vs. ) CASE NO. 89-0638
Respondent. )
Upon due notice, this cause came on for formal hearing on April 20, 1989 in Tallahassee, Florida before Ella Jane P. Davis, a duly assigned Hearing Officer of the Division of Administrative Hearings.
For Petitioner: Mark A. Taylor, Esquire, and
Ira L. Smith, Esquire
as Qualified Representatives of BP America, Inc. o/b/o Sohio Oil Company
Assistant Attorney General Department of Legal Affairs The Capitol - Tax Section Tallahassee, FL 32399-1050
Whether or not Sohio, a subsidiary of BP Oil Company, Inc., is liable for the payment of certain local option gas taxes to the Department of Revenue under the facts of this case.
In addition to filing a detailed and expansive prehearing stipulation, the parties called witnesses and had admitted various items of documentary evidence. Petitioner presented the oral testimony of Charles M. Reed Jr., and had admitted Petitioner's Exhibits 1-6. Respondent presented the oral testimony of Christine McCann and Mark A. Zych, both of the Department of Revenue. Respondent had admitted Respondent's Exhibits R-1A, R-1B, and R-2 through 7. Also as reflected in the record, official recognition was taken of various statutes and legislative history.
A transcript of proceedings was filed with the Division of Administrative Hearings on May 12, 1989, and all timely proposed findings of fact have been ruled upon in the Appendix to this Recommended Order. To the extent possible and appropriate, the parties' prehearing stipulation has been utilized in the preparation of this Recommended Order.
This cause was initiated by the Petition for Formal Hearing filed with the Department of Revenue on or about February 2, 1989. This petition was in response to the Department's assessment of February 29, 1988.
During the period from January 1, 1986 to December 31, 1987, Petitioner Sohio made sales of gasoline to various customers including 290,698 gallons of gasoline to Enos Ying (Ying), and 634,555 gallons of gasoline to Basil Roberts (Roberts).
Petitioner's sales to Ying and to Roberts occurred at their respective places of business in Broward County, Florida, which imposed a six cent per gallon local option gas tax, pursuant to Chapter 336, F.S. during 1986 and 1987.
At all times material, Petitioner was licensed in the State of Florida as a "refiner".
Petitioner collected motor fuel tax under Chapter 206, F.S., but did not collect or remit local option gasoline tax under Chapter 336, F.S., with regard to its sale of gasoline to Ying and to Roberts.
Petitioner did not obtain resale certificates or affidavits from Ying or Roberts covering its sales to them.
On November 1, 1985, the Department of Revenue published an "Important Notice to all Retail Gasoline Dealers" which stated that:
Effective January 1, 1986, Sections 336.021 and 336.025, Florida Statutes, requires (sic) the Retail Gasoline Dealer to collect and remit the local option gas tax and the voted gas tax on the sale of motor or special fuel at the retail level within a county which imposes one of the above taxes.
On January 17, 1986, the Department of Revenue issued an "Important Notice to Motor Fuel Wholesalers, Importers or Distributors Concerning 1986 Licenses" and a list of retail service stations licensed for 1986 as of January 10, 1986, which notice stated:
Those accounts that are unlicensed in 1986 will be receiving notification concerning their account and should secure their licenses immediately in order to prevent further complications,
On the reverse side of the aforesaid notice, it was stated,
Those accounts that are licensed in 1986 are responsible for remitting the local option gas
taxes under Chapter 336, Florida Statutes. If you sell to an unlicensed retail dealer, the wholesaler, importer or refiner is responsible for collecting and remitting the local option taxes due under Chapter 336, Florida Statutes. Evidence should be obtained from the retail dealers as to his (sic) current status with the Department prior to selling to the account on a tax-free (Chapter 336, F.S.) basis.
No rules or regulations of the Respondent Department under Chapter 336,
F.S. or which make specific reference to Chapter 336, F.S. were promulgated by the Department during the period in question.
