STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT OF ) REVENUE, )

)

Petitioner, )

)

vs. ) CASE NO. 80-653

)

HARRIS CORPORATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearing, by its duly designated Hearing Officer, William E. Williams, held a public hearing in this cause on October 17, 1980, in Winter Park, Florida.

APPEARANCES

For Petitioner: Linda C. Procta, Esquire

Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32304

For Respondent: Brian C. Ellis, Esquire

620 Twiggs Street

Tampa, Florida 33602 STATEMENT OF THE ISSUE

By petition dated March 13, 1980, Harris Corporation, Composition Systems Division ("the taxpayer") contests the proposed assessment of taxes by the Department of Revenue ("the Department") on the sale of tangible personal property pursuant to Chapter 212, Florida Statutes. By letter dated March 20, 1980, the Department requested the assignment of Hearing Officer from the Division of Administrative Hearing to conduct the final hearing in this cause.

This cause was scheduled for final hearing on October 17, 1980, by Notice of Hearing dated August 20, 1980. At the final hearing, the Department called Robert Miller as its only witness. The taxpayer called Robert L. Osborne as its only witness. The parties offered Hearing Officer's Exhibits 1 and 2, which were received into evidence.

FINDINGS OF FACT

1. Harris Corporation is a large, multi-national corporation with headquarters in Melbourne, Florida. Harris Corporation conducts its business through several divisions, one of which is Harris Composition Systems Division ("the taxpayer"). The taxpayer is engaged in the business of manufacturing and selling computerized printing equipment.

2. On January 28, 1977, the State of Florida, Department of Revenue ("the Department") mailed a letter to the taxpayer, advising that an audit of the taxpayer's books and records be made available.

   
   

3. The audit was undertaken by agents of the Department and on June 25, 1979, two Notices of Proposed Assessment (the "notices") were mailed to the taxpayer by the Department.

   
   

4. The period covered by the Notices is January 1, 1974 through June 30, 1978.

   
   

5. No proposed or actual assessment of the sales and use taxes referred to in the Notices was made by the Department prior to the proposed assessment.

   
   

6. After receipt of the Notices, the taxpayer's representatives attended an informal conference with representatives of the Department on September 25, 1979. As a result of that conference the Department issued two Revised Notices of Proposed Assessment.

   
   

7. The Revised Notices eliminated January 1, 1974 through May 31, 1974 from the period covered by the Notices but retained the period June 1, 1974 through June 30, 1978.

   
   

8. The portion of the sales and use tax assessment proposed in the Revised Notices that is in dispute in this case is the portion that is attributable to the June 1, 1974 through June 30, 1976 period. The tax in controversy is

   $49,934.01.

   
   

9. The Department has developed a form to be signed by taxpayers in situations where the Department believes that the statute of limitations on assessment of sales and use taxes may expire before an assessent can be made.

   
   

10. The Department did not request that the taxpayer in this case execute such a form, nor did the Department request in any other manner that the taxpayer waive or extend the statute of limitations applicable to sales and use tax assessments and the taxpayer did not do so. Neither the Department nor the taxpayer instituted any judicial or administrative proceedings for review of the assessment proposed in the Notices or in the Revised Notices prior to the filing of a petition by the taxpayer in this case on March 20, 1980.

    
    

11. The Department contends that any delay in issuing the proposed notices of assessment was directly attributable to difficulties encountered in obtaining records in a timely fashion from the taxpayer's parent company, and that the taxpayer should, therefore, be estopped to raise the defense of violation of the statute of limitations. The record in this proceeding does not support such a conclusion. Although there appear to have been some delays in performing the tax audits, the taxpayer was by no means responsible for all of those delays.

    In fact, the longest such delay, from about December 1, 1977, through May 3, 1978, was occasioned by the Department's own budgetary problems relating to per diem and travel expenses for its auditing team. Although some delays were requested by the taxpayer, they were acquiesced in by the Department in the course of establishing its own priorities in conducting the audit of all of the divisions of Harris Corporation. The record is devoid of any indication that the Department at any point considered any failure of the taxpayer to furnish requested information of sufficient severity to invoke the remedies available to the Department under Section 212.13(1), Florida Statutes (mandatory injunction

    to require examination of books and records) or Section 212.14(1), Florida Statutes (issuance of estimated tax deficiency together with distress warrant for collection of such taxes).

