Findings Of Fact The Petitioner is licensed as a dealer of special fuel pursuant to Florida Statutes 206 and has been assigned license Number 1627. The pertinent sections of Florida Statutes which are applicable to this case are ss206.86(1), (6), (8), 206.87, 206.89, 206.93, 206.94 and Ch. 212. The pertinent rules of the Department of Revenue applicable to special fuels sales involved herein is 12A-2.03. The deposition of Albert Colozoff and all answers to interrogatories and responses to requests for admissions are admissible as evidence and are to be made a part of the record in this cause. The Petitioner sold special fuels to Zamora Truck and Car Services, Roberts Equipment Company and Florida Petroleum, Inc. Petitioner was assessed by the Respondent for tax on 1,979,201 gallons of special fuel sold by it and paid tax and interest as set forth in the letter attached hereto as Exhibit A. That no penalty paid on any of the tax paid pursuant to that letter. That Petitioner did not remit taxes that were due during the month the sales of special fuel were reported on any of the sale to Zamora, Roberts or Florida Petroleum or the remaining 1,417,263 gallons sold. Zamora and Roberts represented to Belcher that they were purchasing all special fuel from Belcher for exempt agricultural use. Due to past dealings and delivery of the special fuel to a farm, Belcher believed and relied upon the facts represented to it by Zamora and Roberts. However, Belcher did not obtain written documentation of this agricultural use from Zamora or Roberts and did not furnish the Department with any such written documentation. Belcher did not obtain resale certificates or exemption certificates or dealer license numbers from Zamora, Roberts or Florida Petroleum. Nor did the report forms filed by Belcher contain resale certificates, exemption certificates or dealer license numbers from Zamora, Roberts or Florida Petroleum. An employee of the Department advised Belcher that Zamora and Roberts were under investigation for fraudulent failure to report taxes. Belcher paid sales tax on sales of special fuel in the amount of $18,589.53 on the sale of 538,030 gallons of special fuel. Zamora is not a licensed dealer of special fuels. Florida Petroleum is not a licensed dealer of special fuel. Roberts is not a licensed dealer of special fuel. Belcher did not fraudulently file incorrect monthly special fuels reports. The Department of Revenue audited Belcher and computed tax, penalty and interest due as set forth in the documents attached hereto as Exhibit B. The Department of Revenue advised Belcher of its duties regarding reporting requirements in the letters from L. N. Thomas attached as Exhibit C.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is, RECOMMENDED: That Respondent's assessment be upheld with respect to Petitioner's tax deficiency, penalty and interest as set forth in the assessments with adjustments to be made for payments paid by Petitioner under the "sales tax" theory. DONE and ORDERED this 30th day of April, 1979, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings Room 101, Collins Building Mail: 530 Carlton Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: James R. McCachren, Jr., Esquire Ervin, Varn, Jacobs, Odom & Kitchen Post Office Box 1170 Tallahassee, Florida 32302 William D. Townsend, Esquire Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32301
The Issue The issue in this case is whether Petitioner is liable to Respondent for fuel taxes, and, if so, whether Respondent's levy on Petitioner's bank deposits is warranted and proper.
Findings Of Fact Petitioner was at all times relevant to this proceeding an active corporation in the State of Florida. Petitioner operated as a motor fuel dealer from its inception in 1984, but in 1996, its application for licensure as a motor fuel dealer was not renewed by Respondent due to the existence of fuel tax delinquencies. Respondent is the state agency responsible for collecting taxes paid by motor fuel dealers. On July 3, 1996, Respondent issued a Notice of Final Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of $74,423.25; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office. On July 3, 1996, Respondent issued another Notice of Final Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of $12,625.64; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office. On July 3, 1996, Respondent issued another Notice of Final Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of $15,245.84; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office. On June 28, 1996, Respondent issued a Notice of Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of $90,317.87; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office. On June 28, 1996, Respondent issued another Notice of Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of $57,864.24; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office. On November 27, 1996, Respondent issued a Notice of Final Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of $81,094.54; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office. Another Warrant was filed in the Pasco County Clerk's Office on May 24, 1996, reflecting delinquent taxes, penalties, and interest owed Respondent due to failure of an electronic transfer by Petitioner because of insufficient funds. The amount of that Warrant was $9,918.92. (A filing fee of $32.00 was assessed for each of the filed Warrants.) The time for challenging the assessments set forth in the notices and Warrants has passed. No credible evidence was presented at final hearing to suggest the assessed amounts were incorrect. Petitioner made some payments on the assessed amounts from time to time. Payments were applied to the outstanding balance in accordance with governing statutes: Filing fees, then accrued interest, then penalties, and then the tax liabilities. After applying the payments and taking into account accruing interest, Petitioner owes Respondent $377,074.29 as of the date of the final hearing. On September 13, 1996, Petitioner wrote a letter to Respondent asking that all penalties and interest on the outstanding balance be waived. The basis of the request was that only one officer of the corporation had actual knowledge of the unpaid fuel taxes. Once the other two officers were made aware, they immediately paid the current taxes and discontinued operation of the business. All assets of the business were sold, and the proceeds provided to Respondent to apply against the outstanding balance. Some revenue was being held by the corporation to provide for orderly termination of the business and upkeep of the real property owned by the corporation. Respondent denied Petitioner's request for compromise of the outstanding debt by letter dated December 19, 1996. Respondent requested from Petitioner evidence that Petitioner had exercised "ordinary care and prudence" in complying with state revenue laws. No evidence of a response by Petitioner was identified at final hearing. On August 27, 2009, Respondent, in recognition that the Warrants would expire after a period of time, notified Petitioner of the need to satisfy all the Warrants immediately. Upon Petitioner's failure to pay, Respondent issued a Notice