STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GJPR TWO CORPORATION, )

)

Petitioner, )

)

vs. ) CASE NO. 77-1656

) DEPARTMENT OF REVENUE, STATE OF ) FLORIDA, AND COMPTROLLER, STATE ) OF FLORIDA, )

)

Respondent. )

)

RECOMMENDED ORDER

The petition herein was filed after the State Comptroller, pursuant to Section 215.26, Florida Statutes, denied petitioner's request for refund of tax assessed under Section 212.05(1)(b), Florida Statutes. The Hearing Officer thereafter accepted a stipulation by the parties acknowledging that there were no disputed issues of material fact and agreeing to waive a formal hearing in the matter. The parties further agreed that the issue to be determined was whether the sales tax paid by petitioner under protest was properly exacted or should be refunded. The parties agreed that the matter would be presented to the Hearing Officer on the basis of stipulated facts, briefs and proposed conclusions of law.

FINDINGS OF FACT

The stipulated facts are as follows:

1. The petitioner is GJPR Two Corporation, formerly Employers Insurance Management Corporation, a Florida Corporation, and its address is c/o W. L. Adams, Esquire, Pyszka, Kessler, Adams and Solomon, 2699 South Bayshore Drive, Miami, Florida 33133.

   
   

2. Said petitioner has a substantial interest in these proceedings and has proper standing herein.

   
   

3. The agencies affected are the Department of Revenue, Tallahassee, Florida, and the Office of the Comptroller of Florida, Tallahassee, Florida; no other agencies are affected.

   
   

4. These proceedings have been properly initiated and are now properly before the Division of Administrative Hearings of the Department of Administration of the State of Florida.

   
   

5. The parties are not in dispute as to any issues of fact, and agree to the following findings of fact:

   
   

   1. On or about June 1, 1977, petitioner sold all of its assets of every kind and

      type in a single transaction to Arthur J. Gallagher and Company.

   2. The assets sold included two aircraft.

   3. When the registration documents of such aircraft were presented to the State of Florida for transfer, payment of sales tax was required in the sum of $4,056.00.

   4. Said sum was paid under protest on or about June 10, 1977.

   5. Until the sale of its assets, the business

      of petitioner had always been the sale of insurance and the administration of self-insurance programs for insureds and self-insureds throughout Florida and other states.

   6. The aircraft had been used in the business of petitioner, but petitioner had never engaged in

      the sale or leasing of aircraft as all or any part of its business.

   7. Since the sale of its assets, petitioner has not been engaged in business and petitioner has adopted and filed with the Internal Revenue Service of the United States a Resolution requiring that petitioner conduct no further business and that petitioner be liquidated.

   8. The sale of the two aircraft upon which the tax in question was paid under protest is an occasional or isolated sale.

   9. Petitioner filed a Claim for Refund upon the ground that the sale was an isolated sale.

   10. The Claim for Refund was denied by letter of August 11, 1977 from the Office of the Comptroller of the State of Florida, a copy of which is appended hereto and incorporated herein as Exhibit "A."

       
       

       CONCLUSIONS OF LAW

       
       

6. The State Comptroller's letter of denial of the requested tax refund shows that the tax was assessed under Section 212.05 (1)(b), Florida Statutes, which reads pertinently as follows:

   
   

   "212.05 Sales, storage, use tax.--

   It is hereby declared to be the legislative intent that every person is exercising a taxable privilege who engages in the business of selling tangible personal property at retail in this state, or who rents or furnishes any of the things or services taxable under this chapter, or who stores for use or consumption in this state any item or article of tangible personal property as defined herein and who leases or rents such property within the state. For the exercise of said privilege a tax is levied on each taxable transaction or incident and shall be due and payable, according to the brackets set forth in s. 212.12(10), as follows:

   (1)(a) At the rate of 4 percent of the sales price of each item or article of tangible personal property when sold at retail in this state, the tax to be computed on each taxable sale for the purpose of remitting the amount of tax due the state, and to include each and every retail sale.

