> > fe "ey ey Pa € STATE OF FLORIDA DEPARTMENT OF REVENUE// 0, TALLAHASSEE, FLORIDA cS RED TAG FURNITURE DISCOUNT, INC., Petitioner, Lae vs. Case No. 00-3112 Dok Ol- 8-FOF THE FLORIDA DEPARTMENT OF REVENUE, Respondent . 5m e-Club. FINAL ORDER This cause having come on before the State of Florida, Department of Revenue (hereinafter, "the Department"), for the. purpose of issuing a final order. The hearing officer assigned by the Division of Administrative Hearings heard this cause and . issued an Order Relinquishing Jurisdiction with Recommended : Disposition, a copy of which is attached hereto. The recommended order provided in part that the parties have the right to submit written exceptions within 15 days from the date of the order. No exceptions have been received by the Department. For the reasons expressed herein the Department adopts the Hearing Officer's Recommended Order. The Department has jurisdiction of this cause. FINDINGS OF FACT There are no genuine issues of material fact. The undisputed material facts are fully set forth within: (a) the Department’s Requests for Admissions (hereinafter, “RFA’s”), all of which were deemed admitted by order dated October 13, 2000; and (b) the Petitioner’s response to interrogatories. The undisputed facts show that Petitioner is a Florida corporation, engaged in the retail sale of home furniture and headquartered in Miami, Florida. RFA #1-3. On or about July 24, 2000 the Petitioner filed an administrative challenge to the Department’s Notice of Decision (“NOD”), a copy of which was attached to the Petition. The NOD represents final agency action sustaining the Department’s “assessments” of liability for Ch. 212 tax, penalty and interest. The assessments arose from an audit of the period 9/1/92 through 8/31/97 (hereinafter, “audit * period”). RFA #5-68. ’ During the audit, the Department examined various books and records of the Petitioner, including federal 112058 informational returns for the taxable years 1992-1996 and other books and records of the Petitioner. RFA #6-7. Throughout the audit, Petitioner was represented by its CPAs. Petitioner failed to claim a credit for its bad debts within 12 months from the date following the month in which the bad debts were written off for federal income tax purposes. RFA #84. But for the fact that the Department has audited and assessed the Petitioner, Petitioner would agree that it has failed to meet the time limits for seeking a credit for bad debts written off. RFA #85. Petitioner maintains that a time barred credit can create an "overpayment" for purpose of a set-off during an audit period. RFA #88. The Petition filed in this action raised several issues; however, on March 2, 2001 the Petitioner expressly waived all issues except the issue of whether the Petitioner is entitled to claim an offset. _ (Response to the Department's Motion for Summary Reconimended Order and the Petition's Cross Motion for Summary Recommended Order dated March 1, 2001.) Since there are no disputed facts, the determination of the offset issue is solely a question of law. CONCLUSION OF LAW The sole issue presented is whether Petitioner is entitled to claim an offset against assessed sales tax liability, based. upon a claim of credit for bad debts, when the claim of credit was not made within 12 months from the date following the month in which the bad debts were written off for federal income tax purposes. Petitioner’s credit transactions are taxable pursuant to. Section 212.06(1) (a), Florida Statutes, which provides: 212.06 Sales, storage, use tax; collectible from dealers; "dealer" defined; dealers to collect from purchasers; legislative intent as to scope of tax (1) (a) The aforesaid tax at the rate of 6 percent of the retail sales price as of the moment of sale, 6 percent of the cost price as of the moment of purchase, or 6 percent of the cost price as of the moment of commingling with the i general mass of property in this state, as the case may be, shall be collectible from all dealers as herein defined on the sale at retail, the use, the consumption, the distribution, and the storage for use or consumption in this state of tangible personal property or services taxable under this chapter. The full amount of the tax on a credit sale, installment sale, or sale made on any kind of deferred payment plan shall be due at the moment of the transaction in the Same manner as on a cash sale. (Emphasis Supplied). This statute makes credit sales taxable as of the moment of purchase, without regard to whether cash is ever received. However, as a matter of legislative grace, the Legislature has ereated the following credit provision: 212.17. Credits for returned goods, rentals, or admissions; goods acquired for dealer's own use and subsequently resold; additional powers of department (1)... (2)... (3) A dealer who has paid the tax imposed by this chapter on tangible personal property or services may take a credit or obtain a refund for any tax paid by the dealer on the unpaid balance due on worthless accounts within 12 months following the month in which the bad debt has been charged off for federal income tax purposes. If any accounts so charged off for which a credit or refund has been obtained are thereafter in whole or in part paid to the dealer, the amount so paid shall be included in the first return filed after such collection and the tax paid accordingly. (Emphasis Supplied) . Petitioner’s difficulties arose because Petitioner failed to claim a credit for its bad debts within 12 months from the date 4 following the month in which the bad debts were written off for federal income tax purposes. RFA #84. It is clear that Plaintiff has failed to meet the plain and unambiguous requirements of the tax credit statute. The first rule of statutory construction is to follow the plain language of the statute. st. Petersburg Bank & Trust Co. v. Hamm, 