Am. Heritage Window Fashions, LLC v. Dep't of Revenue

• Decision Date: 06 May 2016
• Docket Number: No. 2D14–3630.,2D14–3630.
• Parties: AMERICAN HERITAGE WINDOW FASHIONS, LLC, Appellant, v. DEPARTMENT OF REVENUE, Appellee.
• Court: Florida District Court of Appeals

191 So.3d 516

AMERICAN HERITAGE WINDOW FASHIONS, LLC, Appellant,

v.DEPARTMENT OF REVENUE, Appellee.

No. 2D14–3630.

District Court of Appeal of Florida, Second District.

May 6, 2016.

Joseph C. Moffa, Gerald J. Donnini, II, and James F. McAuley of Moffa, Gainor, & Sutton, P.A., Ft. Lauderdale, for Appellant.

Pamela Jo Bondi, Attorney General, Tallahassee, and Kelly M. Behmke, Assistant Attorney General, Tallahassee, for Appellee.

SALARIO

, Judge.

This is an appeal from the Florida Department of Revenue's dismissal of a petition to review the denial of a tax refund. Section 72.011(2)(a), Florida Statutes (2009)

, provides that an action to contest the assessment of certain taxes, including those at issue here, must be brought within sixty days of the date the assessment becomes final and also that an action to contest the denial of a refund of tax payments must be brought within sixty days of the date the denial becomes final. American Heritage Window Fashions, LLC filed an application for a tax refund and, after the Department denied it, petitioned for review of that denial pursuant to chapter 120, Florida Statutes (2014). The Department entered a final order dismissing the petition because it concluded that although styled as a timely petition seeking review of a refund denial, the petition actually was an untimely effort to contest a tax assessment made in 2010. We agree and affirm.

I.

American Heritage sells and installs plantation shutters. After conducting an audit of American Heritage's sales tax remittances, the Department concluded that American Heritage failed to collect and remit taxes on sales to wholesale customers as required by chapter 212, Florida Statutes.¹ On March 29, 2010, the Department served American Heritage with a notice of proposed assessment requiring it to pay a tax deficiency and interest in the total amount of $220,330.79. American Heritage takes the view that the tax deficiency was improperly assessed because the sales taxes were to be collected by its wholesale customers from ultimate consumers of the plantation shutters. The underlying issue is whether the Department was right to conclude that the shutters were fixtures within the meaning of a regulation governing tax on sales with respect to real property improvements, a determination that “depends upon review of all of the facts and circumstances of each situation.” See Fla. Admin. Code R. 12A–1.051(2)(c)(3)

.

The assessment notice informed American Heritage that it could file an informal protest of the assessment no later than May 28, 2010. See Fla. Admin. Code R. 12–6.003(1)(b)

(providing a right to file an informal protest within sixty calendar days of a notice of proposed assessment). If an informal protest was not timely filed, the notice explained, the assessment would become final. The notice also informed American Heritage that it could seek either administrative review under chapter 120 or judicial review by filing a petition or complaint, as appropriate, no later than sixty days after the assessment became final. See § 72.011(1)(a), (2)(a) (providing right to administrative or judicial review and establishing time limit). With respect to the right to seek administrative or judicial review, the notice explained that “Florida Statutes mandate this [sixty-day] time limit and the Department cannot extend it.”

American Heritage did not file an informal protest, administrative petition, or civil complaint, and the Department began efforts to collect the assessment in late 2010. On May 10, 2011, the Department ordered a bank at which American Heritage maintained an account to freeze all funds in that account until the assessment was satisfied. American Heritage later agreed to release the funds in the bank account to the Department, and the bank then transferred those funds to the Department. The Department received $7507.58 from the bank on April 1, 2013, of which $6525.95 was applied to the sales tax deficiency, roughly three percent of the assessed sum.

On July 10, 2013, American Heritage requested that the Department refund the $6525.95 on the grounds that it was an audit overpayment. The Department denied the request on August 26, 2013, and American Heritage filed a written protest on September 25, 2013. The protest stated that American Heritage sought “to appeal the Notice of Proposed Assessment” rendered in March 2010 because it “believe[d] this audit assessment to be in error.” The protest argued at length that the plantation shutters American Heritage sells are not fixtures and thus that American Heritage was not required to collect tax on sales to wholesale customers. In a detailed written decision, the Department rejected American Heritage's protest on the merits. That action made final the Department's denial of American Heritage's refund application.

