vs. ) CASE NO. 82-2774
Respondent. )
vs. ) CASE NO. 82-2816
Respondent. )
vs. ) CASE NO. 82-2817
Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a consolidated public hearing in the above-styled cases on 29 March 1983.
For Petitioners: Barbara T. Haffner, Esquire
For Respondent: J. Terrell Williams, Esquire
By Petition dated October 5, 1982, relating back to Petition of September 10, 1982, Allis-Chalmers Corporation (ACC), Petitioner in Case 82-2774, contests the assessment of intangible taxes for the years 1979, 1980, and 1981 in the amount of $4,014.43, plus a penalty of $662.17 and interest of $1,043.37, through March 15, 1982, with additional interest accruing at the rate of $1.45 per day thereafter. As grounds therefor it is alleged the Department of Revenue, Respondent, assessed the taxes based on total sales of Petitioner where goods were finally delivered in Florida even if the business was transacted outside the state.
By Petition dated October 6, 1982, relating back to Petition of September 10, 1982, Allis-Chalmers Credit Corporation (ACCC), Petitioner in Case 82-2816, contests the assessment of additional income taxes for the period 1977, 1978, and 1979 in the amount of $3,950.52, plus a penalty of $342.11, and interest through March 18, 1982, of $1,295.15. As grounds therefor it is alleged the Department of Revenue, Respondent, erred in the treatment given interest paid by Allis-Chalmers Corporation to ACCC in "waived interest" transactions.
By Petition dated October 5, 1982, relating back to Petition dated September 10, 1982, Allis-Chalmers Credit Corporation (ACCC), Petitioner in Case 82-2817, protests the assessment of intangible taxes for the years 1979 and 1980 which resulted in assessed taxes of $23,161.33, plus a penalty of $5,790.34, and interest through March 18, 1982, of $6,128.03. As grounds therefor it is alleged the receivables on which this tax is assessed are purchased outside the state, payments are collected outside the state, and records are maintained outside the state; hence, Florida does not have sufficient contact to tax these transactions occurring outside its boundaries.
Since the same or interrelated parties were involved, these cases were consolidated for hearing. Pursuant to Order the parties presented a prehearing STIPULATION in which essential facts were stipulated; submitted Exhibit 1, which contains the findings of fact made in Case 80-1525 involving the same parties, and stipulated those facts into these proceedings where applicable; and presented arguments, memoranda of law, and authorities. No testimony was presented.
Allis-Chalmers Corporation (ACC), Petitioner in Case 82-2774, is a Delaware corporation commercially domiciled in West Allis, Wisconsin. ACC operates in Florida at the following locations:
U.S. Highway 1 opened 2/1/77
Grant (Industrial Pump Division)
5200 Kennedy Blvd. closed 10/30/78
Tampa (Industrial Pump Division)
406 Rio Street opened 11/1/78
101 Federal Place opened 5/1/80
Tarpon Springs (Cement & Mining System
Division)
(The locations listed are those operating during the audit period. Other locations closed prior to or opened after the audit period.) ACC makes sales of tangible personal property to Florida customers directly from the locations at
(b) and (c) and also makes sales to Florida customers from these two locations where the property is shipped from out-of-state locations to the Florida customers.
ACC is a diversified company which manufactures and markets the following items: (a) agricultural equipment; (b) hydropower equipment; (c) coal gasification systems; (d) ore conveyors, crushers and screening equipment; (e) bulk material-handling equipment, such as ship self-unloaders; (f) stackers and reclaimers for steel mills; (g) compressors and pumps; (h) cement and asphaltic concrete production equipment (i) valves for units larger than household or commercial plumbing installations; (j) systems for the direct reduction of iron ore; (k) kilns and coolers; (l) lawn and garden equipment; and (m) lift trucks and industrial tractors.
The amount in dispute is as stated in the Petition and is not an issue in these proceedings. The only issue is the method of computing the intangible taxes. ACC contends the tax base should be the net accounts receivable based on sales transacted in Florida divided by sales transacted everywhere else. The department contends the ratio should be Florida-destination sales divided by sales everywhere else. The issue is the "business situs" of the intangibles.
Allis-Chalmers Credit Corporation (ACCC), Petitioner in Cases 82-2816 and 82-2817, is a Wisconsin corporation doing business in Florida. It is the wholly-owned subsidiary of ACC and its principal business is financing the sale or lease of equipment by ACC dealers.
