vs. ) CASE NO. 93-2019
Respondent. )
On July 28, 1993, a formal administrative hearing was held in this case in Clearwater, Florida, before J. Lawrence Johnston, Hearing Officer, Division of Administrative Hearings.
For Petitioner: James E. Smith, President
Co-Op Oil Company, Inc. 4911 - 8th Avenue South Gulfport, Florida 33707
For Respondent: Ralph R. Jaeger, Esquire
This proceeding arises out of the Department of Revenue (Department) audit of the Petitioner, Co-Op Oil Company, Inc. (Co-Op), regarding the reporting and payment of motor fuel and special fuel taxes under Chapter 206, Chapter 212, Part II, and Chapter 336, Florida Statutes, for the period from January 1, 1986, through December 31, 1989.
As reflected in the following preliminary statement, the parties have had several opportunities to discuss, argue and narrow the issues in this case through informal proceedings. There is no genuine dispute as to the applicable taxes or tax rates. At some points in the informal proceedings, Co-Op seemed to question the Department's decision to compute motor fuel and special fuel taxes on the "gross" gallons sold to Co-Op's consumers. But it is now clear that Co-Op concedes the Department's determination that those taxes are based on "gross" gallons. Co-Op now contends, in the alternative, either (1) that reporting and paying those taxes on Co-Op's purchases for later resale results in the same tax consequences or (2) that, by paying tax on its purchases, Co-Op actually overpaid its taxes.
In addition, Co-Op makes the argument that, in the event Co-Op underpaid its taxes, the Department should be estopped from seeking payment of those taxes.
There are no other genuine disputed issues in this case.
On or about April 9, 1990, the Department of Revenue (Department) completed an audit of the Petitioner, Co-Op Oil Company, Inc. (Co-Op), regarding the reporting and payment of motor fuel and special fuel taxes under Chapter 206, Chapter 212, Part II, and Chapter 336, Florida Statutes, for the period from January 1, 1986, through December 31, 1989. On or about April 9, 1990, the auditors found additional taxes, penalties and interest to be due.
By letter dated April 16, 1990, Co-Op protested the results of the audit. On or about November 16, 1990, the Department denied the protest and issued six separate notices of proposed assessments of taxes, all upholding the results of the audit.
By letter dated November 29, 1990, Co-Op again protested the assessments. On or about September 23, 1991, the Department issued its Notice of Decision. The Notice of Decision revised the assessments but still maintained that additional taxes, interest and penalties were due.
by reducing the penalties to five percent of the tax liability.
By letter dated October 2, 1991, Co-Op protested this Notice of Decision. In response to this letter of protest, the Department issued a Notice of Reconsideration dated January 5, 1993. In its Notice of Reconsideration, the Department noted that: "For the period of January 1, 1988, through June 30, 1991, the tax on motor fuel could be reported on the net or gross number of gallons, depending on the method used by the taxpayer at the time of first reporting." (Emphasis added.) The Notice of Reconsideration noted that one-half of the audit period was in this time period.
Despite noting that this method of reporting was applicable only to motor fuel, the Department proceeded to reduce all tax, penalty and interest cited in the Notice of Decision by one-half.
Again, Co-Op protested by filing a letter request, dated February 26, 1993, for formal administrative proceedings under Chapter 120, Florida Statutes. The matter was referred to the Division of Administrative Hearings on or about April 13, 1993, and was assigned DOAH Case No. 93-2019. By Notice of Hearing issued on May 7, 1993, the case was set for hearing in Clearwater, Florida on July 28, 1993.
At the final hearing, one Joint Exhibit was admitted in evidence. The Department called three witnesses and had Respondent's Exhibits 1 through 8 admitted in evidence.
Co-Op Oil's president, who also represented the company in this proceeding, testified in Co-Op's case.
The parties ordered the preparation of a transcript of the final hearing and asked for an extension of time to August 27, 1993, in which to file proposed recommended orders. As reflected in the following Findings of Fact, the Department's proposed findings of fact are essentially accepted and incorporated to the extent not unnecessary or subordinate, and Co-Op's proposed findings of fact are rejected as contrary to facts found (or subordinate to facts contrary to those found.)
For the period of time from January 1, 1986, through December 31, 1989, Co-Op Oil Company, Inc., was a wholesaler and retailer of motor fuel (gasoline) and special fuel (diesel) in the Florida west coast area and held Motor Fuel License Number 09_000447 and Special Fuel License No. 10-003477.
