Judges: K. N. AYERS
Agency: Department of Revenue
Latest Update: Sep. 28, 1984
Summary: The state shares obligation to pay interest on overpayment of taxes just as a taxpayer must pay interest on delinquent tax payments.
84-0197STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
GARDINIER, INC., and )
GARDINIER BIG RIVER, INC., )
)
Petitioners, )
)
vs. ) CASE NO. 84-0197
)
DEPARTMENT OF REVENUE, )
STATE OF FLORIDA, )
)
Respondent. )
)
RECOMMENDED ORDER
By Order entered May 2, 1984, the hearing scheduled to commence May 4, 1984, was continued. As grounds therefor the parties, in a Consented Motion to Continue, advised the Hearing Officer that there appeared to be no material fact in dispute and that, in lieu of a formal hearing, the parties would submit a stipulation of facts and memoranda of law to support their positions for the Hearing Officer to prepare a Recommended Order. The findings below consist of the joint stipulations of fact.
APPEARANCES
For Petitioners: Bernard A. Barton, Jr., Esquire
James M. Ervin, Jr., Esquire Post Office Drawer 810 Tallahassee, Florida 32302
For Respondent: Jeff Kielbasa, Esquire
Department of Legal Affairs The Capitol, Room LL04 Tallahassee, Florida 32301
By these proceedings Petitioners are seeking a determination that they are entitled to interest on overpayments of corporate income taxes for the tax years 1975, 1976, and 1980, from the dates the taxes were paid.
The sole issue here involved is whether Petitioners are entitled to payment of interest on their overpayment of corporate income taxes, and, if so, from what date is the interest computed.
FINDINGS OF FACT
Gardinier Big River is a New Jersey corporation authorized to transact business within the State of Florida.
Gardinier is a Delaware corporation authorized to transact business within the State of Florida. Gardinier is a wholly owned subsidiary of Gardinier Big River.
Petitioners were subject to the corporate income tax imposed by Chapter 220, Florida Statutes, for the tax years 1974 through 1981. For the tax years 1974 and 1975, Gardinier and Gardinier Big River each filed separate annual corporate income tax returns. Beginning with the tax year 1976, and continuing through the tax year 1981, Petitioners filed consolidated annual corporate income tax returns as authorized by Section 220.131, Florida Statutes.
Annual corporate income tax returns were filed by Petitioners as follows: (a) Gardinier timely filed on April 1, 1975, an annual corporate income tax return for its tax year ending June 30, 1974; (b) Gardinier Big River timely filed on January 1, 1976, an annual corporate income tax return for its tax year ending March 31, 1975; (c) Gardinier timely filed on April 1, 1976, an annual corporate income tax return for its tax year ending June 30, 1975; (d) Petitioners timely filed on January 3, 1977, a consolidated annual corporate income tax return for their tax year ending March 31, 1976; (e) Petitioners timely filed on March 30, 1977, a consolidated annual corporate income tax return for their tax year ending June 30, 1976; (f) Petitioners timely filed on March 21, 1978, a consolidated annual corporate income tax return for their tax year ending June 30, 1977; (g) Petitioners timely filed on March 27, 1979, a consolidated annual corporate income tax return for their tax year ending June 30, 1978; (h) Petitioners timely filed on April 1, 1980, a consolidated annual corporate income tax return for their tax year ending June 30, 1979; (i) Petitioners timely filed on April 1, 1981, a consolidated annual corporate income tax return for their tax year ending June 30, 1980; (j) Petitioners timely filed on December 8, 1981, a consolidated annual corporate income tax return for their tax year ending June 30, 1981.
For each of the years 1974 through 1981, Petitioners, either individually or jointly, timely paid the corporate income tax which Petitioners determined to be due pursuant to Chapter 220, Florida Statutes (1983), by the return date specified in Section 220.222, Florida Statutes (1983), without regard for extensions. Specifically, corporate income taxes were paid by the Petitioners on the following dates for the following tax years: (a) tax year ending June 30, 1975--taxes paid by October 1, 1975; (b) tax year ending March 31, 1975--taxes paid by July 1, 1976; and (c) tax year ending June 30, 1980-- taxes paid by October 1, 1980.
On several occasions, the latest of which was April 5, 1983, Petitioners and the Department agreed, for the tax years 1974 through 1981, to extensions of the assessment and refund limitation provisions found at Sections
214.09 and 214.16, Florida Statutes.