Case 82-2816 involves an income tax assessment against ACCC for the years 1977-1979. The item in dispute involves treatment given to "waiver interest" in arriving at the ratio by which federal income tax is multiplied to determine state income tax due. This issue applies to the denominator of that equation, hence the higher the figure the lower the tax. On occasion ACC, as a marketing tool, agrees to forego interest on either retail or wholesale financing for a period of perhaps six months. If these notes are assigned to ACCC, ACC must pay the waived interest to ACCC that its dealer or the dealer's customer would otherwise have paid. This is charged to ACC at the rate of one and one-half times the cost of funds to ACCC plus the actual cost of insurance. This rate is one percent to three percent per annum less than ACCC would charge the original debtors for the same period. The difference takes into account the elimination of bad debts and the simplified collection from one source instead of many. Therefore, as contended by ACCC, this "waiver interest" is thus already net of the "expenses of the recipient related thereto."
The department contends that "waiver interest," and ACCC's explanation thereof, merely reflects the fact that a reduced rate of return "interest" is charged by ACCC with respect to the higher quality risk attendant to its relationship with its parent, ACC. As to ACCC's interest expense as a cost carrying the underlying receivables, the department contends that the ratio of ACCC's interest expense as applied is an appropriate adjustment as none is reflected elsewhere as a cost of carrying "waiver interest" generating receivables. As to the related bad debt expense, the department contends it merely applied the overall bad debt information ACCC used in determining its underlying federal taxable income and, that in its use of such data, the department did not find evidence wherein ACCC in its determination of its federal bad debt expense, distinguished between classes of risks which may be in
its aggregate receivables, including the receivables giving rise to the "waiver interest." Thus, the department contends that directly related expense includes interest expense and bad debt expense. By the department's calculation, "waiver interest" as an item in the sales denominator has been reduced by 61 percent to
70 percent in various years to reflect these two categories of directly related expense as mandated by Section 214.71(3)(b) Florida Statutes, and Section 220.44, Florida Statutes. The issue is what constitutes directly related expense to inter-company income. There is no dispute on the numbers. Either the return numbers or the audit numbers on this item will prevail.
Case 82-2817 involves an intangible tax assessment against ACCC for the years 1979-1981.
During the audit period ACCC was represented in Florida by one employee whose duties were to call on ACC Florida dealers to persuade these dealers to use ACCC for financing sales they made, to keep these dealers supplied with necessary forms, and to give advice to these dealers if complicated or difficult financing situations arose. This representative worked out of the Atlanta office but lived in Florida, the state for which this representative was responsible.
Buyers of ACC equipment with good credit ratings can generally obtain bank financing at better rates than are offered by ACCC. The dealer is not required to assign conditional sales contracts to ACCC (via ACC) but is encouraged to do so. The sales contracts for Florida buyers of equipment delivered to Florida are the intangibles upon which the tax here involved was based.
When a dealer sells a piece of equipment on which the buyer wants financing by ACCC, the dealer has the retail customer fill out the purchaser's statement and execute three additional forms that are provided by ACCC. Under his franchise agreement with the parent corporation, the dealer is required to use appropriate precautions in conducting financing transactions, to warranty the truth and completeness of statements in the documents and their enforceability, and to repurchase the paper on demand in the event of default. The dealer forwards the executed documents to ACCC's Atlanta branch office for review and approval before any extension of credit to the customer. In Atlanta ACCC's branch manager, acting under a power of attorney from the parent corporation, accepts the document on behalf of the parent corporation, and tenders them to himself as agent for ACCC. If the paper meets the ACCC requirements as to form, terms, execution and credit-worthiness, as defined in the Master Credit Agreement between the parent corporation and ACCC, he then accepts the documents on behalf of ACCC. In some instances he conducts a supplemental credit inquiry by mail or telephone to assure ACCC's requirements are met. His acceptance of the documents for ACCC constitutes in effect the purchase and receipt of the obligation. The customer receives his financing, and the appropriate credits are transferred from ACCC to the parent corporation to the dealer's inventory account. The dealer receives an additional credit as an incentive to recommend ACCC's financing services to his customers.
ACCC files the signed financing statement with the Florida Secretary of State to protect its security interest under U.C.C. Article 9, and pays the appropriate filing fee. ACCC also files continuation statements in the event the account is extended or refinanced beyond five years.
