STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BURGER KING CORPORATION, )

)

Petitioner, )

)

vs. ) CASE NO. 77-997

) STATE OF FLORIDA, DEPARTMENT ) OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Michael R.N. McDonnell, Hearing Officer for the Division of Administrative Hearings, at 10:00

1. on March 20, 1978 in Room 104 Collins Building, Tallahassee, Florida.

   
   

   APPEARANCES

   
   

   For Petitioner: Alan Greer, Esquire and

   Marsha Niles, Esquire

   One Biscayne Towers, 25th Floor Miami, Florida

   
   

   For Respondent: Cecil L. Davis, Jr., Esquire

   Assistant Attorney General The Capitol

   Tallahassee, Florida

   
   

   Petitioner, Burger King Corporation (hereafter Burger King), seeks a refund of intangible taxes paid for the year 1972, and challenges an assessment of intangible taxes for the year 1973. Respondent, Department of Revenue (hereafter DOR), opposes the request for refund, first because no application for refund has been made, and second, because of the expiration of the three (3) year limitation period for filing refund requests. DOR opposes the assessment challenge on the ground that such an assessment was timely and properly made.

   
   

   FINDINGS OF FACT

   
   

   1. Burger King, a Florida corporation, is a wholly owned subsidiary of the Pillsbury Company, with headquarters located in Minneapolis, Minnesota. Burger King filed its intangible tax returns and made its original tax payments on or before their respective due dates of June 30, 1972, and June 30, 1973.

      
      

   2. On May 3, 1974, DOR sent a letter to Burger King indicating that Burger King's intangible tax account was being reviewed and that DOR's records did not reflect having received the 1972 or 1973 returns. The next piece of correspondence between the parties (according to the record) occurred over two years later on June 3, 1976. At that time DOR informed Burger King that it was auditing Burger King's intangible tax account for the tax year 1973. This

      letter constitutes the initiation of an investigation prior to the expiration of three years from the due date for filing the 1973 return.

      
      

   3. The parties make no further reference in their correspondence to the 1972 return or the tax year 1972. However, DOR does request a copy of Burger King's balance sheet dated December 31, 1972. This request is contained in DOR's letter of September 12, 1977, which letter in its opening paragraph limits the inquiry to tax years 1973 through 1977, inclusive. In addition to its letter of June 3, 1976, DOR filed its proposed assessment for tax year 1973, on the same date, June 3, 1976. Typed at the bottom of the proposed assessment was the following statement:

      
      

      This proposed assessment shall become final within sixty (60) days of receipt, unless you file a protest requesting a departmental conference, or petition for a hearing under the provisions of the Administrative Procedures Act, Chapter 120, F.S.

      
      

   4. Upon receipt of these documents, Mr. Tom Howell, the property tax manager for Pillsbury Corporation asked for an extension of time to file the information requested in the June 3rd letter, which extension was granted by DOR. However, no protest or petition for hearing was filed within the sixty

      (60) days.

      
      

   5. Subsequently, Mr. Nicolas Joanos, a tax examiner with DOR recommended that Burger King file an amended tax return to take advantage of savings that would accrue if subsidiary corporations were consolidated on the return. While no such amended return was filed, a recomputation of tax liability based upon consolidation was made by DOR on January 6, 1977. On January 27, 1977, Burger King paid the additional tax for the years 1974, 1975, and 1976 but declined to pay the tax due for the 1973 tax year on the ground that the billing was dated past the expiration date for making a 1973 assessment.

      
      

   6. On February 23, 1977, DOR computed a new proposed assessment which included accrued interest from the prior proposed assessment. Burger King subsequently filed its request for a hearing pursuant to the provisions of Chapter 120, Florida Statutes.

      
      

   7. The intangible properties sought to be taxed by DOR for 1973 include some $11,000,000 of inter-company accounts receivable due from Burger King's parent corporation, The Pillsbury Company.

      
      

   8. DOR does not contest that Burger King overpaid its intangible tax for the tax year 1972, but opposes a refund on the procedural ground more fully explained below. During the applicable periods of time herein, Burger King never made application for a refund for the 1972 tax paid. Rather, the issue was first raised by Burger King in its amended petition dated January 29, 1978.

      
      

      CONCLUSIONS OF LAW

      
      

   9. Burger King's request for refund for the tax year 1972 should properly be, denied. Section 199.252, Florida Statutes, provides in pertinent part:

      
      

      No refund shall be allowed unless proper application has been made and delivered

      to the Department for approval within three years from the date the right to such refund shall have occurred.

      
      

   10. The first mention of a refund made by Burger King was contained in the Amended Petition some five and one-half years after the payment of the original tax. Burger King's reliance on the case of Hardy, Hardy and Associates, Inc. v. State Department of Revenue, 308 So.2d 187 (1 DCA 1975) is misplaced. In that case the Court determined that the conduct of the employees or agents of the State of Florida amounted to a complete estoppel for the State or its agencies to claim the lack of a formal or timely application for refund. The pertinent facts of that case show that a disagreement existed between the taxpayer and the State over whether the taxes in question were legal and that there was a record of continuing communications regarding the taxes in question. No such facts are present in the instant case. The sole reference to the 1972 tax was inquiry by DOR as to the whereabouts of the 1972 return. Such conduct is insufficient to set up an estoppel in favor of the taxpayer.

       
       

   11. Since DOR commenced its investigation of the 1973 tax return prior to the expiration of three years from the due date for filing the 1973 return, it would not have been barred from making the assessment by virtue of statutory limitation. However, the matter of the 1973 assessment is controlled by the Florida Supreme Court's decision in Department of Revenue v. Amrep Corporation,

358 So .2d 343 (Fla. 1978), wherein the Court held that Section 199.023(7), Florida Statutes, defining "affiliated groups" for the purpose of creating the privilege of filing a consolidated return exempting inter-company accounts receivable violated the taxpayer's right to equal protection of laws and rendered that assessment void. Under the decision in Amrep, Burger King is entitled to file a consolidated return which eliminates all inter-company receivables, notwithstanding the fact that The Pillsbury Company is not incorporated in Florida and does not maintain its principal place of business in this State. It is, therefore,

RECOMMENDED that Burger King's claim for refund of intangible taxes paid for the year 1972 be denied, and that Burger King's challenge to the 1973 assessment be sustained.

DONE and ENTERED this 10th day of May, 1979, in Tallahassee, Florida.

MICHAEL R. N. MCDONNELL

Hearing Officer

Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

COPIES FURNISHED:

Alan Greer, Esquire and Marsha Niles, Esquire

One Biscayne Tower, Suite 1910 25th floor

Miami, Florida 33131

Cecil Davis, Jr., Esquire Assistant Attorney General The Capitol

Tallahassee, Florida 32301

Mr. Randy Miller Executive Director Department of Revenue Carlton Building

Tallahassee, Florida 32301

Mr. Aubrey Williams Classification and Assignment Fletcher Building

Sixth Floor

Tallahassee, Florida 32301

Docket for Case No: 77-000997

Orders for Case No: 77-000997