96-004751 Alphonso And Betty Thurman vs. Department Of Revenue Status: Closed Recommended Order on Tuesday, August 5, 1997.

Summary: Assessment for use tax supported by bills of lading which were not disputed. Petitioners' loss from hurricane cannot excuse tax.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ALPHONSO THURMAN and )

BETTY THURMAN, )

)

Petitioners, )

)

vs. ) Case No. 96-4751

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

__________________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held by telephone

conference call in this case on June 10, 1997, before J. D.

Parrish, a designated Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Alphonso Thurman, pro se

Betty Thurman, pro se

13603 Southwest 102 Court

Miami, Florida 33176

For Respondent: Elizabeth T. Bradshaw

Assistant Attorney General

Office of the Attorney General

The Capitol, Tax Section

Tallahassee, Florida 32399-1050

STATEMENT OF THE ISSUES

Whether the Petitioners are responsible for a use tax on the

purchase of tangible personal property as assessed by the

Respondent and, if so, in what amount.

PRELIMINARY STATEMENT

This case began on July 25, 1996, when the Department of

Revenue (Department) entered a notice of final assessment for

tax, penalty, and interest due against the Petitioners, Alphonso

and Betty Thurman. The assessment notified Petitioners that the

following amounts were claimed to be due: $1,020.84 for the tax

due; $485.96 for the late filing penalty; $137.87 for interest;

and $24.46 as an additional specific penalty. The total amount

claimed by the Department was $1,669.13.

The Petitioners requested an administrative hearing and

alleged that the assessment was unjust due to their

circumstances. Petitioners timely protested the assessment and

requested that it be dismissed.

The case was forwarded to the Division of Administrative

Hearings for formal proceedings on October 9, 1996. Subsequent

to the granting of a joint motion to continue, the case was

rescheduled for June 10, 1997.

At the hearing, the Department presented the testimony of

the following witnesses: William Generette, a senior tax

specialist employed by the Department; and Lourdes Ortiz-

Alarkcon, a tax auditor also employed with the Department. Its

exhibits numbered 1 and 2 have been admitted into evidence.

The Petitioners testified in their own behalf. Their

composite exhibit which was filed after the hearing has been

admitted into evidence.

A transcript of the proceeding was filed on July 2, 1997.

The parties were granted leave to file proposed recommended

orders within 10 (ten) days of the filing of the transcript. The

Petitioners have not filed a proposed order. The Respondent's

order was timely filed and considered in the preparation of this

order.

FINDINGS OF FACT

1. The Department of Revenue is the state agency charged

with the responsibility of collecting use tax in accordance with

Florida law.

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

Petitioners were residents of Miami, Florida.

3. In August, 1992, Hurricane Andrew struck the Miami area

and destroyed most, if not all, of Petitioners' household

furnishings. The Petitioners were devastated by their personal

losses.

4. Financially the Petitioners did not recover enough from

the losses to replace all that had been damaged or destroyed by

the storm.

5. When it came time to refurnish their home, Petitioners

traveled to North Carolina and selected new household furnishings

which were paid for by them and imported into the State of

Florida at their direction.

6. These household furnishings are considered tangible

personal property under the applicable Florida laws.

7. The trucking companies which transported Petitioners'

new furnishings were required to stop at Department of

Agriculture and Consumer Services weigh stations, and copies of

the bills of lading for Petitioners' personal property were

produced and copied.

8. The Department of Revenue utilized such bills of lading

to calculate the use tax owed and due on the Petitioners'

personal property.

9. The Department of Revenue does not instruct the

employees of the Department of Agriculture to stop particular

kinds of trucks for inspection, but rather trains the Agriculutre

employees to look for certain kinds of commodities, in order to

identify all commodities that may be subject to sales and use

tax.

10. The Department of Agriculture employees are instructed

by the Department of Revenue to forward to the Department of

Revenue the bills of lading from those shipments containing

consumer commodities that are for use or consumption and are

subject to tax, and they are instructed not to forward bills of

lading for items which are exempt from tax or which are intended

for resale.

11. The purpose of this program is to assist the Department

of Revenue in its enforcement of the sales and use tax.

12. A purchaser of goods from out-of-state is required to

voluntarily comply with the statutes imposing the use tax.

13. The Department of Revenue calculated the amounts due

from Petitioners for the use tax associated with their personal

property imported into Florida and reduced such amounts to a

final assessment. This assessment was issued by the Department

on or about July 25, 1996.

14. Petitioners have not disputed the accuracy of the

assessment nor the fact that they imported the personal property

described in the bills of lading used to calculate the

assessment.

15. Petitioners maintain that they should not be required

to remit the tax set forth in the assessment as they were the

victims of Hurricane Andrew and, but for their losses from that

storm, would not have incurred the expense of new furnishings.