On or about February 21, 1983, the Department commenced a corporate income tax audit of the Petitioners for the tax years 1974 through 1981.
On or about April 23, 1983, as a result of the foregoing audit, the Department issued to Gardinier a Notice of Intent to Make Audit Changes indicating an overpayment of corporate income taxes for the tax year ending June 30, 1975, and an underpayment of corporate income taxes for the tax year ending June 30, 1974. On that same date, the Department issued to Petitioners jointly two separate Notices of Intent to Make Audit Changes indicating overpayments of corporate income taxes for the tax years ending March 31, 1976, and June 30, 1980, and underpayments of corporate income taxes for the tax years ending March
31, 1975, and June 30, 1979. In addition, these Notices indicated that penalty and interest assessments would be made against Gardinier for the alleged late payment of estimated taxes for the tax year ending June 30, 1975, and against Petitioners jointly for the alleged late payment of estimated taxes for the tax year ending March 31, 1976.
A Notice of Intent to Make Audit Changes is a form used by the Department to advise taxpayers of overpayments or underpayments of taxes determined by the Department in an audit of the taxpayers' books and records. The notice forms are also referred to by the reference "DR 802." If the taxpayer agrees with the results set forth in the notice, it is instructed by the Department to sign the notice at the space indicated thereon and return it to the Department.
By letters dated July 11, 1983, the Department advised Petitioners of its receipt of an unagreed Notice of Intent to Make Audit Changes from the Department's audit staff. The letters further stated that the audit resulted in a refund of taxes to Petitioners' account and that signed agreements to the refunds were required to be reviewed by the Department by September 12, 1983.
By letter dated July 21, 1983, Petitioners notified the Department of their disagreement with certain aspects of the Notices of Intent to Make Audit Changes. Specifically, Petitioners disagreed with the assessment of penalty and interest for the alleged late payment of corporate income taxes for the tax years 1975 and 1976. In addition, Petitioners indicated their disagreement with the Department's failure to provide for the payment of interest on Petitioners' overpayments of corporate income taxes for the tax years 1975, 1976, and 1980.
By letter dated August 4, 1983, the Department advised Petitioners of its agreement that penalty and interest assessments should not have been made for the tax years 1975 and 1976. In addition, the Department advised Petitioners that interest would not be paid upon the overpayments of corporate income taxes for the tax years 1975, 1976, and 1980.
On August 16, 1983, Petitioners submitted to the Department signed Notices of Intent to Make Audit Changes indicating Petitioners' agreement and entitlement to a refund of the net overpayments of corporate income taxes for the tax years 1974 through 1981.
By letter dated August 16, 1983, Petitioners protested the Department's failure to pay interest upon the overpayments of corporate income taxes and made a formal claim for payment pursuant to Section 214.14, Florida Statutes (1983), for said interest.
On November 10, 1983, the Department issued to Petitioners a Notice of Decision denying Petitioners' claim for interest upon the overpayments of corporate income taxes. Petitioners did not request reconsideration of this Notice of Decision.
The overpayment of corporate income taxes by Gardinier for the tax year ending June 30, 1975, was $204,277.61. The overpayment of corporate income taxes by Petitioners for the tax year ending March 31, 1976, was $109,658.00. The overpayment of corporate income taxes by Petitioners for the tax year ending June 30, 1980, was $222,021.00. Total overpayments of corporate income taxes by Petitioners, either individually or jointly, for the tax years 1975, 1976, and 1980 were $535,956.61.
Total underpayments of corporate income taxes by Petitioners for the tax years 1974, 1975, and 1979, including penalties and interest assessed thereon, were $153,595.92.
The Department refunded to Petitioners, by checks dated October 13 and November 16, 1983, $382,360.69 which amount represented the difference between total overpayments and underpayments by Petitioners of corporate income taxes for the tax years 1974 through 1981.
The provisions of Chapters 214 and 220, Florida Statutes (1983), are applicable to the circumstances of this action.
The parties hereby agree that the Joint Exhibits are true and accurate copies of the original documents.
It is the intent of the parties hereto that this stipulation resolve all material facts necessary for a determination of the rights and liabilities of the parties in this action.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.
