Department of Revenue v. Anderson

Decision Date25 September 1980
Docket NumberNo. LL-37,LL-37
Citation389 So.2d 1034
PartiesDEPARTMENT OF REVENUE of the State of Florida, Appellant, v. Virgil ANDERSON, C. M. "Max" Anderson, A. F. Brown and Nick Maltezo,Appellees.
CourtFlorida District Court of Appeals

Jim Smith, Atty. Gen., and Martha J. Cook, Asst. Atty. Gen., for appellant.

David W. Palmer, II, Crestview, for appellees.

LARRY G. SMITH, Judge.

The Department of Revenue appeals a final judgment which enjoined the collection of admissions taxes 1 on admission fees collected from appellees' deep-sea party-boat fishing customers. The trial judge found the facts sufficient to indicate a "representation" by the Department that it would not hold appellees accountable for uncollected admissions taxes accruing during the period from August 1, 1970, 2 to February 6, 1972, the date of issuance of the mandate of this court in Department of Revenue v. Pelican Ship Corp., 257 So.2d 56 (Fla. 1st DCA 1972), cert. den. 262 So.2d 682 (Fla. 1972), cert. dism. 287 So.2d 93 (Fla. 1974). 3 The trial judge also found that the facts presented "an exceptional set of circumstances" justifying application of the defense of estoppel to prevent collection of the taxes for that period. We affirm.

The essential facts and circumstances of this latest episode in the continuing saga of fishing boat admissions tax controversies are set forth adequately in the final judgment, from which we quote as follows:

This suit involves four specific plaintiffs. Those are C.M. (Max) Anderson, Virgil Anderson, A.F. Brown and Nick Maltezo. This was a suit filed on behalf of those four plaintiffs to contest their liability to the State of Florida for admissions taxes accruing between the dates of August 1, 1970 and July 31, 1973. Between those dates, each of the plaintiffs operated deepsea (sic) "party" fishing boats. These boats, for a fee paid, or otherwise arranged for, at dockside within the State of Florida, would take customers into the offshore waters beyond Florida's territorial limits where they would spend the day fishing and relaxing. Later, usually at the close of the day, the customers are returned to the dock from which the boat departed. Brown's business operated out of Pensacola, Florida; Maltezo's operated from Destin, Florida. Both Andersons operated out of Panama City, although C. M. Anderson also operated out of Sarasota, Florida during the period in question.

During most of the period between August 1, 1970 and July 31, 1973, none of the plaintiffs collected an admissions tax from their customers or remitted any such taxes to the Department of Revenue on the fares which were charged their customers to board their boats. In July of 1973, plaintiffs were all served with a document styled "Notification of Intent to Examine Books and Records Under Chapter 212, Florida Statutes." The Andersons received theirs by certified mail; Brown's and Maltezo's were hand delivered by various auditors of the Department of Revenue. The tolling of the statute of limitations is not in dispute. Neither is the computation of the taxes which accrued during the period in question. The taxes accruing during this three year period, computed at 4% of each of the plaintiff's gross sales of admissions, are as follows:

Although each of the plaintiffs also failed to collect taxes on his sales of admissions for various periods prior to August 1, 1970, the Department concedes that assessment and collection of these taxes is barred by the statute of limitations. F.S. § 212.14(6).

The plaintiffs contend that the Department of Revenue is estopped from asserting tax liability for all, or at least a portion, of that period. Each of the plaintiffs except C. M. Anderson testified that he had never received any contact from the Department of Revenue concerning his admissions tax liability prior to July of 1973, when they were contacted by auditors in connection with the audit which is the subject of this litigation. However, C.M. Anderson testified that as a result of his operation in Sarasota, Florida, he was contacted during this period by auditors of the Department of Revenue who covered Sarasota, Florida. His testimony is that these auditors in Sarasota insisted that he collect and remit to the State of Florida admissions taxes on this operation and threatened to take collection actions against him in the event that he did not.