16. The final assessment identified the following sums owed

by Petitioners: tax in the amount of $1,020.84; penalty in the

amount of $510.42; and interest through July 25, 1996, in the

amount of $137.87.

17. Petitioners did not establish that they had paid sales

tax in North Carolina for the personal property shipped to

Florida.

18. Petitioners did not establish that they paid the use

tax in Florida for the personal property described in the bills

of lading used to calculate the tax assessed.

19. Petitioners did not purchase the personal property

through a charitable organization such as the Red Cross which was

afforded tax exemption after Hurricane Andrew to purchase

furnishings for the storm's victims.

20. Petitioners did not establish that they are financially

unable to pay the assessment.

CONCLUSIONS OF LAW

21. The Division of Administrative Hearings has

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

these proceedings.

22. Section 212.05, Florida Statutes, provides, i n part:

It is hereby declared to be the legislative

intent that every person is exercising a

taxable privilege who engages in the business

of selling tangible personal property at

retail in this state, including the business

of making mail order sales, or who rents or

furnishes any of the things or services

taxable under this chapter, or who stores for

use or consumption in this state any item or

article of tangible personal property as

defined herein and who leases or rents such

property within the state.

(1) For the exercise of such privilege, a

tax is levied on each taxable transaction or

incident, which tax is due and payable as

follows:

* * *

(b) 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.

23. Section 212.02, Florida Statutes, defines tangible

property such that personal home furnishings are included. It

must be presumed, and Petitioners admit, that the home

furnishings brought into this state from North Carolina were

intended for use and are used in this state.

24. Rule 12A-1.091, Florida Administrative Code, provides:

12A-1.091 Use Tax.

(1) The Florida Sales and Use Tax Act

imposes a tax on the use, consumption,

distribution, and storage for use or

consumption in this state of tangible

personal property purchased in such manner

that the sales tax would not be applicable at

the time of purchase.

(2)(a) The use tax applies to the use in

this state of tangible personal property

purchased outside Florida which would have

been subject to the sales tax if purchased

from a Florida dealer; provided, however,

that it shall be presumed that tangible

personal property used in other states,

territories of the United States, or the

District of Columbia for six (6) months or

longer under conditions which would lawfully

give rise to the taxing jurisdiction of

another state, territory of the United

States, or District of Columbia before being

imported into this state was not purchased

for use in this state. For purposes of the

presumption set forth herein, it shall be

necessary only that the tangible personal

property was used under conditions which

would allow such other state, territory of

the United States, or District of Columbia to

impose a sales or use tax on the sale or use

of that property regardless of whether any

such tax was actually imposed or paid.

(b) The rental or lease of tangible

personal property which is used or stored in

this state shall be taxable without regard to

its prior use or tax paid on purchase outside

this state.

(3) The provisions of the Florida Sales and

Use Tax shall not apply to the use or

consumption, 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 due

this state has been lawfully imposed and paid

in another state, territory of the United

States, or the District of Columbia before

use tax payable to this state would otherwise

have become due. If the amount of tax so

lawfully imposed and 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

Chapter 212, F.S., then the person from whom

the use tax is due shall pay to the

Department of Revenue 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 that Chapter.

(4) The use tax does not apply to any

property of which the retail sale is

specifically exempt from payment of the

Florida sales tax. The two taxes, sales and

use, stand as complements to each other, and

taken together provide a uniform tax upon

either the sale at retail or the use of all

tangible personal property irrespective of

where it may have been purchased.

(5) Every dealer who solicits business,

either by direct representatives, indirect

representatives or manufacturers' agents and

by reason thereof receives orders for

tangible personal property from consumers for

use, consumption, distribution or storage for

use or consumption in the state, shall

collect the tax from the purchaser, and no

action either in law or in equity on a sale

or transaction as provided by terms of

Chapter 212, F.S., may be had in this state

by any such dealer unless it is affirmatively

shown that the provisions of the law have

been fully complied with.

(6) For self-accrual authorization, see

Rule 12A-1.0911, F.A.C.

(7) Under Section 212.06(1), F.S., use tax

is imposed upon the cost of tangible personal

property imported into this state for use,

consumption, distribution, or storage for use

or consumption in this state, after it has

come to rest and has become a part of the

general mass of property in this state,

subject to the provisions contained in Rule

12A-1.045.

(8) If tangible personal property is sent

out of the state to be repaired and returned,

the transaction is taxable. When tangible

personal property is shipped into this state,

repaired and shipped back to its owner in

another state by common carrier or mail, the

amount charged for the repair is exempt.

(9) If items are purchased from a sales

office in Florida and shipped direct to a

Florida customer by a factory in another

state, the transaction is taxable, whether

the invoicing is handled by the factory or

the Florida office.

(10) If a Florida manufacturer sells

taxable merchandise to an unregistered out-

of-state dealer, but delivers it to the out-

of-state dealer's customer in Florida, he

shall collect tax from the out-of-state

dealer, who, being unregistered, is unable to

furnish a resale certificate.