Interest on overpayments to the State are governed by Section 214.14, Florida Statutes, which provides:
Interest shall be allowed and paid at the rate of 6 percent per year upon any overpay- ment in respect of a tax made subject to this chapter, except that if any overpayment is refunded within 9 months after the last date prescribed for filing the return of such tax, including any extension thereof, or within 9 months after the return was filed, whichever is later, no interest shall be allowed on such overpayrent. For purposes of this section,
no amount of tax for any taxable year shall be treated as having been paid before the date on which the tax return for such year was due under applicable law, without regard to any extension of the time for filing such return.
Since it has been stipulated that all of the returns here involved were filed when due (including applicable extensions), there is no difference between the dates prescribed for filing the returns and the dates the returns were filed.
Respondent takes the position that it has nine months, after a determination is made that a refund is due, to pay the refund without being liable for the payment of interest on the refund. Since it paid the refund within nine months of the time the claim for refund was filed by Petitioners, no interest is due. Respondent equates the notification by taxpayer of a claim for
refund to a "return" from which date it has nine months to make the refund without paying interest. Thus, Respondent contends that the "return" demanding interest on the overpayment was filed by Petitioner on August 16, 1983, and, since a refund of the overpayment was made in November 1983, the refund was made well within the nine-month grace period and no interest is payable by the Department.
Respondent cites Internal Revenue Code provisions to support its position. Although those provisions are irrelevant to these proceedings, they do not support Respondent's position. The general rule applied by the IRS is contained in Section 6402(a), Internal Revenue Code of 1954, which provides in part:
. . . The Secretary, within the applicable period of limitations, may credit the amount of such overpayment, including any interest allowed thereon, against any liability in respect of an internal revenue tax on the part of the person who made the overpayment.
. . .
This clearly indicates that a taxpayer is entitled to interest on his overpayment if a claim for a refund of such overpayment is made within the applicable period of limitations. If the interest was allowed only from the date of the application for refund was filed, little or no interest would accrue to the taxpayer and allowance for interest would, for all intents and purposes, be useless. Words used in a statute should not be so interpreted.
Whether Petitioners are entitled to interest on the overpayments is governed by the provision of Section 214.14, Florida Statutes, above-quoted. The starting point for interpreting a statute is the language of the statute itself, and absent a clearly expressed legislative intent to the contrary, that language must ordinarily be regarded as conclusive. Consumer Product Safety Commission v. GTE Sylvania, 447 U.S. 102, 64 L. Ed. 2d 766, 100 S. Ct. 2015 (U.S. 1930). In statutory construction 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). Inasmuch as a statute is to be taken, construed, and applied in the form enacted, the law clearly requires the legislative intent be determined primarily from the language of the statute. Thayer v. State, 335 So. 2d 815 (Fla. 1976). In statutory construction legislative intent is the pole star by which courts must be guided. Wakulla County v. Davis, 395 So. 2d 540 (Fla. 1981).
Applying these principles to Section 214.14, the legislative intent, as clearly expressed in the statute, is that "interest shall be allowed and paid upon any overpayment in respect of a tax." If the State refunds the overpayments within nine months of the date the overpayment was made or was due, whichever is later, no interest need be paid. This language could hardly be clearer.
The statutory provisions respecting underpayments and overpayments of taxes provide the taxpayer shall pay 12 percent interest on all delinquent taxes from the date due and the State shall refund to the taxpayer 6 percent interest on overpayments subject only to the nine-month grace period within which a
refund may be made without interest. That provision is very explicit that if any overpayment is refunded within nine months after the last date prescribed for filing the return of such tax no interest is payable by the Department. The overpayment was made for the year 1975 on October 1, 1975; for the year 1976 on July 1, 1976; and for the year 1980 on October 1, 1980, the same date these payments were due.
Respondent's argument that interest as used in Section 214.14 is the same as interest as defined in case law is not disputed but is not relevant in these proceedings. No one here disputes the meaning of interest or the fact that the statute provides for payment of 6 percent interest on overpayments of taxes. The only issue here is when does the interest start to accrue. Sullivan
v. McMillon, 19 So. 2d 340 (Fla. 1948), cited by Respondent for the proposition that interest runs from the moment a legal duty is created to pay, would be applicable if the legislature had not established the time from which interest must be paid on overpayments, viz., when the taxes comprising the overpayment were due or when paid, whichever is later.
