Who bore aviation-fuel tax penalties and interest when a Florida refiner failed to collect tax from a licensed importer?

Plain-English summary

The refiner was responsible for collecting and remitting the aviation-fuel tax and therefore faced applicable penalties and interest on the unpaid tax.

The refiner sold fuel without separately charging the stated 6.9-cent-per-gallon tax. Florida law required the refiner to collect that tax from the customer and remit it to the Department.

The ruling did not clear the importer of every issue. It said the importer remained responsible for monthly aviation-fuel reports, had delayed notifying the refiner and Department, and was operating under an importer license that did not authorize its in-state purchase-and-resale activity. That activity required an appropriate Florida jobber or wholesaler license.

The Department expressly limited its advice to statutory collection and remittance duties and did not decide any private agreement between the importer and refiner.

What this means for you

Collection liability, return-filing duties, and licensing were separate. The refiner's failure to collect did not erase the importer's own reporting and business-authorization problems.

Common questions

Q: Who had to collect the aviation-fuel tax?
A: The refiner making the first taxable sale or removal.

Q: Who faced penalties and interest on the uncollected tax?
A: The ruling placed applicable unpaid-tax penalties and interest on the refiner.

Q: Did the importer still have filing duties?
A: Yes. Monthly reports were required even when no tax was due.

Q: Was the importer's license sufficient for its Florida activity?
A: No. The ruling said the described in-state activity required a jobber or wholesaler license.

Citations and references

• Fla. Stat. §§ 206.23 and 206.9835 — fuel-tax invoicing and administration
• Fla. Stat. §§ 206.10 and 206.44 — monthly reports and failure penalties
• Fla. Stat. § 206.01 — importer definition
• Fla. Stat. § 213.29 — willful failure penalty
• Fla. Admin. Code r. 12B-5.203(1) — aviation-fuel tax point and rate
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95B5-001

Original ruling text

TAA 95B5001
[[May 4, 1995]]

Re:Technical Assistance Advisement No. 95(B)5-001
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XXXX (hereinafter called "Importer")
XXX (hereinafter called "Refiner")
Dear :
Your request for a Technical Assistance Advisement (TAA) for "Importer" has been forwarded to this office for response. FACTS AS PRESENTED 1.Importer bought aviation fuel from Refiner during the period between October 1993 and December 1994. 2.Importer failed to file Aviation Fuel Tax Returns (DR119AV) during the period stated. 3.Refiner failed to collect aviation fuel tax from Importer on all sales during the period. 5.Refiner's invoices (submitted with your request) show omission of the $.069 aviation fuel tax. 6.Importer requested Refiner to charge the $.069 aviation fuel tax throughout 1994. 7.Suggestion was made in December 1994 that Importer pay tax to the State for the delinquent period, and that Refiner would begin collecting the tax effective January 1, 1995. 8.Importer's Chief Tax Consultant disagreed with the suggestion in #7 above based on a belief that Importer would be sharing Refiner's tax burden and its applicable penalty and interest charges. 9.Importer takes the position that Refiner was required to collect the tax from Importer, and that the tax collected by Refiner was required to be remitted to the state. 10.Advice is sought on whether Importer may pay the uncollected tax to the Refiner, and if so, is Importer released from the assessment of penalty and interest charges on the unpaid tax to the state? DISCUSSION OF FACTS Advice is given solely from the point of where tax is imposed, and requirements for the collection and remittance of the tax. Advice is not being given regarding any agreement(s) made between Refiner and Importer regarding the payment of the tax to the state. Rule 12B-5.203(1), Florida Administrative Code, provides: "An excise or license tax of 6.9 cents per gallon is imposed upon the first sale or first removal of fuel from storage after importation into this state. For the purpose of this paragraph, the term first sale does not include exchanges or loans, gallon-for-gallon, of aviation fuel between licensed refiners before the fuel has been sold or removed through the

loading rack or transfers between terminal facilities owned or leased by the same refiner. Removal from storage through the loading rack is not considered to have been completed until product has come to rest in the receiving tank of a transport truck or railroad car..." Section 206.23, Florida Statutes, provides further: "Any person engaged in selling motor fuel shall add the amount of the gas tax to the price of the motor fuel sold by him and shall state the tax separately from the price of the motor fuel on all invoices. However, this section shall not apply to retail sales by a retail service station." Additionally, section 206.9835, Florida Statutes, states: "To the extent that they are not manifestly incompatible with the provisions of this part, the provisions of part I shall govern the administration and enforcement of the tax imposed by this part." The provisions of the Florida Statutes and the Florida Administrative Code listed above collectively: 1)impose a tax at the rate of 6.9 cents per gallon on refiners when the fuel is either first sold or removed from storage in this state; 2)require a refiner to collect tax from a customer, and include the tax collected as a separate line item on the sales invoice; 3)provide that the administration and enforcement of the tax on aviation fuel are governed in the same manner as the sale of motor fuel in this state. Regarding the issue of Importer's failure to file returns during the stated period, s. 206.10, F.S., states: "All statements or reports required by part I or part II of this chapter and the gas tax laws of this state to be made to the department monthly shall be filed each month, regardless of whether or not a gas tax is due under the provisions of the laws of Florida." Both Refiner's and Importer's failure to file required reports are subject to a penalty that is assessed under s. 206.44, F.S., which states in pertinent part: "(1) If any refiner, importer, or wholesaler fails to make a report or pay the taxes due as required by this chapter, the department shall add a penalty in the amount of 10 percent of any unpaid tax if the failure is for not more than 1 month, with an additional 10 percent of any unpaid tax for each additional month or fraction thereof during which the failure continues. However, such penalty may not exceed 50 percent in the aggregate of any unpaid tax. Furthermore, in no event may the penalty assessed be less than $10." RESPONSE Though your basic question is whether Importer can pay Refiner taxes that were not collected during the period between October 1993 and December 1994, without Importer being assessed penalty and interest, there are a couple

of issues on which you do not seek advice, but which must be mentioned in this response. First, the two memorandums you submitted to provide documentation of Importer's attempt to notify Refiner to collect tax from Importer are dated September 12, 1994, and October 19, 1994. These documents tend to support a position that Importer, though aware that tax was not being collected, did not actually notify Refiner until approximately eleven months after the first sale occurred. Importer, additionally, did not notify the Department of the fact that tax was not being collected by Refiner until March 2, 1995. Secondly, Importer is validly licensed as an importer of aviation fuel in this state. Section 206.01, F.S., defines importer to mean: "any person with no business location in this state who imports motor fuel into this state or exports motor fuel out of this state and who holds a valid importer of motor fuel license." An importer's license does not grant the license holder the authority to purchase fuel in Florida for sale to customers in this state. Additionally, Importer is neither importing fuel into, nor exporting fuel from the state. Importer is engaging exclusively in a business activity where Importer purchases fuel from Refiner in this state, and where such fuel is picked up by common carrier contracted by Importer, and delivered to Florida customers. This business activity is allowed for Florida businesses only, and is supported by Florida Statutes only when the person engaging in such activity has a business location in this state and is licensed as either a jobber or wholesaler. Thirdly, during the period where tax was not collected by Refiner, Importer failed to file returns in this state. Also during this period, Importer was aware that tax was not being paid, and retained the use of funds that were actually due the State of Florida. The state was deprived of the use of its funds during the period where Refiner failed to collect and remit tax, and where Importer was aware of, but failed to notify the state that tax was not being remitted. Section 213.29, F.S., provides that: "Any person who is required to collect, [emphasis] truthfully account for, and pay over any tax enumerated in chapter 201, chapter 206, chapter 212, s. 336.021, s. 336.025, or s. 336.026 and who willfully fails to collect such tax or truthfully account for and pay over such tax or willfully attempts in any manner to evade or defeat such tax or the payment thereof; or any officer or director of a corporation who has administrative control over the collection and payment of such tax and who willfully directs any employee of the corporation to fail to collect or pay over, evade, defeat, or truthfully account for such tax shall, in addition to other penalties provided by law, be liable to a penalty equal to twice the total amount of the tax evaded or not accounted for or paid over." [emphasis supplied] We reservedly agree with the statement in your letter that, "we were both in agreement that Importer was responsible for filing its monthly aviation tax reports and that Refiner was responsible for collecting the $.069 tax from Importer upon sale of the fuel and for remitting the aviation fuel tax to the State of Florida." Chapter 206, Florida Statutes, requires that Refiner must collect aviation fuel tax from customers when fuel is first sold or removed from storage in this state. The tax collected must then be remitted to the Department of Revenue.

Reservation is taken regarding the length of time taken by Importer in notifying both Refiner and the state that tax was not paid to either the state or the Refiner by Importer. Because Refiner was required to collect the aviation fuel tax from Importer and remit the tax to the state during the period stated, Refiner is then subject to all applicable penalties and interest on the unpaid tax. This response constitutes a technical assistance advisement under s. 213.22, F.S., which is binding on the department only under the facts and circumstances described in the request for this advice as specified in s. 213.22, F.S. Our response is predicated on those facts and the specific situation summarized above. You are advised that subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules upon which this advice is based may subject similar future transactions to a different treatment than expressed in this response. You are further advised that this response and your request are public records under Chapter 119, F.S., which are subject to disclosure to the public under the conditions of s. 213.22, F.S. Your name, address, and any other details which might lead to identification of the taxpayer must be deleted by the department before disclosure. In an effort to protect confidential information, we request you notify the undersigned in writing within 15 days of any deletions you wish made to the request or this response. Sincerely,

Lynwood Taylor
Tax Audit Specialist III
Division of Taxpayer Assistance
Technical Assistance Section B
LNT/kk
Control No. 20181