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the parties to, and subject matter of this proceeding. Section 120.57(1), Florida Statutes.

    
    

13. The statute of limitations applicable to this proceeding is contained in Section 95.091(3), Florida Statutes, which provides that:

    
    

    Except as otherwise provided by law, the amount of any tax may be determined and assessed within three years after the first day of the month following the date on which the tax becomes due and payable. However, this limitation shall be tolled for a period of two years by a request for inspection and examination of the taxpayer's books and records by the taxing authority within that period, in which event the period for which tax due may be determined and assessed shall be the three years immediately preceding the first day of the month in which a request for inspection and examination of the books and records has been made by the taxing authority. (Emphasis added)

    
    

    Section 95.091(3), Florida Statutes, was enacted by the Legislature and became effective January 1, 1975, and thus post-dates Section 212.14(6), Florida Statutes, which went into effect June 22, 1973. Accordingly, the Department's contention that Section 212.14(6), Florida Statutes, is controlling in this proceeding is rejected. Further, although Section 212.14(6), Florida Statutes, provides a three-year period for determination and assessment of tax liability, and a "tolling" provision, both in language almost identical to that contained in Section 95.091(3), Florida Statutes, the former statute contains no time period after "tolling" of the three-year period in which the Department must commence "action" to collect the tax. Section 95.011, Florida Statutes, provides, in part, that any "action", including assessment of tax liability" . .

    . shall be barred unless begun within the time prescribed in this chapter or, if a different time is prescribed elsewhere in these statutes, within the time prescribed elsewhere." Since Section 212.14(6), Florida Statutes, contains no time limitation "different" than that contained in Section 95.091(3), Florida Statutes, the latter controls in this proceeding.

    
    

14. As indicated in the Findings of Fact section of this Order, the Department seeks to impose tax liability on the taxpayer herein for the period from June 1, 1974 through June 30, 1976. The Department first requested to examine the taxpayer's books and records on January 28, 1977, and ultimately issued its first assessment for this period on June 25, 1979. The Department contends that effective upon its request to examine the taxpayer's records, it was entitled to determine and assess tax liability back to January 28, 1974. The Department further argues that the issuance of the tax assessment on June 25, 1979, only limits its ability to assess tax liability which accrued for any period prior to June 1, 1974.

15. Accepting the parties' stipulation that June 1, 1974 was the first date of the taxable period, the three-year statute of limitations provided for in Section 95.091(3), Florida Statutes, began to run on July 1, 1974. The running of the statute was "tolled" by the issuance of the Department's notice of assessment on January 28, 1977. At that point, 942 days of the three-year limitation period had run. The two-year "tolling" period expired on January 28, 1979, with no action having been taken by the Department. The three-year limitation period therefore resumed on January 29, 1979. The Department issued its notice of proposed assessment on June 25, 1979, after 147 additional days had expired on the three-year "clock." The total period expiring before issuance of the notice of assessment was therefore, 1,089 days, or less than the three-year limitation period provided for in Section 95.091(3), Florida Statutes.

    
    

16. The notice of assessment was timely issued by the Department for the period June 1, 1974 through June 30, 1976, and the assessment of $49,934.01 is not barred by the statute of limitations.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED:

That a Final Order be entered by the State of Florida, Department of Revenue, assessing sales and use taxes against Respondent in the amount of

$49,934.01, together with the applicable amount of interest through the date of entry of said Final Order.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 14th day of January, 1981.

WILLIAM E. WILLIAMS

Hearing Officer

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

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 14th day of January, 1981.

COPIES FURNISHED:

Linda C. Procta, Esquire Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32304

Brian C. Ellis, Esquire 620 Twiggs Street

Tampa, Florida 33602

================================================================= AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HARRIS CORPORATION,

Petitioner,

vs. CASE NO. 80-653

STATE OF FLORIDA, DEPARTMENT OF REVENUE,

Respondent.

