American Heritage Window Fashions, LLC v. Department of Revenue

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
AMERICAN HERITAGE WINDOW )
FASHIONS, LLC, )
)
Appellant, )
)
v. ) Case No. 2D14-3630
)
DEPARTMENT OF REVENUE, )
)
Appellee. )
___________________________________)
Opinion filed May 6, 2016.
Appeal from the Department of Revenue.
Joseph C. Moffa, Gerald J. Donnini, II, and
James F. McAuley of Moffa, Gainor, &
Sutton, P.A., Ft. Lauderdale, for Appellant.
Pamela Jo Bondi, Attorney General,
Tallahassee, and Kelly M. Behmke,
Assistant Attorney General, Tallahassee,
for Appellee.
SALARIO, Judge.
This is an appeal from the Florida Department of Revenue's dismissal of a
petition to review the denial of a tax refund. Section 72.011(2)(a), Florida Statutes
(2009), provides that an action to contest the assessment of certain taxes, including
those at issue here, must be brought within sixty days of the date the assessment
becomes final and also that an action to contest the denial of a refund of tax payments
must be brought within sixty days of the date the denial becomes final. American
Heritage Window Fashions, LLC filed an application for a tax refund and, after the
Department denied it, petitioned for review of that denial pursuant to chapter 120,
Florida Statutes (2014). The Department entered a final order dismissing the petition
because it concluded that although styled as a timely petition seeking review of a refund
denial, the petition actually was an untimely effort to contest a tax assessment made in
2010. We agree and affirm.
I.
American Heritage sells and installs plantation shutters. After conducting
an audit of American Heritage's sales tax remittances, the Department concluded that
American Heritage failed to collect and remit taxes on sales to wholesale customers as
required by chapter 212, Florida Statutes.1 On March 29, 2010, the Department served
American Heritage with a notice of proposed assessment requiring it to pay a tax
deficiency and interest in the total amount of $220,330.79. American Heritage takes the
view that the tax deficiency was improperly assessed because the sales taxes were to
be collected by its wholesale customers from ultimate consumers of the plantation
shutters. The underlying issue is whether the Department was right to conclude that the
shutters were fixtures within the meaning of a regulation governing tax on sales with
respect to real property improvements, a determination that "depends upon review of all
1The tax years at issue included 2005 through 2008.
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of the facts and circumstances of each situation." See Fla. Admin. Code R. 12A-
1.051(2)(c)(3).
The assessment notice informed American Heritage that it could file an
informal protest of the assessment no later than May 28, 2010. See Fla. Admin. Code
R. 12-6.003(1)(b) (providing a right to file an informal protest within sixty calendar days
of a notice of proposed assessment). If an informal protest was not timely filed, the
notice explained, the assessment would become final. The notice also informed
American Heritage that it could seek either administrative review under chapter 120 or
judicial review by filing a petition or complaint, as appropriate, no later than sixty days
after the assessment became final. See § 72.011(1)(a), (2)(a) (providing right to
administrative or judicial review and establishing time limit). With respect to the right to
seek administrative or judicial review, the notice explained that "Florida Statutes
mandate this [sixty-day] time limit and the Department cannot extend it."
American Heritage did not file an informal protest, administrative petition,
or civil complaint, and the Department began efforts to collect the assessment in late
2010. On May 10, 2011, the Department ordered a bank at which American Heritage
maintained an account to freeze all funds in that account until the assessment was
satisfied. American Heritage later agreed to release the funds in the bank account to
the Department, and the bank then transferred those funds to the Department. The
Department received $7507.58 from the bank on April 1, 2013, of which $6525.95 was
applied to the sales tax deficiency, roughly three percent of the assessed sum.
On July 10, 2013, American Heritage requested that the Department
refund the $6525.95 on the grounds that it was an audit overpayment. The Department
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denied the request on August 26, 2013, and American Heritage filed a written protest on
September 25, 2013. The protest stated that American Heritage sought "to appeal the
Notice of Proposed Assessment" rendered in March 2010 because it "believe[d] this
audit assessment to be in error." The protest argued at length that the plantation
shutters American Heritage sells are not fixtures and thus that American Heritage was
not required to collect tax on sales to wholesale customers. In a detailed written
decision, the Department rejected American Heritage's protest on the merits. That
action made final the Department's denial of American Heritage's refund application.