The customer makes his installment payments reflecting the base price plus a time-price differential or finance charge by mailing the payments to
ACCC's Atlanta lock box. ACCC furnishes him coupon books or reminder notices by mail. In the event a customer account becomes overdue, ACCC takes limited enforcement action by issuing dunning letters. ACCC, through its Florida Finance Representative, contacts the delinquent customer by telephone or in person, and arranges in appropriate cases for extensions or refinancing of the initial obligation, using printed forms with ACC's name prominently displayed thereon.
In the event the customer defaults, ACCC has authority to repossess and resell the security, to sue on the note, or to amend, extend, renew or release the customer's obligations. In practice ACCC rarely, if ever, exercises these powers, but simply resells the paper to the parent corporation which takes the actions described above.
The agreement between Allis-Chalmers and its dealers is that of buyer and seller and this agreement specifically provides the dealer is not an agent of Allis-Chalmers and is without authority to bind the company.
In Case 82-2817 Petitioner contends that no tax is due because it is not transacting business within the state. The department contends that tax is due because the original contracts, which have been assigned once or twice depending upon whether they were wholesale or retail, have acquired a business situs in the state since they arose from, or are issued in connection with, the sale of tangible personalty in this state. In the event the department prevails, the parties have stipulated to the manner in which the modified tax shall be computed, for this case only. This stipulation is not material to the issues involved and is not replicated herein.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.
Cases 82-2774 and 82-2817 both involve intangible taxes and will be discussed together. Intangible taxes are authorized to be imposed by Chapter 199, Florida Statutes. Section 199.112, Florida Statutes, provides:
All bills, notes or accounts receivable, obligations, or credits, wheresoever situated, arising out of, or issued in connection with, the sale, leasing, or servicing of real or personal property in this state are subject to taxation under this chapter, it being the legislative intent to provide that such intangibles shall be assessable regardless of where they are kept, approved as to their creation or paid. This provision shall apply to any person representing business interests in the state that may claim a domicile elsewhere, the intent further being that no nonresident, either by himself or through an agent, transact business in the state without paying the same tax which the state would impose on residents transacting the same business. Sales of tangible personal property are in this state if the property is delivered or shipped to a purchaser within this state,
regardless of the f.o.b. point or other conditions of the sale. The provisions of this section shall in no way be construed to alter the tax status of intangibles not connected with the sale, leasing, or servicing of real or personal property in the state.
All bills, notes or accounts receivable, obligations, or credits, wheresoever situated, arising out of, or issued in connection with, the sale of services in this state by any person representing business interests in this state that may claim domicile elsewhere or subject to taxation under this chapter; and such intangibles shall be assessable regardless of where they are kept, approved as to their creation, or paid.
In Case 82-2774 ACC acknowledges that intangible taxes are due and contends only that the tax base should be the net accounts receivable based on sales transacted in Florida divided by sales transacted everywhere. Finding of Fact No. 1 above which was stipulated to by Petitioner contains the location of three businesses of ACC in Florida. It obviously has a business situs in this state.
The legislative intent of Section 199.112 is clearly expressed that such taxes will be paid by any person with a business situs in this state representing business interests in this state claiming domicile elsewhere and to the same extent that a resident business would pay. These intangibles are based on sales of tangible personal property and the statutes specifically provide that such sales are deemed to be in the state if the property is delivered or shipped to a purchaser in this state, regardless of other conditions of the sale. In statutory construction the legislative intent is determined primarily from the language of the statute; and the Legislature is assumed to know the meaning of the words and to have expressed its intent by using them in the enactment. SRG Corporation v. Department of Revenue, 365 So.2d 687 (Fla. 1978).
From the foregoing it is concluded that the correct base for the intangible tax owed by ACC is the accounts receivables based on sales delivered in Florida divided by sales everywhere.
Case 82-2817 involves an intangible tax assessment against ACCC for the years 1979-1980. ACCC contends no tax is due because ACCC does not have a business situs in this state and therefore such a tax levy is invalid as violating the Due Process clause of the Fourteenth Amendment of the United States Constitution.
Without reviewing the history of the judicial decisions respecting the rights of a state to tax property of nonresidents doing business within the state, it is sufficient to say the following precepts have become established.
