TA Operating Corp. v. STATE, DEPT. OF REV.

• Decision Date: 28 September 2000
• Docket Number: No. 1D99-3480.,1D99-3480.
• Citation: 767 So.2d 1270
• Parties: TA OPERATING CORPORATION d/b/a Truckstops of America, Appellant, v. STATE of Florida, DEPARTMENT OF REVENUE, Appellee.
• Court: Florida District Court of Appeals

767 So.2d 1270

TA OPERATING CORPORATION d/b/a Truckstops of America, Appellant, v. STATE of Florida, DEPARTMENT OF REVENUE, Appellee.

No. 1D99-3480.

District Court of Appeal of Florida, First District.

September 28, 2000.

Cynthia S. Tunnicliff and Julius F. Parker III of Pennington, Moore, Wilkinson, Bell & Dunbar, P.A., Tallahassee, and Mark E. Holcomb and Susan L. Kelsey of Holland & Knight LLP, Tallahassee, for Appellant.

Robert A. Butterworth, Attorney General; Charles Catanzaro, Assistant Attorney General, Tallahassee, for Appellee.

BENTON, J.

TA Operating Corporation (TA) appeals the final summary judgment denying the refund it sought of excise taxes paid under section 206.87(1), Florida Statutes (1993), when it bought diesel fuel. We affirm, rejecting TA's contention that, because the fuel was delivered to a common carrier for export to Georgia, a Florida tax on the sale violated the Commerce Clause.

The operative facts are not in dispute.¹ A common carrier picked up diesel fuel in Jacksonville, Florida, for delivery to TA "F.O.B. Brunswick, Georgia." The parties stipulated that title to the fuel passed in Jacksonville. Amerada Hess, the Florida vendor, collected the taxes in dispute and remitted them to the Florida Department of Revenue (DOR). At the time of the sales in question (on and between March 1 and September 30, 1994) TA had no personnel in Florida, operated no Florida location, and made no sales in Florida. Georgia sales taxes were paid on subsequent resales of the fuel in Georgia.

I.

When the Florida sales took place, TA did not have a Florida license as a dealer in special fuels. As a threshold matter, DOR argues that, because TA had no Florida license as a dealer in special fuels when the taxes in dispute were paid, section 206.87(3)(d), Florida Statutes (1993), precludes TA's applying for a refund on grounds the taxes were imposed in violation of the Commerce Clause.

We agree that TA was not eligible for the exemption described in the second sentence of section 206.87(3)(d), Florida Statutes (1993), because TA did not have a Florida license as a dealer in special fuels at the time of the transactions. But we reject DOR's reading of the statute as purporting to make such licensure a precondition to rights the Commerce Clause confers.

Special fuel is defined to include diesel fuel. § 206.86(1), Fla. Stat. (1993). Section 206.87, Florida Statutes (1993), provides:

(1) An excise tax of 4 cents per gallon is hereby imposed upon every gallon of special fuel used or sold in this state for use....

. . .

(3) The following sales are not subject to the tax herein imposed:

. . .

(d) Exports of special fuel by a dealer from the state when exempted by any provision of the constitutions of the United States or the State of Florida. The sale for export from the state of special fuel which is not exempted from the taxes imposed by this part by either the constitution of the United States or of the state shall also be exempt, but only if both the seller and the exporter of the special fuel are duly licensed as dealers of special fuel under the terms of this part.

(Emphasis supplied.) Only the second sentence of section 206.87(3)(d) contemplates persons "duly licensed as dealers."

Properly construed, the statute does not purport to make licensure a prerequisite for invoking rights under the Commerce Clause or any other constitutional provision. The term "dealer" in the first sentence of section 206.87(3)(d) necessarily means any person who deals in special fuels, without regard to whether the person holds a license. The language "duly licensed as dealers" stands in stark contrast to the unadorned word "dealer" appearing in the first sentence of section 206.87(3)(d). But for the clearly broader sense in which "dealer" is used in the immediately preceding sentence, the contrasting language in the second sentence would be redundant and—given the definition of dealer² in section 206.86(10)—unnecessary.

II.

TA maintains that it is entitled to a refund of the disputed taxes because their imposition runs afoul of each of four tests laid down in recent³ "dormant Commerce Clause" cases decided by the United States Supreme Court.

Absent congressional approval ... a state tax on ... commerce will not survive Commerce Clause scrutiny if the taxpayer demonstrates that the tax (1) applies to an activity lacking a substantial nexus to the taxing State; (2) is not fairly apportioned; (3) discriminates against interstate commerce; or (4) is not fairly related to the services provided by the State. Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279, 97 S.Ct. 1076, 1079, 51 L.Ed.2d 326 (1977).

Barclays Bank PLC v. Franchise Tax Bd., 512 U.S. 298, 310-11, 114 S.Ct. 2268, 129 L.Ed.2d 244 (1994). While failure to pass any one of these tests would render the special fuel tax unconstitutional, we find no merit in any of TA's arguments as to any of the four tests.

