97-002996 Leonard F. Nichols vs. Department Of Revenue Status: Closed Recommended Order on Thursday, December 18, 1997.

Summary: Taxpayer not entitled to refund of uses taxes paid on out-of-state car purchase. Sales tax in other state were paid after Florida use taxes were paid.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LEONARD F. NICHOLS )

)

Petitioner, )

)

vs. ) Case No. 97-2996

)

STATE OF FLORIDA, )

DEPARTMENT OF REVENUE )

)

Respondent. )

__________________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held by video

teleconference in this case on October 31, 1997, at West Palm

Beach, Florida, before Susan B. Kirkland, a duly designated

Administrative Law Judge of the Division of Administrative

Hearings.

APPEARANCES

For Petitioner: Leonard F. Nichols, pro se

1800 Southeast Street Lucie Boulevard

Building 4-305

Stuart, Florida 34996

For Respondent: Eric J. Taylor

Assistant Attorney General

Department of Legal Affairs

The Capitol, Tax Section

Tallahassee, Florida 32399-1050

STATEMENT OF THE ISSUES

Whether Petitioner is entitled to a refund of use taxes paid

to the State of Florida on October 11, 1995, relating to the

purchase in another state of an automobile.

PRELIMINARY STATEMENT

By letter dated April 28, 1997, Respondent, Department of

Revenue (Department), issued to Petitioner, Leonard F. Nichols

(Nichols), a Notice of Reconsideration of Refund Denial, denying

Nichols' request for a refund of use taxes paid to the Department

relating to Nichols purchase of a 1995 Buick Century in New

Jersey. By letter dated June 25, 1997, Nichols requested an

administrative hearing.

On July 2, 1997, the case was forwarded to the Division of

Administrative Hearings for assignment to an administrative law

judge.

At the final hearing, the parties agreed to the facts

contained in Section III E. of Respondent's Prehearing Statement

with the exception of the following sentence: "No sales taxes

were imposed on or paid by the Petitioner at the time of purchase

of the Buick in Newton, New Jersey." Nichols testified in his

own behalf at the final hearing and introduced Petitioner's

Exhibits 1-4 in evidence. Respondent did not present any

witnesses and introduced Respondent's Exhibits 1-13 in evidence.

The parties agreed to file proposed recommended orders

within ten days of the filing of the transcript. The transcript

was filed on November 17, 1997. The parties timely filed their

proposed recommended orders, and they have been duly considered.

FINDINGS OF FACT

1. Petitioner, Leonard F. Nichols (Nichols), maintains a

residence in Florida at 1800 Southeast St. Lucie Boulevard,

Building 4-305, Stuart, Florida 34996. Nichols is legally

domiciled in Florida. He also maintains a residence in New

Jersey at 3 Wood Run, Newton, New Jersey 07860.

2. Prior to October, 1995, Nichols owned a motor vehicle,

which was registered in Florida. The vehicle had a Florida

vehicle tag.

3. On October 4, 1995, Nichols purchased a 1995 Buick

Century (VIN 1G4AG55M1S6418376) from an automobile dealer in

Newton, New Jersey. The amount paid for the automobile was

$13,710.00.

4. New Jersey imposes a sales tax on the purchase of

tangible personal property in New Jersey. Pursuant to Section

60-570.016, New Jersey Statutes Annotated, New Jersey allows an

exemption for the payment of sales tax on nonresidents on the

purchase of a motor vehicle if the conditions of the statute are

met.

5. At the time of the purchase in New Jersey, Nichols

submitted a ST-10 Motor Vehicle Dealer Sales Tax and Use Tax

Exemption form. The submission of the ST-10 was made in lieu of

payment of sales taxes. Without the submission of the ST-10, the

New Jersey dealer would have been required to collect the sales

tax. Because Nichols filed the ST-10 at the time of the purchase

of the automobile, no New Jersey sales taxes were paid at that

time.

6. One week later, on October 11, 1995, Nichols registered

his vehicle in Florida. At the time of registration, since no

sales tax had been paid on the vehicle prior to this

registration, Florida's use tax of $855.95 was imposed on and

paid by Nichols. Nichols' Florida tags were then transferred to

Nichols' new vehicle.