414 So.2d 1071 (Fla.1982). Where the language employed by the Legislature is plain and unambiguous, there is no need to resort to rules of construction. The statutory language is clear that no credits arise unless they are claimed within the prescribed 12 month period. And even if some ambiguity in the statute existed (which is not the case) the Petitioner should still not prevail. Tax credit statutes, like tax exemption statutes are a matter of legislative grace. Unlike tax levy statutes, which are strictly construed against the taxing authority, tax credit and tax exemption statutes are strictly construed against the taxpayer and in favor of the taxing authority. National Brands Tire Co., Inc., v. Dept. of Revenue, 383 So.2d 257 (Fla. 3d DCA 1980) (taxpayer could not assert its claim for a Section 212.17(3), Fla. Stat. credit in the year of its choosing, but was required to take the credit only in the year provided by statute) and Estate of W.T. Grant v- Lewis, 358 So.2d 76 (Fla. ist DCA 1978) (even where taxpayer went bankrupt and therefore, could not use the Section 212.17(3), Fla. Stat. credit in the year following federal write-offs, as provided by statute, this still did not permit the filing of a refund claim, based upon the credit). 5 The decision in Causeway Lumber Co., Inc. v. Lewis, 410 So.2d 511 (Fla. 4th pca 1981) also supports the Department's position. In Causeway Lumber, the Court held that the Section 212.17(3), Fla. Stat. credit could only be allowed in the year in which the debt was found to be worthless and was charged off for federal tax purposes. Petitioner has admitted that it failed to use the credit within the statutory 12 month period. The Petitioner asserts that it can still "offset" a credit claim against the assessment, even though it has failed to meet a condition precedent to claiming the credit: assertion of the credit claim within 12 months following the date on which the bad debts are written off for federal income tax purposes. In support of its assertion, Petitioner argues that the 12 month period solely applies to refund claims, and not to offset claims. The Petitioner’s distinction between a refund claim and a credit claim is contrary to the plain language of the statute, which provides that "a dealer who has paid the tax imposed by this chapter on tangible personal property or services may take a credit or obtain a refund for any tax paid by the dealer on the unpaid balance due on worthless accounts within 12 months following the month in which the bad debt has been charged off for federal income tax purposes." Section 212.17(3), Fla. Stat. (emphasis supplied). The statute could not be more clear that the 12 month period applies both to claims of credit and to refund claims. As a fallback argument, Petitioner asserts that Section 213.34(4), Florida Statutes entitles him to assert the alleged eredit as an "offset." That statute provides: (4) Notwithstanding the provisions of s. 215.26, the Department shall offset the overpayment of any tax during an audit period against a deficiency of any tax, penalty, or interest determined to be due during the same audit period. . Petitioner’s reliance upon this statute is misplaced. In the case at bar, there is no "overpayment" to "offset." Tax was due at the moment of the credit transaction, pursuant to Section 212.06 (1) (a), Florida Statutes. Liability under that statute is not contingent upon subsequent receipt of payment . In stark contrast, the right to a tax credit is contingent upon various events, including writing off bad debt for federal tax purposes, and claiming the credit within 12 months. The twelve month requirement is as much a condition precedent to the credit as having bad debt. Since Petitioner did not claim bad debt credits within the 12 month statutory period, Petitioner has no right to receive any credits. In the absence of lawful credits, there has been no "overpayment" within the meaning of the offset statute. The offset statute was designed to address a different problem than the problem which Petitioner faces. The offset statute was never intended to enlarge the time period for claiming a credit for bad debt. Rather, that statute was designed to ensure that persons who made "overpayments" would be entitled to offset against "underpayments" arising within the same audit period, in those situations where the only obstacle to offset was the expiration of the time period for seeking a refund pursuant to Section 215.26, Florida Statutes. ° Section 213.34(4), Florida Statutes has been declared, in Kemper, to be "remedial legislation" (i.e., clarifying legislation) and therefore, should not be construed so as to overturn the decisions in National Brands and Estate of Grant or Causeway Lumber. State, Dept. of Revenue v. Kemper Investors Life Ins. Co., 660 So.2d 1124, 1130 (Fla. 18t pca 1995). If _ Section 213.34(4), Florida Statutes were construed in a way which effectively overturned these prior court decisions (as Petitioner suggests) this would be contrary to the Court’s statement in Kemper that Section 213.34(4), Florida Statutes was only remedial. The Petitioner also asserted that the 1992 statutory amendment creating the Taxpayer's Bill of Rights ("TBOR") reflected the intent of the legislature to grant relief on this issue to the taxpayer. The TBOR however was not intended to create new law. The Department notes that both the House Committee on Appropriations and the House Committee on Finance and Taxation specifically stated in their bill analysis that "The rights guaranteed by the TBOR are currently provided to taxpayers by statue or rules of the DOR. However, the TBOR compiles these rights in a single section of the Florida Statutes. . ." (House of Representatives Committee on Appropriations Bill Analysis and Economic Impact Statement dated June 22, 1992 and House of Representatives Committee on