STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LOUIS E. FISHER, )

)

Petitioner, )

)

vs. ) CASE NO. 78-0186

)

STATE OF FLORIDA, )

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Coral Gables, Florida, before the Division of Administrative Hearings, by its duly designated Hearing Officer, Robert T. Benton, II, on July 12, 1978. The parties were represented by counsel:

For Petitioner: Joseph Z. Fleming, Esquire

Fleming & Neuman

Suite 620, Ingraham Building

25 Southeast Second Avenue Miami, Florida 33131

For Respondent: Maxie Broome, Jr., Esquire

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

By notice of proposed assessment dated December 7, 1977, respondent asserted a sales tax deficiency against petitioner in the amount of three thousand two hundred dollars ($3,200.00) on account of petitioner's alleged "purchase of aircraft 1945 Goodyear F-GI D," together with a delinquent penalty and interest.

FINDINGS OF FACT

1. On November 24, 1976, petitioner purchased an airplane (the Corsair) in Florida from R. D. Whittington Aircraft Sales, Inc., for which he paid eighty thousand dollars ($80,000.00). Sales tax has never been paid on account of this transaction.

   
   

2. Before the purchase, petitioner asked George W. Sullivan, an airplane mechanic and test pilot, to evaluate the Corsair as an investment for resale. After petitioner acquired the Corsair, he caused three new cylinders to be installed and had the carburetor, the magneto and the propeller overhauled. Within three or four months of petitioner's acquisition, several prospective purchasers had inspected the Corsair. In the spring of 1977, petitioner began displaying the Corsair. At various times, petitioner engaged other pilots to ferry the Corsair to aircraft shows at Cherry Point, North Carolina, Greenville-

   Spartanburg, South Carolina, and elsewhere. At the time of the hearing, the Corsair had been flown approximately 43 hours since petitioner had acquired it, ten to twelve hours of which petitioner flew himself, in the course of displaying the Corsair and checking out repairs.

   
   

3. Petitioner has traded in airplanes for the last several years and has been recognized as a dealer in aircraft by the Internal Revenue Service. Petitioner, who moved to Florida from California, applied to respondent for a dealer's certificate promptly upon learning that he was required to do so. On November 24, 1976, however, petitioner was not registered as an aircraft dealer with respondent. After an unsuccessful attempt to register effective retroactively to July 1, 1972, petitioner registered as a dealer with respondent, effective October 1, 1977. According to respondent's records, R. D. Whittington Aircraft Sales, Inc., was not registered as a dealer with respondent on November 24, 1976, and has not registered since.

   
   

4. Petitioner obtained an address for R. D. Whittington Aircraft Sales, Inc., from respondent and, on or about, December 20, 1977, sent by certified mail a blanket resale and exemption certificate to the address respondent had furnished. A return receipt indicated that the certificate was delivered as addressed. In the past, respondent has treated sales to dealers as exempt from sales tax where the purchaser furnished the seller a resale and exemption certificate at the time of the sale and even when the certificate has been furnished afterwards, where the purchaser was registered as a dealer with respondent at the time of the transaction.

   
   

5. 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 is attached as an appendix to the recommended order.

   
   

   CONCLUSIONS OF LAW

   
   

6. Florida levies a sales tax "[a]t 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." Section 212.05(1)(a), Florida Statutes (1977). For purposes of the statute, a sale at retail is defined as a "sale . . . for any purpose other than for resale." Section 212.02(3)(a), Florida Statutes (1977). By way of further definition, the same paragraph provides:

   
   

   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.

   Section 212.02(3)(a), Florida Statutes (1977).

   
   

   It is clear from context that this sentence should be read as if it began with the words "A sale for resale," instead of with the words "A resale."

   
   

7. Principal among the rules and regulations with which a sale must be in strict compliance, in order to be treated as a sale for resale, is Rule 12A- 1.38, Florida Administrative Code, which provides in part:

   
   

   Unless the dealer shall have taken from the purchaser a certificate to the effect that the property . . . was purchased for resale

   . . . the sale shall be deemed to be a taxable sale at retail.

   . . . A dealer shall refuse to accept a resale certificate . . . unless the purchaser has obtained a dealer's certificate of registration from the Department of Revenue and the number of his dealer's certificate

   of registration is stated on the resale certificate. Rule 12A-1.38(1) and (3), Florida Administrative Code.

