07-000904 A.L.S.S., Inc. vs. Department Of Revenue Status: Closed Recommended Order on Friday, August 24, 2007.

Summary: The refund must be denied because the sale was taxable at the time of the transaction. Use is construed by the Florida title of the vehicle.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

A.L.S.S., INC., )

)

Petitioner, )

)

vs. ) Case No. 07-0904

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

_________________________________)

RECOMMENDED ORDER

Pursuant to notice a formal hearing was held on May 30,

2007, in Miami, Florida, before J. D. Parrish, a designated

Administrative Law Judge of the Division of Administrative

Hearings.

APPEARANCES

For Petitioner: Darlot A. Veloso, Jr., President

A.L.S.S., Inc.

995 Northwest 72nd Street

Miami, Florida 33150

For Respondent: Warren J. Bird, Esquire

Assistant Attorney General

Office of the Attorney General

Revenue Litigation Section

The Capitol, Plaza Level 01

Tallahassee, Florida 32399-1050

STATEMENT OF THE ISSUE

The issue in this case is whether the Petitioner, A.L.S.S.,

Inc. (Petitioner), is entitled to a refund in the amount of

$3,261.47, for sales tax paid on the purchase of a new

automobile.

PRELIMINARY STATEMENT

On December 11, 2006, the Respondent, Department of Revenue

(Respondent or Department) issued a letter to Mr. Veloso in his

capacity as president of the Petitioner that announced its

decision to deny the refund of sales tax paid on a new motor

vehicle purchased from a Florida dealer and subsequently exported

by the taxpayer. The letter constituted notice of a

reconsideration of the prior decision that had also denied the

refund. Thereafter the Petitioner timely challenged the decision

and sought an administrative hearing to contest the denial of the

refund. The case was forwarded to the Division of Administrative

Hearings for formal proceedings on February 20, 2007.

The case was originally scheduled for a hearing to be

conducted on April 16, 2007, but that date was amended to May 30,

2007, following a Request for Continuance filed on March 13,

2007. All parties appeared for the hearing.

At the hearing, the Respondent presented the deposition

testimony of Bonnie Everton, a Department employee who works and

resides in Tallahassee, Florida. The Respondent’s exhibits

attached to the deposition along with Respondent’s Exhibit 2 were

received in evidence. The Petitioner presented the testimony of

Mr. Veloso and Petitioner’s Exhibit 1 was also admitted into

evidence.

The transcript of the proceedings was filed with the

Division of Administrative Hearings on July 9, 2007. The parties

were afforded ten days from that date within which to file

proposed recommended orders. All proposals filed in this cause

have been deemed timely. Post-hearing motions to correct the

transcript and for attorneys fees are hereby denied.

Irregularities in the transcript have been deemed minor and not

so substantial as to prejudice any party.

FINDINGS OF FACT

1. The Respondent is the state agency charged with the

responsibility of collecting sales and use tax owed to the State

of Florida. See § 213.05, Fla. Stat. (2006).

2. At all times material to the allegations of this case,

the Petitioner was a registered export dealer. The Petitioner

routinely purchases new motor vehicles for export to foreign

buyers. In this case, the Petitioner purchased a new motor

vehicle and subsequently exported it to a buyer in Brazil.

3. More specifically, on or about May 24, 2004, the

Petitioner purchased a new 2004 Hummer from Williamson Cadillac-

Hummer in Miami, Florida. At the time of the purchase, the

Petitioner paid the sales tax associated with the purchase of the

vehicle. The total sales tax paid was $3,261.47. The sale of

the vehicle resulted in the Florida registration of the vehicle

and issuance of a Florida title in the name of the Petitioner.

4. From the automobile dealership the subject vehicle was

loaded on a flatbed wrecker and transported to a warehouse at or

near the Port of Miami. In anticipation of its shipment to

Brazil, the vehicle was drained and prepared for exportation in

accordance with applicable laws and regulations. The Petitioner

never drove the vehicle on the streets of Miami-Dade County and

it was not insured.

