Findings Of Fact On November 24, 1976, petitioner purchased an airplane (the Corsair) in Florida from R. D. Whittington Aircraft Sales, Inc., for which he paid eighty thousand dollars ($80,000.00). Sales tax has never been paid on account of this transaction. Before the purchase, petitioner asked George W. Sullivan, an airplane mechanic and test pilot, to evaluate the Corsair as an investment for resale. After petitioner acquired the Corsair, he caused three new cylinders to be installed and had the carburetor, the magneto and the propeller overhauled. Within three or four months of petitioner's acquisition, several prospective purchasers had inspected the Corsair. In the spring of 1977, petitioner began displaying the Corsair. At various times, petitioner engaged other pilots to ferry the Corsair to aircraft shows at Cherry Point, North Carolina, Greenville- Spartanburg, South Carolina, and elsewhere. At the time of the hearing, the Corsair had been flown approximately 43 hours since petitioner had acquired it, ten to twelve hours of which petitioner flew himself, in the course of displaying the Corsair and checking out repairs. Petitioner has traded in airplanes for the last several years and has been recognized as a dealer in aircraft by the Internal Revenue Service. Petitioner, who moved to Florida from California, applied to respondent for a dealer's certificate promptly upon learning that he was required to do so. On November 24, 1976, however, petitioner was not registered as an aircraft dealer with respondent. After an unsuccessful attempt to register effective retroactively to July 1, 1972, petitioner registered as a dealer with respondent, effective October 1, 1977. According to respondent's records, R. D. Whittington Aircraft Sales, Inc., was not registered as a dealer with respondent on November 24, 1976, and has not registered since. Petitioner obtained an address for R. D. Whittington Aircraft Sales, Inc., from respondent and, on or about, December 20, 1977, sent by certified mail a blanket resale and exemption certificate to the address respondent had furnished. A return receipt indicated that the certificate was delivered as addressed. In the past, respondent has treated sales to dealers as exempt from sales tax where the purchaser furnished the seller a resale and exemption certificate at the time of the sale and even when the certificate has been furnished afterwards, where the purchaser was registered as a dealer with respondent at the time of the transaction. The foregoing findings of fact should be read in conjunction with the statement required by Stuckey's of Eastman, Georgia v. Department of Transportation, 340 So.2d 119 (Fla. 1st DCA 1976), which is attached as an appendix to the recommended order.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent's proposed assessment be upheld. DONE and ENTERED this 11th day of August, 1978 in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 904/488-9675
The Issue The issue in this case is whether Petitioner was properly assessed tax on the delivery fee of rental equipment as part of the "gross proceeds" of the rental operation.
Findings Of Fact Florida Hi-Lift, Petitioner, is in the business of selling, leasing, repairing and transporting aerial lift equipment. Petitioner enters into rental agreements with customers who rent specific equipment F.O.B. Petitioner's location. The lease agreement sets a fixed price for the rental of the equipment and allows the customer to pick up the equipment with the customer's own conveyance, hire a carrier to pick up the equipment, or request the equipment be picked up and delivered by Petitioner's conveyance. The customer pays for the transportation of the equipment by whichever method of transportation is selected. The rental charge is unaffected by the mode of transportation selected by the lessee. Petitioner charged the customer sales tax on the rental of the equipment but not on the charges for transporting the equipment with Petitioner's conveyances. The audit here involved covers the period February 1, 1984, through January 31, 1987, and assesses a total tax, penalty and interest through September 11, 1987 of $23,727.59 with interest at $5.29 per day until paid (Exhibit 2). The major portion of this tax and the only part contested herein is assessed on Petitioner's charges to its lessees for transportation of the equipment. The equipment rental contract/invoice (Exhibit 9) under charges lists options, Damage Waiver nine per cent, Fuel, Delivery Pickup, and Other, with tax which Petitioner computed only on the rental charge for the equipment. The Damage Waiver charge of nine percent was based on the rental price but no evidence was submitted regarding the basis for this charge. Regardless, no sales tax was added to this charge and a sales tax on this charge is not an issue. Petitioner's sole witness, the auditor who initially assessed the sales tax on the transportation charge, testified that his decision to assess sales tax for this charge was influenced by the fact that charges for leasing and transportation were included on the same invoice. Petitioner has a separate liability policy to cover equipment being transported on Petitioner's vehicles apart from the coverage of the equipment while not in transit.
The Issue Petitioner's liability for tax, interest, and penalty, pursuant to Chapter 212, Florida Statutes, as set forth in Notice of Assessment, dated December 9, 1975. At the hearing, it was stipulated that the sale by Petitioner to one Norady as set forth in Paragraph B of the Petition was no longer in issue, and accordingly this count was withdrawn by Petitioner. The amount of sales by Petitioner to Triumpho Electric as shown in Paragraph C of the Petition was stipulated to be in the amount of $243,724.34 instead of $248,255.26. In view of the above Stipulations, the Hearing Officer requested that a revised assessment be prepared and submitted after the hearing to reflect the amount now sought by Respondent and to indicate thereon the taxes, penalty aid interest attributable to sales to Ivan Alexander, Triumpho Electric, Grand Bahama Development Company, and Agregados de Cal, purchasers from Petitioner. The revised schedule in the total amount of $12,358.37 was submitted on April 30, 1976, received by the Hearing Officer on May 4, 1976, and is marked as Respondent's Exhibit 1. The parties stipulated at the hearing that the method of computation was correct and Petitioner has filed no objections to the counts of the revised assessment. Accordingly, it is deemed to reflect the amount due and owing if imposition of tax is valid.
Findings Of Fact During the period November 1, 1973 to February 28, 1975, Petitioner made sales of merchandise to the following: Ivan Alexander, Triumpho Electric, Grand Bahama Development Company and Agregados de Cal. the circumstances of each of these transactions are set forth below. Ivan Alexander Construction Co., Ltd. a. Petitioner made sales of electrical equipment in amount of $1,646.50 to Ivan Alexander Construction Co., Ltd. Freeport, Grand Bahamas1 on September 24, 1974. Petitioner delivered e merchandise to Lindsley-RBC, Miami, Florida. Lindsley-RBC was not licensed exporter, but acted in an agency capacity for the purchaser. Subsequent to Petitioner's delivery, Lindsley-RBC consolidated the merchandise with other purchases made by Ivan Alexander, for shipping purposes. After consolidating the merchandise, Lindsley-RBC delivered the merchandise to the shipping vessel, the Tropic Day. It was received by the purchaser in Freeport on October 11, 1974. (Stipulation, Petitioner's Composite Exhibit 7). Triumpho Electric, Inc. Petitioner made sales of electrical construction equipment n the amount of $237,634.57 to Triumpho Electric, Inc., Christiansted, St. Croix, Virgin Islands, during the period under consideration. The procedures used in purchasing, delivering and shipping the merchandise are s follows: Ivan M. Bauknight, an employee of Triumpho, placed the order or the merchandise "on behalf of Triumpho" personally at Petitioner's - place of business, by telephonic communication with a salesman employed by Petitioner, or by contacting its sales representative who took the order in person from Bauknight. In August of 1972, Triumpho had formed Caribbean Supply Company, Inc., a wholly-owned subsidiary, for purposes of purchasing merchandise, consolidating said merchandise in its own warehouse, and shipping. To further effectuate their purposes, warehouse pace was secured at Miami International Airport. Although Bauknight as in charge of Caribbean Supply Company, Inc., he was not an employee of that company. In fact, Caribbean Supply Company, Inc., had no employees during the period in question, excepting casual labor at intervals who were supervised by Mr. Bauknight. Although it was not a "licensed exporter", Caribbean possessed an export sales tax number issued by Respondent. Subsequent to the placing of orders in the above-described manner, Petitioner delivered the merchandise to Caribbean Supply Company, Inc.'s warehouse located at Miami International Airport where the merchandise was consolidated with other purchases. After delivery, and after packaging and consolidating the merchandise in Caribbean Supply Company, Inc.'s warehouse, Bauknight contacted a shipping company and requested that a "piggyback" trailer be provided on which to load the merchandise. The shipping company then placed the trailer upon Caribbean Supply Company, Inc.`s loading lock where Bauknight and laborers would load the merchandise onto the trailer, seal it, and then inform the shipping company which would take it to Dodge Island Seaport, Miami, Florida, and load it upon a ship. During the assessment period in question, all trailers were loaded at Caribbean Supply Company, Inc. Another method of transportation was shipment by air from Miami International Airport. In such cases, the merchandise was delivered by Petitioners to Caribbean's warehouse where it was packaged and taken to commercial airlines for shipment. (Testimony of Bauknight, Petitioner's Composite Exhibits 1-4). Grand Bahama Development Company, Ltd. Petitioner made sales of merchandise in the amount of $21,407.55 to Grand Bahama Development Company, Ltd., during the period in question. Procedures used in purchasing, delivering and shipping were as follow: America Devco, Inc., Miami, Florida, a wholly-owned company of Grand Bahama Development Company, Ltd., was created by the latter to represent its interests in the United States. At all times pertinent to the instant transactions, America Devco, Inc., was not a licensed exporter but was acting as Grand Bahama Development Company, Ltd's agent. It did, however, possess an export sales tax number issued by Respondent. America Devco, Inc., contacted Petitioner's sales representative by telephone and placed orders subsequently issuing a confirming purchase order to Petitioner. In about 60 percent of the transactions, Petitioner delivered the merchandise to America Devco, Inc.'s warehouse. In about 40 percent of the transactions, America Devco, Inc., went to Petitioner's business site, picked up the merchandise and took it to its warehouse. By both methods, the merchandise usually remained at America Devco, Doc's warehouse from one to three days in order to create shipping documents or to take advantage of the hundred pounds air shipping minimum. America Devco, Inc., utilized its trucks to deliver the merchandise to the airline cargo loading platform. All supplies were kept in the original containers supplied by Petitioner and America Devco, Inc., only affixed shipping label. Shipping documents were prepared by the shipping company. In one transaction, Petitioner delivered purchased merchandise to Alco Shipping Company at the dock in Port Laudania, Florida. (Testimony of Gomez, Petitioner's Composite Exhibit 5). Agregados de Cal. Petitioner made sales of merchandise in the amount of 905.90 to Agregados de Cal during the period in question. The merchandise was delivered by Petitioner to Mr. Robert de la-Puirtilla, in employee or representative of Agregados de Cal, at Petitioner's lace of business, at which time he took possession of the merchandise nd delivered it to the airport. (Stipulation, Petitioner's Composite Exhibit 6).
Recommendation That the tax assessment of $12,358.37 against Petitioner under the provisions of Section 212.05, F.S., including interest and penalties be imposed by the Department of Revenue and enforcement thereof be effected in accordance with the provisions of law. DONE and ENTERED this 12th day of July, 1976, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Patricia S. Turner Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 George A. Buchmann Penthouse B2 7000 S.W. 62 Avenue South Miami, Florida 33143 Attorney for Petitioner
Findings Of Fact Petitioner is a Florida corporation doing business and having its principal place of business in Broward County, Florida. It holds an operating certificate as an air taxi/commercial operator issued by the Federal Aviation Administration on April 4, 1977. The certificate states that Petitioner has met the requirements of the Federal Aviation Act of 1958, as amended, and the rules prescribed thereunder for issuance of the certificate. The operating certificate was issued by the F.A.A. under 14 CFR 135. Petitioner is also registered as an air taxi operator with the Civil Aeronautics Board (C.A.B.) under 14 CFR 298. (Testimony of Jackson, Petitioner's Exhibit 2, Stipulation) Respondent's auditor conducted an audit of Petitioner's records for the period June 1, 1975 through July 31, 1978, and, on August 15, 1978, issued a Notice of Proposed Assessment of tax, penalties and interest under Chapter 212, Florida Statutes, in the total amount of $1,629.35 for alleged delinquent sales and use tax incurred during the audit period. The proposed assessment was based upon audit findings that Petitioner had purchased fuel, aircraft parts and repairs from a firm called Hansa Jet located at the Fort Lauderdale Hollywood Airport on which sales tax was allegedly due, but not paid thereon. Petitioner was not chartered as a corporation until March, 1977, and purchases prior to that time were made by Andy Jackson Yacht and Aircraft, Inc., which was a registered dealer under Chapter 212, Florida Statutes. Although the audit was based upon invoices in the possession of Petitioner, no effort was apparently made to check the records of the supplier, Hansa Jet, to ascertain whether it took tax exemption certificates from either firm. Several of the invoices reflected the sales tax number of Andy Jackson Yacht and Aircraft, Inc. Petitioner was not a registered dealer under Chapter 212, during the audit period. It was originally a division of Andy Jackson Yacht and Aircraft, Inc. and since 1977 has been a wholly owned subsidiary of that firm. (Testimony of Bravade, Jackson, Petitioner's Exhibit 7) By letter of September 12, 1978, Petitioner asked Respondent for an interpretation as to the applicability of the partial tax exemption of Section 212.08(9), Florida Statutes, to its operations. By letter of September 19, Respondent's audit bureau chief advised Petitioner that the exemption applied only to carriers holding certificates of convenience issued by the C.A.B. that establish routes, rates, and reports on operations on such routes. Petitioner thereafter requested a Chapter 120 hearing. (Petitioner's Exhibit 4) Prior to obtaining federal authorization to operate as an air taxi carrier, Petitioner was obliged to meet such preliminary requirements as acquisition of aircraft, insurance coverage, and the preparation of a detailed operations manual for the F.A.A. specifying the structure of the firm, and detailed provisions relating to personnel and operations. Its pilots have the same training and meet the same basic qualifications as those employed by other airlines, and its aircraft are periodically inspected by the F.A.A. under federal standards. Petitioner's place of business is located at the Fort Lauderdale- Hollywood International Airport and it maintains gate and counter space at the terminal. Its aircraft carry both passengers and cargo at published rates. Although it formerly flew scheduled routes to the Bahama Islands, it found these to be unprofitable and discontinued them. Approximately 95 percent of its business is in interstate and foreign commerce, and all of the purchases for which the taxes are presently asserted were for flights in such commerce. Petitioner is listed in the local telephone directory under the heading "Airline Companies." The listing shows destinations in the Bahama Islands and further states "Charter rates on request to all Caribbean and U.S. cities." It accepts passengers without discrimination who are willing to pay the specified rate for passage. It is a member of the Warsaw Pact on limitation of liability for international carriers. Petitioner will quote specific charter rates to a group to a particular place but gives the same rate to any other group desiring transportation to the same destination. Its operations are controlled by the F.A.A. in accordance with Petitioner's plan of operations. It aircraft fly twenty-four hours a day throughout the week. It has no continuing contracts for cargo or passengers. Although it has printed passenger tickets, these are not customarily used. Fares are paid in cash or through national credit cards. Petitioner is free to decline to fly passengers and cargo to a particular destination and exercises its discretion in this respect. It files regular annual reports to the C.A.B. on all of its revenue operations. (Testimony of Jackson, Petitioner's Exhibits 3, 6) Although Petitioner, as an air taxi operator, does not hold a C.A.B. certificate of public convenience and necessity under Section 401 of the Act, it is nevertheless viewed as a "common carrier" by that agency. The C.A.B. does not issue "licenses" to any category of air carrier but construes registration with it to be the same as a license. (Testimony of Untiedt, Petitioner's Exhibit 1)
Recommendation That Respondent revise its proposed assessment against Petitioner to encompass only those transactions occurring after Petitioner's date of incorporation, and enforce the same in accordance with law. DONE and ENTERED this 21st day of March, 1979, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Gaylord A. Wood, Jr. 603 Courthouse Square Building 200 South East 6th Street Fort Lauderdale,, Florida 33301 Maxie Broome, Jr. Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 John D. Moriarty Department of Revenue Room 104, Carlton Building Tallahassee, Florida 32304
The Issue Respondents' alleged violations of Sections 475.25(1)(a) and 475.25(3), Florida Statutes. Respondent Mann appeared at the hearing without counsel. Accordingly, he was advised of his rights at the hearing, including the right to testify as a witness if he so desired.
Findings Of Fact Respondent First Allstate Realty Corporation, Miami, Florida (hereinafter First Allstate) is now and was at all times alleged in the Administrative Complaint a registered real estate broker. Respondent William M. Dorn is now a registered real estate broker and was from September 2, 1975 to December 17, 1975 a registered real estate broker, president and active firm member of First Allstate. Respondent Lawrence Mann is now a registered real estate broker and was from December 17, 1975 until January 19, 1977 registered as the president and active firm member of First Allstate. (Petitioner's Exhibits 1-3) First Allstate was incorporated in Florida on September 3, 1975 with Respondent Dorn as president and Bonnie Weiss as secretary. The latter individual financed the business. The firm's operation consisted of securing listings on real estate located in Florida from out-of-state owners by telephone and correspondence. Larry Grabarnick, who acted as the office manager, hired some four to eight real estate salesmen who each manned a booth in the office during the evening hours to solicit prospective listings by telephone calls. A solicitation "pitch" placed on the wall was used by the salesmen to induce the individual called to list his property with First Allstate. In the course of the telephone call, the salesmen would advise the land owner that there was a $250.00 to $360.00 listing fee charged in advance which was fully refunded when the property was sold and that it would be deducted from the standard real estate commission on the sale. If the prospective client expressed interest in listing property with the firm, a brochure and sample listing agreement were mailed. The brochure depicted First Allstate as a large sales organization that would investigate the status of development and zoning in the area of listed property to recommend a correct selling price, advertise listings in real estate publications and national newspapers, and utilize the services of National Multiple Listing Service in Ft. Lauderdale to achieve wide exposure of the property. A "guarantee of performance" certificate signed by the president of the firm which was provided to persons listing property, promised that First Allstate would advertise the property as it deemed advisable in local newspapers or "other mediums of merit," direct a "concentrated effort to sell same and to use the advance fee to "help defray the cost of preparation for merchandising" the property for sale. Item 5 of the `guarantee" stated as follows: "I understand that this agreement does not guarantee the sale of my property, but that it does guarantee that you will make an earnest and continued effort to sell same until this agreement is terminated." The listing agreement provided that First Allstate would perform the services contained in the "guarantee" and that it would make an "earnest effort" to sell the property. (Testimony of Dorn, Petitioner's Exhibits 7-8 Respondent's Exhibit 1) Although Dorn was ostensibly the supervising broker for the corporation, in fact he was virtually nothing more than a mere figurehead who had "loaned" his license to Weiss in order to establish apparent legitimacy of the business. He did not hire sales personnel, issue their instructions or supervise them. The extent of his activity was to "drop by" the office in the evenings and listen to some of the telephone conversations at random. He had nothing to do with the preparation of the sales literature or the placement of the listings with the National Multiple Listing Service. He was unaware of how the list of property owners was obtained, how the listing price of the property was determined, or what the salesmen were paid. He set no policies and issued no instructions for the operation of the business. All of the corporate records were kept by Weiss and Grabarnick and he did not have access to them. There was not, to his knowledge, any method used to attempt to sell the property other than listing with National Multiple Listing Service, nor were any newspaper advertisements ever published by the firm. Further, he was unaware of any sales that were ever made by First Allstate during the period that he was with the company. His primary function was to sign the listing contracts as broker and the "guarantee of performance document sent to the land owners. For these services, he received between $250.00 and $350.00 a week and was paid a total of $3,475.00 during the period of his employment with the firm. He left First Allstate in December of 1975 be cause he was informed by Weiss that she was going to sell the business because it was not making enough money. At the time he left, he secured a release document from First Allstate bearing the purported signature of the successor broker, Respondent Mann, to identify him against any claims arising from the operations of First Allstate. However, Mann denied signing the release. (Testimony of Dorn, Mann, Petitioner's Exhibit 9) In 1975, Respondent Mann became a salesman for Property Resales Service, Inc., an advance fee firm in Miami that operated similarly to First Allstate. About mid-December, that firm was taken over by Republic National Realty, a firm that conducted similar operations, During this period, Mann made sales over the telephone. First Allstate, which had been purchased by one Joel Steiner about this time, took over Republic National Realty and needed a broker for the First Allstate operation. Accordingly, Mann was made president of First Allstate and two secretaries were listed as officers of the firm. Some fifteen or twenty salesmen who had previously been working for Property Resales Service Inc., and Republic National Realty moved to First Allstate which took over the offices of the other firm. Business was conducted in a manner similar to that in previous months, except that with the increased number of salesmen, some of them served simply as "fronters" who made the initial calls to land owners. In such cases, if the owner was interested in receiving literature, a salesman known as a "driver" made the follow-up phone calls. "Fronters" received $25.00 from the $375.00 listing fee then charged, and a "driver" received one-third of the listing fee. The salesmen operated out of booths in the office generally for a period of four hours in the evening six days a week. The same brochure that First Allstate had used in prior operations was utilized again with a sticker showing Mann's name placed over that of the former broker. Although Mann did not hire sales personnel or have anything to do with setting policies, he did exercise some degree of supervision over the salesmen. Like Dorn, he signed the lifting contracts and the "guarantee of performance" document. He, too, was unaware of any advertising placed by the firm other than in the National Multiple Listing Service but he knew that no sales were made by First Allstate during the time he was with the firm. He further knew that the corporation made no effort to sell thee property other than to use multiple listing. For his services, he received $100.00 a week, but also manned the telephones himself on occasion and secured listings. In such instances, he would inform prospective clients that First Allstate was a big real estate firm and that it was successful in selling property. In this regard, Mann testified at the hearing that "You know, all salesmen lie a little bit." On one occasion in April, 1976, Mann called a Massachusetts resident, informed him that he had a customer for the individual's Florida property, and that he could execute the sale in one or two weeks upon receipt of the advance listing fee. Mann further stated that the fee would be refunded if the transaction did not go through because it was a guaranteed sale. Relying on these representations, the individual sent the fee and about a month later talked to Mann again who said that the deal was being processed and would soon be closed. He heard nothing further and subsequent attempts to call Mann or the firm resulted in information that the telephones had been disconnected. In mid-December, 1975, a salesman for First Allstate telephoned a resident in Rhode Island who owned property in Florida and informed him that he had buyers available and that he thought he could get $10,5,00.00 for a lot that the individual had purchased two years previously for $3,900.00. The salesman indicated that the company had made sales of comparable property and that his lot would be widely advertised and could be sold within a few months. He was further informed that the advance fee of $375.00 was for advertising expenses. He also stated that there were foreign buyers, including South Americans and Japanese, who were looking for property for tax write-offs and investments. After paying the advance fee of $375.00 in reliance on such promises, the owner heard nothing further from the firm. In late May, 1976, after attempting to call First Allstate, he was unable to contact them and finally wrote to the State Attorney General's Office for information. He has beard nothing with respect to the matter since that time from the firm. Another employee of the firm, a "fronter," recalled a salesman telling a prospect that he had a group ready to buy their property and heard other salesmen imply to prospects that the advance fee would be returned if no sale was made of the property. The representations made in the literature of Property Resales, Inc. were used almost yerbatim in the brochures of First Allstate and when the former firm went defunct, their listings were transferred to First Allstate. (Testimony of Mann, Sherman, Reed, Glover, Petitioner's Exhibits 4-6 (Depositions of Kershaw, Andrews, Coppeta) ,Petitioner's Exhibits 10-12, supplemented by Petitioner's Exhibits 13-14)
Recommendation That the certificates of registration of First Allstate Realty Corporation, William M. Dorn, and Lawrence Mann be revoked pursuant to subsection 475.25(3), Florida Statutes. Done and Entered this 24th day of August, 1977, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 COPIES FURNISHED: Richard J. R. Parkinson, Esquire Louis B. Guttmann, III, Esquire Florida Real Estate Commission 2699 Lee Road Winter Park, Florida 32789 Burnett Roth, Esquire 420 Lincoln Road Miami Beach, Florida 32789 Lawrence Mann 7928 West Drive Miami, Florida 33141
The Issue The Department adopts and incorporates in this Final Order the Statement of the Issues in the Recommended Order. The Department's exceptions to the Statement of the Issues in the Recommended Order are not material and are therefore withdrawn.
Findings Of Fact Kjell Bergh operates a Volvo dealership in Minnesota. He also has other business interest in the United States and abroad. In 1986, he received approval from Volvo to open a Volvo dealership in the area of Boca Raton, Florida. Boca Raton zoning makes it very difficult to locate automobile dealerships there. Mr. Bergh therefore located a suitable five acre site to build the Volvo dealership in nearby Delray Beach, Florida. The property was purchased in 1987 solely to build the automobile dealership on it. At some point Mr. Bergh also received a Volkswagen franchise, and operates both the Volvo and the Volkswagen franchises on the Delray Beach property. Title to the land was taken individually in the names of Kjell and his wife Mary Bergh, as joint tenants, on the advice of their tax counsel. The purchase price for the land was approximately one million dollars. The automobile dealership is operated by Borton Motors Incorporated, a Florida corporation organized in 1986. It is owned 75 percent by the Petitioners, Kjell and Mary Bergh, and 25 percent by the vice president and general manager, Loren Sheffer, who has also invested money in the dealership. It is common in the automobile industry for local managers to have a personal stake in automobile dealerships they manage for absentee owners. The manager, however, has only a minority interest, and the automobile manufacturer, Volvo, holds Mr. Bergh responsible for the operation of the dealership. The Berghs financed the purchase of the land and the buildings used as the automobile dealership facilities through the Barnett Bank of Palm Beach County. On July 23, 1987, the Berghs executed a note and mortgage for $2,000,000 in favor of the Barnett Bank for the purchase of the property along with a construction loan agreement to build the dealership facility. The rate and mortgage were modified to increase the amount borrowed to $2,250,000 in May and June of 1988. The land was then leased to Borton Motors, Inc., the legal entity which operated the automobile dealerships. As a condition of obtaining the loan from Barnett Bank, the bank required that Borton Motors, Inc., guarantee the loan which the bank had made to Mr. and Mrs. Bergh, and also required the Berghs to assign the lease to Barnett Bank. The terms of the mortgage give Barnett Bank the right to collect rents and other payments from the property, and prohibits the termination or cancellation of the lease without Barnett's permission. Barnett Bank had the right to approve the lease provisions and to set the amount of the rent so that the debt service coverage ratio would be no less than 1.2 times the amount borrowed. In connection with the loan by Barnett Bank, on July 27, 1987, Borton Motors, Inc., gave to Barnett Bank "its continuing and unconditional guarantee of the payment in full when due of any and all indebtedness of Debtor [Kjell and Mary Bergh] to Bank to the same extent as if Guarantor [Borton Motors, Inc.] were the principal debtor of the indebtedness" (Exhibit 1D). From the inception of the transaction, it was intended that the entity operating the automobile dealership, Borton Motors, Inc., would finance the purchase of the real estate on which the automobile dealership would be located, and the construction of necessary improvements. This was accomplished through the rental payments Borton Motors, Inc., would make to the Berghs, who had actually taken title to the land. Through its guarantee, Borton Motors, Inc., was as liable to Barnett Bank as were the Berghs, from the inception of the loan. The Berghs hoped to receive a return on monies they invested in the automobile dealership, whether for real estate, improvements to the real estate, inventory in the form of cars, or parts, or for payments made for labor to its sales force and service technicians. It is misleading to state that the Berghs intended to receive a return on the real estate investment they made. The return on the real estate is not the result of a separate investment made by the Berghs, it is instead a part of the overall operation of the dealership. The Berghs are not investors in real property who happened to lease property to a tenant who happens to operate a automobile dealership on that property. The Berghs do take a federal income tax deduction for interest paid on the note to Barnett Bank and report the rent received from Borton Motors, Inc., as income on their federal income tax returns. Petitioners have acquired other debt on behalf of the corporation and do not receive any money from the corporation over and above the amount of the mortgage and other indebitness. The Barnett Bank of Palm Beach County eventually sold its loan to the Berghs to Volvo Finance North American, Inc., in late April 1992. This sale has no effect on the taxation of the transaction of issue. On February 8, 1991, the Department of Revenue sent to the Petitioners a form requesting them to file a "application for Sales and Use Tax Registration" and asking them to report the rental income they had received from Borton Motors, Inc., on the dealership property for the period February 1986 through February 1991. The Berghs filed the application and supplied the rental figures to the Department, but maintained no tax was due because the "amount paid reflects the actual debt service." The Department sent the Berghs a Notice of Assessment on February 28, 1991, stating that they owed $71,043.29 in tax, penalties and interest, representing a sales tax at the rate of 6 percent upon the lease payments they had received from Borton Motors, plus penalties and interest. The Department also gave them notice of a right to protest the assessment. The Berghs did protest the assessment to the Department's Bureau of Hearings and Appeals, which sustained the assessment, but agreed to reduce the penalty involved. The Berghs paid $7,043.50 plus interest of $2,327.98 which represents the amount of payments from Borton Motors, Inc., in excess of the debt service due to Barnett Bank.
Recommendation Based on the foregoing, it is recommended that a final order be entered withdrawing the assessment of tax. DONE AND ENTERED this 28th day of September, 1993, in Tallahassee, Leon County, Florida. DON W. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Fl 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of September, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-2106 The following constitutes my rulings pursuant to Section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties. Petitioner's Proposed Findings: 1.-19. Adopted, though not verbatim. Respondent's Proposed Findings: 1. Accepted, excepted for last sentence which is rejected as unsupported by weight of the evidence. 2.-6. Adopted. Subordinate to hearing officer findings on this point. 8.-10. Accepted, but not verbatim. COPIES FURNISHED: Cynthia S. Tunnicliff Carlton, Fields, Ward, Emmanuel, Smith & Cutler P.A. Post Office Drawer 190 Tallahassee, Florida 32302 Mark T. Aliff, Esquire Assistant Attorney General Department of Legal Affairs Tax Section, Capitol Building 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 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue At issue herein is whether or not the Petitioner, a not-for- profit organization is entitled to a refund of taxes collected and paid to Respondent pursuant to the exemption provision of Subsection 212.04(2)(b)2., Florida Statutes.
Findings Of Fact Based on the testimony of the Petitioner's witness, the arguments of counsel and Respondent's brief submitted on June 5, 1979, the following relevant facts are found. The Petitioner, Miami Civic Music Association, is seeking a refund of taxes collected and paid prior to October 1, 1978, on the sale of membership fees. The Petitioner obtained a certificate qualifying it as a not-for-profit organization from the United States Internal Revenue Service since approximately 1945. This status has been submitted to Respondent. Prior to October 1, 1978, Petitioner submitted to Respondent approximately $1,602.33 based on the sale of membership dues received for musical performances which were to he held subsequent to October 1, 1978, i.e., October 25, 1978 through April, 1979. Petitioner bases its refund claim on the fact that the actual concert series which gave rise to the ticket sales occurred after October 1, 1978. Respondent's position is that the Petitioner is not entitled to a refund, first, on the ground that the tax collections for which the refund is being sought were collected prior to October 1, 1978, and therefore not properly refundable under the exemption provision of Subsection 212.04(2)(b)2., Florida Statutes. Secondly, Respondent contends that Petitioner is without standing to seek a refund since the sales tax applicable to admission charges purportedly collected must first be refunded to the respective subscribers which the Petitioner has not done in this case. Subsection 212.04(2)(b)2., Florida Statutes, provides: No tax shall be levied on dues, membership fees, and admission charges imposed by not- for-profit sponsoring organizations or community or recreational facilities. To receive this exemption, the sponsoring organization or facility must qualify as a not-for-profit entity under the provisions of s. 501(c)(3) of the United States Internal Revenue Cede of 1954, as amended. This exemption became effective October, 1978. The membership fees here in question were sold by Petitioner prior to October 1, 1978, and taxes were collected and remitted to the Department of Revenue. An examination of the legislative intent embodied in Chapter 212, Florida Statutes, reveals that each and every admission is taxed unless specifically exempted. (Subsection 212.21(3), Florida Statutes.) Inasmuch as there was no statutory exemption for Petitioner's organization prior to October 1, 1975, and based on the fundamental rule of statutory construction to the effect that a statute operates prospectively unless the intent is clearly expressed that it operates retrospectively. State, Department of Revenue v. Zuckerman-Vernon Corporation (Florida 1977) 354 So.2d 353. Subsection 212.04(2)(b)2., Florida Statutes, reveals no legislative intent that this amendment was to be applied retrospectively. Finally, since an admissions tax like sales taxes, are collected on behalf of the State by the operator, it is in effect a form of excise tax upon the customer for exercising his privilege of purchasing the admission, the Petitioner herein lacks standing inasmuch as it did not pay the taxes, but merely remitted to the Department of Revenue the tax which was paid by subscribers of the memberships from the organization. See, for example, Scripto, Inc. v. Carson, 101 So.2d 775 (Florida 1958) and State ex rel Szabo Food Services, Inc. of N.C. v. Dickinson, 250 So.2d 529 (Florida 1973). In this case, in the absence of the Petitioner showing that it was the party entitled to a refund of the taxes herein based on a claim of either an overpayment, a payment where no tax was due or a payment erroneously made, Petitioner failed to advance a basis upon which its claim can be granted. Section 215.26, Florida Statutes. For these reasons, I shall recommend that the Petitioner's claim for a refund herein be denied.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby, RECOMMENDED: That the Petitioner's claim for a refund herein be DENIED. ENTERED this 29th day of June, 1979, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: James H. Wakefield, Esquire Hedges, Gossett, McDonald & wakefield 3325 Hollywood Boulevard, Suite 305 Hollywood, Florida 33021 Linda C. Procta, Esquire Assistant Attorney General Department of Legal Affairs The Capitol, LL04 Tallahassee, Florida 32301
The Issue Whether C. Fullerton and Landscaping Co., Inc., is indebted to Other Side Sod, LLC, for the purchase of sod and pallets; and, if so, in what amount.
Findings Of Fact Petitioner is a Florida Limited Liability Corporation located in Arcadia, Florida, and at all times relevant hereto was a producer of agricultural products, as defined by section 604.15(9), Florida Statutes. Petitioner is also a “dealer in agricultural products” within the meaning of section 604.15(2). Respondent, during all times relevant hereto, was a “dealer in agricultural products,” within the meaning of section 604.15(2). At all times relevant to this proceeding, Great American served as surety for Respondent. At all times relevant to this proceeding, Respondent was a customer of Other Side Sod. Respondent purchased sod from Petitioner and thereafter resold and installed the sod to Respondent’s customers. Petitioner sold sod to its customers on wooden pallets. An integral part of each transaction involved the pallets. There are 10 invoices in dispute which cover the period October 14, 2016, through February 10, 2017. For the underlying transactions that relate to the invoices in question, the following language is contained on each field/delivery ticket: Terms of Sale: Payment due upon receipt. All payment[s] applied to pallet balance first. Interest at the rate of 1 1/2% per month will be charged on unpaid invoice amounts after 14 days. Invoices will be charged $0.02 per square foot additional after 30 days. Purchaser agrees to pay all costs of collection, including attorney fees, in [the] event it is necessary to institute suit for collection. Venue will be in DeSoto County, Florida. All Sales F.O.B. Shipping Point. On or about October 14, 2016, Petitioner sent Respondent invoice 47293, which showed a balance due of $462 for pallets related to the sale of Bahia sod. The invoice remained unpaid for more than 30 days and Petitioner, in accordance with the terms of sale, amended the original invoice and added a charge of two cents for each of the 83,200 units of Bahia sod related to the transaction ($1,664). Petitioner also added to the invoice a charge of $124.80 for sales tax related to the late payment penalty ($1,664 x 7.50 percent). On or about October 23, 2016, Petitioner sent Respondent invoice 47378, which showed a balance due of $224 for pallets related to the sale of Bahia sod. The invoice remained unpaid for more than 30 days and Petitioner, in accordance with the terms of sale, amended the original invoice and added a charge of two cents for each of the 70,400 units of Bahia sod related to the transaction ($1,408). Petitioner also added to the invoice a charge of $105.60 for sales tax related to the late payment penalty ($1,408 x 7.50 percent). On or about October 24, 2016, Petitioner sent Respondent invoice 47420, which showed a balance due of $280 for pallets related to the sale of Bahia sod. The invoice remained unpaid for more than 30 days and Petitioner, in accordance with the terms of sale, amended the original invoice and added a charge of two cents for each of the 16,000 units of Bahia sod related to the transaction ($320). Petitioner also added to the invoice a charge of $24 for sales tax related to the late payment penalty ($320 x 7.50 percent). On or about November 13, 2016, Petitioner sent Respondent invoice 47549, which showed a balance due of $1,526 for pallets related to the sale of Bahia sod. The invoice remained unpaid for more than 30 days and Petitioner, in accordance with the terms of sale, amended the original invoice and added a charge of two cents for each of the 103,200 units of Bahia sod related to the transaction ($2,064). Petitioner also added to the invoice a charge of $154.80 for sales tax related to the late payment penalty ($2,064 x 7.50 percent). On or about December 6, 2016, Petitioner sent Respondent invoice 47755, which showed a balance due of $434 for pallets related to the sale of Bahia sod. The invoice remained unpaid for more than 30 days and Petitioner, in accordance with the terms of sale, amended the original invoice and added a charge of two cents for each of the 30,400 units of Bahia sod related to the transaction ($608). Petitioner also added to the invoice a charge of $45.60 for sales tax related to the late payment penalty ($608 x 7.50 percent). On or about January 8, 2017, Petitioner sent Respondent invoice 48093, which showed a balance due of $1,256 for 12,800 units of Bahia sod, $224 for a pallet deposit, and $72 for sales tax. The invoice remained unpaid for more than 30 days and Petitioner, in accordance with the terms of sale, amended the original invoice and added a charge of two cents for each of the 12,800 units of Bahia sod related to the transaction ($256). Petitioner also added to the invoice a charge of $19.20 for sales tax related to the late payment penalty ($256 x 7.50 percent). On or about December 13, 2016, Petitioner sent Respondent invoice 48166, which showed a balance due of $343 for pallets related to the sale of Bahia sod. The invoice remained unpaid for more than 30 days and Petitioner, in accordance with the terms of sale, amended the original invoice and added a charge of two cents for each of the 163,200 units of Bahia sod related to the transaction ($3,264). Petitioner also added to the invoice a charge of $244.80 for sales tax related to the late payment penalty ($3,264 x 7.50 percent). On or about January 29, 2017, Petitioner sent Respondent invoice 48285, which showed a balance due of $3,000 for 40,000 units of Bahia sod, $308 for a pallet deposit, and $225 for sales tax (total = $3,533). On February 3, 2017, Respondent submitted to Petitioner partial payment in the amount of $3,210.50, which left an unpaid balance of $322.50. The balance remained unpaid for more than 30 days and Petitioner, in accordance with the terms of sale, amended the original invoice and added a charge of two cents for each of the 40,000 units of Bahia sod related to the transaction ($800). Petitioner also added to the invoice a charge of $60 for sales tax related to the late payment penalty ($800 x 7.50 percent). On or about January 31, 2017, Petitioner sent Respondent invoice 48301, which showed a balance due of $390 for 5,200 units of Bahia sod, $91 for a pallet deposit, and $29.25 for sales tax (total = $510.25). On February 15, 2017, Respondent submitted to Petitioner partial payment in the amount of $468.33, which left an unpaid balance of $41.92.1/ The balance remained unpaid for more than 30 days and Petitioner, in accordance with the terms of sale, amended the original invoice and added a charge of two cents for each of the 5,200 units of Bahia sod related to the transaction ($104). Petitioner also added to the invoice a charge of $7.80 for sales tax related to the late payment penalty ($104 x 7.50 percent). On or about February 10, 2017, Petitioner sent Respondent invoice 48409, which showed a balance due of $390 for 5,200 units of Bahia sod, $21 for a pallet deposit, and $29.25 for sales tax (total = $440.25). On February 15, 2017, Respondent submitted to Petitioner partial payment in the amount of $398.33, which left an unpaid balance of $41.92. The balance remained unpaid for more than 30 days and Petitioner, in accordance with the terms of sale, amended the original invoice and added a charge of two cents for each of the 5,200 units of Bahia sod related to the transaction ($104). Petitioner also added to the invoice a charge of $7.80 for sales tax related to the late payment penalty ($104 x 7.50 percent).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order approving the claim of Other Side Sod, LLC, against C. Fullerton and Landscaping Co., Inc., in the amount of $4,981.34. DONE AND ENTERED this 7th day of November, 2017, in Tallahassee, Leon County, Florida. S LINZIE F. BOGAN 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 7th day of November, 2017.
