Truck Rental Business’ Payments to Dealers Not Subject to Florida Tax

A truck rental business’ commission payments to dealers who rented trucks and equipment to customers were found to be not subject to Florida sales tax because the taxpayer did not have use, access, or control over the dealer’s real property, the dealer had sole discretion as to where to locate the trucks and equipment, the trucks and equipment did not reside on a set amount of space, and the taxpayer did not have a right to enter the dealer’s locations to reclaim property. Further, although the commission payments are made up of a variety of factors (such as safety, maintenance, customer complaints, etc), the payments are essentially tied to the amount of the time the trucks and equipment are rented out by the dealer and not located on the dealer’s property; if the trucks and equipment do not leave the dealer’s location, the dealer will not receive a commission. Because of these factors, the taxpayer was found to not be leasing or being granted a license for the use of the dealer’s real property, and therefore its payments to the dealer are not subject to sales tax. (Technical Assistance Advisement, No. 10A-005, Florida Department of Revenue, February 10, 2010)

Posted on April 9, 2010