On February 29, 1988, the Respondent issued a notice of delinquent local option gas tax, penalty and interest due and assessed against Petitioner in the amount of $1,302,545.13 (tax of $956,420.65, penalty of $229,806.11 and interest of $116,318.37) regarding sales made by the Petitioner to its customers including Ying and Roberts. A schedule describing the items forming the basis of the assessment was enclosed therewith, which schedule described the transaction subject to the assessment as being sales made to unlicensed retail dealers.
The Respondent has never pursued collection of the tax, penalty and interest at issue from either Ying or Roberts.
Petitioner did not know or have reason to know whether or not Ying or Roberts had paid the tax in question.
On March 17, 1988, Petitioner filed a protest with the office of the General Counsel of the Florida Department of Revenue objecting to the entire assessment on the grounds Petitioner was not liable for the local option tax in regard to the subject transactions and in the alternative, that the retail dealers involved were either listed by the Department of Revenue as being licensed or had filed returns and previously paid their tax.
By letter dated April 5, 1988, Petitioner was informed by Christine F. McCann, Special Programs Analyst, Bureau of Enforcement of the Florida Department Revenue, that the above referenced assessment had been revised downward to reflect the liability of $253,260.11 (tax of $182,813.42, penalty of
$45,370.91, and interest of $25,075.78) on the grounds that the Petitioner had identified certain dealers as being licensed by the Department, who were part of a transaction for which the Respondent sought to tax Petitioner.
As a result of an informal conference held on May 27, 1988, a Notice of Reconsideration was issued on December 7, 1988 which further reduced the assessment against Petitioner to a total of $80,463.39 (tax of $57,769.38, interest of $8,251.61 and penalty of $14,442.40) on the grounds that the Petitioner either identified additional dealers as being licensed by the Department or demonstrated that the retail dealers though not licensed by the Department, had paid the tax in question in regard to the subject transactions.
The assessment as revised by the Department's Notice of Reconsideration continues to be in error in that it yet includes certain retail dealers although not licensed and other than Ying and Roberts, who have already paid the tax in question and therefore the assessment should be revised downward
further. After the above-referenced adjustment, there remains and is now in controversy in this case the following amounts:
SALES TO YING SALES TO ROBERTS
Tax | $17,436.48 | Tax | $38,073.30 |
Penalty | 4,359.13 | Penalty | 9,518.37 |
Interest to Interest to
4/20/89 4,073.15 4/20/89 9,679.30
TOTAL $25,868.76 $57,270.97
GRAND TOTAL $83,139.73 as of 4/20/89. Should the Respondent prevail in this matter, interest will continue to accrue until the tax is paid.
During the course of the informal protest procedures before the Department of Revenue, Petitioner established that all the sales which were the subject of the original notice, except those to Ying and to Roberts, were either to licensed gasoline retailers or to unlicensed gasoline retailers who had collected and remitted the local option tax due.
Upon the testimony of Charles (Chuck) M. Reed Jr., Retail Marketer, who has been a dealer lease and supply agent for Ying and for Roberts from Gulf BP, parent corporation of Petitioner Sohio, it is found that Sohio's customary sales both to Ying and to Roberts were made exclusively by filling underground gasoline tanks at the respective establishments of Ying and of Roberts on delivery by the truckload of no less than 7,100 gallons and no more than 8,402 gallons at a time. Also upon the basis of his testimony and the photographs he took which were admitted in evidence, it is found that Ying and Roberts made retail sales to the general motoring public. More specifically, signs posting product affiliation and prices [see Section 206.01 (7) F.S.] which were observed by Mr. Reed identified each of these establishments as retail outlets. The sales agreements between Petitioner and Ying and between Petitioner and Roberts are also clearly in support of this finding. It is also proper to infer from Mr. Reed's testimony that he watched a majority of the gasoline gallons sold to Roberts and to Ying pumped into their respective underground tanks and then observed them pumping gasoline out of those tanks into motorists' cars via the traditional hose arrangements found in commercial gasoline stations, that it was the same Sohio gasoline which was pumped and sold by Ying and Roberts at retail. It was not necessary for Mr. Reed to physically observe the gasoline coursing through the hoses or account specifically day by day from delivery in bulk by Sohio to dispensation one car gasoline tank at a time by Ying and by Roberts in light of the exclusivity clauses of their contracts with Sohio. Therefore, Sohio established that the gasoline it sold to Ying and to Roberts was resold by Ying and by Roberts to the general motoring public.
