STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RAYMOND GUNTER d/b/a JUMBO INTERSTATE TRUCKING,

Petitioner,

vs.

DEPARTMENT OF REVENUE,

Respondent.

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) Case No. 02-0975

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RECOMMENDED ORDER

A formal hearing was conducted in this case on May 13, 2002, in Tallahassee, Florida, before Suzanne F. Hood, Administrative Law Judge with the Division of Administrative Hearings.

APPEARANCES

For Petitioner: No Appearance

For Respondent: R. Lynn Lovejoy, Esquire

Office of the Attorney General The CapitOl, Tax Section Tallahassee, Florida 32399-1050

STATEMENT OF THE ISSUE

The issue is whether Petitioner is a common carrier for the purpose of prorating taxes under Section 212.08(9)(b), Florida Statutes, and Rule 12A-1.064(4)(a), Florida Administrative Code.

PRELIMINARY STATEMENT

On December 21, 2000, Petitioner Raymond Gunter d/b/a Jumbo Interstate Trucking (Petitioner) purchased a vehicle for use in his business. On December 29, 2000, Petitioner registered and paid a use tax due on the vehicle. On September 16, 2001, Petitioner filed an "Application for Refund Sales and Use Tax" with Respondent Department of Revenue (Respondent), seeking a refund of the tax paid on the vehicle in the amount of $6,580.

On November 20, 2001, Respondent issued a "Notice of Intent to Make Refund Claim Changes," denying Petitioner's claim. On December 3, 2001, Petitioner filed a protest of Respondent's denial. On February 5, 2002, Respondent issued a "Notice of Decision of Refund Denial." On February 25, 2002, Petitioner filed a request for an administrative hearing to contest Respondent's denial.

Respondent referred the case to the Division of Administrative Hearings on March 7, 2002. Subsequently, the undersigned issued a Notice of Hearing dated March 22, 2002, scheduling the hearing for May 13, 2002.

On March 22, 2002, Respondent filed a Motion for Clarification of Issues or, in the Alternative, Motion to Dismiss Petitioner's Petition for Hearing. In a telephone conference on March 27, 2002, the undersigned granted Petitioner's request to appear and give testimony at the hearing

by telephone due to his occupation as a long-haul truck driver. The undersigned also denied Respondent's Motion to Dismiss with leave for the parties to raise certain issues at hearing and in their proposed recommended orders. A Transcript of the telephone conference was filed on May 7, 2002.

On May 6, 2002, Respondent filed a Motion for Recommended Summary Final Order and Motion to Deem Admissions Admitted.

On May 10, 2002, Respondent filed a Motion in Limine. Petitioner did not make an appearance at the hearing.

After attempting unsuccessfully to contact Petitioner, the hearing was conducted as scheduled.

During the hearing, the undersigned ruled that Respondent's Motion in Limine was moot due to Petitioner's failure to appear by telephone or otherwise and because no exhibits were filed on Petitioner's behalf. Respondent then presented the testimony of one witness and offered one composite exhibit that was accepted into evidence.

Subsequent to the hearing, Respondent filed a Notice of Filing Petitioner's Responses to Request for Admissions.

According to the notice, Petitioner's responses were faxed to Respondent's office on Sunday, May 12, 2002, at 4:47 p.m.

Respondent's counsel did not receive the responses prior to the hearing on May 13, 2002.

The court reporter filed a Transcript of the proceeding on May 21, 2002. Petitioner had not filed a proposed recommended order as of the date of the issuance of this Recommended Order. Respondent filed a Proposed Recommended Order on May 31, 2002.

FINDINGS OF FACT

1. Petitioner owns Jumbo Interstate Trucking.

   
   

   Petitioner's principal place of business is located in Palm Coast, Florida.

2. The Federal Highway Administration issued Permit

   
   

   No. MC326745 to Petitioner to operate as a contract carrier with a service date of October 17, 1997. Petitioner's federal permit authorizes him to engage in the transportation of property (except household goods) by motor vehicle in interstate or foreign commerce.

3. Common carriers transport cargo according to a rate schedule that applies to anyone in the general public. Contract carriers haul cargo according to market rates and pursuant to an arm's length contract that sets the mileage and freight rates with individual customers.

4. At all times material to this case, Petitioner hauled goods in interstate commerce outside the State of Florida as a common carrier. He does not haul goods as a common carrier pursuant to a predetermined rate schedule or published tariffs.

   According to Petitioner, he negotiates his contracts as he goes along.

5. Petitioner has never operated or filed an application to operate his business other than as a contract carrier. Additionally, his motor vehicles are not insured as common carriers.

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding. Sections 72.011(1), 120.569, and 120.57(1), Florida Statutes.

7. The tax assessment at issue here is considered prima facie correct, with Petitioner having the burden of showing the contrary. Section 120.80(14)(b), Florida Statutes; Department

   of Revenue v. Nu-life Health and Fitness Center, 623 So. 2d 747, 751 (Fla. 1st DCA 1992).

8. When Respondent satisfies its burden of proof by establishing the factual and legal basis for the audit findings, the burden of proof then shifts to Petitioner to prove by a preponderance of the evidence that it qualified for exemption from sales and use taxes. Section 120.80, Florida Statutes; Department of Revenue v. G.R. Swan Enterprises, Inc., 506 So. 2d 455, 457 (Fla. 1st DCA 1987).

9. Florida's sales tax is imposed by Chapter 212, Florida Statutes. Section 212.21(2), Florida Statutes, states as follows in relevant part:

   (2) It is hereby declared to be the specific legislative intent to tax each and every sale, admission, use, storage, consumption, or rental levied and set forth in this chapter, except as to such sale, admission, use, storage, consumption, or rental as shall be specifically exempted therefrom by this chapter subject to the conditions appertaining to such

   exemption. . . .