Finance and Taxation Bill Analysis and Economic Impact Statement dated June 15, 1992, copies of which are attached hereto). ~ The rights that were being provided to taxpayers on this issue at the time that TBOR was enacted were those that are enumerated in section 212.17(3) as construed by Causeway, Grant and National Brands. These cases, which are still good law, do not support the Petitioner's claim for relief. Petitioner erroneously relies ‘upon the Kemper decision as supporting its position, but the facts of Kemper are easily distinguishable. The decision in Kemper did not involve a credit for bad debts. RFA #86. The decision in Kemper did not « involve a taxpayer who had missed a statutory deadline for claiming an entitlement to use tax credits. RFA #87. Rather, the decision in Kemper involved a taxpayer who was entitled to a credit. The only issue in Kemper was when the credit should be applied. Therefore since Kemper only involved the interpretation of s. 624.609(4) and did not involve a taxpayer who had missed a statutory deadline for claiming an entitlement to use tax credits; Kemper is not applicable. CONCLUSION The Department, based on the undisputed facts and the clear and unambiguous language of s. 212.17(3), sustains the assessment of tax, interest and penalties in full. Based on the foregoing, it is, ORDERED: : That the assessment for the tax, interest and penalties for the audit period 09/01/92 through 08/31/97 is sustained in full. ENTERED in Tallahassee, Leon County, Florida, this Sth day of ae, 2001. State of Florida DEPARTMENT OF REVENUE CERTIFICATE OF SERVICE I HEREBY CERTIFY that the foregoing Final Order has been filed in the official records of the Florida Department of Revenue and that a true and correct copy of the Final Order has been furnished by regular U.S.-Mail addressed to: Joseph C. Moffa, Moffa & Moffa, P.A., One Financial Plaza, Suite 2202, 100 10 , 2001. gency Clerk NOTICE OF RIGHT TO JUDICIAL REVIEW A party who is adversely affected by this final order is entitled to judicial review pursuant to section 120.68, Florida Statues. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing one copy of a notice of appeal with the Agency Clerk of the Division of Administrative Hearings and a second copy accompanied by filing fees proscribed by law, with the District Court of Appeal, First District or with the District Court of Appeal in the appellate District where the party resides. The Notice of appeal must be filed within 30 days of rendition of the order to be reviewed. 41 P STATE OF FLORIDA gs : DIVISION oF ADMINISTRATIVE HEARINGS \) : ties DN) SY) oy RED TAG FURNITURE DISCOUNT, W iS ors INC., a RN cf So ® «Sy eps . ana ee we Petitioner, wwe VK SS) : <. vs. & Case No. 00-3112 Vee . . ; . oO DEPARTMENT OF REVENUE, Respondent. _ . a ORDER RELINQUISHING JURISDICTION WITH RECOMMENDED ‘DISPOSITION On February 8, 2001, the Department of Revenue (Department) ‘filed in the. instant casé.a Motion for Summary Recommended Order (Motion) . In its Motion, the Department contended that there "are no genuine issues of Material fact" in the instant case and that the "gole issues" remaining for resolution are.the following "questions of. law": ~ I. Whether Petitioner is entitled to claim an offset against assessed sales tax liability, based upon a claim of credit for bad debts, when the claim of credit was not Ii. Whether Petitioner has stated a cause of action why penalties should not be imposed. III. Whether Petitioner's belated assertion, that the Department did not use-a "statistical" sampling methodology, fails to state a cause of action in light of the - remedial and retroactive provisions contained ip within Laws of Florida. ch. 2000- -355, Section ~ 17. IV. In addition and alternatively, whether Petitioner's belated objections to the Department's Schedules A020 and B040 are , barred by the doctrines of laches, waiver and__ estoppel. On February 9, 2001, the undersigned issued an Order, which provided -as follows: No later than 21 days from the. date of this . “Order, Petitioner shall file a written response to Respondent's Motion. Ih its response, Petitioner, if it disagrees with Respondent's assertion that there "are no genuine issues of material fact" in this case, shall.identify with specificity those disputed issues of material fact that it ‘contends remain for resolution by the undersigned. Petitioner's failure to timely file a written response specifying material facts still in dispute will be deenied a concession on Petitioner's part that there are no disputed issues of material fact in the. instant case. . on March 2, 2001, Petitioner filed a Responsé to the Department's Motion for Summary Recommended Order and Petitioner's Cross Motion for Summary Recommended Order, in which it stated, among other things, the following: 1. There are no genuine issues of material fact. ‘2. The only remaining question [] of ‘law for the Court's determination is issue I ‘of the Respondent's Motion fox Summary Recommended Oxder which states: "Whether Petitioner is entitled to claim an offset against assessed sales tax liability, based upon a claim of credit for bad debts, when the claim of credit was not made within 12 months from the date following the month in which the bad debts were written off for federal income tax purposes." 