STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

VANGUARD INVESTMENT COMPANY, )

)

Petitioner, )

)

vs. ) CASE NO. 82-3464

)

OFFICE OF THE COMPTROLLER, )

)

Respondent. )

)

RECOMMENDED ORDER

This case was heard pursuant to notice on March 3, 1983, in Fort Lauderdale, Florida, by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings. This case arose on the denial by the Office of Comptroller of a request for a refund of sales taxes paid by the Petitioner, Vanguard Investment Company. Vanguard initiated its request for administrative relief in a timely fashion, and the matter was referred by the Office of Comptroller to the Division of Administrative Hearings to conduct a formal hearing pursuant to the provisions of Chapter 120, Florida Statutes.

APPEARANCES

For Petitioner: Edward S. Kaplan, Esquire

907 DuPont Plaza Center Miami, Florida 33131

For Respondent: William G. Capko, Esquire

Assistant Attorney General Office of Comptroller

The Capitol, Suite 203 Tallahassee, Florida 32301

Thomas L. Barnhart, Esquire Assistant Attorney General Department of Legal Affairs The Capitol, Suite LL04 Tallahassee, Florida 32301

ISSUE

There is little controversy as to the facts in this cause. The issue is essentially a legal issue and is stated as follows:

When parties act in reliance and in conformity to a prior construction by an agency of a statute or rule, should the rights gained and positions taken by said parties be impaired by a different construction of said statute by the agency?

Both parties submitted post hearing proposed findings of fact in the form of proposed recommended orders filed March 17 and 18, 1983. To the extent the proposed findings of fact have not been included in the factual findings in this order, they are specifically rejected as being irrelevant, not being based on the most credible evidence, or not being a finding of fact.

FINDINGS OF FACT

1. The Petitioner, Vanguard Investment Company, is a Florida corporation with its principal offices at 440 Northeast 92nd Street, Miami Shores, Florida 33138.

   
   

2. On or about March 3, 1981, Vanguard purchased an aircraft described as a Turbo Commander, serial number N9RN, from Thunderbird Aviation, Inc., for a purchase price of $120,000 plus $4,800 in sales tax. The sale price plus the sales tax was paid by Vanguard to Thunderbird, which remitted the $4,800 in sales tax to the Department of Revenue (DOR) less a three percent discount as authorized by law.

   
   

3. On February 27, 1981, Vanguard had executed a lease of said aircraft to General Development Corporation for a term of two years commencing on March 1, 1981, contingent upon Vanguard's purchase of said aircraft from Thunderbird.

   
   

4. Prior to March 1, 1981, General Development had leased said aircraft from Thunderbird, and the least terminated on February 28, 1981. Vanguard purchased said aircraft for the sole purpose and in anticipation of continuing its lease to General Development. Vanguard never took possession or control of said aircraft, which remained in General Development's possession at Opa-locka Airport in Dade County, Florida.

   
   

5. No controversy exists that all sales tax payable under General Development's lease of the aircraft, both with Thunderbird and subsequently with Vanguard, had been remitted to DOR with no break in continuity of the lease as a result of the change in ownership of the aircraft on or about March 1, 1981.

   
   

6. At the time Vanguard purchased the aircraft from Thunderbird, Vanguard had not applied for or received a sales and use tax registration number pursuant to Rule 12A-1.38, Florida Administrative Code.

   
   

7. Vanguard applied for said sales and use tax registration number on or about April 2, 1981, approximately 30 days after the purchase of said aircraft. The sales and use tax registration number was granted by DOR on or about April 23, 1981. Shortly thereafter, Vanguard inquired of DOR concerning a refund of the $4,800 in sales tax paid on the aircraft plus the three percent discount taken by Thunderbird. In lieu of Vanguard's providing Thunderbird a resale certificate and having Thunderbird apply for the sales tax refund, it was suggested that Vanguard obtain an assignment of rights from Thunderbird and apply directly for the refund because Thunderbird had been dissolved immediately after the sale of the aircraft to Vanguard. Acquisition of the assignment of rights from Thunderbird by Vanguard was delayed by the dissolution of Thunderbird and the death of Thunderbird's principal officer. Vanguard received the assignment of rights from Thunderbird on or about July 1, 1982, and immediately applied for a refund of the sales tax. Said application for refund was well within the three years permitted by Florida law to apply for a sales tax refund.