7. On December 8, 1995, Nichols received notification from

the State of New Jersey, Department of Treasury, Division of

Taxation that Nichols' request for an exemption from payment of

the New Jersey sales tax was denied and Nichols owed the State of

New Jersey $896.63 in taxes, penalty and interest for the sales

tax on the purchase of the Buick in New Jersey.

8. Nichols contacted the Department and told them that he

was being assessed a sales tax by New Jersey. Nichols was

advised that he should pay the New Jersey sales tax and file a

DR-26 form, requesting a refund from the Department.

9. The charges for penalty and interest were later dropped

by New Jersey. On December 29, 1995, Nichols mailed a check in

the amount of $822.60 to the State of New Jersey. On January 5,

1996, Nichols received a receipt of payment from the New Jersey

Division of Taxation.

10. At the time of the registration of Nichols' new Buick

in Florida and the payment of the Florida use tax on October 11,

1995, no taxes had been paid on the sale and purchase of Nichols'

1995 Buick Century in New Jersey or any other state.

CONCLUSIONS OF LAW

11. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding. Section 120.57(1), Florida Statutes.

12. The Legislature has authorized the taxation of tangible

personal property when the item is sold at retail in Florida.

Section 212.05(1)(a)1a, Florida Statutes. When an item is not

sold at retail in Florida, and is not subject to the Florida

sales tax but is being used in Florida, the item is subject to

the use tax imposed by Section 212.05(1)(b), Florida Statutes,

which states:

At the rate of 6 percent of the cost price of

each item or article of tangible personal

property when the same is not sold but is

used, consumed, distributed, or stored for

use or consumption in this state.

13. The use tax is also imposed by Section 212.06(1)(a),

Florida Statutes, which provides:

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 part . . . .

14. The sale or use of a motor vehicle is subject to the

Florida sales or use tax. Section 212.05(1)(a)1 b, Florida

Statutes, states:

Each occasional or isolated sale of an

aircraft, boat, mobile home, or motor vehicle

of a class or type which is required to be

registered, licensed, titled, or documented

in this state or by the United States

Government shall be subject to tax at the

rate provided in this paragraph. . . .

15. Rule 12A-1.007(2)(a), Florida Administrative Code,

which implements Section 212.05(1)(a)1 b, Florida Statutes,

states:

There shall be a presumption that any

aircraft, boat, mobile home, motor vehicle,

or other vehicle purchased in another state,

territory of the United States, or the

District of Columbia but titled, registered,

or licensed in this state is taxable . . . .

16. Florida permits a credit against Florida use taxes if

the taxpayer paid a sales tax to another state on the same

purchase of tangible personal property. Florida's credit

provision is found in Section 212.06(7), Florida Statutes, which

states:

The provisions of this chapter do not apply

in respect to the use or consumption of

tangible personal property, or distribution

or storage of tangible personal property for

use or consumption in this state, upon which

a like tax equal to or greater than the

amount imposed by this chapter has been

lawfully imposed and paid in another state,

territory of the United States, or the

District of Columbia. The proof of payment

of such tax shall be made according to the

rules and regulations of the department. If

the amount of the tax paid in another state,

territory of the United States, or the

District of Columbia is not equal to or

greater than the amount of tax imposed by

this chapter, then the dealer shall pay to

the department an amount sufficient to make

the tax paid in the other state, territory of

the United States, or the District of

Columbia and in this state equal to the

amount imposed by this chapter.

17. The Department has implemented the provisions of

Section 212.06(7), Florida Statutes, by rule. Rule

12A-1.007(3)(a), Florida Administrative Code, provides:

A credit is allowed to a person who as

purchaser provides documentary evidence that

a lawfully imposed sales or use tax has been

paid to another state, territory of the

United States, or the District of Columbia on

any aircraft, boat, mobile home, motor

vehicle, or other vehicle, which later

becomes subject to Florida tax. The credit

shall be the amount of legally imposed sales

and use tax paid to another state, territory

of the United States, or the District of

Columbia.

18. Section 212.06(7), Florida Statutes, is an exemption

from taxation and as such must be strictly construed against the

person claiming the exemption. Sebring Airport Authority v.

McIntyre , 642 So. 2d 1072 (Fla. 1994); Capital City Country Club

v. Tucker , 613 So. 2d 448 (Fla. 1993); Mikos v. City of Sarasota ,

636 So. 2d 83 (Fla. 2d DCA 1994); Asphalt Pavers, Inc. v.

Department of Revenue , 584 So. 2d 55 (Fla. 1st DCA 1991).