3. Petitioner withdraws its challenges to issues II, III and iv as outlined in oo. Respondent's Motion for Summary Recommended Order Because there are no disputed issues of material fact remaining in the instant case, the matter should be returned to Respondent pursuant to Section 120.57(1) (i), Florida Statutes, - which provides as fdllows: When, in any proceeding conducted pursuant to this subsection, a dispute of material fact no longer exists, any party May move the administrative law judge to relinquish jurisdiction to the agency. In ruling on such a motion, the administrative law judge may consider the Pleadings, depositions, answers to interrogatories, and adtiissions 6n ; file, together with supporting and opposing 2 ‘affidavits, if any. Ifthe administrative . : ' law judge enters an order relinquishing ; jurisdiction, the agency may promptly conduct a proceeding pursuant to subsection (2), if appropriate, but the parties may not raise any issues of disputed fact that could have been raised before the administrative law . judge. An order entered by an administrative law judge relinquishing jurisdiction‘to the agency based upon a determination that no genuine dispute .of material fact exists, need . not ‘contain findings of fact, conclusions of law, ox a recommended disposition or penalty. At the parties request, the undersigned will address the lone question of law (Issue I) that the Department needs to resolve to, dispose of the instant case. Having: carefully considered the arguments advanced by the parties, the undersigned agrees with the Department that the question must be answered in the negative. To hold otherwise would require the Department to ignore the clear and unambiguous language of Section 212.17(3), Florida Statutes, that mandates: that a credit for a “bad debt be claimed "within 12 months following the month in which the bad debt has been charged off for federal income tax purposes." This the Department cannot do. See State v. Williams, 520. So. 24 276, ee Se ams 277 (Fla. 1988); Baxnett Banks, Inc. v. Department of: Revenue, 738 So. 2a 502, 504 (Pla. ist DCA 1999) ; Causeway Lumber Co. inc. v. Lewis,. 410 So. 2d 512 (Fla. 4th DCA 1984) ; and National . Brands Tire Coe, Ine, v. Department. of Revenue, (383, So. 2a 257, . 259 (Pla. 3d DCA 1980) . The undersigned further agrees with the Department that. Petitioner's reliance on Section 213.34(4), Florida Statutes (which requires the Department to "offset the overpayment: of any tax during an audit period against, a deficiency of any tax, penalty, or interest determined to be due 7 during the same audit period") is misplaced because, "[iJin the Case at bar, there is no ‘overpayment! to ‘offset' -. - {s] ince Petitioner aid ‘not Claim bad debt credits within the 12 month statutory period," as it was. required to do in order to receive tax credits for these bad debts. In view of the foregoing, the undersigned hereby closes the file of the Division of Administrative Hearings in the instant case and returns the matter to the Department, with the recommendation that the Department enter a final order determining that Petitioner is not nentitled, to claim an offset against assessed sales tax liability, based upon a claim of eredit for bad debts, when the claim of credit was not made within 12 -moriths. from the date following the month ‘in Which the bad_debts were written off for federal income tax purposes. , q : : ; > aan : z . DONE AND ORDERED this < Gay of March, 2001, in Tallahassee, - Leon County, Florida. : STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building . 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Piling (850) 921-6847 www.doah.state.fl.us . * Filed with the Clerk of the _ Division < f Administrative: Hearings this O77 day of March, 2001, COPIES FURNISHED: -. . Jeffrey M. Dikman, Esquire Office of the Attorney General Department of Legal Affairs ‘The Capitol, Tax Section Tallahassee, Florida 32399-1050 Joseph C. Moffa, .Bsquire Moffa & Moffa, B.A. 100 Southeast Third Avenue Oné Financial Plaza, Suite 2202 ; ; Fort Lauderdale, Florida 33394 - James Zingalte, Executive Director Department of Revenue 104 Cariton Building Tallahassee, Florida 32399-0100 Linda Lettera, General Counsel Department ef Revenue : . — 204 Carlton Building Tallahassee, Florida. 32314-6668 , NOTICE OF RIGHT TO SUBMIT EXCEPTIONS All parties have the right to submit written exceptions within 15 days from the date of this order. Any exceptions to this oder should be filed. with the agency that will issue the final order - in this case. , ca DEPT. CF LEGAL AFFAIRS TAK SECTION Wee copy =e a ; - = “STORAGE NAME: HB113H.ft DATE: June 15, 1992 HOUSE OF REPRESENTATIVES COMMITTEE ON FINANCE & TAXATION ; BILL ANALYSIS & ECONOMIC IMPACT STATEMENT BILL #: HB 113H RELATING TO: Taxation i SPONSOR(S): Representative Mortham STATUTE(S) AFFECTED: ss. 213.21, 213.34, 199.262, 206.075,-211.125, 211.33, 212.14, 212.15, 220.179, 220.815, 20.21, 72.011, 95.091, 120.575, 57.111, 120.57, 120.65 COMPANION BILL(S): CS/HB 325H ORIGINATING COMMITTEE (S) /COMMITTEE(S) OF REFERENCE : (1) FINANCE & TAXATION <(2) APPROPRIATIONS THESIS IO USSD O ITSO SS OSES ISTO SDSS SOOO II ESE EERE EEEEE EERE I. SUMMARY: The concept of a Taxpayer's Bill of Rights (TBOR) is a recent ; development: in federal and state tax administration. The United States Congress passed a federal TBOR in 1988 (Public Law 100-647, November, 1988). Since passage of the federal TBOR, many states have adopted a TBOR including Arizona, California, Illinois, Kansas, Ohio, Oregon, and South Carolina. This bill would create the Florida Taxpayer's Bill Of Rights. The Florida TBOR enumerates the general rights and obligations of the Department of Revenue (DOR) and taxpayers during the tax assessment, collection, and enforcement processes. The bill. attempts to specify these rights and obligations in non-technical terms which can be understood by taxpayers. The rights. guaranteed by the TBOR are . currently provided to taxpayérs by statute or rules of the DOR: -° However, the TBOR compiles these rights in a single section of the Florida Statutes with cross’ references to those sections of the -— . Statutes which implement each right guaranteed under the TBOR. STANDARD FORM 11/90 STORAGE NAME: HB113H.