Ying and Roberts therefore fall in the category of being gasoline retailers unlicensed by the Department of Revenue, of whom it is undetermined whether they submitted their county local option gas tax due and from whom Petitioner Sohio, licensed as a refiner, did not obtain resale certificates or affidavits covering Sohio's sales to them.
Petitioner did not establish that Ying and Roberts had collected and remitted the local option gasoline tax in controversy.
There is no statute or rule which precludes Petitioner selling to an unlicensed dealer.
Respondent Department of Revenue requested that Petitioner Sohio provide information which would indicate whether Ying and Roberts had collected and remitted the local option gasoline tax. Since all of the revisions and reductions of the original assessment against Petitioner as set out above were done by the Respondent based on information supplied by the Petitioner, the Respondent anticipated that Petitioner also would be able to provide information on Ying and Roberts. Respondent could have searched its records to find out if Ying and Roberts had paid their tax, and then gone directly to Ying and Roberts to find out why they did not pay the tax, if that were the case. However, due to the agency's search system which is geared to retailer license numbers, Department of Revenue employees asserted that such a search is probably impossible and certainly is impractical.
All retail gasoline dealers are required to be licensed in order to sell gasoline. Accordingly, income tax forms are mailed by the agency only to those retail dealers who have obtained a license, despite the assertion in the agency's Notice described in Finding of Fact 8 that unlicensed retailers who had paid their tax without such a number/license were traceable. The problem appears to be that Petitioner sold to persons (unlicensed retailers Ying and Roberts) who had no vehicles (respective retail license numbers) by which to submit the local option gas tax. Instead of pursuing Ying and Roberts for payment of the county local option gas tax, the agency chose to come back against Petitioner for either the certificates or affidavits specifically required with regard to collection and remittance of the state motor fuel tax under Section 206.425 F.S., or for other proof of Roberts' and Ying's compliance concerning the county local option gas tax. According to Mr. Zych, Administrator of the Disposition Section of the Office of the General Counsel and superior to Ms. McCann, the agency would have accepted properly executed retail certificates if Petitioner had gotten them. Without such proof forthcoming from Petitioner, the agency held Petitioner liable for the local option gas tax imposed by the statute upon the retailer. So far as Ms. McCann, Respondent's Special Program Analyst, was concerned, this election to proceed against Sohio was completely in the discretion of her superior.
There is no rule that requires Petitioner to get an exemption certificate or affidavit before they sell to a retail dealer.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57(1), F.S.
The Respondent Department of Revenue asserts that under the facts of this case, Petitioner Sohio must pay to the Department the local option gas tax due on its sales to Ying and to Roberts because Sohio has failed to establish that its sales to Ying and to Roberts were not taxable retail sales under Chapter 336 and Sohio failed to establish that the local option gas tax due on the gasoline sold by Sohio to Ying and to Roberts was paid and remitted by Ying and by Roberts to the Department and diligent inquiry by the Department (presumably Departmental inquiry of Sohio) failed to establish that the local option gas tax due on the gasoline sold by Sohio to Ying and to Roberts was collected and remitted to the Department.
By itself, Section 336.025 F.S. is abundantly clear that the local option gas tax is to be collected and remitted solely by the retailer. It provides, in pertinent part,
(2)(a) The tax shall be collected and remitted by any person engaged in using or selling at retail motor or special fuels within a county in which the tax is authorized ... (Emphasis supplied)
Respondent seeks to engraft upon this otherwise seemingly clear language the certificate provisions of Section 206.425 (1) F.S., dealing with the state motor fuel tax. There is no similar specific provision contained in Chapter 336 F.S., nor is there any duly promulgated rule requiring certificates for the local option gas tax.