Property situated without the jurisdiction is beyond the state's taxing power and the exaction of a tax upon it is in violation of the Fourteenth Amendment to the United States Constitution. Metropolitan Life Insurance Co. v. New Orleans, 205 U.S. 395, 51 L.Ed. 762, 27 S.Ct. 499, 500 (1907). A tax on intangibles is an ad valorem tax. It is essential to the validity of such a tax, under the Due Process clause, that the property shall be within the territorial jurisdiction of the taxing state. When we deal with intangible
property, such as credit and choses in action generally, we encounter the difficulty that by reason of the absence of physical characteristics they have no situs in the physical sense, but have the situs attributable to them in legal conception. Wheeling Steel Corporation v. Fox, 298 U.S. 193, 80 L.Ed. 1143, 56
S.Ct. 773 (1936).
It is not the character of the property that makes it subject to such a tax, but the fact that the property has a situs within the state and that the owner should give appropriate support to the government that protects it. That duty is not less when the property is intangible than when it is tangible. Such credits and accounts are regarded as situated at the domicile of the creditor and that domicile establishes a basis for taxation. Commonwealth of Virginia v. Imperial Coal Sales Co., Inc., 293 U.S. 15, 79 L.Ed. 171, 55 S.Ct. 12 (1934). Choses in action may acquire a situs for taxation other than at the domicile of the owner, if they have become integral parts of some local business. Wheeling Steel Corp. v. Fox, supra.
The doctrine that intangibles may be taxed at their business situs, as distinguished from the legal domicile of their owner, has usually been applied to the obligations to pay money, acquired in the course of a localized business. First Bank Stock Corporation v. Minnesota, 301 U.S. 234, 81 L.Ed. 1061, 57 S.Ct. 677 (1937).
The business situs of an intangible affords an adequate basis for fixing a place of taxation. Wheeling Steel v. Fox, supra.
The resort to a fiction by the attribution of a tax situs to an intangible is only a means of symbolizing, without fully revealing, those considerations which are persuasive grounds for deciding that a particular place is appropriate for the imposition of the tax. First Bank Stock Corporation v. Minnesota, supra.
To overcome the presumption of domiciliary location, the proof of business situs must definitely connect the intangibles as an integral part of the local activity. Newark Fire Insurance Company v. State Board of Tax Appeals, 307 U.S. 313, 83 L.Ed. 1312, 59 S.Ct. 918 (1939).
Section 199.112, Florida Statutes, above-quoted provides generally that all intangibles arising out of or issued in connection with the sale of real or personal property in this state are subject to taxation under this chapter. The intent is expressed to be that no nonresident either by himself or through an agent may transact business in the state without paying the same tax which the state would impose on a resident transacting the same business.
Respondent cites dicta in Green v. Burroughs Corporation, 137 So.2d
595 (Fla. 1st DCA 1962) for the proposition that had the present law existed at the time the Burroughs case arose the court would have, under the facts of that case, authorized the proposed tax on intangibles representing transactions by Burroughs in Florida. Even if the position is correct, the facts in Burroughs differ significantly from the facts respecting the activities of ACCC in Florida.
The Louisiana statute in which the concurring opinion in Burroughs referred was upheld by the U.S. Supreme Court in its earlier version in New Orleans v. Stemple, 175 U.S. 309, 44 L.Ed. 174, 20 S.Ct. 110 (1899). That Louisiana statute of 1890 made intangibles incurred in businesses conducted in Louisiana subject to taxation. The Act provided in part:
And this shall apply with equal force to any person or persons representing in this state business interests that may claim a domicil elsewhere, the intent and purpose being that no non-resident, either by himself or through an agent shall transact business here without paying to the state a corresponding tax with that exacted of its own citizens; and all bills, receivables, obligations, or credits arising from the business done in this state are hereby declared assessable within this state, and at the business domicil of said non-resident, his agent, or representative.
In Stemple many of the intangibles represented notes secured by mortgages on New Orleans realty, these notes and mortgages were in New Orleans in the possession of an agent of Stemple who collected the interest and principal as it became due and deposited it in a bank in New Orleans to the credit of Stemple.
The Louisiana statutory language referred to in the concurring opinion in Burroughs, supra, appeared in a 1898 Louisiana law and was upheld in Metropolitan Life Insurance Co. v. New Orleans, 205 U.S. 395, 51 L.Ed. 853, 27 S.Ct. 499 (1906). The statutory language above-quoted in the 1890 Louisiana statute was included verbatim in the 1898 Louisiana statute considered in Metropolitan Life. In Metropolitan Life the company was incorporated in New York where it had its home office and principal place of business. It issued policies of life insurance in Louisiana and had a resident agent with a local office in New Orleans. The company loaned money to policy holders which were arranged by the local agent, forwarded to New York where, if approved, the company sent a check to the local agent with a note to be signed by the borrower. Interest due on the loans was paid to the agent in New Orleans. Upon these facts the court held Metropolitan Life had a business situs in Louisiana and the intangible tax did not conflict with the Due Process clause of the Fourteenth Amendment.