£t DATE: PAGE 2 II. s June 15, 1992 UBSTANTIVE ANALYSIS: A. PRESENT SITUATION: The Florida Department of Revenue (DOR) currently publishes a Taxpayer's Bill Of Rights (TBOR) in pamphlet form. This document represents the DOR's commitment to,.providing:.taxpayers-.fair -streatment guaranteed under various statutes and DOR ruies. At present, there is not a statutory compilation of the rights and obligations of the DOR and taxpayers. These rights and — obligations are scattered throughout the statutes dealing with taxation and the DOR rules. . . EFFECT OF. PROPOSED CHANGES: See Section-by-Section Analysis Below SECTION-BY-SECTION ANALYSIS: Section 1 -- This section creates s. 213.015, F.S., to provide the general rights and obligations of the Department of Revenue (DOR). and taxpayers during the tax assessment, collection, and. enforcement processes. These rights and obligations are enumerated in non-technical terms which can be understood by taxpayers. Citations to other sections of the statutes which > - implement these rights and obligations are provided. Section 2 -- This section creates s. 213.018, F.S., which . establishes the taxpayer problem resolution program.and provides . for taxpayer assistance orders. The taxpayer problem resolution program is intended to facilitate prompt review and resolution of taxpayer problems that are not resolved through normal administrative or operational procedures of the Department of Revenue (DOR). The section provides for the designation, by the — executive director of the DOR, of a taxpayers' rights advocate and adequate staff to administer the taxpayer. problem resolution program. The taxpayers' rights advocate has limited authority to issue taxpayer assistance orders which may suspend actions of the ._ DOR when a taxpayer is about to suffer a significant hardship as a result of a tax determination, collection, or enforcement process. Section 3 -- This section amends s. 213.21, F.S., which provides for informal conferences, to guarantee taxpayers the right to representation at such conferences and the opportunity to record such proceedings at the taxpayer's expense. ; Section 4 -- This section amends s, 213.025, F.S., to require the DOR to conduct audits, inspections of records, and interviews at reasonable times and places. Criminal and internal investigations are exempted from this provision. SO - zg Section 5 --"This section amends s. 213.34, F.S., ‘to provide that. the DOR must offset the overpayment of any tax during an audit . period against a deficiency ‘of any tax, penalty, or interest that 'is due during the same audit period. STANDARD FORM 11/90 Dae ad DATE: PAGE 3 “ee “STORAGE NAME: HB113H.£t June 15, 1992 Section 6 -- This section creates s. 213.731, F.S., to require that, absent jeopardy to the revenue, the DOR, at least 30 days prior the institution of any collection action, provide notice to “the taxpayer that collection action is. authorized under the circumstances presented. The section requires the DOR to provide, by rule, procedures which afford the taxpayer an opportunity to’ pay any tax, penalty, or interest on which collection action is sought, or to protest the circumstances presented which gave rise to the notice, within 20 days after the notice is issued. Final assessments under s. 72.011, F.S., are not subject to the : procedures Provided by this section. . Section 7 -- This section creates 213.732, FP.S., which addresses jeopardy findings and assessments. The DOR is required to exhaust reasonable collection efforts prior to finding or assessing jeopardy, unless such efforts would prolong the jeopardy. When the DOR makes a jeopardy assessment, it must provide the taxpayer notice of the facts which constitute the jeopardy. A warrant, lien, or*other detainer of property may be issued and recorded as provided by law, simultaneous with the jeopardy assessment. However, the DOR may not execute the sale of such property, _ without an order from a court of competent jurisdiction, until the time for filing an action in circuit court or an administrative proceeding has expired or, if such action is filed, until such action or proceeding is final.. The DOR is required to provide the taxpayer with notice of his right to a conference with DOR representatives within 10 days of the jeopardy assessment and the opportunity to make a statement of why the taxpayer believes no jeopardy. exists or why a jeopardy lien or warrant should be released. The DOR is required to respond to a taxpayer's statement within 20 days of receipt of the statement. If the DOR freezes the taxpayer's assets, the taxpayer has a right to meet with DOR representatives within 24 hours. The DOR must respond to the taxpayer within 24 hours. If the DOR does not release the assets, the taxpayer has 5 days to request a hearing in circuit court. : ~ Section 8 ~~ This section creates s. 213.733, F.S., which requires the DOR to cancel, amend, or modify a warrant filed in the public records for any. tax administered by the DOR, when the DOR is satisfied that no tax liability exists, that such liability was discharged, or that the warrant is. unenforceable or was filed in error. Upon request of the taxpayer, the DOR is required to provide a credit agency specified by the taxpayer of a copy of the cancellation, amendment, . or modification of the warrant. : Section 9 == This section amends s. 199, 262, F.S., which provides the procedure for tax liens, to require that when jeopardy is asserted the DOR must proceed in accordance with the requirements of s. 213.732, F.S. (section 7 of this bill). Section 10 -- This section amends s. 206.075, F.S., which provides for warrants for collection of unpaid taxes, to require that when jeopardy is asserted the DOR must proceed in accordance with the requirements of s. 213.732, F.S. (section 7 of this bill). STANDARD FORM 11/90 SEB E F DATE: PAGE 4 "STORAGE NAME: HB113H. ft June 15, 1992 Section 11 -- This section amends s. 211.125, F.S., which provides for audits and examinations of taxpayers books and records, to require