However, the Department's statutory interpretation seeks to hold Sohio liable because of certain reporting requirements which are common to both statutes. As set forth above, Section 336.025 (2)(a) F.S. states that the local option gasoline tax shall be collected and remitted by "any person . . selling at retail motor . . . fuel". This section also states that certain sections of Chapter 206 F.S. apply in situations involving the local option gas tax. Specifically, Section 336.025(2)(a) F.S. further provides, in pertinent part,
The sections of chapter 206, including, but not limited to, those sections relating to timely filing of reports and tax collected, suits for collection of unpaid taxes, department
warrants for collection of unpaid taxes, penalties, interest, retention of records, inspections of records, liens on property, foreclosure, and enforcement and collection also apply to the tax authorized in this section. (Emphasis supplied)
Section 206.425(1) F.S. provides in pertinent part,
Each refiner or importer shall request signed affidavits or resale certificates of all persons who purchase or obtain motor fuel from such refiner or importer and who are not required to pay the tax imposed by this part at the time of such purchase. The affidavits or resale certificates shall show the license number issued by the department to purchasers who are authorized to buy motor fuel tax exempt and to act as agents of the state in collecting and remitting the tax. Such affidavits or resale certificates should be executed by the refiner or importer before or at the time of the first sale. (Emphasis supplied)
The Department reads the two foregoing sections in pari materia so as to conclude that Sohio, a refiner, is required to obtain resale certificates or
proper affidavits from its purchasers of gasoline in local option counties with regard to local option gasoline taxes or have those sales effectively treated as if they were retail sales by Sohio.
The agency's statutory argument is not persuasive. Nor do the contradictory notices issued to retail dealers (presumably Ying and Roberts) and to wholesalers, importers, and distributors (presumably Sohio, technically classified only as a refiner) as reflected above in Findings of Fact 7 and 8 bolster the agency's statutory argument.
The parties have stipulated as fact that: Section 336.025 (2)(a) F.S. was amended, effective January 1, 1986 by substituting the phrase: "shall be collected and remitted by any person engaged in using or selling at retail motor or special fuel within a county in which the tax is authorized", in place of the phrase: "collected in the same manner as all other gas taxes pursuant to Chapter 206." Certain sections of Chapter 206 were simultaneously amended to reflect the change of the imposition on retailers only of the local option tax in Chapter 336, including Section 206.01 and Section 206.404 F.S. The aforesaid amendments imposed sanctions against retail dealers who failed to comply with the new changes to the law by denying those dealers a three percent deduction from their local option tax liability as a collection allowance under subsection (2)(b) of 336.025, F.S. and/or charging an additional penalty as provided in Section 206.404, F.S. The aforesaid amendments did not alter the last sentence of subsection (2)(a) of Section 336.025 which provides: "The sections of Chapter 206, including, but not limited to, those sections relating to timely filing of reports and tax collected, suits for collection of unpaid taxes, department warrants for collection of unpaid taxes, penalties, interest, retention of records, inspection of records, liens on property, foreclosure, and enforcement and collection are also applied to the tax authorized in this section." The purpose of the aforesaid amendments was to curtail the alleged practice of retail dealers avoiding or minimizing their local option tax burden by purchasing motor fuel in counties that did not have a local option tax or taxed the fuel at a lower rate than the county in which the retail dealer sold the fuel to the ultimate consumer. The Legislature corrected this problem by requiring the tax to be collected by the retail dealer at the time and in the county where the sale is made to the end consumer. The foregoing stipulations are more clearly conclusions of law, and they are adopted here as those of the undersigned.
The 1985 legislative amendments to Chapters 206 and 336 F.S. changed the responsibility for collection and remittance of the local option gas tax from those persons who are required to collect motor fuel tax under Chapter 206 to "any person engaged in using or selling at retail motor or special fuels." The Petitioner collected and remitted to the State of Florida on a monthly basis, during the subject period, those motor fuel taxes imposed under Chapter
206 F.S. In light of the 1985 amendments, the Petitioner is not responsible for the collection or remittance of Chapter 336 taxes as well, just because of the complexity involved in the Respondent's ferreting out the appropriate taxpayers for itself. The foregoing conclusion is reached upon the following reasoning.
Section 336.025 F.S. now specifically states that the local option tax shall be collected and remitted by any person engaged in the selling at retail of motor fuel. Petitioner refiner herein is not such a person. Roberts and Ying are such persons.