5. It is undisputed that the subject vehicle was exported

to an individual in Brazil.

6. Thereafter, the Petitioner sought a refund of the sales

tax paid on the subject vehicle. The Petitioner contacted the

Department to seek the refund and maintains that a sales tax was

inappropriate in this case as the purchased item was bought for

exportation. The Department offered to refund the sales tax upon

receipt of an assignment of rights from the new vehicle dealer

(Williamson Cadillac-Hummer).

7. When the Petitioner contacted Williamson Cadillac-Hummer

for assistance in obtaining the refund, the automobile dealer

refused to aide the Petitioner. Williamson Cadillac-Hummer is

precluded by its contractual agreement with General Motors from

making sales for exportation. The Petitioner knew this at the

time of the purchase of the new Hummer. Under its contractual

agreement, Williamson Cadillac-Hummer may not directly or

indirectly sell new motor vehicles for export.

8. As the transaction was deemed a new car sale to the

Petitioner (with the Florida title of the vehicle being put in

the Petitioner’s name), the Department declined to refund the

sales tax even though the vehicle was in fact exported to Brazil.

9. It is the Department’s position that a taxable

transaction occurred when the new motor vehicle was sold and

registered in this state.

10. In this case, the transaction could not have occurred

(per the dealer’s agreement with General Motors) as a new motor

vehicle sale for export.

CONCLUSIONS OF LAW

11. The Division of Administrative Hearings has

jurisdiction over the parties to, and the subject matter of,

these proceedings. §§ 120.57(1), and 212.06, Fla. Stat. (2007).

12. Pursuant to Section 212.05, Florida Statutes (2007),

the State of Florida is entitled to a sales tax that is levied on

each taxable transaction or incident for tangible personal

property sold at retail in this state. The purchaser bears the

cost of the tax but the obligation to collect and remit the tax

monies to the state rests with the “dealer,” as that term is

defined by law. The dealer typically adds the amount of the tax

to the price of the item sold. See Florida Department of Revenue

v. Naval Aviation Museum Foundation, Inc. , 907 So. 2d 587 (Fla.

1st DCA 2005).

13. In connection with the imposition of the sales tax,

“sale,” as defined by Section 212.02(5), Florida Statutes (2007),

means and includes:

Any transfer of title or possession, or both,

exchange, barter, license, lease, or rental,

conditional or otherwise, in any manner or by

any means whatsoever, of tangible personal

property for a consideration.

14. Additionally, “tangible personal property,” as defined

by Section 212.02(19), Florida Statutes (2007), means and

includes:

...personal property which may be seen,

weighed, measured, or touched or is in any

manner perceptible to the senses, including

electric power or energy, boats, motor

vehicles and mobile homes as defined in s.

320.01(1) and (2), aircraft as defined in s.

330.27, and all other types of vehicles. The

term "tangible personal property" does not

include stocks, bonds, notes, insurance, or

other obligations or securities or pari-

mutuel tickets sold or issued under the

racing laws of the state.

15. Section 212.06, Florida Statutes (2007), provides, in

part:

212.06 Sales, storage, use tax; collectible

from dealers; "dealer" defined; dealers to

collect from purchasers; legislative intent

as to scope of tax.--

(1)(a) The aforesaid tax at the rate of 6

percent of the retail sales price as of the

moment of sale, 6 percent of the cost price

as of the moment of purchase, or 6 percent of

the cost price as of the moment of

commingling with the general mass of property

in this state, as the case may be, shall be

collectible from all dealers as herein

defined on the sale at retail, the use, the

consumption, the distribution, and the

storage for use or consumption in this state

of tangible personal property or services

taxable under this chapter. The full amount

of the tax on a credit sale, installment

sale, or sale made on any kind of deferred

payment plan shall be due at the moment of

the transaction in the same manner as on a

cash sale.

* * *

(2)(a) The term "dealer," as used in this

chapter, includes every person who

manufactures or produces tangible personal

property for sale at retail; for use,

consumption, or distribution; or for storage

to be used or consumed in this state.

