OPN 98-0015 Sep 29, 1998 Honorable Ernie Mastroianni Duval County Property Appraiser 231 East Forsyth Street Suite 270 Jacksonville, Florida 32202 Re: Tangible Personal Property; Equipment on Trucks; Designation of Shredding Machines for Property Tax Purposes Sections 102.011 and 196.001, Florida Statutes Dear Mr. Mastroianni: This is in response to your inquiry regarding the taxable status of a shredding machine. You inquire to what extent, if any, a commercial truck with a shredder may be taxable as tangible personal property. In brief, it appears that the truck with shredder/compactor machine is taxable. FACTS The shredding service company contracts with companies to go to the companies' premises and shred paper in a shred machine which is bolted into the back of the truck. I have obtained brochures pertaining to a local shredding company and photographs of the interior of the bed of the truck where the shredding is accomplished. The Tangible Personal Property Section staff of the Property Tax Administration Program and I met with shredding company staff to observe the truck and discuss the purchase and functions of the truck and the equipment bolted into the back of the truck. The equipment bolted into the back of the truck is a combination shredder compactor machine. The machine is bolted to the floor and to a wall that was installed about 8 feet directly behind the cab of the truck. As the shredder shreds the paper, the shredded pieces of paper are automatically deposited into the
compactor portion of the machine. Once the shredded paper is compacted, it is immediately deposited in the rear portion of the truck through the wall to which the machine is bolted. The truck that we observed bears a license tag number U60 95B "restricted". I am advised by Gail Christie Jones of the Department of Highway Safety and Motor Vehicles that this type license tag indicates that the "vehicle" is classified as a tool (class 94) and is not a "motor vehicle" license. The truck we observed is a Ford diesel truck purchased from Industrial Shredding Systems. "Industrial" purchases the trucks, installs the shred machines, and sells the entire units to end users. ANALYSIS This truck carried a Class 94 license tag which does not represent a "motor vehicle" license tax which is sold by the weight of the vehicle and, thus, would not include the weight of the equipment. In this instance, the truck with the shredder/compactor unit installed is not taxed by weight under the license tax as a "motor vehicle". The law applicable to general property provides: The property appraiser shall assess all property located within the county, except inventory, whether such property is taxable, wholly or partially exempt, or subject to classification reflecting a value less than its just value at its present highest and best use. Please refer to section 192.011, Florida Statutes. Similarly, another applicable statute provides: Unless expressly exempted from taxation, the following property shall be subject to taxation in the manner provided by law: (1) All real and personal property in this state and all personal property belonging to persons residing in this state.
Please refer to section 196.001, Florida Statutes. The Department's tangible personal property tax guidelines further provide: Licensed motor vehicles and vessels used to transport persons or property over roads or waterways, including items appropriate and necessary, to perform the transportation function for which the vehicle or vessel is designed or equipped. Motor vehicles and vessels employed primarily as a "work platform" for equipment and in certain other uses are not exempt. (Emphasis supplied.) Please refer to the Tangible Personal Property Appraisal Guidelines, Exemptions and Exclusions, page 30, number 13. Motor vehicles are "...subject to a license tax for their operations in the amounts and for the purposes prescribed by law, but shall not be subject to ad valorem taxes." See Florida Constitution, Article VII, Section 1(b). Exemptions to the taxation of personal property are narrowly construed against the party claiming the exemption. You may wish to refer to Volusia County v. Daytona Beach Racing & Recreational Facilities Dist. 341 So.2d 498 (Fla. 1976). Case law provides several examples where similar vehicles were not granted a complete exemption from property tax. In one such case, the owner contended a concrete pump truck is a motor vehicle since it transports persons or property on the roads of this state. See Warren, Jones & Warren v. PAAB of Metropolitan Dade County, 532 So.2d 86 (Fla. 3d DCA 1988). The court held that the owner was not entitled to have the concrete pumper portion of the unit exempted from taxation. The partial assessment approach utilized by the property appraiser was approved, and the truck was found to be partially exempt and partially taxable. This case apparently involved a commercial "motor vehicle" license sold on the basis of weight. The court indicated part of the purpose and use of the unit was to transport persons and property on the roads. Also, the court noted the property appraiser had found no difficulty existed in separating the chassis portion from the taxable concrete pumper portion. Each of these items had been built by different companies and separately listed on the invoice.
In another similar case it was determined that cranes do not operate on the public highways as motor vehicles for the purpose of transporting property or persons. See Crane Rental of Orlando v. Hausman, 518 So.2d 395 (Fla. 5th DCA 1987). Rather, the court held that they are mobile construction equipment that use the public highways for the purpose of locating from one construction site to another and are therefore personal property subject to ad valorem taxation. Id. The court further indicated that the Department of Highway Safety and Motor Vehicles classification, tax class 94, is provided for tractor cranes, power shovels, well-drillers and other such vehicles constructed and designed as a tool and not hauling units on the roads and highways incidental to the purpose for which designed. CONCLUSION As you know, the designation of an item for tax purposes is a mixed question of law and fact involving a determination which must be initially made by the property appraiser. The above cited authority and discussion should enable you to make a determination as to whether the truck with the shredding unit is subject to tangible personal property tax or whether it is exempt as a commercially licensed motor vehicle. Case law supports the property taxation of vehicles classified by the Department of Highway Safety and Motor Vehicles as a "tool" under tax class 94. Case law also supports the property tax exemption of such vehicles to the extent that they transport persons or property on the roads of this state. The factors in this case are that the unit is apparently one item which was assembled by one company and sold as one integrated unit. There is no indication it was separately invoiced. It does not appear it would be readily dissembled or separated. This one integrated unit has, at least for one purpose, been designated as a "tool" and not a "motor vehicle." The presence of these factors would appear to make it difficult for you as property appraiser to ascertain that this is a vehicle for transportation of persons or property in whole or in part. Therefore, under the circumstances you describe, the truck with shredding unit is apparently subject to ad valorem taxation as it is not a "motor vehicle" taxed under the license tax.
I trust this response provides sufficient guidance with regard to the tangible personal property designation for vehicle/tool type units. However, should you care to discuss this matter further, please feel free to contact me at (850) 414-6104. Sincerely, Jane Nobles Tax Law Specialist Control #34888