Section 206.404 F.S. specifically requires retail dealers to report and remit the local option tax under Section 336.025 F.S. Petitioner refiner is
not such a person. Roberts and Ying are such persons. Chapter 85-342, Section 99, Laws of Florida, effective January 1, 1986 gave us Subsection (1) of 206.404 F.S., which provides as follows:
Every retail dealer shall pay a license tax of $5 per annum to the state. No license shall be transferred without an application having been filed with the department and payment of a fee of $5.
Chapter 86-152, Section 31, Laws of Florida, effective July 1, 1986, added the following two subsections:
(2)(a) On or before the 20th day of each calendar month, each retail dealer shall, on forms prescribed by the department, report to the department all purchases or other acquisition and sales or other disposition of motor fuel during the preceding calendar month, and remit the taxes pursuant to ss.336.021, 336.025, and 336.026.
(b) If any person required to file under this subsection fails to make a complete report, the department may impose, in addition to any other penalty or interst due, a penalty in the amount of $30. (Emphasis supplied)
Although the latter two subsections were not in effect for the whole of 1986, they are instructive of the Legislature's continued intent to burden the retailer alone with the duty of collection and remittance of the county local option gas taxes. See, Anthony Abraham Chevrolet Co., Inc. v. Collection Cehvrolet Inc., 533 So. 2d 821 (Fla. 1st DCA 1988).
Neither Chapter 206 nor Chapter 336 F.S. distinguish between licensed and unlicensed retail dealers regarding the collection and remittance of a local option tax. See, Sections 206.01(7) and 336.025 F.S. Roberts and Ying are unlicensed retail dealers. The agency has no logical reason beyond its own inconvenience for giving its imprimitur to such unlicensed retail dealers' failure to pay the tax. Surely their not securing a state license number and the state's failure for that reason to mail unlicensed retailers a local option tax form ought not to shift the nonconforming retail dealers' tax burden to another and exonerate such unlicensed retailers from paying their just tax. In fact, the agency is charged with prohibiting sales by a unlicensed retail dealer and assigns sanctions therefor. In the instant case, there is the further concern that because Respondent has not clearly shown Ying and Roberts did not pay the tax there is the spectre taht the tax could be paid twice.
Respondent Department of Revenue maintains that the tax due on each gallon of fuel sold in the county revolves around the obligation of Petitioner Sohio to prove why they sold each gallon tax free and if they cannot do so, it is up to Petitioner to pay. Apparently, it is the "including but not limited to" language of Section 336.025 (2)(a) F.S. which is the cornerstone of Respondent's position, but the requirement for collection and remittance of the local option tax under Chapter 336 F.S., as amended, differs substantially from the requirements for collection and remittance of motor fuel tax in Chapter 206
F.S. The most obvious difference is the imposition of primary responsibility for collection and remittance of the state motor fuel tax upon refiners, importers, and wholesalers in Chapter 206 F.S. and the imposition of sole responsibility for collection and remittance of the local option gas tax on retail dealers in Chapter 336 F.S. See also the July 1, 1986 amendments, adding Sections 206.404 (2)(a) and (b), as discussed in Conclusion of Law 8, above.
The instant situation is not one in which primary responsibility for collection and remittance may be shifted from a dealer, refiner, or importer to a secondary or dually liable retailer taxpayer by proper certification containing appropriate agency license number, pursuant to a duly promulgated rule. See, Pioneer Oil Company v. Dept. of Revenue, 401 So. 2d 1321 (Fla. 1981), approving 381 So. 2d 263 (Fla. 1st DCA 1980). See, Sections 206.01(13). 206.41, 206.87,
and 206.97 F.S.
