The Issue Whether Respondent, a “seller of travel,” owes Petitioners a refund for misrepresentation of travel services offered pursuant to an agreement between the parties.
Findings Of Fact Axis is a “seller of travel” and at all times material to this matter, was located in St. Augustine, Florida. On or about October 8, 2017, Petitioners attended a presentation that was conducted by Axis. Petitioners were enthusiastic about the travel service and were impressed by the presentation. Petitioners frequently traveled to trade shows and believed the services would help reduce travel costs. They were particularly interested in vacation packages because they intended to travel to Cancun, Mexico. During the presentation, they were told of the bonus week fee of $97.00. Ms. Page asked specific questions about the costs for a vacation package for Cancun and whether there would be any hidden or additional fees. The presenter assured Petitioners there would be no hidden or additional fees. After the presentation, Petitioners jointly executed a Reservation Services Agreement (Agreement) for a non-exclusive license to access the travel network for a fee of $4,394.00. The fee was paid in two installments of $2,000.00 and one installment of $394.00. The agreement provides, in pertinent part, as follows: Customer desires to enter into this Agreement reservation services applicable to vacation packages, nightly stays, bonus weeks, fantasy getaways, activities and excursions, cruises, car rentals, golf discounts, dining discounts, hotels and luxury condominium and villa rentals (“Network Benefits”). The Customer acknowledges that the Network Benefits may be changed from time to time. * * * 8. Discount Variation All benefits and discounts conferred through this Agreement vary greatly based on the characteristics of the vacation unit or type, the time of year, space availability, and/or the rates charged by those parties listing the accommodations for rent through the Network. Customer acknowledges that he/she has been advised that while some discounts may be significant, these same accommodations may not enjoy deep discounts at other times and that deep discounts are not available for some vacation units or types at any time. Customer acknowledges that the value in this License is expected to be realized over time contingent on the frequency of the use and that the Purchase Price is not guaranteed to be recovered on a single vacation, the first year, if Customer does not take vacations, or if the vacation choices are not tailored offerings. * * * 17. Member Best Price Guarantee Customer shall receive the Best Price Guarantee if Customer finds lower prices on Equal Arrangements through a competing vendor. To access the guarantee, Customer must secure a confirmed reservation through the Network that displays the Member Price Guarantee checkmark, pay for the reservation in full and receive a valid confirmation number. The sections on the website included in the Best Price Guarantee are vacations (i.e. Accommodations, Cruises, Vacation Packages, and Worldwide Tours) and vacation add-ons (i.e. Car Rentals, Activities and Golf). Airfare not included. Eligible claims must be submitted within 24 hours from the time the original fully paid reservation is made and meet all the Terms and conditions listed in full on the Website, must be in US dollars, must be an identical comparison to what was purchased and must be publicly viewable via the internet (i.e. the general public must be able to view the rate on a website, as it does not apply to consolidator fares, fares that have been acquired through auction or bid, or any Internet fares that cannot be independently verified as to the price and exact itinerary) and available and bookable (i.e. the rate is currently available and can be reserved online). Equal Travel Arrangements shall be defined as the exact same arrival and departure dates, the exact same property, the exact same room or cabin classification, the exact same room or cabin size, the exact same cruise line, and the exact same itinerary. Reservations excluded from the Best Price Guarantee include Non- Refundable reservations, Airfare and reservations made or purchased with Reward Credits in full or in part. If the claim is found to be valid, Customer will be credited with 110% of the difference to (sic) in the form of Reward Credits. * * * 25. Entire Agreement This instrument contains the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect to such subject matter. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. * * * By signing below, the parties to hereby execute this Agreement on the Execution Date of this Agreement as identified herein. The Licensee acknowledges and agrees that this Agreement is subject to all terms and conditions set forth herein. The Licensee further acknowledges having read the entire Agreement and agreed to each of its provisions prior to signing below. * * * YOU HAVE THE RIGHT TO CANCEL THIS CONTRACT AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD (3) CALENDAR DAY AFTER THE DATE OF THIS CONTRACT. UPON CANCELLATION, YOU WILL RECEIVE A FULL REFUND, WITHOUT ANY CHARGES OR PENALTY, WITHIN TEN (10) DAYS UNLES SOONER REQUIRED BY APPLICABLE LAW. THIS RIGHT IS NONWAIVABLE. TO EXERCISE YOUR RIGHT TO CANCEL, YOU MUST SEND A WRITTEN NOTICE STATING THAT YOU DO NOT WISH TO BE BOUND BY THIS CONTRACT. THE NOTICE MAY BE SENT BY EMAIL, FACSIMILE: 713-535-9239, OR BY DEPOSIT FIRST-CLASS POSTAGE PREPAID, INTO THE UNITED STATES MAIL: 13416 SOUTHSHORE DR. CONROE, TX 77304. In November 2017, Petitioners used the network software for the first time. Petitioners searched for accommodations in Cancun, Mexico at an all-inclusive resort. The resort had a price of $129.00 instead of $97.00 and a mandatory resort fee in the amount of $135.00 to $185 per person per day. Petitioners found accommodations at three different all-inclusive resorts, which also required an additional mandatory resort fee. While rooms were available for the price offered by using the software, Petitioners were dissatisfied because the resorts required a resort fee. At an unknown time after using the software, Petitioners called Respondent but did not receive a return call. On December 14, 2017, Petitioners sent text messages to Jonicar Cruz seeking a refund because the service was not what was represented to them at the presentation. Ms. Cruz offered to assist Petitioners with the software program. Ms. Cruz also directed Petitioners to contact another staff member, as she was no longer an employee of the company at that time. Petitioners’ calls and emails to the other Axis staff member were left unanswered. On February 7, 2018, Petitioners filed a complaint with the Better Business Bureau, and on February 13, 2018, Petitioners filed a complaint with the Office of Citizen Services, Florida Attorney General’s Office, and the Better Business Bureau. In April 2018, Petitioners filed a complaint with the Department. Petitioners admitted that they did not submit a written letter of cancellation of the agreement during the three-day cancellation period. Ms. Cruz testified that she did not receive any written request to cancel the agreement during the cancellation period. Ms. Cruz also testified that while she could not affirm certain representations made by the presenter, she explained to Petitioners the process for the price match guarantee, and that a resort fee may be associated with all-inclusive resorts.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioners, John Elkins and Mary Page’s, claim against Axis and the surety bond be DENIED. DONE AND ENTERED this 4th day of September, 2018, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of September, 2018. COPIES FURNISHED: W. Alan Parkinson, Bureau Chief Department of Agriculture and Consumer Services Rhodes Building, R-3 2005 Apalachee Parkway Tallahassee, Florida 32399-6500 (eServed) John E. Elkins Mary Page Apartment 1605 7507 Beach Boulevard Jacksonville, Florida 32216-3053 (eServed) Michael Borish Axis Getaways Systems, LLC 965 North Griffin Shores Drive St. Augustine, Florida 32080-7726 Axis Getaways Systems, LLC Suite B 108 Seagrove Main Street St. Augustine, Florida 32080 Travelers Casualty Surety Company of America One Tower Square Hartford, Connecticut 06183 Bryan Greiner Axis Getaway Systems, LLC 912 Ocean Palm Way St. Augustine, Florida 32020 Tom A. Steckler, Director Division of Consumer Services Department of Agriculture and Consumer Services Mayo Building, Room 520 407 South Calhoun Street Tallahassee, Florida 32399-0800 Stephen Donelan, Agency Clerk Division of Administration Department of Agriculture and Consumer Services 407 South Calhoun Street, Room 509 Tallahassee, Florida 32399-0800 (eServed)
The Issue The issue in this case is whether proposed amendments to Rule 12A-1.070 are an invalid exercise of delegated legislative authority. Petitioners and Intervenors challenge Proposed Rule 12A-1.070(1) and (4)(a) and (b). Respondent published the amendments in the Florida Administrative Law Weekly on March 18, 1994 and June 10, 1994. As described in the Joint Prehearing Stipulation, the proposed rule amendments address, among other things, the taxation of payments to airport authorities from concessionaires like rental car companies and airport restaurants. The law imposes a sales tax on payments for the use or occupancy of real property, whether the agreement consists of a lease or a license to use real property. The main dispute in these cases is whether the proposed rule amendments illegally extend the sales tax to payments for intangibles like a concession, franchise, or privilege to do business.