During this time, each month Co-Op reported and paid motor fuel and special fuel tax based on the number of "net" gallons purchased during the preceding month. "Net" gallons are an industry standard. They are measured at a temperature of 60 degrees Fahrenheit.
Meanwhile, during the same month, Co-Op sold motor fuel and special fuel through metered pumps and charged customers motor fuel and special fuel tax on the metered gallons sold through the pumps.
Both motor fuel and special fuel are volatile. They expand and contract significantly as temperatures rise and fall. Since the temperature in an underground storage tank generally is around 71-72 degrees Fahrenheit, the "gross" gallons of motor fuel and special fuel stored in
Co-Op's underground tanks and for resale to customers generally exceeds the "net" gallons it purchased by approximately one percent. Additional expansion, or some contraction, of the fuels can occur in transit from the tank to the metered pump, depending on outside temperature. As a result, the "gross" gallons pumped through the meter and sold to customers can differ from the "net" gallons purchased by Co-Op Oil.
"Losses" due to contraction in cold tempertures also can occur, but a reasonable "shrinkage" allowance was factored into the Department's calculations. (Additional losses can occur due to spillage and evaporation. However, tax is still due on fuel lost to spillage and evaporation.)
Except for Chapters 206 and 212, Part II, motor fuel taxes after January 1, 1988, the Department has interpreted the applicable statutes to: (1) require Co-Op to report and pay motor fuel and special fuel taxes monthly on the "gross" gallons it sells to its customers, plus any fuel it loses to spillage or evaporation; (2) hold Co-Op, as a licensee who collects more tax on motor fuel and
special sold than was paid on the same gallons purchased, to be liable for the difference; and (3) hold Co-Op, as a licensee who purchased gasoline tax free, recorded such purchases at "net," and adjusted sales on its tax returns to "net," and sold such fuel at "gross," to be liable for the difference in tax.
The Sampling Method
The parties agreed that, due to the voluminous records that would be the subject of a detailed audit of all pertinent transactions, an audit using a sampling method is not only appropriate but also a practical necessity. The parties agreed that it would be appropriate to average the months of July, a hot month, and December, cold month, to obtain a valid and accurate average for the amount of gains (or losses) in volume of motor and special fuel due to expansion (or contraction) from the "net" gallonage purchased for resale through the metered pumps.
An audit of the sample months reveals the following pertinent information (expressed in gallons):
Month Motor Fuel
Special Fuel
JULY, 1986
Beginning Inventory 139,777
37,263
Amount of Fuel Purchased 622,543 124,809
Amount of Fuel Sold 639,640 125,591
Ending Inventory 126,740
37,167
DECEMBER, 1986
Beginning Inventory 103,046
33,648
Amount of Fuel Purchased 644,966 112,297
Amount of Fuel Sold 627,361 106,795
Ending Inventory 119,169
39,608
JULY, 1987
Beginning Inventory 88,937
30,769
Amount of Fuel Purchased 485,783 66,382
Amount of Fuel Sold 471,823 73,261
Ending Inventory 109,542
24,378
DECEMBER, 1987
Beginning Inventory 85,210
30,678
Amount of Fuel Purchased 552,977 76,584
Amount of Fuel Sold 535,767 78,667
Ending Inventory 102,497
28,311
JULY, 1988
Beginning Inventory 17,863
Amount of Fuel Purchased 61,499
Amount of Fuel Sold 52,380
Ending Inventory 27,197
DECEMBER, 1988
Beginning Inventory 24,195
Amount of Fuel Purchased 52,492
Amount of Fuel Sold 47,242
Ending Inventory 29,293
JULY, 1989
Beginning Inventory 19,829
Amount of Fuel Purchased 45,817
Amount of Fuel Sold 42,834
Ending Inventory 25,386
DECEMBER, 1989
Beginning Inventory 20,114
Amount of Fuel Purchased 54,323
Amount of Fuel Sold 55,520
Ending Inventory 18,824
(Under Chapters 206 and 212, Part II, motor fuel was taxed on purchases, as reported and paid by Co-Op, after December 31, 1987, so only special fuel totals are shown after that date.)
