STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NATIONAL SUN CONTROL COMPANY, )

)

Petitioner, )

)

vs. ) CASE NO. 77-1080

) STATE OF FLORIDA, DEPARTMENT ) OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above styled case on September 15, 1977 at Miami, Florida.

APPEARANCES

For Petitioner: Jack Trent

442 Glenridge Road

Key Biscayne, Florida 33149

For Respondent: Daniel Brown, Esquire

Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida

By letter dated June 6, 1977 National Sun Control Company, Petitioner, requested a hearing to contest the assessment of tax, penalties and interest made against it by Department of Revenue, Respondent, for sales taxes on personal property sold to its distributors in Florida. As a preliminary matter the Department of Revenue raised the question of burden of proof in this proceeding. Thereafter three witnesses testified and three exhibits were admitted into evidence.

FINDINGS OF FACT

1. National Sun Control Company sells reflective film for installation on windows and glass doors throughout the southeastern United States. Sales are made only to distributors and dealers who do the installation or resell the film to customers.

   
   

2. Petitioner holds a wholesalers occupational license and makes no sales to individuals for their own use.

   
   

3. Petitioner sells the film only in 100 foot rolls and the normal order exceeds $100. Throughout Florida its maximum number of dealers has been about

   25 and at present there are only 4 or 5 actively engaged in installing this film for their customers.

   
   

4. Petitioner failed to ascertain that each of its dealers had a tax exemption number and when his accounts for the years 1974 - 1976 were audited by the Respondent, a sales tax was levied on all of Petitioner's sales to Florida dealers in the amount of $3,814.47. To this was added a 25 percent delinquent penalty of $953.62 and interest in the amount of $743.82.

   
   

5. Petitioner has recovered some of the sales taxes for which it was assessed and remitted same to the Respondent. In the revised assessment dated April 5, 1977 the tax was shown to be $1,362.38, the penalty (reduced to 5 percent) to be $68.13 and interest $290.00. From this is deducted a partial payment made by Petitioner of $636.60, leaving a balance owed by Petitioner of

   $1083.91

   
   

6. Petitioner has provided Respondent with the names and addresses of each of the dealers to whom he shipped reflective film for installation and resale and has requested Respondent to collect the taxes owed from those dealers. One area supervisor responded (Exhibit 3) that the dealer said he had been told by Petitioner that the film was tax exempt and he refused to reimburse Petitioner for "the Florida Sales Tax that you [Petitioner) failed to collect."

   
   

   CONCLUSIONS OF LAW

   
   

7. As noted above at the commencement of the hearing Respondent queried the Hearing Officer regarding who had the burden of proof and was advised that the burden was upon the Department of Revenue. In Balino v. HRS, 348 So.2d 349 (Fla. App. 1977) the court applied the rule to administrative hearings that is followed in court proceedings, viz. that the burden of proof, apart from statute, is on the party asserting the affirmative of an issue before an administrative tribunal. Since the Department of Revenue is claiming National Sun Control owed sales taxes which it has not paid they, perforce, have the burden of establishing that fact.

   
   

8. In the instant case there was little, if any, dispute regarding the facts. The primary, if not sole, issue is whether a wholesaler becomes liable for the sales tax if he sells to a retailer who does not have a tax exemption number. Here the film involved is tangible personal property and subject to a tax to be collected by the dealer who sells to a consumer.

   
   

9. Section 212.06(1)(a) F.S. provides that the sales tax, computed at the rate of 4 percent of the retail sales price, as of the moment of purchase

   
   

   "shall be collectible from all dealers as herein defined on the sale at retail. . .of tangible personal property."

10. Section 212.02(3)(a) defines retail sales, or sales at retail to mean: ". . .a sale to a consumer or to any person

    for any purpose other than for resale in the form of tangible personal property, and shall mean and include all such transactions that may be made in lieu of retail sales or sales at retail. A resale must be in strict compliance with rules and regulations and any

    dealer making a sale for resale which is not in strict compliance with rules and regulations shall himself be liable for and pay the tax."

11. Rule 12A-1.38(1) and (2) F.A.C. provides: "It is the specific legislative intent that

    each and every sale, admission, use, storage,

    consumption or rental is taxable under Chapter

    212 F.S. unless such sale, admission, use, storage, consumption or rental is specifically exempt. The exempt status of the transaction must be established by the dealer. Unless the dealer shall have taken from the purchaser a certificate to the effect that the property or service was purchased for resale and bearing the name and address of the purchaser and the number of his dealer certificate of registration or a certificate bearing the number of his consumer's exemption certificate, the sale shall be deemed to be a taxable sale at retail.