Findings Of Fact The Proposed Rules By notice published in 20 Florida Administrative Law Weekly 1549 on March 18, 1994, Respondent proposed amendments to existing Rule 12A-1.070. (All references to Sections are to Florida Statutes. All references to Rules are to the Florida Administrative Code. All references to Proposed Rules are to the rule amendments that are the subject of this proceeding.) The notice explains that the purpose of the rule amendments is to clarify the application of specific statutory sales tax exemptions for the lease or license to use real property at airports, malls and nursing homes. The rule amendments clarify that the total payment pursuant to a lease or license of real property is subject to tax, unless specifically exempt, irrespective of how the payment, or a portion thereof, is identified. However, if such leased property includes specifically exempt property, then such exemption may be applied on a pro rata basis. 20 Florida Administrative Law Weekly 1549 (March 18, 1994). In the notice, Respondent cites as specific authority for the proposed amendments Sections 212.17(6), 212.18(2), and 213.06(1). Respondent states that the proposed amendments implement Sections 212.02(10)(h) and (i) and (13), 212.03(6), and 212.031. By notice published June 10, 1994, in 20 Florida Administrative Law Weekly 4096, Respondent proposed amendments to the amendments previously proposed. As amended by both notices, Rule 12A-1.070 provides, with deletions stricken through and additions underlined: * 12A-1.070 Leases and Licenses of Real Property; Storage of Boats and Aircraft (1)(a) Every person who rents or leases any real property or who grants a license to use, occupy, or enter upon any real property is exer- cising a taxable privilege unless such real property is: * * * <<a>>. Property used at an airport exclusively for the purpose of aircraft landing or aircraft taxiing or property used by an airline for the purpose of loading or unloading passengers or property onto or from aircraft or for fueling aircraft. See Subsection (3). <<b. Property which is used by an airline exclusively for loading or unloading passengers onto or from an aircraft is exempt. This property includes: common walkways inside a terminal building used by passengers for boarding or departing from an aircraft, ticket counters, baggage claim areas, ramp and apron areas, and departure lounges (the rooms which are used by passengers as a sitting or gathering area immed- iately before surrendering their tickets to board the aircraft). Departure lounges commonly known as VIP lounges or airport clubs which are affiliated with an airline or a club which requires a membership or charge or for which membership or usage is determined by ticket status are not included as property exempt from tax. The lease or license to use passenger loading bridges (jetways) and baggage conveyor systems comes under this exemption, provided that the jetways and baggage conveyor systems are deemed real property. In order for the jetways and baggage conveyors to be deemed real property, the owner of these items must also be the owner of the land to which they are attached, and must have had the intention that such property become a permanent accession to the realty from the moment of installation. The items shall not be considered real property if the owner, when the owner is not the airport, retains title to the items after the purchase/installation indebtedness has been paid in full. Any operator of an airport, such as an airport authority, which is the lessee of the land on which the airport has its situs is, for the purposes of this sub- subparagraph, deemed the owner of such land. Real property used by an airline for purposes of loading or unloading passengers or property onto or from an aircraft which is exempt from tax includes: office areas used to process tickets, baggage processing areas, operations areas used for the purpose of the operational control of an airline's aircraft, and air cargo areas. If any portion of the above property is used for any other purpose, it is taxed on a pro- rata basis, which shall be determined by the square footage of the portions of the areas in the airport that are used by an airline exclusively for the purpose of loading or unloading passengers or property onto or from aircraft (which areas shall be the numerator) compared to the total square footage of such areas used by the airlines (which areas shall be the denominator). Example: An airline leases a total of 3,000 square feet from an airport authority. The airline uses the space as follows: 1,000 square feet are used to process tickets and check in the passengers' luggage; 1,000 square feet are used for the passengers' departure lounge; and 1,000 square feet are used for the management office and the employees' lounge. The 1,000 square feet used to process tickets and check in the luggage is exempt; the 1,000 square feet used as a passengers' departure lounge is also exempt; and the 1,000 square feet used as the management office and employees' lounge is taxable. Therefore, a total of 2,000 square feet is exempt because that portion of the total space leased by the airline is used exclusively for the purposes of loading or unloading passengers or property onto or from an aircraft. However, the total amount used as office space and the employees' lounge (i.e., 1,000 square feet) is taxable, because that portion of the space leased by the airline is not used exclusively for the purposes of loading or unloading passengers or property onto or from an aircraft. Real property used for fueling aircraft is taxable when the fueling activities are conducted by a lessee or licensee which is not an airline. However, the charge made to an airline for the use of aprons, ramps, or other areas used for fueling aircrafts is exempt. From July 1, 1990, through June 30, 1991, property used at an airport to operate advertising displays in any county as defined in s. 125.011(1), F.S., was exempt from tax.>> * * * (b)1. A person providing retail concessionaire services involving the sale of food or drink or other tangible personal property within the premises of an airport shall be subject to tax on the rental of such real property. 2. However, effective July 1, 1987, a person providing retail concessionaire services involving the sale of food and drink or other tangible personal property within the premises of an airport shall not be subject to the tax on any license to use such property. For purposes of this subparagraph, the term "sale" shall not include the leasing of tangible personal property. <<3. For purposes of this rule, the term "retail concessionaire," which may be either a lessee or licensee, shall mean any person .. . who makes sales of food, drinks, or other tangible personal property directly to the general public within the premises of an airport. With regard to airports, any persons which contract to service or supply tangible personal property for airline operations are considered to be providing aircraft support services and are not concessionaires for purposes of this rule.>> * * * The provisions of this rule relating to the license to use, occupy, or enter upon any real property are effective July 1, 1986, unless other- wise noted. "Real property" means the surface land, improvements thereto, and fixtures, and is synonymous with "realty" and "real estate." "License," with reference to the use of real property, means the granting of a privilege to use or occupy a building or parcel of real property for any purpose. <<1. Example:>> [[(g)]] An agreement whereby the owner of real property grants another person permission to install and <<operate>> [[maintain]] a full service coin-operated vending machine, coin- operated amusement machine, coin-operated laundry machine, or any like items, on the premises is a [[taxable]] license to use real property. The consideration paid by the machine owner to the real property owner <<for the license to use the real property>> is taxable. . . . <<2. Example:>> [[(h)]] An agreement between the owner of real property and an advertising agency for the use of real property to display advertising matter is a [[taxable]] license to use real property. <<The consideration paid by the advertising agency to the real property owner for the license to use the real property is taxable.>> * * * (4)(a)<<1.>> The tenant or person actually occupying, using, or entitled to use any real property from which rental or license fee is subject to taxation under s. 212.031, F.S., and shall pay the tax to his immediate landlord or other person granting the right to such tenant or person to occupy or use such real property. <<2. Where the lessor's or licensor's ability to impose fee(s) is based on its ownership or control of the real property, and the payment made to the lessor or licensor is for the lessee's or licensee's use of the real property, such fees are subject to tax. In such circumstances, the total payment for the use of real property, including airport property, is taxable, irrespective that the payment or a portion of the payment may be identified as consideration for the privilege to do business at that location, privilege fee, guaranteed minimum, concession fee, percentage fee, or by the use of similar terms which seek to distinguish such portion(s) from the payment for the lease of or license to use such real property for any purpose, unless such lease or license is otherwise specifically exempt. Example: A clothing retailer occupying a location inside a mall has an agreement with the owner of the mall under which it pays a minimum rent plus a percentage of its gross sales for the right to operate its store at that location. The agreement characterizes the minimum rent as consideration for the lease of designated real property and the percentage of gross sales as consideration for the privilege to do business in the mall; failure to make any of these payments can cause the agreement to be terminated. The total amount required under the agreement is subject to tax, regardless of how the consideration, or a portion thereof, is characterized. Example: A push cart or kiosk vendor has an agreement with the owner of the mall under which it pays a minimum rent plus a percentage of its gross sales for the right to sell its merchandise at various locations within the common areas of the mall. Failure to make the payments can terminate the right to sell merchandise in the mall. The total amount under the agreement is subject to tax because the statute defines a taxable license as the granting of the privilege to use real property for any purpose, including the privilege to use the real property to do business. Example: A car rental company has an agree- ment with an airport authority to operate its rental car business with a designated office and counter space within the airport terminal building. The agreement provides for a payment designated as rent for the use of real property as well as a payment based on a percentage of gross sales designated as a privilege fee for engaging in business at the airport. Failure to make either payment can terminate the agreement. The total amount required under the agreement is subject to tax. All past declarations, including Temporary Technical Assistance Advisements issued pursuant to Emergency Rule 87AER-91, Technical Assistance Advisements, Letters of Technical Assistance, and similar correspondence, issued by the Department, which advised that fees or portions of fees identified as privilege fees to engage in business were exempt, and which are inconsistent with this rule are rescinded. Therefore, such privilege fees are taxable payments for a lease or license to use real property for business purposes. (b) Except for tolls charged to the travelling public, both commercial and non- commercial, imposed exclusively for the right to travel on turnpikes, expressways, bridges, and other public roadways, the full consideration paid for the license to use airport real property for the purpose of picking-up or dropping-off passengers and baggage from airport sidewalks, landings, and other facilities by any person providing ground transportation services to such airport, shall be taxable as a license to use airport real property, irrespective of whether the operator of such service enters the airport terminal building while engaged in providing such service. Example: The fee paid by a hotel to an airport, for the privilege of coming on the airport property for the purpose of picking-up and dropping- off its guests at the airport terminal, is a license to use airport real property, and is taxable. Example: The fee paid by a taxicab and limousine company to an airport, for the privilege of coming on the airport property for the purpose of picking-up and dropping- off its passengers at the airport terminal, is a license to use airport real property, and is taxable. Example: The fee paid by a remote location rental car company, for the privilege of using the airport premises to pick-up and drop-off its customers at the airport terminal, is a license to use real property, and is taxable.