Additional Taxable Gallons: Motor Fuel
Adding the beginning inventory and purchases yields the "available fuel" for the month. Subtracting the ending inventory from this figure yields the month's "inventoried fuel accounted for." "Gain" from expansion of fuel above the "net" gallons purchased would equal the difference between a larger amount of fuel sold through the meters, the "metered sales," and a smaller "inventoried fuel accounted for." "Loss" from contraction of fuel below the "net" gallonage purchased (plus other possible losses from spillage, leakage or evaporation) would equal the difference between a larger "inventoried fuel accounted for" and a smaller amount of fuel sold through the meters, the "metered sales."
Using the arithmetic operations described in the preceding paragraph on the samples of motor fuel, it can be calculated that Co-Op had gains of: 4,060 gallons for July 1986; 6,645 gallons for July 1987; and 77 gallons for December 1987. In the month of December 1986, there was a loss of 1,482 gallons. The net gain in motor fuel for those months was 9,300 gallons.
Meanwhile, the total purchases of motor fuel for those months was 2,306,269 gallons. Comparing the net gain with the total purchases yields a gain or error ratio of
.004032487 for motor fuel.
The total number of gallons of motor fuel purchased by Co-Op during 1986 and 1987 was 14,190,105. Application of this gain ratio to the total number of gallons purchased yields 57,223 "additional taxable gallons" of motor fuel for 1986 and 1987.
Computation of Additional Motor Fuel Tax, Penalty and Interest
Multiplying each month's additional taxable gallons by .057 for the Chapter 212, Part II, motor fuel tax, and by .04 for the Chapter 206 motor fuel tax, the total taxes due for motor fuel are $3,262.29 for Chapter 212, Part II, and $2,288.92 for Chapter 206.
Computed at 12 percent per annum or 1 percent monthly, interest or motor fuel taxes under Chapter 212, Part II, Fla. Stat., was $2,592.51 through July 28, 1993, with daily interest accruing at $1.07 per day from that day forward.
Also computed at 12 percent per annum or 1 percent monthly, interest on the motor fuel tax under Chapter 206, Fla. Stat., was $1,500.15 through July 28, 1993, with daily interest accruing at $.75 per day from that day forward.
To calculate the penalty for motor fuel for both Chapter 212, Part II, and Chapter 206, the tax due is multiplied by 25 percent to arrive at total amounts for penalties of $815.57 and $572.23, respectively.
Additional Taxable Gallons: Special Fuel
Using the same arithmetic operations described for motor fuel, the taxable gains for special fuel can be calculated for the sample months. (Special fuel was taxable upon resale at the pump for the entire audit period, and the sample months are examined for the entire audit period.)
These calculations show the total net gain for the eight month sample period to be 3,892 gallons, as follows:
Month Gain/Loss
Gallons
686
458
488
284
215
152 | July, 1986
December, 1986
July, 1987
December, 1987
July, 1988
December, 1988
July, 1989 | Gain Gain Gain Loss Gain Loss Gain | +
+
+
-
+
- |
+2,574 December, 1989 93 |
Loss |
- |
(net gain)
+3,892
Meanwhile, the total purchases of special fuel for those months was 594,203 gallons. Comparing the net gain with the total purchases yields a gain or error ratio of .00655 for special fuel.
The total number of gallons of special fuel purchased by Co-Op during the years 1986 through 1989 was 3,910,608. Application of the gain ratio for special fuel to the total number of gallons purchased yields 25,614 "additional taxable gallons" of special fuel for 1986 through 1989.
Computation of Additional Special Fuel Tax, Penalty and Interest
Multiplying each month's additional taxable gallons of special fuel by $.057 per gallon for the Chapter 212, Part II, special fuel tax, and by $.04 per gallon for the Chapter 206 special fuel tax (except for the months July, 1987, through December, 1987, for which they are multiplied by the $.09 per gallon tax during that period of time), yields Chapter 212, Part II, special fuel tax due in the amount of $1,460.32, and Chapter 206 special fuel tax due in the amount of $1,171.76.
Computing interest using exactly the same method as for the motor fuel taxes yields interest on the special fuel tax due under Chapter 212, Part II, in the amount of
$1,067.32 through July 28, 1993, with daily interest accruing at $.48 per day from that day forward, and in the amount of $858.69 for the special fuel tax due under Chapter 206 through July 28, 1993, with daily interest accruing at $.39 per day from that day forward.
The penalty for overdue special fuel tax for both Chapter 212, Part II, and Chapter 206 is calculated at 25 percent of the tax due, for total amounts of penalty of
$365.08 and $292.94, respectively.
