STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ZIMMER HOMES CORPORATION, )

)

Petitioner, )

)

vs. ) CASE NO. 79-1159

) DEPARTMENT OF REVENUE and OFFICE ) OF THE COMPTROLLER, STATE OF ) FLORIDA, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in the above captioned matter after due notice, on August 7, 1979, at West Palm Beach, Florida, before Thomas C. Oldham, Hearing Officer, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Richard B. Burk, Esquire

Scott, Burk, Royce and Harris

450 Royal Palm Way

Palm Beach, Florida 33480

For Respondent: Barbara Harmon, Esquire

Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

Whether Respondent Office of the Comptroller should refund to Petitioner taxes paid pursuant to Chapter 199 and 201, Florida Statutes.

FINDINGS OF FACT

The parties stipulated to the facts set forth in paragraphs 1 through 9 of the Petition herein, as follows:

1. The agencies affected in this action are the Department of Revenue, Tallahassee, Florida, and the Office of the Comptroller, Tallahassee, Florida.

   
   

2. The Petitioner is Zimmer Homes Corporation, 777 Southwest 12th Avenue, Pompano Beach, Florida.

3. Zimmer Homes Corporation, on or about December 12, 1974, conveyed a piece of property described as follows:

   
   

   All of that part of the Southeast quarter of Section 10, Township 44 South, Range 42 East, of Palm Beach County, Florida, lying

   North of the North right-of-way (r/w) line of Forest Hill Boulevard, less the West 40 feet thereof for road right-of-way and less the East 40 feet thereof.

   
   

4. The sellers paid the necessary excise tax on documents and intangible tax as follows:

   
   

   a. $11,250.00	total consideration $3,750,000.00	of	Section Florida	201.02(1) Statutes
   b. 3,900.00	based upon note of $2,600,000.00		Section Florida	201.07 Statutes
   c. 1,542.00	based upon note of $1,027,906.00		Section Florida	201.07 Statutes
   d. 4,125.00	based upon total consider- ation of $3,750,000.00		Section Florida	201.021(1) Statutes
   e. 5,200.00	based upon mortgage secur- ing note of $2,600,000.00		Section Florida	199.032(2) Statutes
   f. 2,055.81	based upon mortgage secur- ing note of $1,027,906.00		Section Florida	199.032(2) Statutes

   
   

5. A lawsuit was commenced for reasons not relevant to this Petition and the Circuit Court of the Fifteenth Judicial Circuit of Florida entered a Final Judgment on July 12, 1978, a copy of which is attached hereto as Exhibit "A". In the Final Judgment the Court determined that the Purchasers had a right to rescind the transaction. The Court ordered that all obligations of the parties arising out of the Purchase and Sale Agreement were cancelled and that the Purchasers were entitled to a sum of money in order to restore the parties to their original positions. (Petitioner's Exhibit 1).

   
   

6. On March 22, 1979, pursuant to Section 215.26, Florida Statutes, Zimmer Homes Corporation applied for a refund of the excise tax on the documents in an amount as specified in Paragraphs 4(a), 4(b), 4(c) and 4(d), above. (Petitioner's Exhibit 4).

   
   

7. On April 3, 1979, pursuant to Section 199.252, Florida Statutes, and Section 215.26, Florida Statutes, Zimmer Homes Corporation applied for a refund of the intangible tax paid in an amount as specified in Paragraphs 4(e) and 4(f) above. (Petitioner's Exhibit 4).

   
   

8. According to a letter from the Office of the Comptroller dated April 23, 1979, a copy of which is attached hereto as Exhibit "B", the Office of the Comptroller indicated that they concurred with the findings and conclusions of the Department of Revenue in denying the refund request on the excise tax on documents as specified in paragraph 6 above. As grounds therefore, it was indicated that the refund requests were denied because the statute of

   limitations under Section 215.26, Florida Statutes, barred the request for refund. (Petitioner's Exhibit 3).

   
   

9. By letter dated April 26, 1979, a copy of which is attached hereto as Exhibit "C", the Office of the Comptroller indicated that they concurred with the findings of the Department of Revenue on denying the refund for intangible taxes which had been paid as specified above. As grounds therefore it was indicated that the request was denied because the applicable statute of limitations had run. (Petitioner's Exhibit 2).

   
   

   CONCLUSIONS OF LAW

   
   

10. Petitioner seeks refund of documentary stamp tax and intangible tax paid on the deed, mortgage and note, plus surtax, in the total amount of

    $27,662.91. The applicable statute under which such refund was sought and denied is Section 215.26, Florida Statutes, which reads pertinently as follows:

    
    

    1. Repayment of funds paid into State Treasury through error, etc. --

       1. The Comptroller of the state may refund to the person who paid same . . . any moneys paid into the State Treasury which

          constitute:

          1. an overpayment of any tax, license or account due;

          2. a payment where no tax, license or account is due; and

          3. any payment made into the State Treasury in error;

             * * *

       2. Application for refunds as provided by this section shall be filed with the Comptroller, except as otherwise provided herein, within 3 years after the right so such refund shall have accrued else such right shall be barred . . . Upon receipt of an application for refund, the state agency to which the funds were paid shall make a determination of the amount due. If an application for refund is denied, in whole or in part, such state agency shall so notify

    the applicant stating the reasons therefore. . . .