On April 7, 2014, American Heritage filed a petition for a chapter 120
hearing through which it sought to have the Division of Administrative Hearings (DOAH)
review the Department's denial of the refund request. The petition stated that "[t]his is a
controversy whereby the Department has denied a refund . . . by assessing tax on
transactions in which no tax is due" and that American Heritage sought a refund "for the
portion of the audit assessment that it paid."2
The Department responded by filing a motion asking DOAH to relinquish
jurisdiction. The Department argued that the petition was a challenge to the
Department's 2010 assessment of a sales tax deficiency and was, for that reason, time-
barred under section 72.011(2)(a) because it was not brought within sixty days of the
date the assessment became final. American Heritage responded that its petition was
2Although the petition is not clear, presumably American Heritage sought
review of agency action as described in sections 120.569(2)(a) and 120.57. The nature
of the relationship of the proceedings between the Department and DOAH is neither
established by the record and the briefs nor raised as an issue by the parties.
Accordingly, we do not address any issues that may be associated with the procedural
mechanisms employed at the agency level.
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not an action to contest the assessment of a tax, but rather was a challenge to a refund
denial and, as such, was permitted by section 72.011(2)(a) to be brought within sixty
days of the date the denial became final. DOAH granted the motion and relinquished
jurisdiction to the Department, which later entered a final order dismissing American
Heritage's petition on grounds that it lacked jurisdiction.
II.
On appeal, American Heritage argues that its chapter 120 petition timely
commenced proceedings to review the Department's denial of its refund application. It
observes that a taxpayer is authorized by statute to seek a tax refund when it has
overpaid a tax, paid a tax when no tax is due, or paid a tax in error. See § 215.26, Fla.
Stat. (2014). It characterizes the transfer from its bank account to the Department as all
three of those things and argues that its petition sought review of the Department's
denial of its application within sixty days of the date the denial became final. American
Heritage thus contends that the Department misinterpreted section 72.011(2)(a) by
characterizing the petition as a challenge to the 2010 assessment and dismissing it as
untimely.
There is no dispute about the underlying facts, and American Heritage's
argument is one of statutory construction. Because we may set aside an agency's final
order where the agency interprets the law wrongly and the right interpretation compels a
particular result, see § 120.68(7)(d), we consider de novo the issue of whether the
agency misinterpreted section 72.011 when it dismissed the petition. See M.H. v. Dep't
of Children & Family Servs., 977 So. 2d 755, 759 (Fla. 2d DCA 2008).
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Our consideration begins with the text of the statute. In relevant part,
section 72.011 provides as follows:
(1)(a) A taxpayer may contest the legality of any
assessment or denial of refund of tax, fee, surcharge, permit,
interest, or penalty provided for under . . . chapter 212 . . . by
filing an action in circuit court; or, alternatively, the taxpayer
may file a petition under the applicable provisions of chapter
120 . . . .
....
(2)(a) An action may not be brought to contest an
assessment of any tax, interest, or penalty assessed under a
section or chapter specified in subsection (1) more than 60
days after the assessment becomes final. An action may not
be brought to contest a denial of refund of any tax, interest,
or penalty paid under a section or chapter specified in
subsection (1) more than 60 days after the date the denial
becomes final.
....
(5) The requirements of subsections (1), (2), and (3) are
jurisdictional.
(Emphasis added.) Taken together, these subsections create a sixty-day jurisdictional
time limit within which an action brought to contest an assessment of a tax listed in
subsection (1)(a) or an action brought to contest a refund denial with respect to such a
tax must be commenced. In each instance, the time period runs from the date the
Department's action—the original assessment or the refund denial—becomes final.
Because the taxes here are governed by a chapter listed in subsection
(1)(a) of the statute, any action brought to contest an assessment or denial regarding
such a tax is subject to the jurisdictional time limits of subsection (2)(a).3 The issue we
3We note that subsection (1)(a) authorizes the bringing of "an action in the
circuit court" or "a petition under the applicable provisions of chapter 120," while the
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must decide is whether American Heritage's petition was brought to contest a tax
assessment, in which case it is time-barred because it was brought more than sixty
days after the 2010 assessment became final, or was brought to contest a refund
denial, in which case it is timely because it was brought within sixty days of the
date the Department's denial of the refund application became final. We conclude that
American Heritage's petition was brought to contest the assessment and is therefore
untimely.
