Beyond Fighting an Beyond Fighting an Assessment: Assessment: Alternative Alternative Challenges Challenges to to State State and Local Tax Disputes Tax Disputes and Local By: Jeanette By: Jeanette Moffa Moffa and Jerry Donnini and Jerry Donnini
Speakers Speakers Jeanette Moffa is an Jerry Donnini is a partner at associate at Moffa, Moffa, Sutton, & Donnini, P.A. Sutton, & Donnini, P.A. and adjunct professor at Nova and adjunct professor at Southeastern University. He Broward College. She focuses on multistate and focuses on multistate Florida state and local tax. and Florida state and Jerry has brought a variety of local tax. administrative law rule challenges against state agencies in defense of Florida taxpayers. www.FloridaSalesTax.com
Traditional Assessment Traditional Assessment Challenge Challenge
Traditional Assessment Traditional Assessment Challenge Challenge 60 60-120 days to initiate 120 days to initiate audit audit Generally issue DR Generally issue DR-1215 within 1215 within 9 months 9 months 30 days after DR 30 days after DR-1215 to i 1215 to issue ssue Noti Notice ce of Proposed Assessment of Proposed Assessment 60 days after for Assessment to be fi 60 days after for Assessment to be final nal
Traditional Assessment Traditional Assessment Challenge Challenge
Traditional Assessment Challenge Traditional Assessment Challenge DR DR-1215 or DR 1215 or DR-1216 ( 1216 (Desk Audit) Desk Audit) 30 days to request conference 30 days to request conference – generally flexible generally flexible Penalties Penalties usually waived usually waived if first time under audit if first time under audit In Interest terest abated abated accordingly accordingly
Traditional Assessment Traditional Assessment Challenge Challenge
Traditional Assessment Challenge Traditional Assessment Challenge - NOPA NOPA 60 Days until 60 Days until Final Final Statute of Li Statute of Limi mitations tations & & Verizon Verizon In Informal formal Protest, Protest, Administrative Administrative Hearing, Hearing, and Judicial Hearing and Judicial Hearing options options In Informal formal Protest most common Protest most common
Traditional Assessment Traditional Assessment Challenge Challenge
Traditional Assessment Traditional Assessment Challenge Challenge - NOD NOD 30 Days to File 30 Days to File Petition Petition for Reconsideration for Reconsideration 60 Days to File 60 Days to File Petition Petition for Chapter for Chapter 120 Hearing 120 Hearing (D (DOAH) OAH) Recommended Recommended Order; Order; In Informal formal & Fast; Less Expensi & Fast; Less Expensive ve 60 Days to File 60 Days to File in in Court Court Bi Bindi nding ng Order; Lengthy; “Pay to Play” Order; Lengthy; “Pay to Play”
Identifying a Rule Identifying a Rule What is a rule? What is a rule? ““Rule” means each agency statement of general appli ““Rule” means each agency statement of general applicability cability that i that implements, i mplements, interprets, or nterprets, or prescri prescribes law bes law or poli or policy cy or descri or describes the procedure or practi bes the procedure or practice requi ce requirements of an agency and rements of an agency and in includes cludes any form which any form which im imposes poses any requi any requirement or soli rement or solici cits ts any i any informati nformation on not speci not specifi fically cally requi required by statute or by an exi red by statute or by an existing sting rule…” 120.52(16), rule…” 120.52(16), F.S. F.S.
Identifying a Rule Identifying a Rule How does a rule come to be? 120.54( How does a rule come to be? 120.54(3), 3), F F.S. .S. Must gi Must give ve noti notice ce Consi Consider speci der special al matters matters Will it have an adverse Will it have an adverse impact on small impact on small businesses? businesses? Publi Public heari hearing ng opti option on for affected persons for affected persons OR Emergency Rule procedures can be followed OR Emergency Rule procedures can be followed pursuant to 120.54(4), pursuant to 120.54(4), F.S. F.S.
