Days before you even thought about taking down your Halloween decor, the Florida Department of Revenue was already thinking of ways to tax your Christmas decorations. 

According to the Florida Department of Revenue’s TIP 24A01-14, the sale, rental, installation, removal, storage, and “associated charges for design” of holiday decorations are subject to sales and use tax. Since when are design fees subject to sales tax? 

When it comes to sales tax on services, Florida is not known for being aggressive. If anything, our small list of Florida services subject to sales tax is so narrow that it is easy to forget. However, as with many other tricky areas of Florida’s tax laws, the taxability of services may not be as simple as it seems. While only a few services are specifically subject to tax, many services become taxable by being sold as part of a mixed transaction. 

Pure labor is not one of the taxed services under 212.05(1)(i), Fla. Stat. Design fees are also not included in the statute. However, according to the Department of Revenue’s latest “TIP” or Taxpayer Information Publication, both of these nontaxable services become taxable when sold in conjunction with the rental of holiday decor and lighting. It is easy to imagine on a large project that the cost of design and labor could equal or exceed the cost of renting holiday decor and lights, which are relatively inexpensive items. 

The Department’s TIP identifies two taxable scenarios as examples. The first is that a taxpayer hires a designer to assist with the design and purchase of home holiday decor, which the designer will subsequently have installed, removed, and stored on behalf of the taxpayer. In this scenario, the Department of Revenue takes the position that the entire sale is taxable. 

In the second example, the Department describes a similar scenario in a commercial setting. In this situation, a taxpayer hires a company to decorate the office for the holiday. At the end of the holiday (and rental period), the company removes all decor and lighting. According to the Florida Department of Revenue, this sale is taxable in its entirety as well.

On the bright side, TIP 24A01-14 does clarify that charges only for the install and removal of Christmas and other holiday lights and decor would not be taxable. For example, if you are concerned that your favorite lawyer, who is not handy around the house and a bit clumsy on a ladder, could end up in the hospital trying to hang Christmas lights, you may hire someone more competent to install those lights for you. At the end of the holiday season, this handyman or woman can return, remove the lights, and wind them up into nice little loops for you for a price you will happily pay to protect the spine of a loved one (or yourself). 

Like with all of Florida sales tax rules, however, there is a trick. The installer and remover of holiday lights and decor can provide no tangible personal property as part of their service, including the most minor of items typically required for installation. This includes nails, extension cords, lighting clips, and screws. If you add those small items in, the entire transaction becomes taxable.

The bottom line is that sales and use tax is due on the installation and design of holiday decor and lights if there is any tangible personal property sold in conjunction with those services. Florida is NOT a “true object” state like so many others across the country. Instead, we are a “one drop of oil” state, in which even a nail or screw can “taint” the entire transaction, making it taxable. 

While TIP 24A01-14 applies to holiday lights and decor, it is important to remember that the concepts within this TIP apply to other businesses. In recent years, the Florida Department of Revenue has been targeting a variety of seemingly nontaxable services, in particular interior designers, to seek out and find that screw or nail that will taint a much larger transaction, putting it within the grasp of the Florida Department of Revenue and its sales and use tax rules. In fact, interior design services have been the focus of so much attention at the Department of Revenue that they were addressed in the November/December 2024 Florida Bar Journal. The article, “Taxed by Design? Florida’s Tax on Interior Design Contracts and What To Do About It,” provides an overview of these types of audits and the options available to Florida designers subject to a sales tax audit. Florida may not have the statutes to support the imposition of sales tax on design services, and in particular design and labor services relating to holiday decorations, but that has not stopped them from trying.