The total of special fuel tax, interest and penalty due as of July 28, 1993, was $2,892.72 for special fuel under Chapter 212, Part II, and $2,323.29 for special fuel under Chapter 206.
Rejection of Co-Op's Proposed Alternative Method
Co-Op pointed out that for the month of July, 1986, it sold 17,097 gallons more than it purchased, but that for the subsequent sample months it was actually purchasing more gallons than it was selling. Co-Op argues that this demonstrates the payment of tax on 31,695 gallons more than it actually sold.
However, a review of each month shows that, although purchases did exceed sales in several months, the ending inventories generally were larger than the number calculated by subtracting metered sales for the month from the total of beginning inventories plus purchases for the month. Actual dip stick measurements of the inventory in the tanks demonstrates a net increase over the computed book inventory of 9,300 gallons for motor fuel and 3,892 gallons for special fuel.
In addition, sales of motor fuel for 1986 and 1987 totalled 14,247,541 gallons (8,228,593 for 1986, and 6,018,948 for 1987), while total purchases for that same period were only 14,190,105 gallons. For special fuel, sales of special fuel for 1986 through 1989 totalled 3,962,263 gallons (1,685,959 for 1986, 945,775 for 1987, 721,547 for 1988, and 608,982 for 1989), while total purchases of special fuel were only 3,910,608 gallons. In
each case, due to expansion gains in the fuels, sales always exceeded purchases.
Local Option Taxes
The Chapter 336 local option taxes on motor fuel were not affected by the amendments to Chapters 206 and 212, Part II, effective January 1, 1988. The total that Co_Op reported for motor fuel purchases for the period January 1, 1986, through December 31, 1989, was 24,798,440. Multiplying by the gain ratio for motor fuel of .004032487 yields 100,000 gallons of additional taxable motor fuel.
Adding the additional taxable gallons of motor fuel to the 25,614 gallons of additional taxable special fuel yields of 125,614 additional taxable gallons or net gain for the period.
Throughout the audit period, the local option tax rate under Section 336.025 was $.04 per gallon for Lake and Lee County and $.06 per gallon for Manatee and Orange County.
Polk County started with a $.04 per gallon rate and increased that to a $.06 per gallon rate in September, 1986.
Pinellas and Citrus County increased the tax rate from the beginning figure of $.04 per gallon to $.06 per gallon in September, 1987.
Because of the difference in rates between counties and the changes of rates within counties, it is necessary to calculate effective tax rates and compute the percentage of reported taxable gallons for Co-Op's business in each of the respective counties, as follows:
Ratio of Reported
Effective Tax
County Gallons
Rate
.051
.040
.040
.060
Citrus 21 percent
Lake 01 percent
Lee 03 percent
Manatee 11 percent
.060
.050
.055
Orange 02 percent
Pinellas 37 percent
Polk 25 percent
Taking the total net gain of 125,614 gallons and
multiplying it by the appropriate percentage (i.e., the ratio of fuel sold in an individual county) yields the total taxable gains in each county.
To ascertain the additional local option taxes due under Section 336.025, Fla. Stat., the total taxable
gains calculated for each county option tax must be multiplied by each county, as follows:
County | for the | purposes of the local effective tax rate for
Tax Due |
Citrus |
| $1,345.33 |
Lake |
| 50.25 |
Lee |
| 150.74 |
Manatee |
| 829.05 |
Orange |
| 150.74 |
Pinellas |
| 2,323.86 |
Polk |
| 1,727.19 |
Total |
| $6,577.14 |
The statutory 25 percent penalty on the past due local option taxes amounts to $1,644.29.
The statutory interest due on the past due local option taxes amounted to $4,415.33 through July 28, 1993, and has been accruing at a daily rate of $2.16 from that date (the date of the hearing).
In sum, as of July 28, 1993, Co-Op owed local
option tax under Section 336.025, penalty follows: | and interest as |
Tax | $6,577.14 |
Penalty 25 percent | 1,644.29 |
Interest thru 7/28/93 | 4,415.33 |
Total | $12,636.76 |
Interest continues to accrue at the $2.16 daily rate.
