STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA TEXAS FREIGHT, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 77-618

)

DEPARTMENT OF REVENUE, )

STATE OF FLORIDA, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Tallahassee, Florida, before the Division of Administrative Hearings by its duly designated Hearing Officer, Robert T. Benton, II, on September 29, 1977. The parties were represented by counsel:

For Petitioner: Mr. Samuel C. Ullmann, Esquire and

Mr. Richard J. Razook, Esquire 1301 Alfred I. DuPont Building Miami, Florida 33131

For Respondent: Mr. E. Wilson Crump, II, Esquire

Assistant Attorney General Department of Legal Affairs Post Office Box 3906 Tallahassee, Florida 32303

By petition received by respondent on March 25, 1977, petitioner challenged respondent's "proposed deficiency assessment for the calendar years 1972, 1973 and 1974" on the ground that petitioner, during the period in question, "furnished transportation services as that term is used in Section 214.72(2), of the Florida Statutes, and, accordingly, . . . was entitled to use the special method of apportionment set forth at Section 214.72(2) for Florida corporation income tax purposes." At the final hearing, the parties stipulated that petitioner owes respondent the entire sum in controversy, viz., nine thousand two hundred fifty-two dollars ($9,252.00), if respondent's theory as to the method of apportionment is correct, while petitioner owes respondent nothing if petitioner's theory as to the method of apportionment is correct.

FINDINGS OF FACT

1. The parties stipulated, at the final hearing, that petitioner's national headquarters are in Florida. Before the hearing began, the parties had entered into a written stipulation, setting forth facts pertinent to the dispute. The parties also entered into a written supplemental stipulation, before the hearing began. These stipulations are hereby incorporated into the recommended order, and the facts to which the parties have stipulated are deemed

   true. Attached as appendices to the recommended order are the parties' written stipulations, sans attachments.

   
   

   CONCLUSIONS OF LAW

   
   

2. The income tax code provides, for purposes of Florida's corporate income tax, that a corporation's "[a]djusted federal income . . . be apportioned to this state in accordance with part IV of chapter 214." Section 220.15, Florida Statutes (1975). Part IV of Chapter 214, Florida Statutes (1975), consists of three sections. Section 214.71, as modified by Section 220.15, Florida Statutes, sets forth the method of apportionment applicable to corporations generally. Section 214.72, Florida Statutes (1975), sets forth methods of apportionment for corporations engaged in certain specified businesses, including "taxpayer[s] furnishing transportation services." Section 214.72(2), Florida Statutes (1975). Finally, Section 214.73, Florida Statutes (1975), contemplates situations where "the apportionment methods of ss. 214.71 and 214.72 do not fairly represent the extent of a taxpayer's tax base attributable to this state;" the parties are in agreement that Section 214.73, Florida Statutes (1975), does not apply in the present case.

   
   

3. Respondent relies on the recommended order entered in Florida Gift Fruit Delivery, Inc., v. Department of Revenue, No. 76-029 (DOAH; March 24, 1977), which was adopted by the Department of Revenue, on May 17, 1977. In that case, a Florida corporation inspected and label led containers of fruit packed by another corporation G&S Packing Company, then loaded them onto trucks. The decision in the Florida Gift Fruit Delivery, Inc. case turned on the same statutory provisions as control here, particularly Section 214.72(2), which provides, as follows:

   
   

   1. The tax base for a taxpayer furnish- ing 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 pipe- line, a revenue mile is the transportation of one passenger or 1 net ton of freight the distance of 1 mile for a considera- tion. 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 transpor- tation 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.

         The taxpayer corporation, Florida Gift Fruit Delivery, Inc., had "no direct control of the operations of the vehicles who [were] largely independent owner- operators." The taxpayer corporation did "not transport goods locally or in interstate commerce." As a matter of law, Florida Gift Fruit Delivery, Inc., had "no 'revenue miles' on which . . . [to] base an apportionment," the recommended order concluded. There was no showing that the taxpayer corporation had revenue attributable to its activities anywhere other than in Florida.

         
         

4. The present case differs in important respects. Here the taxpayer corporation receives less than carload lots from the public generally, sometimes picking up the parcels and bringing them to one of its facilities in the District of Columbia or one of the 15 states in which it accepts goods for shipment. Freight is assembled into carload lots for shipment by common carrier to one of petitioner's terminals in any one of ten states. Petitioner breaks bulk at its terminals and delivers the freight to the consignees, under its own authority.

   
   

5. Petitioner is regulated by, the Interstate Commerce Commission and the Public Service Commission and holds certificates from both regulatory authorities. When it accepts goods for shipment, it issues bills of lading covering the goods from the time petitioner receives them until the time petitioner delivers them in the state of destination. The amount petitioner charges for its services varies with the total distance over which the goods are to be shipped. In short, petitioner "furnishes transportation services," within the meaning of Section 214.72(2), Florida Statutes (1975).

RECOMMENDATION

Upon consideration of the foregoing, it is RECOMMENDED:

That the proposed deficiency be withdrawn.

DONE and ENTERED this 21st day of October, 1977, in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

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

COPIES FURNISHED:

Mr. Samuel C. Ullmann, Esquire and Mr. Richard J. Razook, Esquire 1301 Alfred I. DuPont Building Miami, Florida 33131

Mr. E. Wilson Crump, II, Esquire Assistant Attorney General Department of Legal Affairs Post Office Box 3906 Tallahassee, Florida 32303

Docket for Case No: 77-000618

Orders for Case No: 77-000618