Petitioners' right to a refund accrued when the taxes were paid, not when demand for a refund was made. While it is true that this right to a refund can be lost if application therefor is not timely made, that too is not an issue in this case by virtue of the stipulation of the parties.
Reason and logic find it unfair that Respondent should have the use of Petitioners' tax overpayments absolutely free of interest payments for an extended time well beyond, and unrelated to, the statutory nine months in which the State may refund overpayments without interest. Payment of 6 percent interest for the use of taxpayers' money at a time when the State could earn interest in double figures on the same money is certainly no hardship on the State or bonanza to the taxpayer.
Equitably, there should be a mutuality of obligations between the taxpayer and the State. If the taxpayer overpays his taxes and meets the statutory guidelines for a refund of such overpayments and interest thereon, the taxpayer should receive interest from the date the overpayment was paid just as the Department is entitled to interest on underpayments of taxes from the date the tax was due, without regard to extensions. Respondent counters the mutuality of obligation argument by simply stating Chapter 220 established a legal duty on the taxpayer to pay the tax when due; the tax constitutes a tax on the corporation's privilege of doing business in this state; that if taxpayer underpays his taxes Respondent is entitled to interest on tie underpayment; that if the taxpayer overpays his taxes through error it is the taxpayer's error for which the Department has no obligation to pay interest; the Department has no legal duty to pay a refund until demand therefor is made; and that interest on the refund runs from the time demand for refund is made and not from the time the overpayment is made. In other words, the Department is not satisfied with having the use of the taxpayers' money at an interest rate well below the market; it wants the use of the money at zero interest. The difficulty with this position is that it is contrary to the explicit wording of Section 214.14.
This identical issue has been before the Division of Administrative Hearings on two previous occasions in R. J. Reynolds Tobacco Company v. Department of Revenue and Office of the Comptroller, D.O.A.H. Case No. 82-3183, and St. Joe Paper Company v. Department of Revenue, D.O.A.H. Case No. 83-2798.
In both of these cases the Hearing Officers found that interest on overpayments of taxes-accrued when the overpayment was made; in both cases the Department of Revenue reversed; and in both cases an appeal was taken to the District Court of Appeal in which a final decision on this issue is pending.
From the foregoing it is concluded that Section 214.14 clearly provides that the taxpayer is entitled to interest on an overpayment of taxes from the date the tax was due or was paid, whichever later occurs; subject only to the Department refunding the overpayment within nine months of the date the overpayment was made, in which case no interest is payable. It is therefore
RECOMMENDED that Petitioners be paid 6 percent interest on their overpayments of corporate income taxes from the dates paid in 1975, 1976, and 1980, until the date of payment.
ENTERED THIS 8th day of June, 1984, 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 8th day of June, 1984.
COPIES FURNISHED:
Bernard A. Barton, Jr., Esquire James M. Ervin, Jr., Esquire HOLLAND & KNIGHT
Post Office Drawer 810 Tallahassee, Florida 32302
Jeff Kielbasa, Esquire Assistant Attorney General Department of Legal Affairs The Capitol, LL04 Tallahassee, Florida 32301
Larry Levy, Esquire General Counsel Department of Revenue
104 Carlton Building Tallahassee, Florida 32301
Randy Miller, Executive Director Department of Revenue
102 Carlton Building Tallahassee, Florida 32301
=================================================================
AGENCY FINAL ORDER
=================================================================
DEPARTMENT OF REVENUE
GARDINIER, INC., and GARDINIER BIG RIVER, INC.,
Petitioners,
vs. CASE NO. 84-0197
DEPARTMENT OF REVENUE STATE OF FLORIDA,
Respondent.
/
FINAL ORDER OF THE DEPARTMENT OF REVENUE
THIS CAUSE came before the Governor and Cabinet, sitting as the Department of Revenue on September 20, 1984.
The parties to the action were represented by:
PETITIONER: John K. Aurell
Bernard A. Barton, Jr. James M. Ervin, Jr.
Post Office Box 810 Tallahassee, Florida 32301
RESPONDENT: Jeff Kielbasa
Assistant Attorney General
Larry Levy Department of Legal Affairs
General Counsel LL04 The Capitol Department of Revenue Tallahassee, Florida 32301
The Hearing Officer of the Division of Administrative Hearings had entered his Order on June 8, 1984 and the Department of Revenue filed its' Proposed Substituted Order on July 20, 1984.
