QUESTION: 2- Are new owners of [RV Resort] required to file a new Declaration of Taxable Status form? ANSWER:

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1 Executive Director Marshall Stranburg QUESTION: ANSWER: 1- Are the rental charges for accommodations at [RV Resort] after a change in ownership subject to sales tax, provided more than half of the total rental units are occupied by tenants who have continuous residence in excess of three (3) months? 2- Are new owners of [RV Resort] required to file a new Declaration of Taxable Status form? 1. Accommodations at [RV Resort] are not subject to sales tax provided the facility qualified for the exemption both prior to and following the change in ownership. Since it is the facility and not the owner that determines whether an exemption is available, a change in ownership alone will not affect the taxable status of [RV Resort] park. 2. New owners are not required to file a new Declaration of Taxable Status form following the change in ownership, provided the prior owner filed such declaration and that the facility continues to qualify for the exemption. December 11, 2013 Re: Technical Assistance Advisement TAA 13A-027 Sales and Use Tax Transient Rental Accommodations Sections: and , Florida Statutes (F.S.) Rule: 12A-1.061(11), Florida Administrative Code (F.A.C.) Petitioner: XXX Dear XXX: This letter is a response to your petition dated XXX, for the Department's issuance of a Technical Assistance Advisement ("TAA") concerning the above referenced parties and matter. Your petition has been carefully examined and the Department finds it to be in compliance with the requisite criteria set forth in Chapter 12-11, F.A.C. This response to your request constitutes a TAA and is issued to you under the authority of s , F.S. Child Support Enforcement Ann Coffin, Director General Tax Administration Maria Johnson, Director Property Tax Oversight James McAdams, Director Information Services Damu Kuttikrishnan, Director Tallahassee, Florida

2 Page 2 FACTS Your request provided the following: Background [Corporation] is a Florida corporation that owns and operates an RV Park in Florida called [RV Resort]. [Corporation] currently owns both the land and the RV units on the land and directly employs the personnel providing services at [RV Resort]. [Corporation] has been acquired by [New Corporation], which intends to undertake certain restructuring steps with respect to [Corporation]. For this purpose, [Corporation] will create two wholly owned legal entities, [Taxpayer #1] and [Taxpayer #2] [hereinafter collectively Taxpayers]. [Taxpayer #1] is a single-member LLC disregarded for federal income tax purposes. [Taxpayer #2] is a single-member LLC that will check the box to be treated as a corporation for federal income tax purposes. [Corporation] will subsequently transfer operations of [RV Resort] to the Taxpayers as follows: 1. [Corporation] will transfer the title to [RV Resort] RV units to [Taxpayer #2]] 2. [Corporation] will transfer the title to [RV Resort] land to [Taxpayer #1]. [Corporation] will also transfer all of the [RV Resort] employees to [XXXXX] Management, LLC, a wholly-owned subsidiary of [New Corporation] Resorts. Subsequent to the transfers, [Corporation] will not conduct any activities related to [RV Resort]. Prospectively, [RV Resort] operations will be conducted collectively by the Taxpayers under the [RV Resort] name. The Taxpayers will charge customers for RV Park accommodations ( Rental Charges ) on one invoice pursuant to a combined lease agreement. The Rental Charges at [RV Resort] will primarily consist of charges for transient accommodations and specifically relate to the lease of [RV Resort] land owned by [Taxpayer #1] and the lease of [RV Resort] units owned by [Taxpayer # 2]. The Taxpayers will obtain respective Florida sales tax identification numbers in connection with [RV Resort] operations. The employees of [XXXXX] Management LLC (previously employees of [Corporation]) will provide services at [RV Resort] for which [XXXXX] Management LLC will charge a management fee to the Taxpayers. Rental Charges invoiced by [RV Resort] have historically qualified for a sales tax exemption pursuant to Florida Statute (7)(c), because [Corporation] filed the Form DR-72-2 ( Declaration of Taxable Status ) and certified that more than half of the total rental units available at [RV Resort] are occupied by tenants who have a continuous residence in excess of three months (a 50 percent requirement ). Currently, based on the annual redeterminations of the taxable

3 Page 3 status of [RV Resort], the facility continues to meet the 50 percent requirement. It is also anticipated that the exemption requirements will be met on an annual basis at [RV Resort] under the ownership of the Taxpayers. REQUESTED ADVISEMENT Taxpayers request guidance that Rental Charges for the accommodations at [RV Resort] invoiced by the Taxpayers should not be subject to sales tax, provided more than half of the total rental units available at [RV Resort] are occupied by tenants who have a continuous residence in excess of three months as provided in Florida Statute (7)(c). In addition, the Taxpayers request guidance that the Taxpayers, as new owners of [RV Resort], should not be required to file new Declaration of Taxable Status forms declaring [RV Resort] as an exempt facility, and that the Taxpayers should not be required to file new Declaration of Taxable Status forms. Section (10)(f), F.S., states: APPLICABLE LAW A trailer camp, mobile home park, or recreational vehicle park is a place where space is offered, with or without service facilities, by any persons or municipality to the public for the parking and accommodation of two or more automobile trailers, mobile homes, or recreational vehicles which are used for lodging, for either a direct money consideration or an indirect benefit to the lessor or owner in connection with a related business, such space being hereby defined as living quarters, and the rental price thereof shall include all service charges paid to the lessor. Section (1)(a), F.S., states in part: It is hereby 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 to use any living quarters or sleeping or housekeeping accommodations in, from, or a part of, or in connection with any.. tourist or trailer camp... Section 2l2.03(7)(c), F.S., states: The rental of facilities, as defined in s (10)(f), which are intended primarily for rental as a principal or permanent place of residence is exempt from the tax imposed by this chapter. The rental of such facilities that primarily serve transient guests is not exempt by this subsection. In the application of this law, or in making any determination against the exemption, the department shall consider the facility as primarily serving transient guests unless the facility owner makes a verified declaration on a form prescribed by the department that more than half of the total rental units available are occupied by tenants who have a continuous residence in excess of 3 months. The owner of a facility declared to be exempt by this paragraph must make a determination of the