Identifying a Rule Identifying a Rule Finding Finding a Rule in an Assessment a Rule in an Assessment Explicitly Explicitly Stated Stated Im Implied plied - Basi Basis for I for Identi dentifyi fying ng a Taxable a Taxable Transacti Transaction on Why is this taxable? Why is this taxable? Im Implied plied - Methodology for Calculati Methodology for Calculating an ng an Assessment Assessment How is the total tax calculated? How is the total tax calculated?
Challenging Rules Challenging Rules How are rules challenged? How are rules challenged? 120.56, 120.56, F F.S. .S. Peti Petiti tioner oner must have standi must have standing ng Typi Typically cally challenged for thei challenged for their valid validit ity Is Is i it inconsistent with the statute? t inconsistent with the statute? Is Is i it outside the scope of the statute? t outside the scope of the statute?
Challenging Rules Challenging Rules What is an What is an unadopted unadopted rule? 120.52( rule? 120.52(20), 20), F F.S. .S. “ “Unadopted Unadopted rule” means an agency statement that meets the defi rule” means an agency statement that meets the defini niti tion on of the term “rule,” but of the term “rule,” but that has not been adopted pursuant to the requi that has not been adopted pursuant to the requirements of s. 120.54. rements of s. 120.54. General applicability, prescri General applicability, prescribes law bes law or poli or policy, not adopted pursuant to the proper admi cy, not adopted pursuant to the proper admini nistrati strative ve law law procedures procedures
Case Study Case Study – Florida Bee Distribution, Inc. Florida Bee Distribution, Inc. v. v. Dep’t of Bus. & Dep’t of Bus. & Prof’l Prof’l Reg., Reg., CASE NO. CASE NO. 1D16 1D16-1064 (Fla. 1st DCA 2016). 1064 (Fla. 1st DCA 2016). Taxable Taxable Base of Wholesale Base of Wholesale Tobacco Tobacco Products Products (Wholesale Sales Pri (Wholesale Sales Price + Federal Exci ce + Federal Excise se Tax) x Tax) x OTP Tax OTP Tax Mi Micjo cjo Wholesale Sales Pri Wholesale Sales Price ce when Separately Stated when Separately Stated Wholesale Sales Pri Wholesale Sales Price ce when Forei when Foreign Manufactured gn Manufactured
Case Study Case Study – – Florida Bee Florida Bee 210.25(13), F.S. 210.25(13), F.S. defined* the taxable base of tobacco product tax as follows: defined* the taxable base of tobacco product tax as follows: “Wholesale “Wholesale sales price” sales price” means the established means the established price for which price for which a manufacturer sells a manufacturer sells a tobacco product to a distributor, exclusive of any diminution tobacco product to a distributor, exclusive of any diminution by volume by volume or other discounts. or other discounts. *the law has since been changed in subsection (14) *the law has since been changed in subsection (14) to: to: “Wholesale sales price” means the sum of: “Wholesale sales price” means the sum of: (a (a) The full price paid by The full price paid by the the distributor to distributor to acquire the tobacco products, acquire the tobacco products, including charges by including charges by the seller for the cost of the seller for the cost of materials, materials, the cost of labor and service, charges for transportation the cost of labor and service, charges for transportation and delivery and delivery, the the federal excise tax, federal excise tax, and any and any other other char charge, ge, even if the charge is listed as a separate item even if the charge is listed as a separate item on the on the invoice paid by invoice paid by the the distributor, distributor, exclusive of any exclusive of any diminution diminution by by volume volume or or other other discounts, discounts, including a discount provided to a distributor including a discount provided to a distributor by by a an affiliate; n affiliate; and and (b (b) The federal excise tax paid by The federal excise tax paid by the distributor the distributor on the on the tobacco products if the tobacco products if the tax is not tax is not included in the included in the full full price under price under paragraph ( paragraph (a). a).
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