of Freeze on October 8, 2009, to Synovus Bank where Petitioner's funds were being held. At that time there was $52,990.21 being held by the bank for Petitioner. On November 3, 2009, Respondent issued a Notice of Intent to Levy, advising Petitioner of its intent to seize the money being held at Synovus Bank. Petitioner timely filed a contest to the Notice of Intent to Levy. Respondent notified Synovus Bank of the contest. Petitioner was formed by three individuals: Earl Radcliff, president; Robert Spence; and R. Michal Marston. Spence and Marston were merely investors; Radcliff operated and controlled the business. Neither Spence, nor Marston was involved in the payment of fuel taxes during the period the business was operating. That duty was left entirely up to Radcliff. Upon Radcliff's failure to pay the taxes that were due, Respondent began issuing notices. Finally, in 1996, Respondent refused to renew Petitioner's motor fuel dealer's license, effectively terminating the business. Spence and Marston were not immediately made aware of this fact, but upon learning that the license had not been renewed, they began attempting to make the appropriate tax payments. When it became obvious there was not enough money available to pay the tax liabilities, Spence began taking steps to protect the real estate owned by Petitioner so that it could be sold to meet the tax liabilities. The funds held by Synovus Bank are being used solely to protect the existing real property. Neither Spence, nor Marston, was ever repaid for their initial investment to the corporation. The real property has not been sold due to many reasons, including the downturn in the economy, the existence of environmental problems on the site, and general deterioration of the property. The property is in two parcels: one is an empty lot and the other is being used as an automobile dealership.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Respondent, Department of Revenue, upholding the Notice of Intent to Levy issued by Respondent as to property owned by Petitioner, Fuel Mart, Inc. DONE AND ENTERED this 28th day of May, 2010, in Tallahassee, Leon County, Florida. R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of May, 2010. COPIES FURNISHED: Lisa Echeverri, Executive Director Department of Revenue The Carlton Building, Room 104 501 South Calhoun Street Tallahassee, Florida 32399-0100 Marshall Stranburg, General Counsel Department of Revenue The Carlton Building, Room 204 501 South Calhoun Street Post Office Box 6668 Tallahassee, Florida 32314-6668 John Mika, Esquire Office of the Attorney General The Capitol - Tax Section Tallahassee, Florida 32399-1050 Robert Spence Fuel Mart, Inc. 250 North Belcher Road, No. 100 Clearwater, Florida 33765-2622
The Issue Whether Petitioner owes tax in the amount of $4,554.80 plus a penalty and interest on the sale of special fuel between December 1, 1976, and December 31, 1979.
Findings Of Fact Miami Tiresoles, Inc., sells both new and retreaded tires for cars and trucks. The company also sells gasoline and diesel fuel. It is licensed by the Department as a dealer in special fuels. As far as this case is concerned special fuel is number 2 diesel oil. Unless an exemption is met each gallon of special fuel sold by MTS is taxed by the Department at a rate of eight cents per gallon. The Department has given BITS a revised notice of proposed assessment of tax for the sale of special fuel in the amount of $4,551.88 plus a penalty of $455.48 and interest in the amount of $735.11 (through April 21, 1980). The tax figure on the assessment appears to reflect a typographical error. The Department's records (Exhibit A) indicate that for the period in question, 2/ MTS sold 56,936 gallons of special fuel subject to tax according to the Department's interpretation of the law. If a tax at a rate of eight cents per gallon is due, then the amount due should be $4,554.88 and not $4,551.88. The correct tax figure is reflected on the Department's work sheets but was probably misread when the figure was transferred to the revised Notice of Assessment issued on April 21, 1980. The foregoing assessment is based on MTS' invoices which reflect sales of special fuel to customers in amounts of more than 110 gallons at one time. Those sales were made to MTS customers who have filed with MTS a document called "Purchaser's Exemption Certificate". A typical example of such a certificate states: PURCHASER'S EXEMPTION CERTIFICATE The undersigned hereby certifies that the motor duel (sic) and/or special fuel pur- chased on 1-19-79 is for the following purpose as checked in the space provided. (X) Purchased for home, industrial, com- mercial, agricultural or marine purposes for consumption other than for the propul- sion of a motor vehicle. ( ) Purchased at bulk plant or terminal in volumes of not more than 110 gallons for delivery into a receptacle not connected to the fuel supply system of a motor vehicle for consumption other than for the propulsion of a motor vehicle. Purchaser is aware that if this exemption if (sic) falsely claimed, or if this certificate is not rescinded at the time he fails to quality (sic) for the exemption, he shall be liable for the taxes imposed under Chapter 206, F.S. Furthermore, by issuing this certificate, the purchaser also certifies that he does not have any motor vehicles which use special fuel for propulsion. This certificate is to continue in force until revoked by written notice to MIAMI TIRESOLES, INC. Purchaser Trade Name A ACME SANDBLASTING, INC. Street Address 9521 W. Oakmont Dr. ,Hialeah,Fla. 33015 BY /s/ The industrial customers of MTS (those who have filed an exemption certificate) are engaged in the construction business. They use the diesel fuel to operate bulldozers, front-end loaders, back hoes, sandblasters and similar equipment. None of the fuel is used for the operation of motor vehicles on the public highways of Florida. All the fuel in question is sold on the premises of MTS. At the time of sale it is placed either in the fuel tank of a particular piece of equipment such as a back hoe, or it is placed in a fuel storage tank mounted on the back of a truck. The storage tanks are not connected so they can provide fuel for the propulsion of the truck. They are used to transport fuel to the purchaser's particular job site. The storage tanks have a capacity of between 100 to 300 gallons. MTS does not have delivery trucks of its own and has no facilities for taking fuel to its customers' job sites. A single invoice of MTS which indicates a sale of 110 gallons of special fuel to an individual customer is frequently the result of a sale where multiple fuel tanks are filled at one time. For Instance, the customer may have a back hoe sitting on the rear of a flat-bed truck. He will fill the fuel tank in his back hoe and then perhaps fill an additional 55 gallon drum or two which would be on the truck. This would occur all in one transaction. The reason why the Department seeks to tax special fuel sold by MTS to its industrial customers in an amount exceeding 110 gallons is because the fuel was placed in the customers' own fuel tanks on the premises of MTS and not on the premises of the customer or at the customer's job site.