>> Note: In the above text, language added to the statute is within the <<>>; deleted language is within the [[]]. Statutes and Legislative History As amended by 66, Chapter 86-152, Laws of Florida, Section 212.031 states: (1)(a) It is declared to be the legislative intent that every person is exercising a taxable privilege who engages in the business of renting, leasing, [[or]] letting<<, or granting a license for the use>> of any real property unless such property is: * * * Note: In the above text, language added to the statute is within the <<>>; deleted language is within the [[]]. Section 212.02(10)(h) defines "real property" as "the surface land, improvements thereto, and fixtures, and is synonymous with 'realty' and 'real estate.'" The 1986 amendments extend the sales tax to licenses for the use or occupancy of real property. Section 212.02(10)(i) defines "license." "License," as used in this chapter with reference to the use of real property, means the granting of a privilege to use or occupy a building or a parcel of real property for any purpose. Section 212.031 imposes a sale tax for the use and occupancy of real property, but not upon payments for intangibles, such as a franchise, concession, or other privilege to do business. The sales tax imposed by Section 212.031 is limited to the payments, or portions of payments, for the use or occupancy of real property. Each of the ten subsections under Section 212.031 exempts from the sales tax various types of property. Three exemptions relevant to these cases are at Section 212.031(1)(a)6, 7, and 10, which exempt real property that is: 6. A public street or road which is used for transportation purposes. 7. Property used at an airport exclusively for the purpose of aircraft landing or aircraft taxiing or property used by an airline for the purpose of loading or unloading passengers or property onto or from aircraft or for fueling aircraft or, for the period July 1, 1990, through June 30, 1991, property used at an airport to operate advertising displays in any county as defined in s. 125.011(1). Leased, subleased, or rented to a person providing food and drink concessionaire services within the premises of [[an airport,]] a movie theater, a business operated under a permit issued pursuant to chapter 550 or chapter 551, or any publicly owned arena, sport stadium, convention hall, [[or]] exhibition hall<<, auditorium, or recreational facility. A person providing retail concessionaire services involving the sale of food and drink or other tangible personal property within the premises of an airport shall be subject to tax on the rental of real property used for that purpose, but shall not be subject to the tax on any license to use the property. For purposes of this subparagraph, the term "sale" shall not include the leasing of tangible personal property.>> Note: In the above text, language added to the statute is within the <<>>; deleted language is within the [[]]. The indicated changes in subparagraph 10 were enacted by 10, Chapter 87-101, Laws of Florida. The remaining statutes cited by Respondent as law implemented by the Proposed Rules are not relevant to this proceeding. Court Decisions In Quick and Havey v. Department of Revenue, Case No. 72-363, Second Judicial Circuit, decided December 5, 1974, Donald O. Hartwell, Circuit Judge, entered a summary judgement in favor of Respondent. Quick and Havey operated a food concession at the municipal auditorium in West Palm Beach. In return for the concession, they agreed to pay the city base rental and a percentage of gross sales. The agreement entitled Quick and Harvey to the exclusive occupancy of part of the auditorium; they also provided concession services at other locations throughout the auditorium. Quick and Harvey paid the sales tax on the base rental, but argued that the percentage payment constituted "a fee paid for the exercise of a privilege." Judge Hartwell held that the tax applied to the base rent and percentage rent because the latter payments "are so inextricably entwined and enmeshed in the agreement to pay rent that they cannot be separated or distilled . . .." Judge Hartwell reasoned that rent is the "compensation paid for the use and occupation of real property." Recognizing that a tenant might make payments to its landlord that are not rent, Judge Hartwell found that at least under the terms of the instruments before it for construction and analysis that there has not been such a sufficient separation of the source of these funds as to warrant their classification solely as a fee for the exercise of a privilege. The right to use property cannot be separated from the property itself. We, of course, do not pass upon the question of whether the so-called concession rights can be [illegible] separated from the lease of the property itself. Suffice it to say that under the facts as herein presented, the Court is of the opinion that all payments made to the City of West Palm Beach under the agreement before the Court constitute payment of rent and are therefore subject to the tax specified in Section 212.031, Florida Statutes. In Avis Rent-A-Car System, Inc. v. Askew, Case No. 74- 338, Second Judicial Circuit, decided January 20, 1977, Judge Hartwell decided whether certain payments made by Avis were taxable under Section 212.031. Avis had "entered into various contracts for a concession or license to do business at various airports and for the rental of real property," as well as contracts with private individuals for the rental of real property to conduct business at nonairport locations. Judge Hartwell divided the contracts of Avis into three categories. The first type of contract was for the payment of rental for the use real property. The second type of contract was for the payment of a concession fee for the right to do business on the premises and for the payment of a sum explicitly identified as rent for the use of real property. The third type of contract was for the payment of a concession fee for the right to do business on the premises and for the use of real property without a sum explicitly identified as rent. Judge Hartwell concluded that all payments for the rights conveyed by the first type of contract were taxable under Section 212.031. He ruled that the payments for the right to rent real property under the second type of contract were taxable, but the payments for the remaining rights were not. Declining to aggregate payments as he had in Quick and Havey two years earlier, Judge Hartwell ruled that the payments for the rights conveyed by the third type of contract required a "reasonable allocation." The allocation was between the payments for the use of real property, which were taxed, and the remaining payments, which were not. Judge Hartwell ordered that the allocation should be based on rental rates charged for the right of occupancy of the real property charged other tenants for comparable space. In a per curiam decision not yet final, the Fifth District Court of Appeal recently considered the taxation of concession fees in Lloyd Enterprises, Inc. v. Department of Revenue, 20 Fla. Law Weekly D552 (March 3, 1995). The findings of fact and conclusions of law in this final order do not rely upon Lloyd Enterprises, which is discussed merely as supplemental material. In Lloyd Enterprises, the taxpayer entered into a concession agreement with Volusia County for the rental of motorcycles at the beach. A fixed- location concessionaire, the taxpayer had the right to park its vehicles within 100 feet in either direction of its assigned spot during its assigned operating hours. Other concessionaires were allowed to roam the beach, but beach rangers would enforce the taxpayer's exclusive right to sell goods within its 200-foot territory if the free- roaming concessionaires parked or tried to sell goods in this territory. Rejecting Respondent's interpretation of its own rules, the court considered the language of the agreement, as well as a county ordinance incorporated by the agreement. The court held that neither document created a lease or license for the use of real property. Rather, they reflected the County's concern with the image that activities on the beach projected to visitors. The documents evidenced the County's intent to enhance the public's enjoyment of the beach through the provision of goods and services, as well as to raise revenue, mostly to defray cleanup costs at the beach. Thus, under the documents, the payments were nontaxable concession fees. Agency Interpretations Interpretations of Law Prior to Proposed Rule Amendments By letter dated May 14, 1968, Mr. J. Ed Straughn, Executive Director of Respondent, advised Mr. Wilbur Jones that tax is due on the space rented to car rental companies in any airport building. If the agreement makes no allocation between rental and nonrent payments, Respondent would require a "reasonable allocation" between rent and other payments with the tax due only on the amount paid for the right of occupancy. Mr. Straughn suggested that the rent component be estimated by the use of comparable rental rates for space elsewhere in the building. By letter dated August 14, 1985, Mr. Hugh Stephens, a Technical Assistant for Respondent, advised Mr. Victor Bacigalupi that a contract between an advertising company and Dade County, concerning advertising at Miami International Airport, did not involve the rental of real property. Mr. Stephens evidently relied on the nonexclusive right of posting advertising displays and the right of Dade County to require the advertiser to relocate or remove displays. By memorandum dated October 28, 1986, Mr. William D. Townsend, General Counsel, proposed policy for the taxation of licenses. Consistent with the Straughn letter 18 years earlier, the memorandum, which is directed to Mr. Randy Miller, Executive Director, states: A license in real property can be defined as a personal, revocable, and unassignable privilege, conferred either by writing or orally, to do one or more acts on land without possessing any interest in the land. Every license to do an act on land involves the occupation of the land by the licensee so far as it is necessary to do the act. Example: A concessionaire pays for permission (a license) to sell hot dogs in the building of a wrestling arena. The concessionaire has no possessory interest in the building. He normally has no specifically or legally described area which is his. He is allowed simply to vend his hot dogs in the building. Perhaps he delivers and vends in the stands. Without special permission, he cannot assign his license and it is normally revocable by the licensor unless specifically agreed otherwise. . . . For purposes of F.S. 212.031, however, the Department of Revenue (DOR) takes the position that either a lease or license is present in any business arrangement in which one or more owners, lessors, sublessors, or other persons holding a possessory interest in real property, permits a third party to use such real property for authorized acts unless all of the facts and circumstances surrounding the agreement between the parties conclusively indicate that the agreement is neither a lease nor a license. The form in which the transaction is cast is not controlling. Accordingly, some portion of the consideration paid for an agreement that in form is a joint venture, profits interest, management agreement, franchise, manufacturer's discount, bailment or other arrange- ment will be presumed by the DOR to be allocable to a lease or license if the arrangement involves the use of real property to perform authorized acts by the lessee or licensee. If the terms of the agree- ment are silent with respect to the portion of the consideration allocable to the inherent lease or license or if the consideration allocated under the terms of the agreement is less than its fair market value, the DOR will allocate to the lease or license a portion of the consideration that is equal to the fair market value of the lease or license. Contrary to the Straughn letter and Townsend memorandum eight months earlier, Technical Assistance Advisement 87A-011 dated July 2, 1987, which was prepared by Mr. Melton H. McKown, advised the Hillsborough County Aviation Authority that the privilege fees paid by car rental companies to the aviation authority were taxable. The agreement between the parties stated that the fees were "for the concession privileges granted hereunder, and in addition to the charges paid for the Premises .. ., [the car rental company] shall pay a privilege fee " Two months later, Temporary Technical Assistance Advisement TTAA 87(AER)-225 reversed TAA 87A-011. In TTAA 87(AER)-225, which is dated September 10, 1987, Ceneral Counsel William Townsend informed Mr. Samuel J. Dubbin that the payments made to airport authorities from concessionaires are "not for the right to use real property, but are for the right to engage in business at the airport." The letter relies upon Avis Rent-A- Car Systems, Inc. v. Askew. Respondent confirmed TTAA 87(AER)-225 in TTAA 88(AER)- 198, which is dated March 24, 1988, and in a letter dated April 6, 1989, from Mr. Robert M. Parsons, Technical Assistant, to Mr. Thomas P. Abbott. The April 6 letter confirms that payments from on- airport rental car companies are taxed only to the extent that the payments represent rent for space on airport property and not to the extent that the payments represent consideration for the privilege to do business. The April 6 letter adds that the payments from off-airport car rental companies for the right to pick up customers at the airport are not taxable because such payments are merely consideration for the privilege to engage in business. The April 6 letter discusses fees paid by other airport concessionaires. Acknowledging the recent enactment of the statutory exemption for license payments made to airports by food and drink concessionaires, the letter notes that, after July 1, 1987 (the effective date of the statutory changes), such payments, even if calculated as percentages of sales, are not taxable because such payments are construed as payments for a mere privilege or license to engage in business. The April 6 letter evidently marks the first time that, in a single document, Respondent inconsistently treats car rental company concession fees and all other concession fees. The April 6 letter adopts the Straughn/Townsend approach when it states that percentage rent is not taxable because it is payment for the privilege to do business. (The letter actually states "privilege or license" to do business, and this alternative use of "license," not involving the use or occupancy of real property, may have caused part of the confusion.) But the assurance of nontaxability of concession fees in the April 6 