STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
UNITED PARCEL SERVICE, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 81-1761
) STATE OF FLORIDA, OFFICE OF ) THE COMPTROLLER, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing officer, K. N. Ayers, held a public hearing in the above- styled case on 19 November 1982 at Tallahassee, Florida.
APPEARANCES
For Petitioner: Gerald R. Hart, Esquire
Ausley, McMullen, McGehee, Carothers & Proctor
Washington Square Building Post Office Box 391 Tallahassee, Florida 32302
and
Ralph S. Snyder, Esquire 1719 Packard Building
Philadelphia, Pennsylvania 19102
For Respondent: Joseph C. Mellichamp, III, Esquire
Department of Legal Affairs The Capitol, LL04 Tallahassee, Florida 32301
By Petition filed in 1981 and received in the Division of Administrative Hearings on July 8, 1981, United Parcel Service, Inc., seeks a refund of
$489,815 in sales and use taxes paid on vehicles and vehicle parts used in Florida by Petitioner. This case was initially scheduled to be heard November 12, 1981, but has been continued from time to time at the request of the parties for additional time to complete discovery and to simplify the issues. At the hearing on 19 November 1982 no witnesses testified, the parties submitted a STIPULATION OF FACTS, made oral arguments, and thereafter submitted briefs. The facts below are derived solely from that stipulation.
FINDINGS OF FACT
The taxes at issue are sales and use taxes on vehicles and vehicle parts. The types of vehicles and the different uses to which they are put are described below. The taxes have been paid by United Parcel Service, Inc. (UPS)
and this is an appeal from the Comptroller's denial of UPS's application for refund in the amounts of $377,786 and $112,029.
The aggregate amount claimed in UPS's application for refund is
$489,515. This amount was an estimate. The applications for refund were timely filed for the period from October 25, 1976, through October 25, 1979. To the extent that the proper amount of any refund has not yet been precisely calculated, the parties will do so following this hearing.
Petitioner, United Parcel Service, Inc. (`UPS-Ohio") is an Ohio corporation. It is a wholly-owned subsidiary of United Parcel Service of America, Inc. ("America") , a Delaware corporation. UPS-Ohio cooperates with another wholly-owned subsidiary of America, UPS-New York, to provide jointly a transportation service for small packages throughout the United States and in certain foreign countries. America and its subsidiaries will hereafter be referred to collectively as "UPS."
The predecessor companies of UPS had their beginning in Seattle, Washington, in 1907. The early growth and activity of UPS occurred almost exclusively in the field of retail store delivery service. By 1934, UPS was engaged in retail store delivery service in principal cities on the west coast, the east coast, and the mid-west. In each case, the service consisted of contract deliveries for one or more retail stores to customers in the main city and the surrounding metropolitan area.
Beginning in 1922, UPS operated in the Los Angeles metropolitan area a common carrier service for small packages which competed with and corrected the deficiencies of United States Parcel Post. In 1953, UPS began to expand that service to other areas of the United States. The service was extended in piecewise fashion as operating rights were obtained.
At present, UPS provides interstate common carrier transportation service throughout the forty-eight contiguous states, Alaska and Hawaii. It provides intrastate common carrier transportation service in all fifty states with the exception of Oklahoma and parts of Texas. It also provides service in West Germany and parts of Canada.
All but a minor portion of UPS's transportation service in the United States is performed by two wholly-owned subsidiaries of America: United Parcel Service, Inc., a New York corporation (hereinafter referred to as "UPS-New York") and UPS-Ohio. UPS-New York is a Class I irregular route common carrier of general commodities which operates in interstate commerce under the jurisdiction of the Interstate Commerce Commission and holds ICC certificate number MC-116200. This certificate authorizes UPS-New York to operate in interstate commerce within an area restricted to the thirteen states north of North Carolina and east of Kentucky and Ohio (i.e., Pennsylvania, Virginia, West Virginia, Maryland, Delaware, New Jersey, New York, and the six New England states), and including the District of Columbia. UPS-Ohio is also a Class I irregular route common carrier holding ICC certificate number MC-115495. This certificate authorizes UPS-Ohio to operate in interstate commerce within an area restricted to the remaining thirty-five of the forty-eight contiguous states, including the State of Florida. An ICC certificate authorizes a carrier to operate within specific areas in interstate commerce such vehicles as the carrier chooses, provided that the certificate number is placed on each powered vehicle operated by the carrier.
