7

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BELCHER OIL COMPANY, )

)

Petitioner, )

)

vs. ) CASE NO. 80-288

) STATE OF FLORIDA, DEPARTMENT OF ) REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

This case is a dispute between a corporate tax payer, Belcher Oil Company, and the Office of the Comptroller over a claim filed by Belcher for a tax refund. The following appearances were entered:

APPEARANCES

For Petitioner: James R. McCachren, Jr., Esquire

Ervin, Varn, Jacobs, Odom & Kitchen Post Office Box 1170

Tallahassee, Florida 32302

For Respondent: Shirley W. Ovletrea

Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301

PRELIMINARY STATEMENT

These proceedings began on February 15, 1980, when Belcher Oil Company filed a petition for a final hearing on the denial of its claim for a refund. By a letter dated, February 19, 1980, the case was forwarded to the Division of Administrative Hearings for the assignment of a Hearing Officer and the scheduling of a final hearing. After numerous conferences of counsel and the scheduling of a final hearing it was agreed between the parties that no fact- finding hearing was required. Pursuant to their agreement a Stipulation of Facts was filed with the Hearing Officer on August 12, 1980.

FINDINGS OF FACT

1. On or before November 27, 1976, Petitioner did file a claim for refund of Florida corporate income tax for its fiscal year ending July 31, 1973. Such claim stated that a refund of $43,517 was due based on the decision reached in Leadership Housing, Inc., Case No. 74-6878, Circuit Court, 17th Judicial Circuit.

2. The claim referred to in paragraph 1 above was filed on or before the last day such claim could be filed.

   
   

3. By letter dated December 6, 1976, Petitioner was notified by Respondent that it could not favorably act upon the claim as the allowability of the claim rested solely upon the validity of a position which Respondent disagreed and was litigating or intended to litigate. Respondent further stated in said letter that it was neither approving nor denying Petitioner's claim at that time.

   
   

4. On September 1, 1978, Petitioner submitted another claim for refund for corporate income taxes for its fiscal year ending July 31, 1973. Such claim showed a lower amount of tax due to be refunded in accordance with the decision in S.R.G. Corporation v. Department of Revenue, State of Florida, 365 So.2d 687 (Fla. 1978), with the opinion entered June 30, 1978.

   
   

5. On September 1, 1978, Petitioner also filed a claim for refund of corporate income taxes paid for its fiscal year ending February 28, 1977.

   
   

6. The facts and circumstances supporting Petitioner's right to refund on the claim referred to in paragraph 5 above are the same as those supporting Petitioner's right to refund the claim which is the subject of this hearing.

   
   

7. On October 10, 1978, Petitioner was notified by letter from Respondent that no action would be taken on either of the claims for refund pending review of the Florida Supreme Court of its decision in S.R.G. Corporation.

   
   

8. In October, 1977, the Office of the Comptroller refunded the corporate income taxes per Petitioner's claim for refund relating to the fiscal year ending February 28, 1977 with certain adjustments consented to by Petitioner.

   
   

9. On January 20, 1980, Petitioner was formally notified of Respondent's intent to deny Petitioner's claim for refund for corporate income taxes paid for fiscal year ending July 31, 1973.

   
   

10. The sole question presented here is whether Respondent's denial of Petitioner's claim for refund based upon the grounds that "The claim for refund was not filed within the time limitations set forth in Section 214.16, Florida Statutes," is valid under the provisions of Chapter 120 and Chapter 214, Florida Statutes, as the same were in effect at the times set forth herein.

    
    

11. Should it be determined that Petitioner's claim for refund was timely filed in accordance with the statutes herein set forth above, Respondent will not allege further or different reasons for denial of the claim and will forthwith refund to Petitioner the amounts claimed to be due. (The foregoing findings are taken directly from the Stipulation of Facts.)

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this case, Section 120.57(1), Florida Statutes (Supp. 1980) and Section 120.65, Florida Statutes (1979).

    
    

13. Petitioner is a corporate taxpayer in Florida. Pursuant to the provisions of Section 214.15, Florida Statutes (1975) it applied for a refund of its 1973 FYE 1/ taxes in the amount of $43,517. Section 214.15 provided in pertinent part that:

    1. Every claim for refund shall be filed with the department in writing in such form as the department may by regulation prescribe, and shall state the amount claimed, the specific grounds upon which the claim is founded, and the taxable years or periods involved.

       
       

    2. As soon as practicable after a claim for refund is filed, the department shall

       examine the claim and either issue a notice of refund, abatement, or credit to the claimant or issue a notice of denial.

       However, if no notice is issued by the department before the expiration of 9 months from the date the claim was filed, the claim shall be deemed to have been denied for all purposes upon such expiration date.

