Plethora of Sales Tax Litigation in Florida
While many people seem to think that sales tax is merely a percentage of the sales price paid at the checkout counter which can easily be managed by software, sales and use tax is far from simple for the businesses that are burdened with collecting the tax on behalf of the state as well as for the state tax departments tasked with administering the tax. A blindingly clear example of just how complicated sales and use tax can be for both the state and businesses alike can be found by a simple review of the sheer volume and diversity of cases currently in the Florida Court system. The purpose of this article is to merely provide a partial listing of the sales tax litigation exploding in the Florida courts at the time this article was written. To the extent this web site has covered the topic of the case, a link to a more detailed article is provided.
FLORIDA SUPREME COURT
FL DOR v AMERICAN BUSINESS USA, Fla Sp Ct Case No. SC14-2404 (Issue: Whether a statute violates the Dormant Commerce Clause by subject ting to sales tax all the flower sales of an online florist with no actual inventory even though neither the flowers nor the customer is located in Florida).
AMICUS CURIAE BREIF in Support of the Appellee, filed by the American Association of Attorney Certified Public Accountants, Inc. authority in part by James Sutton, CPA, Esq.
FL DOR SMELLING THE WRONG KIND OF FLOWERS, published November 19, 2014 by Jerry Donnini, Esq.
ALACHUA COUNTY, ETC AL, v EXPEDIA, INC, ET AL., Fla Sp Ct Case Number SC13-838 (Certified Question: Does the "Local Option Tourist Development Act" … impose a tax on the total amount of consideration received by an on-line travel company from tourists who reserve accommodations using the on-line travel company's web site, or only the amount the property owner receives for the rental of the accommodations)
FL TAX ALERT: ONLINE TRAVEL COMPANY CASE CERTIFIED TO FL SUPEREME COURT, published April 18, 2013, by James Sutton, CPA, Esq.
FLORIDA APPEALATE COURTS
FOSTER WINDOWS AND DOORS, Inc., LLC. V. STATE OF FLORIDA, DEPT. OF REVENUE, Fla, 4th DCA, Case # 14-2970 (filed 8/11/14) (Issue 1: Whether the facts support the imposition of a "transferee liability" claim under Sec. 213.758, F.S., effectively passing the sales and use tax liability from a selling company to a buying company up to the purchase price paid for more than 50% of the company's assets. Issue 2: Whether the taxpayer may pay all or a portion of an assessment and file a refund claim under Florida law when the underlying assessment has not be adjudicated final.)
AMERICAN HERITAGE WINDOW FASHIONS, LLC v FL DEPART. OF REVENUE, Fla. 2nd DCA, Case # 2D14-3630 (filed 11/10/14) (Primary Issue: Whether taxpayer may pay all or a portion of an assessment and file a refund claim when the underlying assessment has not be adjudicated as final)
VERIZON BUSINESS PURCHASING LLC v FL DEPARTMENT OF REVENUE, 1ST DCA, Case # 1D14-3213 (Whether a Notice of Proposed Assessment becomes a "Final Assessment" on the day it is issued or within 60 days)
FL 1st DCA: VERIZON APPEALS PROPOSED ASSESSMENT NOT FINAL, published May 25, 2015, by James Sutton, CPA, Esq.
FL TAX LITIGATION ALERT – NOPA – VERIZON VS FL DOR – STATE WINS AT TRIAL, published June 7, 2012, by James Sutton, CPA, Esq.
FL TAX LITIGATION ALERT – VERIZON – FL DOR MISSES SOL WITH PROPOSED ASSESSMENT, published February 17, 2012, by James Sutton, CPA, Esq.
RHINHART EQUIPMENT CO. v FL DEPARTMENT OF REVENUE, 1st DCA, Case # 1D14-3966((A) Whether the Dormant Commerce Clause and Due Process Clause prevent Florida from taxing the sale of equipment in Georgia to a Florida customer when delivered into FL by company employees and (B) whether the FL DOR must assess tax within 3 years after a protest has been filed challenging nexus)
FL LITIGATION ALERT – RHINEHART EQUIPMENT – SOL, NEXUS, & A TIPSTER, published October 15, 2012, by James Sutton, CPA, Esq.
TRIAL COURTS (partial listing)
Circuit Court
Professional Facilities Management, Inc. v. State of Florida, Department of Revenue, 2nd DCA, Case No. 2012 CA 2893(The primary issue is whether the service provider is entitled to a refund of sales taxes paid erroneously due to an accounting error under Section 215.26, Florida Statutes ("F.S."), when the customer agrees the taxes were erroneous paid and has already agreed to assign any rights to a refund).