Substantially in excess of 95 percent of all revenues generated by America and all of its subsidiaries are generated by UPS-Ohio and UPS-New York.
All of UPS's common carrier operations in Florida are rendered by UPS- Ohio. During the refund period, UPS-Ohio held common carrier intrastate operating authority in Florida under Florida Public Service Commission Certificate Number 1017. In addition, UPS-Ohio was a registered dealer with the State of Florida, Department of Revenue, pursuant to Chapter 212, F.S. UPS-New York has never been a registered dealer with the State of Florida, Department of Revenue, pursuant to Chapter 212, F.S., has never held operating authority from the Florida Public Service Commission as an intrastate common carrier in Florida and in fact did not operate in the State of Florida during the refund period.
In addition, UPS-New York was never registered to do business in the State of Florida and never filed or paid corporate income tax in Florida.
UPS picks up and delivers parcels at any and all addresses throughout its operating area. In order to provide intrastate and interstate service on such a "from and to all points" basis, UPS has developed a specialized operating plan which results in its parcel delivery service being provided by "package delivery cars," "tractors," and "trailers" (the use of each of which is described below), some of which regularly cross state lines and some of which do not. The specialized operating plan is described as follows. UPS has divided the continental United States into what are termed "operating areas." Each operating area has a headquarters, or "operating center," which is the building at which vehicles are garaged and dispatched and packages are sorted. A vehicle which UPS calls a "package delivery car" calls each day at the premises of all shippers who pay a small weekly fee (currently $2.75 a week throughout the United States except New York City where it is $4.00). Package delivery cars are the familiar UPS brown vans. If the shipper has packages to be shipped that day, the package delivery car carries them to the operating center where they are sorted. Packages consigned to an address within the same operating area are delivered the next day by the same or another package delivery car. Packages consigned to an address within another operating area, however, move through the UPS "feeder" network, generally by tractor-trailers.
The feeder network is the system through which packages are transferred from an operating center to another operating center serving the area of destination. Except in a relatively small number of low-volume movements, tractors and trailers are used in the feeder operations. Sometimes such a transfer is by direct trip from one operating center to another but usually it is accomplished through a centrally-located "hub." A hub is a major dispatching and package sorting center. Each hub services a large number of operating areas. Exhibit C is a series of maps showing the feeder network.
Thus, a package picked up at one location within the area served by a particular hub and destined for another address within that area (but not within the same operating area) would be carried by a package delivery car from the shipper's address to an operating center. Thence, during the night, it would be carried, generally by a tractor-trailer, from that operating center to the hub. At the hub, it would be sorted and then placed in another tractor-trailer (generally) to be delivered to the operating center serving the consignee's address. Finally, it would be delivered by package delivery car to the point of destination. Longer distance service is provided in one of two ways, depending on the distance to be traversed. For longer distances (generally, those in excess of 500 miles) , trailers are moved by railroad to a hub near their destination. For shorter distances, trailers move, over the road, from hub to
hub until they reach a hub near their destination. In either case, packages then go to the proper operating center and finally to the destination itself.
Exhibit D identifies (by circling the name of the city of location) the operating centers operated by UPS in Florida and the hubs at Miami, Jacksonville, and Orlando which service them. Exhibit D also shows the areas served by each operating center. The arrows on the map identify operating areas encompassing more than one state; the arrows point to the city in which the operating center is located. Exhibit E shows UPS's package delivery cycle.
UPS believes that its operating plan achieves maximum efficiency and quality of intrastate and interstate service at the lowest cost in the "from and to all points" pick-up and delivery of parcels. To implement this plan, UPS owns and uses package delivery cars, tractors, and trailers. Package delivery cars generally operate only within a single operating area. Accordingly, they do not normally cross the state lines. In certain instances, however, package delivery cars based in Florida may cross the Florida state line. In such instances, UPS-Ohio's interstate operating authority would be registered with the Public Service Commission of the neighboring state and a document certifying that registration would be placed in the package delivery car. Tractors are generally based at a single hub or operating center but because they operate between different operating centers and between such centers and hubs do not operate within a single operating area. Tractors generally make one or more trips from the operating center at which they are based each working shift and return to that center at the end of the shift. Thus a tractor may set out from the center at which it is based with a particular trailer, pull that trailer to another center or a hub, exchange trailers, and return to its origin. Alternatively, two tractors may set out from different points, meet somewhere in between, exchange trailers, and return to their origins. A tractor based at Jacksonville, Florida, pulling a trailer destined for New Orleans, Louisiana, will not make the entire trip to New Orleans but will either pull the trailer to an intermediate hub or operating center and return to Jacksonville with a separate trailer while a different tractor continues with the first trailer or it will meet a second tractor and exchange trailers at some other intermediate point. Most tractors cross state lines on a frequent and regular basis, although some are used primarily or entirely within a single state. Their authorized operations are restricted to those states listed in UPS-Ohio or UPS- New York's ICC certificate, respectively. Trailers are not based at particular operating centers and generally cross state lines on a frequent and regular basis, and move through the ICC authorized operating areas of both corporations. The trailers nevertheless are either owned or leased specifically by UPS-Ohio or UPS-New York and never lose their identity as property of one or the other corporation.
