(1)(a) Persons who provide any of the services enumerated in NAICS National Numbers 561611, 561612, 561613 and 561621 of the North American Industry Classification System, published 2007, except as provided in paragraph (b), are dealers in a taxable service and are required to charge sales tax on the total taxable sales price of the service.
    (b) The sale of private investigation services by a small private investigative agency to a client is exempt. The exemption does not apply during the first calendar year a small private investigative agency makes sales of private investigative services.
    1. “”Private investigation services”” has the same meaning as “”private investigation,”” as defined in s. 493.6101(17), F.S.
    2. “”Small private investigative agency”” means a private investigator licensed with the Department of Agriculture and Consumer Services under s. 493.6201, F.S., which:
    a. Employs three or fewer full-time or part-time employees, including those performing services pursuant to an employee leasing arrangement as defined in s. 468.520(4), F.S., in total; and
    b. During the prevous calendar year, performed private investigation services otherwise taxable in which the charges for the services performed were less than $150,000 for all its businesses related through common ownership.
    (2)(a) Detective, burglar protection, and other protection services are those services which are rendered to minimize or prevent loss or damage to life, limb, or property and are of a kind typically performed by security or alarm system companies, or are those investigative services which are rendered to obtain evidence or other information for legal, business, employment, or personal purposes of a kind typically performed by detective or investigative agencies. Illustrative examples of taxable services are:
    1. Armored car service;
    2. Bodyguard (personal protection) services;
    3. Burglar or fire alarm or other security system devices monitoring and maintenance;
    a. The installation of alarm or security systems that remain tangible personal property is governed by the provisions of Fl. Admin. Code R. 12A-1.016
    b. The installation of alarm or security systems that become a part of real property is governed by the provisions of Fl. Admin. Code R. 12A-1.051
    c. The monitoring or maintenance of alarm or security systems is a taxable service whether such systems are considered to be tangible personal property or a part of real property. The term maintenance includes any inspection of an alarm or security system to confirm its proper working order. The term maintenance does not include the expansion or upgrade of an existing system, but it does include the replacement of defective components.
    4. Detective agency services;
    5. Fingerprint service;
    6. Guard dogs, detection dogs, and other dogs for protection or investigative services (not including training), with or without a handler;
    7. Guard, patrol, and parking or other facility security services;
    8. Investigation services (except credit);
    9. Lie detector or polygraph services;
    10. Missing person tracing services;
    11. Passenger screening services; and,
    12. Skip tracing services.
    (b) The services in paragraph (a) above are taxable for all persons, businesses, residences, or nonresidential properties.
    (c) The following services, when performed by detectives, private investigators, or others are not subject to tax when freestanding, or when separately stated on an invoice given to a purchaser which includes taxable services:
    1. Credit reporting services.
    2. Any report of public information or compiled social, business, or medical information, where the information has not been independently verified or confirmed by the investigator, by such methods as surveillance, interviews, or physical contact.
    3. Insurance services as classified under NAICS National Number 524298, such as insurance investigation services, insurance loss prevention services, or insurance reporting services. The name of the insurance carrier must be included in the billing for the investigative services.
    4. Process serving services.
    5. Courthouse records retrieval.
    6. Repossession services.
    (d) Security Services Provided to Housing Facilities.
    1. Security services, such as vehicle or foot patrols; gate, lobby, or entrance guard service; or personnel which may be dispatched from any other site upon request, are taxable. The following businesses or persons who charge for these services must also charge, collect, and remit tax on those services.
    a. Developers, owners, or lessors of residential developments who charge property owners or residents of such developments.
    b. Homeowner’s, condominium, cooperative, or community associations who charge their members.
    c. Operators of apartments, roominghouses, hotels, motels, and mobile home parks who charge the residents or guests of such facilities.
    2. A charge for the transactions enumerated in subparagraph 1. is considered to be made when:
    a. A charge for security services is expressly noted on an invoice given to the purchaser; or
    b. A charge is made for a package of services which, by agreement, includes security services. See Fl. Admin. Code R. 12A-1.0161(6)(a)
    (e) The services in this rule are not taxable when provided by employees to their employers. See subsection 12A-1.0161(3), F.A.C.