Of the seven counties in which Co_Op was doing business that had enacted the local option tax under Section 336.025, Fla. Stat., only Lake, Lee and Manatee Counties had enacted the Section 336.021, Fla. Stat., tax of $.01 per gallon. They had only approximately 14.26 percent of the 125,614 additional taxable gallon (net gain) for purposes of local option taxes, or 17,913 additional taxable gallons. Using the statutory 1 percent taxable rate, Co-Op owes the following additional taxes:
County Total Tax Percent Ratio Tax
Due
8.60
Lake 171.93 5
Lee 171.93 28
48.14
Manatee 171.93 67
115.19
The statutory 25 percent penalty on the additional Section 336.021 local option tax amounts to
$42.98.
At the statutory rate, interest owing on the additional Section 336.021 local option tax totalled
$127.97 through July 28, 1993, with interest accruing at the rate of $.06 per day thereafter.
In sum, as of July 28, 1993, Co-Op owed local option tax under Section 336.021, penalty and interest in the amount of $342.88, with interest accruing at $.06 per day from that day forward.
Estoppel
Since 1957, each month Co-Op reported and paid motor fuel and special fuel tax based on the number of "net" gallons purchased during the preceding month. Four years before the audit which is the subject of this case, Co-Op was audited and was not told that it was in error in reporting and paying motor fuel and special fuel tax based on the number of "net" gallons purchased. However, at all times when Co-Op reported and paid motor fuel and special
fuel tax based on the number of "net" gallons purchased, it also collected tax from the ultimate purchasers on the number of "gross" gallons pumped through the meter.
Offer to Compromise Penalty
The Department, in its Notice of Decision and Notice of Reconsideration offered to compromise the penalty on all taxes from the 25 percent level to a 5 percent level, but Co-Op protested both of these notices.
The offer of compromise was only good for the duration of the Closing Agreement which was attached to the Notice of Reconsideration.
In light of the prior audit, which did not alert Co-Op that it was reporting and paying taxes incorrectly, it could perhaps initially have been argued by Co-Op that its failure to report and pay these taxes when due was reasonable, and not fraudulent or willful neglect or negligence. But the prior audit cannot justify its decision to contest its liability for these taxes through formal administrative proceedings.
CONCLUSIONS OF LAW
The Department concedes that Chapters 206 and 212, Part II, Fla. Stat., as amended effective January 1, 1988, should be interpreted to assess those motor fuel taxes based on "net" gallons purchased by Co-Op during the last half of the audit period (from January 1, 1988, through December 31, 1989.) Otherwise, the Department takes that position that the taxes in issue in this case are assessed on the "gross" gallons sold at retail through Co-Op's metered pumps.
Chapter 206 Taxes
As of January 1, 1986, Sections 206.41(1) and (2)(a), Fla. Stat. (1985), read as follows:
206.41 Constitutional gas tax imposed.--
(1) An excise or license tax of 2 cents per gallon is imposed upon every gallon of motor fuel sold in this state, or brought into this state for use, upon which such tax has not
been paid or the payment thereof has not been lawfully assumed by some person handling the same in this state. This tax, which is the tax as levied by s. 16, Art. IX of the Constitution of 1885, as amended, and continued by s. 9(c), Art. XII of the 1968 Constitution, as amended, and which is therein referred to as the "second gas tax," is hereby designated the "constitutional gas tax." This levy of tax shall be paid upon the first sale or transfer of title, or use, within this state whether by a refiner, importer, or wholesaler, except as expressly provided in subsection (2), who shall act as agent for
the state in the collection of
such tax whether he is the ultimate seller or not.
(2)(a) Persons who hold a valid refiner, importer, or wholesaler license may purchase motor fuel without the tax imposed by this section being paid upon the first sale or transfer of title in this state as aforesaid for sale in wholesale quantities
to dealers in the state and be liable for and pay the tax on all motor fuel so purchased and sold, and they shall act as agents for the state in the collection and payment thereof. Provided, however, sales by a refiner to another refiner within the
state shall not be considered as a first sale. (Emphasis added.)
Effective July 1, 1986, subsection (3) of Section 206.59, Fla. Stat., was created and stated in pertinent part:
Any person who collects on any one sale of motor fuel more tax than was paid when purchased by that person is liable for the difference in tax plus all applicable interest and penalties.
In addition to the "constitutional gas tax" set out above, Sections 206.60(1) and 206.605(1), Fla. Stat.(1985), provided in pertinent part, effective January 1, 1986:
206.60 County tax on motor fuel.--
(1) Every refiner, importer, or wholesaler of motor fuel, in addition to all other taxes required by law, shall pay an additional tax
of 1 cent per gallon for every gallon of motor fuel sold or used by him on which the tax herein provided has not been paid or the payment thereof has not been assumed by a person preceding him in the handling of said lot of products. Delivery shall be deemed to be made at the point of destination. This additional license tax of 1 cent per gallon
on motor fuel shall be paid to the department monthly as provided in s. 206.43. . . .