Recommendation Based on the foregoing Findings of Fact and the Conclusions of Law it is recommended that the Department of Revenue enter a final order affirming its assessment for a special fuel tax against the Petitioner in the amount of $4,554.88 plus penalty and interest computed pursuant to Section 206.44, Florida Statutes (1979). DONE and RECOMMENDED this 25th day of March 1981, in Tallahassee, Florida. MICHAEL PEARCE DODSON 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 25th day of March 1981.
Findings Of Fact On November 18, 1991, Douglas & Sons, Inc. was operating a commercial vehicle on SR 9 (1-95) when it stopped at a Department of Transportation weigh station in Flagler Beach, Florida. The vehicle was checked by a DOT inspector who determined that the vehicle displayed a Florida decal outside the truck, but that the identification number on the fuel use cab card in the truck varied by one digit from the vehicle identification number on the North Carolina apportioned license registration. The DOT inspector issued a temporary fuel use permit for a $45.00 fee, which he collected to allow the vehicle to proceed on its way; and he collected a $50.00 civil penalty for violation of Chapter 207, Florida Statutes, as provided in Section 316.545(4), Florida Statutes. The Respondent produced evidence that the owner of the vehicle had purchased and returned six fuel use cards, which the Respondent did not use. These cards consist of a decal displayed on the outside of the truck and a card which is carried in the truck. Patricia Lloyd stated that the fuel use card in the inspected vehicle had the wrong vehicle identification number typed in by a clerk in the Respondent's office. The Respondent showed, by introducing the unused fuel use cards, that it had not attempted to violate the statute prohibiting switching fuel use cards between two vehicles. The fuel use cards are ordered by owners of out-of-state commercial vehicles who are responsible for filling out the cards with the vehicles' identification numbers. The fuel use cards may be bought in any quantity. The cost is $4.00 per card per year. The owner is statutorily responsible for the proper use of the card, and transfer of the card is prohibited.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the penalty of $50.00 and the $45.00 be remitted to the Respondent. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 3 day of April, 1992. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 COPIES FURNISHED: Vernon L. Whittier, Jr., Esq. Assistant General Counsel Filed with the Clerk of the Division of Administrative Hearings this 3 day of April, 1992. Florida Department of Transportation 605 Suwannee Street Tallahassee, FL 32399-0458 Ms. Patricia M. Lloyd Douglas & Sons, Inc. Route 5, Box 238 Statesville, NC 28677 Ben G. Watts Secretary Department of Transportation Haydon Burns Building, M.S. 58 605 Suwannee Street Tallahassee, FL 32399-0458 Attn: Eleanor F. Turner Thornton J. Williams, Esq. General Counsel Department of Transportation Haydon Burns Building, M.S. 58 605 Suwannee Street Tallahassee, FL 32399-0458
The Issue Whether the fee and penalty totaling $95.00 assessed against Atlantic Gulf Marine Transport by the Florida Department of Transportation should be sustained.
Findings Of Fact Respondent, Atlantic Gulf Transport, operated a commercial vehicle on State Road 84 in Broward County, Florida, on April 11, 1990, when it was stopped by a Motor Carrier Compliance Officer (Compliance Officer) employed by Respondent. The subject vehicle was not displaying a fuel use tax device for its interstate operations as required by Section 207.004, Florida Statutes, and the driver did not present any fuel use tax registration documentation. The Compliance Officer issued a temporary fuel use permit as authorized by Section 207.004(4), Florida Statutes. The fee for the permit was $45.00. The Compliance Officer also assessed a civil penalty for the violation of Chapter 207, Florida Statutes, as authorized by Section 316.545(4), Florida Statutes. The amount of the civil penalty was $50.00. Petitioner established a prima facie case that the assessment of the fee and penalty were authorized by pertinent statute. Respondent made no appearance at the formal hearing and introduced no evidence to rebut this prima facie showing.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered which upholds the assessment of the subject fee and penalty. DONE AND ORDERED this 10th day of February, 1992, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of February, 1992. COPIES FURNISHED: Vernon L. Whittier, Jr., Esquire Assistant General Counsel Florida Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0450 Charles T. O'Neil Atlantic Gulf Marine Transport P.O. Box 3304 Lantana, Florida 33462 Ben G. Watts, Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0458 ATTN: ELEANOR F. TURNER, M.S. 58 Thornton J. Williams, General Counsel Department of Transportation 562 Haydon Burns Building Tallahassee, Florida 32399-0458
The Issue The issue posed for decision herein is whether or not Respondent was selling "polluted" gasoline in violation of the standards set forth in Chapter 525.06, Florida Statutes (1980), and Rule Chapter 5F-2, Florida Administrative Code.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, the following relevant facts are found. The Petitioner, State of Florida, Department of Agriculture and Consumer Services, is an agency of State government which has the obligation to inspect petroleum products in keeping with the provisions of Chapter 525, Florida Statutes (1980). 2/ The Respondent is a corporation which sells products in the State of Florida at an outlet located at 1050 U.S. 98 North in Brooksville, Florida. On November 11, 1981, a sample of three (3) petroleum products, i.e., regular gasoline, unleaded and diesel fuel was taken from Respondent's location which is known as Chuck's Car Wash. A laboratory analysis by Petitioner revealed that the unleaded gasoline showed a lead content above .110 grams per gallon. This reading is above the .05 gram per gallon maximum allowable lead content as set forth in Rule Subsection 5F-2.01(1)5(j), Florida Administrative Code. An analysis of the regular gasoline revealed an End Point of 494 degrees F. This reading is above the 446 degrees F maximum allowable End Point as set forth in Rule Subsection 5F-2.01(1)(c)4, Florida Administrative Code. Finally, an examination of the diesel product revealed a Flash Point below 60 degrees F. This reading is below the 120 degrees F allowable Flash Point as set forth in Rule Subsection 5F-2.01(3)(b), Florida Administrative Code. The results of these analyses were made known to Respondent and he was afforded the option of either immediately halting the sale of the products or to post a cash bond in the amount of $1,000.00 for 5,900 gallons sold of the above- referred products in lieu of confiscation of the remaining 1,681 gallons of the products. (See Release Notice or Agreement dated November 12, 1981.) Respondent posted a bond in the amount of $1,000.00. In the Release Notice, Respondent was advised that all three (3) products were to be removed from its tanks and new products dropped. Respondent was also afforded the opportunity to remove the no-lead which could he sold as leaded regular with the remaining two (2) products to be used in Respondent's private equipment. Petitioner's inspector who works out of portable laboratory No. 3, Jamie Gillespie, removed the samples from Respondent's tanks and conducted the analyses of the products. Inspector Gillespie made Respondent aware of his findings and his decision to post a Stop Sale Notice of the subject products. Inspector Gillespie obtained the cash bond from Respondent. Use of the above-referred products may cause catalytic converters to become contaminated; restrict exhaust systems and release excessive pollutants in the atmosphere. Use of these products also may clog fuel filters and carburetors. The low Flash Point from the diesel product may cause an engine to "run away" and in some instances may blow the head assembly from a diesel engine. Additionally, use of diesel with such a low Flash Point may contaminate dry injector nozzles and shorten the life of a diesel engine. (Testimony of Gillespie and Morris, inspectors and chemists employed by Petitioner, who conducted analyses of the subject products.) As stated, Respondent did not appear at the hearing to contest or otherwise rebut the charges alleged by Petitioner.
Recommendation Based on the foregoing Findings of Fact, Conclusions of Law and the entire record compiled herein, it is RECOMMENDED: That a final order be entered finding the Respondent in violation of Rule Subsections 5F-2.01(1)5(j), 5F-2.01(1)(c)4, and 5F-2.01(3)(b), Florida Administrative Code, and thereby, Respondent should be subjected to the penalties set forth in Section 525.06, Florida Statutes (1980), and the $1,000.00 bond posted be estreated. RECOMMENDED this 16th day of April, 1982, in Tallahassee, Florida. JAMES E. BRADWELL, 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 16th day of April, 1982.
The Issue The issue presented is whether Petitioners are responsible for unpaid taxes as alleged in the Notices of Final Assessment issued in this cause.
Findings Of Fact At all times material hereto, Petitioner Nana's Petroleum, Inc. (hereinafter "Nana's"), has been licensed by the Department to sell special fuel (diesel) and gasoline. At all times material hereto, Emilio Perez has been the vice president of Nana's, and Edilia Perez has been the secretary. At all times material hereto, Nana's has been required to file with the Department on a monthly basis, and Nana's did so file, Special and Alternative Fuel Tax Returns, including Local Option Tax Schedules, and Refiner, Importer and Jobber Gasoline Tax Returns. Although the Department cannot locate its copy of Nana's May 1988 return, the Department does have copies of the other returns for the six years in question. If the Department had not received the May 1988 return from Nana's, it would have sent a delinquency notice at that time, and no delinquency notice was sent to Nana's. Nana's purchased its fuel from two suppliers at Port Everglades: Belcher Oil Co., n/k/a Coastal States Refinery and Marketing, and Union Oil Co. of California under the same procedures. Nana's sent its trucks to Port Everglades. The driver used a loading card (similar to a credit card) which carried the identification number of the purchaser. The driver put the loading card in the loading rack and received a manifest, which the driver signed and dated, noting the time on it. After the truck was loaded and left the Port, an invoice was issued by the supplier, referencing the manifest and specifying the amount of fuel obtained and when, and whether the fuel was diesel or gasoline. The invoice also specified the amount and kind of taxes charged, or if the purchase was tax exempt, and provided a total purchase figure. The invoices were then sent by the suppliers to Nana's, and Nana's paid those invoices within ten days in order to obtain a 1 percent discount. Nana's kept each invoice, using each to provide the detailed information required on its monthly tax returns. Also, when the Department audits a license holder such as Nana's, the Department audits the invoices against the invoice numbers shown on the tax returns. Each Special and Alternative Fuel Tax Return filed by Nana's itemized fuel acquired or received in Florida by invoice number, the date received, the point of origin, the point of delivery, the name and license number of the supplier, and the invoiced gallonage. Nana's computed any tax due by county for local option taxes. It itemized any gallonage exempt from taxes and why. It further included an itemization of the number of gallons sold, the purchaser's name and license number, the point of delivery, and the invoice number and date. The Refiner, Importer and Jobber Gasoline Tax Returns filed by Nana's were similar and contained a detailed listing of fuel acquired or received in Florida tax paid, specifying the county of origin, the county of destination, the supplier's name and license number, the date, the invoice number, and the number of gallons. Nana's was audited by the Department in 1987, with the audit running through November of that year. As a result of that audit, Nana's hired an accountant in January of 1988 in order to assure that its books and records were properly kept. In 1992, the Department began another audit by sending an employee to the office of Nana's for one day. The Department then contacted Nana's and advised that it was too far for them to come from Ft. Pierce to the office of Nana's in Pahokee and told Nana's to bring its books and records to the Department. Nana's took boxes of records to the Ft. Pierce office. Two weeks later, the Department contacted Nana's, advising that the Department would not be completing the audit and that Nana's should come and pick up its records. In April of 1994, pursuant to a subpoena, Nana's supplied 35 or 36 boxes of records to the Department. Those boxes contained Nana's original invoices from 1987 forward and the original certificates it had obtained from its purchasers reflecting tax exempt status. On April 25, 1994, the Department issued to Edilia Perez as secretary of Nana's its Notice of Final Assessment for Fuel Tax, Penalty and Interest Due for the period of December 1987 through June 1990 in the amount of $414,714.67. That Notice of Final Assessment was accompanied by a Notice of Jeopardy Findings. On April 25, 1994, the Department issued to Emilio Perez as vice president of Nana's its Notice of Final Assessment for the period of December 1987 through June 1990 in the amount of $515,240.25. That Notice of Final Assessment was accompanied by a Notice of Jeopardy Findings. On April 25, 1994, the Department issued to Nana's its Notice of Final Assessment for the period of April 1992 through August 1993 in the total amount of $27,947.84. That total figure represented tax due in the amount of $18,083.17, interest of $2,786.23, and penalty of $7,078.44. That Notice of Final Assessment was accompanied by a Notice of Jeopardy Findings. On September 13, 1990, the Department had previously issued to Nana's its Notice of Final Assessment for the period of December 1987 through June 1990 in the total amount of $573,988.67. That total figure represented tax due of $414,714.67, penalty of $97,201.36, and interest of $62,072.64. That Notice of Final Assessment was accompanied by a Notice of Jeopardy Findings. On September 13, 1990, the Department had previously issued to Emilio Perez d/b/a Nana's Stations its Notice of Final Assessment for the period April 1988 through June 1989 in the amount of $147,291.20. That total figure represented tax due of $100,625.58, penalty of $25,156.43, and interest of $21,509.19. That Notice of Final Assessment was accompanied by a Notice of Jeopardy Findings. On May 23, 1994, an evidentiary