Findings Of Fact National Sun Control Company sells reflective film for installation on windows and glass doors throughout the southeastern United States. Sales are made only to distributors and dealers who do the installation or resell the film to customers. Petitioner holds a wholesalers occupational license and makes no sales to individuals for their own use. Petitioner sells the film only in 100 foot rolls and the normal order exceeds $100. Throughout Florida its maximum number of dealers has been about 25 and at present there are only 4 or 5 actively engaged in installing this film for their customers. Petitioner failed to ascertain that each of its dealers had a tax exemption number and when his accounts for the years 1974 - 1976 were audited by the Respondent, a sales tax was levied on all of Petitioner's sales to Florida dealers in the amount of $3,814.47. To this was added a 25 percent delinquent penalty of $953.62 and interest in the amount of $743.82. Petitioner has recovered some of the sales taxes for which it was assessed and remitted same to the Respondent. In the revised assessment dated April 5, 1977 the tax was shown to be $1,362.38, the penalty (reduced to 5 percent) to be $68.13 and interest $290.00. From this is deducted a partial payment made by Petitioner of $636.60, leaving a balance owed by Petitioner of $1083.91 Petitioner has provided Respondent with the names and addresses of each of the dealers to whom he shipped reflective film for installation and resale and has requested Respondent to collect the taxes owed from those dealers. One area supervisor responded (Exhibit 3) that the dealer said he had been told by Petitioner that the film was tax exempt and he refused to reimburse Petitioner for "the Florida Sales Tax that you [Petitioner) failed to collect."
Findings Of Fact Prior to May, 1983, Camelot Gulfside Interval Vacations, Inc. routinely made monthly payments of the Florida sales and use tax. Apparently during this period of time, the Department of Revenue sent preprinted forms to Camelot on a monthly basis and Camelot used these forms for remittance of the tax. During the months May, 1983, through April, 1985, inclusive, Camelot made no monthly payments of the Florida sales and use tax. During this same period of time, Camelot did not receive forms from the Department of Revenue for the monthly remittance. It cannot be determined from the record whether the cessation of receipt of forms occurred because Camelot failed to send in the monthly payments, or whether the forms ceased to be received independently of Camelot's failure to pay. The total amount of taxes due and paid late was $11,481.69. Ms. Margaret Thompson became the office manager of Camelot in May of 1983. The prior office manager failed to tell her that she had to pay the Florida sales and use tax on a monthly basis. Ms. Thompson was supervised by Mr. Alex Minden, who was present in the St. Petersburg Beach office on a day-to- day basis both prior to May, 1983, and during the period when no sales and use tax was paid. The books of Camelot Gulfside Interval Vacations, Inc. are kept in Toronto, Canada, pursuant to information sent to Toronto by the office in St. Petersburg Beach. In May, 1985, the Toronto office discovered that sales and use tax had previously been routinely paid, but had not been paid for the above periods. Upon investigation, it further discovered that such tax was due and owing. By letter from Mr. Minden, Camelot thus wrote the Department of Revenue on June 11, 1985, to advise it that it owed back taxes. Accompanying the letter was a check for $11,481.69 in full payment. Hearing Officer's Ex. 1. In December, 1985, the Department of Revenue gave notice to Camelot that $3,788.53 was due as penalties and interest. The computation of this amount is not in dispute. Camelot immediately paid the amount assessed as penalties and interest, but previously had requested waiver and timely requested a formal administrative hearing to seek a waiver of penalties and interest. During the period of time that it failed to make monthly sales and use tax payments, Camelot was not notified by the Department of Revenue that payments were overdue and owing. As discussed above, it was Camelot itself that brought the problem to the attention of the Department of Revenue.
