STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA GIFT FRUIT DELIVERY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 76-029

)

DEPARTMENT OF REVENUE, )

STATE OF FLORIDA, )

)

Respondent. )

)

RECOMMENDED ORDER

Upon stipulation of the parties this cause is determined upon depositions of various persons taken at the request of the Petitioner and Respondent, request for admissions and responses thereto, and upon memorandum of law submitted by the parties.

APPEARANCES

For Petitioner: Clark Stillwell, Esquire

Tucker, Hicks, Blanchard & Brannen, P.A. Post Office Box 24

Ocala, Florida 32670

For Respondent: E. Wilson Crump, II, Esquire

Assistant Attorney General Department of Legal Affairs Tax Division, Northwood Mall Tallahassee, Florida 32303

ISSUE

Whether the Petitioner furnishes "transportation services" within the meaning of Section 214.72(2), Florida Statutes, and is entitled to an apportionment of its corporate income revenues pursuant thereto.

INTRODUCTION

On or about October 15, 1975, the Petitioner, FLORIDA GIFT FRUIT DELIVERY, INC., appeared at an informal conference before the Respondent, Department of Revenue, concerning the application of Florida Statute 214.72(2) apportionment provisions to the operation of FLORIDA GIFT FRUIT DELIVERY'S economic enterprises made on behalf of G & S PACKING COMPANY of Weirsdale, Florida. In response to the Petitioner's request for apportionment pursuant to Florida Statute 214.72(2), the Department of Revenue on November 17, 1975, issued a Letter of Opinion to the Petitioner's attorneys denying the Respondent's request.

A motion was made for an administrative hearing under Chapter 120, Florida Statutes, which was granted and a date, time and place established. Motions for continuance were granted and thereafter the parties agreed to submit depositions, requests for admissions and responses thereto and memorandum of law without personal appearance before the Hearing Officer.

Petitioner contends: that it furnishes "transportation services" and is entitled to use a mileage apportionment in computing its tax base.

Respondent contends: that the business of Petitioner does not fall within the contemplation of the statute; that the utilization of the mileage formula would not fairly represent the extent of the taxpayer's base attributable to the State of Florida.

FINDINGS OF FACT

1. Petitioner, FLORIDA GIFT FRUIT DELIVERY, INC., is a Florida corporation with its principal business offices located in Weirsdale, Florida.

   
   

2. The Respondent is the DEPARTMENT OF REVENUE, an agency of the State of Florida with offices located at Department of Revenue, Division of Corporate, Estate and Intangible Tax, Northwood Mall, Tallahassee, Florida 32303.

   
   

3. This matter has been submitted on the depositions of various persons taken at the request of the Petitioner and the Respondent. Before the Hearing Officer there are certain requests for admissions and responses thereto and memorandum of law submitted by both parties. The parties have agreed to submit this cause to the Hearing Officer on the basis of this discovery plus the memorandum of law without actual appearance before the Hearing Officer. This is a proper procedure agreed to by all parties under the provisions of Chapter 120, Florida Statutes.

   
   

4. Petitioner, FLORIDA GIFT FRUIT DELIVERY, INC., operates out of Weirsdale, Florida, serving G & S PACKING COMPANY, a wholesale gift fruit shipper, by contracting for trucks and drivers, inspecting and labeling baskets and packages of fruit and then loading the fruit on board these trucks for transportation to Post Offices or delivery services inside and outside the State of Florida.

   
   

5. The aforesaid trucks are not owned by Petitioner but are owned and operated by independent owner-operators. Several other transportation systems are used from time to time including the services of United Parcel Post and scheduled airlines. The type of transportation depends on the particular route and drop points.

   
   

6. Receipts of income of FLORIDA GIFT FRUIT DELIVERY, INC., for the years 1972, 1973 and 1974 were solely from G & S PACKING COMPANY.

