STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AUTOMATED PETROLEUM AND ENERGY ) CO., INC., )

)

Petitioner, )

)

vs. )

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

Case No. 05-3780

)

RECOMMENDED ORDER

Pursuant to notice a final hearing was held in this case before Carolyn S. Holifield, a duly-designated Administrative Law Judge of the Division of Administrative Hearings, on January 27, 2006, in Tampa, Florida.

APPEARANCES

For Petitioner: Willard Burnett, pro se

Automated Petroleum & Energy Co., Inc.

1201 Oakfield Drive, Suite 109

Brandon, Florida 33509

For Respondent: James O. Jett, Esquire

Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050

STATEMENT OF THE ISSUE

The issue is whether Petitioner is entitled to a refund of motor fuel taxes paid for motor fuel exported from Florida when

Petitioner was not licensed as an exporter at the time of the transactions.

PRELIMINARY STATEMENT

Petitioner, Automated Petroleum and Energy Company, Inc. (Automated Petroleum or Petitioner), paid the State of Florida

$8,775.16 for motor fuel taxes on four (4) deliveries of diesel fuel. Subsequently, Petitioner requested that Respondent, Department of Revenue (Department), refund the motor fuel taxes. In the request for the refund, Petitioner indicated that the fuel was picked up on the wrong account by the carrier. Instead of being picked up on the appropriate Georgia distributor's account, the fuel was loaded on Petitioner's account.

After the Department reviewed the refund request, it determined that Petitioner did not qualify for a refund of the motor fuel taxes paid. On April 1, 2005, the Department issued a Notice of Proposed Refund Denial (Proposed Refund Denial). By letter dated April 20, 2005, Petitioner protested the Proposed Refund Denial. On August 16, 2005, the Department issued a Decision of Denial, indicating that Petitioner was not eligible for the requested refund of $8,775.16. Petitioner timely challenged the Department's denial of the refund request.

On or about October 12, 2005, the Department forwarded the

matter to the Division of Administrative Hearings (Division) for

assignment of an Administrative Law Judge to conduct a hearing. By Notice issued October 28, 2005, the case was set for hearing as noted above.

Prior to the final hearing, the parties filed a Joint Stipulation of Facts, setting forth facts to which the parties agreed and which required no proof at hearing.

At hearing, Petitioner presented the testimony of Willard Burnett, wholesale manager of Automated Petroleum, and Bill McKnight, president of Automated Petroleum. The Department presented the testimony of Ron Gay, a senior tax specialist with the Department. The parties offered and had one exhibit, Joint Exhibit 1, admitted into evidence.

After the hearing, on February 1, 2006, the Department filed the deposition transcript of Daniel Way, a driver for Kenan Advantage Group/Kenan Transport.

The hearing Transcript was filed with the Division on February 15, 2006. At the conclusion of the hearing, the parties agreed to file proposed recommended orders ten days after the hearing Transcript was filed. Subsequently, the Department filed an unopposed motion, which requested that the time for filing proposed recommended orders be extended to March 14, 2006. Pursuant to an Order issued March 1, 2006, the

unopposed motion was granted. Both parties timely filed post-

hearing submittals, which have been considered in preparation of this Recommended Order.

FINDINGS OF FACT

1. Petitioner is a Florida corporation engaged in the business of purchasing and reselling motor fuel.

2. Petitioner, whose principle place of business is 1201 Oakfield Drive, Brandon, Florida 33509, does business within and without the State of Florida.

3. Petitioner currently has a Florida Fuel Tax License, which is number 59-2150510.

4. On April 5, 2004, and May 7, 12, and 13, 2004, upon Petitioner's orders, Kenan Transport loaded diesel fuel at the Marathon facility in Jacksonville, Florida, and delivered the fuel to Petitioner's Kingsland, Georgia, location.

5. Daniel Way, the driver employed by Kenan Transport, delivered the April 5, 2004; May 7, 2004; May 12, 2004; and May 13, 2004, fuel loads to Petitioner's Kingsland, Georgia, location.

6. For the April 5, 2004; May 7, 2004; May 12, 2004; and May 13, 2004, fuel deliveries to Petitioner's Kingsland, Georgia, facility, Petitioner paid a total of $8,775.16 in Florida fuel taxes.

1. The amount of Florida fuel taxes paid for each delivery was as follows: $2,192.99, for the April 5, 2004, delivery;

   $2,187.77, for the May 7, 2004, delivery; $2,187.20, for the May 12, 2004, delivery; and $2,187.20, for the May 13, 2004, delivery.

