STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MIAMI TIRESOLES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 80-0517

) STATE OF FLORIDA, DEPARTMENT ) OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings by its designated Hearing Officer, Michael Pearce Dodson, held a final hearing in this case on December 10, 1980, in Miami, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: Warren S. Wepman, Esquire

WEPPAN AND WEPNAN, P.A.

El Dorado

3636 Bougainvillea Road

Miami, Florida 33133

For Respondent: Linda C. Procta, Esquire

Assistant Attorney General Department of Legal Affairs The Capitol, LLO4 Tallahassee, Florida 32301

PROCEDURAL BACKGROUND

These proceedings began on January 14, 1980, when the Respondent, Department of Revenue (Department) gave notice to Petitioner, Miami Tiresoles, Inc. (MTS), of a proposed tax assessment for a special fuels tax in the amount of $6,695.39 1/ plus interest. In response to the notice Petitioner filed a request for an administrative hearing. The case was forwarded on March 18, 1980, to the Division of Administrative Hearings for the assignment of a Hearing Officer and the scheduling of a final hearing. On April 7, 1980, the Department answered MTS' first

Petition. Because the original Petition contained allegations which appeared to constitute a rule challenge cognizable under Section 120.56, Florida Statutes, the Hearing Officer, sua sponte, entered an Order to Show Cause why those portions of the original petition attacking Respondent's rule should not be stricken without prejudice to the later filing of a Section

1. proceeding.

   
   

   As a result of the Order to Show Cause,, MTS filed a Petition in Case No. 89-927R to challenge the validity of, Section 12B-5.01, Florida Administrative Code, as amended. Petitioner also requested that the tax assessment case, No. 80- 517, be consolidated with the rule challenge case, No. 80-927R. That request was initially denied because of the different time lines for a decision in a rule case as compared to a Section 120.57(1) case. After a stipulation by the parties to waive the time limit in Section 120.56, Florida Statutes for a Final Order, the cases were consolidated for discovery and hearing. The final hearing was initially scheduled for April 28 and 29, 1980, but after a Joint Motion for Continuance the hearing was reset for December 10, 1980.

   
   

   At the final hearing, Petitioner presented Mr. Charles Rigl, Ms. Jeanne Ann Rigl, Ms. Eleanor Stonaker and Mr. Thomas J. Kilbury as its witnesses. The following stipulation was also offered in support of Petitioner's case: "It is stipulated that the testimony of Abner Turk, Gary Marjama, Jose Juelle, Robert Sims, and Leon Glazer who are respectively Abner Turk, owner of Chuck's Backhoe Service; Jose Juelle, owner of Juelle Bros.

   Construction Company; Robert Sims, owner of Sims Paving Company; Gary Marjama, owner of Atomic Sandblasting Company; and Leon Glazer, owner of A & M Trucking Company, would be to the same effect as the testimony of Thomas Kilbury, that special fuels purchased by them on which no road tax of eight cents per gallon was collected, were used by them for industrial purposes, placed by them in their receptacles, whether that be the tanks of their heavy equipment or their tank truck, on the premises of Miami Tiresoles, regardless of the number of gallons involved in each invoice." Petitioner offered Exhibits 1-4 which were received into evidence. The Respondent presented the testimony of Mr.

   David Pratt and offered Exhibits A and B which were received into evidence.

   At the conclusion of the hearing the parties were offered the opportunity to file memoranda or proposed orders with findings of fact on or before January 15, 1981. The Department filed a Memorandum of Law and the Petitioner filed a Proposed Recommended Order which contains findings of fact. To the extent that the proposed findings of fact submitted by the Petitioner are not reflected in this Order, they are rejected as being

   either not supported by competent substantial evidence or as irrelevant to the issues for determination here.

   
   

   ISSUES PRESENTED

   
   

   Whether Petitioner owes tax in the amount of $4,554.80 plus a penalty and interest on the sale of special fuel between December 1, 1976, and December 31, 1979.

   
   

   FINDINGS OF FACT

   
   

   1. Miami Tiresoles, Inc., sells both new and retreaded tires for cars and trucks. The company also sells gasoline and diesel fuel. It is licensed by the Department as a dealer in special fuels. As far as this case is concerned special fuel is number 2 diesel oil.