hearing was conducted by the Circuit Court of the Fifteenth Judicial Circuit of Florida in and for Palm Beach County on a Petition for Review of the Jeopardy Findings filed by the Petitioners in this cause. In a detailed Order Reversing the Department of Revenue's Jeopardy Findings and Releasing Seizure of Assets, entered June 2, 1994, Circuit Judge Lucy Brown analyzed the deficiency of the notice given by the Department in its two groups of Jeopardy Findings and accompanying Notices of Final Assessments: the September 13, 1990, group and the April 25, 1994, group. In her factual determinations, Judge Brown determined that the Department had not provided notice as required of the Department as to its September 13, 1990, Notices of Final Assessment and Notices of Jeopardy Findings issued to Nana's and to Emilio Perez d/b/a Nana's Stations in that the Department knew at the time that Emilio Perez was the principal of Nana's and that Perez was not at the time present at the address used by the Department to serve notice on him and on Nana's, that no officer or director or employee of Nana's was shown to have received notice of the issuance of the Notices of Final Assessment and Notices of Jeopardy Findings, and that the Department made no attempt to effectuate personal service. It was further found that no notice or knowledge of the outstanding September 19, 1990, Notices of Final Assessment and of Jeopardy Findings was received prior to April 1994. After concluding that the Department did not fulfill its obligation to provide notice of its September 13, 1990, Notices of Final Assessment and Notices of Jeopardy Findings, and after concluding that the Department had not shown the existence of jeopardy upon which its April 25, 1994, Notices of Jeopardy Findings were based, Judge Brown reversed both groups of Notices of Jeopardy Findings and further set aside and vacated the Department's seizure of Petitioners' assets. The Department did not file an appeal from that Order. Accordingly, the Circuit Court determination that Petitioners were not notified that the Department was seeking additional taxes from them until April 1994 cannot be disputed herein. The Special and Alternative Fuel Tax Returns filed with the Department by Nana's for the months of February 1990 through June 1990 each declared that money was due from Nana's to the Department. The Department has no record of payment being received with each of those returns or thereafter. The Department's summary sheet itemizes the tax due with penalty and interest computed through August 1990 as follows: Nana's Petroleum 10011605 DATE TAX DUE AS REPORTED PENALTY THRU 8/19/90 INTEREST THRU 8/14/90 TOTAL DUE 2/90 26,376.57 6,594.14 1,274.75 34,245.46 3 16,459.04 3,291.81 627.70 20,378.55 4 8,287.07 1,243.06 234.31 9,764.44 5 11,339.26 1,133.93 205.04 12,678.23 6 11,822.56 591.13 97.17 12,510.86 74,284.50 12,854.07 2,438.97 89,577.54 Accordingly, Nana's is responsible for unpaid taxes in the amount of $74,284.50, together with the increasing penalty and interest until date of payment.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered sustaining Petitioners' contest of the assessments issued against them but for that portion of the September 13, 1990, Notice of Final Assessment issued to Nana's encompassing the months of February 1990 through June 1990 wherein Nana's reported tax due in the total amount of $74,284.50 but failed to pay that amount to the Department, together with the statutory penalty and interest on that amount through date of payment. DONE and ENTERED this 16th day of May, 1995, at Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of May, 1995. APPENDIX TO RECOMMENDED ORDER Petitioners' six un-numbered paragraphs in that portion of its proposed recommended order entitled "Factual Findings" have been adopted to the extent that they include any findings of fact which were intermingled with Petitioners' conclusions of law and argument of counsel contained within those un-numbered paragraphs. Respondent's proposed findings of fact numbered 1-6, 8, 9, 12, 21, and 34 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 7, 10, 13-18, 20, 22- 27, 29, 39-47, 49, and 50 have been rejected as not being supported by the weight of the competent evidence in this cause. Respondent's proposed finding of fact numbered 11 has been rejected as being irrelevant. Respondent's proposed findings of fact numbered 19, 28, 30-33, 35-38, and 48 have been rejected as being subordinate to the issues in this cause. COPIES FURNISHED: Andrew Helgesen, Esquire Harris, Kukey, and Helgesen 11380 Prosperity Farms Road, Suite 201 Palm Beach Gardens, Florida 33410 Dean L. Willbur, Jr., Esquire 319 Clematis Street, Suite 600 Post Office Box 6917 West Palm Beach, Florida 33405-0917 Lealand L. McCharen, Esquire Francisco M. Negron, Jr., Esquire Office of the Attorney General Capitol Building - Tax Section Tallahassee, Florida 32399-1050 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100
The Issue 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.
Findings Of Fact 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.
Recommendation 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 Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 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): Petitioner' s 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. Respondent ` s PFOF: 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. Rejected as not supported by the greater weight of the competent substantial evidence and the natural logical inferences there from. Accepted but not adopted because not dispositive of any material issue of fact in dispute in this cause. COPIES FURNISHED: Mark A. Taylor, Esquire Excise Tax Analyst Ira L Smith, Esquire Director, Ad Volorem Tax Division BP America, Inc. 200 Public Square 38-3600-L Cleveland, Ohio 44114-2375 Lealand McCharen Assistant Attorney General Department of Legal Affairs Tax Section, The Capitol Tallahassee, FL 32399-1050 William D. Townsend General Counsel Department of Revenue 203 Carlton Building Tallahassee, FL 32399-0100 Katie D. Tucker Executive Director 102 Carlton Building Tallahassee, FL 32399-0100
The Issue Was the amendment to Section 12B-5.01, Florida Administrative Code adopted on November 8, 1978, adopted in violation of the procedural requirements of Section 120.54, Florida Statutes? Is the amendment to Section 12B-5.01, Florida Administrative Code an invalid exercise of the Department's delegated legislative authority?
