Could a sublessee recover sales tax paid on potentially exempt concession lease payments from 1983 through 1988 when the refund claim came years later?

Plain-English summary

Florida denied the refund because the claim was filed outside the applicable three-year deadline, even though the lease payments may not have been taxable.

The requester had paid sales tax from July 1983 through June 1988 as the sublessee of a motel, restaurant, and lounge. The requester later learned of another Department advisement applying section 212.031(1)(a)10. to exempt food-and-drink concession lease payments at a publicly owned recreational facility, including qualifying subleases.

Section 215.26 allowed refunds for overpayments, tax paid when none was due, or payments made in error. But for these older payments, the application had to be filed within three years after the refund right accrued, measured from the date the tax was paid. The five-year period enacted later applied only to tax paid after September 30, 1994.

The Department treated section 215.26 as a nonclaim statute. Missing its deadline extinguished the refund right in law and equity, so the Department had to deny the claim regardless of whether the original tax collection was mistaken.

What this means for you

Businesses discovering old tax overpayments

Potential exemption on the merits does not preserve a refund indefinitely. Identify the payment dates and submit the claim within the statute's applicable period.

Lessors, lessees, and concession operators

Review rental exemptions when payments begin rather than years later. The ruling recognized that the described concession lease may have been exempt but still denied recovery because of timing.

Accountants and tax professionals

Separate the substantive tax question from the procedural refund deadline. A strong merits argument cannot overcome a nonclaim statute once the filing period expires.

Common questions

Q: Did the Department conclusively say the old lease payments were taxable?
A: No. It said they may not have been taxable under the concession exclusion.

Q: Why was the refund denied?
A: The requester did not file within three years after paying the tax.

Q: When did the refund period begin?
A: When each tax payment was made.

Q: Did a five-year refund period help?
A: No. The ruling said that amendment applied only to tax paid after September 30, 1994, while these payments were made from 1983 through 1988.

Q: Could equity overcome the missed deadline?
A: No. The cited Florida Supreme Court authority treated the deadline as an effective bar in law and equity.

Q: Can another taxpayer rely on this TAA?
A: Not automatically. The advisement states that it binds the Department only under the facts and circumstances described in the request, and later legal changes or judicial interpretations may produce a different result.

Citations and references

• Fla. Stat. § 212.031(1)(a)10. — food-and-drink concession lease exclusion
• Fla. Stat. § 215.26(1), (2) — refunds and filing deadline
• State ex rel. Tampa Electric Co. v. Gay, 40 So. 2d 225 (Fla. 1949)
• State ex rel. Victor Chemical Works v. Gay, 74 So. 2d 560 (Fla. 1954)
• E.W. Wright v. Reynolds Fasteners, Inc., 184 So. 2d 699 (Fla. 3d DCA 1966)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96A-055

Original ruling text

Nov 22, 1996

Re: Technical Assistance Advisement 96A-055
Refund of Sales Tax Denied as Out of Statute

Sections 212.031(1)(a)10., 215.26, F.S.

Dear:

This is a response, styled a Technical Assistance Advisement, to
your letter dated June 27, 1996, in which you request a refund

of sales taxes paid by you for the right to occupy and use real
property as a sublessee of such property owned by the XXX during
the period July 1, 1983 through June 30, 1988. You attached a
copy of a document bearing the XXX (herein Lease), executed July
1, 1983, in which XXX is named as lessee/sublessor, and yourself
as sublessee of the premises described in the document as a

motel, restaurant, and lounge of the XXXX.

You state in your letter that it is your belief that Florida

sales tax "... was wrongly collected from my former business."

You further allege that you were informed that sales tax was
imposed on the payments made by you under the Lease. You state
that "| have cancelled checks to show that | paid the lease
payments and Sales Tax to XXXX monthly, which he paid to the
XXX."

It appears that you first learned that sales tax may have been
erroneously paid to the State at a meeting of the XXXX on June

7, 1995. During this event you read Technical Assistance
Advisement 92A-082, issued by the Department, which held that a
lessee of a municipally owned restaurant which served food and
drink located on a municipally owned golf course was not
obligated to remit sales tax on the lease payments made by the
lessee to the municipality. An especial note is made that this

exemption also applies to sublesses.