(11) Law and medical books, accounting

manuals, tax service books with currently

issued inserts and similar publications are

taxable when purchased from out-of-state

suppliers for delivery in Florida.

(12)(a) Any person who manufactures

factory-built buildings out-of-state for his

own use in the performance of a contract for

the construction or improvement of real

property in Florida shall pay tax at the time

such building is imported into Florida. The

tax shall only be computed on the cost price

of the items used in the manufacture of the

building.

(b) For the purpose of this subsection,

"factory-built building" means a structure

manufactured in a manufacturing facility for

installation or erection as a finished

building; "factory-built building" includes,

but is not limited to, residential,

commercial, institutional, storage, and

industrial structures.

(13) Any person who has purchased at

retail, used, consumed, distributed or stored

for use or consumption in this state tangible

personal property, admissions, communication

services, or leased tangible personal

property, or who has leased any real

property, space or spaces in parking lots or

garages for motor vehicles, hangar storage or

tie down for aircraft, or docking or storage

space or spaces for boats in boat docks or

marinas, and cannot prove that the tax levied

by Chapter 212, F.S., has been paid to his

vendor or lessor shall be directly liable to

the state for any tax, interest, or penalty

due on any such taxable transactions.

(14)(a) Any person, whether registered or

unregistered, who has purchased or leased

tangible personal property either in this

state or from out-of-state for use,

consumption, or distribution, or for storage

to be used or consumed in this state without

having paid sales tax on such property if

subject to tax, is required to remit use tax

on the cost price and on the lease of such

property. If such person is registered, use

tax is to be remitted with the dealer's sales

and use tax return. If such person is

unregistered, use tax is to be remitted on

Form DR-15MO, Mail Order/Use Tax Return

(incorporated by reference in Rule 12A-1.097,

F.A.C.), on or before the 20th day of the

first month after the end of the calendar

quarter during which any such property first

came to rest and became a part of the general

mass of property in this state. In those

cases where the 20th day falls on Saturday,

Sunday, or a federal or state legal holiday,

returns shall be accepted as timely if

postmarked or delivered to the Department of

Revenue on the next succeeding day which is

not a Saturday, Sunday, or legal holiday.

(b) Any person required to file and remit

use tax on Form DR-15MO is not considered, by

virtue of that fact alone, as "engaged in or

conducting business in this state as a

dealer," within the meaning of section

212.18(3), F.S., and is not required to file

an application for a certificate of

registration.

(c) Any person required to file and remit

use tax on Form DR-15MO is not entitled to a

collection allowance on account of keeping

required records and accounting and remitting

of taxes as required.

(d) Any person required to file and remit

use tax on Form DR-15MO is not required to

remit local option surtaxes on property

purchased in a mail order sale.

(15) The use tax applies to promotional

materials, as defined in s. 212.06(11)(b),

F.S., including mail order sales as defined

in s. 212.0596, F.S. After July 1, 1992, an

exemption is provided on promotional

materials which are subsequently exported

outside this state through a refund of

previously paid taxes or by the dealer self-

accruing taxes as provided in Rule 12A-

1.0911, F.A.C. While a dealer purchasing and

distributing the promotional materials and

the seller of the promoted subscriptions to

publications are not required to be the same

person, the exemption only applies when the

seller of promoted subscriptions to

publications sold in this state is a

registered dealer and is remitting sales tax

to the Department on publications sold in

this state. See Rule 12A-1.034, F.A.C., to

obtain a refund of tax previously paid on

promotional materials.

(16) For use tax on services taxable under

Part I, Chapter 212, F.S., see Rule 12A-

1.0161, F.A.C.

25. In this case the Department has established its

entitlement to the amounts claimed under the challenged

assessment. Petitioners have not paid the assessment nor

presented any legal justification for why the assessment should

not stand. Regrettably, Hurricane Andrew caused Petitioners to

suffer a tremendous loss. That they were required to replace

their home furnishings after the devastation has not been

disputed by the Department. It is undoubted that they incurred a

significant financial burden as a result of the storm. Such

personal loss and tragedy does not, however, eliminate the

obligations set forth in Chapter 212, Florida Statutes, regarding

the imposition of a use tax.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

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

final order affirming the assessment in this cause.

DONE AND ENTERED this 5th day of August, 1997, in

Tallahassee, Leon County, Florida.

___________________________________

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]

Filed with the Clerk of the

Division of Administrative Hearings

this 5th day of August, 1997.

COPIES FURNISHED:

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

Elizabeth T. Bradshaw

Assistant Attorney General

Office of the Attorney General

The Capitol, Tax Section

Tallahassee, Florida 32399-1050

Alphonso Thurman

Betty Thurman

13603 Southwest 102 Court

Miami, Florida 33176

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.