4 Page 4 taxable status of the facility at the end of the owner s accounting year using any consecutive 3-month period at least one month of which is in the accounting year. The owner must use a selected consecutive 3-month period during each annual redetermination. In the event that an exempt facility no longer qualifies for exemption by this paragraph, the owner must notify the department on a form prescribed by the department by the 20th day of the first month of the owner s next succeeding accounting year that the facility no longer qualifies for such exemption. The tax levied by this section shall apply to the rental of facilities that no longer qualify for exemption under this paragraph beginning the first day of the owner s next succeeding accounting year. The provisions of this paragraph do not apply to mobile home lots regulated under chapter 723. Rule l2a-l.06l(11)(d), F.A.C., provides: (d)1. Rental charges for transient accommodations at new trailer camps, new mobile home parks (except mobile home lots regulated under Chapter 723, F.S.), and new recreational vehicle parks are subject to tax until more than 50 percent of the total rental units available are occupied by tenants who have continuously resided there for more than three months. When more than 50 percent of the total rental units available are occupied by tenants who have continuously resided there for more than three months, the owner or owner s representative of the camp or park is required to declare to the Department that the rental of transient accommodations at the new camp or park is no longer subject to tax. All rental charges for transient accommodations at a camp or park are presumed taxable until the owner or owner s representative has declared to the Department that the charges for transient accommodations at the park qualify for exemption. 2. Once the owner or owner s representative has declared to the Department that the rental charges for transient accommodations at the camp or park are exempt, the owner or owner s representative is required to make a redetermination of the taxable status of the camp or park at the end of the owner s accounting year. To make this determination, the owner must use a consecutive three month period with at least one month in the accounting year. In the event that charges for transient accommodations at an exempt camp or park no longer qualify for exemption, the owner or owner s representative must notify the Department no later than the 20th day of the first month of the owner s next succeeding accounting year that the rental charges for transient accommodations at the camp or park have become taxable. The rental charges for transient accommodations at that camp or park will become taxable on the first day of the owner s next succeeding accounting year. 3. The Department prescribes Form DR-72-2, Declaration of Taxable Status-Trailer Camps, Mobile Home Parks, and Recreational Vehicle Parks, incorporated by reference in Rule 12A-1.097, F.A.C., as the form to be used for the purposes of declaring the rental charges for transient accommodations at a trailer camp, mobile home park (except mobile home lots regulated under Chapter 723, F.S.), or recreational vehicle park exempt and notifying the Department at the time of annual redetermination that the rental charges for

5 Page 5 transient accommodations at an exempt camp or park have become taxable. This form is not required to be filed with the Department when the owner or owner s representative of an exempt camp or park determines at the time of annual review that the rental charges for transient accommodations continue to qualify for exemption. RESPONSE The rental of transient accommodations is generally subject to Florida sales tax, unless the rental qualifies for an exemption. The Florida Statutes provide an exemption for trailer camps, mobile home parks (except mobile home lots regulated under Chapter 723, F.S.), and recreational vehicle parks when certain criteria are met. To receive the exemption from tax, the park must rent more than 50 percent of its units to tenants who have continuously resided there more than three months. The owner of the park must declare to the Department that the 50 percent requirement has been met to receive the exemption. This can be done by submitting Form DR to the Department. The Department will presume all rentals in the park to be taxable unless the declaration by the owner is made. Since it is the facility and not the owner that determines whether an exemption is available, a change in ownership alone will not affect the taxable status of the park. If the prior owner had filed a Declaration of Taxable Status affirming that the facility qualified for exemption, the new owner is not required to file a separate declaration following the change in ownership, so long as the facility continues to qualify for exemption. CONCLUSION In summary, the answers to your specific requests are as follows: 1. Accommodations at [RV Resort] invoiced by the Taxpayers are not subject to sales tax provided the facility qualified for exemption both prior to and following the change in ownership. 2. Since it is the facility and not the owner that determines whether an exemption is available, a change in ownership alone will not affect the taxable status of the RV Park. 3. Taxpayers are not required to file a new Declaration of Taxable Status following the change in ownership, provided the prior owner had filed such declaration and that the facility continues to qualify for the exemption. Please be aware that reliance on the prior owner s declaration as to the taxable status of the facility will not protect the new owner from liability for tax, interest, or penalty, if it is determined that the facility did not qualify for exemption during the period covered by the prior owner s declaration. In addition, even though the Taxpayer s are not required to file a new Declaration of Taxable Status, please notify the Department of the change in ownership, when it is completed, for record purposes. This response constitutes a Technical Assistance Advisement under Section , 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 , F.S. Our response is predicated on those facts and the

6 Page 6 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 , 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) Sincerely, Horace Royals Tax Law Specialist Technical Assistance & Dispute Resolution Record ID: