Okaloosa County BOCC — March 1, 2016 — Okaloosa County Sales Tax Warren Averett.pdf — reading text

tax on these payments. Additionally, Hudson News is charged an environmental fee for use of garbage dumpsters, and the Department deemed these payments as taxable rent. This is a taxable transaction not otherwise exempt under Fla. Stat. § 212.031(1)(a). This portion of the assessment also included the utility charges passed on by the County to the car rental companies as well as the charges by the County to the various taxi and limo companies for permits to operate at the airport. This is a taxable transaction not otherwise exempt under Fla. Stat. § 212.031(1)(a). In addition to the above, this portion of the assessment also included sales tax on commuter parking fees paid by airline employees directly to the County, as well as advertising space leased by the County to Interspace Advertising. This is a taxable transaction not otherwise exempt under Fla. Stat. § 212.031(1)(a). The Department also deemed fuel flowage fees paid by Fuel F/X as taxable rent. Based on conversations with the Department the assessment above did consider the fact that Fuel F/X is currently under audit for Florida sales and use tax, and the assessment does not include double-taxation. However, since we are not on the Power of Attorney for Fuel F/X, the Department could not give us specific detail regarding that audit. We are currently waiting on confirmation from Aero F/X to determine whether it remitted the tax due for the entire period of the County’s audit. As such, we recommend remitting the liability and corresponding interest related to this portion of the assessment in the combined amount of $82,234.16. Please review attached schedule for support related to this amount. A07 This portion of the assessment relates to the lease agreement between Bob Sikes Airport and the fixed base operator Aero F/X. More specifically, the Department deemed the fuel flowage fees paid by Aero F/X as taxable rent. Additionally, the Department also deemed the monthly fees paid by L3 Commercial and Crestview Technology to access airport property as additional rental considerations subject to sales tax. Given that these amounts are paid for purposes of either occupying the premises and the property atissue is not otherwise exempt under Fla. Stat. § 212.031(1)(a) they are likely taxable. Based on conversations with the Department the assessment above did consider the fact that Aero F/X is currently under audit for Florida sales and use tax, and the assessment does not include double-taxation. However, since we are not on the Power of Attorney for Aero F/X, the Department could not give us specific detail regarding that audit. We are currently waiting on confirmation from Aero F/X to determine whether it remitted the tax due for the entire period of the County’s audit. To the extent we can obtain confirmation from Aero F/X that they remitted this tax during their sales and use tax audit, as well as during the remaining period of the County’s audit, we recommend holding off payment until we can confirm tax was paid by Aero F/X for the County’s entire audit period. We should have that information prior to the NOPA level. A08 This portion of the assessment relates to several contracts between the Destin airport and its tenants. One issue relates to the back rent payments and other principal amounts assumed by Regal Air and Destin Jet. In addition to these costs flowage fees were also deemed taxable rent. Another aspect of this portion of the assessment ramp space leased by Regal Air for a flat fee plus a percentage of gross sales, a portion of which was subleased by Regal Air to Vertol Systems. The Department could not find evidence of sales tax being charged by Vertol to its tenants, and as such did not allow for an exemption from sales tax on the subleased space. Hangars were also leased by the County to tenants, and those tenants were required to pay insurance and administrative fees annually. These amounts were deemed rent by the Department. Given that the payments were for past-due rent, as well as for purposes of occupying the premises, we believe there is not a strong position to get this amount abated at the NOPA level. As such, we recommend remitting the liability and corresponding interest related to this portion of the assessment in the combined amount of $46,324.97. Please review attached schedule for support related to this amount. A09 This portion of the assessment relates to the contract between the Department of Corrections and Securus. The Department is taking the position that because Securus maintains its equipment at the facilities, there is essentially a lease of the real property subject to sales tax. As such, its payments to the County are deemed taxable rent. We argued that the contract between the parties is a nontaxable bailment as outlined above. The Department did not agree with that position at this level of the audit. We recommend protesting this at the NOPA level. We cannot guarantee that we will be successful in getting the assessment abated, but it is our opinion that the Department may be more inclined to give credence to our argument. Additionally, this issue could potentially be resolved going forward if Securus were to lease the tangible property to the County. In this case it is not a lease of real property where the County is responsible for collecting sales tax, but rather a lease of tangible personal property whereby Securus is the vendor, and the County is the lessee who is presumably exempt from Florida sales and use tax. The liability and corresponding interest related to this portion of the assessment is approximately $65,183.85. Please review attached schedule for support related to this amount. A10 This portion of the assessment relates to a refund due for overpayment of sales tax pre-paid phone cards in the approximate combined amount of $(4,911.30). o Tom Santomaggio, CPA, JD Warren Averett, LLC A01,A11 A02 A03 A09 Al10 A05 A06 AO07 A08 AO4 Due Date 2/13/2016 Payment Date 3/1/2016 Days Outstanding 17 Additional Interest Due $652.29 Okaloosa County, Florida Proposed Sales Tax Assessment by ltem For the period 8/1/2012 - 7/31/2015 Pier Associates (fishing pier/restaurant) Island Sands Beach Service Highway 98 (Wild Wiley's) Dept of Corrections (Securus) Dept of Corrections (overpayment) Subtotal Non Airport VPS-Airlines VPS Bob Sikes Destin Airport Subtotal Airport Total Republic Parking Interest previously paid Total amount previously remitted Additional Interest Daily Interest @ Tax Allocation $38.37 Total $ 3191331 $ 4,213.55 84.10 S 36,210.96 5,100.00 673.36 13.44 5,786.80 11,705.82 1,545.53 30.85 13,282.20 57,447.59 7,584.87 151.39 65,183.85 (4,328.41) (571.48) (11.41) (4,911.30) 101,838.31 13,445.82 268.38 115,552.51 24,843.83 3,280.16 65.47 28,189.46 72,474.30 9,568.86 190.99 82,234.16 7,533.75 994.69 19.85 8,548.29 40,826.95 5,390.43 107.59 46,324.97 145,678.83 19,234.14 383.91 165,296.88 $ 247,517.14 S 32,679.96 652.29 $ 280,849.39 $ 357,501.86 46,906.36 $ 404,408.22