letter is limited to the period after July 1, 1987. Consistent with the McKown approach, the letter relies on the relatively recent statutory exemption for license payments from airport retail concessionaires. Consistent with the McKown approach, the letter later adds that percentage rent was taxable after the legislature amended Section 212.031 to tax payments for a license to use real property. The April 6 letter concludes erroneously that it is treating all airport concessionaires like on-airport car rental companies. In a Notice of Decision dated July 28, 1992, Respondent addressed the taxation of payments to airport authorities from car rental companies. Under a concession agreement, the airport charged a car rental company a fixed rent for occupied airport space, such as for parking, check-in, and service. Under the same agreement, the airport also charges the car rental company the greater of a guaranteed minimum or percentage of gross revenues. Taking the Straughn/Townsend approach, the Notice of Decision reversed a tentative assessment and held that the additional payments were not taxable. The July 28, 1992 Notice of Decision also addresses the taxation of percentage payments to airport authorities from other concessionaires. Explicitly endorsing the inconsistency of the April 6 letter, Respondent determined that percentage payments from concessionaires other than rental car companies were taxable either as leases or, since July 1, 1986, as licenses. The only explanation offered for the inconsistent treatment of concessionaires is that TTAA 87(AER)-225 applies only to rental car companies. Two years later, as reflected in a March 3, 1994 internal memorandum from Ms. Nydia Men,ndez to two Miami auditors, Respondent continued to perpetuate its inconsistent policy of taxing all payments for the privilege of engaging in business at airports, except for such payments from rental car companies. Returning to advertising, the July 28, 1992, Notice of Decision also states that the payments from the advertiser addressed in the letter dated August 14, 1985, have been taxable, as payments for a license, since July 1, 1986. This conclusion represents the correct treatment of licenses, as another means of granting a right to use or occupy real property. This treatment contrasts with the apparent misinterpretation in the April 6 letter that taxable licenses include grants of privileges to do business. In an early attempt to revisit the tax treatment of payments for concessions, franchises, and other privileges to do business, especially at airports, Respondent evidently chose the Quick and Havey and McKown approach that such business payments are taxable, at least when they are combined with taxable payments for the use or occupancy of real property. By memorandum dated January 14, 1993, from Assistant General Counsel Jeff Kielbasa to Ms. Lorraine Yoemans, Legislative Affairs Director, Mr. Kielbasa explained the purpose of unidentified proposed rule amendments addressing the same issues addressed by the subject proposed rule amendments. He wrote: The proposed rule amendment attempts to level the field by recognizing that any charge for the right, privilege, or license to do business at an airport is fundamentally a charge for the privilege to use or occupy land. If an airport business refuses to pay the fee, the airport's remedy is to have the business removed as a trespasser. It should be pointed out that we are not concerned with true business licenses or privilege fees attendant to use of trademarks, franchises and the like. These are licenses or privilege fees unrelated to the use of real property. The proposed rule does not differentiate between businesses such as on-airport car rental companies (with counterspaces) and off-airport car rental companies. The fee (however characterized) charged by the airport for the privilege to use or occupy the airport for business purposes is subject to the section 212.031 sales tax. See section 212.02(10)(i) defining license with reference to the use of real property as the "privilege to use or occupy a building or parcel of real property for any purpose." We believe that separation of a payment by characterizing one portion as a lease or license of realty (whether site specific or not) and another for the privilege of conducting business on the premises is artificial. It would be just as easy for the property owner on the corner of College and Monroe to charge a business tenant the average commercial square footage rental in Leon County for the lease and require the tenant to pay the premium attributable to the location at College and Monroe as a separate charge in the form of a license to do business. However carved up and characterized, under the statute each charge would be taxable since both leases and licenses to use real property are taxable. Interpretations of Proposed Rule Amendments On April 14, 1994, Respondent conducted a workshop on the proposed rule amendments prior to the modification published June 10, 1994. Respondent's representatives were understandably reluctant to opine on questions of law without detailed facts. However, explaining the tax consequences of payments from a concessionaire to an airport, Assistant General Counsel Kielbasa stated: I think the notion that there is a separate privilege fee that an airport charges unrelated to the fact that the privilege is being granted to function at the airport, I don't think that's what's happening. I think it's a very simple case, and I think it's very clear. But there may be separate provisions in contracts or lease agreements which have nothing to do with operating at that location, and to that extent, I don't think it would be subject to tax at all under the statute, and that's what we're trying to get at. Respondent's Exhibit 1A, pages 33-34. A major element of the dispute between Respondent and Petitioners and Intervenors (collectively, Petitioners) concerned Respondent's choice to take the Quick and Havey and McKown approach over the Avis and Straughn/Townsend approach in taxing mixed payments for the use of real property and for business intangibles. Following the rule workshop, Respondent made some Avis and Straughn/Townsend changes to the proposed rules, but the changes did not preclude a Quick and Havey and McKown approach, as evidenced by the following statement in the Prehearing Stipulation: "The Department contends that where the amount paid for a privilege fee is so intertwined or meshed with a payment for a license or lease to use real property that it cannot be separated, the full amount is taxable." Airports and Concessions Governmental entities operate and typically own large commercial airports, such as those in Orlando, Miami, and Tampa. By law, these airport authorities are empowered to enter into contracts with third parties to supply persons using airports with goods and services, such as food and beverage, retail sales, and car rentals. In some cases, airport authorities may obtain services by management agreements, which are not subject to sales tax. In most cases, though, airport authorities obtain goods and services for airport visitors by leases and grants of concessions, franchises, or other privileges to do business. The Dictionary of Real Estate Appraisal defines "concession" as "a franchise for the right to conduct a business, granted by a government body or authority." The Dictionary of Real Estate Appraisal defines "franchise" as "a privilege or right that is conferred by grant to an individual or group of individuals; usually an exclusive right to furnish public services or to sell a particular product in a certain community." By what are normally labelled "concession" or "franchise" agreements, airport authorities permit a concessionaire to operate a business with some nexus to the airport or at least its passengers, in return for which the concessionaire pays money to the airport authority. The nexus to the airport may take various forms. Some concessionaires sell food or drink or retail merchandise at exclusively assigned locations within the airport terminal. Hotel concessionaires operate hotels at fixed locations in the terminal. Some concessionaires, like taxi companies and nonairport hotels, pick up and drop off passengers at the airport terminal in areas designated for such purpose, but not reserved exclusively for any one concessionaire. An on-airport car rental concessionaire rents cars at the airport, using fixed counter space, parking areas, car service areas, and car pick-up and drop-off areas. A variation of the car rental concession is the off- airport car rental concessionaire, which has no fixed space at the airport except for customer pick-up and drop-off areas and usually counter space. In Florida, all off-airport rental car companies use their own vans to pick-up and drop-off customers. At some airports outside Florida, such as Sacramento, Dallas, and Minneapolis, the airport authorities operate their own vans to pick up and drop off customers of off-airport rental car companies. In such cases, the off-airport rental car companies do not directly use or occupy any of the real property of the airport. In general, the payments from the concessionaires to the airport authorities consist of two categories. First, there is a fixed payment, which the concession agreement typically characterizes as consideration for the use and occupancy of real property. The airport authority normally bases this rental payment on the fair market value of the space leased, as estimated by a licensed real estate appraiser, or under a cost-based formula. Second, there is a payment representing a percentage of the gross revenue of the concessionaire derived from airport business. The concession agreement typically characterizes this payment as consideration for the privilege to do business with airport passengers. Rents typically exceed $50 per square foot per year. Most, but not all concessionaires, make total payments of considerably more that $50 per square foot per year, often totalling hundreds and sometimes thousands of dollars. In entering into concession agreements, airport authorities pursue a variety of goals. They must produce high revenues because airport authorities do not operate on public subsidies, aside from the monopoly grant of the airport operation itself. But high returns from concessionaires are not the only goal. Airport authorities must serve airport visitors in order to maintain successful relations with the airlines. And airport visitors demand a mix of goods and services at acceptable prices and quality. In selecting concessionaires and pricing concession fees, airport authorities therefore balance maximizing revenues with serving visitors' needs. Airport authorities price concession fees based on the type of goods and services offered by the concessionaire. A bank at one major Florida airport pays six times the concession fees of a travel agency, which occupies space of equal size next to the bank. At the same airport, one theme-park retailer pays concession fees of more than three times what another theme-park retailer pays for the identical space. In the typical concession arrangement, the airport authority receives payments consisting of rent and "something else." The rent is attributable to the use and occupancy of real property. The "something else" is business income, which is attributable to an intangible business asset, such as a franchise, concession, or privilege to do business. Like any other lessor, airport authorities undertake, in their concession agreements, to provide their lessees with offices or retail space for their use and occupancy. Unlike other lessors, however, airport authorities also undertake, in their concession agreements, to provide nearly all of the concessionaire's customers through operating agreements with airlines. Through concession agreements, airport authorities allow concessionaires to share in the authority's most valuable asset, which is not the real property comprising the airport, but the exclusive, governmental franchise to operate the airport. In these regards, airport authorities are in very similar roles to the county in Lloyd Enterprises with the subjects of the government monopoly being in one case a beach and another an airport. Both governmental "owner/operators" provide customers for their respective concessionaires and predicate their agreements upon the ability of the contracting party to supply the needs of the customers in a manner that does not compromise the public asset--i.e., an airport or a beach. These elements are not typical of a lessor or licensor. To varying, lesser degrees, airport authorities also distinguish themselves from mere lessors through the marketing, management, working capital, and workforce that characterize the airport operation. Respondent's key witness identified four factors useful in determining whether a payment is for the use or occupancy of real property: the relationship of the parties to the real property, the use to be made of the real property, the rights granted the parties under the agreement, and the basis for the payment or charge for the real property. These four factors assist in the determination whether a payment is for the use or occupancy of real property. But the usefulness of the four factors is limited because they do not directly address the other possible component of a mixed payment, which is a payment for a franchise, concession, or other privilege to do business. It is easy to determine that concessionaire payments typically comprise rent or some other payment for the use and occupancy of real property plus a payment for an intangible, such as the privilege to do business with airport users. Obviously, Respondent is not required to accept the parties' labelling or allocations of these payments. But it is difficult to determine how much of a mixed payment is for the use or occupancy of real property, which is taxable (ignoring, as always, the special treatment of certain airport license payments, as well as other exemptions), and how much is for a privilege to do business, which is nontaxable. The issue is whether a "reasonable allocation" is possible between the two components in a mixed payment. As ordered in Avis and suggested by the Straughn letter and Townsend memorandum, the allocation process should begin with finding a fair rental value. It is difficult to estimate the fair market rent for space in a large commercial airport. The universe of comparables is small due to the uniqueness of major airports. But the appraisal of airport real property is not impossible. Nonairport comparables normally exist that, with suitable adjustments, yield reasonable approximations of fair market rentals. A real estate appraisal helps determine how much of a concessionaire's payment should be characterized as rent. However, the allocation problem can be approached at the same time from the opposite end. In appraising business assets, an accountant or business appraiser estimates the value of the concession, franchise, or other privilege to do business with airport visitors. The business-income approach to the allocation problem is aided by analysis of the payments made by completely off- airport car rental concessionaires in Sacramento, Minneapolis, and Dallas. These payments provide a rough approximation of the value of this intangible, even though they probably require major adjustments to reflect, among other things, differing passenger counts and demographics, as well as the costs incurred by the airport authorities in providing transportation to the off- airport sites. Based on the foregoing, the record demonstrates that: a) the payments of a concessionaire to an airport authority ordinarily consist in part of rent or license payments and in part of payments for an intangible, such as a franchise, concession, or other privilege to do business and b) these payments may be allocated, with reasonable precision, between the real property and business components. The Proposed Rules Proposed Rule 12A-1.070(4)(a)2 and (b) Rule 12A-1.070(4)(a)1. is not materially changed by the proposed rule amendments. Consistent with the statute, this paragraph of the rule merely imposes the sales tax in taxable transactions on the person actually occupying, using, or entitled to use the real property and requires that such person pay its immediate landlord or grantor. The next subparagraph is new. Proposed Rule 12A- 1.070(4)(a)2 contains two introductory sentences followed by three examples and a notice. The first sentence of Proposed Rule 12A-1.070(4)(a)2 fairly interprets the statute. The first sentence states that the sales tax is due on payments made to lessors or licensors when the payment is for the use of the real property and is based on the ownership or control of the real property by the lessor or licensor. By limiting the tax to those payments based on the payee's interest in the real property, the proposed rule ensures that the tax is imposed only on the portion of the payment attributable to the use or occupancy of real estate. The first sentence is unobjectionable. The second sentence of Proposed Rule 12A-1.070(4)(a)2 is no more controversial. This sentence provides that the "total payment for the use of real property" is taxable, even though the payment or part of the payment "may be identified" as payment for a privilege to do business. The use of "may be identified" in the "even though" clause refers to the label given such payments by the parties. The second sentence of Proposed Rule 12A-1.070(4)(a)2 merely provides that the taxable consequence of the transaction is not governed by the label given the payments by the parties. In other words, just because the parties use "concession fee," "privilege fee," "percentage fee," or "similar terms" does not necessarily make them payments for the privilege to do business. The second sentence assures that Respondent will not be deterred by mere labels from its lawful responsibility to characterize properly the nature of the payments, and make reasonable allocations when allocations are indicated. The three examples under Proposed Rule 12A-1.070(4)(a)2 are neither illustrative nor useful. To the contrary, they are vague and misleading and appear to reveal a misunderstanding of the proper taxation of mixed payments consisting of rent and payments for a privilege to do business. The first example is Proposed Rule 12A-1.070(4)(a)2.a. A clothing retailer occupies a location in a shopping mall. The retailer pays the mall owner minimum rent plus a percentage of gross sales. The agreement characterizes the minimum rent as consideration for the lease of designated space and the percentage of sales as consideration for the privilege to do business in the mall. The failure to pay either amount is grounds for termination of the agreement. The proposed rule concludes: "The total amount required under the agreement is subject to tax, regardless of how the consideration, or a portion thereof, is characterized." In fact, both payments made by the retailer to the mall owner may constitute taxable payments for the use of real property. Supplying little useful information as to how to determine the true character of payments, the proposed example ignores all of the important factors necessary in making this determination. The proposed example overrides the characterization of the payments by the parties. As discussed above, the parties' labelling of a payment may be tax-motivated, but it may also reveal their true intent. However, the proposed example offers insufficient explanation why it ignores the label of "privilege to do business" at the mall. The only possible grounds for ignoring the label are that the retailer occupies a location inside a mall under which it pays minimum rent and percentage rent and a default in the payment of either amount is grounds for terminating the agreement. The first basis is only that the payments are mixed and, except under the most strained reading of Quick and Havey, cannot, without more, possibly be considered justification for taxing the total payments. The key factor in the first proposed example is thus the presence of a cross-default clause. Such a clause may play a role in distinguishing between payments for the use of real property and other types of payments. In certain cases, the total amount actually being paid for the use of the real property may include all payments that must be paid in order for the agreement to remain in good standing. This would likely be true of base rent and additional rent, consisting of a lessee's prorata share of insurance, taxes, maintenance, and utilities. However, there is nothing in the record to suggest that a cross- default clause is of such importance as to confer upon it the status that it is given in the rule example. Nothing in the record supports the assertion that all cross-defaulted payments are therefore payments for the use or occupancy of real property. For instance, Respondent concedes that a lessee/payor might be obligated under a lease to make taxable payments of rent and nontaxable payments of promotional fees, such as for the use of logos or other intangibles. It is conceivable that a prudent (and powerful) lessor/payee might provide in the agreement, even if called a "lease agreement," that a default in either payment is grounds for terminating the agreement. Even so, the mere existence of such a cross-default clause does not, without more, transform the promotional fee into rent. The proper characterization of the two payments under the first proposed example requires consideration of, among other things, the four factors identified by Respondent's key witness: the relationship of the parties to the real property, the use to be made of the real property, the rights granted the parties under the agreement, and the basis for the payment or charge for the real property. The proper characterization requires consideration, in some fashion, of the elements that distinguish a real property asset from a business asset, such as any contributions by the mall owner in the form of operating agreements, other leases, marketing, management, working capital, and workforce, as well as the method by which the mall owner decides with whom it will enter into agreements and the total payments that it will require. The second example is Proposed Rule 12A-1.070(4)(a)2.b. A push cart vendor pays a mall owner minimum rent plus a percentage of gross sales for the right to sell merchandise at various locations within the common area of the mall. The mall owner may terminate the agreement if the vendor fails to make either payment. The example concludes that both payments are taxable "because the statute defines a taxable license as the granting of a privilege to use real property for any purpose, including the privilege to use real property to do business." The only difference in the first two examples is that the second involves a license and the first involves a lease. Like the example of the mall retailer, the example of the push cart vendor elevates the cross-default provision to outcome-determinative status. Again, the record does not support such reliance upon this factor for the above-discussed reasons. The third example is Proposed Rule 12A-1.070(4)(a)2.c. A car rental company pays an airport authority for designated office and counter space in the terminal. The agreement identifies a payment as rent for the use of real property. The agreement also identifies a payment, representing a percentage of gross sales, as a privilege fee for the right to engage in business at the airport. Failure to make either payment is grounds for terminating the agreement. The example concludes that the "total amount required under the agreement is subject to tax." As with the preceding examples, the example of the airport car rental company relies upon a cross-default clause to characterize all payments as for the use of real property. Again, for the reasons stated above, the record does not support such reliance upon this single factor. The three examples make no "reasonable allocation" between the real property and business components of what are probably mixed payments. Best revealed by the last sentence of the second example, the examples illegitimately transform business payments into real property payments simply because the business payor uses or occupies real property to conduct its business. In reality, the three examples seek to find their way back to the haven of Quick and Havey by equating cross-default clauses with inextricable intertwining and enmeshment. It is only conjecture whether a court would today so readily abandon an attempt to allocate between real property and business income. In any event, the present record demonstrates that "reasonable allocations" are achievable and require consideration of much more than cross- default clauses. Respondent's defense of the examples is inadequate. Respondent argues that the examples are modified by the language of Proposed Rule 12A- 1.070(4)(a)2. As previously stated, the two sentences of Proposed Rule 12A- 1.070(4)(a)2 represent a fair restatement of the statutory taxing criteria. But the role of the two examples is to illustrate the application of Proposed Rule 12A-1.070(4)(a)2, not provide a circular restatement of the rule and, thus, the statute. Given their language, the proposed examples stand alone and cannot be saved by the implicit incorporation of the first two sentences of Proposed Rule 12A- 1.070(4)(a)2. Standing alone, the illustrations are erroneous in their reliance on cross-default clauses, misleading in their omission of material factors required for any reasonable allocation, and misguided in their implicit bias against making allocations between payments for real property and business components. Respondent claims that the examples create presumptions that a taxpayer may rebut. This claim is dubious on two counts. First, Respondent's key witnesses disagreed on whether the presumptions created by the examples were indeed rebuttable. One witness testified clearly that, if a nonexempt transaction fit one of the examples, then the transaction was taxable. Nothing in the examples suggests that these presumptions are rebuttable. But the examples do not work even if they establish only rebuttable presumptions. The cross-default provision cannot bear the burden even of creating a rebuttable presumption. A cross-default provision is simply not that important to the proper characterization of the payments, especially in light of far more important factors. Proposed Rule 12A-1.070(4)(a)d warns taxpayers that all past declarations, including technical assistance advisements, that "advised that fees . . . identified as privilege fees to engage in business were exempt, and . . . are inconsistent with this rule" are rescinded. Proposed Rule 12A- 1.070(4)(a)d concludes: "Therefore, such privilege fees are taxable payments for a lease of license to use real property for business purposes." Respondent's key witness could not identify with certainty the past declarations rescinded by Proposed Rule 12A-1.070(4)(a)d or the past declarations left unaffected. This leave the proposed rule unnecessarily vague, at least as to airport authorities. There are a limited number of airport authorities and concessionaires that could be relying on past declarations and, if there are any besides those uncovered in this proceeding, they should be easily found. Proposed Rule 12A-1.070(4)(b) identifies as a taxable license to use real property the "full consideration paid for the license to use airport real property for the purpose of picking- up or dropping-off passengers and baggage from airport sidewalks, landings, and other facilities" by any provider of ground transportation services, regardless whether the provider "enters the airport terminal building while . . . providing