In the course of its business, UPS maintained data regarding the origin and destination of packages on a state-by-state basis. Packages handled by UPS in Florida may be divided into three categories:
Those which originated in Florida and are destined for another state;
Those which originated in another state and are destined for Florida; and
Those which both originated in and are destined for Florida.
Over 50 percent of all packages handled by UPS in Florida are in the first and percentages of packages carried in Florida in the three categories and the
of such information and its consistency with the statement.
carry, at any given time, a mix of packages in the three categories described in carry over 50 percent packages in categories (a) and (b) and less than 50 delivery cars and some tractor-trailers carry a percentage of packages in information regarding and to audit the percentage of such packages carried by
is entitled to partial exemptions from sales and use tax.
charge, delivery distance, and weight. The charge increases for greater
18. UPS-Ohio took possession in Florida of all parts purchased in Florida was extended at the time of purchase. On July 1, 1982, UPS filed with Mr. Randy relief from Department of Revenue v. Anderson, 403 So.2d 397 (Fla. 1951) in within Florida maintains its own inventory of parts.
transportation service throughout the United States. When a shipper in Florida whether its eventual destination is in the UPS-Ohio or in the UPS-New York
Carolina-Virginia border (which is the border between the UPS-Ohio and UPS-New certificates), the driver carrying that package does not stop his tractor-
New York. Generally, the package stays on the same trailer all the way to its Tractors and drivers are usually changed, as explained in Finding 14 above, in which they are based. When a tractor owned by UPS-Ohio pulling a trailer driver makes a notation and an "interchange of equipment" takes place. This is
only within the UPS-Ohio service area and the tractors owned by UPS-New York may area. Thus, when a tractor owned by UPS-Ohio enters the UPS-New York service the service area of UPS-Ohio. UPS-Ohio makes a charge to UPS-New York in operating centers, as described in Finding 14 above a tractor belonging to UPS- normally penetrate more than several hundred miles into the UPS-New York service
area but will exchange trailers and return to the UPS-Ohio service area within such distance of the dividing line between the service areas of the two corporations. As indicated above, all operations of such a tractor outside UPS- Ohio's service area must be and are conducted under the operating authority of UPS-New York by virtue of an interchange of equipment. Tractors belonging to UPS-New York do not operate in Florida.
If a trailer owned by UPS-New York requires repair while in the service area of UPS-Ohio, repairs will be made by and paid for by UPS-Ohio which will then bill UPS-New York for the cost of the repairs.
If a package is shipped via UPS from Florida to New York, the full payment for transportation services is received by UPS-Ohio from the Florida shipper. UPS-Ohio, through an accounting entry, makes a payment to UPS-New York for that portion of services rendered by the latter in connection with such a parcel.
No distinction is made between UPS-Ohio and UPS-New York in the manner in which UPS deals with its customers and with the public in general. All UPS corporations use the same logo of the initials "UPS" enclosed in a shield. The forms used by UPS in connection with the pick-up and delivery of packages make no distinction as to whether the operating company that picks up or delivers is UPS-New York or UPS-Ohio. Rather, all forms carry only the name "United Parcel Service" and the UPS logo. UPS makes available to the public certain materials which describe its operations. Those materials likewise draw no distinction between UPS-Ohio and UPS-New York.
UPS-Ohio's applications for refund were filed with the Department of Revenue on October 25, 1979. The applications for refund are Exhibits G & H.