By Order entered May 2, 1984, the hearing scheduled to commence May 4, 1984, was continued. As grounds therefor the parties, in a Consented Motion to Continue, advised the hearing officer that there appeared to be no material fact in dispute and that, in lieu of a formal hearing, the parties would submit a stipulation of facts and memoranda of law to support their positions for the hearing officer to prepare a Recommended Order. The findings below consist of the joint stipulations of fact.
APPEARANCES
For Petitioners: Bernard A. Barton, Jr., Esquire
and James M. Ervin, Jr., Esquire Post Office Drawer 810 Tallahassee, Florida 32302
For Respondent: Jeff Kielbasa
Assistant Attorney General The Capitol LL04 Tallahassee, Florida 32301
By these proceedings, Petitioners are seeking a determination that they are entitled to interest on overpayments of corporate income taxes for the years 1975, 1976, and 1980, from the dates the taxes were paid.
The sole issue here involved is whether Petitioners are entitled to payment of interest on their overpayment of corporate income taxes, and, if so, from what date is the interest computed.
FINDINGS OF FACT
Gardinier Big River is a New Jersey corporation authorized to transact business within the State of Florida.
Gardinier is a Delaware corporation authorized to transact business within the State of Florida. Gardinier is a wholly owned subsidiary of Gardinier Big River.
Petitioners were subject to the corporate income tax imposed by Ch. 220, F.S., for the tax years 1974-1981. For the years 1974 and 1975, Gardinier and Gardinier Big River each filed separate annual corporate income tax returns. Beginning with the tax year 1976, and continuing through the tax year 1981, Petitioners filed consolidated annual corporate income tax returns as authorized by Section 220.131, F.S.
Annual corporate income tax returns were filed by Petitioners as follows: (a) Gardinier timely filed on April 1, 1975, an annual corporate income tax return for its tax year ending June 30, 1974; (b) Gardinier Big River timely filed on January 1, 1976, an annual corporate income tax return for its tax year ending March 31, 1975; (c) Gardinier timely filed on April 1, 1976, an annual corporate income tax return for its tax year ending June 30, 1975; (d) Petitioners timely filed on January $ 3, 1977, a consolidated annual corporate income tax return for their tax year ending March 31, 1976; (e) Petitioners timely filed on March 30, 1977 a consolidated annual corporate income tax return for their tax year ending June 30, 1976; (f) Petitioners timely filed on March 21, 1978, a consolidated annual corporate income tax return for their tax year ending June 30, 1977; (g) Petitioners timely filed on March 27, 1979, a consolidated annual corporate income tax return for their tax year ending June 30, 1978; (h) Petitioners timely filed on April 1, 1980, a consolidated annual corporate income tax return for their tax year ending June 30, 1979; (i) Petitioners timely filed on April 1, 1981, a consolidated annual corporate income tax return for their tax year ending June 30, 1980; (j) Petitioners timely filed on December 8, 1981, a consolidated annual corporate income tax return for their tax year ending June 30, 1981.
For each of the years 1974 through 1981, Petitioners, either individually or jointly, timely paid the corporate income tax which Petitioners determined to be due pursuant to Ch. 220, F.S. (1983), by the return date specified in Section 220.222, F.S. (1983), without regard for extensions. Specifically, corporate income taxes were paid by the Petitioners on the following dates for the following tax years: (a) tax year ending June 30, 1975-
-taxes paid by October 1, 1975; (b) tax year ending March 31, 1976--taxes paid by July 1, 1976; and (c) tax year ending June 30, 1980--taxes paid by October 1, 1980.
On several occasions, the latest of which was April 5, 1983, Petitioners and the Department agreed, for the tax years 1974 through 1981, to extensions of the assessment and refund limitation provisions found at Section Section 214.09 and 214.16, F.S.
On or about February 21, 1983, the Department commenced a corporate income tax audit of the Petitioners for the tax years 1974 through 1981.
