STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WILLIAMS ENERGY COMPANY, )

)

Petitioner, )

)

vs. ) CASE NO. 77-1968

) 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 January 25, 1978. The parties were represented by counsel:

APPEARANCES

For Petitioner: Mr. John Radey, Esquire

Holland & Knight

Post Office Drawer 810 Tallahassee, Florida 32302

For Respondent: Mr. Cecil L. Davis, Jr., Esquire

Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32304

By notice of proposed assessment dated January 24, 1978, respondent asserted that petitioner owed taxes which should have been paid over the period July 1, 1975, through February 28, 1977, in the amount of fifty-nine thousand seven hundred forty-eight dollars and fifty-six cents ($59,748.56), together with penalty and interest.

FINDINGS OF FACT

1. Petitioner is a dealer in liquefied petroleum gas (LPG), duly licensed in Florida. Petitioner buys LPG in Florida and resells it to dealers who in turn sell most of it at retail, but use part of it as fuel for their trucks.

   
   

2. During the period July 1, 1975, through February 28, 1977, neither petitioner nor any of its customers paid any tax on account of petitioner's sales of LPG, other than LPG used by its customers to propel trucks. Petitioner's customers kept records as to how much LPG was sold by them for home cooking or heating use by their customers, the ultimate consumers. Until the summer of 1977, petitioner's customers who used LPG as truck fuel kept records of how far the trucks so fueled were driven. Using the resulting mileage figure, they calculated the amount of LPG that had been used as truck fuel.

   Until the summer of 1977, petitioner collected from its customers a tax of eight cents ($.08) per gallon on LPG used as truck fuel.

   
   

3. During the period from July 1, 1975, through February 28, 1977, none of petitioner's Florida customers held Florida dealer's licenses, except Gene Lewis Auto Brokers, which obtained a license as a special fuel dealer in August of 1976. Also in August of 1976, Gene Lewis Auto Brokers purchased 2,052 gallons of LPG from petitioner, on which no tax was paid. Thereafter, the same customer bought 41,011 gallons from petitioner in the period ending February, 1977, on which no tax was paid.

   
   

4. Petitioner made tax returns monthly, using forms furnished by respondent. With respect to respondent's Form DR-115-F, styled "Special Fuel Sold . . . Within the State to Licensed Dealers Tax-Free," general instructions furnished to petitioner by respondent provided:

   
   

   To be used in support of claims for exemp- tion ... for sales ... to other licensed dealers. Signed resale certificates ... which bear the name and address of the pur- chaser and the number of his dealer's license are required to be retained in the seller's permanent file .... Petitioner's exhibit

   No. 2. (emphasis supplied)

   
   

   Monthly, petitioner listed on Form DR-115-F the amounts of LPG sold to its Florida customers, less amounts its Florida customers advised had been used to propel trucks.

   
   

5. On another form furnished by respondent, Form DR-115-J, petitioner listed monthly, by county, the LPG used by its Florida customers to propel motor vehicles and on which petitioner had collected tax at the rate of eight cents ($.08) per gallon. At the time petitioner filed its monthly tax return, it forwarded to respondent the taxes it had collected from its Florida customers.

   
   

6. The foregoing findings of fact should be read in conjunction with the statement required by Stuckey's of Eastman, Georgia v. Department of Transportation, 340 So.2d 119 (Fla. 1st DCA 1976), which appears as an appendix to the recommended order.

   
   

   CONCLUSIONS OF LAW

   
   

7. Florida levies an "excise tax of 8 cents per gallon upon every gallon" of special fuel used or sold in the state for use. . ." Section 206.87(1), Florida Statutes (1977).The term "special fuel" includes LPG and all other "forms of liquefied petroleum gases, except [gasoline]." Section 206.86(1), Florida Statutes (1977). Applicable statutory provisions create certain presumptions and assign responsibility for collecting the tax:

   
   

   Unless expressly provided to the contrary in this part, every sale shall be deemed to be for use in this state. This levy of tax is upon the consumer but shall be paid upon the first sale or transfer of title within this state by a dealer,

   except as expressly provided in this part, who shall act as an agent for the state in

   the collection of said tax whether he be the ultimate seller or not. Section 206.87 Florida Statutes (1977)

   
   

8. Petitioner's suggestion that the phrase "every sale" should be read as though it were written "first sale" has no basis in law or in logic.

