Ford Motor Co. v. Florida Department of Revenue, 2011CA2411
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W TH E CIRCUIT COURT OF TH THE E CIRCU CUIT IT W AN D SECOND JUDI CIAL CIR FOR LEON COUNTY, FLORIDA CASE NO.:
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DIVISION: FORD MOTOR FORD MOTOR COMPANY, a foreign corporation, Plaintiff, v.
STATE OF FLO FLORI RIDA DA DEPARTMENT DEPARTMENT OF Statee of Flo Florid rida, a, REVENUE, an agency the Stat
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Defendant.
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COMPLAINT
Plai Plain ntiff, ff, Ford Moto Motorr Company Ford ) by and and thro throug ugh h counsel sues the State of Florida, De Depar partme tment nt of Rev Revenu enuee and alleges as follows: The Par Partie tiess 1.
Ford is a Delaware corporation with its principal hea ead dqua quart rteers in Dearborn,
Michigan. 2.
Defe De fend ndan ant, t, the Flo Florid ridaa Dep Depart artmen mentt
Revenue the Departrnent ), is an agency
established under the laws of the Stat Statee of Flo Florid rida. a. Jurisdic Juri sdiction tion and Ve Venu nuee 3. s a l ~ s
action on to contest an ass assess essmen mentt by tile Dep Depart artmen mentt against against Ford for This is an acti
taxe xes, s, interest interest and pen penal alti ties es ma made de pursua pursuant nt to Chapter 212, Fl or orid idaa S tatuLes. This and use ta
subjec jectt matte matterr jurisdictio jurisdiction n pursuan pursuantt to Section 72.011, Florid Floridaa Sta Statu tute tes. s. Court has sub
JA646998;2)
v
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The Departn1ent denied Ford the relief sought in tllis Complaint.
Depa De part rtme ment nt's 's denial con constit stitu utes tes final agen agency cy action.
The
Ford has ex exha haus uste ted d al alll ad admi mini nist stra rati tive ve
acttua uall an andd justiciabJecas remedie reme diess and and an ac justiciabJecasee or contro controver versy sy ex exis ists ts.. 5
Ford obtained a waiver of the the requi requirem remen ents ts of Section n.Oll 3 b , Florida
Statu Sta tute tess pu pursu rsuant ant to Fla. Admin. Code Rule 12-3.007.
A tru e and correct co py o f the
Department's wa waive iverr is attached as Ex Exhib hibit it A . 6
Venue is pro prope perr in this this Co Cour urtt pu purs rsua uant nt to Sect Sectio ion n 72. 2.01 011 1 (4 (4)( )(a) a),, Florida Statute Statutes. s. ature of the th e ontroversy
7
This action seek seekss to resolve
Department concerning a sales and use
s s
a
s s m
current controversy between Ford and the ~ t
by the' Department agai ns t Ford.
The
partss and Department contends Ford is responsible for sales and/or use tax on the val alu ue o f part mater mat erial ialss us used ed to comp compllete ete afte afterr-wa warr rran anty ty repa repair irss (the (the Re Repa pair irss ) by in indep depen ende dent ntly ly owne owned d and op oper erat ated ed Ford Ford de deal aler ersh ship ipss
Flor Florid idaa (th (the
Deale ealers rshi hip ps ) for re reta tail il pu purc rcha hase sers rs o f n e w Ford
vehic veh icles les (t (the he Reta Retail il Pur Purcha chaser serss ). 8
for for
On May 18 20 2009 09,, the the Depa Depart rtme ment nt issu issued ed a no noti tice ce of pr prop opos osed ed assess assessmen mentt to Ford Ford
1,39 1,392, 2,16 167. 7.78 78 comp compri rise sed d of 1,269,530.86 in sales and use tax, inter eres estt o f 260,774.94,
penalties of 125,288.56 and a credit for payments made o f 2 263 63,4 ,42 26. 6.58 58 (t (th he Asse Assess ssme ment nt ). The Prop Propos osed ed Asse Assess ssme ment nt wa wass iss issued ued
V\T1th
Prop Propos osed ed
respect to the Flo Flori rid da sales and use
taxation of the the Repairs for for the the peri period od Janu Januar ary y 1 2006 through Dec ecem embe berr 31, 2008 008 (t (th he Audi Auditt Pe Peri riod od ). A cop copy of the Pro Propo posed sed Asse Assess ssme ment nt is attached as Ex Exhi hibi bitt B . 9
On July 17 2009, Ford filed a timely protest challenging the sa sale less and use use tax
lia liabil bility ity assert asserted ed in the the Prop Propos osed ed Asses ssessm smen ent, t,
By
let ettter dated Nove Novemb mber er 2-4 2009, the
Depa De part rtme ment nt iss ssu ued a no noti tice ce of deci ecision denying Fo Ford rd's 's appeal and sustai ain ning th thee sa sale less an and d use use
{JA646998;2}
2
tax tax liability liability cont contai aine ned d the Pr Prop opos osed ed As Asse sess ssme ment nt.. On Dece Decemb mber er 17 2009 Ford filed a t ime imell y petition fo1 reconsideration referendng
inter
li
certai cer tain n mis missta statem tement entss o f f a ct a nd again
ch chal alle leng ngin ing g th thee sales and and use use ta x liabi liabili lity ty ref refere erence nced d in the the Prop Propos osed ed
A ~ s e s s m e l
t
On Au Augu gust st 9
2011, t h e Department issued a n o ti ti c e o f rec recons onside iderat ration ion (the (the CNotice o f Reconsideration ) sustaini sust aining ng the amou amount nt o f the the Prop Propos osed ed Asses Assessme sment nt and and conc conclu ludi ding ng that that For Ford d wa s liab liable le for sale saless ta tax x with with re resp spec ectt to the Repairs. A c o p y o f the Notice of Reco Recons nsid ider erat atio ion n is atta attached ched as Exhibit C
1
The The Noti Notice ce o f Rec Recon onsid sider erati ation on cons consti titu tute ted d the the fmal fmal admi admini nist strat rativ ivee dec decisi ision on from from
the Depa Depart rtme ment nt with r eesp spec ectt to Ford s prot,est of tax liab liabil ilit ity y conc concer erni ning ng th e R ep ep ai ai rs rs and theref the refore ore repr repres esen ents ts a fina finall assessment assessment wit with h resp respect ect to the tax liab liabil ilit itie iess refe reference renced d there therein in.. 11.
Ford maintains t h a t th e sales and u se se t a x liability r ef er en ce d in t he he Pr o p o se d
Asse Assess ssme ment nt refl eflect ects the the Dep Depart artmen mentt s unla unlaw wful ful at atte temp mptt to pyram amiid the the tax on th e same tangible personal person al pro proper perty ty beca because use:th :thee cost o f the the Re Repa pair irss is incl includ uded ed in the pr pric icee of t h he e F or or d veh vehicl iclee sol sold d by the Deal Dealer ersh ship ipss to the the Ret Retail ail Purcha Purchasers. sers. 12.
Ford further c o n t e n d s t h a t it is t he he Ret ail Purchasers, and no t Fo r d , t h a t ar e
respon res ponsib sible le fo forr use use ta tax, x, i f any, on the the Repai epairs rs.. Eac Each h Re Reta tail il Purchas chaser er,, as reci recipi pien entt o f the the ben benefit efitss o f the Repai Repairs, rs, repr repres esen ents ts the the ultimate ultimate con consum sumer er for for purpo purposes ses of the Flor Florid idaa use use tax. tax.
13.
Alternatively, For d asser ts th at it is t h e Dealerships, and no t Ford, that are
responsible respon sible fo forr u.se tax, i f any, on th e Repairs. It is the the Deal Dealer ersh ship ips, s, and and not not Ford that are are liab liable le for the Flo Flo ri ri d daa use tax b eeca cau u se se is th e Dea ealler ersh shii ps ps that own the parts and ma matt er er ial ialss and tal<e them ou t o f th thei eirr inve invent ntor ory y for for purpos purposes es of com comple pletin ting g the the Repa Repair irs. s. 14.
Through tbis C o mp l a in in t, t, Fo r d seeks a j u d gm gm een n t fTom this this Cour Courtt dec declar laring ing that that:: (1)
Ford is not not liable for sales or us e ta tax x on the the Re Repa pair irss be beca caus usee the the anti antici cipa pate ted d cos costt o f all Repairs is
{JA646998;2}
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incl includ uded ed in the the sal salee pri price ce ofthe Fo Ford rd vehi vehicl clee sold by the Dealershi Dealerships ps to the Ret Retail ail Purch Purchasers; asers; 2) in the alternative, Ford is no nott liab liable le for use ta tax x on the the Re Repa pair irss be beca caus usee it is each Ret Retail ail Purch Purchase aserr
who wh o rece receiv ives es the the benefits of the Re Repa pair irs; s; 3) in the altemative, Ford is not liab iable for use tax on the the Re Repa pair irss beca becaus usee it is the De Deal alers ershi hips ps that that own the parts an and d materials and ta take ke them them out of inventory to complete the Repairs; 4) Ford is not liable for the the disputed tax liab liabilit ility y becaus becausee the Notice Noti ce of Recons Reconside iderat ration ion vvrongly stat states es that that Ford is res respon ponsib sible le for sales tax wit with h respec respectt to the Re Repa pair irss and Ford did not make taxa taxabl blee sales of the the pmis and materials; and 6) any any and all penalt pen alties ies imp impose osed d under Chapter 212, Flo Florid ridaa Stat Statut utes es,, mu must st be ab abat ated ed as mw noncompliance by Ford was du duee to reasonable cause and not willf willful ul neg negli ligen gence, ce, willf-ul ne negl glec ectt orfraud. c tu tu l
15.
nd
Legal Leg al Allega Allegatio tions ns
All All factual allega allegatio tions ns below are true and correct for all tax ye year arss comp compri risi sing ng the the
i
i
i
Audit Aud it Period Period un unles lesss spe specif cifica ically lly stat stated ed otherw otherwise ise.. 16,
Ford is a motor motor veh vehicl iclee manufact manufacturer urer hea headql dqllart lartere ered d in De Dearb arbor orn, n, Michigan and is
in the business of designing, manu manufact facturin uring, g, market marketing ing and se selllin ling motor vehi vehicl cles es to the Dealerships. 17.
Ford sold the mo moto torr ve vehi hicl cles es that that it de desi sign gned ed and and manu manufa fact ctur ured ed thro throug ugh h a ne netw twor ork k
of indep indepen enden dentt ret retai aill dealers loca locate ted d ac acros rosss the Un Unit ited ed Stat States es,, incl includ udin ing g the the Dealer Dealershi ships, ps, 18.
All new veh ehiicle cles that that Fo Ford rd ma manu nufa fact ctu ure red d were were covered by a wri rittten ten wan wanan anty ty
e eac ach, h, a Warra Warrant nty y ) to be provided by the Dea Dealers lership hipss to each Reta Retail il Purc Purchase haser. r.
19.
Th Thee De Deal aler ersh ship ipss fumish fumished ed a Warra Warranty nty t each Retail Purchaser.
20.
Th Thee terms of the the Wa Warr rran anty ty Ad Admi mini nistr strat atio ion n Manu Manual al existing be betw twee een n Ford and the
Deal De alers ershi hips ps the the Manu Manual al ) cont contro roll lled ed all reimbursements fl.·om Ford to the Dealerships for the Repairs.
{JAG G998; }
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T he Ma Manu nual al st stat ated ed t.hat De Deal aler ersh ship ipss we werre to co com mpJ pJet etee the Repair s pu purs rsua uant nt to a
21 .
recom rec omme mend nded ed se sett of gu guide idelin lines es and also pro provid vided ed that that ce1iai11 be completed on a
{he terms
22.
c a s e - b y - c a s e
~
th thee Rep epaairs irs wer weree au auth thor oriz ized ed to
ba basi siss ev even en the Re Repa pair irss were were mad adee after th thee stat stated ed ex expi pira rati tion on
the Warrant Warranty. y. The Dealers Dealerships hips part participa icipated ted in Ford Ford s De Deal aler er Sel Selff Auth Author oriz izat atio ion n Prog Progra ram m with
respect to the Repairs pe perf rfor orme med d un unde derr th thee te term rmss of th thee Manu Manual al.. 23
The va vasst majorit ajority y of the Repairs fllrnished by the De Deal aler ersh ship ipss were self au auth thor oriz ize· e·d d
pmsuant to For Fordls dls Dealer Dealer Sel Selff Aut Author horiza izatio tion n Pr Prog ogra ram. m. 24.
If a Deal Dealer ersh ship ip was unable to se self lf authorize a -Repair under For Ford d s Deal Dealer er Se Self lf
Authorization Program advan advanced ced approv approval al was ne need eded ed fr from om a Ford repres represent entati ative. ve. 25.
In all cases in which a Dea eale lerrship ship was requ requir ired ed to seek seek adv advance anced d approval for a
Repair Ford approved th thee re repa pair ir and reim reimbms bmsed ed th thee Dea Dealer lershi ship p for such cost costs. s. 26. 26.
For the period Janmiry 1 20 2006 06 un unti till on or ab abou outt Octo Octobe berr 1 2008 Fo Ford rd bu budg dget eted ed
on onee interna internall acco accoun untt from which each of th thee De Deal aler ersh ship ipss receiv received ed reimbu reimburse rsemen mentt fo forr th thee Re Repai pairs rs Dmin ing g this period Ford did not maintain individual budgets wi with th the Dealer alersships ips for the Repairs. 27
From
011
or ab abou outt Oct ctob ober er 1 2008 thl Ough December 31 20 2008 08 Ford maintained maintained
de deale aler-b r-by-d y-deal ealer er bu budg dget etss for for th thee Re Repa pair ir re reim imbu burs rsem emen ents ts.. Despi Despite te the fact th that at Fo Ford rd used dealer by-dealer by-d ealer bu budg dget etss for th thee pe peri riod od Oct ctob ober er 1 2008 th thro roug ugh h Decembe Decemberr 31 2008 almost almost vithout
exception excep tion reim reimbms bmsemen ements ts sub submit mitted ted by. th thee De Deal aler ersh ship ipss wi with th respect to the Repa Repair irss du duri ring ng th this is period per iod we were re fu full lly y pa paid id by Ford Ford.. 28
Almost with withou outt exception the Repairs were don done by the De Deale alers rshi hips ps withou withoutt
knowledg know ledgee by Ford.
{JA646998;2}
29 29..
Forel did not require that the Dealerships use any particular p a rt rt or material in
maki ma king ng th thee Re Repa pairs irs.. 30.
All parts and mate aterial rialss neces ecessa sary ry for for th thee Re Repa pair irss wer eree owned wned by and and came came ou outt
of
the invent inventory ory of the Dealers Dealership hips. s. 31.
For purp purpos oses es
of
reim reimbu burs rsem emen entt the De Deal aler ersh ship ipss relayed ayed any any and all req required ired
info inform rmat atio ion n with with resp respec ectt to the the compl complete eted d Repa Repair irss to Ford. 32.
Af Afte terr rece receiv ivin ing g th thee ii iirf rfor orma mati tion on rela relati ting ng to
Deal Dealer ersh ship ipss fo forr the the co cost st of su such ch Re Repa pair irss unde underr the term termss 33.
th e
of th e
Repairs
Ford
reimbursed tIle
Manua1.
The The man manufa ufactm ctmer er s sug sugges gested ted reta retail il pric pricee MSRP>l)
of
the Ford Ford v eeh h icl icles es sold by
the Dealerships was determined by Ford Ford and in all cases included the the an anti tici cip pated ated co cosst
of
the
Repairs. 34.
The sale
of
Fo r d ve hi hic le les b y the Dealerships was subject to F lo lo ri ri da da sales tax
ca calc lcul ulat ated ed on the the reta retail il sale saless price price of such motor motor ve vehi hicle cles. s. 35.
Th e Dealerships col collect lected ed and remitted to the De Dep p aart rtm men entt all ap app p lic licab able le sales tax tax
due due on thei theirr sa sale less
o f new
Fo Ford rd vehicl vehicles es to Reta Retail il Purc Purcha hase sers rs.. COUNT
I
F O R D IS NO T LI BLE F OR OR S L ES ES NDUSE T USE LL PPLIC LE T X W
REPAIRS EC
X WITHRESPE T TO TH E PREVIOUSLY OLLE TED
NDRE REM M IT IT T TE E D T O TH THE E DEP RTMENT RTMENT BY TH THE E DE LERSIDPS
36.
Ford Ford realleges and rein eincorpo rporate ratess the allegations o fp ara arag gra rap ph s 1 tlu ough 35 as
if
fu full lly y set set fo fort rth h he herei rein. n. 37.
The Florida sales and use tax tax are mutuaUy excl exclu usive sive and must must be ad admi mini nist ster ered ed by
the the Depa Depart rtme ment nt in a mann manner er that that avoi avoids ds dupl duplic icat atio ion n
{JA646998;2}
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38.
Under Section 212,12(12), Flo r iid d a Statutes, the Florida sales and use tax is
im impo pose sed d on th thee end consumer or last last reta retail il sale. 39.
Under Section 212.02(16), F llo o r id id a Statutes, the Florida sales and use tax is
calculat calc ulated ed based on the sales sales price price 40. MSRP
of
of the
tangible tangible pers person onal al propel propelty. ty.
Without exception, the ant anticip cipated ted cost
of
the Repa Repair irss was incl includ uded ed by Ford Ford in the
new Ford Ford vehi vehicl cles es sold sold by the the Dealer Dealershi ships ps to Reta Retail il Purc Purcha hase sers rs..
4
The sale saless price price char charge ged d by the Deal Dealer ersh ship ipss wi with th res respec pectt to the the sales
vehi vehicl cles es to Reta Retail il Purc Purcha hase sers rs incl includ uded ed the ant anticip icipatedcost atedcost of 42 42..
On each each sale sale
of
new new Ford Ford
Repairs.
a new Ford Ford vehic ehicle le,, th thee Retail Pu Purc rch has aser erss pa paid id the the De Deal aler ersh ship ipss a
sales sales price that that in incl clud uded ed the anti antici cipa pated ted cos costt 43
of
of
aU Repairs.
The De Deal aleersh rship ipss coll collec ecte ted d and remi remitt tted ed to the the Depa Depali lime ment nt any and and
sales
t x
due on th thee sale of new Ford vehicle vehicless to Reta Retail il Pu Purc rcha hase sers rs bas ased ed on the the re reta tail il sales sales price price.. · 44.
Because the applicable sales t ax on th thee sale
of
ne w Ford vehicles t o Retail
Pu Purc rcha hase sers rs was collected by th thee De Deal aler ersh ship ipss an and d rem remit itte ted d to the De Depa part rtme ment nt on the an anti tici cipa pate ted d cost
ll Rep Repai airs rs,, it is unla unlawf wfu ul for th thee De Depa part rtme ment nt to g in seek tax with resp respec ectt to the the s m
of
Repairs. 45.
Ford is not liable for use tax o n th e patis and materials owned and u s eed d by
th
Dealerships to co comp mpllete ete th thee Rep Repairs airs for for Reta Retail il Pu Purc rcha hase sers rs beca becaus usee the the Dep Depart artme ment nt has has lre dy
re eived any and all sales tax due from
th
De Deal aler ersh ship ipss wi with th re resp spec ectt to
cost
of th
s m
Repa Repair irss at is issu suee in this this acti action on.. COUNT II FORD IS NO NOT T LI
BEC
BLE F O R U S E T X WITH RESPECT TO TH E REP IRS
USE IT IS T HE HE R ET ET IIL L PUR H SER TH T RECEIVE RECEIVED D T HE HE B E NE NE FIT FIT S REL
{JA646998;2}
TING TO SUCH R
7
IRS
46,
Ford realleges and reincorporates th thee allegations
of
paragr par agrap aphs hs 1 tlrr tlrrou ough gh 45 as
if
full fully y set set fort forth h he here rein in.. 47,
Section 2l2,05(1)(B), Florida Statutes, provides that use tax is imposed on
ta tang ngib ible le pers person onal al pr prop opel eliy iy wh when en it is
t
sold sold,, but but is used, consulTied di dist stri ribu bute ted, d, or st stor ored ed fo forr
us usee or con consu sump mpti tion on in th this is stat state[,] e[,] 48,
Section 212. 212.02 02(2 (20) 0),, Flor Florid idaa Sta Statu tute tes, s, defines tile term term us usee fo forr purp purpos oses es
Fl Flor orid idaa use ta tax x as the exe exerci rcise se
of
of
the
any ri righ ghtt or powe powerr over over tang tangib ible le pers person onal al pro proper perty ty in inci cide dent nt to
th thee ow owne ners rshi hip p th ther ereo eof, f, or in inte tere rest st th there erein in[,] [,] 49. ownership
In DIder for the Florida use tax to be imposed the taxpayer m u s t have an of
other intere erest in th thee tang tangib ible le pers person onal al prop proper erty ty enti entitl tlin ing g the taxp taxpay ayer er to exer exerci cisse a
righ ri ghtt or powe powerr over over the property. 50.
Ford never had title or possession to th thee part partss or ma mate teri rial alss used used by th thee Deal Dealer ersh ship ipss
to com comple plete te th thee Re Repa pair irss fo forr Retai Retaill Pw Pw-c -cha hase sers rs.. S
On completion
of
th thee Re Repa pair irss by th thee De Deal aler ersh ship ips, s, th thee Retail Purch Purchase asers rs re rece ceiv ived ed
title to the pa part rtss and ma mate teri rial alss to malce suc such h Repa Repairs. irs. 52. 52. possession 53
On completion ofthe
of
th thee Re Repa pair irss by th thee De Deal aler ersh ship ips, s, th thee Reta Retail il Purch Purchase asers rs re rece ceiv ived ed
pa palt ltss and ma mate teri rial alss to ma make ke such such Re Repa pair irs. s.
mallee Havi aving rece receiv ived ed both both ti titl tlee and poss posses essi sion on to th thee par parts ts and ma mate teria rials ls used used to ma
th thee Repa Repair irs, s, it is th thee Re Reta tail il Pw Pw-c -ch haser aserss tha thatt are are resp respon onsi sibl blee fo forr th thee us usee tax. ax. 54,
Ford is not liab iable fo forr use tax on th thee Rep Repairs airs beca becaus usee it is th thee Ret Retail ail Purch Purchas aser er th that at
respo pons nsib ible le for for use use tax tax rel relat atin ing g to the rec recei eipt pt of tit itlle and poss posses essi sion on to the part partss and ma matter eria ials ls is res used use d by the De Deal aler ersh shi] i])s )s in mal maldng dng su such ch Re Repa pair irs, s, COUNT II I
8
FORD IS NO FORD NOT T LIAB LIABLE LE FO R US USE E TAX WITH RESPECT TO TH E REPAIRS BECAUSE IT IS TH E DEALERSHIPS THAT TAKE TH E PAR PARTS TS AN AND D MATERIALS OUT OF INVEN INVENTORY TORY TO COMPL COMPLETE ETE SUC SUCH H REPAIRS 55
Forel real realle lege gess and and rei reinco ncorpo rporat rates es the alle allega gati tion onss of para paragr grap aphs hs 1 th thro roll llgh gh 54 as if
full fully y set fo fort rth h he here rein in.. 56
Section 212.05 1) B), Flor Florid idaa Statutes, provides th that at use ta x is imposed all
tangib tan gible le per perso sona nall pro proper perty ty whe when n it is 11 t sold sold,, but but is us used ed,, co cons nsum umed ed,, disbi disbibuted buted,,
st stor ored ed fo forr
use or consumption in th this is stat state[.] e[.] 57,
Section 212.02 20), Flor Florida ida Stat Statut utes es,, de defi fine ness
term use forpm poses of the
Fl Flor orid idaa us usee tax tax as the exerc exercis isee of any any ri righ ghtt or powe powerr over ver tang tangib ible le pers person onal al pro proper perty ty in inci cide dent nt to th thee ow owne ners rshi hip p th ther ereo eof, f, or inte interest rest there therein[.] in[.] 58
In order for the Florida use tax to be imposed the taxp ayer mus t have an
ownership of ot othe herr int interes erestt in th thee tan tangi gible ble per perso sonal nal prop proper erty ty en enti titl tlin ing g th e taxp taxpay ayer er to exe xerc rciise a righ rightt or pow power er over over th thee prop propert erty. y. 59
Ford never had had ti tittle or po poss sses essi sion on to the part partss or ma mate teri rial alss use used d by the De Deal aler ersh ship ipss
to co comp mple lete te th thee Repa Repair irss for for Ret Retai aill Pu Purc rcha hase sers rs..
60.
The Dealerships ha d coml)lete and unilateral discretion wit h res pect to the
purchases of parts and mat materi erials als us used ed to make the Repairs. 61
Ford h ad n o di direc rectt or ind indirec irectt co cont ntro roll ov over er th thee pl pllT lTch chas asin ing g decisi decisions ons of Dealerships
wit ith h re resp spec ectt to the parts and materials purchased, owned and h el d in i nventory by the Dealersh Deal erships ips for for pur purpos poses es of com complet pleting ing the Repa Repairs irs for Ret Retail ail Purch Purchasers asers,, 62
The De Deal aler ersh ship ipss had bot both h title title and pos possess sessio ion n to the par artts and ma mate teri rial alss used to
make ma ke th thee Repa Repair irss for Re Reta tail il Purc Purcha hase sers rs..
{JA646998;2}
63.
All parts and ma mate teri rial alss used used to com comple lete te the Repairs for Re Reta tail il Purc Purcha hase sers rs were ere
owned by talcen ou outt of th thee in inven vento tory ry of the Dealers Dealership hips. s. 64.
Beca Becaus usee th thee Dealer Dealersh ships ips have both both ·tit ·title le and possession to the the part partss and and ma mate teri rial alss
he held ld in inve invent ntor ory y to make th thee Re Repa pair irs, s,
is th thee Deal Dealer ersh ship ipss that that
o
resp respon onsi sibl blee for the the use tax
relating to such such Rep epai airs rs for for Re Reta tail il Pu Purch rchase asers. rs. 65.
Ford is not liable for use ta tax x on the RelJairs be beca caus usee it is the Dea Dealer lershi ships ps that that had had
both bot h titl titlee and possession to th thee part partss and mate materi rial alss rel relat atiing to the Repai epairrs for Re Reta tail il Pmch Pmchas aser ers, s, Thus hus, the the Deale ealers rshi hip ps, not For ord, d, are are respo respons nsib ible le fo forr the use tax on the the parts arts and mate materi rial alss used used to makee the mak the Repa Repair irss for Ret Retail ail Purchasers. Purchasers. COUNT IV
IS NOT NOT RESP RESPON ONSI SIBL BLE E F O R TH E DIS DISPUT PUTED ED TAX LIABI LIABILITY LITY BECAU BECAUSE SE FORD CA CANN NNOT OT BE LIABLE LIABLE F O R SALES TAX WITHRESPECT T O TH E PARTS AND MATE MATERI RIAL ALS S USED BY DEALERSHIPS TO MA KE KE T HE HE REPAIRS F O R RETAIL PURCHASERS FORD
66.
Ford rea11eges and and rei reinc ncorp orpor orate atess th thee al alle lega gati tion onss of pa para ragr grap aphs hs 1 thro throug ugh h 65 as if
fully fully set set fort forth h herei:p.. 67.
Und Un der Fl Flor orid idaa law, the le lega gall cOIlclusiol1S contained in a noti notice ce of reconsideration
re refl flec ectt the the Depa Depart rtme ment nt s fi fin nal admi admini nist stra rati tive ve deci decisi sion on wi with th resp respec ectt to the the tax li liab abil ilit ity y disp dispu ute ted d therein. 68.
The legal conclusions stated in the Notice of Reco Recons nsid ider erat atio ion n fi fina nali lize zed d the the
. asse asserted rted assessme assessment nt contai contained ned the Proposed Proposed Asse Assess ssme ment nt.. 69,
rn rnle le Noti Notice ce of Re Reco cons nsid ider erat atio ion n concl clu udes that Ford is lia iabl blee for for sa sale less ta., { with
respect to the the part partss and ma mate teri rial alss us used ed by th thee Dealerships in making the Rep epai airrs for Retail Pllrchasers.
(JA646998;2)
. ]
70.
Ch Chap apte terr 21 212, 2, Florid Floridaa Statut Statutes, es, define definess reta retail il sale
or a sale at re rettail ail as qa sa sale le to
a cons consum umer er or to any pers person on for for an any y purp purpos osee ot othe herr th than an for for re ressale ale in
form
of
tangible tang ible personal personal
prop proper erty ty or se serv rvic ices es taxa taxab ble unde underr this this cha chapte pter[. r[.]] 71.
The Retail Purc Purch haser aserss are th thee cons consum umer erss or end end users
of
all pa part rtss and mate materi rial alss
relating to the Repairs perf perfor orme med d by th thee De Deal aler ersh ship ips. s. 72.
Ford did not malce a sale sale
of
an any y paIi paIiss or mate materi rial alss to Retai tail Pu Purc rcha hase sers rs re rela lati ting ng to
the Repa Repair irss perf perfon onne ned d th thee Dealershi Dealerships. ps. 73.
Because Ford did not make ake a reta retail il sale sale or a sale ale at ret retail ail re rela lati ting ng to the })arts
and materials used by Dealerships
in
completing
th e
Repairs for Retail Purchasers, the
D e p a r t m e n t s ultimate decision finalizing th e assessment contained in Re Reco cons nsid ider erat atio ion n is in error. The here refo fore re,, th thee sale saless tax Notice of Rec Recon onsi side derat ratio ion n must be
the Notice
of
liab iabilit lity con confirmed rmed agai agains nstt Ford Ford in the
n full.
COUN CO UNT TV ANY AN AND D AL ALL L PE PENA NALT LTIE IES S IMPOSED G lNST FO FORD RD UN UNDE DER R CH FLORI FL ORIDA DA STA STATUT TUTES ES MUST E AB ABAT ATED ED IN FULL
PT E R
212,
, 74.
Ford realleges and rein eincorp rpo orate ratess th thee allegations
of
pa para ragr grap aphs hs 1 throu through gh 73 as if
fully fully se sett forth her erei ein n. 75.
The Depar epartm tmeent has im imp p ose osed d penal,ties agains inst Ford under Ch Chap apte terr 212,.Flo .Florid rida
St Stat atut utes es,, for nonc noncom ompl plia ianc ncee wit with h the the appl applic icab able le Flor Florida ida sa sale less and use tax tax laws laws.. 76.
The The imposi impositio tion n
of
pena penalt ltie iess und under er Cha Chapte pterr 212, Florida Statu Statutes, tes, iis s inappropriate
wher wh eree a ta taxp xpay ayer er demo emonst stra rattes th that at an any y nonc noncom ompl plian iance ce wa wass due to re reas ason onab able le ca caus use, e, an and d to will willfu full negl neglig igen ence ce,, will willfu full negl neglec ectt or frau fraud. d.
(JA646998;2 )
11
no t
due
Fla. Admin. Code Rule ule 12-1 12-13, 3,00 002( 2(3) 3) defi define ness reas reason onab able le cause
77.
as th thee ta taxp xpaye ayerr s ex exer erci cisse
o
for for th this is purp purpos osee
ord rdiina nary ry care care and pr prud uden ence ce in co com mplying with a reve revenu nuee law
o
this st stat ate. e. 78.
Any alleged nonco com mplian ance ce by Ford wit ith h res respe pect ct to this dispute w aass due to
reaso rea sonab nable le ca caus usee and no nott will illful ful ne negl glig igen ence ce,, will illfu full negl neglec ectt or fraud becau ecausse Fo Ford rd reas reason onab ably ly beli eliev eved ed th that at it was not responsible for Florida sales or use tax with respect to the parts and materi mat erials als ow owne ned d and used by the Dealerships to mak akee th thee Rep epai airs rs for Reta Retail il Purc Purchase hasers rs wh whoo ul ulti timat mately ely obta obtain ined ed titl titlee an and d po poss sses essi sion on to such such pa part rtss and materials. Prior to the the Au Audi ditt Period, the Depar arttmen entt ha had d no nott previously au aud dit ited ed Fo Ford rd with
79. r ~ s p
t
to th thee Fl Flor orid idaa sa salles and use use ta taxa xati tion on
the Flo Florid ridaa sale saless and use taxa taxatio tion n 81.
the Rep Repair airs. s.
Fo Ford rd fu full lly y co coop oper erat ated ed with with the De Depa part rtme ment nt wi with th resp respec ectt to the Department s audi auditt
80. o
o
o
the the Re Repa pair irss fo forr the Aud Audit it Peri Period od,,
Ford Ford has ad adeq equa uate tely ly demo demons nstr trat ated ed its ex exer erci cise se
ordinary car care and pr prud uden ence ce in
o
complying with the Florida sales and use ta tax x laws. Bec ecau ausse Ford has est establ ablish ished ed reason reasonable able caus causee for th thee al alllege eged fa fail ilur uree to comply with the Florida sales and use tax laws, any and all penalties penal ties imp imposed osed by the the De Depa part rtme ment nt unde underr Ch Chap apte terr 212, Flo Florid ridaa Sta tatu tute tes, s, mu must st be abat abated ed in full.
WHEREFORE, Ford respectfully requests that jud gme nt be entered against the Department Depar tment an and d fa favo vorr ofFord ofFord:: declaring that Ford is not liable for use tax on the Repa Repair irss bec becaus ausee t h
a.
antici ant icipate pated d cos costt
o
all su such ch Re Repai pairs rs is included in the sal alee pr pric icee
Dealershi Deal erships ps to the Re Reta tail il Pu Purch rchase asers; rs;
JA64 6998;2)
12
o
the Ford vehi vehicl clee sol sold d by the
b.
al alte terr n naati tiv vel ely y, d ecl eclar arin ing g that F or or d is not li liab able le f or or use ta x on t h hee R ep ep ai rrss
because it is th thee Reta Retail il Purch Purchas asers ers that re recei ceive ve tit itlle and and po poss sses essi sion on to th thee par parts and ma mate teri rial alss used used Dealerships to com comple plete te the Repairs; Repairs; by the Dealerships c.
al alte terrnat ativ ivel ely y, d eecl clar arin ing g that F or or d is no t li liab able le f o orr use ta x on th e Repairs
beca becaus usee it is the D ealer sh ips that t aak k e the parts and ma te ter i al al s' s' o ut ut o f inve invent ntor ory y to make the Repair Rep airss fo forr Retai Retaill Purch Purchase asers; rs; d.
al alte tern rnat ativ ivel ely, y, decla declarin ring g that that Ford Ford is not li liab able le f or or the the disp isp ute uted d tax tax li liaab ili ility ty
as fi fina nall lly y stat stated ed n the Notice Notice o f Reco Reconsi nsider deratio ation n becaus becausee For Ford d di d no t make an y retai retaill sal salee or the sal salee at reta retail il of the the pa part rtss and and ma mate teri rial alss used y De Deal aler ersh ship ipss to comp comple lete te the the Repa Repair irss fo forr Reta Retail il Purchasers; e.
de cla ri ng t h a t a n y a n d all pe pena nalt ltie iess imp impose osed d by the Department under
Chap Chapte terr 21 212, 2, Fl Flor orid idaa St Stat atut utes es,, must must be abated n full full becau because se Ford has ade adequ quate ately ly dem demons onstra trated ted reas reason onab able le ca caus usee for for any al alle lege ged d fa fail ilur uree to comp comply ly wi with th th thee FlO lOllid idaa sale saless and us e tax law law s; s; and and f.
Such Such othe otherr rel relief ief as is just and equi equitable table..
DATED DATE D th this is 3 th day o f Aug August ust,, 2011 2011
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AKERMANBENT. RFITT B y : : . L . . ~ .; ~ = = = j = = ~ t = = = ~ ~ .chae J. Bdwe Florida Flor ida Bar No No.. Peter O. Larsen Fl Flor orid idaa Bar No. 08491 0849146 46 50 No Nort rth h Laur Lauraa St Stre reet et,, Suit Suitee 31 3100 00 Jacksonville, F L 3 Phone: (904) 7 9 98 8 --3 3 70 70 0 Fax: (904) 7 9 8 - 3 7 3 0 Attorn Att orneys eys fo forr F ord ord Motor Motor Company
JA646998;2
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