There is no textual indication that the statutory phrase "brought to contest"
carries a specialized meaning, and we should therefore interpret it as the words would
be understood in ordinary, everyday discourse. See Donato v. Am. Tel. & Tel. Co., 767
So. 2d 1146, 1154 (Fla. 2000) ("[W]ords or phrases in a statute must be construed in
accordance with their common and ordinary meaning."). Where an infinitive phrase
(here, "to contest") is used as an adverb modifying a verb (here, "brought"), the infinitive
phrase is most often understood as conveying the purpose or reason for the action
expressed by the verb. See Kushell v. Dep't of Nat. Res., 870 A.2d 186, 194 (Md.
2005) ("Where an infinitive phrase is used as an adverb, speakers of English normally
will understand it to convey purpose."); see also Mark Lester & Larry Beason, The
McGraw-Hill Handbook of English Grammar and Usage, 107 (2d ed. 2013) (explaining
that "[a]dverb infinitive phrases . . . answer adverb questions (especially why
questions)"). Describing an "action brought to contest an assessment" is thus akin to
time limits proscribed by subsection (2)(a) apply to "an action" to contest an assessment
or refund denial. The parties here have assumed that "a petition" under subsection
(1)(a) is "an action" within the meaning of subsection (2)(a). We express no opinion on
that issue.
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describing a "truck used to carry equipment" or a "book read to pass time." The
infinitive phrase in each example expresses a reason for the action the verb connotes:
"To carry" means "in order to carry," "to pass" means "in order to pass," and "to contest"
means "in order to contest." See Lester & Beason, supra at 107 ("A particularly easy
and reliable test for adverb infinitive phrases is to put in order in front of the
infinitive. . . ."). In ordinary discourse, then, an action is "brought to contest an
assessment" of a tax when it is brought in order to contest that assessment—i.e., for the
purpose of disputing that assessment.
In this case, we know that American Heritage's petition was brought for
the purpose of disputing the 2010 assessment because American Heritage has been
explicit about that purpose. When it protested the Department's initial denial of its
refund application, American Heritage explained that its purpose was "to appeal the
Notice of Proposed Assessment" because it believed that the deficiency assessment
was made in error and that "no balance should be outstanding as a liability." The
petition confirmed this purpose by stating that the parties' dispute was over the
Department "assessing tax on transactions in which no tax is due." American Heritage's
response to the Department's motion to relinquish jurisdiction explained that it needed
the refund proceedings to challenge the validity of the assessment because it
"mistakenly missed the assessment appeals deadlines." In American Heritage's own
words, the assessment was the raison d'être for both its application for a refund and,
later, for its petition under chapter 120.
Moreover, it cannot reasonably be said that the purpose or reason for the
petition was to contest the denial of a refund. American Heritage paid three percent of a
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final tax assessment, which it did with funds from a bank account the Department had
frozen. It then pursued a refund on grounds that any payment of the assessment was
refundable and explicitly sought a determination that the assessment was invalid in its
entirety. On the face of it, the refund application and subsequent petition were not
brought in order to secure the return of the three percent American Heritage paid; they
were brought to obtain a determination absolving it of any liability to pay the ninety-
seven percent that it did not. Put differently, although the petition takes the form of one
seeking review of refund denial, it has been brought for the purpose of contesting the
underlying tax assessment. American Heritage's argument that its petition should be
regarded as having been brought to contest a refund denial as distinguished from a tax
assessment is thus inconsistent with the plain meaning of the phrase "brought to
contest" as applied to its operation on its object, in this case a refund denial. Labeling
an action brought to contest an assessment as one brought to contest a refund denial
does not change its purpose as an action brought to contest an assessment.
American Heritage's argument that we should interpret the statute
differently, if accepted, would place section 72.011(2)(a)'s separate time limitations for
assessment and refund contests in conflict. See Woodham v. Blue Cross & Blue Shield
of Fla., Inc., 829 So. 2d 891, 898 (Fla. 2002) ("[R]elated statutory provisions must be
read together to achieve a consistent whole, and . . . '[w]here possible, courts must give
full effect to all statutory provisions and construe related statutory provisions in harmony
with one another.' " (second alteration in the original) (citations omitted) (quoting
Forsythe v. Longboat Key Beach Erosion Control Dist., 604 So. 2d 452, 455 (Fla.
