vs. ) CASE NO. 78-545
Respondent. )
THIS CAUSE is before the undersigned based on a Joint Stipulation of Facts submitted by the Petitioner, Belcher Oil Company, and the Respondent, Department of Revenue and Comptroller, by and through their respective counsel, pursuant to Chapter 120.57(3), F.S.
For Petitioner: James R. McCachren, Jr., Esquire
For Respondent: William D. Townsend, Esquire
Pursuant to the parties' joint stipulation, the following facts were stipulated and agreed to:
The Petitioner is licensed as a dealer of special fuel pursuant to Florida Statutes 206 and has been assigned license Number 1627.
The pertinent sections of Florida Statutes which are applicable to this case are ss206.86(1), (6), (8), 206.87, 206.89, 206.93, 206.94 and Ch. 212. The pertinent rules of the Department of Revenue applicable to special fuels sales involved herein is 12A-2.03.
The deposition of Albert Colozoff and all answers to interrogatories and responses to requests for admissions are admissible as evidence and are to be made a part of the record in this cause.
The Petitioner sold special fuels to Zamora Truck and Car Services, Roberts Equipment Company and Florida Petroleum, Inc.
Petitioner was assessed by the Respondent for tax on 1,979,201 gallons of special fuel sold by it and paid tax and interest as set forth in the letter attached hereto as Exhibit A. That no penalty paid on any of the tax paid pursuant to that letter.
That Petitioner did not remit taxes that were due during the month the sales of special fuel were reported on any of the sale to Zamora, Roberts or Florida Petroleum or the remaining 1,417,263 gallons sold.
Zamora and Roberts represented to Belcher that they were purchasing all special fuel from Belcher for exempt agricultural use. Due to past dealings and delivery of the special fuel to a farm, Belcher believed and relied upon the facts represented to it by Zamora and Roberts. However, Belcher did not obtain written documentation of this agricultural use from Zamora or Roberts and did not furnish the Department with any such written documentation.
Belcher did not obtain resale certificates or exemption certificates or dealer license numbers from Zamora, Roberts or Florida Petroleum. Nor did the report forms filed by Belcher contain resale certificates, exemption certificates or dealer license numbers from Zamora, Roberts or Florida Petroleum.
An employee of the Department advised Belcher that Zamora and Roberts were under investigation for fraudulent failure to report taxes.
Belcher paid sales tax on sales of special fuel in the amount of
$18,589.53 on the sale of 538,030 gallons of special fuel.
Zamora is not a licensed dealer of special fuels.
Florida Petroleum is not a licensed dealer of special fuel.
Roberts is not a licensed dealer of special fuel.
Belcher did not fraudulently file incorrect monthly special fuels reports.
The Department of Revenue audited Belcher and computed tax, penalty and interest due as set forth in the documents attached hereto as Exhibit B.
The Department of Revenue advised Belcher of its duties regarding reporting requirements in the letters from L. N. Thomas attached as Exhibit C.
CONCLUSIONS OF LAW
Section 206.87(1), Florida Statutes (1975), provides:
"An excise tax of 8 cents per gallon is hereby imposed upon every gallon of special fuel used or sold in this state for use. 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 agent for the state in the collection of said tax whether he be the ultimate seller or not."
"Special fuels" are defined in Section 206.86(1), Florida Statutes (1975), to mean, "any liquid product or gas product or combination thereof used in an internal combustible engine or motor to propel any form of vehicle, machine, or mechanical contrivance, or used for the generation of power, heat, light, or energy .... "Use" is defined in Section 206.85(5), Florida Statutes (1975), to mean, "the placing of special fuel into any receptacle on a motor vehicle from which fuel is supplied for the propulsion thereof."
Section 206.87(2), Florida Statutes (1975), provides: "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(4), Florida Statutes (1975), provides for certain exempt sales of special fuel. Subsection (5) of Section 206.87 states that "Sales or exports enumerated in paragraphs (4)(a), (b) and (d), shall not be exempt from sales unless the sale or export is conducted by a person who is the holder of a valid license as a dealer of special fuels as issued by the department."
Section 206.89(1), Florida Statutes (1975), provides that, "No person shall act as a dealer unless he holds a valid dealer's license issued by the department ..." A "dealer" is defined under Section 206.86(8)(g), Florida Statutes (1975), to mean any person who holds a valid dealer of special fuels license issued by the department and who purchases or receives in this state special fuels in bulk quantities for resale to service stations, to a user or another dealer, or to the ultimate consumer for nontaxable consumption upon which the tax has not been paid.
Since the Petitioner in this case is seeking an exemption to a taxing statute, the burden of proof clearly rests with him to show that the sales of special fuels it made to the three purchasers were exempt from the tax imposed by Chapter 206, Florida Statutes, with any doubt being resolved in favor of the Respondent. See, for example, State v. Thompson, 101 so.2d 381 (Fla. 1958); State ex rel Szabo Food Service, Inc., of N.C. v. Dickinson, 286 So.2d 529 (Fla. 1974).
The Department of Revenue takes the position that under Chapter 206, Florida Statutes, and the relevant rules and regulations of the Department of Revenue, Petitioner could not and cannot sell special fuel on a tax-free basis to unlicensed purchasers of special fuel who purchase the fuel for resale purposes. The Petitioner takes the position that the Department's proposed assessment upon the sale of special fuel to Florida Petroleum in 1975 and 1976 is invalid because said fuel was used for tax exempt purposes.
In resolving this issue, it is noted that this very issue has been presented for review to the Department and a decision has been rendered by the First District Court of Appeal, Williams Energy Company v. Department of Revenue (1st DCA Fla. 1978, affirmed, per curiam).
There are existing means for establishing the exempt status of a sale. For example, the dealer may obtain a resale certificate verifying that the sale was made for resale purposes or he can establish the exempt status of the sale by sales invoices. As Petitioner sells most of its fuels for resale purposes, and not directly to the ultimate consumer, under the statutes and the relevant regulations, it is responsible for obtaining from its purchasers resale certificates in order to establish that their sales to the independent contractor were not taxable. Inasmuch as Petitioner's customers involved herein did not hold such licenses when the sales in question took place, the sales to such customers do not qualify for the exemption from taxes 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 is immaterial to Petitioner's tax liability. For this reason, the Petitioner's arguments going to the means by which alternative methods of establishing the tax exempt purposes for which the fuels were ultimately used are immaterial and are, therefore, rejected.
Finally, Petitioner's argument that the Respondent's rules implementing Chapter 206 in essence amends such statutes inasmuch as they are inconsistent with the provisions thereof, were considered and are rejected since the means by which an exempt status is established is clearly set forth in the Department rules (Chapter 12D-5.03, Florida Administrative Code). No showing has been made that such rule is unreasonable. Therefore, Petitioner having failed to establish the exempt status of the transactions pursuant to Rule 12D-
5.03 (1), Florida Administrative Code, such sales involved herein must be deemed to be for use in this state, Section 206.87(1), Florida Statutes (1977), and are, therefore, taxable transactions.
Based upon the foregoing findings of fact and conclusions of law, it is, RECOMMENDED:
That Respondent's assessment be upheld with respect to Petitioner's tax deficiency, penalty and interest as set forth in the assessments with adjustments to be made for payments paid by Petitioner under the "sales tax" theory.
DONE and ORDERED this 30th day of April, 1979, in Tallahassee, Florida.
JAMES E. BRADWELL
James R. McCachren, Jr., Esquire Ervin, Varn, Jacobs, Odom & Kitchen Post Office Box 1170
William D. Townsend, Esquire Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32301