The Burroughs case involved a Michigan corporation that maintained branch and sub-offices in various cities in Florida. The Florida business was supervised by a regional office located in Georgia. Burroughs sold business machines and supplies and maintained warehouses at each branch office for their inventory. The vast majority of Burroughs' business is on credit with the unpaid balance secured by unrecorded retain title contracts. The branch managers have no authority to extend credit to any purchasers and all such contracts are approved by the regional office where the intangibles are retained.
Respondent also cites the case of All State Enterprises, Inc. v. Florida Department of Revenue, 398 So.2d 849 (Fla. 1st DCA 1981) which upheld another provision of the Florida Statutes requiring the filing of intangible tax returns as required by Section 199.052(1), Florida Statutes. That provision required every person in this state, who owns or has control, management, or custody of intangible personal property which is subject to annual taxation under this chapter, to file a return. In All State Enterprises (Enterprises) appellant is a Delaware corporation authorized to do business in Florida. All State Financial Corporation (Financial) is a wholly-owned subsidiary of Enterprises. Enterprises lends money to purchasers of automobiles from
unrelated third parties, sells without recourse the note secured by lien on auto to Financial on a discounted basis, and the note is physically transferred to and maintained by Financial in Delaware. The borrower is not advised his note has been sold and he makes all payments directly to Enterprises in Florida.
Pursuant to its agreement with Financial, Enterprises makes collections on the notes, remits funds collected to Financial, maintains records on these accounts, repurchases the notes from Financial in case of default, and conducts repossession or foreclosure proceedings. Under these facts the court held the installment notes were "issued in connection with the sale of personal property" within the meaning of Section 199.112 and that the notes had a business situs in Florida.
The facts in Burroughs and All State differ substantially from the facts in the instant case. ACCC has no office in Florida and its one employee in this state is attached to the Atlanta office. His function is to assist ACC dealers in obtaining ACCC credit forms, completing same, and in processing the credit applications. This employee is not an agent for ACCC and has no authority to transact any business on behalf of ACCC other than as described above.
The intangibles in issue in these proceedings are acquired by ACCC outside the State of Florida; all payments made on these obligations are mailed to a lock box outside the State of Florida; and ACCC never, as a matter of practice, uses the courts of Florida to collect on these obligations. If the debtor defaults ACCC takes recourse against ACC who in turn has recourse against the dealer who originated the intangible. This dealer is specifically denominated as not being an agent of ACC and has no direct relationship with ACCC. ACCC does file the signed financial statement with the Secretary of State to protect its security interests under the U.C.C. Article 9, and pays the appropriate filing fee.
While the language of Section 199.112 above-quoted could be read to indicate that all intangibles issued in connection with the sale of personal property in Florida are subject to intangible tax in this state, the intent of the statute, stated expressly therein, is that this provision is intended to apply to any person representing business interests in this state that may claim a domicile elsewhere. It is also significant that the title of this section is "Business situs."
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 appear to contradict the strict letter of the statute and well-settled canons of constructions. Wakulla County v. Davis, 395 So.2d 540 (Fla. 1981).
The starting point for the construction of 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. GTE Sylvania, 447 U.S. 102, 64 L.Ed.2d 766, 100 S.Ct. 2051 (1980).
It is a cardinal rule of statutory construction that the entire statute under construction must be considered in determining legislative intent, and effect must be given to every part of the statute as a whole; from a review of the whole law in para materia, the reviewing court will determine legislative intent. State v. Gale Distributors, Inc., 349 So.2d 150 (Fla. 1977).
Applying these principles of construction to the statute here involved it is clear that the Legislature intended to tax intangibles of those entities that have a business situs in this state whether the intangibles are retained in this state or not. By copying the words used in the Louisiana statute, the Legislature is presumed to have adopted that language with full knowledge that those words had been interpreted by the highest courts in Louisiana and in the United States and that the meaning so found by the courts was the meaning intended by the Legislature. It did not intend to tax nonresidents who have no business situs in this state.