(Emphasis added.)
* * *
206.605 Municipal tax on motor fuel.--
(1) Every refiner, importer, or wholesaler of motor fuel, in addition to all other taxes required by law, shall pay an additional tax of
1 cent per gallon for every gallon of motor fuel sold or used by him or brought into this state by him for sale or use on which the tax herein provided has not been paid or the payment thereof has not been assumed by a person preceding him in the handling of said lot of products. Delivery shall be deemed to be made at the point of destination. This additional license tax of 1 cent per gallon on motor fuel shall be paid to the department monthly, as provided in s. 206.43.
(Emphasis added.)
Section 206.43, Fla. Stat. (1985), provides in pertinent part:
206.43 Refiner, importer, and wholesaler to report to department monthly; deduction.-- The taxes levied and assessed as provided in this part shall be paid to the department monthly in the following manner:
(1) Taxes are due on the first day of the succeeding month and shall be paid on or before the 20th day of each month. The refiner, importer, or wholesaler shall mail to the department verified reports on forms
prescribed by the department of the number of gallons of such products sold by him during the preceding month and shall at the same time pay to the department the amount of
tax computed to be due. . . . (Emphasis added.)
Section 206.87, Fla. Stat. (1985), states in pertinent part:
206.87 Levy of tax.--
(1) An excise tax of 4 cents per gallon
is hereby imposed upon every gallon of special fuel used or sold in this state for use, except alternative fuels which are subject
to the fee imposed by s. 206.877. Unless expressly provided to the contrary in this part, every sale shall be deemed to be for use in this state. This levy of tax shall be paid upon the first sale or transfer of title within this state by a dealer, except as expressly provided in this part, who shall act as agent for the state in the collection of such tax whether he is the ultimate seller or not.
(2)(a) A dealer may purchase special
fuel without the tax imposed by this section being paid upon the first sale or transfer of title in the state, and he shall pay the tax on all special fuel used or sold by him and shall act as agent for the state in the collection and payment thereof.
(Emphasis added.)
Chapter 212, Part II, Taxes
As amended by ch. 85_342, effective January 1, 1986, Section 212.62, Fla. Stat. (1985), stated in pertinent part:
A tax shall be imposed on the privilege of the sale at retail in this state of motor fuel and special fuel.
(2)(a) This levy of tax is upon the ultimate retail consumer.
* * *
(c)2. The tax per gallon shall be computed as 5 percent of the total retail price,
rounded to the nearest tenth of a cent. However, it shall not be lower than 5.7 cents per gallon.
Agency Interpretation of Applicable Statutes
As found, except for Chapters 206 and 212, Part II, motor fuel taxes after January 1, 1988, the Department has interpreted the applicable statutes to: (1) hold Co-Op, as a licensee who collects more tax on motor fuel and special sold than was paid on the same gallons purchased, to be liable for the difference; and (2) hold Co-Op, as a licensee who purchased gasoline tax free, recorded such purchases at "net," and adjusted sales on its tax returns to "net," and sold such fuel at "gross," to be liable for the difference in tax.
Administrative agencies are afforded wide discretion in interpreting the statutes which they administer. Braman Cadillac, Inc. v. Department of Highway Safety and Motor Vehicles, 584 So. 2d 1047, 1050 (Fla. 1st DCA 1991). The contemporaneous construction of a statute by an agency, charged with its enforcement and interpretation, is entitled to great weight. PW Ventures, Inc. v. Nichols, 533 So. 2d 281 (Fla. 1988). The courts will defer to the agency's interpretation of the statute if the agency's interpretation is within the range of permissible interpretations of the statute. Escambia County v. Trans Pac, 584 So. 2d 603 (Fla. 1st DCA 1991). A reviewing court will not overturn an agency's interpretation of a statute unless such interpretation is clearly erroneous. Pan American World Airways, Inc. v. Florida Public Service Commission, 427 So. 2d 716, 719 (Fla. 1983); Cataract Surgery Center v. Health Care Cost Containment Board, 581 So. 2d 1359 (Fla. 1st DCA 1991).