such service." The full payment for the real property component is taxable, and Proposed Rule 12A-1.070(4)(b) accurately interprets the statutes. However, Respondent again encounters problems in the three examples that follow Proposed Rule 12A-1.070(4)(b). In Proposed Rule 12A-1.070(4)(b)1, a hotel pays a fee to an airport authority for the privilege of coming onto airport property to pick up and drop off hotel guests at the terminal. The example states that the payment is taxable because it is for a license to use airport real property. The second and third examples are identical except they involve a taxicab and limousine company and an off-site car rental company. Proposed Rule 12A-1.070(4)(b) states the obvious-- i.e., that whatever the payor pays for the right to use or occupy real property is subject to sales tax. Proposed Rule 12A- 1.070(4)(b) does not require the characterization of all payments between such parties as taxable payments for the use or occupancy of real property. The problem with the proposed examples is that they depart from the real-property language of Proposed Rule 12A- 1.070(4)(b) and use the business language of a privilege to do business. The first example baldly provides that a fee paid by a hotel to an airport for the "privilege" to enter airport property and pick up and drop off hotel guests is a license to use airport property and is taxable. There is no mention of allocation or of the factors that would go into a reasonable allocation. The fee is taxable. The language and paucity of reasoning are practically identical for the second and third examples. Respondent argues that Proposed Rule 12A-1.070(4)(b) must be read in connection with the language of Proposed Rule 12A-1.070(4)(a)2, which restates the statutory language. This argument fails for two reasons. Like the examples under Proposed Rule 12A-1.070(4)(a)2, Proposed Rule 12A-1.070(4)(b) does not incorporate by reference the language of Proposed Rule 12A-1.070(4)(a)2. Respondent's argument of implicit incorporation is even weaker here because Proposed Rule 12A-1.070(4)(b) is not even a subparagraph of Proposed Rule 12A- 1.070(4)(a)2. The first set of proposed examples at least mentions a cross-default clause, which could have some bearing on the proper characterization of the payments, even though the omission of far more important factors invalidates the first set of examples. The second set of proposed examples fails even to mention a single factor. If the hotel, taxi cab company, or rental car company pays for the privilege of entering airport property to do business, the entire payment is taxable. Proposed Rule 12A-1.070(1)(a)6.b and c Proposed Rule 12A-1.070(1)(a)6.b provides that property "used by an airline exclusively for loading or unloading passengers onto or from an aircraft is exempt." The proposed rule identifies examples of such property as common terminal walkways used by passengers for boarding or exiting planes, ticket counters, baggage claim areas, ramp and apron areas, and departure lounges (but distinguished from VIP lounges or clubs that require a membership not determined by ticket status). Proposed Rule 12A-1.070(1)(a)6.c adds that "[r]eal property used by an airline for purposes of loading or unloading passengers or property . . . which is exempt from tax includes ... office areas used to process tickets, baggage processing areas, operations areas used for the purpose of the operational control of an airline's aircraft, and air cargo areas." Petitioners object to the use of "exclusively" in subparagraph b. The statute provides an exemption for property used exclusively for aircraft landing or taxiing or property used by an airline for loading or unloading persons or property or for fueling. Clearly, due to the repetition of "property used" in the second clause, the modifier "exclusively" applies only to the first clause, which is consistent with the doctrine of the nearest antecedent argued in Petitioner's proposed final order. It is unclear how Proposed Rule 12A-1.070(1)(a)6.b and c work together because they seem to define the same exempt property under different subparagraphs. Both subparagraphs apply to real property, and both seem to describe the same examples of real property, using different words. The subparagraphs under subparagraph b present reasonable rules for determining what is real property based on ownership of the underlying land, with a special rule when the airport authority leases, but does not own, the land on which the airport is situated. The subparagraphs under subparagraph c identify a prorating process, which applies when the property is used for both exempt and nonexempt purposes. It is unclear how property could be used for exempt and nonexempt purposes under the requirement of "exclusive" use in subparagraph b, although such mixed uses is contemplated by subparagraph c. The requirement contained in the first sentence of Proposed Rule 12A- 1.070(1)(a)6.b that the property be used exclusively for loading or unloading passengers conflicts with the language of Proposed Rule 12A-1.070(1)(a)6.c, as well as the language of Rule 12A-1.070(1)(a)6.a; neither of the latter two provisions predicates the exemption upon exclusivity of use. More importantly, the first sentence of Proposed Rule 12A- 1.070(1)(a)6.b conflicts with the relevant statutes. However, the remainder of Proposed Rule 12A- 1.070(1)(a)6.b, including subparagraphs (I) and (II), is a reasonable interpretation of the relevant statutes, as is Proposed Rule 12A-1.070(1)(a)6.c, including subparagraphs (I) and (II). Petitioners argue that Respondent intends to tax nonairline concessionaires for their use of property used for loading or unloading persons or property. This argument is unclear, perhaps because the unobjectionable proposed rules do not require such an application. Proposed Rule 12A-1.070(1)(b)3 Proposed Rule 12A-1.070(1)(b)3 defines "retail concessionaire" as either a lessee or licensee that makes sales directly to the public within an airport. The words "retail concessionaire" are not used elsewhere in the rule or proposed rules at issue except in Rule 12A-1.070(1)(b)1 and 2, which addresses "a person providing retail concessionaire services" involving the sale of food or drink or other tangible personal property in an airport. Subparagraph 1 imposes tax on rent paid by such persons, and subparagraph 2 exempts from tax any license payments made by such persons. Petitioners' arguments against the definitional proposed rule are misplaced. The definition covers lessees and licensees, but does not impose any tax. In conjunction with subparagraphs 1 and 2, the proposed definition of "retail concessionaire" says, in effect, that all lessees and licensees selling food and drink or other personal property are subject to tax on payments for the rental of associated real property, but are not subject to tax on payments for the licensing of associated real property. The subparagraphs that carry tax consequences honor the legislative directives as to taxability.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: At all relevant times, respondent, Passport Internationale, Inc. (Passport or respondent), was a seller of travel registered with the Department of Agriculture and Consumer Services (Department). As such, it was required to post a performance bond with the Department conditioned on the performance of contracted services. In this case, petitioner, Cassandra Cook, has filed a claim against the bond for $349.50 alleging that Passport failed to perform on certain contracted services. On April 20, 1989, petitioner received a solicitation telephone call from Global Travel inviting her to purchase a travel certificate entitling her and a companion to a five-day, four-night cruise to the Bahamas. Global Travel was a Tennessee telemarketeer selling travel certificates on behalf of Passport. Petitioner agreed to purchase the certificate and authorized a $349.50 charge on her credit card payable to Global Travel. Thereafter, petitioner received her travel certificate, brochure and video, all carrying the name, address and logo of Passport. In order to use the travel certificate, it was necessary for petitioner to fill out the reservation form with requested dates and return the form, certificate, and a deposit to Passport. Before doing so, petitioner repeatedly attempted to telephone Passport's offices in Daytona Beach to obtain additional information and to inquire about the availability of certain travel dates but was never able to speak to anyone because of busy lines. She then requested a refund of her money and simultaneously filed a complaint with the Department in January 1990. In responding to the complaint in February 1990, Passport denied liability on the ground petitioner was obligated to "deal directly with the company that has charged her credit card as that is who has her money." By then, however, Global Travel was out of business. To date, petitioner has never received a refund of her money.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the claim of petitioner against the bond of respondent be granted, and she be paid $349.50 from the bond. DONE AND ENTERED this 12th day of December, 1994, in Tallahassee, Florida. DONALD R. ALEXANDER 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 12th day of December, 1994. COPIES FURNISHED: Cassandra Cook 3818 Firdrona Drive, N. W. Gig Harbor, Washington 98332 Julie Johnson McCollum 2441 Bellevue Avenue Daytona Beach, Florida 32114 Robert G. Worley, Esquire 515 Mayo Building Tallahassee, Florida 32399-0800 Honorable Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, Florida 32399-0810 Richard D. Tritschler, Esquire The Capitol, PL-10 Tallahassee, Florida 32399-0810
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: Stipulated Facts: Petitioner submitted its application for DBE certification on or about July 27, 1993. Petitioner and Travel Professionals International Licensing Co., d/b/a Travel Professionals, Inc. (TPI) entered into a franchise agreement on September 28, 1993. Department conducted an on-site review of Petitioner's business on November 4, 1993. Department notified Petitioner of its intent to deny its application for DBE certification by certified mail on December 9, 1993. Petitioner requested a hearing pursuant to Section 120.57(1), Florida Statutes, on December 15, 1993. One hundred per cent of Petitioner's stock is owned by Jeanne Santo, a "socially and economically disadvantaged individual" as defined in Rule 14- 78.002(1), Florida Administrative Code, and therefore, Petitioner is in compliance with 14-78.005(7)(b), Florida Administrative Code. All securities which constitute ownership by Jeanne Santo are held directly by Jeanne Santo, and therefore Petitioner is in compliance with Rule 14-78.005(7)(d), Florida Administrative Code. The contributions of capital or expertise invested by Jeanne Santo are real and substantial, and therefore Petitioner is in compliance with Rule 14- 78.005(7)(f), Florida Administrative Code. The provisions of Rule 14-78.005(g) and (h), Florida Administrative Code, do not apply to Petitioner. The franchise agreement (Agreement) between Petitioner and TPI contains the following terms and conditions which are not in the agreements between Petitioner and Airlines Reporting Corporation (ARC); Petitioner and International Airlines Travel Agent Network (IATAN); and Petitioner and Systems One: a requirement that Petitioner locate its travel office only in "That portion of Pinellas County, Florida lying south of Florida State Highway 694". a requirement that Petitioner pay a quarterly advertising contribution. a requirement that Petitioner attend mandatory managers' meetings. ARC is customary in the travel agency industry. IATAN is customary in the travel agency industry. A leasing agreement for an automated reservation and ticketing system is customary in the travel industry. The Agreement requires that Petitioner be an ARC agent. Facts Not Stipulated The Fral Highway Administration (FHWA) is the federal agency that inisters the DBE program on the national level. The Department is the agency charged with the responsibility of administering the DBE program for the State of Florida. In making its determination of an applicant's eligibility for DBE, the Department considers: (a) Surface Transportation Uniform Relocation Assistance Act of 1987 (Public Law 100-17); (b) 49 CFR Part 23; (c) Chapter 339, Florida Statutes, (d) Chapter 14-78, Florida Administrative Code, (e) United States Department of Transportation (USDOT) administrative decisions; and (f) guidelines and training material from the FHWA or USDOT. The USDOT through FHWA provided the Department with a copy of DBE Program Administration Manual (Publication No. FHWA-HI-90-047, April, 1990) which the Department uses as a guideline for USDOT's and FWWA's interpretation of the DBE program. Below are portions of the Agreement which are pertinent to this preceeding: Purposes of this Agreement: We have developed the Travel Professionals International System (hereinafter called "the TPI System) for the operation of retail travel agencies, and we have developed policies, procedures and techniques that are designed to enable such agencies to compete more effectively in the travel market... You have requested our assistance, the use of the TPI Systems, and a franchise from us to operate a retail travel agency using the TPI System.... Franchise: We hereby grant to you and you hereby accept from us a franchise to operate a retail travel agency utilizing the TPI System, only at the following location(s): That portion of Pinellas County, Florida lying south of Florida State Highway 694. We will not establish another franchisee or agency owned by us within the territory described above, or establish other franchises or company owned outlets providing similar products and services under a different trade name or trademark or modify your