    
    

    A resale certificate is required from every purchaser who purchases tangible personal property or service for resale. Otherwise the dealer will be required to collect and remit the tax to the Department of Revenue.

    Purchases for resale outside the State of Florida by unregistered, out of state dealers are governed by rule 12A-1.64(23)."

    
    

12. From the foregoing it is concluded that when Petitioner, without obtaining a tax exemption number from his dealer, made a sale to such dealer, this sale became taxable and Petitioner became liable for the sales tax on the merchandise sold. In view of the cooperation extended to the Respondent by the Petitioner it is further concluded that the penalty should be remitted. It is therefore,

RECOMMENDED that the appeal from the assessment be denied, but the penalty assessed in the amount of $68.13 be remitted.

DONE and ENTERED this 3rd day of October, 1977, in Tallahassee, Florida.

K. N. AYERS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Daniel C. Brown, Esquire Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32304

Mr. Jack Trent

National Sun Control Company

442 Glenridge Road

Key Biscayne, Florida 33149

================================================================= AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NATIONAL SUN CONTROL COMPANY,

Petitioner,

vs. CASE NO. 77-1080

STATE OF FLORIDA, DEPARTMENT OF REVENUE,

Respondent.

/

FINAL ORDER

Pursuant to notice, a hearing was held on the above-captioned matter by the Division of Administrative Hearings on September 15, 1977, at Miami, Florida.

APPEARANCES

For Petitioner: Jack Trent

442 Glenridge Road

Key Biscayne, Florida 33149

For Respondent: Daniel Brown, Esquire

Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32304

Upon review of the record in this matter and the recommended order presented by the hearing officer, the Department of Revenue enters the following as its final order in the above-entitled matter.

FINDINGS OF FACT

1. National Sun Control Company sells reflective film for installation on windows and glass doors throughout the Southeastern United States.

   
   

2. Petitioner, National Sun Control Company, holds a wholesaler's occupational license in Dade County, Florida. Petitioner sells the film only in

   100 foot rolls and the normal order exceeds $100.

   
   

3. Representatives of petitioner testified at hearing that petitioner makes sales oily to distributors and dealers who in turn install the sun screen film or resell the film to customers. However, petitioner failed to require from each of its dealers a resale certificate containing the tax number of the dealer for the transactions upon which the assessment is made. Petitioner could adduce no testimony or evidence other than hearsay as to the ultimate disposition of the sun screen film, the sales of which are the subject of this assessment.

   
   

4. The accounts of the petitioner for the years 1974 - 1976 are audited by the Department of Revenue, and a sales tax was levied on all of petitioner's sales to Florida dealers in the amount of $3,814.47. To this was added a 25 percent delinquent penalty of $953.62 and interest in the amount of $743.82.

   
   

5. Petitioner has recovered some of the sales taxes for which it was assessed and remitted the same to the Department of Revenue. In the revised assessment dated April 5, 1977, the tax was shown to be $1,362.38, the penalty (reduced to 5 percent) to be $68.13 and the interest to be $290. From this is deducted a partial payment made by Petitioner in the amount of $636.60, leaving a balance owed by Petitioner of $1,083.91.

   
   

6. Petitioner has provided the Department of Revenue with the names and addresses of each of the dealers to whom he shipped reflective film for installation or resale and has requested the Department of Revenue to collect the taxes owed from those dealers. One area supervisor responded that the dealer said he had been told by the petitioner that the film was tax exempt and he refused to reimburse petitioner for "the Florida Sales Tax that you [Petitioner] failed to collect."

   
   

   CONCLUSIONS OF LAW

   
   

7. At the hearing, the Hearing Officer ruled that the Department of Revenue bore the burden of proof regarding the petitioner's tax liability, relying upon Balino v. HRS, 348 So.2d 349 (Fla. App. 1977). That ruling by the hearing officer was erroneous.