2. At the time the four fuel deliveries noted in paragraphs 4 and 5 above were made to Petitioner's Kingsland, Georgia, facility, Petitioner did not have an exporter fuel license.

3. Petitioner obtained an exporter fuel license that became effective December 1, 2004.

4. The parties stipulated to the findings in paragraphs 1 through 9.

5. Petitioner asserts that the Department should refund the fuel taxes it paid because, in the four transactions, Petitioner's account was mistakenly billed for the fuel.

6. Gowan Oil Company (Gowan) is a distributor based in Folkston, Georgia, and has contracts with many fuel terminals in Jacksonville.

7. Pursuant to an arrangement between Petitioner and Gowan, Petitioner did not usually buy fuel from any of the terminals in Jacksonville. Instead, Petitioner bought fuel for

   
   

   its truck stop in Georgia from Gowan, since Gowan could buy fuel at the Jacksonville terminals for less than Petitioner could.

8. Depending on the price of fuel on a particular day, Petitioner would call Kenan Transport and tell the company to pick up fuel from a particular terminal in Jacksonville. The instructions relative to the above transactions were for the driver to pick up BP fuel and to put it on Gowan's account.

9. Notwithstanding the specific instructions given to the driver, he made two mistakes with respect to the four fuel purchases. He not only mistakenly picked up the wrong fuel, Marathon fuel, but he also put the fuel he picked up on Petitioner's account, not on Gowan's account.

10. The mistake made by the Kenan Transport driver is a common mistake made by transport drivers, who are "hauling out of multiple terminals every day."

11. Drivers have loading cards for all of the accounts on which they pick up fuel. When picking up fuel, the driver should use the loading card which corresponds to the account for that particular load. In the four transactions that are at issue in this proceeding, the driver "loaded" the card for Petitioner's account, not the card for Gowan's account.

12. Petitioner did not have an export license at the time

    
    

    of the transactions. Therefore, Marathon properly billed

    
    

    Petitioner for the Florida fuel taxes on the fuel that was picked up in Jacksonville, Florida, charged on Petitioner's account, and delivered to Petitioner's truck stop in Kingsland, Georgia.

13. Petitioner tried unsuccessfully to have Marathon bill the subject fuel purchases to Gowan.

14. If Gowan had been billed, it would not have been required to pay Florida fuel taxes on the four fuel purchases because it had an export license.

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the subject matter of and parties to this proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2005).

16. As the party asserting the affirmative of this issue, the burden of proof is on Petitioner to demonstrate by a preponderance of the evidence that he is entitled to a refund. See Florida Department of Transportation v. J.W.C. Company, Inc., 396 So. 2d 778, 788, (Fla. 1st DCA 1981); Balino v.

    Department of Health and Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 1977).

17. Subsection 206.87(2)(a), Florida Statutes (2003),1 imposes taxes on diesel fuel when it is removed, in this state,

    "from a terminal if diesel fuel is removed at the rack."

    
    

18. Section 206.052, Florida Statutes, provides that, in certain circumstances, licensed exporters may purchase motor fuels for export without paying the fuel taxes.

19. Subsection 206.052(1), Florida Statutes, provides in relevant part the following:

    1. Export of tax-free fuels

       
       

       1. A licensed exporter may purchase from a terminal supplier at a terminal taxable motor fuels for export from this state without paying the tax imposed pursuant to this part only under the following circumstances:

          1. The exporter has designated to the terminal supplier the destination for delivery of the fuel to a location outside the state;

          2. The exporter is licensed in the state of destination and has supplied the terminal supplier with that license number;

          3. The exporter has not been barred from making tax-free exports by the department for violation of s. 206.051(5); and

          4. The terminal supplier collects and remits to the state of destination all taxes imposed on said fuel by the destination state.

    
    

20. Section 206.01, Florida Statutes, which defines terms relevant to Chapter 206, Florida Statutes, provides in relevant part:

    206.01 Definitions.--As used in this chapter:

    
    

    * * *

    
    

    (7) "Fuel tax" means and includes any tax imposed by the laws of the state upon or measured by the sale, use, distribution, or consumption of motor fuel.

    
    

    * * *

    
    

    (18) "Terminal" is a storage and distribution facility for taxable motor or diesel fuel, supplied by pipeline or marine vessel, that has the capacity to receive and store a bulk transfer of taxable motor or diesel fuel, including a loading rack through which petroleum products are physically removed into tanker trucks or rail cars, and that is registered with the Internal Revenue Service as a terminal.

