The Florida Department of Revenue issued a Technical Assistance Advisement, No. 08A-006
, on March 5, 2008 discussing the tax treatment of cleaning nonresidential properties. The specific question was whether store lighting retrofits performed by a contractor in Florida stores are subject to sales tax.
There is always a question in FL (and certain other states) on real property services. In FL, sales tax is imposed on charges for all nonresidential cleaning services included in SIC Industry Group Number 734. You might have considered changing a light bulb to be taxable because a rule provides that lighting maintenance services (bulb replacement and cleaning) are an example of nonresidential cleaning services. Another rule provides the general rule of taxability of real property contracts and it states that contractors are the ultimate consumer of the materials and supplies used to perform real property contracts and must pay tax on their cost of those materials and supplies. As such, charges made by a contractor maintaining and washing existing lighting are taxable. Note the word “existing”. If you change lightbulbs in existing fixtures in FL, then that service is taxable. The replacement of lighting fixtures, however, referred to as “retrofitting,” constitutes a real property improvement and, as such, is not included within SIC Industry Group Number 734, nonresidential cleaning services.
So, changing a light bulb is taxable, but replacing a fixture and “retrofitting” the lighting is not. It’s like we always say, “Sales tax is not brain surgery — it’s worse.”