Recommendation For these reasons, it is recommended that the Department of Revenue enter its final order denying any waiver of interest paid, but granting a waiver to the taxpayer of 50 percent of the amount of the penalties paid as an overpayment of such tax, and crediting such amount on future assessments. DONE and RECOMMENDED this 9th day of April, 1987, in Tallahassee, Florida. WILLIAM C. SHERRILL, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of April, 1987. COPIES FURNISHED: Randy Miller, Executive Director Department of Revenue 102 Carlton Building Tallahassee, Florida 32399-0100 William D. Townsend, Esquire General Counsel Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 J. Gordon Alexander, President Camelot Gulfside Interval Vacations, Inc. 1801 Gulf way St. Petersburg Beach, Florida 33706-4297
The Issue Whether the Petitioner owes sale and/or use tax for the purchase/lease of magnetic tapes containing mailing lists used by the Petitioner in its mail order business, as set forth in the Notice of Decision dated December 10, 2003, and, if so, the amount owed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, including the Joint Pre-Hearing Stipulation, the following findings of fact are made: The Department is the agency authorized to administer the tax laws of the State of Florida. See § 213.05, Florida Statutes (2004). At the times material to this proceeding, Spectramin was a Florida "S" corporation whose home office and principal place of business was located at 5401 Northwest 102 Avenue, Suite 119, Sunrise, Florida. Spectramin was a Florida- registered sales tax dealer. On October 19, 2001, the Department issued to Spectramin a Notification of Intent to Audit Books and Records for audit number A0127016590, which was a sales and use tax audit covering the Audit Period. On January 15, 2002, the Department and Spectramin signed an audit agreement that delineated the procedures and sampling method to be used by the Department for the audit. Because Spectramin's books and records were voluminous, the Department and Spectramin agreed to employ certain specified sampling procedures. For the audit, the Department examined Spectramin's purchase invoices, general ledgers, and income statements for the 2000 calendar year. At the times material to this proceeding, Spectramin was a mail-order company that sold nutritional supplements throughout the United States. It engaged in direct marketing of its products and employed two methods of direct marketing: Self-mailers were sent to prospective customers, and catalogs were sent to persons who had purchased its products, as a means of educating these buyers and converting them into repeat customers.1 In order to send self-mailers to prospective customers, Spectramin leased mailing lists consisting of names and addresses, and, in some instances, bar codes, compiled by various vendors who sold mailing lists. The contents of the mailing lists were based on demographic criteria specified by Spectramin. Under the terms of the lease, Spectramin was allowed to use the mailing list for only one mailing. Pertinent to this proceeding, Spectramin received some of the mailing lists in the form of data digitally encoded on magnetic tapes. The cost of leasing a mailing list was based on the number of names on the list, and the invoice for a list included a separately-stated, standard charge of $25.00 to cover the cost of the magnetic tape containing the data. The magnetic tapes themselves had no value to Spectramin; the only value of the tapes to Spectramin lay in the data encoded on the tapes, and the greatest part of the cost of the one-time lease was the cost of the data encoded on the magnetic tapes; for example, Spectramin paid $75.00 per 1,000 names for one of the mailing lists it leased, plus the $25.00 charge for the magnetic tape. Spectramin did not pay sales tax in Florida on the cost of the data encoded on the magnetic tapes at the time it leased the mailing lists. Spectramin did not have the computer equipment necessary to read the data on magnetic tapes, so it contracted with third-party letter shops and printers to process the magnetic tapes. The letter shops with which Spectramin has done business since 1991 are all located outside the state of Florida. Once a letter shop received magnetic tapes from Spectramin, the data on the tapes were downloaded to a computer, and cleaned, and sorted into usable names and addresses; the letter shop then sent the cleaned and sorted data to a print shop, which printed the names and addresses onto self-mailers provided by Spectramin. The letter shop sorted the self-mailers by zip code and mailed them. All of these operations took place outside Florida. At one time, Spectramin's practice was to have the mailing-list vendors ship the magnetic tapes encoded with the data directly to a letter shop specified by Spectramin. The letter shop held the Spectramin magnetic tapes until it had accumulated several tapes, and then it would process the data from the tapes, have the names and addresses printed on the self-mailers, and mail the self-mailers. Spectramin found that the letter shops with which it did business sometimes lost track of the tapes received for Spectramin's mailings, and it cost Spectramin additional time and money to track down the tapes or to purchase mailing lists. Because of the additional time and money Spectramin spent to track down the lists, it stopped having the magnetic tapes sent directly to the letter shop. At the times material to this proceeding, the magnetic tapes containing the digitally-encoded mailing lists were shipped directly to Spectramin by the mailing-list vendors, and Spectramin took delivery of the tapes at its principal place of business in Florida. The vendors sent the mailing lists to Spectramin's Florida office by overnight delivery through either Federal Express or United Parcel Service. It was Spectramin's usual business practice for an employee to take delivery of the magnetic tapes containing the mailing lists and to place them on a shelf in the front of the office. The boxes containing the magnetic tapes were not opened. When Spectramin had accumulated several boxes of magnetic tapes, an employee put the boxes into a larger box and sent the tapes by overnight delivery to one of the out-of-state letter shops with which Spectramin did business. Spectramin did not keep the tapes in its Florida office more than one or two days because the mailing lists it had leased lost their value with time.2 The only value of the magnetic tapes was in the names and addressed encoded on the tapes, and the only use to which Spectramin put the data was to cause the names and addresses it had leased to be printed on self-mailers and mailed to the prospective customers. Because the letter shops that printed the names and addresses and mailed the self-mailers were located outside of Florida, Spectramin did not "use" the data or the magnetic tapes in Florida. The only contact the magnetic tapes had with Florida was during the short period of time the tapes sat on the shelf at Spectramin's office before being shipped out of the state for processing. Spectramin did not pay use tax in Florida on the cost of the data encoded on the magnetic tapes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue issue a final order withdrawing the sales and use tax assessment against Spectramin, Inc., for the audit period extending from September 1, 1996, through August 31, 2001. DONE AND ENTERED this 24th day of January, 2005, in Tallahassee, Leon County, Florida. S PATRICIA HART MALONO Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of January, 2005.
