vs. ) CASE NO. 77-804
Respondent. )
A hearing was held in the above-captioned matter, after due notice, at Jacksonville, Florida, on October 18, 1977, before the undersigned Hearing Officer.
For Respondent: Harold F.X. Purnell, Esquire
Whether Petitioner is liable for special fuel taxes, penalty and interest under Chapter 206, Florida Statutes, as set forth in the Petition herein.
Petitioner Auto/Truck Plaza Specialists, Inc., a Florida Corporation, (formerly GHM, Inc. of Baldwin) operates a "truck stop" in Baldwin, Florida, which sells special fuel and motor fuel under a dealer's license issued by the respondent. The firm leases the buildings under an agreement with the Union Oil Company of California. Part of the rental for the leased premises consists of one cent per gallon on sales of special fuels based on monthly reports that reflect fuel inventory at the beginning of the month, gallons acquired during the month, and the amount sold during the month based on manual measurement of the storage tanks. In like manner, the required state monthly tax return is based upon gallons to be accounted for" and consists of basically the same method as used in accounting to Union Oil Company. However, in preparing bimonthly excise tax returns to the Internal Revenue Service, it is unnecessary to show the number of gallons sold, but just the dollar amount of sales.
Petitioner used pump meter readings to arrive at federal tax figures computed from daily reports of station personnel who read the pump meters at the beginning and end of each of three eight-hour shifts. The daily reports are recapitulated by petitioner's bookkeepers into monthly reports that take certain adjustments into account, such as fuel that is pumped by mistake into trucks and then replaced in the tanks. The daily reports are subject to mathematical mistakes by station attendants and the meters themselves periodically become defective, thus necessitating repair or replacement. This type of report is used by petitioner also as a comparison of months to see how the business is progressing and to attempt to detect theft by employees. (Testimony of Hires, Morris, Petitioner's Exhibits 2-5)
Although petitioner normally purchases all of its special fuel from Union Oil Company, there was a period from June, 1973, through February, 1974, when, due to a shortage of fuel, purchases of some 500,000 gallons were made from five other distributors. Petitioner was under the impression that it paid tax on these purchases because none of the firms asked for its license number and the price charged for the fuel appeared to be an amount sufficient to include the state tax. No taxes were separately stated on the invoices from these firms, but petitioner's license number appeared on some of them. All such purchases were made by checks drawn on petitioner's bank account. The state tax due on later resales of this special fuel was not collected or paid to the state by petitioner. Nevertheless, it is found that petitioner's explanation that it was unaware that tax had not been previously paid to distributors is credible and that there was no intent to purposely evade payment of state taxes. (Testimony of Hires)
In the summer of 1976, respondent's tax examiner Heyward R. Steinhauser, learned that sales of special fuels had been made to petitioner without the payment of tax and had not been reported to his agency. Petitioner explained the situation concerning outside purchases to Steinhauser, and the latter thereafter conducted an audit of the firm's books covering the period June, 1973, through June, 1976. He examined petitioner's check register to determine how much excise tax had been paid to the federal government and determined that this amount corresponded substantially with the number of gallons sold as reflected on the monthly meter reading reports. During this audit, Steinhauser found no evidence of outside purchases except that reflected by checks issued by petitioner to the five firms during the latter half of 1973 and 1974. However, Steinhauser made no effort to verify the totals set forth on the monthly meter reports as far as accuracy of computation. Petitioner made all of its records available for the audit and offered the daily reports to Steinhauser which he declined to use due to their bulk. (Testimony of Hires, Steinhauser).
An informal meeting was held between petitioner and representatives of respondent on September 28, 1976, based on a proposed assessment resulting from the audit. At this meeting, certain credits were allowed to petitioner. The meeting was followed by a formal Notice of Proposed Assessment, dated November 22, 1976, wherein respondent claimed tax due in the amount of $48,016.22, interest in the amount of $15,248.30, and penalties of $6,196.76, for a total of
$69,461.01. After deducting a $10,000 payment made by petitioner on September 28, 1976, the total amount due as stated in the assessment letter was
$60,316.07. This was followed by a subsequent meeting on February 2, 1977, whereby petitioner sought further adjustment of the proposed assessment. A letter of February 15, 1977, from respondent's audit supervisor of the Motor Fuel Tax Bureau reasserted the original assessment, plus additional interest making the total allegedly due, as of February 10, 1977, $61,582.00. In that
letter, petitioner was advised that since the daily pump readings or reports had not been made available to reconcile any discrepancies in the monthly reports, no adjustment could be made as to the proposed assessment. The reason for the unavailability of the daily records was that they had been inadvertently destroyed by an employee of the petitioner several months after the audit.