/

FINAL ORDER OF DEPARTMENT OF REVENUE

The Division of Administrative Hearings issued its Recommended Order on January 14, 1981. The parties submitted their Exceptions and Proposed Substituted Orders on March 2, 1981. Pursuant to notice, the Governor and Cabinet, acting as head of the Department of Revenue, on April 8, 1981, adopted the Proposed Substituted Order of the Department as the Final Order of the Department of Revenue as follows:

Pursuant to notice, the Division of Administrative Hearings, by its duly- designated Hearing Officer, William E. Williams, held a public hearing in this cause on October 17, 1980, in Winter Park, Florida.

APPEARANCES

For Petitioner: Brian C. Ellis, Esquire

620 Twiggs Street

Tampa, Florida 33602

For Respondent: Linda C. Procta, Esquire

Assistant Attorney General The Capitol, LL04 Tallahassee, Florida 32301

By Petition dated March 13, 1980, Harris Corporation, Composition Systems Division (the "Taxpayer") contested the proposed assessment of taxes by the Department of Revenue (the "Department") on the sale of tangible personal property, pursuant to Chapter 212, Florida Statutes. By letter dated March 20, 1980, the Department requested the assignment of a Hearing Officer from the Division of Administrative Hearings to conduct the final hearing in this cause.

This cause was scheduled for final hearing on October 17, 1980, by Notice of Hearing dated August 20, 1980. At the final hearing, the Department called Robert Miller as its only witness. The Taxpayer called Robert L. Osborne as its only witness. The parties offered Hearing Officer's Exhibits 1 and 2, which were received into evidence.

FINDINGS OF FACT

Harris Corporation is a large, multi-national corporation with headquarters in Melbourne, Florida. Harris Corporation conducts its business through several divisions, one of which is Harris Composition Systems Division (the "Taxpayer"). The Taxpayer is engaged in the business of manufacturing and selling computerized printing equipment.

On January 28, 1977, the State of Florida, Department of Revenue (the "Department") mailed a letter to the Taxpayer advising that an audit of the Taxpayer's books and records for sales and use tax purposes was planned and requesting that the Taxpayer's books and records be made available.

The audit was undertaken by agents of the Department and on June 25, 1979, two Notices of Proposed Assessment (the "Notices") were mailed to the Taxpayer by the Department.

The period covered by the Notices is January 1, 1974 through June 30, 1978.

No proposed or actual assessment of the sales and use taxes referred to in the Notices was made by the Department prior to the proposed assessment.

After receipt of the Notices, the Taxpayer's representatives attended an informal conference with representatives of the Department on September 25, 1979. As a result of that conference, the Department issued two Revised Notices of Proposed Assessment.

The Revised Notices eliminated January 1, 1974 through May 31, 1974 from the period covered by the Notices but retained the period June 1, 1974 through June 30, 1978.

The portion of the sales and use tax assessment proposed in the Revised Notices that is in dispute in this case is the portion that is attributable to the June 1, 1974 through June 30, 1976 period. The tax in controversy is

$49,934.01.

The Department has developed a form to be signed by taxpayers in situations where the Department believes that the statute of limitations on assessment of sales and use taxes may expire before an assessment can be made.

The Department did not request that the Taxpayer in this case execute such a form, nor did the Department request in any other manner that the Taxpayer waive or extend the statute of limitations applicable to sales and use tax assessments, and the Taxpayer did not do so. Neither the Department nor the Taxpayer instituted any judicial or administrative proceedings for review of the assessment proposed in the Notices or in the Revised Notices prior to the filing of a Petition by the Taxpayer in this case on March 20, 1980.

The Department contends that any delay in issuing the proposed notices of assessment was directly attributable to difficulties encountered in obtaining records in a timely fashion from the Taxpayer's parent company and that the

Taxpayer should, therefore, be estopped to raise the defense of violation of the statute of limitations. The record in this proceeding does not support such a conclusion. Although there appear to have been some delays in performing the tax audits, the Taxpayer was by no means responsible for all of those delays.

In fact, the longest such delay, from about December 1, 1977 through May 3, 1978, was occasioned by the Department's own budgetary problems relating to per diem and travel expenses for its auditing team. Although some delays were requested by the Taxpayer, they were acquiesced in by the Department in the course of establishing its own priorities in conducting the audit of all of the divisions of Harris Corporation. The record is devoid of any indication that the Department at any point considered any failure of the Taxpayer to furnish requested information of sufficient severity to invoke the remedies available to the Department under Section 212.13(1), Florida Statutes (mandatory injunction to require examination of books and records), or Section 212.14(1), Florida Statutes (issuance of estimated tax deficiency, together with distress warrant for collection of such taxes).