On April 7, 2014, American Heritage filed a petition for a chapter 120 hearing through which it sought to have the Division of Administrative Hearings (DOAH) review the Department's denial of the refund request. The petition stated that “[t]his is a controversy whereby the Department has denied a refund ... by assessing tax on transactions in which no tax is due” and that American Heritage sought a refund “for the portion of the audit assessment that it paid.”²

The Department responded by filing a motion asking DOAH to relinquish jurisdiction. The Department argued that the petition was a challenge to the Department's 2010 assessment of a sales tax deficiency and was, for that reason, time-barred under section 72.011(2)(a)

because it was not brought within sixty days of the date the assessment became final. American Heritage responded that its petition was not an action to contest the assessment of a tax, but rather was a challenge to a refund denial and, as such, was permitted by section 72.011(2)(a) to be brought within sixty days of the date the denial became final. DOAH granted the motion and relinquished jurisdiction to the Department, which later entered a final order dismissing American Heritage's petition on grounds that it lacked jurisdiction.

II.

On appeal, American Heritage argues that its chapter 120 petition timely commenced proceedings to review the Department's denial of its refund application. It observes that a taxpayer is authorized by statute to seek a tax refund when it has overpaid a tax, paid a tax when no tax is due, or paid a tax in error. See § 215.26, Fla. Stat. (2014)

. It characterizes the transfer from its bank account to the Department as all three of those things and argues that its petition sought review of the Department's denial of its application within sixty days of the date the denial became final. American Heritage thus contends that the Department misinterpreted section 72.011(2)(a) by characterizing the petition as a challenge to the 2010 assessment and dismissing it as untimely.

There is no dispute about the underlying facts, and American Heritage's argument is one of statutory construction. Because we may set aside an agency's final order where the agency interprets the law wrongly and the right interpretation compels a particular result, see § 120.68(7)(d), we consider de novo the issue of whether the agency misinterpreted section 72.011

when it dismissed the petition. See

M.H. v. Dep't of Children & Family Servs., 977 So.2d 755, 759 (Fla. 2d DCA 2008).

Our consideration begins with the text of the statute. In relevant part, section 72.011

provides as follows:

(1)(a) A taxpayer may contest the legality of any assessment or denial of refund of tax, fee, surcharge, permit, interest, or penalty provided for under ... chapter 212 ... by filing an action in circuit court; or, alternatively, the taxpayer may file a petition under the applicable provisions of chapter 120....

....

(2)(a) An action may not be brought to contest an assessment of any tax, interest, or penalty assessed under a section or chapter specified in subsection (1) more than 60 days after the assessment becomes final. An action may not be brought to contest a denial of refund of any tax, interest, or penalty paid under a section or chapter specified in subsection (1) more than 60 days after the date the denial becomes final.

....

(5) The requirements of subsections (1), (2), and (3) are jurisdictional.

(Emphasis added.) Taken together, these subsections create a sixty-day jurisdictional time limit within which an action brought to contest an assessment of a tax listed in subsection (1)(a) or an action brought to contest a refund denial with respect to such a tax must be commenced. In each instance, the time period runs from the date the Department's action—the original assessment or the refund denial—becomes final.

Because the taxes here are governed by a chapter listed in subsection (1)(a) of the statute, any action brought to contest an assessment or denial regarding such a tax is subject to the jurisdictional time limits of subsection (2)(a).³ The issue we must decide is whether American Heritage's petition was brought to contest a tax assessment, in which case it is time-barred because it was brought more than sixty days after the 2010 assessment became final, or was brought to contest a refund denial, in which case it is timely because it was brought within sixty days of the date the Department's denial of the refund application became final. We conclude that American Heritage's petition was brought to contest the assessment and is therefore untimely.

There is no textual indication that the statutory phrase “brought to contest” carries a specialized meaning, and we should therefore interpret it as the words would be understood in ordinary, everyday discourse. See Donato v. Am. Tel. & Tel. Co., 767 So.2d 1146, 1154 (Fla.2000)

(“[W]ords or phrases in a statute must be construed in accordance with their common and ordinary meaning.”). Where an infinitive phrase (here, “to contest”) is used as an adverb modifying a verb (here, “brought”), the infinitive phrase is most often...