* * *

(5)(a)1. Except as provided in subparagraph

2., it is not the intention of this chapter

to levy a tax upon tangible personal property

imported, produced, or manufactured in this

state for export, provided that tangible

personal property may not be considered as

being imported, produced, or manufactured for

export unless the importer, producer, or

manufacturer delivers the same to a licensed

exporter for exporting or to a common carrier

for shipment outside the state or mails the

same by United States mail to a destination

outside the state; or, in the case of

aircraft being exported under their own power

to a destination outside the continental

limits of the United States, by submission to

the department of a duly signed and validated

United States customs declaration, showing

the departure of the aircraft from the

continental United States; and further with

respect to aircraft, the canceled United

States registry of said aircraft; or in the

case of parts and equipment installed on

aircraft of foreign registry, by submission

to the department of documentation, the

extent of which shall be provided by rule,

showing the departure of the aircraft from

the continental United States; nor is it the

intention of this chapter to levy a tax on

any sale which the state is prohibited from

taxing under the Constitution or laws of the

United States. Every retail sale made to a

person physically present at the time of sale

shall be presumed to have been delivered in

this state.

* * *

(10) No title certificate may be issued on

any boat, mobile home, motor vehicle, or

other vehicle, or, if no title is required by

law, no license or registration may be issued

for any boat, mobile home, motor vehicle, or

other vehicle, unless there is filed with

such application for title certificate or

license or registration certificate a

receipt, issued by an authorized dealer or a

designated agent of the Department of

Revenue, evidencing the payment of the tax

imposed by this chapter where the same is

payable. A presumption of sales and use tax

applicability is created if the motor vehicle

is registered in this state. For the purpose

of enforcing this provision, all county tax

collectors and all persons or firms

authorized to sell or issue boat, mobile

home, and motor vehicle licenses are hereby

designated agents of the department and are

required to perform such duty in the same

manner and under the same conditions

prescribed for their other duties by the

constitution or any statute of this state.

All transfers of title to boats, mobile

homes, motor vehicles, and other vehicles are

taxable transactions, unless expressly exempt

under this chapter. [Emphasis Added.]

13. In this matter, the Petitioner bears the burden of

proof to establish it is entitled to the refund of the sales tax

paid. As the party asserting the affirmative of the issue, the

Petitioner must demonstrate by a preponderance of the evidence

that it is entitled to the refund. See Department of

Transportation v. J.W.C. Company, Inc. , 396 So. 2d 778 (Fla. 1st

DCA 1981).

14. The facts of this case are not in dispute. The parties

have agreed that the Petitioner exported the motor vehicle that

was purchased from Williamson Cadillac Hummer. Nevertheless,

statutes allowing exemptions from sales tax are construed against

the taxpayer. See State Department of Revenue v. Anderson , 403

So. 2d 397 (Fla. 1981). In this regard, the sales transaction

must be reviewed in hindsight at the time of the point of sale.

A Florida title to the subject vehicle passed to the Petitioner

at the point of sale. That point of sale triggered a taxable

event or not. Since Williamson Cadillac-Hummer could not make a

sale for exportation, collected the sales tax for the otherwise

taxable sale, secured a Florida title to the vehicle for the

Petitioner, and refused to aide the Petitioner in obtaining a

refund, the sale must be deemed a taxable event.

15. Florida Administrative Code Rule 12A-1.007, addresses

the sale of motor vehicles. In part, the Rule provides:

(1)(a) The sale , including occasional or

isolated sales, the use , consumption, or

storage for use in this state of any

aircraft, boat, mobile home, motor vehicle ,

or other vehicle of a class or type required

to be registered, licensed, titled, or

documented in this state or by the United

States Government is taxable on the full

sales price without any deduction for

freight, handling, delivery, commission,

repossessions, advertising, future free

service, or any other expense or cost

whatsoever. Separately stated fees or

charges as a requisite to the titling,

licensing, registration, transfer of

ownership, or recording of lien, or operation

of any automobile in this state, mandated by

the state, its subdivisions, or any state or

licensed tag agency or office, shall not be

included in the sales price, and as a result

are not subject to tax.

