Carpenter, on October 9, 1981. The parties were represented by:
For Petitioner: Lawrence C. Rolfe, Esquire
This case arose from a tax assessment by Respondent wherein it determined that Petitioner owed sales and use taxes of $5,830.56, a delinquent penalty of
$1,457.64, and interest through December 11, 1980, of $1,017.91. Petitioner denies that it owed any taxes, claiming exemption as a newspaper. In the alternative, Petitioner contends that a major portion of the amount assessed was indirectly paid by a supplier.
The parties submitted proposed findings of fact and conclusions of law. To the extent these proposed findings have not been adopted or otherwise incorporated herein, they have been specifically rejected as not relevant or not supported by the evidence.
During the period covered by the tax audit, Petitioner published and distributed free of charge two Jacksonville area editions of a weekly magazine entitled TV Facts. This magazine contains substantial advertising which provides all revenues. In addition to the advertising, television schedules and feature stories are included to interest the general public in the publication. Petitioner obtained a second class postal permit for the magazine, but has never used the mails for distribution.
During the period at issue, the magazine was prepared in a three step process. The rough layout without television schedules was prepared by Petitioner and forwarded to Composition Compound, Inc., a Miami company. This company obtained the television schedules and prepared the final layout. Composition Compound then photographed this layout and sent the negatives to Sun 'N' Fun Printing, a Clearwater company. Sun 'N' Fun then printed the magazine and delivered it to Petitioner.
Petitioner paid Composition Compound for all services provided by that company and Sun 'N' Fun. Thus, there was no direct business relationship between Petitioner and Sun 'N' Fun. Petitioner believed it qualified for the newspaper exemption and was neither charged nor paid any sales taxes until it learned through Respondent's audit of Composition Compound that such taxes were due.
Respondent seeks to assess Petitioner sales taxes in the amount of
$5,830.56 with penalty of $1,457.64 plus 12 percent interest to the date of payment for the audit period December 1, 1977, through November 30, 1980.
Petitioner does not contest these computations, but believes the tax due, if any, should be reduced by the amounts it paid to Composition Compound to cover the sales tax billed by Sun 'N' Fun.
Petitioner submitted Sun 'N' Fun invoice (Exhibit 7) to demonstrate that Composition Compound was billed for about $2,700.00 in sales taxes by Sun 'N' Fun for printing Petitioner's magazine between December 29, 1978, and December 29, 1979. Composition Compound separately computed its costs and profits which it billed to Petitioner (Exhibit 6). However, there was no separate brochure of the sales tax shown on the Composition Compound invoices, nor was any additional tax charged on the value added by that company.
CONCLUSIONS OF LAW
Subsection 212.08(6), Florida Statutes, provides that newspapers are exempt from sales tax. However, Subsection 12A-1.08(4), Florida Administrative Code, provides:
To qualify for exemption as a newspaper, a publication must be sold, and not given to the reader free of charge . . . .
Since Petitioner's magazine is given to the reader free of charge, it does not qualify for the newspaper exemption.
Subsection 212.02(3)(a), Florida Statutes, provides in part: "Retail Sale" or a "sale at retail" means a
sale to a consumer or any person for any purpose other than for resale in the form of tangible personal property . . . .
Under the above provision, Composition Compound was not required to remit sales tax to Sun 'N' Fun since the property it purchased was, in fact, for resale to Petitioner. Conversely, Composition Compound should have, but did not, collect a sales tax from Petitioner.
Subsection 212.07(2), Florida Statutes, provides:
Dealers shall, as far as practicable, add the amounts of the tax imposed under this chapter to the sale price and the tax shall be separately stated as Florida tax on any charge tickets, sales slips, invoices or other tangible evidence of sale, and such tax shall constitute a part of such price, charge or proof of sale which shall be a debt from the purchaser or consumer to the dealer, until paid, and shall be recoverable at law in the same manner as other debts.
Any dealer who shall neglect, fail or refuse to collect the tax herein provided upon any, every and all retail sales made by him or his agents or employees of tangible personal property which is subject to the tax imposed by this chapter shall be liable for and pay the tax himself.