On October 31, 1979, Mr. Gary R. Roush of UPS wrote to Mr. Melton McKowan of the Department of Revenue in support of the claims for refund (Exhibit I). On May 4, 1981, the Office of the Comptroller notified UPS of its intent to deny the applications for refund (Exhibit J). By letter dated May 27, 1981, the Office of the Comptroller extended the time for UPS to file the present appeal until June 8, 1981 (Exhibit K). UPS filed the present appeal on June 5, 1981 (Exhibit L).
The formula which the Respondent believes should be used to arrive at the correct amount of the refunds, if any, is as follows:
by constructing a ratio in
which the numerator is the miles traveled in Florida and the denominator is the total miles traveled by
the vehicle. This is the correct application and allows Florida to tax the percentage of interstate and foreign commerce activity which occurs within Florida's boundaries.
The Department of Revenue has administered Section 212.08(9), F.S., and Rule 12A-1.64(5) by allowing a corporation entitled to the partial exemption from sales and use tax to apply a single apportionment fraction. In the Department of Revenue's view this single apportionment fraction is determined by dividing the total intrastate (Florida) miles traveled by the vehicles, which have both intrastate (Florida) miles and interstate miles, by the total intrastate and interstate (non-Florida) miles traveled by such vehicles. This ratio is then
applied each month to the total purchases of such vehicles and parts thereof which are used in Florida to establish that portion of the total used and consumed in intrastate movement and subject to tax under Ch. 212, F.S.
In the transactions in the instant case which involve sales tax, the method of demonstrating exemptions, as provided by statute and rule, was not followed. Thus, it is the Respondent's position that the Petitioner cannot claim a refund under any of the provisions of Section 215.26, F.S., of sales tax paid during the refund period.
The formula which the Petitioner believes should be used to arrive at the correct amount of the refund is as follows:
The taxable base is the purchase price of vehicles and parts purchased in Florida for licensing and
use within Florida plus the fair market value when first brought into
Florida of vehicles and parts purchased outside of Florida for licensing
and use within Florida. This taxable base should be multiplied by a fraction the numerator of which is the total mileage traveled by UPS- Ohio and UPS-NY within the State of Florida divided by the total mileage traveled by UPS-Ohio and UPS-NY
everywhere during the previous fiscal year of UPS.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.
Petitioner is here seeking a refund pursuant to Section 215.26, Florida Statutes, which provides three-rounds upon which a refund may be based. These are:
An overpayment of any tax, license or account due;
A payment where no tax, license or account is due; and
Any payment made into the state treasury in error. Petitioner presumably is basing his petition upon an erroneous payment.
Petitioner is claiming the exemption provided to common carriers pursuant to Section 212.08(9), Florida Statutes, which provides:
Vehicles which are licensed as common carriers by the Interstate Commerce Commission or by the Civil Aeronautics Board and parts thereof used to transport persons or property in interstate
or foreign commerce are subject to the
tax imposed in this chapter only to the extent provided herein. The basis for the tax shall be the ratio of intrastate mileage to interstate or foreign
mileage traveled by the carrier during the previous fiscal year of the carrier, such ratio to be determined at the close of the carrier's
fiscal year. This ratio shall be applied each month to the total purchases of such vehicles and parts thereof which are used and consumed in intrastate movement
and subject to tax under this chapter.
Vehicles which are licensed
as common carriers by the Interstate Commerce Commission or the Civil Aeronautics Board and parts thereof used to transport persons or property in interstate or foreign
commerce are hereby determined to be susceptible to a distinct and
separate classification for taxation under the provisions of this chapter.
It is the statutory exemption from the sales and use tax that is in question in these proceedings. Petitioner takes the position that the total miles traveled in Florida by all vehicles it owns should be the numerator of the fraction and the total miles traveled by all vehicles it owns throughout the United States should be the denominator. This ratio is multiplied by the taxable base which Petitioner contends is the purchase price of vehicles and parts purchased in Florida for licensing and use within Florida plus the fair market value when first brought into Florida of vehicles and parts purchased outside of Florida for licensing and use within Florida.
The problem for Petitioner with respect to this base is contained in the words of Section 212.05, Florida Statutes, which provides in pertinent part:
It is hereby declared to be the legislative intent that every person is exercising a taxable privilege who engages in the business of selling tangible personal property at retail in this state . . . or who stores for use or consumption in this state any article of tangible personal property . . .
For the exercise of said privilege, a tax is levied on each taxable transaction or incident and shall be due and payable . . . as follows:
(b) At the rate of 4 percent of
the cost price of each item or article of tangible personal property when
the same is not sold but is used,
consumed, distributed, or stored for use or consumption in this state.