The 1986 Legislature took care to specifically address the retailer and the local option gas tax by July 1, 1986 amendments to Section 206.404 (2)(a) and (b) and those new statutes do not relate reasonably to Section
206.425 F.S. See, Conclusion of Law 8, above. However, it is also clear that Section 206.425 F.S, requiring refiners or importers to request signed affidavits or resale certificates showing the license number issued by the agency to "purchasers authorized to buy motor fuel tax exempt and to act as agents of the state in collecting and remitting the state motor fuel tax" is not the same kind or species of statute as: timely filing reports and tax collected (Sections 206.10, 206.43-206.45, 206.404 [as amended 1985] and 206.93), suits for collection of unpaid taxes (Section 206.07), department warrants for collection of unpaid taxes (Section 206.075), penalties, interest (Sections
206.11 and 206.44), retention of records (Section 206.12), inspection of records (Section 206.14), liens on property (Section 206.15), foreclosure (Section 206.175), and enforcement and collection (Section 206.44) which were incorporated by description into Chapter 336 by Section 336.025 (2) F.S., as relied upon by Respondent and as in effect at all times material. Therefore, pursuant to the doctrines of ejusdem generis and nositur a sociis, the certification requirements of Section 206.425 F.S. have not been engrafted onto Chapter 336 F.S. See, State v. Thompson, 101 So. 2d 381 (Fla. 1958).
Also, when a statute is amended, it is presumed that the Legislature had a purpose and intended the statute to have a meaning different than before. See, Arnold v. Shumpert, 217 So. 2d 116 (Fla. 1968). The parties have stipulated as to the legislative intent and purpose behind tagging the retailers with collection and remittance of the local option tax as of January 1, 1986, instead of handling such collection and remittance "in the same manner as all other gas taxes pursuant to chapter 206," which language was purposefully struck. In light of such stipulated legislative purpose, to hold Petitioner liable for the retailers' tax would subvert a clear legislative purpose and render ineffective the complicated web of incentives and sanctions woven into the statutes so as to insure collection and remittance of the local option tax by the retailers.
While the intent of the Legislature seems clear, as set forth above, that the "including but not limited to" language was intended only to insure that the local option tax is to be collected from retailers in the same manner as the state fuel tax is collected from refiners, importers, and wholesalers, it should be observed that even if the "including but not limited to" language relied upon by the Respondent had created any ambiguity or vagueness, that ambiguity or vagueness would, of necessity, have to be resolved in favor of the Respondent taxpayer. Notwithstanding Respondent's citations with regard to application of "exemptions", which are not on point with the instant statutory
situation, it has been the time-honored standard that "all doubts relative to the interpretation of taxing statutes should be resolved against the state when legislative intent is . . . doubtful." See, State ex rel. Housing Authority of Plant City v. Kirk, 231 So. 2d 522 (Fla. 1970), citing with authority Walgreen Drug Stores Co. v. Lee, 28 So. 2d 535 (Fla. 1946) as follows:
[W)ell settled rule of tax statute construction that, if the text of the act does not reveal with certainty the intent of the Legislature and it is susceptible of two meanings, that meaning most favorable to the taxpayer should be adopted. This is all the more true if one meaning results in imposing the tax and the other relieves it.
Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order rescinding
its Notice of Assessment against Petitioner with regard to its sales to Ying and Roberts and letting Petitioner go hence without ay.
DONE AND ENTERED this 16th day of June, 1989, in Tallahassee, Leon County, Florida.
ELLA JANE P. DAVIS
Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 1989.
APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 89-0638
The following constitutes specific rulings pursuant to Section 120.59(2), Florida Statutes, upon the parties respective proposed findings of fact (PFOF):
All of Petitioner's proposed findings of fact are accepted, but those not adopted have not been adopted because they are unnecessary, subordinate to the facts as found or mere legal argument.
1.-6. Accepted.
7. Accepted as modified to conform to the record and the natural inferences of the evidence of record.
8.-11. Accepted but not necessarily adopted as subordinate and unnecessary to the facts as found.
12. Accepted.
13.-15. Accepted but not necessarily adopted as subordinate and unnecessary to the facts as found.
Mark A. Taylor, Esquire Excise Tax Analyst
Director, Ad Volorem Tax Division BP America, Inc.
Assistant Attorney General Department of Legal Affairs Tax Section, The Capitol Tallahassee, FL 32399-1050
William D. Townsend General Counsel Department of Revenue
Katie D. Tucker Executive Director