Findings Of Fact Miami Tiresoles, Inc. sells both new and retreaded tires for cars and trucks. The company also sells gasoline and diesel fuel. It is licensed by the Department as a dealer in special fuels. As far as this case is concerned special fuel is number 2 diesel oil. Unless an exemption is met each gallon of special fuel sold by MTS is taxed by the Department at a rate of 8 cents per gallon. The Department has given MTS a revised notice of proposed assessment of tax for the sale of special fuel in the amount of $4,551.88 plus a penalty of $455.48 and interest in the amount of $735.11 (through April 21, 1980). The tax figure on the assessment appears to reflect a typographical error. The Department's records (Exhibit A) indicate that for the period in question 2/ MTS sold 56,936 gallons of special fuel subject to tax according to the Department's interpretation of the law. If a tax at a rate of 8 cents per gallon is due, then the amount due should be $4,554.88 and not $4,551.88. The correct tax figure is reflected on the Department's work sheets but was probably misread when the figure was transferred to the revised Notice of Assessment issued on April 21, 1980. The foregoing assessment is based on MTS' invoices which reflect sales of special fuel to customers in amounts of more than 110 gallons at one time. Those sales were made to MTS customers who have filed with MTS a document called "Purchaser's Exemption Certificate". A typical example of such a certificate states: PURCHASER'S EXEMPTION CERTIFICATE The undersigned hereby certifies that the motor duel (sic) and/or special fuel pur- chased on 1-19-79 is for the following purpose as checked in the space provided. (X) Purchased for home, industrial, com- mercial, agricultural or marine purposes for consumption other than for the propul- sion of a motor vehicle. ( ) Purchased at bulk plant or terminal in volumes of not more than 110 gallons for delivery into a receptacle not connected to the fuel supply system of a motor vehicle for consumption other than for the pro- pulsion of a motor vehicle. Purchaser is aware that if this exemption if (sic) falsely claimed, or if this certi- ficate is not rescinded at the time he fails to quality (sic) for the exemption, he shall be liable for the taxes imposed under Chapter 206, F.S. Furthermore, by issuing this certificate the purchaser also certifies that he does not have any motor vehicles which use special fuel for propulsion. This certificate is to continue in force until revoked by written notice to MIAMI TIRESOLES, INC. Purchaser: Trade Name: A ACME SANDBLASTING, INC. Street Address: 9521 W. Oakmont Dr., Hialeah, Fla. 33015 BY: /s/ The industrial customers of MTS (that is those who have filed an exemption certificate) are engaged in the construction business. They use the diesel fuel to operate bulldozers, front-end loaders, back hoes, sandblasters and similar equipment. None of the fuel is used for the operation of motor vehicles on the public highways of Florida. All the fuel in question is sold on the premises of MTS. At the time of sale it is placed either in the fuel tank of a particular piece of equipment such as a back hoe, or it is placed in a fuel storage tank mounted on the back of a truck. The storage tanks are not connected so they can provide fuel for the propulsion of the truck. They are used to transport fuel to the purchaser's particular job site. The storage tanks have a capacity of between 100 to 300 gallons. MTS does not have delivery trucks of its own and has no facilities for taking fuel to its customers job sites. A single invoice of MTS which indicates a sale of 110 gallons of special fuel to an individual customer is frequently the result of a sale where multiple fuel tanks are filled at one time. For instance, the customer may have a back hoe sitting on the rear of a flat-bed truck. He will fill the fuel tank in his back hoe and then perhaps fill an additional 55 gallon drum or two which would be on the truck. This would occur all in one transaction. The reason why the Department seeks to tax special fuel sold by MTS to its industrial customers in an amount exceeding 110 gallons is because the fuel was placed in the customers' own fuel tanks on the premises of MTS and not on the premises of the customer or at the customer's job site. The amendment to Section 12B-5.01, Florida Administrative Code challenged by Petitioner here was adopted by the Governor and Cabinet, sitting as the head of the Department of Revenue, on November 8, 1978. No hearing was held on the amendment's adoption because no person requested one. Notice of the Department's intent to adopt the rule was given in the October 13, 1978 issue of the Florida Administrative Weekly. At the time the notice was published a copy of the amendment was available for inspection and copying by the public. The notice published in the Florida Administrative Weekly stated: DEPARTMENT OF REVENUE, DIVISION OF MISCELLANEOUS TAX, MOTOR FUEL TAX Rule 12B-5.01 TITLE: Specific Exemption PURPOSE AND EFFECT: To amend the rule which implements Subsection 206.87(4)(a) & (b), F.S. to clarify interpretation of the law. SUMMARY: Provides specifically the requirements necessary in order for the licensed dealer of special fuel to make an exempt sale for home, industrial, commercial, agricultural, or marine purposes and exempt sales of not more than 110 gallons at his place of business, and by cross reference, the records needed to be maintained by the licensed dealer to substantiate the sale. SPECIFIC LEGAL AUTHORITY UNDER WHICH THE ADOPTION IS AUTHORIZED AND THE LAW BEING IMPLEMENTED, INTERPRETED OR MADE SPECIFIC: SPECIFIC AUTHORITY: 206.14(1), 206.59, FS. LAW IMPLEMENTED: 206.87(4)(a)(b), FS. ESTIMATE OF ECONOMIC IMPACT ON ALL AFFECTED PERSONS: There will be no significant economic impact. IF REQUESTED, A HEARING WILL BE HELD AT: TIME: 10:00 A.M. PLACE: The New Capitol, Lower Level 3 DATE: November 9, 1978 A COPY OF THE PROPOSED RULE AND THE ECONOMIC IMPACT STATEMENT MAY BE OBTAINED BY WRITING TO: L. N. Thomas, Chief, Motor Fuel Tax Bureau, Department of Revenue, Carlton Building, Tallahassee, Florida 32304 Individual notices of the proposed rule making were not sent to licensed special fuel dealers in Florida. On October 10, 1978, the Department sent the following items to the Joint Administrative Procedures Committee: A copy of the proposed amendment to Rule l2B-5.01. The notice to appear in the Florida Administrative Weekly. The Economic Impact Statement. The "Summary and Justification Sheet" (apparently the Department's term for the facts and circumstances justifying the proposed rules). The following shows how the Department's amendment adopted on November 8, 1978, changed Section 12B-5.01, Florida Administrative Code. Words stricken were deleted; words underlined were added. 