* * *

(6) Sales of Aircraft, Boats, Mobile Homes,

Motor Vehicles, or Other Vehicles to a

Nonresident Dealer for Resale Outside

Florida.

(a) If delivery of any aircraft, boat,

mobile home, motor vehicle, or other vehicle

is made in Florida to a nonresident aircraft,

boat, mobile home, motor vehicle, or other

vehicle dealer who does not hold a Florida

certificate of registration as an aircraft,

boat, mobile home, motor vehicle, or other

vehicle dealer, it is taxable unless the

nonresident aircraft, boat, mobile home,

motor vehicle, or other vehicle dealer

furnishes the seller a notarized statement

that the aircraft, boat, mobile home, motor

vehicle, or other vehicle will be transported

outside of Florida by the dealer for resale

and no other purpose. The burden of

obtaining this evidential matter rests with

the seller, who must retain the documentation

to support the exempt sale.

* * *

(8) Motor Vehicles.

* * *

(i) A motor vehicle dealer or a

licensed export-import dealer registered

under the sales and use tax law must obtain

and provide an ocean bill of lading from a

regularly operated transportation company

engaged in foreign commerce to prove export

and exemption from Florida tax, except as

otherwise provided in subsection (6), above.

Claimed shipment abroad in privately operated

vessels or vehicles where no bill of lading

is issued as proof of export of specific

items cannot be allowed without tax. Such

claimed shipment is construed to be

acceptance of delivery in Florida by

purchaser and is taxable.

* * *

(n) The act of registering any motor

vehicle in this state constitutes

constructive importation for use of such

motor vehicle in this state and shall subject

such motor vehicle to Florida use tax .

[Emphasis Added.]

16. If the purpose of Chapter 212 is to raise revenue for

the state [see Gaulden v. Kirk , 47 So. 2d 567 (Fla. 1950)], the

allowance of an exemption from the imposition of a tax must be

clear. The Department set procedures for allowing a dealer to

refrain from collecting sales tax or to allow a dealer to seek a

refund of a sales tax remitted in error. Neither is applicable

in this case. Although this ruling may seem harsh, it is

consistent with rulings that hold parties seeking exemptions to a

strict construction of the law. See State Department of Revenue

v. Anderson , 403 So. 2d 397 (Fla. 1981).

17. The dealer and Petitioner completed a transaction based

upon their decision to sell and purchase a new Hummer under the

terms set forth in their agreement. The dealer did not sell the

vehicle for export. As a new car sale to be titled in Florida in

the Petitioner’s name the dealer was required (and did) collect

sales tax that was remitted to the state. The Petitioner may not

after-the-fact restructure that transaction. In this case the

seller would not and could not support the exempt sale. Simply

stated, if the transaction was not exempt it was a taxable event.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Revenue enter a

Final Order denying the refund sought by Petitioner.

DONE AND ENTERED this 24th day of August, 2007, in

Tallahassee, Leon County, Florida.

S

___________________________________

J. D. Parrish

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 24th day of August, 2007.

COPIES FURNISHED :

Darlot A. Veloso, Jr., President

A.L.S.S., Inc.

995 Northwest 72nd Street

Miami, Florida 33150

Warren J. Bird, Esquire

Assistant Attorney General

Office of the Attorney General

Revenue Litigation Section

The Capitol, Plaza Level 01

Tallahassee, Florida 32399-1050

Bruce Hoffmann, General Counsel

Department of Revenue

The Carlton Building, Room 204

501 South Calhoun Street

Tallahassee, Florida 32399-0100

James Zingale, Executive Director

Department of Revenue

The Carlton Building, Room 104

501 South Calhoun Street

Tallahassee, Florida 32399-0100

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15

days from the date of this Recommended Order. Any exceptions to

this Recommended Order should be filed with the agency that will

issue the Final Order in this case.