territory without your written permission, so long as you are not in default under the terms of this Agreement.... You may move the office of the travel agency to a new location in the same general vicinity with our prior written approval, which approval will not be unreasonably withheld. You may not operate any additional office or location without our prior written consent, which consent will be given upon inspection and approval of such new premises.... Advertising Contributions: In addition to the service fees set forth above, you will be required to pay an "advertising contribution" in the amount of ONE HUNDRED FIFTY ($150.00) DOLLARS per quarter. We may adjust the advertising contribution annually on October 1, provided that any increase in the advertising contribution will be made only with the affirmative vote of at least fifty percent (50 percent) of the franchisees...The advertising contributions of all franchisees shall be placed in an advertising fund to be managed by us, and shall be used exclusively for advertising. Tradenames, Service Marks, Logos, Trade Secrets, and other Proprietary Matters: d. As you know, you will be given certain information about the Travel Professionals International System, our products and methods of doing business, as well as preferred supplier agreements, training and educational programs, computer operation and computer system arrangements, correspondence, memoranda, operating, sales and marketing manuals, and other confidential information. You recognize and acknowledge that this information is a valuable, special and unique asset belonging to us and constitutes our trade secrets which you agree to keep secret and not to disclose, during the operation of this Agreement, or after its termination or expiration, to any person or entity for any reason or purpose whatsoever.... Relationship of Parties: During the term of this Agreement, and any renewal term, you will be an independent contractor, and you will have no authority, expressed or implied, to bind us or to act as our agent, legal representative, or joint venturer. At our option, you will be required to describe yourself on all business forms, invoices, orders, stationery, and the like, as an independent licensee of Travel Professionals International, and to submit all such items to us for our written approval...The operation of your business shall be determined by your own judgment and discretion, subject only to the provisions of this Agreement and our policies and procedures, as they may be adopted or revised from time to time. We will not regulate the hiring or firing of your employees, the parties from whom you may accept business, the working conditions of your employees, or the terms of your contracts with your customers, except as may be necessary to protect the Travel Professionals International System. Service To Be Provided By Us: We will provide the following services to you pursuant to this Agreement: (b) We will prescribe certain standards of operation designed to enhance your profitability, which we shall expect you to follow. * * * (e) We may make recommendations to you regarding accounting and recordkeeping systems. * * * We will provide you with a policy manual, operations manual, preferred supplier manual, marketing manual, and an employee handbook which may be updated periodically. We will provide you with marketing, sales and promotional aids to include currently available professionally produced television spots, a series of high quality radio jingles, and from time to time, printed and other promotional material for use in your local area. We will operate an ongoing training program for you and your personnel. This program will include seminars, conferences, familiarization trips, and printed materials, such as bulletins and manuals, relating to marketing, management, and accounting procedures, and the like, and developments with the travel industry... * * * (l) We will provide, at no charge, up to five (5) person days of management expertise and sales effort effective on the first date of contract signing.... Your Obligation: During the term of this Agreement, and any renewal term, you will obligated to pay promptly to us any fees that are due hereunder, to maintain and keep such records and reports as we may prescribe, and to provide us with copies of such records and reports. You will be required to allow us to make inspection of your business and premises at any reasonable time, and to allow us to examine your books, tax returns and records during normal working hours. We reserve the right to establish a uniform accounting system to keep your books and records in conformity with such system. Your business shall be conducted in conformity with the provisions of this Agreement, with such policies and procedures as we may publish from time to time, and all state, federal and local laws and regulations.... You will be required to cause your chief operating officer or manager to attend our next available training program and to cause each of the franchise employees and principals (as shown on Schedule A attached hereto) to attend the required training courses set forth in our published policies and procedures. At present, mandatory training programs we provide include "New Owners Orientation", "New Manager Orientation", and the periodic "Managers Meetings". Although we are not obligated to do so, we offer, and plan to offer in the future, periodic (at least three times per year), Managers Meetings. Attendance at Managers Meetings, when offered, is mandatory. In the event you fail to send a representative to any Managers Meetings, then you shall pay to us the registration fee for that meeting, notwithstanding your lack of attendance at such meeting. Although paragraph 8 does require Petitioner to pay a fixed sum to TPI for advertising, it does not restrict the qualifying owner's exercise of control over the day-to-day decisions concerning advertising. In fact, TPI, under paragraph 11(i) of the Agreement, agrees to furnish certain materials to assist Petitioner in advertising on the local level. It is clear throughout the Agreement that the operation of the business is to be determined by the qualifying owner's own judgment and discretion subject to the provisions of the Agreement and TPI's policies and procedures which may be adopted or revised from time to time. Paragraph 4 , Terms of the Franchise, provides for the termination of the Agreement prior to its expiration date. It is clear from the qualifying owner's testimony ("Because nobody tells me what to do."), that she would terminate the Agreement rather than to allow TPI to exercise the day-to-day control of the business. There is no question that the qualifying owner has the authority to take such action under Paragraph 4 of the Agreement, if in no other manner, than by defaulting under Paragraph 4(4). This gives the qualifying owner the final authority as to who exercises the day-to-day control of the business. It is clear from the testimony of TPI's Vice-President of Franchise Sales and Development that TPI does not consider those provisions of the Agreement that appear to place restrictions on the qualifying owner's discretion as to the day- to-day control of the business as being mandatory, notwithstanding the language of the provisions to the contrary. Likewise, it is clear that TPI will not involve itself in the hiring, supervision or firing of employees because of the liability it would place upon TPI, notwithstanding any provision in the Agreement. The parties to the Agreement are experienced business people, who have expertise in the travel agency industry and franchising. The parties to the Agreement have clear and mutual understandings and interpretation of the meanings of the terms of the Agreement . Their understandings and interpretations are that the Agreement does not restrict the qualifying owner's exercise of the day-to-day control of the business. The parties' interpretation of the Agreement is a possible and permissible interpretation. TPI has some 60 franchisees within 22 states, with 17 franchisees in the State of Florida. There are several other franchisors that franchise travel agencies throughout the United States, including the State of Florida. The purpose of franchise agreements in the travel business in general, and this Agreement in particular, is to enable the small, independent travel agency to compete more effectively in the travel market. The growing trend in the travel agency industry is to belong to a franchise. The Agreement is a typical franchise agreement and customary in the travel industry.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department enter a Final Order granting Petitioner's application for certification as a Disabled Business Enterprise. RECOMMENDED this day 9th of January, 1995, at Tallahassee, Florida. WILLIAM R. CAVE 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 9th day of January, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-0568 The following constitutes my specific rulings, pursuant to Section 120.59(2), Florida Statutes, on all of the proposed findings of fact submitted by the parties in this case. Petitioner's Proposed Findings of Fact. Petitioner has listed the stipulated facts separately as paragraphs 1 through 14. These stipulated facts have been adopted in Findings of Fact 1 through 14, respectively. Proposed findings of fact 1, 2, 3 and 4-5 adopted in substance as modified in Findings of Fact 23, 24, 26 and 21, consecutively. Proposed findings of fact 6 through 9 are neither material nor relevant to this proceeding. Proposed finding of fact 10 is adopted in substance as modified in Findings of Fact 20 through 22. Department's Proposed Findings of Fact. The Department has listed the stipulated facts separately as paragraphs 1 through 14. These stipulated facts have been adopted in Findings of Fact 1 through 14, respectively. Proposed findings of fact 1 and 2 are adopted in substance as modified in Finding of Fact 19. Proposed finding of fact 3 is adopted in substance as modified in Findings of Fact 20 through 22. Proposed findings of fact 4, 5 and 6 are adopted in substance as modified in Findings of Fact 15, 16 and 17, respectively. Proposed finding of 7 is rejected as being neither material nor relevant to this proceeding. Proposed findings of fact 8 and 9 are adopted in substance as modified in Findings of Fact 18. Proposed findings of fact 10, 11 and 12 are considered conclusions of law or legal argument and for that reason are rejected as Findings of Fact. Proposed findings of fact 13 and 14 are rejected as not being supported by the record. COPIES FURNISHED: Oscar Blasingame, Esquire Blasingame, Forisz, Smiljanich, P.A. Post Office Box 1259 St. Petersburg, Florida 33731 Dorothy S,. Johnson, Esquire Mary J. Dorman, Esquire Department of Transportation 605 Suwannee Street, MS-58 Tallahassee Florida 32399-0458 Ben G. Watts, Secretary ATTN: Eleanor F. Hunter Department of Transportation 605 Suwannee Street, MS-58 Tallahassee, Florida 32399-0458 Thornton J. Williams General Counsel Department of Transportation 562 Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450
Findings Of Fact On November 24, 1976, petitioner purchased an airplane (the Corsair) in Florida from R. D. Whittington Aircraft Sales, Inc., for which he paid eighty thousand dollars ($80,000.00). Sales tax has never been paid on account of this transaction. Before the purchase, petitioner asked George W. Sullivan, an airplane mechanic and test pilot, to evaluate the Corsair as an investment for resale. After petitioner acquired the Corsair, he caused three new cylinders to be installed and had the carburetor, the magneto and the propeller overhauled. Within three or four months of petitioner's acquisition, several prospective purchasers had inspected the Corsair. In the spring of 1977, petitioner began displaying the Corsair. At various times, petitioner engaged other pilots to ferry the Corsair to aircraft shows at Cherry Point, North Carolina, Greenville- Spartanburg, South Carolina, and elsewhere. At the time of the hearing, the Corsair had been flown approximately 43 hours since petitioner had acquired it, ten to twelve hours of which petitioner flew himself, in the course of displaying the Corsair and checking out repairs. Petitioner has traded in airplanes for the last several years and has been recognized as a dealer in aircraft by the Internal Revenue Service. Petitioner, who moved to Florida from California, applied to respondent for a dealer's certificate promptly upon learning that he was required to do so. On November 24, 1976, however, petitioner was not registered as an aircraft dealer with respondent. After an unsuccessful attempt to register effective retroactively to July 1, 1972, petitioner registered as a dealer with respondent, effective October 1, 1977. According to respondent's records, R. D. Whittington Aircraft Sales, Inc., was not registered as a dealer with respondent on November 24, 1976, and has not registered since. Petitioner obtained an address for R. D. Whittington Aircraft Sales, Inc., from respondent and, on or about, December 20, 1977, sent by certified mail a blanket resale and exemption certificate to the address respondent had furnished. A return receipt indicated that the certificate was delivered as addressed. In the past, respondent has treated sales to dealers as exempt from sales tax where the purchaser furnished the seller a resale and exemption certificate at the time of the sale and even when the certificate has been furnished afterwards, where the purchaser was registered as a dealer with respondent at the time of the transaction. The foregoing findings of fact should be read in conjunction with the statement required by Stuckey's of Eastman, Georgia v. Department of Transportation, 340 So.2d 119 (Fla. 1st DCA 1976), which is attached as an appendix to the recommended order.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent's proposed assessment be upheld. DONE and ENTERED this 11th day of August, 1978 in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 904/488-9675