12B-5.01 Specific Exemptions. (1) - (2) - No change. HOMES, INDUSTRIAL. COMMERCIAL, AGRICULTURAL OR MARINE. Any sale of special fuel by a licensed dealer, regardless of quantity, when such fuel is to be consumed exclusively for home, industrial, commercial, agricultural, or marine purposes, is exempt from tax, provided the sale is made by a licensed dealer who delivers the fuel into the customer's storage facility, which must be located on the customer's premises, place of business, or job site. (Cross Reference - Rule 12B-5.03(1). (7)(b) - (6) - No change. (7) SALES OF 110 GALLONS OR LESS. A licensed dealer may deliver, at his place of business, tax free, not more than 110 gallons of special fuel to a person who is not a licensed dealer of special fuel, provided the fuel is placed into a receptacle which is furnished by the purchaser and which is not connected to the fuel supply system of a motor vehicle. (Cross Reference - Rule 12B-5.03(1), (7)(b) Any licensed dealer of special fuel who, at his place of business, delivers more than 110 gallons of special fuel to a person who is not a licensed dealer of special fuel, shall be liable for and shall pay to the state taxes, penalties and interest on the total quantity sold even though the fuel may not be ultimately used to propel a motor vehicle on the highway.
Findings Of Fact Silver Sand is in the aggregate business. A major portion of this business involves the trucking of sand, rock, and shell. Diesel fuel, a special fuel, is used in these trucking operations. Approximately fifteen percent of the trucking takes place off of highways and roads. Fuel utilized for off-road operations is not subject to the Florida excise tax on special fuel. To facilitate its trucking operations, Silver Sand purchases diesel fuel in bulk, and uses it in its own trucks and sells it to lease operators who are under contract to Silver Sand. Silver Sand holds a Florida Department of Revenue license which entitles it to purchase diesel fuel in bulk without paying the excise tax. The assessment period involved in this case is April, 1973 through December, 1973. During that period the United States was in the middle of a fuel crisis, and motor fuels, including diesel fuel, was difficult to obtain. During the relevant period Jeremiah J. Kelly, Jr., was Silver Sand's lease operations manager. He was responsible for obtaining diesel fuel. In April, 1973, a Mr. Carruthers, representing Handy Haul-It, approached Kelly and told him that Handy Haul-It could provide Silver Sand with diesel fuel. Kelly had the authority to negotiate diesel fuel purchases on behalf of Silver Sand. Kelly did not know where Carruthers or Handy Haul-It could get diesel fuel, and he assumed that Handy Haul-It was a fuel distributor. Carruthers told Kelly that he would need to have a "Purchaser's Blanket Resale and Exemption Certificate" issued by Silver Sand in order to obtain the fuel. Carruthers presented Kelly with such a certificate. The certificate was addressed to Radiant Oil. Kelly went to his superior, Kenneth Surbaugh, and asked whether he should issue the certificate. Surbaugh authorized Kelly to sign the certificate. Kelly signed the certificate that day, and left it on his desk. When he returned the following day the certificate was gone. Kelly did not write the name "Silver Sand Company" on the certificate, and did not date it. The name "Silver Sand Company" and the date were placed on the certificate after Kelly signed it. The certificate came into Carruthers' possession. The evidence did not reveal whether the certificate was delivered to Carruthers by anyone at Silver Sand, but Kelly did intend to deliver the certificate to Carruthers. A copy of the certificate was received in evidence as Respondent's Exhibit 1. The name Silver Sand Company is inserted as the purchaser, and it is dated January 1, 1973. The document was predated. It was actually signed during April, 1973. NCJ is in the business of distributing motor fuels, including diesel fuel. Joseph Capitano is the President and Chief Executive Officer of NCJ. During April through December, 1973, NCJ had a relative abundance of diesel fuel. In April, 1973, Bill Simms, a friend of Capitano who is also in the fuel distribution business, told Capitano that he had a customer who desired to purchase substantial quantities of diesel fuel. This customer was Carruthers. Simms introduced Carruthers to Capitano. Capitano told Carruthers that he would need a Purchaser's Blanket Resale and Exemption Certificate in order to sell him diesel fuel. Capitano gave Carruthers a certificate to be executed which would fulfill this function. This is the certificate that was signed by Kelly, and received in evidence as Respondent's Exhibit 1. Carruthers ultimately returned the form to Capitano. The form is addressed to Radiant Oil, not to NCJ. NCJ and Radiant Oil are separate entities. NCJ and Radiant Oil are separately registered with the Department of Revenue as motor fuel dealers. The corporations are somewhat related. Joseph Capitano's father owns Radiant Oil. NCJ leases office space from Radiant Oil, and the two corporations share clerical help. The companies use common gas tanks. The companies also utilize many of the same business forms. NCJ had on occasion utilized Radiant Oil's "Purchaser's Blanket Resale and Exemption Certificate" form for its use. NCJ was a new company, and did not have its own forms. Respondent's Exhibit 3 is a compilation of such forms which were used by NCJ during the relevant period. Some of these were Radiant Oil's forms. In utilizing Radiant Oil's forms, the name Radiant Oil Company was marked off and NCJ Investment Company was inserted. That was not done on the form signed by Kelly on behalf of Silver Sand. After Carruthers delivered the exemption certificate to Capitano Handy Haul-It proceeded to purchase fuel from NCJ and resell it to Silver Sand. The fuel