STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

B & D INTERNATIONAL YACHT ) CHARTERS, LTD., )

)

Petitioner, )

)

vs. ) CASE NO. 85-2427

)

DEPARTMENT OF REVENUE, )

STATE OF FLORIDA, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William

1. Kendrick, held a public hearing in the above-styled case on September 27, 1985, in Tallahassee, Florida.

   
   

   APPEARANCES

   
   

   For Petitioner: No appearance.

   
   

   For Respondent: Edwin A. Bayo, Esquire

   Assistant Attorney General Department of Legal Affairs Tax Section - The Capitol Tallahassee, Florida 32301

   
   

   PRELIMINARY STATEMENT

   
   

   By Petition for Administrative Hearing filed July 17, 1985, Petitioner, B & D International Yacht Charters, Ltd., challenged the assessment of the Respondent, Department of Revenue (Department), that Petitioner was liable for use tax, interest and penalties incident to its purchase of the motor yacht, Realite.

   
   

   By request for production, served August 2, 1985, and interrogatories, served August 5, 1985, the Department sought to obtain, inter alia, a copy of the yacht's log, a

   copy of all charter or lease agreements, a chronological list of the yacht's ports-of-call, and a list of all marinas at which the yacht had been moored. The purpose of the Department's discovery requests was to rebut Petitioner's assertion that the Realite was purchased in Nassau, Bahamas, as opposed to Fort Lauderdale, Florida, and to rebut Petitioner's assertion that the Realite's presence in the State of Florida during October 1983 was for repair work, as opposed to a taxable use.

   
   

   Petitioner did not respond to the Department's discovery requests. Consequently, on the Department's motion, Petitioner was ordered to produce the requested documents and file its answers to the Department's interrogatories, on or before September 26, 1985.

   Petitioner failed to comply with the Hearing Officer's order. Therefore, on the Department's motion, pursuant to Rule 1.380(b), Fla. R. Civ. P., the Hearing Officer entered an order, which deemed established as fact, that the purchase of the Realite occurred in the State of Florida, and that her presence in the State of Florida, within six months of her date of purchase, was for reasons other than repair work.

   
   

   The Department's answer admitted paragraphs 1-3, 4(B) & (C), 5-7, and 8(A)-(C), of the Petition for Administrative Hearing. At final hearing, the Department offered Exhibits 1 and 2, and they were received into evidence.

   
   

   The Department has submitted proposed findings of fact and conclusions of law, and they have been reviewed, considered, and adopted. No proposed findings of fact and conclusions of law have been filed on behalf of Petitioner.

   
   

   FINDINGS OF FACT

   
   

   1. On July 8, 1983, Petitioner, B & D International Yacht Charters, Ltd., a California corporation, purchased the 96-foot motor yacht, Realite, from Broward Marine, Inc., 1601 Southwest 20th Street, Fort Lauderdale, Florida, for the sum of $2,495,787.02. Petitioner paid no Florida sales tax on the purchase of the Realite. On October 14 and 16, 1983, the Realite was observed operating in the State of Florida.

   2. On January 24, 1985, the Department issued a "Notice of Delinquent Tax, Penalty and Interest Due and Assessed," against Petitioner, on the purchase of the Realite. The Department's assessment claimed (1) Florida State Sales/Use Tax of 5% ($124,789.35), (2) a penalty of 5% per month, up to a maximum of 25% of the tax due ($31,197.34), (3) the statutory penalty of, 100% of the tax due ($124,789.35), and (4) interest on the tax due at the rate of 1% per month from the date of purchase.

      
      

   3. Petitioner, pursuant to Section 72.011, Florida Statutes, initiated a proceeding under Section 120.57, Florida Statutes, to contest the Department's assessment. Petitioner alleged it was not liable for the use tax because the Realite had been purchased in Nassau, Bahamas, and that her presence in the State of Florida, in October 1983, was for the sole purpose of having warranty repair work done. However, Petitioner offered no evidence that the purchase of the Realite occurred in Nassau, Bahamas, or that the reason for her presence in the State of Florida, in October 1983, was for warranty repair work.

      
      

      CONCLUSIONS OF LAW

      
      

      1. The Division of Administrative Hearings has jurisdiction over the parties to, and subject matter of, these proceedings.

         
         

      2. Section 212.05, Florida Statutes, provides:

Sales, storage, use tax.--It is declared to be the legislative intent that every person is exercising a taxable privilege who engages in the business of selling tangible personal property at retail in this state, or who rents or furnishes any of the things or services taxable under this chapter, or who stores for use or consumption in this state any item or article of tangible personal property as defined herein and who leases or rents such property within the state.

1. For the exercise of such privilege, a tax is levied on each taxable transaction or incident, which tax is due and payable as follows:

   
   

   1. 1. At the rate of 5 percent of the sales price of each item or article of tangible personal property when sold at retail in this state, computed on each taxable sale

for the purpose of remitting the amount of tax due the state, and including each and every retail sale. Each occasional or isolated sale of an aircraft, boat, or motor vehicle of a class or type which is required to be registered, licensed, titled, or documented in this state or by the United States Government shall be subject to tax at the rate provided in this paragraph.

1. This paragraph does 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 pur

   chaser licensed, registered, or documented the boat outside the state:

   
   

   * * *

   
   

   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 the 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.

   
   

2. The Department has established that Petitioner's purchase of the Realite and her use in the State of Florida within six months thereafter were taxable uses under Section 212.05 Florida Statutes.

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

RECOMMENDED that the Department of Revenue enter a Final Order sustaining the Department's assessment, and dismissing the Petitioner's contest with prejudice.

ENTERED this 18th day of October, 1985, at Tallahassee, Florida.

WILLIAM J. KENDRICK

Hearing Officer

Division of Administrative Hearings Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301 904/488-9675

FILED with the Clerk of the Division of Administrative Hearings this 18th day of October, 1985.

Copies furnished:

Timothy J. Warfel, Esq. Post Office Box 1876 Tallahassee, FL 32302

William D. Townsend, Esq. General Counsel Department of Revenue

104 Carlton Building Tallahassee, FL 32301

Randy Miller, Executive Director Department of Revenue

102 Carlton Building Tallahassee, FL 32301

Edwin A. Bayo, Esq. Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, FL 32301

Docket for Case No: 85-002427

Orders for Case No: 85-002427