Florida Administrative Code › 12 - DEPARTMENT OF REVENUE › 12A - Sales and Use Tax › Chapter 12A-1 - SALES AND USE TAX › Section 12A-1.105 - Service Warranties

Current through Reg. 50, No. 138; July 16, 2024
(1)
(a) Every person who solicits, offers,
				provides, enters into, issues, or delivers any service warranty, or who
				receives, on behalf of another person, any consideration from a service
				warranty holder is exercising a taxable privilege and shall register as a
				dealer with the Department of Revenue before such person may engage in or
				conduct business in this state. See rule
				12A-1.060, F.A.C.
(b)
1. The
				term "service warranty" means any contract or agreement which indemnifies the
				holder of the contract or agreement for the cost of maintaining, repairing, or
				replacing tangible personal property, whether or not the contract provides for
				the furnishing of parts. The term "service warranty" includes motor vehicle
				warranties issued under part I of chapter 634, F.S., and service warranties
				issued under part III of chapter 634, F.S.
a.
				Example: A service contract covering an appliance, such as a refrigerator, is a
				service warranty.
b. Example: A
				service contract (motor vehicle service agreement) covering the repair of a
				component part of a motor vehicle is a service warranty.
c. Example: A warranty agreement which
				indemnifies the agreement holder for the cost of repair or replacement of a
				television is a service warranty.
d. Example: A maintenance contract covering
				the cost of labor only to repair or maintain computer hardware is a service
				warranty.
e. Example: A service
				agreement covering the cost of labor, and which provides for the furnishing of
				parts at an additional charge, to repair a washing machine is a service
				warranty.
2. The term
				"service warranty" does not include contracts or agreements to repair,
				maintain, or replace tangible personal property if such property when sold at
				retail in this state would not be subject to sales tax or if the parts and
				labor to repair tangible personal property qualify for an exemption under
				chapter 212, F.S.
a. Example: The sale of a
				wheelchair in Florida is not taxable. A service contract covering the cost of
				maintaining, repairing, or replacing a wheelchair is not a service
				warranty.
b. Example: The purchase
				of a hearing aid in Florida is not taxable. The purchase of a service agreement
				covering the cost of repairing or replacing a hearing aid is not a service
				warranty.
c. Example: A maintenance
				contract covering the cost of parts and labor that are exempt when used to
				repair industrial machinery and equipment, as provided in section
				212.08(7)(xx),
				F.S., is not considered a service warranty contract.
3. The term "service warranty" does not
				include contracts or agreements covering tangible personal property which
				becomes a part of real property.
a. Example:
				A central air conditioning system is considered to be part of real property. A
				service contract covering the cost of repairing a central air conditioning
				system is not a service warranty.
b. Example: An elevator or escalator is
				considered to be part of real property. A maintenance contract covering the
				cost of repair or maintenance of an elevator or an escalator is not a service
				warranty.
(c)
1. If a transaction involves both the
				issuance of a service warranty subject to tax and the issuance of a warranty,
				guaranty, extended warranty or extended guaranty, contract, agreement, or other
				written promise which is not subject to tax, the consideration shall be
				separately identified and stated with respect to the taxable and nontaxable
				portions of the transaction. If the consideration for such a transaction is not
				separately identified and stated, the entire transaction is taxable.
2. If a reasonable, good faith apportionment
				of the actual consideration for the taxable portion is not evident, that is, if
				only a nominal amount of the consideration is attached to the taxable portion,
				the Department shall have the power to reform the contract; such reformation by
				the Department shall be considered prima facie correct; and the burden to show
				the contrary shall rest upon the dealer. Sales tax shall apply to the
				transaction to the extent that the consideration is for a service warranty
				subject to tax.
3.
a. Example: A service contract covers the
				cost of repairing a central air conditioning system and a refrigerator. The
				cost of the contract covering the repair of the central air conditioning system
				and repair of the refrigerator are separately identified and stated on the
				service contract. The separately identified and stated amount of the contract
				for the cost of coverage for repair of the central air conditioning system is
				$500. The separately identified and stated amount of the contract for the cost
				of coverage for repair of the refrigerator is $100. The portion of the contract
				covering the refrigerator ($100) is taxable, while that portion covering the
				central air conditioning system ($500) is not subject to tax.
b. Example: A service contract covers the
				cost of repairing a central air conditioning system and a refrigerator. The
				costs of the contract covering the repair of the central air conditioning
				system and repair of the refrigerator are separately identified and stated on
				the service contract. The separately identified and stated amount of the
				contract for the cost of coverage for repair of the central air conditioning
				system is $599. The separately identified and stated amount of the contract for
				the cost of coverage for repair of the refrigerator is $1. Evidence provided to
				the Department fails to show the apportionment between the taxable and
				nontaxable portion of the contract was made on a good faith basis, and the
				Department determines $500 represents the fair amount of the contract which
				represents coverage for the repair of the central air conditioning system and
				$100 represents the fair amount of the contract which represents coverage for
				the repair of the refrigerator. The portion of the contract covering the
				refrigerator ($100) is taxable, while that portion covering the central air
				conditioning system ($500) is not subject to tax.
4. Example: A service contract covers the
				cost of repairing a central air conditioning system and a refrigerator. A
				single charge is made for the contract, and items covered under the contract
				are not separately stated. The entire charge for the contract is
				taxable.
(d) The partial
				exemption for the sale of new or used motor vehicles to a resident of another
				state authorized pursuant to section
				212.08(10),
				F.S., does not apply to the sale of service warranty
				contracts.