Am. Bus. USA Corp. v. Dep't of Revenue
| Citation | 151 So.3d 67 |
| Decision Date | 12 November 2014 |
| Docket Number | No. 4D13–1472.,4D13–1472. |
| Parties | AMERICAN BUSINESS USA CORP., Appellant, v. DEPARTMENT OF REVENUE, Appellee. |
| Court | Court of Appeal of Florida (US) |
Michael D. Sloan, David B. Esau, and Dean A. Morande of Carlton Fields, P.A., West Palm Beach, for appellant.
Pamela Jo Bondi, Attorney General, Jeffrey M. Dikman, Senior Assistant Attorney General, and Angela L. Huston, Assistant Attorney General, Tallahassee, for appellee.
The issue presented for our review is whether the State of Florida's tax on the internet sale of flowers, which are ordered by out-of-state customers for out-of-state delivery, violates the commerce clause of the United States Constitution. We find that Florida impermissibly burdened interstate commerce when it taxed out-of-state customers for out-of-state deliveries of out-of-state tangible goods. Because the flowers sold by the Florida-registered internet business were never stored in or brought into Florida, the imposition of taxes did not meet the “substantial nexus” test and thus violated the dormant commerce clause. As such, we reverse the order of the Florida Department of Revenue imposing a tax assessment on the sale of flowers to out-of-state customers for out-of-state delivery. As to the part of the order regarding the imposition of a tax assessment on the sales of prepaid calling arrangements, we affirm.
The Florida Department of Revenue (“the department”) issued a proposed assessment on American Business USA Corp. (“the taxpayer') for taxes and interest on the taxpayer's sales transactions between April 1, 2008, and March 31, 2011. The taxpayer filed a timely protest and a final hearing was set in front of a Division of Administrative Hearings judge.
For the final hearing, the parties stipulated to the following facts: The taxpayer is a Florida corporation doing business as “1Vende.com,” in Wellington, Florida. All of the company's sales were initiated online. The taxpayer specialized in the sale of flowers, gift baskets, and other items of tangible personal property, as well as “prepaid calling arrangements.” The taxpayer “did not maintain any inventory of flowers, gift baskets and other items of tangible personal property.”
The taxpayer would use “local florists to fill the orders it received for flowers, gift baskets and other items of tangible personal property.” The taxpayer “charged its customers sales tax on sales of flowers, gift baskets and other items of tangible personal property delivered in Florida.” However, the taxpayer “did not charge its customers sales tax on sales of flowers, gift baskets and other items on tangible personal property delivered outside of Florida.” Finally, the taxpayer “did not charge its customers sales tax on the prepaid calling arrangements it sold.”
The co-owners of the taxpayer, a husband and wife, both testified at the hearing. The department offered no witnesses but offered several exhibits into evidence. The department filed a proposed order which stated that the taxpayer was responsible for the sales tax when the business “receives an order pursuant to which [it] gives telegraphic instructions to a second florist located outside Florida for delivery of flowers to a point outside Florida,” under Florida Administrative Code Rule 12A–1.047(2)(b). The department conceded that the business sold primarily to customers in Latin American markets. The department tax auditor noted that “[t]he taxpayer's customers are throughout the world primarily to [sic] Spanish speaking countries.”
The administrative law judge issued its recommended order to uphold the department's proposed assessment and made the following findings of fact. There were two principal aspects of the taxpayer's business: (1) the sale of flowers, gift baskets, and tangible personal property, and (2) the sale of prepaid calling arrangements. All of the taxpayer's sales were initiated online. The taxpayer sold to customers throughout Latin America, Spain, and the United States, including Florida. The taxpayer charged its customers sales tax on the sale of flowers, gift baskets, and other items of tangible personal property when the items were delivered within Florida. The taxpayer did not charge its customers sales tax on the sales of flowers, gift baskets, and other items of tangible personal property delivered outside of Florida. Finally, the taxpayer did not charge sales tax on any of the prepaid calling arrangements it sold.
The administrative law judge upheld the department's assessment, finding that “[t]he taxpayer's sale of flowers, wreaths, bouquets, potted plants, and other such items of tangible personal property were subject to sales tax pursuant to section 212.05(1)(l ) and rule 12A–1.047(1).” The administrative law judge recommended to validate the department's proposed assessment. The department accepted the recommendation by entering a final order. An appeal of this final order ensues.