   
   

7. The Corporate Income Tax Returns for the years 1972, 1973 and 1974 were audited by the Corporate Income Tax Bureau of the Department of Revenue of the State of Florida which audit culminated with a Notice of Deficiency to the Petitioner for the foregoing tax years. A protest was filed, a conference between the parties did not resolve the issue and thereupon these proceedings were instituted by Petitioner.

   
   

8. A major function of Petitioner, FLORIDA GIFT FRUIT DELIVERY, INC., is to seek out transportation services that can deliver the gift fruit in a minimum

   time frame to preserve the fresh quality of the fruit. Petitioner secures the transportation for shipment of the fruit of G & S PACKING COMPANY and makes other arrangements for the delivery of the fruit to the various Post Offices and other delivery centers. The drivers of the vehicles are not employees of Petitioner and Petitioner has no direct control over them.

   
   

9. Petitioner bills G & S PACKING COMPANY at the end of the month for its services which reflects the transportation cost incurred at FLORIDA GIFT FRUIT DELIVERY, INC., both inside and outside the state, as billed to FLORIDA GIFT FRUIT DELIVERY, INC., from the transportation sources arranged. It has no direct control of the operators of the vehicles who are largely independent owner-operators.

   
   

   CONCLUSIONS OF LAW

   
   

10. Section 214.72 Apportionment; methods for special industries.- provides:

    
    

    "(2) The tax base for a taxpayer furnishing transportation services, for the purpose of computing a tax on those activities, shall

    be apportioned to this state by multiplying such base by a fraction the numerator of which is the revenue miles of the taxpayer in this state and the denominator of which

    is the revenue miles of the taxpayer everywhere.

    1. For transportation other than by pipeline, a revenue mile is the transportation of one passenger or 1 net ton of freight the distance of 1 mile for a consideration. When a taxpayer is engaged in the transportation of both passengers and freight, the fraction shall be determined by means of an average of the passenger revenue mile fraction and the freight revenue mile fraction, weighted to reflect the taxpayer's relative railway operating income from total passenger and total freight service as reported to the Interstate Commerce Commission, in the case of transportation by railroad, or weighted to reflect the taxpayer's relative gross receipts from passenger and freight transportation, in case of transportation other than by railroad."

       
       

11. Petitioner, FLORIDA GIFT FRUIT DELIVERY, INC., furnishes no "transportation services" within the meaning of the foregoing statute. Petitioner does not transport goods locally or in interstate commerce. Independent truckers or airlines do the actual transporting of the product. The services of Petitioner are to arrange for transportation to serve its function of warehousing and providing for delivery of gift fruit for G & S PACKING COMPANY. The major function of Petitioner is to label and inspect and load fruit in the vehicles that are owned or leased and operated by independent operators on a contractual basis for particular trips. The vehicles are not owned or leased and the drivers are not under the control of Petitioner. Once the fruit is loaded the transportation is performed by others not in the employment of FLORIDA GIFT FRUIT DELIVERY, INC. The fact that Petitioner makes

arrangements with the various Post Offices and other delivery services to accept the product being transported does not bring it within the statute. The Petitioner has no "revenue miles" on which it can base an apportionment. The statute speaks specifically to the transportation of passengers and freight and not to the allied services as provided by Petitioner for G & S PACKING COMPANY.

RECOMMENDATION

Affirm the Respondent DEPARTMENT OF REVENUE's adjustments for deficiencies in the Petitioner FLORIDA GIFT FRUIT DELIVERY, INC.'s tax returns for the fiscal years ending in 1972, 1973 and 1974.

DONE and ORDERED this 24th day of March, 1977, in Tallahassee, Florida.

DELPHENE C. STRICKLAND

Hearing Officer

Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 24th day of March, 1977.

COPIES FURNISHED:

Clark Stillwell, Esquire Tucker, Hicks, Blanchard &

Brannen, P.A.

Post Office Box 24

Ocala, Florida 32670

E. Wilson Crump, II, Esquire Assistant Attorney General Department of Legal Affairs Tax Division, Northwood Mall Tallahassee, Florida 32304

Docket for Case No: 76-000029

Orders for Case No: 76-000029