The Issue The issue in this case is whether the Petitioner is entitled to an award of attorney's fees and costs pursuant to section 57.111, Florida Statutes (2011).1/
Findings Of Fact The parties have stipulated that the Petitioner is a "small business party" as the term is defined at section 57.111(3)(d). On June 21, 2010, the Petitioner applied to acquire an existing alcoholic beverage "quota" license from another licensee. The Petitioner had to pay a fee to transfer the license pursuant to section 561.32(3)(a), Florida Statutes (2010), which provides as follows: Before the issuance of any transfer of license herein provided, the transferee shall pay a transfer fee of 10 percent of the annual license tax to the division, except for those licenses issued pursuant to s. 565.02(1) and subject to the limitation imposed in s. 561.20(1), for which the transfer fee shall be assessed on the average annual value of gross sales of alcoholic beverages for the 3 years immediately preceding transfer and levied at the rate of 4 mills, except that such transfer fee shall not exceed $5,000; in lieu of the 4-mill assessment, the transferor may elect to pay $5,000. Further, the maximum fee shall be applied with respect to any such license which has been inactive for the 3-year period. Records establishing the value of such gross sales shall accompany the application for transfer of the license, and falsification of such records shall be punishable as provided in s. 562.45. All transfer fees collected by the division on the transfer of licenses issued pursuant to s. 565.02(1) and subject to the limitation imposed in s. 561.20(1) shall be returned by the division to the municipality in which such transferred license is operated or, if operated in the unincorporated area of the county, to the county in which such transferred license is operated. (emphasis added). License transfer applicants are required to provide gross sales records pursuant to Florida Administrative Code Rule 61A-5.010(2)(b), which provides as follows: An applicant for a transfer of a quota liquor license shall provide records of gross sales for the past 3 years or for the period of time current licensee has held license in order that the division may compute the transfer fee. An applicant may, in lieu of providing these records, elect to pay the applicable transfer fee as provided by general law. The gross sales records provided to the Respondent by the Petitioner were for the five-month period between January 21 and June 21, 2010, and totaled $573,948.94 for the period. To compute the transfer fee, the Respondent divided the reported gross sales ($573,948.94) by five to estimate an average monthly gross sales figure of $114,789.79.2/ The Respondent multiplied the estimated average monthly gross sales by 12, to estimate annual gross sales of $1,377,477.48. The Respondent then applied the 4-mill rate to the estimated annual gross sales and determined the transfer fee to be $5,509.91. The Respondent also calculated the transfer fee through a formula set forth on a form that had been challenged as an unadopted rule by an applicant in a 2008 proceeding. While the 2008 rule challenge was pending, the Respondent commenced to adopt the form as a rule, but the dispute was ultimately resolved without a hearing, after which the Respondent discontinued the process to adopt the rule. According to the formula on the form, the transfer fee was $5,599.50. Because both of the Respondent's calculations resulted in transfer fees in excess of $5,000, the Respondent required the Petitioner to pay the statutory maximum of $5,000. The Petitioner paid the $5,000 transfer fee under protest. The Petitioner asserted that the appropriate transfer fee should have been $765.27. The Petitioner's calculation used the reported five months of gross sales ($573,948.94) as the total annual gross sales for the licensee. The Petitioner divided the $573,948.94 by three to determine a three-year average of $191,316.31 and then applied the 4-mill rate to the three-year average to compute a transfer fee of $765.27. On March 17, 2011, the Petitioner filed an Application for Refund of $4,234.73, the difference between the $5,000 paid and the $765.27 that the Petitioner calculated as the appropriate fee. The Application for Refund was filed pursuant to section 215.26, Florida Statutes, which governs requests for repayment of funds paid through error into the State Treasury, including overpayment of license fees. Section 215.26(2) requires that in denying an application for a tax refund, an agency's notice of denial must state the reasons for the denial. As authorized by section 72.11(2)(b)3, Florida Statutes, the Respondent has adopted rules that govern the process used to notify an applicant that a request for refund has been denied. Florida Administrative Code Rule 61-16.002(3) states as follows: Any tax refund denial issued by the Department of Business and Professional Regulation becomes final for purposes of Section 72.011, Florida Statutes, when final agency action is taken by the Department concerning the refund request and taxpayer is notified of this decision and advised of alternatives available to the taxpayer for contesting the action taken by the agency. By letter dated May 9, 2011, the Respondent notified the Petitioner that the request for refund had been denied and stated only that "[w]e reviewed the documentation presented and determined that a refund is not due." The Respondent's notice did not advise that the Petitioner could contest the decision. On May 16, 2011, the Petitioner submitted a Request for Hearing to the Respondent, asserting that the Respondent improperly calculated the transfer fee by projecting sales figures for months when there were no reported sales. On August 4, 2011, the Respondent issued a letter identified as an "Amended Notice of Denial" again advising that the Petitioner's refund request had been denied. The letter also stated as follows: The Division cannot process your refund application due to the fact that the transferee has not provided the Division records which show the average annual value of gross sales of alcoholic beverages for the three years immediately preceding the transfer. On September 14, 2011, the Respondent forwarded the Petitioner's Request for Hearing to the Division of Administrative Hearings (DOAH Case No. 11-4637). By letter dated October 10, 2011, the Respondent issued a "Second Amended Notice of Denial" which stated as follows: We regret to inform you that pursuant to Section 561.23(3)(a), Florida Statutes, your request for refund . . . in the amount of $4,234.73 is denied. However, the Division has computed the transfer fee and based upon the records submitted by you pursuant to Rule 61A-5.010(2)(b), F.A.C., the Division will issue the Applicant a refund in the amount of $2,704.20. The records referenced in the letter were submitted with the original application for transfer that was filed by the Petitioner on March 17, 2011. The Respondent's recalculated transfer fee was the result of applying the 4-mill levy directly to the reported five months of gross sales reported in the transfer application, resulting in a revised transfer fee of $2,295.80 and a refund of $2,704.20. On October 11, 2011, the Respondent filed a Motion for Leave to Amend the Amended Notice of Denial, which was granted, over the Petitioner's opposition, on October 21, 2011. DOAH Case No. 11-4637 was resolved by execution of a Consent Order wherein the parties agreed to the refund of $2,704.20 "solely to preclude additional legal fees and costs," but the Consent Order also stated that the "Petitioner expressly does not waive any claim for attorneys' fees in this matter pursuant to F.S. 57.111." The Petitioner is seeking an award of attorney's fees of $8,278.75 and costs of $75, for a total award of $8,353.75. The parties have stipulated that the amount of the attorney's fees and costs sought by the Petitioner are reasonable. The Respondent failed to establish that the original calculation of the applicable transfer fee was substantially justified. The evidence fails to establish that there are special circumstances that would make an award unjust.
Findings Of Fact Petitioner is engaged in the cattle business and sells these cattle to in-state and out-of-state buyers who purchase the cattle at Clewiston, Florida, and have them transported either by the purchaser's own equipment or by a commercial carrier to their in-state or out-of-state destination. Those sales determined to be out-of-state sales are not included in the numerator of the fraction used to compute what percentage of Petitioner's income results from Florida sales and is therefore subject to Florida income tax. In making the determination respecting out-of-state sales Respondent applies the destination test if the cattle are shipped by common carrier but treats all other carriers as agents of the buyer to whom the cattle are delivered at Clewiston, thereby making such sales in-state sales. It is this policy determination which Petitioner contends is a rule. The policy has not been promulgated in accordance with Chapter 120, Florida Statutes, and, if this interpretation constitutes a rule, it is invalid because it was never promulgated as required. In determining whether certain sales are subject to the Florida sales tax, the Legislature in Section 212.06(5)(a), Florida Statutes, excluded from tax that tangible property imported or manufactured for export and provided such tangible property shall not be considered as being manufactured for export unless the manufacturer delivers the same to a licensed exporter for exporting or to a common carrier for shipment outside the State or mails the same by United States Mail to a destination outside the State. The rationale of the sales tax provision is used by Respondent in determining whether the sales are in-state sales for the purpose of computing Florida income tax. Respondent has promulgated, to its auditors, as a policy and as an interpretation of the statute, the directive to apply the destination test in determining out-of-state sales only when the merchandise sold is shipped by common carrier to a destination out of state. It is this policy determination or interpretation of the statutes that Petitioner contends is a rule and attacks in these proceedings. In the testimony Respondent acknowledged that this policy determination is uniformly applied. It also has application both within and outside the agency. Respondent further testified that if the merchandise (here cattle) had been delivered by Petitioner to the buyer outside the State of Florida by any means of transportation Petitioner chose, it would have treated the sale as an out-of-state sale.