      
      

   2. Unless an exemption is met each gallon of special fuel sold by MTS is taxed by the Department at a rate of eight cents per gallon.

      
      

   3. The Department has given BITS a revised notice of proposed assessment of tax for the sale of special fuel in the amount of $4,551.88 plus a penalty of $455.48 and interest in the amount of $735.11 (through April 21, 1980). The tax figure on the assessment appears to reflect a typographical error. The Department's records (Exhibit A) indicate that for the period in question, 2/ MTS sold 56,936 gallons of special fuel subject to tax according to the Department's interpretation of the law. If a tax at a rate of eight cents per gallon is due, then the amount due should be $4,554.88 and not $4,551.88. The correct tax figure is reflected on the Department's work sheets but was probably misread when the figure was transferred to the revised Notice of Assessment issued on April 21, 1980.

      
      

   4. The foregoing assessment is based on MTS' invoices which reflect sales of special fuel to customers in amounts of more than 110 gallons at one time. Those sales were made to MTS customers who have filed with MTS a document called "Purchaser's Exemption Certificate". A typical example of such a certificate states:

      
      

      PURCHASER'S EXEMPTION CERTIFICATE

      
      

      The undersigned hereby certifies that the motor duel (sic) and/or special fuel pur- chased on 1-19-79 is for the following purpose as checked in the space provided.

      (X) Purchased for home, industrial, com- mercial, agricultural or marine purposes

      for consumption other than for the propul- sion of a motor vehicle.

      ( ) Purchased at bulk plant or terminal in volumes of not more than 110 gallons for delivery into a receptacle not connected to the fuel supply system of a motor vehicle for consumption other than for the propulsion of a motor vehicle.

      
      

      Purchaser is aware that if this exemption if (sic) falsely claimed, or if this certificate is not rescinded at the time he fails to quality (sic) for the exemption, he shall be liable for the taxes imposed under Chapter 206, F.S. Furthermore, by issuing this certificate, the purchaser also certifies that he does not have any motor vehicles which use special fuel for propulsion.

      
      

      This certificate is to continue in force until revoked by written notice to MIAMI TIRESOLES, INC.

      
      

      Purchaser Trade Name A ACME SANDBLASTING, INC.

      Street Address

      9521 W. Oakmont Dr. ,Hialeah,Fla. 33015 BY /s/

      
      

      The industrial customers of MTS (those who have filed an exemption certificate) are engaged in the construction business. They use the diesel fuel to operate bulldozers, front-end loaders, back hoes, sandblasters and similar equipment. None of the fuel is used for the operation of motor vehicles on the public highways of Florida.

      
      

   5. All the fuel in question is sold on the premises of MTS. At the time of sale it is placed either in the fuel tank of a particular piece of equipment such as a back hoe, or it is placed in a fuel storage tank mounted on the back of a truck. The storage tanks are not connected so they can provide fuel for the propulsion of the truck. They are used to transport fuel to the purchaser's particular job site. The storage tanks have a capacity of between 100 to 300 gallons.

      
      

   6. MTS does not have delivery trucks of its own and has no facilities for taking fuel to its customers' job sites.

   7. A single invoice of MTS which indicates a sale of 110 gallons of special fuel to an individual customer is frequently the result of a sale where multiple fuel tanks are filled at one time. For Instance, the customer may have a back hoe sitting on the rear of a flat-bed truck. He will fill the fuel tank in his back hoe and then perhaps fill an additional 55 gallon drum or two which would be on the truck. This would occur all in one transaction.

      
      

   8. The reason why the Department seeks to tax special fuel sold by MTS to its industrial customers in an amount exceeding

      110 gallons is because the fuel was placed in the customers' own fuel tanks on the premises of MTS and not on the premises of the customer or at the customer's job site.

      
      

      CONCLUSIONS OF LAW

      
      

   9. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this case. Section 120.57(1) and Section 120.55, Florida Statutes (1979).

