STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ERNST WYSS, )

)

Petitioner, )

)

vs. ) CASE NO. 81-264

) DEPARTMENT OF REVENUE and OFFICE ) OF THE COMPTROLLER, STATE OF ) FLORIDA, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause was heard by Linda M. Rigot, the assigned Hearing Officer of the Division of Administrative Hearings, on April 17, 1981, in Miami, Florida.

APPEARANCES

For Petitioner: Michael Lechtman, Esquire

801 Northeast 167th Street, Suite 301 North Miami Beach, Florida 33162

For Respondent: John Browdy, III, Esquire

Department of Legal Affairs The Capitol

Tallahassee, Florida 32301

The Respondent Department of Revenue issued a Warrant for Collection of Delinquent Sales and Use Tax arising form the purchase of a yacht by the Petitioner. The Petitioner paid under protest the amount of tax assessed, together with interest thereon and filing fees, but refused to pay the penalty assessed. Thereafter, Petitioner filed a Petitioner for Formal Proceedings, seeking both a refund of the moneys paid by him and a determination that his purchase of the yacht is exempt from taxation. According, the issues for determination are as follows: (1) whether the sales and use tax applies to the Petitioner's purchase of the vessel; and (2) if the sales and use tax does apply, then whether the penalty provision applies.

The Petitioner testified on his own behalf and presented the testimony of Ralph E. Martin. Additionally, Petitioner offered his Exhibits 1 through 12. All of the Petitioner's Exhibits were received in evidence except for Petitioner's Exhibit numbered 11, which was not admitted and was marked for identification only. The Respondents offered the testimony of Ralph E. Martin and offered their Exhibits 1 and 2, both of which were received in evidence.

Both the Petitioner and the Respondents submitted post-hearing memoranda of law, and the Petitioner submitted a proposed order. To the extent that the Petitioner's proposed order contains proposed findings of fact which have not

been adopted in this Recommended Order, they have been rejected as not having been supported by the evidence, as having been irrelevant to the issues under consideration herein, or as constituting unsupported argument of counsel or conclusions of law.

FINDINGS OF FACT

1. Petitioner is a Swiss national, who resides in Jamaica. His business in Jamaica involves water sports and vacation tours, primarily for European tourists. Petitioner attended a boat show in Fort Lauderdale, Florida, in order to locate a suitable boat for entertainment and tour purposes for use by his business in Jamaica. There, he saw The Lady, a vessel being brokered by Anchorline Yacht and Ship Brokerage, Inc., of St. Petersburg, Florida.

   
   

2. On February 28, 1980, Petitioner purchased The Lady from Anchorline for

   $120,000. Prior to that date, a survey was conducted by Wilkinson Company, marine surveyors, and repairs indicated by that survey were completed at South Pasadena Marina, Inc.

   
   

3. At the time that Petitioner purchased The Lady from Anchorline, he advised the broker that he was taking the vessel out of the country. Accordingly, the broker required Petitioner to sign an affidavit that Petitioner had read the provisions of Section 212.05, Florida Statutes, and no tax was collected on the sale and purchase of The Lady.

   
   

4. As The Lady was journeying from St. Petersburg across the State of Florida to West Palm Beach in order to reach Jamaica, she started taking on water. She was taken to Lantana Boatyard, where another marine survey was conducted. That survey concluded that The Lady was not seaworthy and, therefore, could not be taken to Jamaica at that time. As one of the required repairs, her engines needed to be overhauled by Cummins in Miami. Accordingly, after the repairs to be made at the Lantana Boatyard were completed, The Lady was taken to the Keystone Point Marina in North Miami, Florida, so that the work on her Cummins engines could be undertaken.

   
   

5. During this time, Petitioner attempted to register The Lady in Jamaica; however, the Jamaican Government refused to license or register the vessel since she was not in Jamaica but was still physically located within the State of Florida. As a result of discussion between Petitioner and a Mr. Mathews at Anchorline, on September 18, 1980, the Petitioner made application for a Florida boat Certificate of Title at a tag agency. He reported the purchase price as ten dollars and, accordingly, paid forty cents tax on the transaction.

   
   

6. Cummins started the repair work necessary on The Lady's engines while she had been docked at the Keystone Point Marina. On occasion, Petitioner has stayed overnight on The Lady for security purposes. He has had a telephone attached to the vessel for his personal use while on board.

   
   

7. On January 7, 1981, Respondent Department of Revenue issued a Warrant for Collection of Delinquent Sales and Use Tax against the Petitioner in the total amount of $9,967.37, representing the follows:

   
   

   Tax	$4,799.60
   Penalty	4,799.60
   Interest	350.17
   Filing Fee	18.00
   	$9,967.37

8. On January 19, 1981, Petitioner made payment to Respondent Department of Revenue in the amount of $5,167.77, which payment was made under protest and which payment represents the amount of tax, interest, and filing fees, but does not include the amount of penalty.

   
   

9. Pursuant to its warrant, the Department of Revenue has chained The Lady to the dock at the Keystone Point Marina. Accordingly, the work being performed by Cummins on her engines has not been completed, and no sea trial can be conducted.

   
   

10. As stipulated by the parties, since the Petitioner purchased The Lady, she has been under repair and has never left Florida waters.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the subject matter hereof and the parties hereto, Section 120.57(1), Florida Statutes (1979).