8. On November 22, 1982, the Office of Comptroller (OOC) notified Vanguard of its intent to deny Vanguard's application for the sales tax refund because Vanguard had failed to obtain a sales and use tax registration number prior to purchasing the aircraft from Thunderbird.

   
   

9. At the time of the purchase, it was the policy of DOR to permit individuals to apply late for a sales and use tax registration number and not to deny refunds on the basis that the applicant did not have the sales and use tax registration number at the time of the taxable purchase.

   
   

10. On or about July 1, 1982, this policy of DOR was altered to conform with the decision of the Florida Supreme Court in State Department of Revenue v. Robert N. Anderson, 403 So.2d 297 (Fla. 1981).

    
    

11. Vanguard was aware of the DOR policy at the time of the sale, relied on that policy, and conformed to that policy. It was clearly stated that had Vanguard applied for its refund even a month earlier, in June of 1982, the refund would have been approved under the then-existing policy.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Department of Revenue is charged under Chapter 212, Florida Statutes, with approving applications for sales tax refunds and recommending same to the Office of Comptroller. This Recommended Order is entered pursuant to the provisions of Section 120.57, Florida Statutes.

    
    

13. The sole basis for the denial of Vanguard's application for its sales tax refund is that Vanguard lacked the sales and use tax registration number at the time it purchased the subject aircraft from Thunderbird. The decision of OOC to deny Vanguard's application for its sales tax refund is contrary to DOR's prior policy of permitting late applications for sales and use tax registration numbers and the policy of not disapproving applications for refunds solely because of failure to obtain the registration number prior to the sale.

    
    

14. The OOC cites State Department of Revenue v. Robert N. Anderson, 403 So.2d 397, in support of its denial of the refund. While Anderson, supra, is the definitive case in this area, the facts presented in the instant matter differ significantly from those presented in Anderson. In Anderson, supra, some conflict existed concerning the nature of the agency's policy concerning late application for sales and use tax certificates. In the instant case, the evidence is uncontroverted that the agency's policy at the time of the taxable event was to permit late application for sales and use tax registration certificates and to approve refunds for sales made before acquisition of said certificates. The situation presented in the instant case is more in line with that of Outdoor Advertising Art, Inc. v. Florida Department of Transportation,

    366 So.2d 114 (Fla. 1st DCA 1979), than that presented in Anderson, supra. Vanguard's personnel were aware of the agency's policy, they relied on the agency's policy, and they conformed to that policy. All of the elements necessary to establish an estoppel are present as presented in the majority opinion in Anderson, supra.

    
    

15. The result of such a shift in policy is addressed by Chief Justice Sundberg in his dissent to Anderson, supra, as follows:

Because the hearing examiner found that the department had changed its

policy or practice regarding the necessity

for the dealer's certificate during

the progress of its determination of the tax due from the sale of respondent's boats, which finding was accepted by the district court of appeal, I would approve the decision of the district court upon this alternative holding. See section 120.68(12)(b), Florida Statutes (1979); Shaw v. Shaw, 334 So.2d 13 (Fla. 1976); Westerman v. Shell's City, Inc., 265 So.2d 43 (Fla. 1972). (Page 401.)

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the application of Vanguard Investment Company for refund of sales tax be approved, and that said refund be paid by the Office of Comptroller.

DONE and RECOMMENDED this 25th day of April, 1983, in Tallahassee, Leon County, Florida.

STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 25th day of April, 1983.

COPIES FURNISHED:

Edward S. Kaplan, Esquire 907 DuPont Plaza Center Miami, Florida 33131

William G. Capko, Esquire Assistant Attorney General Office of Comptroller

The Capitol, Suite 203 Tallahassee, Florida 32301

Thomas L. Barnhart, Esquire Assistant Attorney General Department of Legal Affairs The Capitol, LL04 Tallahassee, Florida 32301

The Honorable Gerald A. Lewis Office of Comptroller

The Capitol

Tallahassee, Florida 32301

Docket for Case No: 82-003464

Orders for Case No: 82-003464