   
   

10. Exemptions from tax are strictly construed against the taxpayer. State ex rel. Szabo Food Services, Inc. of North

    Carolina v. Dickinson, 286 So. 2d 529, 530-531 (Fla. 1973).

    
    

11. Section 212.02, Florida Statutes, states in pertinent part as follows:

    212.02 Definitions.--The following terms and phrases when used in this chapter have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning: . . . .

    
    

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    (14)(a) "Retail sale" or a "sale at retail" means a sale to a consumer or to any person for any purpose other than for resale in the form of tangible personal property or services taxable under this chapter, and includes all such transactions that may be made in lieu of retail sales or sales at retail.

    * * *

    
    

    (15) "Sale" means and includes:

    (a) Any transfer of title or possession, or both, exchange, barter, license, lease, or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property for a consideration.

    
    

12. Section 212.06, Florida Statutes, states as follows in pertinent part:

    (1)(a) The aforesaid tax at the rate of 6 percent of the retail sales price as of the moment of sale, 6 percent of the cost price as of the moment of purchase, or 6 percent of the cost price as of the moment of commingling with the general mass of property in this state, as the case may be, shall be collectible from all dealers as herein defined on the sale at retail, the use, the consumption, the distribution, and the storage for use or consumption in this state of tangible personal property or services taxable under this chapter. The full amount of the tax on a credit sale, installment sale, or sale made on any kind of deferred payment plan shall be due at the moment of the transaction in the same manner as on a cash sale.

    
    

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    (2)(a) The term "dealer," as used in this chapter, includes every person who manufactures or produces tangible personal property for sale at retail; for use, consumption, or distribution; or for storage to be used or consumed in this state.

    
    

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    (c) The term "dealer" is further defined to mean every person, as used in this chapter, who sells at retail or who offers

    for sale at retail, or who has in his or her possession for sale at retail; or for use, consumption, or distribution; or for storage to be used or consumed in this state, tangible personal property as defined herein . . . .

    
    

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    (6) It is however, the intention of this chapter to levy a tax on the sale at retail, the use, the consumption, the distribution, and the storage to be used or consumed in this state of tangible personal property after it has come to rest in this state and has become a part of the mass property of this state.

    
    

13. Section 212.08(9)(b), Florida Statutes, states as follows in relevant part:

    (b) Motor vehicles which are engaged in interstate commerce as common carriers, and parts thereof, used to transport persons or property in interstate or foreign commerce are subject to tax imposed in this chapter only to the extent provided herein. The basis of the tax shall be the ratio of intrastate mileage to interstate or foreign mileage traveled by the carrier's motor vehicles which were used interstate or in interstate or foreign commerce and which had at least some Florida mileage during the previous fiscal year of the carrier. . . .

    
    

14. Rule 12A-1.064(4)(a), Florida Administrative Code, states as follows in pertinent part:

    1. Motor vehicles which are licensed as common carriers by the Interstate Commerce Commission and parts thereof used to transport persons or property in interstate or foreign commerce are subject to the tax imposed by Part I, Chapter 212, F.S. only to the extent provided herein. . . .

15. The requirement that truckers be licensed as common carriers for the exemption at issue here has been long-standing in Florida law. Tropical Shipping & Construction Company,

    Ltd. v. Askew, 364 So. 2d 433 (Fla. 1978); Florida Growers Coop. Transport v. Department of Revenue, 273 So. 2d 142 (Fla. 1st DCA 1973). See also TA Operating Corporation v. State, Department

    of Revenue, 767 So. 2d 1270 (Fla. 1st DCA 2000), rev denied TA Operating Corporation v. State, Department of Revenue, 790

    So. 2d 1108 (Fla. 2001), cert denied TA Operating Corporation v. State, Department of Revenue, U.S. , 122 S. Ct. 212 (2001)(taxpayer obligated to register with Respondent as a dealer of special fuels in order to be eligible for an excise tax exemption where excise taxes were paid under Section 206.87(1), Florida Statutes).

16. The phrase "passengers or property in interstate and foreign commerce" must be interpreted in "its narrower sense and relates only to what is more generally referred to as common carriers." L.B. Smith Aircraft Corporation v. Green, 94 So. 2d 832, 836 (Fla. 1957).

17. In this case, Respondent has correctly interpreted and applied Section 212.08(9)(b), Florida Statutes, and Rule

12A-1.064, Florida Administrative Code. Respondent has demonstrated the factual and legal basis of its proposed assessment against Petitioner. On the other hand, Petitioner

has provided no evidence that he is a common carrier entitled to an exemption or that the proposed assessment is incorrect in any respect, including the calculation of the amount of the tax, penalties, and interest owed. Accordingly, the proposed assessment should be sustained in full.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED:

That Respondent issue a final order denying Petitioner's request for a refund.

DONE AND ENTERED this 10th day of June, 2002, in Tallahassee, Leon County, Florida.

SUZANNE F. HOOD

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 10th day of June, 2002.

COPIES FURNISHED:

Raymond Gunter

Jumbo Interstate Trucking

45 Moody Drive

Palm Coast, Florida 32137

R. Lynn Lovejoy, Esquire Office of the Attorney General The Capitol, Tax Section

Tallahassee, Florida 32399-1050

Bruce Hoffmann, General Counsel Department of Revenue

204 Carlton Building Tallahassee, Florida 32399-0100

James Zingale, Executive Director Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 02-000975

Orders for Case No: 02-000975