    
    

12. Section 212.05, Florida Statutes (1979), establishes a four percent tax on the sale, storage, and use of tangible personal property in the State of Florida. That section also provides an exemption from such four percent tax as follows:

    
    

    1. This subsection shall not apply to the sale of a boat by or through a registered dealer under this chapter to a purchaser who removes such boat from this state within 10 days after the date of purchase or, when the boat is repaired or altered, within 10 days after completion of such repairs or alterations. In no event shall the boat remain in this state more than 90 days after the date of purchase. This exemption shall not be allowed unless the seller:

       1. Obtains from the purchaser within 90 days from the date of sale written proof that the purchaser licensed, registered, or documented the boat outside of the state:

       2. Requires the purchaser to sign an affidavit that he has read the provisions of this section; and

       3. Makes the affidavit a part of his permanent record.

          
          

          In the event the purchaser fails to remove the boat from this state within 10 days after purchase or, when the boat is repaired or altered, within 10 days after completion of such repairs or alterations, or permits the boat to return to this state within 6 months from date of departure, the purchaser shall be liable for use tax on the cost price of the boat and, in addition thereto, payment of a penalty to the Department of Revenue equal to the tax payable. This penalty shall be in

          lieu of the penalty imposed by s. 212.12(2) and is mandatory and shall not be waived by the department.

          
          

13. Petitioner claims entitlement to the exemption provided in Section 212.05(1)(c), Florida Statutes, and argues that, accordingly, no taxable transaction took place when he purchased The Lady. This argument is without merit. The statute clearly states that the exemption can only be claimed if the seller obtains an affidavit from the purchaser to become part of his permanent record and also obtains within ninety days from the date of sale written proof that the purchaser has registered the boat outside of the State of Florida. Although Petitioner has attempted in good faith to comply with the mandatory language of the statute, he admittedly was not able to so register The Lady within ninety days from February 28, 1980. Accordingly, Petitioner has failed to show compliance, although through no fault of his own, with the statutory requirements.

    
    

14. Petitioner next argues that the time by which he must comply with the statute has not yet begun for the reason that he has ten days after completion of repairs in which to remove the vessel from the state. He reasons that since the vessel has never been in a state of repair and, therefore, accordingly has never been capable of being removed from the state, then his deadline for registration of the vessel outside of the State of Florida is automatically extended. Although this argument is persuasive under the harsh facts of this case, the Legislature clearly limited the period of time over which repairs can be extended by provided that under no circumstances could the vessel remain in Florida for more than ninety days after the date of purchase and still qualify for the exemption from taxation. Upon the Petitioner's failure to register the vessel outside of Florida within ninety days from the date of sale and upon his failure to remove the boat from the state within that same time period, Petitioner lost his entitlement to the statutory exemption, and Petitioner became obligated to pay the sales tax on his purchase of The Lady. Accordingly, the Respondent Department of Revenue's assessment of a four percent sales tax on Petitioner's purchase of The Lady upon Petitioner's failure to comply with the requirements of the statute by the statutory deadline is proper, and Petitioner has failed to sustain his burden of proving entitlement to the statutory exemption.

    
    

15. The Department of Revenue also seeks to impose upon the Petitioner a penalty equal to the sales tax. The statute clearly imposes such a penalty if the purchaser fails to remove the boat from this state within ten days after purchase or completion of repairs or permits the boat to return to this state within six months from the date of departure. The parties have stipulated that The Lady has never been repaired and has never left Florida waters since she was purchased by the Petitioner on February 28, 1980. Accordingly, Petitioner has not failed to remove the boat from this state within ten days after completion of repairs and has not permitted the boat to return to this state within six months from date of departure. Accordingly, the penalty imposed upon the occurrence of either of those two conditions simply does not apply to the Petitioner. Had the Legislature not included within the statute the language "[i]n no event shall the boat remain in this state more than 90 days after the date of purchase," then the Petitioner's purchase of The Lady would not yet, if ever, constitute a taxable event. Since the only reason that Petitioner has become obligated to pay the sales tax on The Lady's purchase is the absolute deadline provided in the statute for removal of the vessel from the state, and since the two conditions under which the penalty can be imposed have not been

    met by the Petitioner, the Department of Revenue has erroneously invoked the penalty provision of Section 212.05(1)(c), Florida Statutes.

    
    

16. One additional issue raised by the Petitioner herein requires mention. Petitioner argued that no taxable event occurred when he purchased The Lady since he is an alien and, accordingly, approval of the United States Maritime Administration was required to be obtained. Issues concerning the validity, or rescission, of contracts between private parties are not within the jurisdiction of the Division of Administrative Hearings. Such issues can only be litigated before a court of competent jurisdiction and, accordingly have not been considered herein.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusions of law, it is therefore,

RECOMMENDED THAT:

A final order be entered denying Petitioner's claim for a refund, finding the Petitioner liable for a sales tax equal to four percent of the purchase price, together with interest and filing fees, but finding the penalty assessed against Petitioner to be erroneous and therefore invalid.

DONE AND ENTERED this 8th day of October 1981 in Tallahassee, Florida.

LINDA M. RIGOT

Hearing Officer

Division of Administrative Hearings 2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 8th day of October 1981.

COPIES FURNISHED:

Michael Lechtman, Esquire

801 N.E. 167th Street, Suite 301 North Miami Beach, Florida 33162

John Browdy, III, Esquire Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32301

Mr. Randy Miller Executive Director Department of Revenue

102 Carlton Building Tallahassee, Florida 32301

The Honorable Gerald A. Lewis Comptroller, State of Florida The Capitol

Tallahassee, Florida 32301

Docket for Case No: 81-000264

Orders for Case No: 81-000264