   
   

9. Sales by petitioner to its Florida customers must "be deemed to be for use in this state," Section 206.87(1), Florida Statutes (1977), in the absence of statutory authority to the contrary. Petitioner contends that the following provision constitutes such contrary authority:

   
   

   A dealer may purchase special fuel without the tax imposed by this section being paid upon the first sale or transfer of title in the state, and shall pay the tax on all special fuel used or sold by him and act

   as agent for the state in the collection and payment thereof. Section 206.87(2), Florida Statutes (1977)

   
   

10. But the term "dealer" is restricted for purposes of the statute to "any person who holds a valid dealer of special fuels license issued by the department." Section 206.86(8), Florida Statutes (1977). Inasmuch as petitioner's customers (with one exception) did not hold such licenses when the sales in question took place, the sales do not qualify for the exemption from tax set forth in Section 206.87(2), Florida Statutes (1977). In view of the statutory presumption that petitioner's sales to its Florida customers were for use, the nature of the transactions which subsequently took place between petitioner's Florida customers and the ultimate consumers of the LPG is immaterial to petitioner's tax liability.

    
    

11. Petitioner argues that respondent should be estopped from collecting the tax it has assessed, on the ground that respondent did not discover more promptly that petitioner's Florida customers were not licensed as special fuel dealers in Florida. This argument is untenable, inasmuch as petitioner represented on its monthly returns that its customers were licensed as special fuel dealers in Florida. As far as the evidence disclosed, these misrepresentations were entirely inadvertent. Petitioner cannot, however, profit from respondent's having taken at face value the information petitioner itself furnished.

    
    

12. The evidence does not establish on which day of August, 1976, Gene Lewis Auto Brokers obtained its license, or how many gallons of LPG had been purchased from petitioner during August, if any, before the license was acquired. Respondent failed to prove that any of petitioner's sales to Gene Lewis Auto Brokers in August of 1976 preceded issuance of a dealer's license to Gene Lewis Auto Brokers, while petitioner failed to prove that any of the LPG it sold to Gene Lewis Auto Brokers in August of 1976 was sold after issuance of the license. Whether or not the August purchases create a tax liability for petitioner turns, therefore, on whether petitioner or respondent had the burden of proof on this point. Inasmuch as the "exempt status of the transaction must be established by the . . . dealer," Rule 12B-5.03(1), F.A.C., petitioner's August sales to Gene Lewis Auto Brokers must "be deemed to be for use in this state," Section 206.87(1), Florida Statutes (1977), and taxable transactions accordingly.

RECOMMENDATION

Upon consideration of the foregoing, it is RECOMMENDED:

1. That respondent's assessment be upheld with respect to petitioner's tax deficiency, except for the portion attributable to sales by petitioner to Gene Lewis Auto Brokers after August of 1976, being three thousand two hundred eighty and eighty-eight hundredths dollars ($3,280.88).

   
   

2. That interest and penalty be adjusted accordingly.

DONE and ENTERED this 8th day of March, 1978, in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

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

(904) 488-9675

COPIES FURNISHED:

Mr. John Radey, Esquire Holland & Knight

Post Office Drawer 810 Tallahassee, Florida 32302

Mr. Cecil L. Davis, Jr., Esquire Assistant Attorney General

The Capitol, Room LL04 Tallahassee, Florida 32304

APPENDIX

Paragraph one of petitioner's proposed findings of fact has been adopted, in substance, except that the evidence did not show that petitioner's customers used LPG for home heating or cooking, only that persons to whom petitioner's customers sold used the LPG in this fashion.

Paragraph two of petitioner's proposed findings of fact has been adopted in substance.

Paragraph three of petitioner's proposed findings of fact has been adopted in large part. The gist of the information supplied to petitioner by its dealers was that LPG not used by them would be resold to domestic users.

Although respondent did not undertake to determine whether petitioner listed the same LPG as taxable and as tax-exempt on the same tax return, there is no reason to believe that petitioner did so.

Paragraph four of petitioner's proposed findings of fact has been adopted, in substance, except that petitioner's tax returns were inaccurate as to its customers' status as dealers.

The final three paragraphs of petitioner's proposed findings of fact accurately reflect evidence adduced at the hearing, but are not relevant to a decision of this controversy.

Docket for Case No: 77-001968

Orders for Case No: 77-001968