       
       

       In this case the Department of Revenue has never issued a notice of refund, abatement or credit or a notice of denial. The Comptroller argues that the claim of Belcher was denied by operation of law as provided in paragraph 2 above. That means that the claim would have been denied on May 27, 1977 (9 months after November 27, 1976). If the claim was in fact denied in May 1977 and since no appeal was taken by Petitioner under Section 120.68, Florida Statutes (1975) the Comptroller argues that the denial is final.

       
       

14. To keep its claim viable, Petitioner argues that the denial by operation of law provision of Section 214.15(2), Florida Statutes (1975) was repealed by the enactment, effective January 1, 1975 of the new Administrative Procedure Act (APA), Chapter 120, Florida Statutes (1975). In support of its argument Belcher relies on the repeal of the automatic denial provision by Chapter 78-95, Laws of Florida (1978), a Reviser's Bill designed to eliminate portions of the Florida Statutes which conflict with the APA. This is a reasonable argument.

15. As explained by Section 120.722(1), Florida Statutes (1979): The primary purpose of Chapter 78-95, Laws of

    Florida, is to repeal or amend various

    provisions of the Florida Statutes containing procedural language superseded or redundant by Chapter 120 (the Administrative Procedure Act). Chapter 78-95 is designed to . . . place the provisions affected in conformity with Chapter 120, except where expressly noted to the contrary.

    
    

    The Legislature's hindsight interpretation in Chapter 78-95 of what it thought it was doing when the new APA was adopted is entitled to considerable weight here.

    
    

16. An automatic denial provision is antithetical to the whole ethos of the APA--that agencies come out into the open and explain what they are doing and why. Cf. Section 120.68(5)c), Florida Statutes (1979). If the automatic denial provision continued to be effective, a taxpayer would have no record for judicial review and no way to make one. At the time Petitioner's claim for

    refund was filed the Department of Revenue had no "point of entry" rule. As stated by Judge Smith in Capeletti v. Department of Transportation, 362 So.2d 346, 348 (Fla. 1st DCA 1978):

    
    

    Yet the agency's rule must clearly signal when the agency's free-form decisional process is completed or at a point when it is appropriate for an affected party to request formal proceedings if authorized, or to accept his statutory opportunity for informally structured proceedings under Section 120.57(2). In other words, an agency must grant affected parties a clear point of entry, within a specified time after some recognizable event in investigatory or other free-form proceedings, to formal or informal proceedings under Section 120.57.

    
    

17. From the foregoing it is concluded that the automatic denial provision of Section 214.15(2), Florida Statutes (1975) was repealed by the APA and Belcher's claim is still in the "free-form" state, never having been finally denied. Krestview Nursing Home v. Department of Health and Rehabilitative Services, 381 So.2d 240, 241 (Fla. 1st DCA 1978).

    
    

18. In addition to arguing that the automatic denial provision was repealed by implication by the APA, Belcher asserts that no denial can be made of its claim unless the Department of Revenue sends it a notice conforming to the provisions of Section 120.57(2)(a), Florida Statutes (1975). That provision of the APA requires:

    
    

    The agency shall, in accordance with its rules of procedure:

    
    

    1. Give reasonable notice to affected persons or parties of the agency's action, whether proposed or already taken, or of its decision to refuse action, together with a summary of the factual, legal, and policy grounds therefor.

    
    

    This portion of Belcher's argument is specifically rejected. If an agency had to give such a notice every time it granted or denied a refund, the wheels of government would soon be mired in notices. Capeletti v. Department of Transportation, supra at 348.

    
    

19. Because it has been determined that Belcher's first claim for refund is still pending and valid, it is not necessary to discuss the second claim for a refund filed by Belcher for 1973 FYE. Both parties agreed that this claim is time barred by Section 214.16, Florida Statutes (1975 and 1979).

CONCLUSION

Petitioner's first claim for refund was timely filed according to the provisions of Section 214.15 and 214.16, Florida Statutes (1975). Due to the repeal by the APA of the automatic denial provision of the Tax Administration Act Belcher's claim remains pending and valid. Because the Comptroller has

stipulated that he would not deny the claim except for the timeliness issue, the claim should be granted in the appropriate amount.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:

That the Office of the Comptroller enter a final order approving a refund to the Petitioner of that portion of its corporate income tax overpaid for the fiscal year ending in 1973.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 21st day of January, 1981.

MICHAEL PEARCE DODSON

Hearing Officer

Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 21st day of January, 1981.

ENDNOTE

1/ Fiscal year ending in 1973.

COPIES FURNISHED:

James R. McCachren, Jr., Esquire Ervin, Var, Jacobs, Odom & Kitchen Post Office Box 1170

Tallahassee, Florida 32302

Shirley W. Ovletrea Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301

Docket for Case No: 80-000288

Orders for Case No: 80-000288