that when jeopardy is asserted the DOR must proceed in accordance with the requirements of s. 213.732,.F.8. (section 7 of this bill). . : Section 12 -- This section amends s. 211.33, F.S., which provides for the collection of taxes, to require that when jeopardy is . asserted the DOR must proceed in accordance with the requirements of s. 213.732, F.S. (section 7 of this bill). Section 13 -- This section amends s. 212.14, F.S., which provides for warrants to collect taxes, to require that when jeopardy is | asserted the DOR must proceed in accordance with the requirements of s. 213.732, F.S. (section 7 of this. bill). Section 14 -- This section amends s. 212.15, F.S., which provides for warrants and garnishment proceedings for collection of taxes, _to require that when jeopardy is asserted the DOR must proceed in accordance with the requirements of s. 213.732, F.S. (section 7 of this bill). ‘ . Section 15 -- This section amends s. 220.719, F.S., which addresses jeopardy assessments, to require that when jeopardy is ‘asserted the DOR must proceed in accordance with the requirements . of s. 213.732, F.S. (section '7 of this bill). Section 16 -~ This section amends s. 220.815, F.S., which addresses the filing and priority of tax liens, to require that when jeopardy is asserted the DOR must proceed in accordance with’ the requirements of s. 213.732, F.S. (section 7 of this bill).. Section 17 -- This section amends s. 20.21, F.S., to establish the position of taxpayer’ rights advocate within the DOR. The duties and responsibilities of the advocate are described.. Section 18 -- This section amends s. 72.011, F.S., which provides for challenges to certain actions of the DOR in circuit court or before the Division of Administrative Hearing, to provide that if a challenge is brought pursuant to s. 120.575, F.S., an action in ' circuit court relating to the same Subject matter is foreclosed. Section 19 ~- This section amends s. 95.091, F.S., which provides | the limitations periods on actions for collection of certain taxes, to provide that the DOR must commence a tax audit, within 120 days of providing notice of its intent to conduct such an audit, unless the taxpayer requests a delay. If the audit is not commenced within 120 days, the limitations period begins to run. Section 20 -- This section amends s. 120.575, F.S., to delete existing statutory procedures applicable to services tax cases, provides for a stay upon collection and enforcement activities by the DOR when the taxpayer contests a department action in an . administrative proceeding and, provides for the award of costs and ‘attorney's fees in such proceeding. STANDARD FORM 11/90 STORAGE NAME: HB113H.ft. DATE: June 15, 1992 ; —_ PAGE 5 — Section 21 -- This section amends s. 57.111, F.S., to delete a _ cross reference to s. 120.575(1)(b), which is repealed by this bill. . : : : ; Section 22 -- This section amends s. 120.57, F.S., to delete a cross reference to s. 120.575(1)(b), which is repealed by this bill. Section 23 -- This. section deletes s. 120.65(5), F.S, which provides procedures for the assignment of hearing officers in _proceedings undér s.°120.575(1)(b), which is deleted by this bill. Section 24 -- This section provides that provisions of this act should not be interpreted to negate any other amendments to the Florida Statutes, except that if the provisions of this act are in - direct conflict with other provisions, the provisions of this act shall control. Section 25 -- This section provides an effective date for the bill of July I, 1992. III. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT: A. FISCAL IMPACT ON STATE AGENCIES/STATE FUNDS: 1. Non-recurring Effects:. : : , - ‘es _FY_92-93 FY 93-94 Department of Revenue: — : oco ; $ 11,529 Total $ 11,529 $ -0- 2. Recurring Effects FY 92-93 FY 93-94 Department of Revenue: : : Salaries & Benefits $ 107,161 $ 107,161 . (3.00 FTE) é Expenses : 30,465 ___30,465 Total .. oe $ 137,626 $ 137,626 3. ong Run _Eifec ts Other Than Normal Growth: None. ‘STANDARD FORM 11/90 “STORAGE NAME: HB113H.ft. DATE: June 15, 1992 - PAGE 6 oo ' 4, Total Revenues and Expenditures: FY_ 92-93 FY 93-94 Department of Revenue: Salaries & Benefits . $ 107,161 $ 107,161 (3.00 FTE) - OCO 11,529 . : Expenses 30,465 30,465 Total . $.149,055 $ 137,626 B. FISCAL IMPACT ON.LOCAL GOVERNMENTS AS A WHOLE: . -. 1. Non=recurring Effects: None. ; ; 2. Recurring Effects: None. . 3. Long Run Effects Other Than Normal Growth: None. . . C. DIRECT ECONOMIC IMPACT ON’ PRIVATE SECTOR: 1. Direct Private Sector Costs: . : : # None. 2. Direct Private Sector Benefits: None.. 3. Effects on Competition, Private Enterprise and Employment Markets: None. D. FISCAL COMMENTS: Z None. IV. CONSEQUENCES OF ARTICLE VII, SECTION 18 OF THE FLORIDA CONSTITUTION: A. APPLICABILITY.OF THE MANDATES PROVISION: Not Applicable. STANDARD FORM 11/90 ‘Seas a "STORAGE NAME: HB113H.ft DATE: June 15, 1992 ” PAGE 7 om B. REDUCTION OF REVENUE RAISING AUTHORITY: Not Applicable. C. REDUCTION OF STATE TAX SHARED WITH COUNTIES AND MUNICIPALITIES: Not Applicable. V. COMMENTS: | None. vi. AMENDMENTS OR COMMITTEE SUBSTITUTE CHANGES: VII. SIGNATURES: _ COMMITTEE ON FINANCE & TAXATION: Prepared by: . Staff Director: McVaney Jose Diez~Arguelles STANDARD FORM 11/90 Buzz Ritchie, Vice Chairman Ro Florida House of Representatives T. K. Wetherell, Speaker Committee on Appropriations Ron Saunders Chairman Buzz Ritchie Vice Chairman AGENDA < ' House of Representatives copriations wit JLL COMMITTEE une 23 8:30 A.M. Morris Hall sideration of the following bill(s): B 0113H by Mortham--Taxpayer's Bill of Rights ........-..04 1 B 0271H by Muscarella & others--Trust Funds ... 