CONCLUSIONS OF LAW

1. The Division of Administrative Hearings had jurisdiction over the parties to, and the subject matter of, the proceedings. Section 120.57(1), Florida Statutes.

   
   

2. The statutory provision that is in dispute is contained in Section 95.091(3), Florida Statutes, which provides:

Except as otherwise provided by law, the amount of any tax may be determined and assessed within three years after the first day of the month following the date on which the tax becomes due and payable. However, this limitation shall be tolled for a period of two years by a request for

inspection and examination of the taxpayer's books and records by the taxing authority within that period, in which event the period for which tax due may be determined and assessed shall be the three years immediately preceding the first day of the month in which a request for inspection

and examination of the books and records has been made by the taxing authority.

There is also a statute of limitations provision, Section 212.14(6), Florida Statutes, which applies specifically to sales tax assessments. It is a fundamental rule of construction that statutes on the same subject shall be read in pari materia and if at all possible, construed in harmony. Mann v. Goodyear Tire & Rubber Co., 300 So.2d 666 (Fla. 1974); 30 Fla. Jur., Statutes, Section

114. A careful review of Section 95.091(3), Florida Statutes, and Section 212.14(6), Florida Statutes, indicates that thee is no conflict between the two provisions. Although Section 212.14(6), Florida Statutes, provides a three-year period for determination and assessment of tax liability, and a "tolling" provision, both in language almost identical to that contained in Section 95.091(3), Florida Statutes, the former statute contains no time period after "tolling" of the three-year period in which the Department must commence "action" or collect the tax. Section 95.011, Florida Statutes, provides, in part, that any "action", including assessment of tax liability ". . . shall be

barred unless begun within the time prescribed in this chapter or, if a different time is prescribed elsewhere in these statutes, within the time prescribed elsewhere." Since Section 212.14(6), Florida Statutes, contains no time limitation "different" than that contained in Section 95.091(3), Florida Statutes, it must be presumed that two-year "tolling" period in the latter provision controls.

1. As indicated in the Findings of Fact section of this Order, the Department seeks to impose tax liability on the Taxpayer herein for the period from June 1, 1974 through June 30, 1976. The Department first requested to examine the Taxpayer's books and records on January 28, 1977 and ultimately issued its first assessment for this period on June 25, 1979. The Department contends that effective upon its request to examine the Taxpayer's records, it was entitled to determine and assess tax liability back to January 28, 1974. The Department further argues that the issuance of the tax assessment on June 25, 1979 only limits its ability to assess tax liability which accrued for any period prior to June 1, 1974.

   
   

2. Accepting the parties' stipulation that June 1, 1974 was the first date of the taxable period, the three-year statute of limitations provided for in Section 95.091(3), Florida Statutes, began to run on July 1,1974. The running of the statute was "tolled" by the issuance of the Department's notice of assessment on January 28, 1977. At that point, 942 days of the three-year limitation period has run. The two-year "tolling" period expired on January 28, 1979, with no action having been taken by the Department. The three-year limitation period, therefore, resumed on January 29, 1979. The Department issued its notice of proposed assessment on June 25, 1979, after 147 additional days had expired on the three-year "clock." The total period expiring before issuance of the notice of assessment was, therefore, 1,089 days, or less than the three-year limitation period provided for in Section 95.091(3), Florida Statutes.

   
   

3. The notice of assessment was timely issued by the Department for the period June 1, 1974 through June 30, 1976, and the assessment of $49,934.01 is not barred by the statute of limitations.

Based upon the foregoing findings of fact and conclusions of law, it is ORDERED:

That the Department of Revenue's assessment of sales and use taxes against Respondent in the amount of $49,934.01, together with the applicable interest thereon is upheld and the parties are realigned to show Harris Corporation as Petitioner and the State of Florida, Department of Revenue as Respondent.

DONE and ENTERED this 14th day of April, 1981.

RANDY MILLER

Executive Director Department of Revenue State of Florida

102 Carlton Building Tallahassee, Florida 32301

Filed with the Clerk this 14th day of April, 1981.

Docket for Case No: 80-000653

Orders for Case No: 80-000653