1992))); B.R. v. State, 145 So. 3d 196, 198 (Fla. 2d DCA 2014) (same). Interpreting
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section 72.011(2)(a) to allow a taxpayer to mount an untimely action to contest a tax
assessment through a petition to review a refund denial under circumstances like those
here would render the statute's sixty-day limitation on actions brought to contest tax
assessments meaningless. The sixty-day period would not serve as a limitation on
assessment contests at all; the taxpayer could always wait months or years after the
assessment becomes final—perhaps until the Department takes coercive action to
obtain payment of the assessment—pay a small fraction of the assessed tax, seek a
refund on grounds that the tax was unlawfully assessed, and then attempt to invalidate
the entire assessment by seeking administrative or judicial review of any denial of that
refund within sixty days of the date the denial becomes final. Read as American
Heritage urges, the limitation on assessment contests means only that a taxpayer may
not file a document formally called a "Petition to Contest Tax Assessment" more than
sixty days after the assessment becomes final, but it may in substance directly and
explicitly contest the assessment through a refund application without having paid the
tax in any material amount.
This type of outcome would be problematic with any statute—the
legislature means for statutes it adopts to be effective—but it is especially so here. In
this statute, the legislature has not merely specified a time limit within which actions
brought to contest tax assessments must be brought; it has stated that the time limit is
jurisdictional. § 72.011(5). This is the language of a jurisdictional statute of nonclaim.
See Markham v. Neptune Hollywood Beach Club, 527 So. 2d 814, 816 (Fla. 1988)
(holding that analogous language in section 194.171, Florida Statutes, setting time
limitations for actions contesting property tax assessments was "a jurisdictional statute
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of nonclaim"). Such a statute "automatically bars untimely claims and is not subject to
waiver or extension," May v. Ill. Nat'l Ins. Co., 771 So. 2d 1143, 1157 (Fla. 2000), and
operates as a divestiture of jurisdiction to hear a claim, Taylor v. City of Lake Worth, 964
So. 2d 243, 244 (Fla. 4th DCA 2007). In section 72.011(2)(a), then, the legislature
established an absolute rule that assessment contests must be brought within sixty
days of finality. Interpreting the separate statutory provision governing contests of
refund denials to permit untimely challenges to tax assessments places the provision of
the statute setting a jurisdictional time limit for refund contests in conflict with the
provision of the statute setting a jurisdictional time limit for assessment contests. In
contrast, interpreting the statute as we have allows both jurisdictional time periods in
section 72.011(2)(a) to have effect and to function harmoniously. 4
Relying on Newsweek, Inc. v. Florida Department of Revenue, 522 U.S.
442 (1998), American Heritage asserts, for the first time on appeal, that denying it a
remedy after it has paid a portion of the tax assessed denies it procedural due process.
This unpreserved argument was not presented to DOAH or the Department, and
4We disagree with American Heritage that the First District's decision in
Pogge v. Department of Revenue, 703 So. 2d 523 (Fla. 1st DCA 1997), requires a
different outcome. Pogge interpreted an earlier version of the statute that established a
sixty-day time limit for assessment challenges and provided that the statute was "not
applicable to actions for refund of taxes previously paid." Id. at 526. In holding that the
circuit court had jurisdiction over a civil action contesting the denial of a refund of taxes
that should never have been assessed, the First District relied heavily on that language.
Unlike Pogge, we now interpret a statute that sets a time limit for actions brought to
contest an assessment and a separate time limit for actions brought to contest a refund
denial, and we conclude, as set forth in this opinion, that this action does not contest the
denial of a refund and only contests matters related to the original assessment.
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American Heritage cannot raise it for the first time on appeal.5 See Fowler v. Dep't of
Health, Bd. of Optometry, 821 So. 2d 1246, 1248 (Fla. 1st DCA 2002).
Even if the argument had been preserved, however, Newsweek does not
apply here. In that case, Newsweek paid sales tax on magazine sales as they came
due. Newsweek, 522 U.S. at 443. After it paid the taxes, our supreme court rendered a
decision holding that a statute that exempted newspapers, but not magazines, from
paying sales tax violated the First Amendment. Id. at 442. Based on that decision,
Newsweek applied for a refund, which the Department denied. Id. at 443. Judicial relief
through an action seeking review was filed. Ultimately, the First District held that
Newsweek had a prospective, prepayment remedy to challenge the constitutionality—it
could have filed a lawsuit and deposited the disputed tax in the court registry, see
§ 72.011(1), (3)—and that due process therefore did not require that it also have a
retrospective, postpayment refund action. Id. (citing Newsweek, Inc. v. Dep't of
Revenue, 689 So. 2d 361, 363-64 (Fla. 1st DCA 1997)).
The United States Supreme Court vacated the judgment because
Newsweek "reasonably relied on the apparent availability of a postpayment refund when
paying the tax." Id. at 445. It explained that "[u]nder Florida law, there was a
longstanding practice of permitting taxpayers to seek refunds . . . for taxes paid under
an unconstitutional statute." Id. at 444. Indeed, "[a]t Florida's urging, federal courts
have dismissed taxpayer challenges, including constitutional challenges, because [the
refund statute] appeared to provide an adequate postpayment remedy for refunds." Id.
5American Heritage does not argue fundamental error, and we do not see
it in the circumstances of this case.
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The Court held that Florida could constitutionally maintain "an exclusively predeprivation
remedial scheme" but that it would deny Newsweek due process to "hold[] out what
plainly appears to be a 'clear and certain' postdeprivation remedy and then declare, only
after the disputed taxes have been paid, that no such remedy exists." Id. (quoting Reich
v. Collins, 513 U.S. 106, 110-11 (1994)).
In sum, the First District in Newsweek went astray by holding that any
legal challenge to the validity of a taxing statute had to be brought prepayment or was
lost, when Florida law in fact provided a clear and certain postpayment remedy for such
claims in circumstances where the tax scheme was subsequently determined to be
unconstitutional. This case does not present that kind of problem. To begin with, it
does not involve a tax paid under a statute that was deemed invalid only after the
taxpayer paid it. It involves a taxpayer's assertion that the Department incorrectly
determined on the facts that a particular transaction was subject to tax, which was
known to or knowable by American Heritage at the time the tax was assessed.
American Heritage thus had notice of the basis for a dispute about that tax prior to
payment in a way that a taxpayer who pays a tax under a statute that is later
determined to be invalid does not.
Moreover, it cannot be said that Florida held out a clear and certain
postpayment remedy for the kind of dispute American Heritage seeks to have decided.
The assessment dispute in this case was subject to an explicit statutory limitation that it
may not be brought "more than 60 days after the date the assessment becomes final."
§ 72.011(2)(a). The Department notified American Heritage of this time limitation when
it assessed the tax and explained that the deadline was statutory and not subject to
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extension. Unlike the bait and switch that concerned the Court in Newsweek, 522 U.S.
at 444, the statute and the notice provided to American Heritage here are inconsistent
with any expectation of a clear and certain postpayment remedy for claims brought to
contest tax assessments.
Finally, this does not appear to be a case in which American Heritage
"reasonably relied on the apparent availability of a postpayment refund when paying the
tax." Id. at 445. Newsweek paid its taxes in full and sought a refund after the tax was
deemed unconstitutional. American Heritage paid only three percent of the tax and then
made a refund application for the stated purpose of appealing the assessment after it
had missed the deadline for doing so before the tax came due. In other words,
American Heritage understood that any action to contest the assessment was time-
barred and paid a small part of the tax to attempt a backdoor review of the assessment
after the time-bar by seeking review of the denial of the token amount of refund paid.
That looks like an expectation that a postpayment remedy would not be available rather
than reliance on the availability of such a remedy.
III.
American Heritage's petition under chapter 120 was brought for the
purpose of contesting a deficiency assessment more than sixty days after it became
final. The Department correctly determined that the challenge was untimely, and
American Heritage's assertion that it was denied procedural due process is both
unpreserved and without merit. The Department's final order is affirmed.
Affirmed.
SILBERMAN and MORRIS, JJ., Concur.
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