   
   

   Assuming petitioner furnished a resale certificate to a dealer, 1/ petitioner has nonetheless failed to demonstrate the requisite "strict compliance" with Rule 12A-1.38, Florida Administrative Code, so that the sale of the Corsair to petitioner must "be deemed to be a taxable sale at retail," Rule 12A-1.38(1), Florida Administrative Code, unless petitioner's "registration as a dealer and submission of a resale certificate some months after the date of the sale . . . can relate back," Robert H. Anderson and/or Out Island Charters, Inc. vs. State of Florida, Department of Revenue, DOAH No. 77-1257 (Rec. Order June 9, 1978) to the time of the sale.

   
   

8. The hearing officer concluded in Anderson that the seller was liable for sales tax on account of sales of tangible personalty even though the purchasers later registered as dealers and furnished the seller resale certificates. The Governor and Cabinet, acting as head of the Department of Revenue, have not yet taken final action on the recommended order entered in Anderson, and there are, in any event, factual differences between the situation that gave rise to the Anderson case and the circumstances of the present case. Unlike the seller in the present case, the seller in Anderson had a valid certificate of registration as a dealer at the time of the sales and at the time of the receipt of the resale certificates. Also unlike the present case, however, there was no showing in Anderson that the purchasers could have qualified as dealers if they had applied for registration before the transactions at issue there took place. Additionally, the evidence adduced in the Anderson case as to the practice of the Department of Revenue with respect to late furnished resale certificate differed from the evidence adduced on the same point in the present case. Petitioner, like the purchasers in the Anderson case, was not registered as a dealer at the time of the transaction sought to be taxed, but did subsequently secure a certificate of registration as a dealer.

   
   

9. Petitioner failed to demonstrate that he had "obtained a dealer's certificate of registration from the Department of Revenue," Rule 12A-1.38(3), Florida Administrative Code, at the time he purchased the Corsair. The evidence showed that the certificate of registration petitioner eventually did obtain became effective some ten months after the purchase of the Corsair. This does not amount to the strict compliance with applicable rules and regulations, which Section 212.02(3)(a), Florida Statutes (1977), requires in order for a sale to escape treatment as a sale at retail. The prohibition in Rule 12A-1.38(3), Florida Administrative Code, against a seller's accepting a resale certificate from an unregistered dealer must be read in pari materia with Rule 12A-1.54(1), Florida Administrative Code, which makes the "full amount of the tax . . . due at the moment of the transaction . . . [and requires sellers to remit sales tax] on the first day of the month following the date of sale. "

   
   

10. Pursuant to Rule 12A-1.38, Florida Administrative Code, petitioner must be deemed a "person who has purchased at retail," within the meaning of Section 212.07(a), Florida Statutes (1977), even though he in fact acquired the

Corsair for resale; and because petitioner "cannot prove that the [sales] tax .

. . has been paid to his vendor . . . [he is] directly liable to the state for any tax, interest or penalty due . . . ." Section 212.07(9), Florida Statutes (1977).

RECOMMENDATION

Upon consideration of the foregoing, it is RECOMMENDED:

That respondent's proposed assessment be upheld.

DONE and ENTERED this 11th day of August, 1978 in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

Division of Administrative Hearings 2009 Apalachee Parkway

Tallahassee, Florida 32301 904/488-9675

ENDNOTE

1/ Section 212.06(2)(d), Florida Statutes (1977), defines dealer"to mean any person who has sold at retail . . . [but] cannotprove that the tax levied by . .

. chapter [212] has been paidon the sale at retail." But see Section 212.18(3), FloridaStatutes (1977) ("No person shall engage in business as adealer . . . without first having obtained . . . a certificate[of registration] or after such certificate has been canceled.")

APPENDIX TO THE RECOMMENDED ORDER IN CASE NO.78-186

Section A of petitioner's proposed findings of fact has been adopted, in substance, insofar as relevant, and generally reflects the evidence accurately except that Mr. Adams testified that he began as petitioner's accountant in 1974, not 1973, petitioner testified that he obtained a commercial pilot's license in 1952, not 1953, and it was not established that petitioner learned from Mr. Sullivan that the Corsair was available.

Paragraphs one, three, four, five and six(a) of Section B of petitioner's proposed findings of fact generally reflect the evidence accurately and have been adopted, in substance, insofar as relevant, except as noted above and in the findings of fact.

Paragraphs two, six(b), seven, eight, nine and ten of Section B of petitioner's proposed findings of fact have largely been rejected as unsupported by the evidence, as calling for legal conclusions, or as being irrelevant.

COPIES FURNISHED:

Joseph Z. Fleming, Esquire Fleming & Neuman

Suite 620, Ingraham Building

25 Southeast Second Avenue Miami, Florida 33131

Maxie Broome, Jr., Esquire Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32304

Docket for Case No: 78-000186

Orders for Case No: 78-000186