State Dept. of Revenue v. Anderson

• Decision Date: 23 July 1981
• Docket Number: No. 58994,58994
• Citation: 403 So.2d 397
• Parties: STATE DEPARTMENT OF REVENUE, Petitioner, v. Robert N. ANDERSON, etc., Respondents.
• Court: Florida Supreme Court

Page 397

403 So.2d 397

STATE DEPARTMENT OF REVENUE, Petitioner, v. Robert N. ANDERSON, etc., Respondents.

No. 58994.

Supreme Court of Florida.

July 23, 1981.

Rehearing Denied Sept. 29, 1981.

Jim Smith, Atty. Gen. and Linda C. Procta, Asst. Atty. Gen., Tallahassee, for petitioner.

Howard Hochman of the Law Offices of A. John Goshgarian, Miami, for respondents.

McDONALD, Justice.

The Court accepted jurisdiction to review alleged conflict between Anderson v. State Department of Revenue, 380 So.2d 1083 (Fla. 3d DCA 1980), and Pioneer Oil Co., Inc. v. State Department of Revenue, 381 So.2d 263 (Fla. 1st DCA 1980), approved, 401 So.2d 1319 (Fla. 1981). Art. V, § 3(b)(3), Fla.Const. Although we consolidated these cases for oral argument, we choose to issue separate opinions. We disapprove the Third District's decision.

Anderson and Out Island Charters, Inc., sold, leased, repaired, and chartered yachts. From 1973 through 1976 Anderson, the principal of Out Island, sold yachts to individuals who entered into agreements whereby Out Island leased the yachts on a "bare boat" ¹ basis to third parties. Anderson did not collect sales tax from the purchasers, but did collect sales tax on third-party leases. When Anderson sold the yachts, none of his purchasers were registered dealers as required by chapter 212, Florida Statutes (1975 and Supp.1976). ² Anderson believed the transactions exempt from sales tax because the purchases were for rental purposes.

After an audit, the Department of Revenue (DOR) assessed more than $26,000 in sales tax, penalties, and interest. At Anderson's request, most of the purchasers subsequently executed both affidavits stating that the yachts were used exclusively for leasing and certificates of resale; most also registered with DOR as dealers. On appeal from an adverse administrative decision, the Third District ruled that a taxpayer may avoid a tax assessment by showing that use was for an exempt purpose even though such taxpayer failed to file the required dealer's certificate at the time of purchase.

We disagree with this basic holding. The principal purpose of chapter 212 is to raise revenue. See Gaulden v. Kirk, 47 So.2d 567 (Fla.1950). Section 212.05 declares that selling tangible personal property at retail is a taxable privilege and imposes a sales tax on such transactions. Sales tax is due and owing as of the moment of sale. § 212.06(1)(a), (3), Fla.Stat. Section 212.02(3)(a) defines a retail sale as "a sale to a consumer or to any person for any purpose other than for resale" and further states that resales "must be in strict compliance with rules and regulations and any dealer making a sale for resale which is not in strict compliance with rules and regulations shall himself be liable for and pay the tax." (Emphasis supplied.) A "sale" is defined to include lease or rental. ³ § 212.02(2)(a), Fla.Stat. Additionally, anyone who wants to engage in business as a dealer ⁴ must register with DOR. § 212.18(3), Fla.Stat.

Pursuant to its rule-making authority, ⁵ DOR promulgated rule 12A-1.38, Florida Administrative Code, to implement the resale provisions of section 212.02(3)(a). The parts of rule 12A-1.38 pertinent to this case read as follows:

(1) It is the specific legislative intent that each and every sale, admission, use, storage, consumption or rental is taxable under Chapter 212, F.S., unless such sale, admission, use, storage, consumption or rental is specifically exempt. The exempt status of the transaction must be established by the dealer. Unless the dealer shall have taken from the purchaser a certificate to the effect that the property or service was purchased for resale and bearing the name and address of the purchaser and the number of his dealer's certificate of registration or a certificate bearing the number of his consumer's exemption certificate, the sale shall be deemed to be a taxable sale at retail.