was generally picked up at NCJ's tanks by Handy Haul-It's truck. Occasionally Handy Haul-It hired trucks from another common carrier to pick up the fuel. Handy Haul-It paid for the fuel by check made out on the account of Handy Haul-It. NCJ invoices reflected, however, that the purchaser was Silver Sand. Copies of these invoices were not mailed to Silver Sand, and never came into the possession of Silver Sand. No one at Silver Sand was aware of the existence of NCJ. Handy Haul-It purchased 1,753,027 gallons of special fuel from NCJ in this manner. Handy Haul-It did not pay the special fuel tax on any of the purchases. While NCJ was selling tax free based upon the Purchaser's Blanket Resale Exemption Certificate (Respondent's Exhibit 1) it did not place Silver Sand's dealer or distributor license number on many of the invoices. NCJ never made any inquiry of anyone at Silver Sand as to Carruthers' or Handy Haul-It's authority to purchase fuel on Silver Sand's behalf. 882,264 gallons of the special fuel purchased by Handy Haul-It from NCJ was delivered to Silver Sand. This fuel was delivered either in Handy Haul-It's own truck, or in a truck hired by Handy Haul-It. Silver Sand paid Handy Haul-It directly by check when it received each of the deliveries. Handy Haul-It delivered invoices to Silver Sand. The invoices do not reflect a separate itemization showing that motor fuel taxes were paid. The price paid for the fuel would indicate that the price included the tax. Carruthers represented to officials at Silver Sand that the price included the tax, and that he would pay the taxes. In its monthly reports to the Department of Revenue, Silver Sand did not report the purchases because it believed that it was not required to report purchases upon which taxes had been paid. The evidence at the hearing was insufficient to establish the ultimate destination of the fuel which Handy Haul- It purchased from NCJ but did not sell to Silver Sand. Handy Haul-It did make sales to several other trucking companies, including Keystone Trucking Company, Montgomery Trucking, Montgomery Hauling, Keys of the Coast, Florida Bulk Transport, Dirt Haulers, Inc., and Mid Florida Hauling. Handy Haul-It had purchased some fuel from sources other than NCJ, and it cannot be gleaned from the evidence whether the fuel purchased from NCJ was ultimately delivered to these other companies. It is clear from the evidence that the remaining fuel was not delivered to Silver Sand, and that Silver Sand was not aware that Handy Haul-It had purchased such additional quantities from NCJ in Silver Sand's name. Handy Haul-It was not licensed as a distributor or dealer of motor fuels by the Florida Department of Revenue. By agreeing to purchase diesel fuel from Handy Haul-It, Silver Sand authorized Handy Haul-It to obtain diesel fuel on behalf of Silver Sand. Handy Haul-It was therefore Silver Sand's agent for the purpose of obtaining fuel for Silver Sand. When Kelly signed the Purchaser's Blanket Resale and Exemption Certificate, he authorized Handy Haul-It to use Silver Sand's special fuel dealer's license to obtain diesel fuel tax free from Radiant Oil Company of Tampa, the addressee on the certificate. Silver Sand thus clothed Handy Haul-It and Carruthers with the apparent authority to purchase diesel fuel tax free utilizing Silver Sand's special fuel dealer license number from Radiant Oil Company of Tampa. NCJ knew, or should have known, that in making sales to Carruthers and Handy Haul-It, it was not dealing directly with Silver Sand. Although the exemption certificate had the name Silver Sand on it, and NCJ chose to address its invoices to Silver Sand, all of the purchases were made by Handy Haul-It and Carruthers. There was no evidence that Carruthers ever represented to NCJ that he had authority to speak for Silver Sand. NCJ took no action to inform itself as to Carruthers' authority to act on Silver Sand's behalf, other than to obtain the exemption certificate. The exemption certificate, however, was not made out to NCJ. The only authority of Handy Haul-It to act on Silver Sand's behalf that NCJ was entitled to rely upon was the authority to purchase fuel from Radiant Oil Company of Tampa. The authorization is very specific in this regard, and although it may be that Silver" Sand would gladly have executed an exemption certificate addressed to NCJ, it did not do that. The fact that the certificate was back-dated, and was issued to the wrong entity, should have caused NCJ to take action to contact Silver Sand. If NCJ had done that, Handy Haul-It would never have been in a position to purchase fuel from NCJ and to deliver it to someone other than Silver Sand. Indeed, it is possible that Handy Haul-It would never have been placed in the position of buying fuel under Silver Sand's license number at all. Knowing that it was dealing with an agent, NCJ should have sent copies of the invoices to the principal, Silver Sand. If NCJ had done that, Silver Sand would have been on notice that Handy Haul-It was purchasing considerable fuel in its name, and delivering it elsewhere. Silver Sand did not give Handy Haul-It the authority to obtain fuel for any purpose except delivery to Silver Sand. When Handy Haul-It utilized the exemption certificate to purchase fuel for purposes other than delivery to Silver Sand, it exceeded the scope of its authority. NCJ did not obtain special fuel taxes from Handy Haul-It on the sales which NCJ made to Handy Haul-It. NCJ did report the sales to the Department of Revenue. Silver Sand believed that it was paying special fuel taxes to Handy Haul-It. The fact that the price which Silver Sand paid to Handy Haul-It included the tax was not, however, placed on the invoices. Handy Haul-It did not pay any special fuel taxes.
Recommendation Based upon the foregoing findings of fact and conclusions of law, IT IS THEREFORE RECOMMENDED: That the assessment for Special Fuel Tax in the amount of $154,644.50 imposed against Silver Sand Company of Leesburg, Inc., by the Department of Revenue be upheld. CERTIFICATION I certify that the foregoing is the Final Order of the Department of Revenue adopted by the Governor and Cabinet on the 19th day of April, 1977. Harry L. Coe, Jr., Executive Director State of Florida, Department of Revenue Room 102, Carlton Building Tallahassee, Florida 32304 Dated this 20th day of April, 1977.