Findings Of Fact On January 31, 1984, the subject vessel, a 1969 sixty-five foot Hargrave Halmatic motor yacht, was purchased by Nelson Gross as President and principal of the corporation, Binghamton Too, Inc., for $457,500 in Houston Texas. It was financed through a Connecticut bank. The closing was held in Mr. Gross' New Jersey office. No sales or use tax has been paid on the yacht in Florida or in any other state. Mr. Gross' initial intent was to operate his new purchase as a commercial charter boat in conjunction with the "Binghamton," a ferryboat permanently moored and operating in Edgewater, New Jersey, as a floating restaurant. To get the new motor yacht there, Mr. Gross directed that it be brought to New Jersey around the Florida coast under its own power. The motor yacht reached Florida on February 17, 1984, but en route from Texas an unexpected vibration had arisen which required emergency repairs. These repairs were commissioned at Bradford Marine, Ft. Lauderdale, Florida, where the motor yacht remained, except for sea trials in connection with the vibration problem, until the first week in April, 1984. A cracked strut was diagnosed as the cause of the vibration problem. Repair costs of this emergency problem totalled $5,975. The balance of charges incurred at Bradford Marine, Ft. Lauderdale, was $21,729, including dockage. Many more of the repairs catalogued by Respondent's Exhibit 5, the Bradford Marine records for this period, were clearly voluntary, discretionary, and cosmetic in nature. The majority were of a non-emergency nature. The vessel, by then relettered "Binghamton Too," left Florida waters approximately April 20, 1984. "Binghamton Too" next spent approximately three weeks at Thunderbolt Marine Industries in Georgia at an approximate cost of $12,000. There, a strap was fabricated to hold the strut and the yacht proceeded on to New Jersey. The "Binghamton Too" began its charter business as part of the "Binghamton" operation in Edgewater, New Jersey on May 5, 1984. Seventy-five to eighty charters were accomplished between May, 1984 and October, 1984 under New Jersey state and local chartering, transit liquor, and environmental licenses and under U.S. Corps of Engineers permits. "Binghamton Too" returned to Florida waters sometime on or before October 25, 1984, when it was sighted at the Indian River Causeway Bridge. On October 26, 1984, it was sighted at Flagler Bridge in West Palm Beach. Thereafter, it went on to the Lantana Boat Works Marina, Lantana, Florida, for repairs. Lantana is the location of the yacht's original builder, whose equipment and expertise were preferable to that of other boatyards for certain strut repairs due to the peculiar nature of this type of yacht. After those repairs, the yacht was anchored in Palm Beach from January 1985 to April 1985. Although Mr. Gross testified that the strut repairs of necessity had to be done in the Lantana boatyard, his view is not necessarily conclusive of this issue because he admitted "Binghamton Too" was the first yacht he had ever purchased, because he was vague about equating desirability and necessity without any supporting direct expert testimony, and because of the facts found infra. The Lantana repair records from October 29 to December 31, 1984 show $42,521.82 in repairs, of which only $2,500 pertain to fabrication of a strut. Again, the majority of repairs was to refurbish and paint the vessel. Mr. Gross spent approximately October 1984 to April 1985, October 1985 to April 1986, and October 1986 to April 1987 in his father's home in West Palm Beach, Florida. By his own testimony, he confirmed that he established the "technical" office for his "Binghamton Too" business there. He applied, in early December 1984, for a Florida sales tax registration to operate a charter business, representing Palm Beach as his place of business. The account was established January 1, 1985 with the account number of 60-22-080051-61. The captain and mate of the "Binghamton Too" also wintered in Florida each of these years. On December 6, 1984, Mr. Gross wrote the State of New Jersey's Division of Taxation that the yacht's "principal location and headquarters are in West Palm Beach, Florida where it maintains an office and full-time employees," thus successfully arguing that the "Binghamton Too" should be exempt from New Jersey's registration requirements for any vessel residing in that state in excess of 180 days. This correspondence was in connection with a tax problem of the mother ship "Binghamton," still moored in New Jersey. Mr. Gross further represented that Florida was "Binghamton Too's" primary location with trips to the Bahamas." For most of the period from late December, 1984 to early April, 1985, the yacht was in Palm Harbor Marina, West Palm Beach, Florida, the first time not in repairs, and clearly could have returned to New Jersey under its own power had Mr. Gross chosen to do so. From January 24 to March 26, 1985, the boat was in operation, as sighted at the Pompano Beach and Fort Lauderdale bridges. From April 1985 until October of 1985, the yacht was operated as part of Petitioner's commercial charter operation in New Jersey, which included over 100 charters during this time period. Nonetheless, on June 10, 1985, Mr. Gross purchased a boat slip at Ocean Reef Club in Key Largo, Florida. This slip was later sold. Upon the foregoing Findings of Fact 6-12, which clearly establish a pattern of wintering the yacht in Florida waters, it is inferred