    
    

    The Petitioner contends that judicial rescission of the contract upon which the taxed documents in question were predicated justifies refund of the taxes on the documents under Section 215.26(1)(b), Florida Statutes, as a payment where no tax is due. Petitioner further claims that the Comptroller's denial of its request for refund on the ground that such request had not been filed within the statutory three-year period is erroneous in that the right to refund did not accrue until after rescission had been ordered by the Palm Beach County Circuit Court on July 12, 1978. Respondents deny that refund is warranted and assert that the three-year period for filing an application for refund commenced on the date the tax was paid which was more than three years prior to the refund application.

    
    

11. It is undisputed that the taxes in question were required to be paid at the time of recordation. The initial question for consideration is whether

    the rescission of the purchase agreement effectively provided Petitioner with a right to a tax refund. In its Final Judgment, the Palm Beach Circuit Court determined that "All obligations of the parties arising out of the Purchase Agreement are cancelled and rescinded," and ordered the return of monies paid under the contract. The effect of court-ordered contract rescission has been described as follows:

    
    

    As a general thing, the effect of a rescission is to extinguish the contract and to annihilate it so effectually that in contemplation of law it has never had any existence, even for the purpose of being broken. Accordingly, it has been said that a lawful rescission of an agreement puts an end to it for all purposes. . . .

    * * *

    The effect of a rescission of an agreement is to put the parties back in the same position they were in prior to the making of the contract. At least, it has the legal effect of entitling each of the parties to be restored as far as is possible to the condition he was in before the contract was made. 17 Am. Jur 2d, Section 516.

    
    

    Thus, a rescission results in the abrogation of the agreement, and necessarily nullifies the documents incident thereto upon which the state tax was paid.

    Since rescission implies that the transaction never had existence, it must follow that tax liability likewise is nullified and that no payment thereof "is due."

    
    

12. Subsection 215.26(2), F.S., requires that applications for refunds must be filed with the Comptroller within three years after the "right to such refund shall have accrued." Here, the tax was paid in 1974 and claim for refund was not made until April 9, 1979. However, Final Judgment rescinding the Purchase Agreement was entered July 12, 1978. The remaining question for determination is whether the three-year statutory period for filing claims commenced when the tax was paid or when the Final Judgment was entered. If the latter date is applied, Petitioner has timely filed its refund request. Respondents have pointed to several judicial decisions which appear to support the position that when a claim for refund of taxes must be made within a stated period after the refund accrues, the time period commences when the tax is paid. State ex rel. Victor Chemical Works v. Gay, 74 So.2d 560 (Fla. 1954), Stewart Arms Apartments, Ltd. v. State Department of Revenue, 363 So.2d 1003 (Fla. 4th DCA 1978), and cases cited therein. The cited cases, however, deal with situations in which the taxpayer was or should have been aware at the time the tax was paid that he could have filed claims for refund at that time under an available statutory exception, or could have challenged the constitutionality of the taxing statute immediately upon payment of the tax. In the instant situation, Petitioner had no such alternatives available since, at the time of tax payment, there was no question but that the tax was due and the subsequent rescission of the contract could not reasonably have been anticipated. In Petitioner's situation, no right to refund had, in fact, accrued, until the agreement was rescinded in 1978. It is probably true that most claims for refund of taxes arise in instances where the taxpayer, either at the time of payment or soon thereafter, recognizes that an error or overpayment has been made and can promptly file application for refund. However, this general

    proposition must certainly be subject to exceptions in appropriate cases such as the one under consideration. If such were not the case, the Legislature would simply have stated that the time period for filing claims commences when the tax is paid rather than when the right to refund accrues. An analogous situation in the tax field is shown in Section 212.17, F.S., which entitles a seller to reimbursement of sales tax collected from purchasers when such purchases are returned to the seller. It also provides that a conditional seller may obtain a refund for tax paid on an unpaid balance when the personal property is repossessed.

    
    

13. In view of the foregoing, it is concluded that Petitioner has established a timely and proper claim for refund.

    
    

14. The posthearing briefs submitted by the parties have been fully considered and those positions which have not been incorporated or discussed herein are considered to be either inapplicable, unnecessary, or unwarranted in law or fact.

RECOMMENDATION

That Petitioner's application for refund of tax paid under Chapters 199 and 201, Florida Statutes, be approved.

DONE AND ENTERED this 6th day of September 1979 in Tallahassee, Florida.

THOMAS C. OLDHAM

Hearing Officer

Division of Administrative Hearings

101 Collins Building Tallahassee, Florida 32301 (904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 6th day of September 1979.

COPIES FURNISHED:

Richard B. Burk, Esquire Scott, Burk, Royce and Harris

450 Royal Palm Way

Palm Beach, Florida 33480

Barbara Harmon, Esquire Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32301

John D. Moriarty, Esquire Department of Revenue

Room 104, Carlton Building Tallahassee, Florida 32301

Honorable Gerald A. Lewis Comptroller, State of Florida The Capitol

Tallahassee, Florida 32301

Docket for Case No: 79-001159

Orders for Case No: 79-001159