, but neither the Assignee nor the Administrator has any interest in the lease at the moment the payments are made to the dealership. The Assignee and the Administrator state that the dealership is obligated to collect and remit the rental car surcharge. The Assignee and the Administrator cite Rule 12A-16.002(1)(b), F.A.C., which states that "[e]ach person engaged in the business of leasing or renting for hire passenger motor vehicles is required to collect the rental car surcharge when the lease or rental payments are to be paid under the terms of the lease or rental agreement." The rental car surcharges are paid to the dealership at the same time the down payments and first month's lease payments are made to the dealership. The Assignee states that it acquires the lease almost immediately after it is entered into, but neither the Assignee nor the Administrator has any interest in the lease at the moment the payments are made to the dealership. The Assignee and the Administrator cite Technical Assistance Advisement [TAA] No. 96A-032 (Apr. 30, 1996), in which the Department concluded that a Florida automobile dealer that assigned motor vehicle leases to another company was liable for the rental car surcharge because the dealer received the surcharge from the customer prior to the time the other company assumed the lease.
APPLICABLE LAW Section 212.02(15)(a), F.S., provides, in part: (15) "Sale" means and includes: (a) Any transfer of title or possession, or both,... lease, or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property for a consideration. Section 212.05(2), F.S., provides: The tax shall be collected by the dealer, as defined herein, and remitted by the dealer to the state at the time and in the manner as hereinafter provided. Section 212.15(1), F.S., provides, in part: The taxes imposed by this chapter shall... become state funds at the moment of collection... Section 212.0606(1), F.S., provides: A surcharge of $2.00 per day or any part of a day is imposed upon the lease or rental of a motor vehicle licensed for hire and designed to carry less than nine passengers regardless of whether such motor vehicle is licensed in Florida. The surcharge applies to only the first 30 days of the term of any lease or rental. The surcharge is subject to all applicable taxes imposed by this chapter. Rule 12A-16.001, F.A.C., provides: For the purpose of administering the Rental Car Surcharge (referred to as the surcharge), all rules relating to Sales and Use Tax (Chapter 12A-1, Florida Administrative Code) shall apply to the surcharge, except in those situations where rules relating to the surcharge have been issued to clarify specific statutory provisions. Rule 12A-16.002, F.A.C., provides, in part: (1)(a) The lease or rental in Florida of a for hire passenger motor vehicle is subject to a surcharge of $2.00 per day or any part of a day, regardless whether the vehicle is licensed in Florida. (b) Each person engaged in the business of leasing or renting for hire passenger motor vehicles is required to collect the rental car surcharge when the lease or rental payments are to be paid under the terms of the lease or rental agreement. (2) For the purposes of this rule chapter, the following definitions will apply: * * *
(b) The term "for hire passenger motor vehicle" means any automobile designed to carry fewer than nine (9) passengers let or rented to another for consideration; offered for lease or rent as a means of transportation for compensation; advertised; or generally held out as being for lease or rent. The term "for hire passenger motor vehicle" does not include any motorcycle, moped, truck, truck trailer, travel trailer, camping trailer, recreational vehicle with living facilities, or van conversion. * * * DISCUSSION AND RESPONSE Section 212.02(15)(a), F.S., defines "sale" to include any transfer of title or possession, or both, lease or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property for a consideration. Section 212.05(2), F.S., states that the tax associated with any lease or rental shall be collected by the dealer and remitted to the state of Florida. Section 212.15(1), F.S., provides that the taxes imposed by Chapter 212, F.S., shall become state funds at the moment the dealer collects them from a purchaser. When a customer leases a motor vehicle from a dealership, the dealership enters into a closed-end vehicle lease agreement with the customer for a specified term not less than twelve months. According to your letter, at the time the customer signs the lease, the customer makes a payment to the dealership, which includes a down payment, the first month's rent, and the applicable sales tax. The dealership is obligated to collect and remit the Florida sales tax on the down payment and on the first month's rent at the time it receives those payments. These amounts become state funds "at the moment of collection," and the dealer is responsible for remitting the sales tax to the Department. In regards to the rental car surcharge, Rule 12A-16.002(1)(b), F.A.C., states that the surcharge is due and payable when the rental payment from the lessee or renter is due. Rule 12A-16.002(1)(b), F.A.C., specifically provides that the person engaged in the business of leasing for hire motor vehicles is required to collect the surcharge; Rule 12A- 16.002(2)(b), F.A.C., defines "for hire passenger motor vehicle" to include any automobile designed to carry fewer than nine passengers let or rented to another for consideration. When a dealership leases for hire motor vehicles and the first month s lease payments are due and payable to the dealership at the signing of the lease agreements, the rental car surcharge must be collected by the dealership at that time. The surcharge becomes Florida state funds "at the moment of collection," and the dealer is responsible for remitting the surcharge to the Department. CONCLUSION If a dealership accepts a down payment and payment for the first month's rent when a customer signs a motor vehicle lease, the dealership must collect and remit the applicable Florida sales tax on these payments to the Department. Additionally, the dealer must collect and remit the applicable rental car surcharge to the Department. 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 backup documents are public records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions of s. 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. If you have any further questions with regard to this matter and wish to discuss them, you may contact me directly at (850) 488-8565. Sincerely, Matt Crockett Attorney Technical Assistance & Dispute Resolution ID: 21544