Campus Communications, Inc. v. Department of Revenue, State of Fla.
| Citation | 473 So.2d 1290,10 Fla. L. Weekly 371 |
| Decision Date | 11 July 1985 |
| Docket Number | No. 65786,65786 |
| Parties | 27 Ed. Law Rep. 408, 10 Fla. L. Weekly 371 CAMPUS COMMUNICATIONS, INC., a Florida corporation not for profit, Petitioner, v. DEPARTMENT OF REVENUE, STATE OF FLORIDA, Respondent. |
| Court | United States State Supreme Court of Florida |
Lee S. Johnson, Jr. of Brown and Johnson, Gainesville, for petitioner.
Jim Smith, Atty. Gen. and Edwin A. Bayo, Asst. Atty. Gen., Tallahassee, for respondent.
Thomas R. Julin of Steel, Hector and Davis, and Richard J. Ovelmen, General Counsel, Miami, amicus curiae for The Miami Herald Pub. Co.
This case is before us to respond to a question certified by the district court to be of great public importance in Department of Revenue v. Campus Communications, Inc., 454 So.2d 30 (Fla. 1st DCA 1984). We have jurisdiction. Art. V, § 3(b)(4), Fla. Const.
Campus Communications is a not-for-profit corporation which publishes The Independent Florida Alligator (The Alligator), a student-operated newspaper distributed free of charge in the Gainesville area. The Alligator was originally affiliated with the University of Florida, but the relationship was terminated in the 1970's and the corporation was created to continue publication independently. The newspaper is printed by a commercial printer who then sells the finished product to petitioner for distribution. In 1980, the Department of Revenue (DOR) assessed Campus Communications for sales taxes over the prior three years on these transactions between printer and publisher.
Campus Communications sought review of the assessment within the DOR. Failing to receive relief there, the publisher challenged the assessment in circuit court. The trial judge granted The Alligator's motion for summary judgment. The DOR appealed the decision to the First District Court of Appeal.
The DOR position throughout this case has been that The Alligator is not exempt from sales tax because it fails to meet the criteria for exemption established by Florida Administrative Code Rule 12A-1.08. The district court rejected The Alligator's argument that the rule is an invalid exercise of delegated legislative authority, holding that it was bound to follow its decision in North American Publications, Inc. v. Department of Revenue, 436 So.2d 954 (Fla. 1st DCA 1983), review denied, 449 So.2d 265 (Fla.1984), wherein the court had held the rule valid. However, the court noted that The Alligator was clearly a "newspaper" despite its failure to meet the criteria of the rule, and questioned whether it was proper to deny the tax exemption. It certified the following question to this Court:
Is Rule 12A-1.08, Fla.Admin.Code, which requires taxation of all publications which are not sold but are given away, unconstitutional as applied to The Alligator and similarly situated school publications?
We answer the question in the affirmative, to the extent that an invalid exercise of delegated authority may be viewed as an unconstitutional act. 1 We do
not reach the first amendment and equal protection issues raised by the parties.
Florida's sales tax is imposed by chapter 212, Florida Statutes (1983). Section 212.05, embodies the basic statement of legislative intent:
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.... For the exercise of such privilege, a tax is levied on each taxable transaction ... [a]t the rate of 5 percent [a percent for the period at issue here] of the sales price of each item or article of tangible property when sold at retail in this state.... 2
A "sale" means "[a]ny transfer of title or possession, or both, ... in any manner or by any means whatsoever, of tangible personal property for a consideration." § 212.02(2)(a). A "retail sale" or "sale at retail" is defined as "a sale to a consumer or any person for any purpose other than for resale in the form of tangible personal property and includes all such transactions that may be made in lieu of retail sales or sales at retail." § 212.02(3)(a). Certain exemptions to the tax are made in section 212.08 which reads, in part:
The sale at retail, the rental, the use, the consumption, the distribution and the storage to be used or consumed in this state of the following tangible personal property are hereby specifically exempt from the tax imposed by this chapter.
....