A.

As to the first test, TA posits a separate requirement of substantial nexus not only between the taxing state and the taxable activity, but also between the taxing state and the taxpayer. In support of this contention, TA cites Allied-Signal, Inc. v. Director, Division of Taxation, 504 U.S. 768, 777, 112 S.Ct. 2251, 119 L.Ed.2d 533 (1992); Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977); Quill Corporation v. North Dakota, 504 U.S. 298, 306, 112 S.Ct. 1904, 119 L.Ed.2d 91 (1992) and National Bellas Hess, Inc. v. Illinois Department of Revenue, 386 U.S. 753, 87 S.Ct. 1389, 18 L.Ed.2d 505 (1967), and argues that TA's connection with Florida is too slight for Florida to tax the sale of diesel fuel TA bought.

In Allied-Signal, the Court decided that a state may tax its share of a nondomiciliary corporation's "unitary" income, where the corporation carries on some discrete business enterprise both inside and outside the state, but cannot tax "nonunitary" income earned by a nondomiciliary corporation in an unrelated business enterprise having no connection to the state. The Court explained that the rule that

a State may not tax value earned outside its borders rests on the fundamental requirement of both the Due Process and Commerce Clauses that there be "some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax." Miller Brothers Co. v. Maryland, 347 U.S. 340, 344-345, 74 S.Ct. 535, 539, 98 L.Ed. 744 (1954).

Allied-Signal, 504 U.S. at 777, 112 S.Ct. 2251 (emphasis supplied). The question in Allied-Signal was how much income a corporate taxpayer—with unquestioned ties to the taxing state and concededly liable for state income taxes in some amount—had to pay taxes on. But the present case is very different. For one thing, it is not an income tax case. The tax at issue here is an excise on a transaction that was consummated in Florida when a Florida vendor sold diesel fuel (at rest in Florida tanks) in Florida, and relinquished possession of the fuel in Florida.

In Complete Auto Transit, Quill Corp. and National Bellas Hess, the question was whether one state could require a mail order house in another state to collect use taxes levied on mail order customers residing in the taxing state. The nexus necessary to tax the state's own residents' use was never in doubt.

TA occupies a position in the present case analogous to that of the mail order customers in National Bellas Hess and its progeny. See generally Monamotor Oil Co. v. Johnson, 292 U.S. 86, 94, 54 S.Ct. 575, 78 L.Ed. 1141 (1934)

("The distributor who reports the gasoline and pays the tax is required to pass the burden on to the consumer.") Not holding a Florida license as a dealer in special fuels at the time, TA was treated as a consumer.

Amerada Hess, the licensed dealer in special fuels who, physically present in Florida, collected and remitted the taxes, occupies the position that the mail order houses occupied in National Bellas Hess and its progeny. See § 206.87(2)(a), Fla. Stat. (1993). Amerada Hess has not complained about the imposition or collection of the taxes in dispute.

TA concedes the substantial nexus Florida has with the transactions on which the contested taxes were paid. See Oklahoma Tax Comm'n v. Jefferson Lines, Inc., 514 U.S. 175, 184, 115 S.Ct. 1331, 131 L.Ed.2d 261 (1995)

("[A] sale of tangible goods has a sufficient nexus to the State in which the sale is consummated to be treated as a local transaction taxable by that State."); McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 49, 60 S.Ct. 388, 84 L.Ed. 565 (1940) (upholding a tax on the sale of coal where the coal was shipped by a seller outside the taxing jurisdiction). The parties stipulated that title passed in Florida. No additional taxpayer nexus requirement exists. "There is `nexus' aplenty here." D.H. Holmes Co. v. McNamara, 486 U.S. 24, 33, 108 S.Ct. 1619, 100 L.Ed.2d 21 (1988).

B.

Contending that the tax levied by section 206.87, Florida Statutes (1993), is unfairly apportioned, TA argues that the tax fails both the internal consistency and the external consistency tests. "In analyzing these contentions, we are mindful that the central purpose behind the apportionment requirement is to ensure that each State taxes only its fair share of an interstate transaction." Goldberg v. Sweet, 488 U.S. 252, 260-61, 109 S.Ct. 582, 102 L.Ed.2d 607 (1989).

To be internally consistent, a tax must be structured so that if every State were to impose an identical tax, no multiple taxation would result. 463 U.S., at 169 Thus, the internal consistency test focuses on the text of the challenged statute and hypothesizes a situation where other States have passed an identical statute.

Id. at 261, 109 S.Ct. 582 (citing Container Corp. of America v. Franchise Tax Bd., 463 U.S. 159, 169, 103 S.Ct. 2933, 77 L.Ed.2d 545 (1983)). "Internal consistency is preserved when the imposition of a tax identical to the one...