Thus, the statute provides the tax is on the cost price of the personal property purchased outside of this state but used in this state. This statute makes no reference to market value of the property so used.
Chapter 212 protects the user of property in this state from paying the use tax at the original cost price for used property brought into Florida. Section 212.06(8), Florida Statutes, provides this relief with the presumption that tangible personal property used in another state for six months or longer before being imported into this state was not purchased for use in this state. Accordingly, Petitioner's claim that the basis for the property used in this state is the fair market value at the time it is brought into this state is not supported by the statutes and is without merit.
Before considering Petitioner's contention that the ratio to be used to compute the sales tax owed Florida by Petitioner is Petitioner's total miles in Florida divided by Petitioner's total miles throughout the United States, it is established and accepted that Petitioner is engaged in interstate transportation and all of its vehicles used to transport packages in Florida are engaged in interstate commerce even though they may never cross the Florida state line. On the other hand, many of the vehicles here involved also transport packages in intrastate commerce.
This leaves the issue of which percentage of the vehicles and vehicle parts purchased by Petitioner in Florida or purchased outside Florida and used in this state are subject to the sales or use taxes.
In interpreting statutes numerous canons of statutory construction exist and courts have provided additional guidelines. In statutory construction legislative intent is the pole star by which courts must be guided, and this intent must be given effect even though it may contradict the strict letter of the statutes and well-settled canons of construction. Wakulla Co. v. Davis, 395 So.2d 540 (Fla. 1981). In statutory construction legislative intent is determined primarily from the language of the statutes; and the legislature is presumed to know the meaning of the words used and to have addressed its intent by using them in the enactment. S.R.G. Corp. v. Department of Revenue, 365 So.2d 637 (Fla. 1978). The starting point for interpreting a statute is the language of the statute itself; absent a clearly expressed legislative intent to the contrary, that language must ordinarily be regarded as conclusive. Consumer Products Safety Commission v. G.T.E. Sylvania, 447 U.S. 102, 64 L.Ed. 766, 100 S.Ct. 2051 (1950). Inasmuch as a statute is to be taken, construed and applied in the form enacted, the law clearly requires that the legislative intent be determined primarily from the language of the statute, since the legislature must be assumed to know the meaning of the words and to have expressed its intent by the use of the words found in the statute. Thayer v. State, 335 So.2d 815 (Fla. 1976). Where the legislative intent as evidenced by the statute is plain and unambiguous, there is no necessity for any construction or interpretation of the statute, and courts need only to give effect to the plain meaning of its terms. State v. Egan, 287 So.2d 1 (Fla. 1973)
The legislative intent as expressed in Section 212.05, Florida Statutes, above quoted is that every sale at retail is subject to a sales tax unless expressly exempted. Section 212.08(9) provides a partial exemption for vehicles used in interstate commerce. In construing tax statutes the fundamental rule of construction is that tax laws are to be construed strongly
in favor of the taxpayer and against the government, and that all ambiguities are to be resolved in favor of the taxpayer, Maas Bros. Inc. v. Dickinson, 195 So.2d 193 (Fla. 1967); however, exemptions to taxing statutes are special favors granted by the legislature and are to be strictly construed against the taxpayer. Department of Revenue v. Anderson, 403 So.2d 397 (Fla. 1981); Pioneer Oil Company v. Revenue, 401 So.2d 1319 (Fla. 1981); State ex rel Szabo Food Services v. Dickinson, 286 So.2d 529 (Fla. 1973); Wanda Marine Corp v.
Department of Revenue, 305 So.2d 65 (Fla. 1st DCA 1974).
The exemption is granted to "vehicles" which are licensed as common carriers and parts thereof used to transport persons or property in interstate or foreign commerce. Thus it is clearly expressed that the exemption goes only to vehicles and vehicle parts. However, the second sentence of the statutory provision which establishes the basis for computing the tax that is to be imposed, provides the basis shall be the ratio of intrastate mileage to interstate or foreign mileage traveled by the carrier during the previous fiscal year of the carrier. "Carrier" normally denotes the company rather than an individual vehicle. It is the carrier that is given the authority by the ICC to transport goods in interstate commerce, but it is the vehicle and parts thereof purchased or used in Florida that are subject to the tax.
