SKFW MANAGEMENT CORP. v. Department of Revenue

• Decision Date: 12 March 2004
• Docket Number: No. 5D04-524.,5D04-524.
• Citation: 867 So.2d 1232
• Parties: SKFW MANAGEMENT CORP., etc., et al., Petitioners, v. DEPARTMENT OF REVENUE, Respondent.
• Court: Florida District Court of Appeals

867 So.2d 1232

SKFW MANAGEMENT CORP., etc., et al., Petitioners, v. DEPARTMENT OF REVENUE, Respondent.

No. 5D04-524.

District Court of Appeal of Florida, Fifth District.

March 12, 2004.

Eric J. Stockel, Esq. and Allen H. Libow, Esq, Libow & Muskat L.L.P., Boca Raton, for Petitioners.

No Appearance for Respondent.

PER CURIAM.

SKFW Management Corporation and Royal Palace Hotel Associates seek a writ of prohibition or certiorari in their challenge to the assessment of certain sales and use taxes. The trial court denied their motion for alternative security arrangements, and determined that petitioners were not entitled to a waiver of the bond posting requirement of section 72.011, Florida Statutes. Because we conclude that neither prohibition nor certiorari is an appropriate remedy, we deny the petition.

The facts, as set forth in the trial court's order, are as follows:

Plaintiffs filed suit against the Florida Department of Revenue ("Department") challenging the assessment of sales and use taxes. On April 5, 2000, Plaintiffs requested that the Department waive the bond posting requirements enumerated in section 72.011, Florida Statutes. Plaintiffs argued that according to their financial statements, they clearly had the financial resources to satisfy any possible judgment in favor of the Department. Plaintiffs' request was denied on April 18, 2003.

The Department advised Plaintiffs that in order to determine whether a taxpayer's financial resources are sufficient to warrant a waiver under section 72.011, it is necessary to ensure that the taxpayer will have the resources to pay the Department in full if it prevails in the litigation. The Department concluded that it was unable to make such a determination based on the information provided by Plaintiffs. Specifically, the Department noted that Plaintiffs' total tax assessment was in excess of $350,000.00, that they had only $174.00 in liquid assets for tax years 1996 through 1998, and that although Plaintiffs' net income was $996,300.00 in 1998, they failed to retain that income and made almost $1.1 million in distributions.

Plaintiffs now seek an alternative security arrangement pursuant to section 72.011(3)(b)(2), Florida Statutes. Under section 72.011, a taxpayer who challenges the legality of a tax assessment in circuit court must pay the amount of the uncontested tax and either: (1) deposit the contested amount of the assessment into the court's registry with the complaint; or (2) file with the complaint a cash or surety bond for the contested amount endorsed by a surety company, or by any other security arrangement approved by the court. § 72.011(3), Fla. Stat. (2004).

Plaintiffs state, "Based upon the financial condition of the Plaintiffs as well as the statutory right on the part of the [Department] to lien the property in question whose value exceeds [$500 million], there should be no question that the [Department] will have no problem collecting any upheld assessment in this action." (Pls.' Mot. ¶ 10.) Plaintiffs claim that they generate over $60 million per year in revenue and that their property is valued at over $500 million. They also claim that the Department's statutory lien on that property significantly exceeds the amount of the assessment. Thus, Plaintiffs argue "the Department has an extremely secure position concerning its ability to satisfy any final judgment upholding the assessment of tax, penalty, and interest" in the event it prevails in the litigation. (Pls.' Mot. ¶ 17.)

The Department, on the other hand, argues that Plaintiffs have failed to present any evidence to establish that they are financially stable enough to allow the Department to grant a bond waiver. The Department also argues that Plaintiffs have submitted nothing thus far that will assure that it will be made whole at the end of the litigation. It claims that Plaintiffs did not present any testimony from a corporate executive, accountant or financial officer to verify their financial resources and, in fact, did not present any evidence at the hearing. Furthermore, the Department argues that any statutory lien it has on Plaintiffs' property does not guarantee it will be made whole. It states that based on the lack of evidence in the record, it is unaware of who actually owns the property and of who may have a prior secured interest in the property.

Moreover, the Department argues that it has been willing to accept other forms of alternative security from Plaintiffs, such as an irrevocable letter of credit issued by a bank naming the Department as beneficiary, or a guarantee by a financially stable entity. Plaintiffs had the opportunity to provide such documentation prior to, and at, the hearing, but have continually failed to do so.

The court then found that plaintiffs "failed to provide sufficient evidence of financial viability to warrant a waiver under section 72.011." Petitioners now seek review of the circuit court's order.

Petitioners request that this court grant a writ of prohibition restraining the circuit court from requiring them to post a bond or make any other financial security arrangement in favor of respondent when, according to them, section 72.011 is "silent as to whether any security arrangement is required when a taxpayer files, and is denied, a refund of tax concurrently with its challenge to an assessment on the very same tax issue as the one...