    
    

    * * *

    
    

    1. "Export" means any removal of taxable motor or diesel fuels from this state other than by bulk transfer.

       
       

    2. "Exporter" means any person that has met the requirements of s. 206.052 and that is licensed by the department as an exporter of taxable motor or diesel fuels either from substorage at a bulk facility or directly from a terminal rack to a destination outside the state.

    
    

21. Subsection 206.02(1), Florida Statutes, provides that a person may not engage in business as an exporter unless such person has a license issued by the Department.

22. Subsection 206.02(1)(g), Florida Statutes, provides:

    
    

    1. It is unlawful for any person to engage in business as a terminal supplier, importer, exporter, blender, biodiesel manufacturer, or wholesaler of motor fuel within this state unless such person is the

       
       

       holder of an unrevoked license issued by the department to engage in such business. A person is engaging in such business if he or she:

       
       

       * * *

       
       

       (g) Exports taxable motor or diesel fuels either from substorage at a bulk facility or directly from a terminal rack to a destination outside the state.

       
       

23. To become licensed as an exporter, a person must comply with the requirements of Sections 206.02 and 206.03, Florida Statutes. Upon compliance, the Department is required to issue a license which authorizes the person to conduct business in the state as an the exporter, unless the person is disqualified by Subsections 206.026(1) and (2), Florida Statutes.

24. Pursuant to conditions prescribed in Subsection 206.051(4), Florida Statutes, a credit or refund is available when fuel taxes have been paid of fuel exported from this state. That subsection states in pertinent part the following:

    A licensed exporter shall be authorized to take a credit on its monthly fuel tax return or apply for a refund of all state fuel tax and local option fuel tax paid on fuel exported from the state in compliance with this section. To establish the right to refund, an exporter shall provide a copy of the return filed in the destination state showing the import of all fuels claimed for refund. The department shall, absent any

    
    

    violation, authorize a refund based on the information submitted.

    
    

25. The relevant and material facts in this case are not disputed and were, in fact, stipulated to by Petitioner.

26. In April and May 2004, Petitioner purchased fuel from a terminal in Jacksonville, Florida, and exported the fuel to Georgia. At the time of these transactions, Petitioner was not a licensed exporter. Accordingly, Petitioner was required to pay the fuel taxes due pursuant to Section 206.87, Florida Statutes.

27. The undisputed evidence is that Petitioner obtained an exporter license after the April and May 2004 fuel deliveries to Georgia. Petitioner, therefore, was not within the purview of Subsection 206.052(1), Florida Statutes, quoted above, that enumerates the circumstances in which a "licensed exporter" is not required to pay taxes.

28. In this case, Petitioner seeks a refund of the fuel taxes which it paid on the diesel fuel that was delivered to Georgia in April and May 2004.

29. Pursuant to Subsection 206.051(4), Florida Statutes, quoted above, there are instances where refunds and credits of fuel taxes are authorized. However, the language in that provision expressly states that only "[a] licensed exporter"

    shall be authorized to apply for a refund of all fuel taxes. Given the clear language of the statute, any unlicensed person engaged in exporting does not meet the requisite qualification for applying for a refund.

30. Here, Petitioner's license as an exporter did not become effective until December 1, 2004, about seven months after the April and May 2004 fuel deliveries to Georgia. Having failed to qualify as an exporter prior to exporting the fuel from Florida to Georgia, Petitioner is not eligible to apply for or receive a refund of all fuel taxes paid on fuel exported from the state.

31. Petitioner failed to meet its burden to show that it is entitled to the refund under Florida law, and, therefore, the denial of the refund should be sustained.

RECOMMENDATION

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

RECOMMENDED that the Department of Revenue enter a final order denying Petitioner's application for a refund of fuel taxes.

DONE AND ENTERED this 28th day of April, 2006, in Tallahassee, Leon County, Florida.

S

CAROLYN S. HOLIFIELD

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 28th day of April, 2006.

ENDNOTE

1/ All references to Florida Statutes are to Florida Statutes (2003) unless otherwise indicated.

COPIES FURNISHED:

Willard Burnett Automated Petroleum &

Energy Co., Inc.

1201 Oakfield Drive, Suite 109

Brandon, Florida 33509

James O. Jett, Esquire

Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050

Bruce Hoffmann, General Counsel Department of Revenue

The Carlton Building, Room 204 Tallahassee, Florida 32399-0100

James Zingale, Executive Director Department of Revenue

The Carlton Building, Room 104 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: 05-003780

Orders for Case No: 05-003780