The last sentence is reinforced by the well-recognized principle that courts should not pass upon the constitutionality of a statute if a case in which the question arises may be effectively disposed of on other grounds. Singletary v. State, 322 So.2d 551 (Fla. 1975); Stembridge v. Harwitz, 303 So.2d
85 (Fla. 3rd DCA 1975); U.S. v. Rias, 524 F2d 118 (5th Circuit 1975). It is also appropriate to consider the canon of statutory construction that if a statute is reasonably susceptible to interpretation, by one of which it would be unconstitutional and by the other valid, the court must adopt the interpretation which will render the statute valid. Florida State Board of Architecture v. Wasserman, 377 So.2d 653 (Fla. 1979).
Fundamental principles of statutory construction dictate that an enactment should be interpreted to render it constitutionally possible. However, the courts may not vary the intent of the Legislature with respect to the meaning of the statute in order to effect this result. State v. Keaton, 371 So.2d 86 (Fla. 1979).
From the foregoing it is concluded that having one roving representative in this state and filing financial statements with the Secretary of State does not create a business situs in Florida by ACCC or a situs for the intangibles generated in Florida, and, absent such a situs, Florida may not tax intangibles held by ACCC without this state.
Case 82-2816 involves the determination of the sales ratio to be applied to ACCC's federal income tax to arrive at the proper Florida corporate income tax for the years 1977-1979. The dispute involves only the treatment afforded the "waived interest" payments made by ACC to ACCC. Section 214.71(3)(b), Florida Statutes, is controlling in this case and provides in part that sales of a financial organization shall be in this state if derived from:
5. Any other gross income resulting from the operation as a financial organization within this state. In computing the amount referred to in this paragraph, any amount received by a member of an affiliated group (determined under s.1504(a) of the Internal Revenue Code, but without reference to whether any such corporation is an "includable corporation" under s.1504(b) of the Internal Revenue Code) from another member of such group shall be included only to the extent such amount exceeds expenses of the recipient directly related thereto.
It is not disputed that ACC and ACCC are affiliated as defined by s.1504 of the IRC and the sole issue in this case is the interpretation of the phrase ". . .to the extent such amount exceeds expenses of the recipient directly related thereto."
That language is hardly ambiguous. It states simply that payments on notes from ACC to ACCC shall be included in gross income only to the extent such amount exceeds the expenses of ACCC directly related to such payments.
By the stipulated terms of the agreement between ACC and ACCC the former pays ACCC one and one-half times the cost of money to ACCC plus the actual cost of insurance. Certainly two-thirds of the amount paid by ACC represents costs of money to ACCC and is excluded.
ACCC is a wholly-owned subsidiary of ACC. Accordingly, there is certainly no business reason for ACCC establishing a reserve for bad debts to cover loans made to ACC on which the latter may default. Nor would there be any expense related to collection of these payments through use of "dunning" letters or other methods to bring current delinquent debts.
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).
Applying this principle ACCC should include in its gross income only the amount received from ACC under its "waiver interest" agreements that exceed 66-2/3 percent (cost of money) plus costs of insurance and costs for processing the paperwork involved. Reserves for bad debts should not be included. Since the inclusion of the bad debt expenses is the only issue in dispute (ultimate paragraph of STIPULATION), the position of ACCC, that this is not an expense "directly related" to the waiver interest payments, is deemed correct.
From the foregoing it is concluded that the reserve for bad debts is not an expense directly related to the waiver interest payments made by ACC to ACCC and should not be deducted in computing the gross income received by ACCC from ACC as a result of these waiver interest payments; and that the Department of Revenue's assessment for additional tax in the amount of $4,950.52 plus penalty and interest is invalid.
IT IS RECOMMENDED that a Final Order be entered denying the relief sought in Case 82-2774.
IT IS FURTHER RECOMMENDED that a Final Order be entered dismissing the Department of Revenue's assessment for intangible taxes against ACCC for the years 1979 and 1980 in Case 82-2817 in the amount of $23,161.33 plus penalty and interest.
IT IS FURTHER RECOMMENDED that the Department of Revenue's assessment against ACCC in Case 82-2816 for additional income taxes in the amount of
ENTERED this 26th day of April, 1983, at Tallahassee, Florida.
K. N. AYERS, Hearing Officer Division of Administrative Hearings The Oakland Building
Filed with the Clerk of the Division of Administrative Hearings this 26th day of April, 1983.
Barbara T. Haffner, Esquire 1205 South 70th Street
J. Terrell Willlams, Esquire Department of Legal Affairs The Capitol, LL04 Tallahassee, Florida 32301
