United Engines, Inc. v. Department of Revenue, BI-202

• Decision Date: 01 June 1987
• Docket Number: No. BI-202,BI-202
• Citation: 508 So.2d 459,12 Fla. L. Weekly 1369
• Parties: 12 Fla. L. Weekly 1369 UNITED ENGINES, INC., Appellant, v. DEPARTMENT OF REVENUE, State of Florida, Appellee.
• Court: Florida District Court of Appeals

Page 459

508 So.2d 459

12 Fla. L. Weekly 1369

UNITED ENGINES, INC., Appellant, v. DEPARTMENT OF REVENUE, State of Florida, Appellee.

No. BI-202.

District Court of Appeal of Florida,

First District.

June 1, 1987.

Arthur J. England, Jr., of Fine, Jacobson, Schwartz, Nash, Block & England, P.A., Miami, for appellant.

William Townsend, Gen. Counsel, Dept. of Revenue, Stephen J. Keller, Asst. Gen. Counsel, Dept. of Revenue, and Edwin A. Bayo, Asst. Atty. Gen., Tallahassee, for appellee.

SHIVERS, Judge.

This is an appeal from final agency action of the Department of Revenue (Department), assessing a use tax and penalty against the appellant, United Engines, Inc. (United). We agree with the Department that the assessment was correct, and affirm.

In 1981, United, a Delaware corporation, entered into a joint venture with Broward Marine, Inc. of Fort Lauderdale, Florida for the construction of a prototype vessel with three marine engines instead of the traditional two. The purpose of the 92-foot prototype vessel, the "Jervet," was allegedly to travel to boat shows throughout the world in order to display United's new technology. (One of United's principal activities is the fabrication and sale of diesel marine engines.) The construction of the "Jervet" in Fort Lauderdale ran from April 1, 1981, through April 7, 1983. The "Jervet" was then moved to Pier 66 in Fort Lauderdale for installation of its interior. That work was completed on May 8, 1983, on which date the "Jervet" departed from Florida and set sail for northern waters.

At that time, United filed, as purchaser, an "Affidavit for Exemption of Boat Sold From Removal From the State of Florida by the Purchaser" in order to claim an exemption under section 212.05(1)(a)2, Florida Statutes (1983) from the 5% Florida sales tax on the purchase of the boat. According to section 212.05(1)(a)2, ¹ a sales tax exemption applies where a vessel departs Florida waters within ten days after its purchase or the completion of repairs, and where the purchasers comply with the listed requirements of the statute. The statute also provides that if the purchaser either fails to remove the boat from the state within ten days or permits the boat to return to the state within six months after the date of departure, the purchaser shall be liable for a use tax on the cost of the boat and a 100% penalty.

The "Jervet" returned to Florida in January of 1984, more than seven months after its departure, where it was docked at Broward Marine for maintenance and repairs through March 12, 1984. It then left Florida for the Bahamas and returned again to Fort Lauderdale on May 15, 1984, where it underwent repair work. It left again for the Bahamas sometime in early June and thereafter returned to Fort Lauderdale on June 24, 1984. From that date, the record indicates that the "Jervet" was in several different locations within Florida until January 2, 1985. It then returned to Fort Lauderdale again on January 6, 1985, and remained until at least January 17, 1985.

On July 9, 1985, the Department assessed a use tax and penalty against United, pursuant to section 212.06(8), Florida Statutes (1983). ² We affirm the assessment, on the authority of this court's recent decision in Department of Revenue, State of Florida, v. G.R. Swan Enterprises, Inc., 506 So.2d 455 (Fla. 1st DCA 1987), the facts of which are strikingly similar to those in the instant case. In that case, Swan, a Delaware corporation, purchased a yacht in Fort Lauderdale, Florida, allegedly for use as a live aboard vessel in the Bahamas. The sale of the yacht to Swan was exempt from sales tax, as in this case, under section 212.05(1)(a)2. The boat was removed from Florida within ten days of purchase. It then returned to Florida on March 2, 1985, for maintenance and repairs. The repairs were finished on March 22, 1985, and the boat returned to the Bahamas on May 13, 1985. A use tax and penalty were assessed against Swan pursuant to section 212.06(8), Florida Statutes, and both Swan and the Department moved for summary judgment. The trial court held for Swan, finding it to be exempt from taxation under section 212.05(1)(a)2. This court reversed the trial court's findings, and held that the use tax and penalty assessed by the Department were valid.

We agree with the holding in Swan and the Department's assertion in the instant case, that the legal benefit of the sales tax exemption provided by section 212.05(1)(a)2 inures to the dealer who sells the boat, and that this exemption is distinct from the use tax assessed against the purchaser for importing, using, and storing the boat in Florida. United fulfilled, as did Swan, the requirements for the sales tax exemption in section 212.05(1)(a)2, and successfully avoided the imposition of a penalty by not returning the boat to Florida within six months. However, "once the initial six month period expired, [United's] subsequent importation and use of the ["Jervet"] in Florida waters triggered the use tax pursuant to Section 212.06(8), Florida Statutes." 506 So.2d 458 (emphasis in original). In so holding, we specifically find incorrect the appellant's argument that section 212.05(1)(a)2 creates an implied use tax exemption for a purchaser who complies with the requirements of that section. Such an...