19. The Department interprets Section 212.06(7), Florida

Statutes, and Rule 12-A1.007(3)(a), Florida Administrative Code

to mean that in order for the credit to be applicable, a tax had

to have been lawfully imposed and paid in another state prior to

the tax being due and payable in Florida.

20. In other cases where a statute similar to Section

212.06(7), Florida Statutes, has been interpreted, the other

state courts have focused on when the other state tax had been

paid. In New England Yacht Sales, Inc. v. Commission of Revenue

Services , 198 Conn. 624, 504 A. 2d 605 (Conn. 1986), the

Connecticut Supreme Court dealt with a similar statute relating

to credit for taxes paid in other states. Connecticut General

Statutes, Section 12-430(5), provides:

(5) PAYMENT OF SALES OR USE TAX TO ANOTHER

STATE. If any service or article of tangible

personal property has already been subjected

to a sales or use tax by any other state or

political subdivision thereof and payment

made thereon in respect to its sale or use in

an amount less than the tax imposed by this

chapter, the provisions of this chapter shall

apply, but at a rate measured by the

difference, only, between the rate herein

fixed and the rate by which the previous tax

or use was computed. If such tax imposed in

such other state or political subdivision

thereof is equivalent to or in excess of the

rate imposed under this chapter at the time

of such sale or use, then no tax shall be due

on such article.

21. The court in New England Yacht Sales, Inc. rejected a

yacht sellers argument that it should be given a credit for use

tax paid in another state by the out-of-state purchaser. The

court stated:

The plaintiff's claim is difficult to square

with the language of Section 12-430. That

statute provides a credit in the event that

'any service or article of tangible personal

property has already been subjected to a

sales or use tax by any other state . . . and

payment made thereon. . . . ' (Emphasis

added.) Since the plaintiff's liability for

sales tax in this state was antecedent to the

purchaser's payment of use tax in Rhode

Island, the plaintiff can succeed only if we

give retroactive effect to the Rhode Island

payment. Such retroactive effect would be

inconsistent with the general rule that

statutory exemptions are a matter of

legislative grace and are thus strictly

construed against the taxpayer. The B.F.

Goodrich Co. v. Dubno , 196 Conn. 1, 8-9, 490

A. 2d 991 (1985); Yaeger v. Dubno , 188 Conn.

206, 212, 449 A. 2d 144 (1982). As in

Connecticut Theater Foundation v. Brown , 179

Conn. 672, 677, 427 A. 2d 863 (1980), the

plaintiff cannot rely on an exemption that

does not yet exist when its tax obligation

becomes due.

22. In the case of Potashnick Construction Co. v. Louisiana

Department of Revenue and Taxation , 470 So. 2d 526 (La. App. 1st

Cir. 1985), the court awarded a credit toward Louisiana taxes

because the taxpayer had proved that prior to the equipment

coming into Louisiana it had paid a sales tax to Missouri. The

same result was reached in Allmed, Inc. v. Department of Revenue ,

428 101 Ill. App 747, 428 N.E. 714 (Ill. 4th DCA 1981).

23. In the instant case, at the time the Florida use tax

became due and payable, when Nichols applied for titling and

registration of his Buick, no sales tax had been paid by Nichols

in any other state. Thus, the exemption from taxation contained

in Section 212.06(7), Florida Statutes, does not apply and

Nichols is not entitled to a credit for sales taxes paid in

New Jersey.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a Final Order be entered denying

Leonard F. Nichols' request for a refund of the use taxes paid to

the Department on October 4, 1995.

DONE AND ENTERED this 18th day of December, 1997, in

Tallahassee, Leon County, Florida.

___________________________________

SUSAN B. KIRKLAND

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 18th day of December, 1997.

COPIES FURNISHED:

Eric J. Taylor

Assistant Attorney General

Department of Legal Affairs

The Capitol, Tax Section

Tallahassee, Florida 32399-1050

Leonard F. Nichols, pro se

1800 Southeast St. Lucie Boulevard

Building 4-305

Stuart, Florida 34996

Larry Fuchs

Executive Director

Department of Revenue

104 Carlton Building

Tallahassee, Florida 32399-0100

Linda Lettera

General Counsel

Department of Revenue

204 Carlton Building

Tallahassee, Florida 32399-0100

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.