Co-Op freely admits that both during this period and for the whole time prior to this period, it was reporting on purchased net gallons. Co-Op has not challenged the rate of taxation or even that tax should have been paid on sales and not purchases. It merely maintains that there have really been no gains and that purchases either equal or exceed sales. However, the evidence clearly indicates that there were in fact gains, and Co-Op should not be allowed to sell those gallons through the meter and collect the tax which is built into
the price on the meter without remitting the tax that it collects.
Estoppel
Co-Op has raised an estoppel argument, saying that a previous audit had not found anything wrong with method of reporting and paying these taxes and that it would now be unfair to go back four years and assess additional taxes.
Taxpayers can avoid taxation by resorting to estoppel only in rare instances and under exceptional circumstances. Anderson, supra. See also, North American Co. v. Green, 120 So. 2d 603 (Fla. 1960); Dolphin Outdoor Advertising v. Department of Transportation, 582 So. 2d 709 (Fla. 1st DCA 1991). This is not one of those cases.
In State, Department of Revenue v. Anderson, 403 So. 2d 397 (Fla. 1981), the Florida Supreme Court stated that in order to estop the state, the following elements must be shown:
[A] representation as to a material fact that is contrary to a later-asserted position;
Reliance on that representation; and,
A change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon.
Anderson, at 400. None of those elements are present in this case.
The previous audit merely found no additional tax to be due and did not direct Co-Op to change its method of reporting. Co-Op has been reporting the same way since 1957 and did not point to any representation of a material fact that is contrary to a later-asserted position.
In addition, even assuming that such a representation were made, it is a general rule that administrative officers are not estopped through a mistaken statement of the law. Greenhut Construction Company v. Henry A. Knott, Inc., 247 So. 2d 517 (Fla. 1971); Special Disability Trust Fund v. Master Distributors, 418 So. 2d 1124 (Fla. 1st DCA 1982); Department of Revenue v. Hobbs,
368 So. 2d 367 (Fla. 1st DCA 1979), appeal dismissed, 378 So. 2d 345 (Fla. 1979); and Austin v. Austin, 350 So. 2d
102 (Fla. 1st DCA 1977).
Co-Op also did not prove that it relied on any representation.
As for the third requirement, Co-Op cannot show any detrimental reliance. It has collected tax monies for sales through the meter, and has remitted only a portion of that tax.
64. Sections 212.12(2)(a) and (3), Fla. Stat. (1985), provided in pertinent part:
(2)(a) When any person, firm, or corporation required hereunder to make any return or to pay any tax or fee imposed by this chapter fails to timely file such return or fails to pay the tax or fee due within the time required hereunder, in addition to all other penalties provided herein and by the laws of this state in respect to such taxes or fees, a specific penalty shall be added to the tax or fee in the amount of 5 percent of any unpaid tax or fee if the failure is for not more than 30 days, with an additional 5 percent of any unpaid tax or fee for each additional 30 days, or fraction thereof, during the time which the failure continues, not to exceed a total penalty of 25 percent, in the aggregate, of any unpaid tax or fee.
(3) When any dealer, or other person charged herein, fails to remit the tax, or any portion thereof, on or before the day when such tax is required by law to be paid, there shall be added to the amount due interest at the rate of 1 percent per month of the amount due from the date due until paid. Interest on the delinquent tax shall be calculated beginning on the 21st day of the month following the month for which the tax is due, except as otherwise provided in this part.
$2,892.72, with interest accruing at $.48 per day from July 29, 1993.
(3) Ch. 206, Motor Fuel.--$4,361.30, with interest accruing at $.75 per day from July 29, 1993.
(4) Ch. 206, Special Fuel.--$2,323.39, with interest accruing at $.39 per day from July 29, 1993.
$342.88, with interest accruing at $.06 per day from July 29, 1993.
$4.91 per day from July 29, 1993.
RECOMMENDED this 22nd day of September, 1993, in Tallahassee, Florida.
J. LAWRENCE JOHNSTON Hearing Officer
Filed with the Clerk of the Division of Administrative Hearings this 22nd day of September, 1993.
James E. Smith, President Co-Op Oil Company, Inc.
Ralph R. Jaeger, Esquire Assistant Attorney General Department of Legal Affairs Tax Section, Capitol Building
All parties have the right to submit to the Department of Revenue written exceptions to this Recommended Order. All agencies allow each party at least ten days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the Department of Revenue concerning its rules on the deadline for filing exceptions to this Recommended
Order.