   
   

8. The rule is virtually unanimous that in court proceedings the party bringing the action has the burden to initially go forward with evidence. See Red Top Cab and Baggage Co. v Dorner, 31 So.2d 409 (Fla. 1947); Huston v. Green,

   108 So. 846 (Fla. 1926); 88 C.J.S. Trial 94 (1955). Once the party bringing the action has established its prima facie case, then the burden of producing evidence shifts to the responding party. Thomas Jefferson, Inc. v. Hotel Employees Union, Local 255, 84 So.2d 583 (Fla. 1956). Nevertheless, uniformly, the initial burden of producing evidence falls upon the party bringing the action. The application of this principle is made binding upon the administrative proceedings in the instant action by the model rules of procedure

   adopted pursuant to Ch. 120, Florida Statutes. Rule 28-5.25(10), Florida Administrative Code, states in part:

   
   

   The petitioner(s) shall make his presentation first, then the opposing partie(s) shall make their presentations.

   
   

   See also Rule 12-3.01, Florida Administrative Code.

   
   

9. Reason and authority likewise necessitate that the burden of ultimate proof or the burden of persuasion falls upon the taxpayer. One reason the taxpayer has the burden of proof is that actions by administrative officials within the scope of their authority are presumed to he correct. This rule applies to actions taken by taxing officials. The legislature has specifically stated such a rule again and again in the tax statutes of Florida. See 199.232(5)(b), Florida Statutes (involving intangible personal property tax); 206.075, Florida Statutes (involving motor fuel tax); 212.14, Florida Statutes. Cf. 201.16, Florida Statutes. The courts have recognized this presumption of correctness and applied it to resolve issues in judicial proceedings. See North Port Bank v. State Department of Revenue, 313 So.2d 683 (Fla. 1975) (involving intangible personal property tax); Homer v. Dade County Shopping Center, 229 So. 2d 834 (Fla. 1969) (involving ad valorem tax); Green v. Pederson, 99 So.2d 292 (Fla. 1957)( involving use tax). See also Green v. Wisner, 119 So.2d 814 (Fla. 2d DCA 1960). This presumption of correctness is accorded to proposed tax assessments in federal courts. See, e.g., Railroad Federal Savings and Loan Assoc. v. United States, 135 F. 2d 290 (2d Cir. 1942); Kobacker and Sons Co. v. United States, 124 F. Supp. 211 (N.D. Ohio 1954); Gamble-Skogmo, Inc. v. Kelm,

   112 F. Supp. 872 (D. Minn. 1953). See also Helvering v. Taylor, 293 U.S. 507 (1935); Mersel v. United States, 420 F. 2d 517 (5th Cir. 1970). An apparently overwhelming majority of states are in accord. State v. Mobile Stove & Pulley Mfg. Co., 52 So.2d 693 (Ala. 1951); Fusco-Amatrada Co. v. Tax Commissioner, 362 A. 2d 847 (Conn. 1975); Young v. Hulman, 234 N.E. 2d 797 (I11. 1968); Mounting and Finishing Co. v. McColdrick, 60 N.E. 2d 825 (N.Y. 1945); Fort v. Dixie Oil Co., 95 S.W. 2d 931 (Tenn. 1936); Bailes Oldsmobile, Inc. v. Hawes, 177 S.E. 2d

   170 (Ga. Ct. of App. 1970). See generally 72 Am. Jur. 2d State and Local Taxation, 1151 (1974). To rule otherwise in the context of tax assessments would in affect accord the department's assessment a presumption of invalidity. There is no case or statutory law whatsoever supporting such a result.

   
   

10. A second reason that a taxpayer must bear the burden of proof is that this burden is normally placed upon the party bringing action, not just in tax proceedings, but in all proceedings. See City of Fort Lauderdale v. Casino Realty, Inc., 313 So.2d 649 (Fla. 1975); Trickey v. Stone, 152 So.2d 748 (Fla. 1 DCA 1963); Smith's Bakery, Inc. v. Jernigan, 134 So.2d 519 (Fla. 1 DCA 1961); 13 Fla. Jur. Evidence 62 (1957). See also 73 C.J.S. Public Administrative Bodies & Procedure, 124 (1951), stating "In Administrative Proceedings, the general rule is that an applicant for relief, benefits or a privilege has the burden of proof." This view was adopted by the Florida court in case Southern Trucking Co. v Mack, 54 So.2d 153 (Fla. 1951). There exists no sound policy for altering the well-established burden of proof simply because the complainant-petitioner chooses an administrative rather than a judicial forum.

