vs. ) CASE NO. 79-2107
Respondent. )
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 January 23, 1980 in Tallahassee, Florida.
For Petitioner: Robert D. West, Esquire
John C. Stark & Associates
For Respondent: Barbara S. Harmon, Esquire
By letter dated October 12, 1979 Fort Myers Community Hospital, Inc., Petitioner, requested an administrative hearing on the Office of the Comptroller, Respondent, denial of its application for refund of taxes paid in 1973 and 1974.
The facts in this case are generally undisputed and at the commencement of the hearing Findings of Fact numbered 1-10 were stipulated by the parties.
Thereafter one witness was called by Petitioner and four exhibits were admitted into evidence.
Certain hospital equipment ("Equipment") was sold in 1973 and 1974 by Hospital Contract Consultants ("Vendor") to F & E Community Developers and Jackson Realty Builders (hereinafter referred to as "Purchasers") who simultaneously leased the Equipment to Petitioner. These companies are located in Indiana.
At the time of purchase, Florida sales tax ("Tax") was paid by the Purchasers and on or about March 18, 1974, the tax was remitted to the State of
Florida by the Vendor. However, the Tax was paid in the name of Medical Facilities Equipment Company, a subsidiary of Vendor.
In 1976, the Department of Revenue audited Petitioner and on or about April 26, 1976 assessed a tax on purchases and rental of the Equipment. On or about April 26, 1976, petitioner agreed to pay the amount of the assessment on the purchases and rentals which included the Equipment, in monthly installments of approximately Ten Thousand and no/100 Dollars ($10,000.00) each and subsequently paid such amount of assessment with the last monthly installment paid on or about November 26, 1976.
On or about December, 1976, the Department of Revenue, State of Florida, checked its records and could not find the Vendor registered to file and pay sales tax with the State of Florida. Petitioner then looked to the State of Indiana for a tax refund.
On or about January 4, 1977, Petitioner filed for a refund of sales tax from the State of Florida in the amount of Thirty Five Thousand One Hundred Four and 02/100 Dollars ($35,104.02). This amount was the sales tax paid to and remitted by various vendors for certain other equipment purchased in 1973 and 1974 and simultaneously leased. The amount of this refund request was granted and paid.
Relying upon the facts expressed in paragraph 4 heretofore, Petitioner on or about June 2, 1977 filed with the Department of Revenue of the State of Indiana for the refund of the Tax.
On or about June 7, 1979, the Department of Revenue of Indiana determined that the Vendor was registered in the State of Florida as Medical Facilities Equipment Company and therefore Petitioner should obtain the refund of the Tax form the State of Florida.
So advised, Petitioner then filed the request for amended refund, which is the subject of this lawsuit, on July 16, 1979 in the amount of Seventeen Thousand Two Hundred Sixteen and 28/100 Dollars ($17,216.28).
This request for refund was denied by Respondent, Office of the Comptroller, on the basis of the three year statute of non-claim set forth in section 215.26, Florida Statutes.
Purchasers have assigned all rights, title and interest in sales and use tax refunds to Petitioner.
During the audit of Petitioner in 1976 the lease arrangement on the equipment apparently came to light and Petitioner was advised sales tax was due on the rentals paid for the equipment. This resulted in an assessment against Petitioner of some $80,000 which was paid at the rate of $10,000 per month, with the last installment in November, 1976.
The auditor advised Petitioner that a refund of sales tax on the purchase of this equipment was payable and he checked the Department's records for those companies registered as dealers in Florida. These records disclosed that sales taxes on the sale of some of this rental equipment had been remitted by the sellers of the equipment but Hospital Contract Consultants was not registered. Petitioner was advised to claim a refund of this sales tax from Indiana, the State of domicile of Hospital Contract Consultants.
By letter on March 18, 1974, Amedco Inc., the parent company of wholly owned Hospital Contract Consultants, Inc. had advised the Florida Department of Revenue that Medical Facilities Equipment Company, another subsidiary, would report under ID No. 78-23-20785-79 which had previously been assigned to Hospital Contract Consultants Inc. which had erroneously applied for this registration. (Exhibit 2) Not stated in that letter but contained in Indiana Department of Revenue letter of April 18, 1979 was the information that the name of Hospital Contract Consultants had been changed to Medical Facilities Equipment Company.
The request for the refund of some $17,000 submitted to Indiana in 1976 was finally denied in 1979 after research by the Indiana Department of Revenue showed the sales tax had been paid to Florida and not to Indiana.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings.
Here there is no dispute that had the refund request been timely filed Petitioner would have received the refund from Respondent.
Section 215.26 Florida Statutes provides in pertinent part:
Applications for refunds as provided by this section shall be filed with the Comptroller, except as otherwise provided herein, within three years after the right to such refund shall have accrued else such right shall be barred.
(exceptions not here applicable)
Petitioner takes the position that the acts of Respondent's agents induced petitioner to file its application for refund to the state of Indiana, that this filing and processing by Indiana caused the delay in submitting the claim for refund to Florida and therefore Respondent is estopped from asserting the statute of limitations as a bar to the otherwise valid claim.