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: At all relevant times, respondent, Passport Internationale, Inc. (Passport or respondent), was a seller of travel registered with the Department of Agriculture and Consumer Services (Department). As such, it was required to post a performance bond with the Department conditioned on the performance of contracted services. In this case, petitioner, Patricia Ritter, has filed a claim against the bond for more than $299.00 alleging that Passport failed to perform on certain contracted services. On March 24, 1990, petitioner received an offer by telephone to purchase travel certificates entitling the holder to a five-day, four-night vacation package to the Bahamas plus two nights lodging in both Daytona Beach and Orlando, Florida. The offer was made by Uno Gold Card, a telemarketeer located in Atlanta, Georgia, and authorized to sell Passport's travel certificates. Before agreeing to purchase the certificates, petitioner was told that she could take the cruise at one time and use the Florida portion of her trip at a later date. She was never told that some dates were not available, or that other restrictions on travel might apply. Petitioner agreed to purchase the certificates and authorized a $299.00 charge on her credit card payable to Uno Gold Card. After receiving her travel certificates, which carried the name, address, and logo of Passport International Express, a ficticious name under which Passport was then operating, petitioner decided to use the Florida portion of her trip. She filled out one of the certificates requesting September 3 and 4, 1990, as the dates on which she wanted to begin her four-night stay in Florida. This was because she and her husband were traveling to Florida that week on their vacation and it was the only time period when she could use the certificate. She sent in a $50.00 deposit with her request. On June 28, 1990, respondent returned petitioner's $50.00 deposit and advised her that she "failed to leave the required amount of days between (her) requested travel dates," and thus her reservation could not be honored. She was told to resubmit her form within 21 days. Because petitioner was unable to travel on a different date to Florida, she could not use the certificate. When she contacted Passport for a refund of her money, Passport declined to refund her money and instead told her to contact Uno Gold Card. By now, however, Uno Gold Card was no longer in business. To date, petitioner has never received a refund of her money. Had petitioner been told to begin with that there were restrictions on how and when the certificates could be used, she would not have purchased them. But for this misrepresentation on the part of Passport's agent, the transaction would not have been consummated.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the claim of petitioner against the bond of respondent be granted, and she be paid $299.00 from the bond. DONE AND ENTERED this 12th day of December, 1994, in Tallahassee, Florida. DONALD R. ALEXANDER 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 12th day of December, 1994. COPIES FURNISHED: Patricia Ritter 154 Midvale Road Wampum, PA 16157 Julie Johnson McCollum 2441 Bellevue Avenue Daytona Beach, FL 32114 Robert G. Worley, Esquire 515 Mayo Building Tallahassee, FL 32399-0800 Honorable Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, FL 32399-0810 Richard D. Tritschler, Esquire The Capitol, PL-10 Tallahassee, FL 32399-0810
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: At all relevant times, respondent, Passport Internationale, Inc. (Passport or respondent), was a seller of travel registered with the Department of Agriculture and Consumer Services (Department). As such, it was required to post a performance bond with the Department conditioned on the performance of contracted services. In this case, petitioner, Ananta M. Dasgupta, has filed a claim against the bond in the amount of $531.00 alleging that Passport failed to perform on certain contracted services. In response to a mail offer, in March 1987 petitioner purchased a travel certificate from VIP Vacations (VIP), a Miami Beach telemarketeer that was reselling travel certificates previously obtained from Passport. As such, VIP was acting as an agent on Passport's behalf. The holder of the certificate was entitled to a vacation package for two persons to Hawaii for a cost of $488.00. The travel certificate carried the name, address and logo of Passport and provided that all transportation authorized by the certificate would be fulfilled by Passport. The certificate expired in one year, or at the end of March 1988. After receiving the certificate, petitioner filled out the reservation request form with three requested travel dates (the fourth week of December 1987, 1988 or 1989) and returned it to VIP in November 1987 along with a $50.00 deposit. The form and deposit were forwarded by VIP to Passport. When petitioner could not secure travel on his first selected date, and he was told the certificate expired at the end of March 1988, he requested a refund of his money. Passport then agreed to extend the certificate to December 1988 but advised petitioner it could not confirm his reservations for the second requested travel date during the fourth week of December 1988. When petitioner continued to pursue his demand for a refund, Passport declined to refund anything other than the $50.00 deposit saying the trip was solicited by VIP, and not Passport, and in any event, the certificate had by then expired. Finding Passport's response to his demand for a refund to be unacceptable, petitioner filed an action against Passport in a Wisconsin circuit court, and on April 6, 1990, he obtained a judgment in the amount of $531.00. It is undisputed that the judgment resulted from a cause of action involving Passport's activities as a seller of travel. The judgment forms the basis for petitioner's claim.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the claim of petitioner against the bond of respondent be granted, and he be paid $531.00 from the bond. DONE AND ENTERED this 9th day of December, 1994, in Tallahassee, Florida. DONALD R. ALEXANDER 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 9th day of December, 1994. COPIES FURNISHED: Ananta M. Dasgupta 1009 East Hamilton Avenue Eau Claire, Wisconsin 54701 Michael J. Panaggio 2441 Bellevue Avenue Daytona Beach, Florida 32114 Robert G. Worley, Esquire 515 Mayo Building Tallahassee, Florida 32399-0800 Honorable Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, FL 32399-0810 Richard D. Tritschler, Esquire The Capitol, PL-10 Tallahassee, FL 32399-0810
The Issue Petitioners' alleged liability for sales tax, interest and penalties under Chapter 212, Florida Statutes.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the arguments of counsel and the stipulation of facts entered herein, the following facts are found. Petitioners are Florida corporations having their principal place of business at Palm Beach International Airport, West Palm 8each, Florida. Petitioners conduct a fixed base aircraft operation by which they provide services to both aircraft owners and aircraft users. Petitioners are licensed, qualified and certified by the Federal Aviation Administration, the Civil Aeronautics Board, the State of Florida, and Palm Beach County to conduct its operation. Petitioners employ qualified mechanics, technicians, flight instructors, pilots, and consulting and sales personnel for conducting these services, which are described in detail below. Petitioners lease and occupy facilities appropriate for the storage, use, and repair of aircraft. Petitioners have written contractual agreements with aircraft owners in which Petitioners obtain the use of the aircraft. Petitioners pay the owners an agreed amount per hour for the use of the aircraft, which amount varies with the aircraft age and type. (Examples of said agreements are attached to Joint Exhibit number 1.) These agreements use the term "lease" to describe the Petitioners' rights to use the aircraft. The agreements provide that Petitioners will have exclusive supervision, control, and custody of the aircraft during the term of the agreement. The agreements permit the owner of the aircraft to use the aircraft for personal needs, however, so long as such use does not conflict with Petitioners' scheduled use thereof. Petitioners use the aircraft to conduct approved flight instruction for the public, to engage in charter transportation of passengers and property, and to rent to qualified pilots. Petitioners charge the third parties for instruction, charter, or rental and report the proceeds as "income" on their federal tax returns. Petitioners' payments to the aircraft owners are reflected as an "operating or overhead expense" for federal tax purposes. When using the aircraft, Petitioners employ and pay qualified flight instructors, pilots, crews and mechanics to fly and service the aircraft. The aircraft owners have no contractual agreement with these persons. Petitioners are responsible for providing all required inspection, maintenance, and repair services to the aircraft, subject to reimbursement by the owners. The aircraft owners pay the costs of fuel and lubricants used during Petitioners' use of the aircraft. Petitioners provide property damage insurance on the aircraft and liability insurance for the pilots, crew, and third parties who charter or use the aircraft. Petitioners are responsible, at the expiration of the agreement, to return the aircraft to the owner in substantially the same condition as at the commencement of the agreement, except for normal wear and depreciation. Petitioners advertise themselves to the public as a charter flying service and flying instruction service and actively solicit customers for these services. Petitioners are also in the business of selling aircraft and are authorized dealers for Cessna and Piper aircraft companies. Some of Petitioners' purchasers enter into agreements like those attached hereto, granting Petitioners exclusive use and control of the aircraft. Petitioners' purchasers properly pay sale tax under Chapter 212, Florida Statutes, when they purchase aircraft. They do not, insofar as Petitioners are aware, furnish Petitioners with resale certificates which certify that the purchase is solely for resale, in the manner designated by Rule 12A-1.38, Florida Administrative Code. Some of the purchasers have furnished exemption certificates, however, so those purchases were not taxed. Petitioners contend that they are an integrated business for the selling, storing, maintenance, and servicing of aircraft for aircraft purchasers and the provision of chartering and instruction services for third parties. Petitioners contend that their experience and expertise in providing all these services to owners and the general public is economically feasible only through an integrated operation of this nature, or through a substantially greater capital investment. Petitioners assert that the agreements by which they obtain exclusive use of the aircraft are agreements to provide expert management services to the owners, and are not subject to sales tax under Chapter 212, Florida Statutes. Respondent contends that the agreements by which Petitioners obtain exclusive use of the aircraft are separate and distinct from the rest of Petitioners' business, for sales tax purposes. Respondent also contends that the remainder of Petitioners' business is immaterial to the incidence of the tax. Respondent asserts that the agreements described herein are agreements to lease tangible personal property which are taxable as "sales" under Chapter 212, Florida Statutes. Petitioners also assert that certain of the agreements are not taxable because the aircraft owner paid sales tax on the initial purchase of the aircraft, as described in Paragraph 13 above. The Respondent contends that the prior payment of tax at the time of purchase is immaterial, since the purchase was not for resale. The issues thus presented herein are: whether the agreements are taxable transactions, as disputed in Paragraphs 14 and 15; and whether certain of the agreements are specifically nontaxable by virtue of the owner's payment of tax at the time of purchase, as disputed in Paragraph 16. The Respondent originally assessed Petitioners for tax, penalty, and interest in the amount of $19,149.08. It then appeared that in certain of Petitioners' transactions, the aircraft owners were already remitting sales tax. Respondent thereupon revised its assessment. The Respondent now alleges that the following amounts were due on March 15, 1978: Tax $11,144.68 Penalty 557.22 Interest 1,652.86 Total $13,354.76 The penalty and interest figures are subject to revision with the passage of time. The Respondent will update those figures upon issuance of a final order. Petitioners have paid no part of the foregoing assessment. Petitioners have not placed the computation of the amount due in issue, however, in the event they are held to be liable.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby, RECOMMENDED: That the Revised Notice of Proposed Assessment of Tax, Penalties, and Interest under Chapter 212, Florida Statutes, dated March 15, 1978, be asserted against Petitioners pursuant to applicable law, with interest computed to reflect the passage of additional time. ENTERED this 20th day of August, 1979, in Tallahassee, Florida. JAMES E. BRADWELL, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: John A. Gentry, III, Esquire David K. Miller, Esquire Moyle, Gentry, Jones, Flanigan Assistant Attorney General & Groner, P.A. Department of Legal Affairs Post Office Box 3888 The Capitol, LL04 West Palm Beach, Florida 33402 Tallahassee, Florida 32301