that, despite Mr. Gross' testimony that it was "necessary" to have "Binghamton Too's" strut repaired in late 1984 by the original Florida manufacturer of the yacht, its presence in Florida from October 1984 until April, 1985 was primarily and substantially due to the preference of Mr. Gross, Petitioner's President, and not due to necessity or emergency. In October of 1985, the yacht returned to Florida where it remained until April of 1986. During this time, the boat underwent further repairs, including the complete repainting of the hull, the need for which Mr. Gross attributed to the old paint being cracked and shaken off by the vibration of the yacht. From April 1986 until October of 1986, the yacht was operated as part of Petitioner's commercial charter operation in New Jersey, which included over 100 charters during this time period. The yacht returned to Florida in October, 1986, and again remained in Florida until early April, 1987, when it left for New Jersey. In late October 1987, the yacht returned to Florida where it was traded in as part of the consideration for a larger yacht in November of 1987. The closing date was December 30, 1987. The cash equivalent received by Petitioner as credit on the trade-in was $100,000. In all, Petitioner asserts that over $200,000 was spent by the corporation on the "Binghamton Too" before it was traded. Shortly after buying the "Binghamton Too", Petitioner had begun trying to sell it for the highest price obtainable. These sales efforts included large ads in national yachting publications and listings with active yacht brokers. The highest outright offer received by Petitioner was $75,000. However, this was Mr. Gross' first sales effort of this kind, and his opinion testimony that the "Binghamton Too" was not bought from the Petitioner outright and at a good price because of latent defects and cost of repair is neither credible nor persuasive since his opinion does not possess the reliability of an expert in assessing whether it was the condition of the yacht, its unusual "Halmatic" type, or some other factor which made the "Binghamton Too" undesirable to potential purchasers. The Florida Department of Revenue issued a Notice of Delinquent Tax January 30, 1987, of five-percent use tax upon the purchase price plus 25 percent penalty. Interest was figured at 12 percent per annum. Petitioner timely protested. The agency conceded that the purchase price on the original notice was mistakenly listed at $475,000, that the assessment appropriately should have been on $457,500 (see Finding of Fact No. 1) and that the State presently claims only the tax amount of 5% of Petitioner's initial $457,500 purchase price at $22,875, the 25 percent penalty at $5,719, and interest on the tax from February 18, 1984, to June 18, 1989 at $14,650. (Interest accrues at $7.52 daily.) The total assessment through June 18, 1989 is $43,234.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that the Department of Revenue enter a Final Order affirming the assessment of $22,875, with 25% penalty and interest at $7.52 per day from February 18, 1984 until paid. DONE and RECOMMENDED this 11th day of August, 1989, in Tallahassee, Leon County, Florida. ELLA JANE P. 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 11th day of August, 1989. APPENDIX TO RECOMMENDED ORDER Upon consideration of Section 120.59(2) Florida Statutes the following rulings are made upon the parties' respective proposed findings of fact (PFOF). Petitioner's PFOF: 1, 2,3, 5, 10, 11, 13, 14, 15, 17, 18, 19, 21, 22: Accepted except to the degree not proven. 4: Rejected as stated because not supported by the greater weight of the evidence as a whole. 6, 12: Rejected in part as not proven, in part as subordinate and unnecessary, and in part as to the conclusion-if law as "latent." 7, 8, 9: Accepted except as subordinate and unnecessary to the facts as found. 16: Accepted that Mr. Gross testified to this amount, however, the evidence does not support the amount precisely nor that it all went to "repairs." 20: Accepted as modified to better express the record as a whole. Respondent's PFOF: 1: Accepted, but as a Conclusion of Law. 2, 3, 4, 9, 10, 12, 13, 14, 15, 16, 17, 19, 20, 21, 22, 23: Accepted. 5: Accepted in substance; what is not adopted is either mere recitation/characterization of testimony, is cumulative, or is subordinate to the facts as found. 6: Accepted but subordinate and unnecessary to the facts as found. 7: Sentence 1 is accepted. The remainder is rejected as mere legal argument or subordinate to the facts as found. 8, 11: Accepted as modified to conform to the record as a whole. Mr. Gross testified to a May 5, 1984 date for No. 8. 18: Except for mere legal argument, accepted. 24: Accepted upon the terms set forth in the Recommended Order. 25: Except as subordinate and unnecessary, accepted. COPIES FURNISHED: Gene D. Brown, Esquire 3836 Killearn Court Tallahassee, Florida 32308 Linda G. Miklowitz, Esquire Department of Legal Affairs Tax Section, The Capitol Tallahassee, Florida 32399-1050 William D. Moore, General Counsel Department of Revenue 203 Carlton Building Tallahassee, Florida 32399-0100 Katie D. Tucker Executive Director Department of Revenue 102 Carlton Building Tallahassee, Florida 32399-0100
The Issue Whether the agency has an unpromulgated statement of general applicability that imposed a requirement not specifically required by statute or by an existing rule, and which has been utilized against Petitioners to their detriment.