Petitioner contends that the ratio to be used to multiply the total purchases of vehicles and parts used in Florida is the mileage traveled by all of its vehicles in Florida divided by the total mileage of its vehicles traveled throughout the United States. Petitioner contends this includes the UPS-New York vehicle miles in the denominator although none of that company's vehicles ever traveled in Florida. Under the system of operation used by Petitioner very few of its delivery vehicles [brown vans] ever cross the Florida state line and most of its tractors never cross the Florida state line. Of all the vehicles operating from Florida UPS centers upwards of 75 percent of their miles traveled are intrastate. On the other hand, based on the fact that less than five percent of the United States population is in Florida, it would be reasonable to assume that not more than five percent of the total miles traveled by UPS carriers would be within Florida. If these figures are approximately correct, the following ratios would result. If UPS total miles traveled by vehicles which operate at any one time in Florida was 1,000,000 miles per year, 750,000 of those miles would be intrastate and the total miles traveled by UPS vehicles throughout the United States would be 20,000,000 per year. To obtain the basis for the sales tax Petitioner contends the ratio should be 750,000 divided by 20,000,000. Respondent contends the ratio should be 750,000 divided by 1,000,000. What the legislature intended is the issue for resolution.
The legislative history of an act is important in its interpretation only when there is doubt as to what is meant by the language employed. Rinker Materials Corp. v. City of North Miami, 286 So.2d 552 (Fla. 1973). Such a doubt led to these administrative proceedings; therefore, this legislative history may be important.
Prior to 1963 the legislature exempted sales and use taxes on vehicles and parts thereof used to transport persons or property in interstate commerce. This blanket exemption was removed in 1963 when the precursor to the present Section 212.08(9) was enacted. In 1973 (Ch. 73-240, Laws of Florida) Section 212.08(9) was modified by deleting those words in brackets ([ ]) and adding those words underlined below:
The basis of the tax shall be the
interstate or foreign mileage traveled by the carrier during the previous
ratio to be determined at the close of the carrier's fiscal year. This
to the total purchases [by the carriers] of such vehicles and parts
to establish that portion of the total used and consumed in intrastate movement and subject to
When the legislature amends a statute by omitting words, it is to be presumed that the legislature intended the statute to have a different meaning
658 (Fla. 1979). With regard to a statutory amendment, the rule of construction is to assume that the legislature intended the amendment to serve a useful
intended it to have a meaning different to that accorded it before the amendment. Carlile v. Game and Fresh Water Fish Commission, 354 So.2d 362 (Fla.
indicate an intent to change the law for the intent may be to clarify what was doubtful and to safeguard against misapprehension as to existing law. State ex
It is significant that the formula to establish the basis has remained unchanged in this statute since its enactment in 1963, viz:
ratio of intrastate miles to interstate or foreign mileage traveled
fiscal year of the carrier, such ratio to be determined at the
This basis is used to determine that "portion of total used and consumed in intrastate movement."
Petitioner argues that the legislature intended all miles traveled by the carrier in the denominator would include all carrier-owned vehicles even though
the denominator of the ratio equation and reduce the sales and use taxes collected. It is more likely that the legislature intended to imbue the word
Florida and did not include vehicles which never entered the state or had any connection with the Florida sales and use taxes. Since this change is equivocal
construction of Section 212.08(9).
The intent of Chapter 212 is to levy and collect sales and use taxes on property purchased at retail or used in this state. Exceptions are provided for sales which are not within the taxing powers of the state. Some taxes on interstate transportation fall into this category. Rule 12A-1.64(1), Florida Administrative Code, provides:
The retail sales tax is imposed on
the sales price of each item or article of tangible personal property when sold at retail in the state. However, the tax does not apply to sales which are not within the taxing powers of this state. This involves interstate and foreign commerce.
While the history of this rule cannot be ascertained from Florida Administrative Code Annotated so as to determine when this rule first appeared, the rule does express the interpretation of the agency charged with enforcing and administering the sales and use tax statute. As such it is entitled to great weight. Austin v. Austin, 350 So.2d 102 (Fla. 1 DCA 1977).
That this interpretation by the Department of Revenue has been extant for some time is clear from Tropical Shipping & Construction Co., Ltd. v. Askew,
364 So.2d 433 (Fla. 1978) where the court stated:
This latter point [Section 212.08(9)] needs further clarification. The purpose of the partial tax exemption is to prevent the state from exceeding its powers to tax interstate and foreign commerce. The pro-ration formula was designed so that Florida
would only tax that portion of commerce activity that occurred within
the state. Unfortunately the exact language of the statute establishing
a "ratio of intrastate miles to interstate or foreign mileage" does not
do this. The Department of Revenue, however, has applied the statute by constructing a ratio in which the numerator is the miles traveled in Florida and the denominator is the total miles traveled by the vehicle. This is the correct application and allows Florida to tax the percentage of interstate and foreign commerce activity which occurs within Florida's boundaries. (Underlining added.)