   
   

   (b) Occasional or isolated sales of boats and other vehicles in this state which are documented by the United States Government or which are required to be registered, licensed, or titled in this state shall be subject to tax at the rate provided in this subsection (Emphasis supplied)

   
   

   The Comptroller's reference in his denial letter to Section 212.06 (10) dealing with the requirement that payment of tax under Chapter 212 must be evidenced prior to issuance of title certificates on boats and vehicles in instances "where the same is payable," is considered to have no relevance in determining whether or not the tax is payable in the first instance.

   
   

7. A fair reading of Section 212.05 indicates that the tax is applicable only to those who "engage in the business of selling tangible personal property at retail in this state." It would therefore appear that if that threshold question is answered in the negative, no further inquiry need be made as to the applicability of the tax to "occasional or isolated sales of boats and other vehicles in this state" as mentioned in Section 212.05(1)(b). If that were the case, petitioner, by its one-time sale of corporate assets, including two aircraft, and who is not in the business of selling tangible personal property at retail, should not be subject to tax on the sale of the aircraft in spite of the broad definition of "business" as set forth in Section 212.02(9). (See examples in Rule 12A-1.37). It is clear from the stipulated facts that petitioner was in the business of selling intangible and not tangible personal property. (See Section 212.02(12)

   
   

8. However, the Department of Revenue rules referred to in the petition and briefs, to-wit: Rule 12A-1.07 and 12A-1.37, Florida Administrative Code, which were not challenged by the petitioner in proceedings for the administrative determination of a rule under Section 120.56, F.S., interpret the tax statute to arrive at a contrary result. Such rules are binding upon a hearing officer in his determinations under Section 120.57, F.S.

   
   

9. Rule 12A-1.37(1) provides that "Occasional and isolated sales made by a person who does not hold himself out as engaged in the business of selling tangible personal property" are not exempt from tax on sales of boats and other vehicles that require registration. This interpretation of Section 212.05(1) appears to require payment of the tax even by one not in the business of selling tangible personal property if boats and "other vehicles" are sold. It therefore becomes necessary to determine the meaning of the term "other vehicles" as used in the rule. As pointed out in the brief of petitioner, this determination ordinarily would be difficult to reach in view of the confusing terminology employed in Sections 212.02(9) and (12). Subsection 212.02(9) provides that "Except for sales of motor vehicles, the term 'business' shall not be construed in this chapter to include occasional or isolated sales or transactions involving tangible personal property by a person who does not hold himself out as engaged in business." The question therefore arises as to whether the term

   "motor vehicles" in the statute includes aircraft, and therefore might limit the taxation of occasional or Isolated sales of "other vehicles" under 212.05(1)(b). Section 212.02(12) defines "tangible personal property" as including "boats, motor vehicles as defined in s. 320.01(1), aircraft as defined in s. 330.01, and all other types of vehicles." Thus, the further question arises as to whether the separate designation of "motor vehicles" and "aircraft" is intended to place aircraft in a different category of vehicle. The definition of aircraft in Section 330.01 uses the words "any contrivance," yet Section 330.06(1) calls aircraft a "motor vehicle," as does Section 330.27(2). Those provisions in Chapter 330 deal with the state regulation of aircraft. However, again it is unnecessary to resort to a consideration of legislative intent, because Rule 1.07(1)(a) effectively settles the matter. It confirms that occasional or isolated sales of motor vehicles are taxable and defines the term "motor vehicles' to mean any vehicle required to be registered, licensed, or titled in the state, including all aircraft. Inasmuch as Chapter 330, Florida Statutes, requires that aircraft be registered in the State, it follows that the tax herein imposed was valid.

   
   

10. The proposed conclusions of law submitted by the petitioner after the hearing have been considered in arriving at the above conclusions of law.

RECOMMENDATION

That the denial of tax refund to the petitioner by the State Comptroller be affirmed.

DONE and ENTERED this 24th day of January, 1978, in Tallahassee, Florida.

THOMAS C. OLDHAM

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 24th day of January, 1978.

COPIES FURNISHED:

Richard J. Horwich, Esquire

Suite 302 University Federal Building 2222 Ponce de Leon Boulevard

Coral Gables, Florida 33134

Cecil Davis, Esquire Department of Legal Affairs The Capitol

Tallahassee, Florida 32304

John D. Moriarty, Esquire Department of Revenue Room 104 Carlton Building

Tallahassee, Florida 32304

Docket for Case No: 77-001656

Orders for Case No: 77-001656