Another meeting was held on March 29, 1977, which apparently was unsuccessful because a further letter of respondent, dated March 31, 1977, again asserted the previous amount of tax due, plus additional interest, making a total due of
$62,198.07. Thereafter, on April 28, 1977, petitioner filed its petition for an administrative hearing. (Testimony of Steinhauser, Hires, Morris, Petitioner's Exhibits 1, 9-10)
At the hearing, petitioner submitted its own audit based on fuel purchases, its check register, and invoices from Union Oil Company and outside suppliers. After computing exempt purchases, collection fees, and taxes already paid to the state, petitioner admitted that taxes had been due in the total amount of $42,342, based on sales of 541,825 gallons of fuel. The state's figures had based tax due on 592,587 gallons sold. After deductions of the
$10,000 payment made on September 28, 1976, and a further payment of $30,000 on August 11, 1977, plus penalties and interest, petitioner admits that a sum of
$11,390 is still due and owing. A further audit presented by respondent at the hearing reflects a total due at the end of September, 1977, of $47,699.44.
Petitioner pointed out at the hearing that various mistakes in addition had been made in the monthly meter reports utilized by respondent in arriving at its assessment. However, neither petitioner nor respondent had verified the accuracy of these figures. Accordingly, the Hearing Officer requested that this be accomplished subsequent to hearing and that a report be furnished as a late- filed exhibit. Petitioner submitted such a report on November 15, 1977, which shows that mathematical mistakes in the reports were made to the extent that they reflected 56,595.5 more gallons sold during the audit period than was actually the case. This figure corresponds favorably with petitioner's contention based on its audit that it had sold some 51,000 gallons less than that asserted by respondent. Respondent has not contested the late-filed exhibit of petitioner and it is found that the figures reflected therein are correct. (Testimony of Morris, Petitioner's Exhibits 6, 7, 11, Respondent's Exhibits 1, 2)
CONCLUSIONS OF LAW
Respondent's proposed assessment is based on Section 206.87(1), Florida Statutes, which imposes an excise tax of eight cents per gallon on every gallon of special fuel used or sold in the state for use. The tax levy is upon the consumer but must be paid upon the first sale or transfer of title within the State of Florida by a dealer. Section 206.91(1) provides that each dealer must submit monthly reports to the respondent showing the total gallons of special fuel sold on which the tax had not been paid by a dealer. That provision also authorizes the dealer to deduct a percentage of the tax for his services and expenses in complying with the reporting provision. The dealer is required to pay the respondent the amount of special fuels tax at the time of filing the monthly report for the preceding calendar month. Section 206.94 provides that when a dealer files an incorrect report, respondent "shall determine, after investigation, the number of gallons of special fuels with respect to which the dealer has incurred liability under this part, for any particular month or months, and fix the amount of tax due and payable thereon, to which sum shall be added a sum equal to 10 percent thereof as a penalty for the default of the dealer."
Accordingly, the above statutory provisions authorize the respondent to go behind the monthly state reports if it is not satisfied as to their correctness. This was done by the respondent in this case by examining petitioner's federal excise tax returns and monthly meter reading reports to arrive at an estimated tax. However, the foregoing Findings of Fact make it clear that the meter reading reports were inaccurate and should not have been relied upon by respondent for the purposes of tax assessment. Since the federal excise returns were also based on these erroneous reports, they too should not be used as a basis for arriving at the amount of tax due. Petitioner's recalculation of the meter reading reports shows that they now basically equate to the original monthly state reports based on invoices of fuel purchased and tank readings at the end of each month. Therefore, in the absence of contradiction by respondent, they are considered to be the most accurate reflection of taxable sales.
Petitioner's recapitulation of the amount which it considers due and owing to the state includes interest accruing only after the effective date of the enactment of Section 206.94(2), June 27, 1976. That provision reads as follows:
"206.94 Department may estimate special fuel sold or used.--
* * *
(2) Any payment that is not received by the department on or before the due date as provided in s. 206.91, in addition to any other penalties, shall bear interest at the rate of 1 percent per month of the amount due from the date due until paid."
No interest on delinquent payments was authorized by statute until the amendment of Section 206.94 by the addition of subsection (2). It is considered that petitioner's contention as to its liability for interest under the amended statute is correct. Tax statutes, like statutes generally, operate only prospectively unless the intention that they should operate retrospectively is clearly expressed. State ex rel Riverside Bank and Green, 101 So 2d 805 (Fla. 1958). Accordingly, Petitioner's position that interest under the amended statute should be paid on the amount due commencing only after June 27, 1976, is well-founded.
That petitioner be held liable for special fuels tax, penalty and interest in the amount of $11,390.
DONE and ENTERED this 29th day of November, 1977, in Tallahassee, Florida.
THOMAS C. OLDHAM
Linder Smith, Jr. Esquire 1320 Atlantic Bank Building Jacksonville, Florida 32202
Harold F.X. Purnell, Esquire Assistant Attorney General Department of Legal Affairs The Capital