This interpretation of the statute which confirms the interpretation placed on Section 212.08(9) by the Department of Revenue, in effect equates the word "carrier" in the second sentence of Section 212.08(9) with "vehicle." Thus only vehicles which operate in Florida are included in the denominator to obtain the ratio used to compute the sales tax attributed to intrastate operations. This interpretation is consonant with the view that the intent of the legislature is to tax so much of interstate commerce as is permissible so as to
impose a "fair share of the cost of local government." Freeman v. Hewitt, 329 U.S. 249, 67 S.Ct. 274, 91 L.Ed. 265 (1974)
Furthermore, reason and common sense support the position that only those vehicles which operate in Florida should be included in computing this ratio. It is only those vehicles which are subject to Florida's sales or use taxes. On none of Petitioner's other vehicles are sales or use taxes paid and no logical basis can be ascertained for including the miles traveled by these vehicles which never enter Florida in the denominator to compute that portion of the sales or use tax attributable to Florida operations. This interpretation of the statute is in line with the interpretation placed on the statute by the Department of Revenue. As stated in E. I. DuPont de Nemours & Co. v. Collins, 432 U.S. 53, 97 S.Ct. 2229, 53 L.Ed. 2d 100 (1977):
The construction of a statute
by those charged with its execution should be followed unless there are compelling indications that such
construction is wrong. . . Contemporaneous administrative construction
is entitled to great weight . . . even though it was applied in cases settled by consent rather than by litigation. (Citations omitted.)
For the reasons expressed above it is not necessary to consider Petitioner's contention that the mileage traveled by vehicles operated by UPS- New York should be included in the denominator to compute the ratio. Since none of the miles traveled by Petitioner's vehicles which never enter Florida are to be considered in the ratio, this excludes all UPS-New York vehicle miles.
Respondent contends that even if Petitioner's position is sustained with respect to the denominator used to ascertain the ratio by which the sales or use tax is determined, Petitioner is precluded from a refund because it failed to file a dealer's certificate at the time of purchase. As authority for this position Respondent relies upon State Department of Revenue v. Anderson, supra. Petitioner contends that Anderson is inapplicable here because not included by Respondent as a reason for denying refund as required by the amended Section 215.26; and because the statutes specifically provided for a dealer's resale certificate where property was sold for resale. In view of the conclusions above it is not necessary to reach the issue respecting the failure to produce a resale certificate. Furthermore, Anderson involved a dealer who failed to obtain a resale certificate from the buyer from whom no tax was collected. Here the buyer is seeking a refund alleging simply that he paid taxes erroneously.
From the foregoing it is concluded that in computing the sales or use tax owed by Petitioner as a result of its intrastate operations the ratio should be reached using as the numerator all UPS vehicle miles traveled in Florida and as denominator total miles traveled by all UPS vehicles used in Florida during the previous fiscal year. It is
RECOMMENDED that the Comptroller enter a Final Order denying refund of all sales and use taxes computed using a ratio other than shown in the preceding paragraph.
ENTERED this 30th day of December 1982, at Tallahassee, Florida.
K. N. AYERS, 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 30th day of December, 1982.
COPIES FURNISHED:
Gerald R. Hart, Esquire Ausley, McMullen, McGehee,
Carothers & Proctor Washington Square Building Post Office Box 391 Tallahassee, Florida 32302
Ralph S. Snyder, Esquire 1719 Packard Building
Philadelphia, PA 19102
Joseph C. Mellichamp, III, Esquire Department of Legal Affairs
The Capitol, LL04 Tallahassee, Florida 32301
Michael Basile, Esquire General Counsel Department of Banking and
Finance The Capitol
Tallahassee, Florida 32301
Gerald Lewis, Comptroller State of Florida
The Capitol
Tallahassee, Florida 32301
| Issue Date | Proceedings |
|---|---|
| Dec. 30, 1982 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Dec. 30, 1982 | Recommended Order | Petitioner claims error in paying sales/use taxes. Recommend Petitioner's taxes be based on increase in Florida miles over previous year. |