Although the term "dealer" is defined broadly elsewhere, and could be construed to include Petitioner, it is apparent from the above provision that Composition Compound is the dealer responsible for tax collection. However, since this company has been dissolved, Respondent seeks to obtain the uncollected taxes from Petitioner.
Subsection 212.07(9), Florida Statutes, provides: Any person who has purchased at retail,
used, consumed, distributed, or stored for use or consumption in this state tangible personal property, admissions, communication services, or leased tangible personal property, or who has leased any commercial offices or buildings, real property, space or spaces in parking lots or garages for motor vehicles or docking, or storage space, or spaces for boats in boat docks or marinas
and cannot prove that the tax levied
by this chapter has been paid to his vendor or lessor shall be directly liable to the state for any tax, interest, or penalty
due on any such taxable transactions.
Under the above provision, Respondent is empowered to hold Petitioner liable for any unpaid taxes. Under this provision, Petitioner must prove that the tax at issue was paid to escape responsibility. Petitioner offered Exhibits
6 and 7 in support of its claim that about $2,700 of the amount due was paid by Composition Compound to Sun 'N' Fun, and ultimately passed on to Petitioner.
The invoices issued by Sun 'N' Fun (Exhibit 7) constitute hearsay as defined by Section 90.801, Florida Statutes, and Respondent objects to their evidentiary consideration. Since there was no testimony by the custodian or other qualified witness regarding these invoices, they do not meet the business records hearsay exception provided by Subsection 90.803(6), Florida Statutes. Thus, while admissible for the purpose of supplementing or explaining other
evidence, Exhibit 7 may not be used to support findings of fact. Subsection 120.58(1)(a), Florida Statutes.
Exhibit 6, the invoices of Composition Compound to Petitioner, were attested to by their recipient (Petitioner's president) and are admissible for fact finding purposes. However, these invoices do not itemize taxes, and in no way establish that the taxes billed to Composition Compound by Sun 'N' Fun were passed on to Petitioner. Further, there was no evidence (hearsay or otherwise) to demonstrate that Composition Compound paid the taxes billed by Sun 'N' Fun or that Respondent received such tax receipts, if any. Therefore, Petitioner is liable for $5,830.56 in sales taxes due for the audit period.
Subsection 212.12(2), Florida Statutes, provides:
When any person, firm, or corporation required hereunder to make any return or to pay any tax imposed by this chapter shall fail to make such return or shall fail to pay such tax, within the time required hereunder, in addition to all other penalties provided herein, and by the laws of Florida in respect to such taxes, a specific penalty shall be added to the tax in the amount of 5 percent if the failure is for not more than 30 days, with an additional 5 percent for each additional 30 days, or fraction thereof, during the time which the failure continues, not to exceed, however, a total penalty of
25 percent in the aggregate; however, in
no event shall the penalty be less than $5. In the case of a false or fraudulent return or a willful intent to evade payment of any tax imposed under this chapter, in addition to the other penalties provided by law,
the person making such false or fraudulent return or willfully attempting to evade the payment of such a tax shall be liable to a specific penalty of 50 percent of the tax bill and for fine and punishment as provided by law for a conviction of a misdemeanor of the second degree.
Respondent sees to levy a delinquent penalty of $1,457.64 under the above provision. Petitioner, in good faith, believed that it did not owe a sales tax on its products, but began payment as soon as it was notified of this responsibility. Further, Composition Compound was primarily responsible for the failure of collection. Therefore, Petitioner should be absolved of the delinquent penalty. 1/
Subsection 212.12(3), Florida Statutes, provides:
When any dealer, or other person, charged herein, fails to remit the tax, or any portion thereof, on or before the day when such tax shall be required by law to be paid, there shall be added to the amount due interest at the rate of 1 percent per month of the amount due from the date due until paid.
Under the above provision, Respondent is authorized to collect interest on delinquent taxes at the monthly rate of 1 percent. This is not a penalty provision, but merely recognizes that the taxpayer has had the use of such funds and that, conversely, the state suffered a resulting loss. Therefore, Petitioner must remit interest on the amount due through date of payment.