Division of Administrative Hearings
Kingpin Tattoo Supply, Inc. v Department of Revenue, Case No: 15-003100 (Issue: Whether Taxpayer has submitted suitable information and/or documentation to warrant revision of the proposed audit assessment as it relates to exempt sales, collection of tax, and fixed assets). Facts: St. Petersburg, FL based tattoo supply company sells tattoo machines, parts, accessories, and other tattoo related products at both the wholesale and retail levels. As a result of the Audit, the DOR issued an assessment of $73,270.41. Taxpayer states that some of the transactions assessed related to "dummy invoices" used to test Taxpayer's new computer system. Taxpayer indicated that one very large transaction skewed the sample in the audit report inappropriately against taxpayer.
American Import Car Sales, Inc., vs. FL Department of Revenue, DOAH Case No. 14-3115(Recommended Order issued 1/15/15 with a finding that the assessment against the taxpayer was flawed, and should issue a new assessment based on the statute. The FL DOR must either use "best available records" under Sec. 212.15(5)(b) if the taxpayer provided no books or records OR the FL DOR must sample all records under Sec. 212.12(6)(b), if the taxpayer provided adequate records. However, because the DOR based the assessment off "best available records" (gross bank deposits) and did not consider the other taxpayer provided records (the general ledger), the court found that the DOR used a "hybrid" method not allowed by statute. The taxpayer is awaiting the DOR acceptance of the recommended order.)
WHEN SALES TAX AUDITORS MAY NOT PICK AND CHOOSE RECORDS TO USE, published April 19, 2015, by Joseph C. Moffa, CPA, Esq.
S. Gail Force, LLC d/b/a Capital City Imports v. State of Florida, Department of Revenue, Case No: 15-000287 (Sec. 213.029, Fla. Stat.200% of tax personal liability assessment) Facts: Petitioner is in Chapter 11 Bankruptcy proceedings. Petitioner closed its Tallahassee motor vehicle dealership. Petitioner is claiming that the DOR spend 20-30 hours per week at Petitioner's Tallahassee business location, which caused disruption and loss of business to Petitioner.
East Coast Metal Decks, Inc. v. Department of Revenue, Case No: 15-002842 (Issue 1: The taxpayer provided numerous records to the first auditor, who left the DOR. Thereafter, a fire destroyed many records before a second auditor began working. The final assessment did not take into account the records reviewed by the first auditor, creating a substantial over assessment. Issue 2: The Notice of Proposed Assessment did not become final until 29 days after the end of the statute of limitations expired.)
the Law Offices of Moffa, Sutton, & Donnini, P.A. is a law firm dedicated to fighting the state of Florida on behalf of businesses, primarily in the area of sales and use tax controversy. With 7 attorneys and 2 former Florida Department of Revenue agents working out of 3 offices around Florida, our job is to understand when the Florida Department of Revenue is crossing the line and determine the best way to cost effectively fight back on behalf of business owners. If you believe your company or your client's company is being treated unfairly by the Florida Department of Revenue, then please pick up the phone now to take advantage of our free initial consolation policy.
About the author: Mr. Sutton is a Florida licensed CPA and Attorney and a shareholder in the law firm the Law Offices of Moffa, Sutton, & Donnini, P.A. Mr. Sutton's primary practice is Florida tax controversy, with an almost exclusive focus on Florida sales and use tax. Mr. Sutton worked for in the State and Local Tax department of one of the Big Five accounting firms for a number of years and has been an adjunct professor of law at Stetson University College of Law since 2002 teaching State and Local Tax and at Boston University College of Law since 2014 teaching Sales and Use Tax. Mr. Sutton is a frequent speaker on Florida sales and use taxes for the FICPA, Lorman Education, NBI, and the Florida Society of Accountants. Mr. Sutton is also co-author of CCH's Sales and Use Tax Treatise. You can contact Mr. Sutton at 813-775-2131 or JamesSutton@FloridaSalesTax.com or his firm bio.
ADDITIONAL RESOURCES
MIAMI-DADE PROPERTY TAX OWNERS TAKE ON TAX COLLECTOR, published April 11, 2015, by Amanda Levine, Esq.
FLORIDA DBPR ABT LOSES BLUNT WRAPS TAXABILITY CASE, published March 15, 2015, by Jerry Donnini, Esq.
2015 – FLORIDA BAR / DEPARTMENT OF REVENUE LIAISON MEETING, published January 17, 2015, by James Sutton, CPA, Esq.
TAXPAYER FORCED TO SIGN AWAY RIGHTS TO REMIT TAX?, published September 2, 2013, by James Sutton, CPA, Esq.
TAMPA BAY RAYS TAKE ON FLORIDA DEPARTMENT OF REVENUE, published June 24, 2013, by Jerry Donnini, Esq.