(6) EMEMPTIONS: POLITICAL SUBDIVISIONS, COMMUNICATIONS.--There are also exempt from the tax imposed by this chapter sales made to the United States Government, the state, or any county, municipality, or political subdivision of this state.... Likewise exempt are newspapers; film rentals when an admission is charged for viewing such film; and charges for services rendered by radio and television stations.... 3
The statutory scheme therefore provides that when there is "a transfer of title or possession ... for a consideration.... to a
consumer or any person for any purpose other than for resale" of tangible personal property denoted as "newspapers," that transaction is exempt from the sales tax.
The Department of Revenue is delegated the power to enforce chapter 212, including the authority "to make, prescribe and publish reasonable rules and regulations not inconsistent with this chapter, or the other laws, or the constitution of this state, or the United States, for the enforcement of the provisions of this chapter and the collection of revenue hereunder, and such rules and regulations shall when enforced be deemed to be reasonable and just." § 212.17(6). In attempting to implement the statutory exemption for newspapers, the DOR adopted Florida Administrative Code Rule 12A-1.08, the relevant portions of which follow:
12A-1.08 Newspapers, Magazines and Periodicals.
(1) Receipts from the sale of newspapers are exempt....
(3) In order to constitute a newspaper, the publication must contain at least the following elements:
(a) It must be published at stated short intervals (usually daily or weekly).
(b) It must not, when successive issues are put together, constitute a book.
(c) It must be intended for circulations among the general public.
(d) It must have been entered or qualified to be admitted and entered as second class mail matter at a post office in the county where published.
(e) It must contain matters of general interest and reports of current events. If the publication is devoted primarily to matters of specialized interests such as legal, mercantile, political, religious or sporting matters, and it contains in addition thereto general news of the day, information of current events and news of importance of current interest to the general public, it is entitled to be classed as a newspaper.
(4) To qualify for exemption as a newspaper, a publication must be sold and not given to the reader free of charge. So-called newspapers which are given away for advertising and public relations purposes are taxable.
The Alligator fails to meet this administrative definition of "newspaper" on two counts; it has no second class mailing permit, and it is not sold, but is given free of charge to its readers. Rule 12A-1.08(3)(d) & .08(4). It is the free distribution of The Alligator which is the fatal-flaw of the newspaper on both counts, since a second class mailing permit is available only to newspapers with a paid circulation under postal regulations. 4
A sales tax is an excise tax. An excise tax is "an indirect tax levied somewhere in the chain of manufacture and distribution." Rutledge v. Chandler, 445 So.2d 1007, 1009 (Fla.1984). An excise tax is a tax on the exercise of a privilege. City of DeLand v. Florida Public Service Commission, 119 Fla. 804, 161 So. 735 (1935). The sales tax is a tax upon the exercise of the privilege of engaging "in the business of selling tangible personal property at retail in this state." § 212.05, Fla.Stat. The sales tax is levied at the point when "a sale [is made] to a consumer or any person for any purpose other than for resale." § 212.02(3)(a).
The DOR argues that, because The Alligator is given away, the purchase from the printer is not for resale, and therefore is, for tax purposes, a taxable sale. A publisher who sells his newspaper to readers is clearly exempt under the statute. Because he sells the newspaper, the DOR allows the publisher to have a dealer's certificate of registration which permits the publisher to issue resale certificates. Fla.Admin.Code Rule 12A-1.38. A resale certificate is presented to a seller and allows a purchaser to avoid payment of a sales tax, since the sales tax will ultimately be levied at the point the purchaser, or a subsequent exempt purchaser-for-resale, resells the item purchased or a product containing the item purchased as a component part. The publisher of a for-sale newspaper thus may purchase his newspapers from a printer, or the ink and paper and other component parts for his own printing presses, free of sales tax. Fla.Admin.Code Rule 12A-1.28.
In attempting to impose this scheme of certification upon a variant situation, the DOR has produced an outcome inconsistent with legislative intent. The Alligator, because it is given away, cannot get a dealer's certificate of registration, and thus cannot present a resale certificate to the printer to avoid paying a sales tax.
What the DOR fails to recognize is that the transaction between printer and publisher is exempt, provided that The Alligator is a newspaper. For newspapers are exempt from the sales tax imposed when "a sale [is made] to ... any person for any purpose other than for resale." § 212.02(3)(a) (emphasis added). The Alligator purchased a completed product from the printer, and if that product was a newspaper, then the transaction was exempt.
This view was adopted by the Supreme Judicial Court of Massachusetts in Greenfield...
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