    (f) The services which are subject to tax in this rule are taxable when performed within or outside this state and used within this state by the purchaser or when the purchaser’s primary benefit of the services is within this state. The services which are subject to tax in this rule are exempt when performed within this state but used outside this state by the purchaser or when the purchaser’s primary benefit of the services is outside this state. The seller must maintain a log pursuant to Fl. Admin. Code R. 12A-1.0161(2)(c), documenting any transaction where services are performed in this state but used by a purchaser outside this state.
    1. Example: Company E is located in Georgia and Florida. Company E suspects that its Georgia warehouse manager is stealing merchandise from the company and hires a Florida detective agency to investigate. Irrespective of where the investigative services are performed, since the services do not directly relate to real or tangible personal property located in Florida, nor do they directly relate to the Florida activities of Company E, it is presumed that the primary benefit or use of the detective services is enjoyed in Georgia. Therefore, the investigative services are not taxable.
    2. Example: Company N is a manufacturer located only in Florida. Company N has suffered losses of tangible personal property that it consigned to a location in Illinois. Company N hires a local Illinois detective agency to investigate. All field work is performed in Illinois and a report is directly submitted to Company N in Florida. Although the services were performed outside of Florida, the detective services directly relate to tangible personal property that is still owned by a Florida company and directly related to the Florida company’s activities. Therefore, the primary benefit or use of the services is in Florida, and the services are subject to tax. If the Illinois detective agency is not registered with the State of Florida for sales and use tax purposes, it cannot charge Florida sales tax to Company N, thereby requiring Company N to report and remit use tax on the cost of the investigative services to the State of Florida.
    3. Example: A California art gallery has loaned an important work of art to a Florida art gallery. Security services must be hired to protect this work of art. If the California art gallery is invoiced for the security services, it will be presumed that the primary benefit of the services is to protect the California art gallery’s tangible personal property. Since the services are used by a purchaser who is located outside this state, the security services will not be taxable. If the Florida art gallery is invoiced for the security services, it will be presumed that the primary benefit of the services is to protect the activities of the Florida art gallery, and the charges will be subject to tax.
    (3)(a) If a transaction involves both the sale or use of a service which is taxable and the sale or use of a service which is not taxable, the charges for the taxable portion of the transaction must be separately stated from the charges for the nontaxable portion or the entire transaction will be presumed taxable.
    1. Example: An armored car company makes daily pick-ups of currency and coins from a discount store for transport to a local bank. For an increased single monthly fee, the armored car company will count and wrap the currency and coins prior to transporting the cash to the bank. Since the currency and coin wrapping service is included in the taxable armored car service, the entire charge made by the armored car company to the discount store is subject to tax.
    2. Example: Company A is a defense industry contractor. Company A hires an investigative firm to perform a full background check, including psychological and drug testing, on employment applicants. The investigative firm engages the services of a psychologist and a medical lab to perform the necessary testing procedures. The professional services of the psychologist and the medical lab do not fall within the taxable services enumerated in subsection (1). However, the charge that the investigative firm makes to Company A for the psychological and drug testing must be separately stated or the entire transaction will be subject to tax.
    3. Example: A security company has a contract to provide monthly security services for Company C’s physical facility. Company C has requested the security company to provide personal security classes to Company C’s employees. The personal security classes are separate from and not included in the security services for the physical facility. The personal security instruction classes will not be subject to tax, provided the security company separately states or itemizes the instruction charges on the monthly service billing to Company C.
    (b) Investigative services provided to private attorneys are not exempt, unless such services are those which are enumerated in paragraph (2)(c) above.
    (c) Investigative or security services provided directly to a governmental entity that is exempt from sales and use taxes under Florida Statutes § 212.08(6), are exempt if payment is made directly by the governmental entity. Such services are not exempt when provided to a contractor for a governmental entity.
    (d) There can be no deduction from the taxable sales price of a service for expenses incurred in activities necessary for the performance of the service or for any taxes paid on those expenses.
    1. Example: A security company provides security to a client for $125,000 a year. That contract incurs $85,500 in direct wages for several security guards. The security service pays $6,541 in Social Security (FICA) taxes on the wages paid to the security guards. Neither the $85,500 in wages nor the $6,541 in FICA tax can be deducted from the $125,000 charge for this taxable service when computing the sales tax.