      
      

   10. Special fuel as defined by Section 206.86(1), Florida Statutes, includes the diesel fuel sold by the Petitioner for use other than in motor vehicles operated on public highways in Florida. A tax of eight cents per gallon is imposed by Section 206.87, Florida Statutes (1977). It provides:

       
       

       1. An excise tax of 8 cents per gallon is hereby imposed upon every gallon of special fuel used or sold in this state for use. Unless expressly provided to the contrary in this part, every sale shall be deemed for use in this state. This levy, of tax is upon the consumer but shall be paid upon the first sale or transfer of title within this state by a dealer except as expressly provided in this part, who shall act as agent for the state in the collection of said tax whether he be the ultimate seller or not.

          
          

          The foregoing language makes it quite clear that every gallon of special fuel sold or used in Florida is taxed unless an exemption from tax can be met by the nature of the sale or use. Pioneer Oil Company, Inc. v. Department of Revenue, 381 So.2d 263 (Fla.

          1st D.C.A. 1980); Belcher Oil Company v. Department of Revenue,

          382 So.2d 793 (Fla. 1st D.C.A. 1980). The two exemptions of Section 206.87 relevant here are: (4)(a) and (b). They provide:

          
          

          1. The following sales shall not be sub- ject to the tax herein imposed:

             1. Sales by a dealer when the special fuel is delivered for home, industrial, commercial, agricultural, or marine purposes, for consump- tion other than use, or for resale pursuant to paragraph (c) hereof.

(c) Sales at the dealer's place of business of not more than 110 gallons by a dealer

into a receptacle not connected to the fuel supply system of a motor vehicle for consump- tion other than use.

1. These exemptions, when construed in pari materia provide that: (1) if fuel is delivered at some location other than the dealer's place of business and is used for an exempt purpose, it may be sold in any quantity and be exempt from the proposed tax, and (2) if fuel is delivered at the dealer's place of business (not into a motor vehicle fuel tank) in any amount less than 110 gallons and is used for an exempt purpose, it will be exempt from the tax imposed.

   
   

2. It is a reasonable implication that for sales at a dealer's place of business of more than 110 gallons, the tax is imposed even though the fuel is ultimately used for an exempt purpose. Cf. Pioneer Oil Company, Inc. v. Department of Revenue, supra and Belcher Oil Company v. Department of Revenue, supra. This is what has occurred here. The sales at issue have been for more than 110 gallons and have been made at the place of business of the dealer, Miami Tiresoles, Inc. These facts are encompassed by Section 12B-5.01(7)(b), Florida Administrative Code. It states:

Any licensed dealer of special fuel who, at his place of business, delivers more than 110 gallons of special fuel to a per-

son who is not a licensed dealer of special fuel, shall be liable for, and shall pay to the state taxes, penalties, and interest on the total quantity sold even though the fuel may not be ultimately used to propel a motor vehicle on the highway.

This rule, whose validity was affirmed in the companion case of Miami Tiresoles, Inc. v. State of Florida, Department of Revenue, Case No. 80-927R, requires that the Petitioner pay tax, penalties, and interest on the 56,936 gallons of special fuel sold between December 1, 1976 and December 31, 1979.

RECOMMENDATION

Based on the foregoing Findings of Fact and the Conclusions of Law it is recommended that the Department of Revenue enter a final order affirming its assessment for a special fuel tax against the Petitioner in the amount of $4,554.88 plus penalty and interest computed pursuant to Section 206.44, Florida Statutes (1979).

DONE and RECOMMENDED this 25th day of March 1981, in Tallahassee, Florida.

MICHAEL PEARCE DODSON

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

FILED with the Clerk of the Division of Administrative Hearings this 25th day of March 1981.

ENDNOTES

1/ Later revised to $4554.88 because, as announced at the final hearing, the parties reached a settlement on that part of the assessment relating to sales of less than 110 gallons.

2/ December 1, 1976, through December 31, 1979.

COPIES FURNISHED:

Warren S. Wepman, Esquire WEFMAN AND WEPMAN, P.A.

El Dorado

3636 Bougainvillea Road

Miami, Florida 33133

Linda C. Procta, Esquire Assistant Attorney General Department of Legal Affairs The Capitol, LL04 Tallahassee, Florida 32301

Docket for Case No: 80-000517

Orders for Case No: 80-000517