2.0... ee ee) 27 bee wisension a . Peter J. Mitchell, Staff Director 221 The Capitol ‘Tallahassee, Florida 32399-1300 (904) 488-6204 Printed on Recyclable Paper STORAGE NAME: HO113Ha.ap DATE: June 22, 1992 HOUSE OF REPRESENTATIVES _ = ‘ : : AS REVISED BY THE COMMITTEE ON APPROPRIATIONS : ‘BILL ANALYSIS & ECONOMIC IMPACT STATEMENT BILL #: HB 113H » RELATING TO: Taxation SPONSOR (8S) : Representative Morthan STATUTE(S) AFFECTED: sS. 213.21, 213.34, 199. 262, 206.075, 211.125, 211.33, 212.14, 212.15, 220.179, 220.815, 20.21, 72.011, 95.091, 120.575, .87. qn, 120.57, 120.65 ..COMPANION BILL(S): CS/HB 325H ORIGINATING COMMITTEE (8S) /COMMITTEE(S) OF REFERENCE: (1) FINANCE & TAXATION YEAS 28 NAYS 0 (2) APPROPRIATIONS — . | RRRRER ERE KKAERRRERRER EERE RRERR ERE RRRREREKRREREEREREEREEREERER AREER ERELEEE I. SUMMARY : The concept of a Taxpayer's Bill of Rights (TBOR) is a recent development in federal and state tax administration, The United | States Congress ‘passed a federal TBOR in 1988 (Public Law 100-647, November, 1988). Since passage of the federal TBOR, many states have adopted a TBOR including Arizona, California, Illinois, Kansas, Ohio, Oregon, and South ‘Garolina. . This pill ‘would “erdate ‘the Florida . Paxpayer's Bill Of Rights. The Florida TBOR enumerates the general rights and obligations of the * Department of Revenue (DOR) and taxpayers during the tax assessment, “collection, and enforcement processes. The bill attempts to. specify these rights and obligations in non-technical terms which canbe understood by taxpayers. The, rights guaranteed by the. TBOR. are . currently provided to. taxpayers by statute.or niles of the DOR. Héwever, the TBOR compiles these rights ina single section of the _F¥oerida Statutés with cross references to those sections of the # statutes which implement each right guaranteed under the TBOR. ~ STANDARD FORM 11/90 20 DATE: - June 22, 1992 PAGE 2 II. SUBSTANTIVE ANALYSIS: = A. PRESENT SITUATION: The Florida Department of Revenue (DOR) currently publishes a Taxpayer's Bill Of Rights (TBOR) in pamphlet form. This document represents the DOR's commitment to prowiding..ta: mo ‘treatments guaranteed under various statutes | At present, there is not a statutory compilation of the rights and obligations of the DOR and taxpayers. These rights and obligations are scattered throughout the statutes dealing with taxation and the DOR rules. EFFECT OF PROPOSED CHANGES: See Section-by-Section Analysis Below SECTION-BY-SECTION ANALYSIS: Section 1 -- This section creates s. 213.015, F.S., to provide the general rights and obligations of the Department of Revenue (DOR) and taxpayers during the tax assessment, -collection, and enforcement processes. These rights and obligations are enumerated in non-technical terms which can be understood by- taxpayers. Citations to other sections of the statutes which implement these rights and obligations are provided. “Section 2 -- This section creates S. 213.018, F.S., which establishes the taxpayer problem resolution program and provides for taxpayer assistance orders. The taxpayer problem resolution program is intended to facilitate prompt review and resolution of. taxpayer problems that are not resolved through normal # administrative or operational procedures of the. Department of. Revenue (DOR). ‘The section provides for the designation, by the executive director of the DOR, of a taxpayers' rights advocate anc adequate staff to administer the taxpayer problem resolution ‘. program. The taxpayers! rights advocate has limited authority to issue taxpayer assistance orders which may suspend actions of the DOR when a taxpayer is about to suffer a significant hardship as ¢ "result of a tax determination, collection, or eriforcement Process. is due during the same audit period. — this section amends s. 213,21, F. Sey ‘which provides I“conferences, e taxpayers the right to representation at such conferences and the opportunity to record such proceedings at the taxpayer's expense. wed Section 4 -- This section amends s. 213.025, F.S., to require the : DOR to conduct audits, inspections of records, and interviews at reasonable times and places. Criminal and internal investigation: are exempted from this provision. : Section 5 --. This section amends s. 213.34, F.S., to provide that the DOR must offset the overpayment of any tax during an audit period against a deficiency of any tax, penalty, or interest ‘that STANDARD FORM 11/9 _ DATE: & PAGE 3 June 22, 1992 Section 6 -- This section creates s. 213.731, F.S., to require that, absent jeopardy to the revenue, the DOR, at least 30 days prior the institution of any collection action, provide notice to the taxpayer that collection action is authorized under the ; circumstances presented. The section requires the DOR to provide, by rule, procedures which afford the taxpayer an opportunity to pay any tax, penalty, or interest on which collection action is sought, or to protest the circumstances presented which gave rise to the notice, within 20 days after the notice is issued. Final assessments under s. 72.011, F.S., are not subject to the procedures provided by this section. Section 7 -- This section creates 213.732, F.S., which addresses jeopardy findings and assessments. The DOR is required to exhaust reasonable collection efforts prior to finding or assessing jeopardy, unless such efforts would prolong the jeopardy. When the DOR makes a jeopardy assessment, it must provide the taxpayer notice of the facts which constitute the jeopardy. A warrant, lien, or other detainer of property may be issued and recorded as provided by law, simultaneous with the jeopardy assessment. However, the DOR may not execute the sale of such property, without an order from a court of competent jurisdiction, until the ‘time for filing an action in circuit court or an administrative proceeding has expired or, if such action is filed, until such action or proceeding is final. The DOR is required to provide the taxpayer with notice of his right to a conference with DOR representatives within 10 days of the jeopardy assessment and the “opportunity. to