    2. Example: A private investigator, in performing a taxable service for a client, stays in a hotel room, for which he pays $100 plus $6 tax. He bills the client $500 for his service, plus reimbursement of the $106 expenses incurred in performing the service. The tax on the investigator’s service will be six percent of the $606 total charged, or $36.36.
    (e)1. A deduction is not allowed from the taxable sales price of a service for the service provider’s overhead or administrative costs incurred to support the services provided.
    2. Example: A security company provides security to a client under a contract that provides for thirty percent of the total charge to be for services incurred in support of providing security, but not in the actual provision of security, such as administrative, personnel, training, and other support activities. In computing the tax on the service there can be no deduction of such expenses from the total charge for the service.
    (f) In the event of an audit by the Department of Revenue, pursuant to Florida Statutes § 212.13, a service provider will not be required to divulge any information that it is prohibited from divulging under Florida Statutes § 493.6119
    1. Example: A detective agency performs a taxable service for a client and it discovers certain information. If the agency is audited, the agency is required to provide access to its records indicating that it provided the service and the amount charged for the service, but the agency cannot be required to provide access to records divulging any information it is prohibited from divulging under Florida Statutes § 493.6119
    2. Example: During an audit of a detective agency, a Department of Revenue auditor asks for records on transactions for the audit period. A number of pages of the agency’s records contain both information pertinent to the taxability of services and information that cannot be divulged without violating Florida Statutes § 493.6119 The agency is required to provide the auditor with photocopies of those pages on which the confidential information has been blocked out.
    (4) A shopping mall providing security services for its tenants is required to charge and collect tax on the security service.
    (5)(a)1. Any law enforcement officer, as defined in Florida Statutes § 943.10, who is performing approved duties as determined by his law enforcement agency, in his capacity as a law enforcement officer subject to the direct and immediate command of his law enforcement officer subject to the direct and immediate command of his law enforcement agency, and in the uniform of his law enforcement agency, is performing law enforcement and public safety services and is not performing detective, burglar protection, or other protective services, if the law enforcement officer is performing his approved duties in a geographical area in which the law enforcement officer has arrest jurisdiction. Such law enforcement and public safety services are not subject to tax irrespective of whether the duty is characterized as “”extra duty,”” “”off-duty,”” or “”secondary employment,”” and irrespective of whether the officer is paid directly or through his agency by an outside source. The term “”law enforcement officer”” includes full-time or part-time law enforcement officers, and any auxiliary law enforcement officer, when such auxiliary law enforcement officer is working under the direct supervision of a full-time or part-time law enforcement officer.
    2. Example: A deputy sheriff is a full-time employee of county “”A””. During his off-duty hours, he is employed on a contract basis as a security guard by a department store in county “”B””. The deputy sheriff is not an employee of the department store. Since the sheriff’s department in county “”A”” does not have law enforcement jurisdiction in county “”B””, the charge the deputy makes to the department store for providing security guard service is subject to tax.
    (b)1. The consideration paid solely for directing the control of vehicular traffic not associated with protection services provided to particular persons or properties is not taxable. However, the consideration paid for protection services provided to particular persons or properties, which may include some traffic control, is fully taxable.
    2. Example: A major celebrity will be appearing at the grand opening of a department store. The department store engages a security company to provide security officers for the protection of the celebrity. Since the celebrity will be appearing outside the main entrance to the department store, some of the security officers will be used to direct the extra anticipated vehicle traffic in the parking lot in front of the department store’s main entrance. The total charge made by the security company to the department store for the protection services is taxable.
    3. Example: A shopping mall engages a security company to provide security officers solely to assist in directing an anticipated heavy amount of vehicle traffic during the holiday shopping season, while the mall’s own security force provides protection to the stores against shoplifters. The charge that the security company makes to the shopping mall is not subject to tax.
    (6) Detective, burglar protection, and other protection service providers are considered the ultimate users or consumers of the tangible personal property sold to them and used in connection with their service and are required to pay the tax imposed upon such sales of tangible personal property to their dealers.
Rulemaking Authority Florida Statutes § 212.18(2), 213.06(1) FS. Law Implemented 212.05(1)(b), (i), 212.06(1)(a), (2)(k), 212.08(7)(uuu), 212.085 FS. History-New 5-13-93, Amended 10-17-94, 3-20-96, 7-29-98, 1-12-11, 1-1-24.