(2) A resale certificate is required from every purchaser who purchases tangible personal property or service for resale. Otherwise the dealer will be required to collect and remit the tax to the Department of Revenue ....

(3) A dealer shall refuse to accept a resale certificate ... and shall collect the tax unless the purchaser has obtained a dealer's certificate of registration from the Department of Revenue and the number of his dealer's certificate of registration is stated on the resale certificate.

(4) Any resale certificate containing the statement to the effect that a purchase is for resale which contains the date, purchaser's name, address and dealer's certificate of registration number and dealer's signature shall be sufficient compliance with the law only to the extent provided by this rule. Such certificate shall show that the property or service was purchased (a) for resale or ... (b) for some other purpose which is exempt under the law. Certificates issued under classification (a) may be given only by a purchaser who has obtained a dealer's certificate of registration from the Department of Revenue, and the number of this certificate of registration must appear on the resale certificate. Certificates issued under classification (b) should bear the purchaser's consumer's certificate of exemption number when applicable.

(Emphasis supplied.)

By statute, therefore, a dealer who makes a sale for resale which does not comply with chapter 212 and DOR's rules is himself liable for payment of the sales tax. By both statute and rule, a dealer must register with DOR. Finally, by rule, purchasers of items for resale must give their sellers certificates of resale bearing the name and address of the purchaser and the number of his dealer's certificate of registration.

Although taxing statutes are strictly construed against a taxing authority, exemptions are strictly construed against the taxpayer. State ex rel. Szabo Food Services, Inc. v. Dickinson, 286 So.2d 529 (Fla.1973); United States Gypsum Co. v. Green, 110 So.2d 409 (Fla.1959). The legislature, besides giving DOR rule-making power and expressly requiring compliance with DOR's rules and regulations, has stated its intent that any exemptions granted be subject to conditions pertaining to those exemptions. § 212.21(2), Fla.Stat. In the transactions in the instant case, the method of demonstrating exemption, as provided by statute and rule, was not followed. At the time of sale, none of Anderson's purchasers was registered as a dealer and none gave, or even could have given, a valid certificate of resale. Unlike the district court, we do not find that the later registration and tender of certificates by some of the purchasers establishes their exempt status at the time of sale.

The power to make rules is essentially administrative and necessary to the complete administration of the law. See Richardson v. Baldwin, 124 Fla. 233, 168 So. 255 (1936). The legislature has given DOR rule-making power, which DOR has exercised in a reasonable manner. We realize that our ruling may impose a hardship on individuals in isolated instances, but any such hardship is outweighed by public policy considerations. Chapter 212 imposes a tax on the privilege of doing business, computed upon the price of the commodity sold or the service rendered. It is the responsibility of those benefitting from the privilege to comply with the statute and the rules promulgated pursuant thereto.

The district court's reference to "double taxation" (380 So.2d at 1087) is unclear. We do not find that upholding this assessment will result in double taxation. See Ryder Truck Rental, Inc. v. Bryant, 170 So.2d 822 (Fla.1964); American Video Corp. v. Lewis, 389 So.2d 1059 (Fla. 1st DCA 1980). We disapprove the court's first holding.

We also disagree with the district court's holding that DOR changed its position regarding the taxability of the instant transactions and that Anderson had a right to rely on the interpretation originally set forth.

In March 1973 Anderson purchased a sailing vessel and paid the applicable sales tax. He later incorporated Out Island Charters, and that corporation became registered as a dealer in July 1973. Because the vessel was being leased out, Anderson felt that his original purchase should have been exempt. In 1974 a refund of the sales tax paid by Anderson was made to Out Island. ⁶

The DOR examiner who corresponded with Anderson regarding the refund is now an area office coordinator for the department. Through a deposition received into evidence by the hearing officer, he testified that late registration as a dealer and late tender of a resale certificate would not prevent exemption of a sale for resale such as occurred in...