While it has been held that the refunding of taxes paid is a matter of governmental grace, State ex rel Victor Chemical Works v. Gay, 74 So.2d 560 (Fla. 1954), the legislative intent regarding sales tax as expressed in Section 212.12(12) Florida Statutes is there be no duplication or pyramiding of the tax. The requirement placed upon Petitioner to pay sales tax on the rental of the Equipment gave rise to the refund of sales tax paid by the purchaser.
Here the right to refund accrued when the taxes were paid. State ex rel Victor Chemicals Works v. Gay, supra. Even if the right to refund did not accrue until Petitioner was made aware of this right during the audit, the claim for refund still was not filed within three years of this time.
The object and nature of limitations of actions are described in 21 Fla. Jur. Limitations of Actions, Sec. 3 as follows:
Statutes of limitations are predicated on public policy, and are designed to prevent the assertion of stale claims
after the lapse of a long period of time.
In general experience, claims that are valid are not usually allowed to remain unenforced. It is the function of a statute of limitations to encourage promptness in this respect by fixing arbitrary periods within which the right to enforce such claims must be asserted. Requiring those who complain of injuries to seek redress by action within an
appropriate time imposes a salutory vigilance and puts an end to litigation.
In general, a statute of limitations may not be asserted as a ground for affirmative relief. It gives rise merely to a personal defense of which a party may avail himself or not, as he pleases. (citations omitted)
Respondent contends that the Comptroller cannot waive the statute of limitations as could an individual. I agree. However in determining whether or not the Respondent is estopped to assert such defense the reasons behind the limitations of actions statutes as well as those factors involved in estoppel must be considered.
Estoppel is a doctrine for the prevention of injustice. Therrell v. Reilly, 151 So. 305 (Fla. 1932); Ennis v. Warm Mineral Springs, Inc. 203 So.2d
514 (Fla. 2nd DCA 1967). While equitable estoppel is not applied against the state as freely as against individuals, it may be invoked where necessary to prevent injustice and wrongs, provided the restraint does not interfere with the exercise of governmental powers. Callaway v. Stetson, 448 F. Supp. 575 (D.C. Fla. 1978); Trustees of Internal Improvement Fund v. Cloughton, 06 So.2d 775 (Fla. 1956)
Although the state may under certain circumstances be estopped, such circumstances must be exceptional and must include some positive act on the part of some officer of the state upon which the aggrieved party had the right to rely and did rely to its detriment. Greenhut Construction Co. v. Knott, 247 So.2d 417 (Fla. 1 DCA 1971)
Here the state's auditor advised Petitioner that records of the state did not show sales tax paid to Florida on the Equipment and there would be no basis for Petitioner to claim a refund from Florida. If sales tax was in fact paid, of which Petitioner had obviously been advised, such tax must have been paid in Indiana and the refund should be claimed from Indiana. Relying on this information Petitioner filed a claim for refund with Indiana and while awaiting a determination by Indiana that the sales tax on the Equipment had in fact been paid to Florida in the name of Medical Facilities Equipment Company the three years limitation of Section 215.26 ran.
The general effect of one being estopped to enforce a claim (here to insert the defense of limitations of actions) is his plight is substantially the same as it would have been if the claim (or defense) had never existed. Here the effect of equitable estoppel would be to preclude what would otherwise be a good defense.
Respondent, through its agents, was aware of Petitioner's right to a refund as soon as, if not before, Petitioner became so aware. These same agents
assisted Petitioner in submitting the refund claim to Respondent which Respondent's agent believed at the time to constitute the entire refund available from Florida. In this respect this case is similar to Hardy, Hardy and Associates, Inc. v. Department of Revenue, 300 So.2d 187 (Fla. 1st DCA 1975) In Hardy, the taxpayer was advised he should pay the disputed tax so the running of interest would stop and a refund would be in order if the Department's decision was reversed by higher authority. When suit was subsequently filed against the State by the taxpayer, the Deparment of Revenue interposed the defense that a claim for refund had not been made by taxpayer within three years of his right to such refund. In overruling this defense the court stated at p. 189:
... we determine that the conduct of the employees or agents of the State of Florida, as contained in the filed letters between the taxpayer and the State Agencies amounted to a complete estoppel for the State or any of its agencies, to claim as an affirmative defense the lack of a formal or timely application for refund.
Here the conduct of Respondent's agents was the motivation behind Petitioner applying to Indiana for a refund of taxes actually paid to Florida. While the actions of these employees was innocent of any intentional misleading of Petitioner, nevertheless Petitioner did rely on these representations to its detriment in waiting to file for a refund of taxes wrongly paid to Florida. This gives rise to estoppel.
From the foregoing it is concluded that the acts of Respondent's agent or agents in advising Petitioner to file its claim for refund of sales taxes paid on the Equipment to Indiana were such that Respondent is estopped from interposing the defense to the claim for refund from Florida that the claim of Petitioner is barred by the three year limitation period of Section 215.26 Florida Statutes. It is therefore
RECOMMENDED that the claim of Petitioner for refund of sales taxes paid on the Equipment in 1974 in the amount of $17,216.26 he honored.
ENTERED this 13th day of February, 1980, in Tallahassee, Florida.
K. N. AYERS, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301
Robert D. West, Esquire JOHN C. STARK & ASSOCIATES
Barbara S. Harmon, Esquire Assistant Attorney General Department of Legal Affairs The Capitol