Findings Of Fact On March 24, 1994, the Department of Revenue (Department) issued a Notice of Reconsideration (NOR) that claimed the Petitioners, Terry and Donna Ernst, had willfully failed to collect sales tax. Petitioners' assertion of an exemption in connection with the sales tax assessment was denied. The NOR provided that the Petitioners are the president and vice- president of Hussh, Inc., a retail apparel store in Palm Beach, Florida and that such company made sales to customers for delivery in the store and for shipment outside of the State of Florida. At issue were the alleged shipments to out of state destinations. Pertinent to this case is the language in the NOR found at page two which provided: Due to the inadequacy and volume of Hussh's records, the auditor sampled the available records, and assessed Hussh for asserted out of state sales that were improperly documented. According to the auditor, many of the sales receipts or invoices of asserted out of state shipments were missing the top portion of the invoice. Significantly, this portion of the invoice would contain the names, addresses, and asserted export destination information on each sale. Other invoices were stamped, "out of state shipped," but no destination information was present on the invoice. [Emphasis added.] The Petitioners maintain that the portions of the NOR emphasized in the foregoing paragraph constitute an agency statement of general applicability and is, therefore, an unpromulgated rule. The Department does not have a rule which lists all documentation which might establish an exemption for sales tax assessment. Similarly, the Department does not have a rule that lists the type of documentation which would be inadequate to establish an exemption for sales taxes. The Department's existing rule, Rule 12A-1.064, Florida Administrative Code, provides, in part: (1)(a) Sales tax is imposed on the sales price of each item or article of tangible personal property, unless otherwise exempt, when the property is delivered to the purchaser or his representative in this state. However, the tax does not apply to tangible personal property irrevocably committed to the exportation process at the time of sale, when such process has been continuous or unbroken. (b) Intent of the seller and the purchaser that the property will be exported is not sufficient to establish the exemption; nor does delivery of the property to a point in Florida for subsequent transportation outside Florida necessarily constitute placing the property irrevocably in the exportation process. Tangible personal property shall be deemed committed to the exportation process if: The dealer is required by the terms of the sale contract to deliver the goods outside this state using his own mode of transportation. The dealer must retain in his records trip tickets, truck log records, or other documentation reflecting the specific items and export destination; The dealer is required by the terms of the sale contract to deliver the goods to a common carrier for final and certain movement of such property to its out of state destination. Sales by a Florida dealer are exempt when the dealer delivers the merchandise to the transportation terminal for shipment outside this state and secures a dock or warehouse receipt and a copy of the bill of lading. On shipments to points outside the United States, a shipper's export declaration shall also be obtained; [Emphasis added.] Rule 12A-1.093, Florida Administrative Code, requires taxpayers to maintain and preserve records. This rule provides, in part: (2) Each dealer defined in Chapter 212, F.S., each licensed wholesaler, and any other person subject to the tax imposed by Chapter 212, F.S., shall keep and preserve a complete record of all transactions, together with invoices, bills of lading, gross receipts from sales, RESALE CERTIFICATES, CONSUMER EXEMPTION CERTIFICATES and other pertinent records and papers as may be required by the Department of Revenue for the reasonable administration of Chapter 212, F.S., and such books of account as may be necessary to determine the amount of tax due thereunder. The terms "bill of lading," "dock or warehouse receipt," and "invoice" are common terms used in the business community. Each connotes that, at the minimum, certain information will be retained on the face of the document. For example, according to Petitioners' witness, the minimum information expected on a bill of lading would be: the name of the person that the item is being shipped to, the item being shipped, the cost of the shipment, and the terms of the shipment with the value of the item being shipped. Similarly, the minimum information which is expected on an "invoice" would be: a description of the item sold, the amount of the sale, and the name of the person to whom the item was sold. The terms "bill of lading," "dock or warehouse receipt," and "invoice" are not defined by rule. The Department determined whether an exemption was documented based upon the results of this audit.
The Issue Whether Petitioner is entitled to a refund of use taxes paid to the State of Florida on October 11, 1995, relating to the purchase in another state of an automobile.