One Joe Ed Davis who operates a similar business out of Panama City, Florida also testified to the effect that he had had certain conversations with agents of the Department of Revenue during this period in question which had led him to believe that his operation would not be subject to back assessments of admissions taxes in the event that he did not collect those taxes from his customers. Although when he first ceased collecting these taxes, Mr. Davis had structured his prices so as to absorb a deficiency should one be assessed as a result of his failure to collect these taxes, as a result of these conversations, he stopped structuring his prices so as to cover a possible deficiency. There was some evidence adduced to the effect that, at a certain undisclosed point in time he may have informed the various plaintiffs of some or all of these conversations. However, none of the plaintiffs were present at the time these conversations between Davis and the Department of Revenue transpired. Likewise, no representatives of the Department of Revenue were present at such times as Davis may have informed any of the various plaintiffs about the substance of these conversations.

The Bureau Chief of the Department of Revenue Sales Tax Bureau, W.D. Mayo testified to the effect that the two Andersons periodically had received sales and use tax report forms for some time through 1968 and 1969. He testified that they continued to be sent forms for several months after they had ceased collecting and remitting tax but that eventually the Department of Revenue, several months after tax remissions had ceased, stopped sending forms to them. Brown continued to receive sales and use tax report forms throughout the period and continued to make small remissions, apparently for sales other than admissions. Nick Maltezo never registered with the Department of Revenue until some time in 1973 and hence received no forms until that time.

The various plaintiffs all testified that the fact that they ceased to collect, or in the case of Brown and Maltezo never collected, admissions taxes was due to their knowledge of the case of Straughn v. Kelly Boat Services, 210 So.2d 266 (1 D.C.A. Fla. 1968), and to some extent, the advice of counsel. Also, the plaintiffs brought forth evidence that DOR officials indicated that no effort would be made to collect the taxes after the Kelly case (cited above).

Without digging more deeply than is necessary into the quagmire of decided cases on this issue, we can now say with assurance that Kelly I, supra, footnote 3, was in error, either by indicating (improperly) that admissions taxes could not be assessed on admission fees charged to fishing boat customers, as stated in Pelican, supra footnote 3, or by erroneously holding the admissions tax void, as declared in George W. Davis & Sons, Inc. v. Askew, 343 So.2d 1329 (Fla. 1st DCA 1977), although it was actually valid, according to Pelican. The Kelly I error and its correction have been revisited most notably in Department of Revenue v. Kelly Boat Service, Inc., 324 So.2d 651 (Fla. 1st DCA 1975), hereafter Kelly II, Davis, and Department of Revenue v. Hobbs, 368 So.2d 367 (Fla. 1st DCA 1979), with seemingly disparate and virtually irreconcilable opinions. Kelly II held that the Department was not foreclosed by Kelly I or otherwise from collecting the admissions tax. However, as recognized by the court in both the Davis and Hobbs decisions, the "primary focus" (Davis at 1333) of the complaining taxpayers in Kelly II was the alleged illegality of the tax, not that the State was estopped to collect it. The Hobbs case was similar to Kelly II in that (although the court's opinion dealt extensively with the estoppel theory and its inapplicability in that case) the "entire thrust" (Hobbs at 368) of the taxpayers' original and amended complaint was that Kelly I prohibited collection of the admissions taxes, with no issue of estoppel being raised by the pleadings.

Summarizing, we are thus faced with the holding of Kelly II that collection of the tax was not prohibited by Kelly I ; the holding of Davis that Kelly I might nevertheless be the basis for estoppel in favor of a taxpayer who, with the approval of the Department of Revenue, followed the law as announced in Kelly I, and neglected to collect the admissions tax from his customers; and finally, the holding of Hobbs that the admissions tax was collectible notwithstanding Kelly I, and estoppel, which could be a defense, could not be applied in the circumstances present in that case.

Our analysis convinces us that in certain respects the essential facts of this case are similar to those found in Hobbs, in which the court said:

Even if it were established it was common knowledge among party boat operators that the Department had decided to delay its audits until the uncertainty of its authority to collect-created by Kelly I -was resolved, the circumstance of knowledge still would not create an estoppel against the State. (Id. at 369)

As previously noted, however, the taxpayers did not plead estoppel in the Hobbs case, whereas in the present case they did. Furthermore, the trial judge, in his resolution of this controversy, undoubtedly found this case similar to the circumstances in Davis, in that the taxpayers established their reliance upon the Kelly I decision, and properly pleaded the estoppel defense. Even though, as the Department appropriately points out, the appellees here could not establish any direct contact with Department officials as did the taxpayers...

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