On February 1, 2012, a case was decided that would change the alcohol and beverage tax world in Florida. Many of you in the industry are familiar with the Micjo decision. In Micjo, the taxpayer did not think it was fair that it was paying federal excise tax on all of the invoice components. Rather it believed the tax should only apply to the tobacco product itself, not the federal excise tax and transportation charges. In a simply example, Micjo gets an invoice from its supplier that says tobacco $100, federal excise tax $80, transportation charges $20, total invoice $200. Should the tobacco tax apply to the $100 or the $200. Of course our friends up at the Division of Alcoholic Beverages and Tobacco of the Florida Department of Business and Professional Regulation ("AB&T") believed it was the $200 and Micjo believed it was the $100
Micjo had the "audacity" to challenge AB&T as to what it believed was wrong. As it turns out, Micjo was right and they won. The Second District Court of Appeals looked to the statute at issue and determined that the tax should apply ONLY to the tobacco product itself. Since the case came down, many tobacco distributors and manufacturers have been claiming refunds and getting them back. Well, until recently. . . In fact, AB&T had been granting refunds… at least until the cumulative amount of the refunds began to hit tens of millions of dollars.
Over the past several months we have been receiving an increased number of calls from tobacco distributors and manufacturers saying that AB&T has stopped issuing refunds on this issue. There has been no change in the law and no new cases. Rather the almighty AB&T simply believes the court in Micjo was wrong and has been denying refunds. That's correct, despite an appellate court ruling what the law is, AB&T has been ignoring it.
What is even more frustrating for taxpayers is that AB&T really does not have any grounds to stand on. For taxpayers on the west coast, this is simply wrong in my opinion. Put other way taxpayers in the 14 counties governed by the second district, from Pasco Polk and Hillsborough down through Collier County, the ABT has no grounds to stand on. For the lucky taxpayers in Florida's four other districts, AB&T will be fighting for the refunds simply because it believes Micjo is wrong.
It is likely that AB&T is looking to get another case before a judge in the other counties to try and get the case overturned. However, the appellate courts respect one another and this is really an uphill battle for AB&T. We strongly recommend if you are paying tobacco tax based on federal excise tax or shipping charges, then file for your refund. AB&T will likely deny the refund at which point you will be forced to file in court. Don't roll over and let them win. It is money to which you are entitled and you should not be afraid to fight for it. While many view this as the end of the road, this is just the beginning for our firm and we regularly challenge taxing agencies in court. There are firms out there like ours that are on your side and willing to fight. In the right set of facts a contingency fee arrangement would be possible.
If you have any questions about beverage tax or tobacco tax imposed by Florida's Division of Alcoholic Beverages and Tobacco, or are under audit for beverage and tobacco tax then please contact me for a free consultation. If any agency in Florida threatens your business then please reach out to a competent Florida attorney to fight back.
About the author: Mr. Donnini is a Florida and multi-state sales and use tax attorney and an associate in the law firm the Law Offices of Moffa, Sutton, & Donnini, P.A., based in Fort Lauderdale, Florida. Mr. Donnini's primary practice is Florida sales and use tax as well as Florida beverage and tobacco tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, motor fuel tax, and Native American taxation. Mr. Donnini is currently pursuing his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact him via email JerryDonnini@Floridasalestax.com or phone at 954-642-9390. Please also visit his blog, facebook, and Twitter