Evidently, the discovery of this Department communication

prompted you to write a letter to the Finance Department of the

XXXX dated September 15, 1995, in which you cited Technical
Assistance Advisement 92A-082 and stated on page 2 that"...

sales tax should be refunded to us."

Department Response

Technical Assistance Advisement 92A-082 (herein TAA 92A-082),
which you cite in your letters to the Department, and to the
Finance Department of the XXXX, correctly applies the provisions
of s. 212.031(1)(a)10., F.S., to the payments made by a lessee

of a municipally owned golf club in the instance when such

lessee is providing food and drink concession services within

the facility.

Section 212.031(1)(a)10., F.S., excludes the lessor from the
taxable privilege of engaging in the lease of real property when
such property is leased "... to a person providing food and
drink concessionaire services within the premises of... a

publicly owned ... recreational facility."

In TAA 92A-082 the Department conceded that such a municipally
owned golf course was a recreational facility, and that the
operation of a restaurant represented the provision of food and
drink concessionaire services. Thus, applying the provisions of

s. 212.031(1)(a)10., F.S., to the facts, the Department

concluded that lease payments made by the operator of the
restaurant, as a lessee of a municipally owned golf course, were

not subject to sales or use tax.

Notwithstanding that the lease payments made by you to XXX may
not have been subject to sales tax, a refund of sales tax paid
by you for the period July 1, 1983 through June 30, 1988, is

barred by the statute of limitations.

Section 215.26, F.S., reads, in pertinent part, in subsection

(1) as follows:

The Comptroller of the state may refund to the person who
paid same, or his or her heirs, personal representatives,
or assigns, any moneys paid into the State Treasury which

constitute:

(a) An over payment of any tax, license, or account due;
(b) A payment where no tax, license, or account is due, and

(c) Any payment made into the State Treasury in error...

Albeit you may have paid the tax when no tax was due as provided
in (1)(b), the statute also provides in part, in subsection (2),

that:

[a]pplication for refunds as provided by this section must
be filed with the Comptroller, except as otherwise provided
in this subsection, within 3 years after the right to the

refund has accrued or else the right is barred.

This subsection was amended to provide for a filing of the
application within 5 years after the right to a refund has
accrued, but this amendment only is pertinent to tax paid after
September 30, 1994. Thus, considering your facts, the

limitation period is 3 years.

The general rule in interpreting s. 215.26, F.S., is that a

claim for refund must be made within the time following the
accrual of the right to the refund and that the time period
begins when the tax is paid. The Florida Supreme Court has
considered this question in State ex rel. Tampa Electric Co. v.
Gay, 40 So.2d 225 (Fla. 1949), and in State ex rel. Victor
Chemical Works v. Gay, 74 So.2d 560 (Fla. 1954).

In the latter case, the Court established that the statute, s.
215.26, F.S., is one designated as a "non-claim" statute which
means that if a refund claim has not been filed within the 3
years after the tax has been paid, as required by the statute,

the right to the refund is barred. State ex rel. Victor Chemical

Works, at 562. The Court stated that "[a] refund is a matter of
grace and if the statute of non-claim is not complied with, the
statute becomes an effective bar in law and in equity." State ex

rel. Victor Chemical Works, at 562.

With respect to transactions which are not subject to tax, but
on which tax was remitted, the parties in E.W. Wright v.

Reynolds Fasteners, Inc., 184 So.2d 699, 700 (Fla. 3DCA 1966)

agreed "... that the property involved in this cause was immune
from taxation ....". Nonetheless, the court held that if the
provisions of s. 215.26, F.S., are not satisfied, a denial of

the refund is required.

Consequently, the refund of sales tax paid to your lessor, XXX,
by you as the sublessee of the motel, restaurant, and lounge of
the XXX for the period July 1, 1983 through June 30, 1988, when
you initially notified the Department of this fact in your

letter dated July 27, 1996, must be denied as not in compliance

with s. 215.26, Florida Statutes.

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 the confidentiality

of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the

request or the response.

Sincerely,

Robert G. Parsons

Tax Law Specialist

Tax Policy and Dispute Resolution

Ctrl. No. 25930