On or about April 23, 1983, as a result of the foregoing audit, the Department issued to Gardinier a Notice of Intent to Make Audit Changes indicating an overpayment of corporate income taxes for the tax year ending June 30, 1975, and an underpayment of corporate income taxes for the tax year ending June 30, 1974. On that same date, the Department issued to Petitioners jointly two separate Notices of Intent to Make Audit Changes indicating overpayments of corporate income taxes for the tax years ending March 31, 1976, and June 30, 1980, and underpayments of corporate income taxes for the tax years ending March 31, 1975, and June 30, 1979. In addition, these Notices indicated that penalty and interest assessments would be made against Gardinier for the alleged late payment of estimated taxes for the tax year ending June 30, 1975, and against Petitioners jointly for the alleged late payment of estimated taxes for the tax year ending March 31, 1975.
A Notice of Intent to Make Audit Changes is a form used by the Department to advise taxpayers of overpayments or underpayments of taxes determined by the Department in an audit of the taxpayer's books and records. The notice forms are also referred to by the reference "DR-802." If the taxpayer agrees with the results set forth in the notice, it is instructed by the Department to sign the notice at the space indicated thereon and return it to the Department.
By letters dated July 11, 1983, the Department advised Petitioners of its receipt of an unagreed Notice of Intent to Make Audit Changes from the Department's audit staff. The letters further stated that the audit resulted in a refund of taxes to Petitioners' account and that signed agreements to the refunds were required to be reviewed by the Department by September 12, 1983.
By letter dated July 21, 1983, Petitioners notified the Department of their disagreement with certain aspects of the Notices of Intent to Make Audit Changes. Specifically, Petitioners disagreed with the assessment of penalty and interest for the alleged late payment of corporate income taxes for the tax years 1975 and 1976. In addition, Petitioners indicated their disagreement with the Department's failure to provide for the payment of interest on Petitioners' overpayments of corporate income tax for the tax years 1975, 1976 and 1980.
By letter dated August 4, 1983, the Department advised Petitioners of its agreement that penalty and interest assessments should not have been made for the tax years 1975 and 1976. In addition, the Department advised Petitioners that interest would not be paid upon the overpayments of corporate income taxes for the tax years 1975, 1976, and 1980.
On August 16, 1983, Petitioners submitted to the Department signed Notices of Intent to Make Audit Changes indicating Petitioners' agreement and entitlement to a refund of the net overpayments of corporate income taxes for the, tax years 1974 through 1981.
By letter dated August 16, 1983, Petitioners protested the Department's failure to pay interest upon the overpayments of corporate income taxes and made a formal claim for payment pursuant to Section 214.14, F.S. (1983), for said interest.
On November 10, 1983, the Department issued to Petitioners a Notice of Decision denying Petitioners' claim for interest upon the overpayments of corporate income taxes. Petitioners did not request reconsideration of this Notice of Decision.
The overpayment of corporate income taxes by Gardinier for the tax year ending June 30, 1975, was $204,277.61. The overpayment of corporate income taxes by Petitioners for the tax year ending March 31, 1976, was $109,658.00. The overpayment of corporate income taxes by Petitioners for the tax year ending June 30, 1980, was $222,021.00. Total overpayments of corporate income taxes by Petitioners, either individually or jointly, for the tax years 1975, 1976, and 1980 were $535,956.61.
Total underpayments of corporate income taxes by Petitioners for the tax years 1974, 1975 and 1979, including penalties and interest assessed thereon, were $153,595.92.
The Department refunded to Petitioners, by checks dated October 13 and November 16, 1983, $382,360.69 which amount represents the difference between total overpayments and underpayments by Petitioners of corporate income taxes for the tax years 1974 through 1981.
The provisions of Chs. 214 and 220, F.S., (1983) are applicable to the circumstances of this action.
The parties hereby agree that the Joint Exhibits are true and accurate copies of the original documents.
It is the intent of the parties hereto that this stipulation resolve all material facts necessary for a determination of the rights and liabilities of the parties in this action.
CONCLUSIONS OF LAW
The question of whether Petitioners are entitled to interest is governed by 214.14, F.S., read in pari materia with Ch. 214 and 220, F.S. Fla. Jai Alai, Inc. v. Lake Howell Water & Rec. Dist., 274 So. 2d 522 (Fla. 1973).
Section 214.14, F.S., entitles taxpayers to interest on an overpayment of tax if the overpayment has not been refunded "within 9 months after the last date prescribed for filing the return of such tax, including any extension thereof, or within 9 months after the return was filed, whichever is later. . .
."