    
    

11. The burden of ultimate proof is rightfully allocated to the taxpayer for a third reason. The transactions upon which the tax is levied are the taxpayer's transactions, and all information and records which would be relevant in determining the validity of the assessment are peculiarly within the

    taxpayer's control. Where one party has peculiar knowledge or control of all relevant information, generally the burden of ultimate proof falls on that party. See Allstate Finance Corp. V. Zimerman, 330 F. 2d 740 (5th Cir. 1964); 31A C.J.S. Evidence 113 (1964). It is significant that the only case under the Administrative Procedure Act which addresses the burden of proof problem held that the government agency had that burden, based in large part upon its superior access to relevant information. Balino v. Dept. of Health & Rehab.

    Serv., 348 So.2d 349 (Fla. App. 1977).

    
    

12. Accordingly, the burden of proof in the above-entitled matter falls upon the taxpayer-petitioner.

    
    

13. In the instant case, there is little dispute regarding the facts. The sole issue is whether a dealer becomes liable for payment of sales tax if he sells tangible personal property to another dealer and does not obtain a resale certificate. The film involved here is tangible personal property and subject to a tax to be collected by the dealer who sells to a consumer.

    
    

14. Section 212.06(1)(a), Florida Statutes, provides that the sales tax, computed at the rate of 4 percent of the retail sales price, as of the moment of purchase

    
    

    ". . .shall be collectible from all dealers as herein defined on the sale at retail. . .

    of tangible personal property."

15. Section 212.02(3)(a), Florida Statutes defines retail sales to mean: ". . .a sale to a consumer or to any person

    for any purpose other than for resale in the

    form of tangible personal property. . .A resale must be in strict compliance with rules and regulations and any dealer making a sale for resale which is not in strict compliance with rules and regulations shall himself be liable for and pay the tax."

    
    

16. Rule 12A-1.38(1) and (2), F.A.C., provides:

    
    

    "It is the specific legislative intent that each and every sale, admission, use, storage, consumption or rental is taxable under Chapter

    212 F.S. unless such sale, admission, use, storage, consumption or rental is specifically exempt. The exempt status of the transaction must be established by the dealer. Unless the dealer shall have taken from the purchaser a certificate to the effect that the property or service was purchased for resale and bearing the name and address of the purchaser and the number of his dealer certificate of registration or a certificate bearing the number of his consumer's exemption certificate, the sale shall be deemed to be a taxable sale at retail.

    A resale certificate is required from every purchaser who purchases tangible personal property or service for resale. Otherwise the dealer will be required to collect and remit the tax to the Department of Revenue.

    Purchases for resale outside the State of Florida by unregistered, out-of-state dealers are governed by Rule 12A-1.64 (23)."

    
    

17. The evidence adduced in this matter shows that the petitioner, National Sun Control Company, has not produced resale certificates as required by the above-quoted statutes and rules with regard to the amount of the assessment left remaining. The result is the same irrespective of the allocation of burden of proof.

    
    

18. Furthermore, in view of the record as a whole the Department of Revenue must reject the recommendation of the hearing examiner that the late penalty of $68.13 be remitted. That recommendation constitutes a matter of opinion or policy consideration for which the agency has special responsibility. See McDonald v. Department of Banking and Finance 346 So.2d 569 (Fla. 1 D.C.A. 1977). The evidence adduced at hearing indicated cooperation by the petitioner- taxpayer with the Department in collecting the tax due from dealers to whom sales were made. However, no evidence was produced at hearing to explain petitioner's failure to receive resale certificates at the time of purchase or to collect the tax owed other than ignorance of Florida's tax laws. It is the responsibility of dealers in tangible personal property within the state of Florida to become familiar with the requirements of Florida's laws concerning taxation. Therefore, such lack of information is an inadequate basis for waiver of the late penalty, which has already been reduced from 25 percent to 5 percent.

Based upon the foregoing Findings of Fact and Conclusions of Law it is ORDERED

That the petitioner, National Sun Control Company, be held liable for the remaining assessment of tax, penalty and interest in the above-captioned matter as set forth in respondent's proposed assessment.

CERTIFICATION

I certify that the foregoing is the final order of the Department of Revenue adopted by the Governor and Cabinet on day of , 1977.*

* Harry L. Coe, Jr., Executive

Director

State of Florida, Department of Revenue

Room 102, Carlton Building Tallahassee, Florida 32304

DATED THIS DAY OF , 1977.*

* NOTE: The Final Order was filed with this Division undated and unsigned. The DOAH filing date (11/08/77) is being used in ACCESS as the date the Final Order was issued.

Docket for Case No: 77-001080

Orders for Case No: 77-001080