“Whether a lower tribunal had subject matter jurisdiction is a question of law which we review de novo. ” Dep't of Revenue ex rel. Smith v. Selles, 47 So.3d 916, 918 (Fla. 1st DCA 2010). “Lack of subject matter jurisdiction may be raised for the first time on appeal.” Id. (citation omitted). Further, “judicial interpretation of statutes and determinations concerning the constitutionality of statutes are pure questions of law subject to the de novo standard of review.”Abram v. Dep't of Health, Bd. of Med., 13 So.3d 85, 88 (Fla. 4th DCA 2009) (citation omitted). Since this case involves an administrative agency, issues of the constitutionality of the tax statute may be raised for the first time on appeal. See S. Alliance for Clean Energy v. Graham, 113 So.3d 742, 748 (Fla.2013).
In upholding the assessment of the sales tax, the department relied on section 212.05(1)(l ), Florida Statutes (2012), and Florida Administrative Code Rule 12A–1.047(1). Section 212.05(1)(l ) states:
Florists located in this state are liable for sales tax on sales to retail customers regardless of where or by whom the items sold are to be delivered. Florists located in this state are not liable for sales tax on payments received from other florists for items delivered to customers in this state.
Rule 12A–1.047(1), the administrative regulation that implements the florist tax, states that “[f]lorists are engaged in the business of selling tangible personal property at retail and their sales of flowers, wreaths, bouquets, potted plants and other such items of tangible personal property are taxable.”
The taxpayer contests the imposition of taxes on out-of-state sales of flowers, gift baskets, and other tangible personal property. The taxpayer claims that the imposition of taxes violates the due process clause of the Fourteenth Amendment and the dormant commerce clause emanating from Article 1, Section 8 of the United States Constitution. For the same reasons, the taxpayer also contests the imposition of taxes on the prepaid calling arrangements and disputes the department's determination that the taxpayer's books and records were inadequate and that the taxpayer did not retain statutorily mandated records of transactions.
We affirm that part of the department's order that assessed taxes for the calling arrangements, and we determine that the failure to maintain adequate records was sufficient grounds to affirm. We also find that the imposition of taxes did not violate the due process clause of the Fourteenth Amendment. We do find, however, that the imposition of taxes on out-of-state customers for out-of-state flower deliveries violates the dormant commerce clause, and we reverse that part of the tax assessment which emanates from the sale and delivery of flowers entirely outside Florida. We further find that the tax is unconstitutional as applied to the taxpayer's sales to out-of-state customers for out-of-state delivery.
The Federalist No. 22, at 140 (Alexander Hamilton) (Clinton Rossiter ed., 1999).
Prior to the adoption of the Constitution, “[u]nder the Articles of Confederation, state taxes and duties hindered and suppressed interstate commerce; the Framers intended the Commerce Clause as a cure for these structural ills.” Quill Corp. v. N. Dakota, 504 U.S. 298, 312, 112 S.Ct. 1904, 119 L.Ed.2d 91 (1992).
Hamilton, in referring to the Articles of Confederation, was highlighting one of the glaring weaknesses of the governing structure during the times before the passage of the Constitution. Hamilton warned about interstate barriers on interstate commerce: “Though the genius of the people of this country might never permit this description to be strictly applicable to us, yet we may reasonably expect from the gradual conflicts of State regulations that the citizens of each would at length come to be considered and treated by the others in no better light than that of foreigners and aliens.” The Federalist No. 22, at 140–41.
Madison, writing in a letter in 1829, stated that the commerce clause “grew out of the abuse of the power by the importing States in taxing the non-importing, and was intended as a negative and preventive provision against injustice among the states themselves, rather than as a power to be used for the positive purposes of the General Government, in which alone, however, the remedial power could be lodged.” Letter from James...
To continue reading
Request your trial
-
Fla. Dep't of Revenue v. Am. Bus. USA Corp.
...the Court for review of the decision of the Fourth District Court of Appeal in American Business USA Corp. v. Department of Revenue, 151 So.3d 67 (Fla. 4th DCA 2014). Because the district court expressly declared invalid a state statute, section 212.05(1)(l ), Florida Statutes (2012), this ......
- DFC Tamarac, Inc. v. Jackson
-
Am. Bus. USA Corp. v. Dep't of Revenue, 4D13–1472.
...Supreme Court Of FloridaPER CURIAM.This case returns to us on remand from the Supreme Court of Florida.In American Business USA Corp. v. Department of Revenue, 151 So.3d 67 (Fla.2014), we reversed the Florida Department of Revenue's order imposing a tax assessment for the sale of flowers to......