The use of the term "return" in Section 214.14, F.S., was intended by the Legislature to include "amended returns" for the following reasons:
Section 214.14, F.S., being a refund statute providing for interest on overpayments of tax, is to be strictly construed against the party seeking the refund. State ex rel. Szabo Foods v. Dickinson, 286 So. 2d 529 (Fla. 1973); Tampa & J. R. Co. v. Catts, 85 So. 2d 364 (Fla. 1920).
Federal tax provisions provide that refund claims are to be secured by filing either an original or amended return.
The entitlement to interest, as construed by case law in Florida, accrues as soon as the legal duty to pay the principal arises. Sullivan v. McMillan, 19 So. 340 (Fla. 1896).
The legal duty of Respondent to refund the principal overpayment arose when Respondent
was given notice of the overpayment and its amount was determined. Sullivan v. McMillan, supra.
In the case at bar, notice was given Respondent of the overpayment and entitlement to a refund on April 23, 1983 when the Department issued its' Notice of Intent to Make Audit Changes indicating that an over- payment had been made.
Consistent with federal tax concepts, Petitioners' August 16, 1983 signed Notices of Intent to Make Audit Changes indicating Petitioners' agreement of entitlement to a refund constituted its "amended return" for the tax years in question.
Respondent became legally obligated to refund the money and therefore became legally obligated to interest on the refund pending payment, except for the 9 month grace period in Section 214.14, F.S.
The purpose of the 9 month grace period in Section 214.14, F.S., is to allow Respondent time to ascertain whether or not a refund is due prior to the accrual of interest thereon. At least three situations exist which would create the need for departmental review of overpayments payments within 9 months: (1) a return showing that an overpayment was made (e.g., a taxpayer remitting too much tax in estimated payments during the tax year); (2) filing an amended return alleging an overpayment after the
original return was filed; (3) an audit by the
Department or Federal Government which causes adjustments to be made resulting in an overpay- ment. In the second and third examples, the amended return or audit most likely occur more than 9 months after the original return was filed. Yet under the taxpayer s theory, the Department would be required to pay interest even if the claim were not made until well after the original return was filed. The Department would not be able to conduct the review as contemplated by the above statutes.
There would be no grace period for review as intended by the Legislature.
A strict construction of Section 214.14, F.S., does not reveal legislative intent to pay
interest in the absence of an underlying obligation to do so.
From the foregoing, it is concluded that Section 214.14, F.S., provides that a taxpayer is entitled to interest on an overpayment of taxes which entitlement accrues from the moment notice is given to the Department that an overpayment has been made coupled with a demand for refund. From that point, the Department has, by Section 214.14, F.S., 9 months to verify the correctness of the amended return and refund the overpayment. Should it fail to do so within the 9 months, interest would then be due. Here, since Petitioners' refunds and credits were made less than 9 months after both the Department was given notice of the overpayments and Gardinier agreed, no interest accrued and none is payable.
j. Section 214.14, F.S., does not expressly provide when the right to interest accrues. Only inferentially can it be concluded that Section 214.14 alters the legal principle that interest begins to accrue as soon as it is the legal duty of the Department to refund or credit the overpayment. The Legislature is presumed to know the law as it exists. Atkins v. Bethea, 33 So. 2d 638 (Fla. 1948). Therefore, while the Legislature obviously has the power to modify existing law, courts must not infer such modification by implication within tax refund statutes which by their nature are subject to strict construction. Szabo Foods, supra.
IT IS THEREFORE ORDERED, that Petitioners' claim for interest on their overpayments of corporate income taxes from the dates paid in 1975, 1976 and 1980 is denied.
The foregoing Order was entered by the Governor and Cabinet sitting as the Department of Revenue this 20th day September, 1984.
RANDY MILLER EXECUTIVE DIRECTOR DEPARTMENT O REVENUE STATE OF FLORIDA
I HEREBY CERTIFY that a true and correct copy of the above Final Order has been filed in the official records of the Department of Revenue this 20th day of September, 1984.
Agency Clerk
Docket for Case No: 84-000197
Orders for Case No: 84-000197
| Issue Date |
Document |
Summary |
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Sep. 20, 1984 |
Agency Final Order
|
|
|
Jun. 08, 1984 |
Recommended Order
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The state shares obligation to pay interest on overpayment of taxes just as a taxpayer must pay interest on delinquent tax payments.
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