Findings Of Fact Petitioner, Leonard F. Nichols (Nichols), maintains a residence in Florida at 1800 Southeast St. Lucie Boulevard, Building 4-305, Stuart, Florida 34996. Nichols is legally domiciled in Florida. He also maintains a residence in New Jersey at 3 Wood Run, Newton, New Jersey 07860. Prior to October, 1995, Nichols owned a motor vehicle, which was registered in Florida. The vehicle had a Florida vehicle tag. On October 4, 1995, Nichols purchased a 1995 Buick Century (VIN 1G4AG55M1S6418376) from an automobile dealer in Newton, New Jersey. The amount paid for the automobile was $13,710.00. New Jersey imposes a sales tax on the purchase of tangible personal property in New Jersey. Pursuant to Section 60-570.016, New Jersey Statutes Annotated, New Jersey allows an exemption for the payment of sales tax on nonresidents on the purchase of a motor vehicle if the conditions of the statute are met. At the time of the purchase in New Jersey, Nichols submitted a ST-10 Motor Vehicle Dealer Sales Tax and Use Tax Exemption form. The submission of the ST-10 was made in lieu of payment of sales taxes. Without the submission of the ST-10, the New Jersey dealer would have been required to collect the sales tax. Because Nichols filed the ST-10 at the time of the purchase of the automobile, no New Jersey sales taxes were paid at that time. One week later, on October 11, 1995, Nichols registered his vehicle in Florida. At the time of registration, since no sales tax had been paid on the vehicle prior to this registration, Florida's use tax of $855.95 was imposed on and paid by Nichols. Nichols' Florida tags were then transferred to Nichols' new vehicle. On December 8, 1995, Nichols received notification from the State of New Jersey, Department of Treasury, Division of Taxation that Nichols' request for an exemption from payment of the New Jersey sales tax was denied and Nichols owed the State of New Jersey $896.63 in taxes, penalty and interest for the sales tax on the purchase of the Buick in New Jersey. Nichols contacted the Department and told them that he was being assessed a sales tax by New Jersey. Nichols was advised that he should pay the New Jersey sales tax and file a DR-26 form, requesting a refund from the Department. The charges for penalty and interest were later dropped by New Jersey. On December 29, 1995, Nichols mailed a check in the amount of $822.60 to the State of New Jersey. On January 5, 1996, Nichols received a receipt of payment from the New Jersey Division of Taxation. At the time of the registration of Nichols' new Buick in Florida and the payment of the Florida use tax on October 11, 1995, no taxes had been paid on the sale and purchase of Nichols' 1995 Buick Century in New Jersey or any other state.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Leonard F. Nichols' request for a refund of the use taxes paid to the Department on October 4, 1995. DONE AND ENTERED this 18th day of December, 1997, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 18th day of December, 1997. COPIES FURNISHED: Eric J. Taylor Assistant Attorney General Department of Legal Affairs The Capitol, Tax Section Tallahassee, Florida 32399-1050 Leonard F. Nichols, pro se 1800 Southeast St. Lucie Boulevard Building 4-305 Stuart, Florida 34996 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 Petitioner Schooley Cadillac, Inc. is a dealer in Cadillac automobiles in West Palm Beach, Florida. The firm requires its salesmen to purchase a new Cadillac automobile each year. When a salesman decides to acquire the new automobile, an order is placed with the Cadillac Motor Car Division and delivery is made some eight to ten weeks thereafter. During the interim period, the salesman's used automobile is placed in petitioner's used car department and sold to a customer. State sales tax is collected by petitioner and remitted to respondent based on sales of the used cars. Title to the used car is transferred from the salesman to petitioner at the time it is resold. Although there is no contract or purchase agreement executed between the salesman and petitioner for the purchase of the new automobile, he is credited with the sale price of the used car on the books of the petitioner at the time the used car is sold. When the salesman's new car arrives, an invoice is prepared that reflects the amount credited to the salesman for the used car on the purchase price of the new car as a "previous trade." State sales tax is collected by petitioner and paid to the state on the price of the new automobile, less the amount credited for the used automobile. Petitioner handles a lesser number of transactions for General Motors retirees and a few winter residents using basically the same procedures involving purchases of new automobiles and prior sale of the individual's used car. In such cases, however, title to the used car is normally transferred to petitioner prior to its sale. (Testimony of Eichhorn) Respondent's tax examiner examined the books of petitioner in 1977 and determined that credit should not have been allowed for the price of the used automobiles in determining the amount of sales tax payable to the state because he viewed the amounts credited for the used automobiles as "down payments" rather than "trade-ins." Based upon 33 such transactions which took place between May 1, 1974 through April 30, 1977, a Notice of Proposed Assessment was prepared and sent to petitioner on August 2, 1977, in which delinquent sales tax in the amount of $9,814.44 was claimed, together with a penalty in the amount of $2,367.19, and interest through June 23, 1977, in the amount of $1,703.79, for a total assessment of $13,885.39. A prior Notice of Proposed Assessment in a somewhat larger amount had been scaled down after certain credits had been allowed to the petitioner. The 33 transactions in question involved 24 sales to petitioner's salesmen and the remainder to General Motors retirees or regular customers. As a result of the proposed assessment, petitioner filed its petition for an Administrative Hearing in the matter. At the hearing, petitioner conceded that tax was payable on three of the transactions in which used vehicles were not sold by the petitioner. These three transactions involved the purchase of new automobiles for the price of $7,500 and $5,200 respectively, and the purchase of a motorcycle for $375, thus making a total of $13,075 upon which petitioner acknowledges sales tax in the amount of 4 percent is due. Such tax amounts to $523, plus applicable interest and penalties thereon. (Testimony of Eichhorn, Elliot, Exhibits 1-2)
Recommendation That petitioner Schooley Cadillac, Inc. be held liable for sales tax under Chapter 212, Florida Statutes, in the amount of $523, plus an appropriate amount for penalty and interest thereon. Done and Entered this 7th day of December, 1977, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 COPIES FURNISHED: Robert W. Jensen and James Adams, Esquires 186 Southeast 13th Street Miami, Florida 33130 Edwin J. Stacker, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304