make a statement of why the taxpayer believes no _ jeopardy exists or why a jeopardy lien or warrant should be. released. The DOR is required to respond to a taxpayer's “statement within 20 days of receipt of the statement. If the DOR freezes the taxpayer's assets, the taxpayer has a right to meet with DOR representatives within 24 hours. ‘The DOR must respond to the taxpayer within 24 hours. If the DOR does not release the assets, the taxpayer has 5 days to request a hearing in circuit court. . : Section 8 -- This section creates s. 213.733, F.S., which requires the DOR to cancel, amend, or modify a warrant filed in the public records for any tax administered by the DOR, when the DOR is satisfied that no tax liability exists, that such liability was discharged, or that the warrant is unenforceable or was filed in error. Upon request of the taxpayer, the DOR is required to provide a credit agency specified by the taxpayer of a copy of the cancellation, amendment, or modification of the warrant. Section 9 -~ This section amends s. 199.262, F.S., which provides - the procedure. for tax liens, to require that when jeopardy is . asserted the DOR must proceed in accordance with the requirements of s. 213.732, F.S. (section 7 of this bill). Section 10 -- This section amends s. 206.075, F.S., which provides for warrants for collection of unpaid taxes, to require that when jeopardy is asserted the DOR must proceed in accordance with the . requirements of s. 213.732, F.S. (section 7 of this bill). STANDARD FORM 13/90 DATE: June 22, 1992 PAGE 4 . this bill). : Section 12 -~ This section amends s. 211.33, F.S., which provides for the collection of taxes, to require that when jeopardy is : asserted the DOR must proceed in accordance with the requirements of s. 213.732, F.S. (section 7 of this bill). : Section 13 -~ This section amends S. 212.14, F.S., which provides for warrants to collect taxes, to require that when jeopardy is asserted the DOR must proceed in accordance with the requirements of Ss. 213.732, F.S. (section 7 of this bill). this bill). . Section 15 -- This section amends s. 220.719, P.S., which 7 addresses jeopardy assessments, to require that when jeopardy is. ~ asserted the DOR must proceed in accordance with the requirements of Ss. 213.732, F.S. (section -7 of this bill). sS section amends s. 220.815, F.S., which ing and priority of tax liens, to require that 3 asserted the DOR must proceed in accordance with the requirements of s. 213.732, F.S. (section 7 of this bill). Section 17 -~ This section amends s. 20.21, F.S., to establish th ° position of taxpayer' rights advocate within the Dor. The duties and responsibilities of the advocate are described. Section 18 -- This section amends s. 72.011, F.S., which provides ' for challenges to certain actions of the DOR in circuit court or | before the Division of Administrative Hearing, to provide that if a challenge is brought pursuant to s. 120.575, F.S., an action in circuit court relating to the same subject matter is foreclosed. Section 19 -- This section amends s. 95.091, F.S., which provides the limitations periods on actions for collection of certain . taxes, to provide that the DOR must commence a tax audit, within 120 days of providing notice of its intent to conduct such an - audit, unless the taxpayer requests a delay. If the audit is not £ commenced within 120 days, the limitations perioa begins to run. STANDARD FORM 11/9 22 (a ee a nn etn net eS ee SRE EN DEUMRVe aware averse up DATE: June 22, 1992 PAGE 5. ‘ Section 21 ~- This section amends s. 57.111, F.S., to delete a : cross reference to s. 120.575(1)(b), which is repealed by this bill. Section 22 -- This section amends Ss. 120.57, F.S., to delete a cross reference to s. 120.575(1).(b), which is repealed by this bill. . : Section 23 -~ This section deletes s. 120.65(5),-F.S, which provides procedures for the assignment of hearing officers in proceedings under s. 120.575(1)(b), which is deleted by this bill. | Section 24 -- This section provides that provisions of this act should not be interpreted to negate any other amendments to the Florida Statutes, except that if the provisions of this act are in direct conflict with other provisions, the provisions of this act — « shall control. . : ~ Section 25 -- This section provides an effective date for the bill of July i, 1992. : . III. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT: A. FISCAL IMPACT ON STATE AGENCIES/STATE FUNDS: 1. Non-recurring Effects: Be FY 92-93 FY _93~-94 Department of Revenue: oco. . $21,529 Total o : $ 11,529 $ -0- 2. Recurring Effects: FY 92-93 = FY_93-94 Department of Revenue: Salaries & Benefits $ 107,161 $ 107,161: (3.00. PTR) : Expenses « ; 30,465 30,465 : 3 Total i _ $ 137,626 $ 137,626 - 3. Long Run Effects Other Than Normal Growth: None. STANDARD FORM 11/90, “ PATE: June 22, 19¥2 PAGE 6 24 4. Total Revenues and Expenditures: = FY 92-93 FY 93-9 Department of Revenue: Salaries & Benefits $ 107,161 $ 107,161 (3.00 FTE) oco 11,529 Expenses — . 30,465 30,465 Total $ 149,055 $ 137,626 Be FISCAL IMPACT ON LOCAL GOVERNMENTS AS A WHOLE: 1. Non-recurring Effects: . None. ‘2. Recurring Effects: None? 3. Long Run Effects Other Than Normal Growth; None. C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR: 1. Direct Private Sector Costs: None. , a ; ; : ¢ 2. Direct Private Sector Benefits: None. . : . 3. Effects on Competition, Private Enterprise and Employment Markets: . : None. D. FISCAL COMMENTS: | None. é Iv. CONSEQUENCES OF ARTICLE VII, SECTION 18 OF THE FLORIDA CONSTITUTION: A. APPLICABILITY OF THE MANDATES PROVISION: Not Applicable. STANDARD FORM 11/90 S STORAGE Namo: nuisonasay PATE: June 22, 1992 B. REDUCTION OF REVENUE RAISING AUTHORITY: Not Applicable. C. REDUCTION OF STATE TAX SHARED WITH COUNTIES AND MUNICIPALITIES: Not Applicable. V. COMMENTS: None. vi. AMENDMENTS OR COMMITTEE SUBSTITUTE CHANGES: