The Issue The issue presented is whether Petitioners are entitled to an award of attorney's fees and costs pursuant to the Florida Equal Access to Justice Act.
Findings Of Fact The underlying proceeding, DOAH Case No. 94-3605, involved Petitioners' challenge to notices of final assessments for fuel taxes. The assessments had been issued by the Department against Nana's Petroleum, Inc.; Emilio Perez d/b/a Nana's Stations; Emilio Perez as Vice President of Nana's Petroleum, Inc.; Edilia Perez as Secretary of Nana's Petroleum, Inc.; Sun Petroleum, Inc.; and Emilio Perez as President and Manager of Sun Petroleum, Inc. At the commencement of the final hearing, Sun Petroleum, Inc., and Emilio Perez as President and Manager of Sun Petroleum, Inc., withdrew their challenge to the assessments against them, and those assessments became final. Five assessments thereafter remained for determination in the underlying proceeding: one against Edilia Perez as secretary of Nana's; one against Emilio Perez as vice president of Nana's; one against Emilio Perez d/b/a Nana's Stations; and two against Nana's Petroleum, Inc. In the Recommended Order and in the Final Order entered in the underlying proceeding, only a portion of one of the assessments against Nana's Petroleum, Inc., was upheld. The Department was substantially justified in issuing its assessments against Petitioners and in initiating this proceeding. Further, an award of attorney's fees and costs for the underlying proceeding would be unjust.
Findings Of Fact During the period covered by the tax audit, Petitioner published and distributed free of charge two Jacksonville area editions of a weekly magazine entitled TV Facts. This magazine contains substantial advertising which provides all revenues. In addition to the advertising, television schedules and feature stories are included to interest the general public in the publication. Petitioner obtained a second class postal permit for the magazine, but has never used the mails for distribution. During the period at issue, the magazine was prepared in a three step process. The rough layout without television schedules was prepared by Petitioner and forwarded to Composition Compound, Inc., a Miami company. This company obtained the television schedules and prepared the final layout. Composition Compound then photographed this layout and sent the negatives to Sun 'N' Fun Printing, a Clearwater company. Sun 'N' Fun then printed the magazine and delivered it to Petitioner. Petitioner paid Composition Compound for all services provided by that company and Sun 'N' Fun. Thus, there was no direct business relationship between Petitioner and Sun 'N' Fun. Petitioner believed it qualified for the newspaper exemption and was neither charged nor paid any sales taxes until it learned through Respondent's audit of Composition Compound that such taxes were due. Respondent seeks to assess Petitioner sales taxes in the amount of $5,830.56 with penalty of $1,457.64 plus 12 percent interest to the date of payment for the audit period December 1, 1977, through November 30, 1980. Petitioner does not contest these computations, but believes the tax due, if any, should be reduced by the amounts it paid to Composition Compound to cover the sales tax billed by Sun 'N' Fun. Petitioner submitted Sun 'N' Fun invoice (Exhibit 7) to demonstrate that Composition Compound was billed for about $2,700.00 in sales taxes by Sun 'N' Fun for printing Petitioner's magazine between December 29, 1978, and December 29, 1979. Composition Compound separately computed its costs and profits which it billed to Petitioner (Exhibit 6). However, there was no separate brochure of the sales tax shown on the Composition Compound invoices, nor was any additional tax charged on the value added by that company.
Recommendation From the foregoing, it is RECOMMENDED: That Respondent enter a final order holding Petitioner liable for $5,830.56 in taxes assessed on December 11, 1980, and for interest computed at the rate of 1 percent per month thereafter until said tax is paid to Respondent. DONE AND ENTERED this 9th day of November, 1981, in Tallahassee, Florida. R. T. CARPENTER, 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 9th day of November, 1981.
Findings Of Fact The Petitioner holds a valid special fuel dealer's license issued by the Respondent. The license was issued during approximately March, 1972. The Respondent conducted an audit of Petitioner's sales operations, and assessed special fuel taxes, plus penalty, on approximately 264,973 gallons of special fuel for which the Respondent contended inadequate account was given. 29,166 gallons of the special fuel involved in the assessment was sold to local oil field drillers. These sales are reflected in invoices which were received in evidence as Joint Exhibit 1. This fuel was used for industrial and commercial purposes, and not for the propulsion of motor vehicles on the public highways of the State of Florida. 161,900 gallons of the special fuel involved in this assessment was sold to Ard Oil Company, Summerdale, Alabama. Petitioner had every reason to believe that Ard Oil Company held a valid license as a dealer of special fuels in the State of Florida. Petitioner took reasonable steps to insure himself as to Ard's status, and received no instructions from the Respondent as to steps that could be taken to identify persons who were not properly licensed as special fuel dealers. 11,700 gallons of the special fuel involved in this assessment was sold to Hagler Grocery. All subsequent sales made by Hagler Grocery were for off- road, agricultural uses. During July, 1973, 5,000 gallons of the Petitioner's special fuel was mistakenly mixed with gasoline. The mixing rendered the special fuel unusable, and it was emptied onto Petitioner's property. This 5,000 gallons of fuel was never sold by the Petitioner, and was never used. On one occasion during the period of the audit, 5,000 gallons of special fuel leaked from one of the Petitioner's storage tanks due to a valve being left open erroneously. This fuel was never sold by the Petitioner, and was never used. During the period covered by the audit involved in this case, the Petitioner sold more than 5,000,000 gallons of special fuel. The Petitioner donates approximately 2,000 - 3,000 gallons of fuel yearly to the local fire department for training purposes. The Petitioner rinses his tanks periodically to keep down the lead content, and this results in some loss in special fuel. The Petitioner loses approximately 5 gallons of special fuel in each loading operation. The Petitioner made effort to account for all special fuel which came into his possession. Less than one percent of the fuel that came into his possession during the audit period has not been accounted for. It is reasonable to conclude, that 52,207 gallons of the Petitioner's special fuel was lost due to spillage, flushing operations, and donations to the local fire department. There was no evidence offered at the hearing from which it could be determined that any unaccounted fuel was used for a taxable purpose, or for any purpose.
Findings Of Fact Petitioner is Carl R. Glass, d/b/a Osceola Forge located at 2749 North Orange Blossom Trail, Kissimmee, Florida 34744. Petitioner is engaged in the business of manufacturing and fabricating burglar bars, steel gates, decorative plastic ornamental castings and injection moldings. Petitioner built and erected one double sided billboard on his business property at 2749 North Orange Blossom Trail, Kissimmee, Florida. It is anchored by its owns supports into the ground as a permanent improvement to Petitioner's real property. The size of the billboard is approximately 12' x 38', plus an apron that runs along the length of the bottom of the billboard. Petitioner leases the face and apron of each side of billboard to customers who are generally required to supply their own labor and material to create an advertising message. The billboard was built to provide double-sided advertising for lanes of traffic going northbound or southbound past Petitioner's place of business. Petitioner has rented the billboard to various lessees for a monthly rental fee over the relevant period. Petitioner did not charge or collect sales and use taxes on the rental fee. Respondent conducted an audit of Petitioner's entire business, for the period May 1, 1986 through April 30, 1991. There was only one item assessed as a result of the audit which was on the lease of the billboard located on Petitioner's business property. Petitioner was assessed sales and use taxes, interest and penalties totalling $6,142.38, including taxes ($4,017.76) with a per diem interest rate of $1.32 to be computed from 10/3/91 to the present. Additional interest due, as of July 1, 1993, was calculated to equal $842.16 (638 days x $1.32). The sales tax assessment was based on invoices and other information provided by the Petitioner and followed the Department of Revenue routine procedures required for all audits. From January 1987 through February 1991, Petitioner, or his secretary, made five telephone calls from Osceola Forge to the Taxpayer Assistance Number of the Department of Revenue's regional office located in Maitland, Florida, requesting assistance. On each occasion, the Department's employee advised Petitioner or his employee that they could call the Department's Tallahassee 800 taxpayer assistance number. On at least one occasion, Petitioner's secretary or Petitioner was advised that the transaction was tax exempt, and need not be collected. Petitioner was aware of the 800 taxpayer assistance number in Tallahassee and tried to call the number. However, he was unable to get through, and called the local office only. On April 9, 1992, Petitioner personally telephoned the Titusville office of the Department of Revenue. On each occasion, Petitioner inquired whether or not sales or use taxes should be collected on the rental of the billboard. A free, updated Sales and Use Tax Rules Book is available to any tax payer upon request. In addition, a taxpayer could personally appear and bring documentation relating to any questions relating to the sales and use tax at any regional office. Petitioner did not obtain an updated rules book or personally appear at a regional office. On April 30, 1992, Petitioner filed a Protest Letter with Respondent challenging the abovementioned tax assessment. Respondent issued to Petitioner a Notice of Decision dated December 1, 1992. On January 8, 1993, Petitioner filed a Request for a Formal Administrative Hearing with Respondent. To date, Petitioner has not paid any of the contested taxes, interest, and penalties to Respondent. Petitioner relied on information provided by his secretary, his accountant, and brief phone conferences with the DOR's Maitland office to determine that the rental fees were tax exempt, and did not collect the sales tax from his customers. The DOR Audit Supervisor testified that there is a clear distinction between the taxable rental of a billboard and the nontaxable services of placing an advertising message on the billboard. The rental of the face of the billboard is a taxable transaction. On the other hand, if a person rents or leases a billboard, then hires a third party to place an advertising message on the billboard, this advertising service is tax exempt.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Revenue enter a Final Order upholding its sales and use tax assessment, waive penalties and interest accrued prior to October 2, 1991, and assess a tax of $4,017.76, plus interst from the date due. DONE and ENTERED this 14th day of July, 1993, in Tallahassee, Florida. DANIEL M. KILBRIDE 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 14th day of July, 1993. APPENDIX The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties. Proposed findings of fact submitted by Petitioner. Petitioner did not submit proposed findings of fact. Proposed findings of fact submitted by Respondent. Proposed findings submitted by Respondent are accepted except as noted below. Those proposed findings neither noted below nor included in the Hearing Officer's findings were deemed unnecessary to the conclusions reached. Rejected as argument: paragraphs 37, 38, 39 COPIES FURNISHED: Carl R. Glass 2749 North Orange Blossom Trail Kissimmee, Florida 34741 James McAuley, Esquire Assistant Attorney General Capitol Building Tallahassee, Florida 32399-1050 Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Linda Lettera General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact The parties stipulated to certain facts, legal issues, and their respective contentions, as follow: "1. At all times pertinent to this action, Petitioner Lawrence Nali Construction Company, Inc., was a Florida Corporation licensed and doing business in the State of Florida. At all times pertinent to this action, Respondent Department of Revenue, State of Florida, was an agency of the State of Florida exercising duties relating to the assessment and collection of sales and use taxes pursuant to Chapter 212, Florida Statutes. Respondent conducted an audit of tran- sactions involving Petitioner for the period November 1, 1972, through October 31, 1975. As a result of that audit, Respondent claims that as of September 17, 1976, the Petitioner had a balance due to the Depart- ment of Revenue of $17,383.58 in taxes, interest and penalties. The assessment indicating the above amount is attached as Exhibit A. Petitioner is in agreement that if the assessment is upheld, Petitioner owes to the Respondent the amount of $17,383.58 plus interest calculated to date of payment to Respondent. The tax assessment in this case is based upon two factual situations: Petitioner, manufactured and installed asphaltic concrete from raw material at a rate certain per ton determined by bid, as an improvement to the real property of political entities consisting of cities, towns, municipalities, counties, school boards, junior colleges and others. Petitioner also hauled the asphalt to the job cite (sic) at a fixed ton/mile rate determined by bid. Petitioner, as a subcontractor, manu- factured and installed asphaltic concrete from raw material at a rate certain per ton determined by bid, as an improvement to the real property of political entities above described. The general contractor contracted with the political entities in various fashions but the Petitioner's duties were always the same and included manufacture, installation and hauling of asphaltic concrete based on a rate certain per ton and per ton mile. The issue in this case is whether the Respondent is correct in contending that the Petitioner must pay a sales and use tax on the produced asphalt which it uses in the performance of the construction contract jobs described in paragraph 6. It is agreed by the parties that no sales or use tax was remitted, by the Petitioner on the produced asphalt. It is agreed by the parties that no sales or use tax was paid by the instant customers to the Petitioner. It is Respondent's contention that, pursuant to the above-cited rules, the Peti- tioner is required to pay sales or use tax on the produced asphalt which is used to construct real property pursuant to a con- tract described in Rule 12A-1.51(2)(a), F.A.C. It is Petitioner's contention that the above-cited rules do not apply in the instant case since the customers involved in the instant fact situations are political subdivision or because the transaction was of the type described by Rule 12A-1.51(2)(d), F.A.C. Petitioner is entitled to rely on the earlier 1967 audit by Respondent because neither Petitioner's method of doing business, nor the law, has changed materially since 1967. Respondent agrees that this is an issue but fails to agree that Petitioner is so entitled to rely." All purchase orders or invitations for bid received by petitioner from political subdivisions stated that the entity was exempt from federal and state sales taxes and that such taxes should not be included in the bid. Typical bid forms entitled "Specifications for Asphaltic Concrete" called for a lump-sum price per ton for delivery and placement of the material by the vendor plus a sum per ton per mile for transportation costs. No breakdown of amounts for the cost of materials and cost of installation is reflected in the bid documents. (Testimony of Cowan, Cook, Exhibits 3, 7 (late filed)) Respondent audited petitioner's operations in 1967 and, although it had had previous transactions with governmental entities prior to that date, no assessment for back taxes was issued for failure to pay sales tax on such transactions nor was petitioner advised to do so in the future by state officials. After 1967, petitioner did not seek information from respondent concerning the subject of sales tax. As a consequence of the 1967 audit, petitioner believed that it was unnecessary to charge or pay sales tax on such transactions with political subdivisions. (Testimony of Cowan, Cook) As of April 1, 1977, Brevard County had a population of over 250,000. Although it is a large county in terms of size, respondent has only two auditors in the sales tax division to cover the entire county. (Testimony of Alberto, Cowan, Exhibit 4)
Recommendation That the petitioner Lawrence Nali Construction Company, Inc. be held liable for sales tax, penalty, and interest under Chapter 212, Florida Statutes, as set forth in respondent's proposed assessment. DONE and ENTERED this 9th day of September, 1977, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 COPIES FURNISHED: Daniel Brown, Esquire Department of Legal Affairs The Capitol Tallahassee, Florida 32304 Andrew A. Graham, Esquire Post Office Box 1657 Cocoa, Florida 32922
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.
The Issue Whether or not the Petitioner, Radiant Oil Company of Jacksonville, is responsible to pay $4,466.64, plus the penalty and interest currently due from a proposed assessment by the Respondent, State of Florida, Department of Revenue, Motor Fuel Tax Bureau, under the alleged authority of Chapter 206, Florida Statutes.
Findings Of Fact The Radiant Oil Company of Jacksonville is a dealer in special fuels within the meaning of Chapter 206, Florida Statutes. The Respondent, State of Florida, Department of Revenue, Motor Fuel Tax Bureau is responsible for the enforcement of the tax provisions found in Chapter 206, Florida Statutes. On October 6, 1977, the Respondent issued a notice of proposed assessment against the Petitioner claiming the amount of tax due to be $4,837.92. This notice of proposed assessment may be found as part of the Composite Exhibit 1 of the Respondent, admitted into evidence. There remains in dispute $4,466.64 together with a possible penalty and interest that would be assessed. This amount of disputed tax, penalty and interest pertains to transactions between the Petitioner and the Boam Company, one of its customers. Specifically, the Respondent is asserting a tax on the amount of 55,833 gallons of diesel fuel which was sold to the Boam Company by the Petitioner. Diesel fuel is a "special fuel" within the meaning of Section 206.86(1), Florida Statutes. The Boam Company is not a dealer within the meaning of Chapter 206, Florida Statutes, it has executed an exemption certificate for the benefit of the Petitioner on a form provided by the Respondent. The certificate is Petitioner's Exhibit 1, admitted into evidence. The facts in the transaction which lead the Respondent to believe that the tax is owed are constituted through the method of Boam Company sending their tanker truck to the depot/business compound of the Radiant Oil Company for purposes of picking up the diesel fuel in question. After the individual deliveries of diesel fuel were made at the compound, that fuel was then taken by the Boam Company's tanker truck to be delivered for utilization by certain off road equipment owned by Boam Company. None of the fuel in dispute was used by any form of over the road vehicle which requires a motor vehicle license. (The 55,833 gallons in dispute does not involve the first 110 gallons of diesel fuel delivered on each pickup made by the Boam Company tanker at the Petitioner's compound.) The Petitioner takes the position that Section 206.87 (4)(a) exempts the questioned transactions from the taxes set forth in Chapter 206, Florida Statutes. That provision of Chapter 206 reads as follows: 206.87 Levy of tax.- The following sales shall not be subject to the tax herein imposed: Sales by a dealer when the special fuel is delivered for home, industrial, commercial, agricultural, or marine purposes, for consumption other than use, or for resale pursuant to paragraph (c) hereof. In particular the Petitioner contends that the sale by Radiant Oil Company to the Boam Company constitutes deliveries for commercial purposes other than use or other than for resale pursuant to paragraph (c) of the same section of Chapter 206, Florida Statutes. That paragraph (c) pertains to sales of five gallons or less by a person not a dealer, when that person does not have facilities for placing this special fuel in the fuel supply system of a motor vehicle, and would not fit the facts of this case. To understand the continuation of the argument by the Petitioner, it is necessary to look at the meaning of the word "use." In Section 206.86(5), Florida Statutes, "use" is defined in this fashion: 206.86 Definitions.- As used in this part: "Use" means the placing of special fuel into any receptacle on a motor vehicle from which fuel is supplied for the propulsion thereof. It is also necessary to understand what "motor vehicle" means within the definition of Chapter 206, Florida Statutes. "Motor vehicle," is defined in Section 206.86(2), Florida Statutes, as being: 208.86 Definitions.- As used in this part: (2) "Motor vehicle" means any form of vehicle machine, or mechanical contrivance which is propelled by any form of engine or motor which utilizes special fuel and is required, or which would be required, to be licensed under the motor vehicle license law if owned by a resident. It is the Petitioner's position that the vehicles which ultimately used the diesel fuel in question, did not require any form of license under the motor vehicle license law in the State of Florida, if they had been owned by a resident, and consequently did not constitute "motor vehicles" within the meaning of the definition found in the aforementioned section. Accordingly, from the point of view of the Petitioner this utilization of the motor fuel was for purposes of consumption other than "use." The Respondent replied to the Petitioner by stating that the exempt category which would apply in this instance is that found in Section 206.87(4)(b), Florida Statutes. That provision reads as follows: 206.87 Levy of Tax. - (4) The following sales shall not be subject to the tax herein imposed: (b) Sales at the dealer's place of business if not more than 110 gallons by a dealer into a receptacle not connected to the fuel supply system of a motor vehicle for consumption other than use. In the mind of the Respondent, this provision of the law creates an exemption for the sale of the first 110 gallons by a dealer, delivered into a receptacle not connected to the fuel supply system of a motor vehicle for consumption other than "use;" and acts to the exclusion of any possible exemption under 206.87(4)(a), Florida Statutes, which has been claimed by the Petitioner. Moreover, the Respondent relied strongly on a portion of the language of Section 206.87, Florida Statutes, which states ". . . unless expressly provided to the contrary in this part, every sale shall be deemed to be for use in this state . . . " Consequently, according to the Respondent, because Section 206.87 (4)(b), Florida Statutes, addresses the kind of transaction that the petitioner is involved in, this exemption creates the only possible exclusion from tax consequences that is available to the Petitioner. The Respondent expresses a retreating argument to the effect that the use of the word "delivered" found in Section 206.87 (4)(a), Florida Statutes, would mean direct delivery to the site of the place of consumption other than "use." After examining the position of the two parties, it is the undersigned's conclusion that Section 206.87(4)(a), Florida Statutes, creates an exemption from the possible tax consequences noted in Chapter 206, Florida Statutes. This conclusion is reached because the use of the word "delivered" in Section 206.87(4)(a) is followed by the word, "for" which creates the impression that delivery could be made either at the business location of the vendor, or at the location of the equipment that would be consuming the fuel for purposes other than "use." Had the legislature intended to limit the exemption found in the quoted provision to only those transactions involving deliveries to the home, industrial location, commercial location, agricultural location, or marine location, it would seem that they would have expressed it in the terms of the necessity to deliver "to the location" as opposed to stating it in terms of delivering "for purposes." In addition, the Section 206.87 (4)(b) Florida Statutes, does not exclude the right of the Petitioner to claim an exemption under Section 206.87(4)(a), Florida Statutes, nor is it inconsistent with that prior provision. Section 206.87(4)(b) , Florida Statutes, when read in pari materia with Section 206.87(4)(a) Florida Statutes, stands on its own and involves a different category of exemption. This category of exemption would include utilization of the special fuel for home, industrial, commercial, agricultural, or marine purposes, as well as any other utilization of the special fuel other than "use." Had it been intended for this provision, Section 206.87(4)(b), Florida Statutes, to exclude the right to exemption found in Section 206.87(4)(a), Florida Statutes, there would have been a connecting phrase between the two subsections (a) and (b) such as the word "or," such as the phrase "unless it exceeds the 110 gallon exemption found in the following subsection," or some similar comment. Since that type of language does not appear, it is unreasonable to assume that the legislature intended to have the prospective exempt organization or person required to accede to the exemption which affords the least advantage. For the reasons stated above the assessment in the amount of $4,466.64 plus the possible penalty and interest asserted under Chapter 206, Florida Statutes, should be rejected.
Recommendation It is recommended that the portion of the proposed assessment to the extent of $4,466.64 together with the penalty and interest be denied, and the Petitioner not be required to make such payment. DONE and ENTERED this 19th day of May, 1978, in Tallahassee, Florida. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of May, 1978. COPIES FURNISHED: Jack G. Hand, Jr., Esquire 1320 Atlantic Bank Building Jacksonville, Florida 32202 Maxie Broome, Jr., Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 John D. Moriarty, Esquire Department of Revenue Room 104, Carlton Building Tallahassee, Florida 32304 =================================================================
Findings Of Fact There are no disputed issues of fact. The parties stipulated to the following facts: (Exhibits referred to are not attached to this Recommended Order) As to Sun Oil Company: On February 14, 1978, a claim for refund was submitted to the Florida Department of Revenue and the Comptroller of the State of Florida. A copy of the transmittal letter is annexed as Exhibit 8 and a copy of the claim for refund is annexed as Exhibit 9. On August 31, 1978, another claim for refund, covering a subsequent time period was filed. A copy of the transmittal letter is annexed as Exhibit 10 and a copy of the claim for refund is annexed as Exhibit 11. Meanwhile, to the knowledge of all parties, the Exxon appeal referred to below was prosecuted. As to Exxon Corporation: On January 19, 1978, Exxon submitted to the Department of Revenue and to the Comptroller a claim for refund of severance tax which may have been overpaid by Exxon Corporation for the period March 1, 1974, through December 31, 1976. The claim reflected its contingent nature. A copy of the transmittal letter is annexed as Exhibit 1. A copy of the claim for refund of severance tax is annexed as Exhibit 2. (Subsequently, claims for subsequent time periods have also been filed with the Comptroller). By letter dated February 6, 1978, the Department of Revenue responded that the claim was barred by the one-year provision contained in Section 211.06, Florida Statutes. Enclosed with the response was a copy of an earlier letter to Exxon Corporation from the General Counsel of the Comptroller of the State of Florida, setting forth the position of the Comptroller that the contingent nature of the claim created no problem, but that the one-year provision in Section 211.06 was a statute of limitations. A copy of the letter of February 6, 1978, together with the enclosure, is annexed as Exhibit 3. On February 27, 1978, Petitioner wrote the Comptroller requesting consideration of the claim for refund under the provisions of Section 215.26, Florida Statutes. A copy is annexed as Exhibit 4. By letter dated March 7, 1978, the Comptroller wrote Petitioner denying the claim because it was not filed within one year from the date of payment of the tax as allegedly required by Section 211.06(2), stating that no further administrative review was available, and inviting judicial review, under Section 120.68, Florida Statutes. A copy of the letter is annexed as Exhibit 5. Petitioner filed a notice of appeal from the order contained in the letter of March 7, 1978 (Exhibit 5). The First District Court of Appeal of Florida in due course rendered a decision and opinion, a copy of which is annexed as Exhibit 6. The First District Court of Appeal held that the one-year period described in Section 211.06 did not bar the application for refund, that the refund provisions of Section 215.26, Florida Statutes, were applicable, and remanded the case. Thereafter, the Comptroller's Office asked for a further statement of Exxon's position on this matter, which was given in a letter dated May 24, 1979, a copy of which is annexed as Exhibit 7. As to Louisiana Land and Exploration Company: On January 25, 1978, Louisiana Land and Exploration Company submitted to the Department of Revenue and to the Comptroller a claim for refund of severance tax which may have been paid by Louisiana Land and Exploration company for the period March 1, 1974, through December 31, 1976. The claim reflected its contingent nature. A copy of the transmittal letter is annexed as Exhibit A copy of the claim for refund of severance tax is annexed as Exhibit 13. By letter dated February 6, 1978, the Department of Revenue responded that the claim was barred by the one-year provision contained in Section 211.06, Florida Statutes. Enclosed with the response was a copy of an earlier letter to Exxon Corporation from the General Counsel of the Comptroller of the State of Florida, setting forth the position of the Comptroller that the contingent nature of the claim created no problem, but that the one-year provision in Section 211.06 was a statute of limitations. A copy of the letter of February 6, 1978, together with the enclosure, is annexed as Exhibit 14. On October 31, 1978, Louisiana Land and Exploration Company again submitted to the Comptroller of the State of Florida a claim for refund of severance tax which may have been paid by Louisiana Land and Exploration Company for the period March 1, 1974, through December 31, 1976. The claim reflected its contingent nature. A copy of the transmittal letter is annexed as Exhibit A copy of the claim for refund of severance tax is annexed as Exhibit 16. Meanwhile, to the knowledge of all parties the Exxon appeal referred to above was prosecuted. As to Roadway Express, Inc.: On December 14, 1978, a claim for refund was submitted to the Florida Department of Revenue and the Comptroller of the State of Florida. A copy of the transmittal letter is annexed as Exhibit 17 and a copy of the claim for refund is annexed as Exhibit 18. On November 13, 1979, a similar claim for refund was submitted to the Department of Revenue and the Comptroller of the State of Florida. A copy of the transmittal letter is annexed as Exhibit 19 and a copy of the claim for refund is annexed as Exhibit 20. Meanwhile, to the knowledge of all parties the Exxon appeal referred to above was prosecuted. As to all Parties: In the case of each of the parties, by document entitled "Notice of Intent to Deny Refund" dated August 30, 1979 (and in the case of the second Roadway Express matter, Case No. 80-098, January 2, 1980), the Comptroller gave notice of his intent to deny refund solely because the contingent nature of the claim, stating as the sole grounds for denial: "At this time there is no basis under Section 215.26, Florida Statutes, to grant the requested refund." In response to the Notice of Intent to Deny Refund, Petitioners promptly requested a hearing, which has resulted in the above consolidated proceedings. There are no disputed issues of material fact with respect to this proceeding, at which the issue is whether or not the contingent claims filed within the three-year period prescribed by Section 215.26, Florida Statutes, should be held in abeyance until the contingency has occurred or it is determined that it will not occur. By agreeing that there are no disputed issues of material fact for the purpose of this proceeding, no party waives its right to present facts or contest facts in the event the case is considered in the future on its merits.
The Issue Whether the contested and unpaid portions of the tax, penalty and interest assessment issued against Petitioners as a result of Audit No. 9317210175 should be withdrawn as Petitioners have requested?
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Shuckers is an oceanfront restaurant and lounge located at 9800 South Ocean Drive in Jensen Beach, Florida. In November of 1992, Petitioner Mesa's brother, Robert Woods, Jr., telephoned Mesa and asked her if she wanted a job as Shuckers' bookkeeper. Woods had been the owner of Shuckers since 1986 through his ownership and control of the corporate entities (initially Shuckers Oyster Bar Too of Jensen Beach, Florida, Inc., and then NAT, Inc.) that owned the business. Mesa needed a job. She therefore accepted her brother's offer of employment, notwithstanding that she had no previous experience or training as a bookkeeper. When Mesa reported for her first day of work on November 19, 1992, she learned that Woods expected her to be not only the bookkeeper, but the general manager of the business as well. Mesa agreed to perform these additional responsibilities. She managed the day-to-day activities of the business under the general direction and supervision of Woods. After a couple of weeks, Woods told Mesa that it would be best if she discharged her managerial responsibilities through an incorporated management company. Woods had his accountant draft the documents necessary to form such a corporation. Among these documents were the corporation's Articles of Incorporation. Mesa executed the Articles of Incorporation and, on December 3, 1992, filed them with the Secretary of State of the State of Florida, thereby creating Petitioner TAN, Inc. TAN, Inc.'s Articles of Incorporation provided as follows: The undersigned subscribers to these Articles of Incorporation, natural persons competent to contract, hereby form a corporation under the laws of the State of Florida. ARTICLE I- CORPORATE NAME The name of the corporation is: TAN, INC. ARTICLE II- DURATION This corporation shall exist perpetually unless dissolved according to Florida law. ARTICLE III- PURPOSE The corporation is organized for the purpose of engaging in any activities or business permitted under the laws of the United States and the State of Florida. ARTICLE IV- CAPITAL STOCK The corporation is authorized to issue One Thousand (1000) shares of One Dollar ($1.00) par value Common Stock, which shall be designated "Common Shares." Article V- INITIAL REGISTERED OFFICE AND AGENT The principal office, if known, or the mailing address of this corporation is: TAN, INC. 9800 South Ocean Drive Jensen Beach, Florida 34957 The name and address of the Initial Registered Agent of the Corporation is: Linda A. W. Mesa 9800 South Ocean Drive Jensen Beach, Florida 34957 ARTICLE VI- INITIAL BOARD OF DIRECTORS This corporation shall have one (1) director initially. The number of directors may be either increased or diminished from time to time by the By-laws, but shall never be less than one (1). The names and addresses of the initial directors of the corporation are as follows: Linda A. W. Mesa 9800 South Ocean Drive Jensen Beach, Florida 34957 ARTICLE VII- INCORPORATORS The names and addresses of the incorporators signing these Articles of Incorporation are as follows: Linda A. W. Mesa 9800 South Ocean Drive Jensen Beach, Florida 34957 On the same day it was incorporated, December 3, 1992, TAN, Inc., entered into the following lease agreement with the trust (of which Woods was the sole beneficiary) that owned the premises where Shuckers was located: I, Michael Blake, Trustee, hereby lease to Tan, Inc. the premises known as C-1, C-2, C-3, C-4, 9800 South Ocean Drive, Jensen Beach, Florida for the sum of $3,000.00 per month. This is a month to month lease with Illinois Land Trust and Michael Blake, Trustee. Mesa signed the agreement in her capacity as TAN, Inc.'s President. She did so at Woods' direction and on his behalf. No lease payments were ever made under the agreement. 3/ The execution of the lease agreement had no impact upon Shuckers. Woods remained its owner and the person who maintained ultimate control over its operations. At no time did he relinquish any part of his ownership interest in the business to either Mesa or her management company, TAN, Inc. Mesa worked approximately 70 to 80 hours a week for her brother at Shuckers doing what he told her to do, in return for which she received a modest paycheck. Woods frequently subjected his sister to verbal abuse, but Mesa nonetheless continued working for him and following his directions because she needed the income the job provided. As part of her duties, Mesa maintained the business' financial records and paid its bills. She was also required to fill out, sign and submit to Respondent the business' monthly sales and use tax returns (hereinafter referred to as "DR- 15s"). She performed this task to the best of her ability without any intention to defraud or deceive Respondent regarding the business' tax liability. The DR-15s she prepared during the audit period bore NAT, Inc.'s Florida sales and use tax registration number. On the DR-15 for the month of December, 1992, Mesa signed her name on both the "dealer" and "preparer" signature lines. Other DR-15s were co-signed by Mesa and Woods. In April of 1993, Woods told Mesa that she needed to obtain a Florida sales and use tax registration number for TAN, Inc., to use instead of NAT, Inc.'s registration number on Shuckers' DR-15s. In accordance with her brother's desires, Mesa, on or about May 14, 1993, filed an application for a Florida sales and use tax registration number for TAN, Inc., which was subsequently granted. On the application form, Mesa indicated that TAN, Inc. was the "owner" of Shuckers and that the application was being filed because of a "change of ownership" of the business. In fact, TAN, Inc. was not the "owner" of the business and there had been no such "change of ownership." By letter dated June 22, 1993, addressed to "TAN INC d/b/a Shuckers," Respondent gave notice of its intention to audit the "books and records" of the business to determine if there had been any underpayment of sales and use taxes during the five year period commencing June 1, 1988, and ending May 31, 1993. The audit period was subsequently extended to cover the six year period from June 1, 1987 to May 31, 1993. Relying in part on estimates because of the business' inadequate records, auditors discovered that there had been a substantial underpayment of sales and use taxes during the audit period. The auditors were provided with complete cash register tapes for only the following months of the audit period: June, July, August and December of 1992, and January, February, March, April and May of 1993. A comparison of these tapes with the DR-15s submitted for June, July, August and December of 1992, and January, February, March, April and May of 1993 revealed that there had been an underreporting of sales for these months. Using the information that they had obtained regarding the three pre- December, 1992, months of the audit period for which they had complete cash register tapes (June, July and August of 1992), the auditors arrived at an estimate of the amount of sales that had been underreported for the pre- December, 1992, months of the audit period for which they did not have complete cash register tapes. The auditors also determined that Shuckers' tee-shirt and souvenir sales, 4/ Sunday brunch sales, cigarette vending sales, vending/amusement machine location rentals 5/ and tiki bar sales that should have been included in the sales reported on the DR-15s submitted during the audit period were not included in these figures nor were these sales reflected on the cash register tapes that were examined. According of the "Statement of Fact" prepared by the auditors, the amount of these unreported sales were determined as follows: TEE-SHIRT SALES: Sales were determined by estimate. This was determined to be $2,000/ month. No records were available and no tax remitted through May, 1993. SUNDAY BRUNCH SALES: Sales were determined by estimate. This was determined to be 100 customers per brunch per month (4.333 weeks). No audit trail to the sales journal was found and no records were available. CIGARETTE VENDING SALES: The estimate is based on a review of a sample of purchases for the 11 available weeks. The eleven weeks were averaged to determine monthly sales at $3/pack. VENDING MACHINE LOCATION RENTAL REVENUE: The revenue estimate is based on a review of a one month sample. TIKI BAR SALES: The sales estimate is based on a review of infrequent cash register tapes of February, 1993. The daily sales was determined by an average of the sample. The number of days of operation per month was determined by estimate. In addition, the auditors determined that TAN, Inc. had not paid any tax on the lease payments it was obligated to make under its lease agreement with Illinois Land Trust and Michael Blake, Trustee, nor had any tax been paid on any of the pre-December, 1992, lease payments that had been made in connection with the business during the audit period. According to the "Statement of Fact" prepared by the auditors, the amount of these lease payments were determined as follows: The estimate is based on 1990 1120 Corporate return deduction claimed. This return is on file in the Florida CIT computer database. The 1990 amount was extended through the 6/87 - 11/92 period. For the period 12/92 - 5/93 audit period, TAN's current lease agreement of $3,000/month was the basis. No documentation was produced during the audit supporting any the sales tax exemptions that the business had claimed during the audit period on its DR-15s. 6/ Accordingly, the auditors concluded that the sales reported as exempt on the business' DR-15s were in fact taxable. Using records of sales made on a date selected at random (February 1, 1993), the auditors calculated effective tax rates for the audit period. They then used these effective tax rates to determine the total amount of tax due. An initial determination was made that a total of $201,971.71 in taxes (not including penalties and interest) was due. The amount was subsequently lowered to $200,882.28. On or about December 22, 1993, TAN, Inc., entered into the following Termination of Lease Agreement with Ocean Enterprises, Inc.: TAN, Inc., a Florida corporation, hereby consents to termination of that certain lease of the premises known as C-1, C-2, C-3 and C-4 of ISLAND BEACH CLUB, located at 9800 South Ocean Drive, Jensen Beach, Florida, dated December 3, 1992, acknowledges a landlord's lien on all assets for unpaid rent; and transfers and sets over and assigns possession of the aforesaid units and all of its right, title and interest in and to all inventory, equipment, stock and supplies located on said premises 7/ in full satisfaction of said unpaid rent; all of the foregoing effective as of this 22nd day of December, 1993. FOR AND IN CONSIDERATION of the foregoing termin- ation of lease, OCEAN ENTERPRISES, Inc., a Florida corporation, hereby agrees to pay Linda Mesa, each month all of the net revenues of the operation of the bar and restaurant located on said premises, up to the sum of $15,000.00, for sales tax liability asserted against TAN, Inc. or Linda A. W. Mesa based upon possession or ownership of said premises or any of the assets located thereon, plus attorney's fees incurred in connection with defending or negotiating settlement of any such liability. Net revenue shall mean gross revenue, less operating expenses, includ- ing, but not limited to, rent, up to the amount of $5,000.00 per month, costs of goods sold, utilities, payroll and payroll expense and insurance. OCEAN ENTERPRISES, Inc. represents that it has entered into a lease of said premises for a term of five years commencing on or about December 22, 1993, pursuant to the terms and conditions of which OCEANFRONT [sic] ENTERPRISES, Inc. was granted the right to operate a restaurant and bar business on said premises. Ocean Enterprises, Inc., leases the property from Island Beach Enterprises, which obtained the property through foreclosure. TAN, Inc., has been administratively dissolved.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Revenue enter a final order withdrawing the contested and unpaid portions of the assessment issued as a result of Audit No. 9317210175, as it relates to TAN, Inc., and Linda A. W. Mesa. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 27th day of June, 1995. STUART M. LERNER 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 27th day of June, 1995.
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
