Filing # 188677403 E-Filed 12/27/2023 09:30:07 AM IN THE CIRCUIT COURT OF THE SECOND JUDICIAL CIRCUIT IN AND FOR LEON COUNTY, FLORIDA DELTA AIR LINES, INC., Plaintiff, 2023 CA 002871 CASE NO,; 2023 CA vs. STATE OF FLORIDA, DEPARTMENT OF REVENUE, Defendant. COMPLAINT Plaintiff, Delta Air Lines, Inc. (“Delta” or “Taxpayer”), by and through its undersigned counsel and pursuant to chapters 72, 212, and 215, Florida Statutes, files this complaint for relief against the State of Florida, Department of Revenue (“DOR” or “Department”), alleging as follows: 1. Delta is a commercial interstate and international airline carrier that transfers both passengers and cargo to various destinations worldwide. Delta is headquartered in Atlanta, Georgia, and services airport locations throughout the State of Florida. Delta is a “transportation company” as. the term is used in rule 12A-1.0115(6), Florida Administrative Code (“F.A.C.”). 2. Defendant DOR is the state agency responsible for, among other items, the administration of Florida’s sales and use tax code, chapter 212, Florida Statutes, and the assessment and collection of sales and use tax. 3. This is an action contesting the denial of four consolidated refund requests made by Delta pursuant to section 215.26, Florida Statutes. 4. Delta contests the denial of its refund request due to DOR’s failure to properly recognize Delta’s overpayment of use tax erroneously accrued and remitted to the Department, Deltais a Direct Pay Permit Holder in Florida, and as a result directly accrued and remitted use tax on the purchases at issue. 5. Delta timely filed four separate refund requests associated with four time periods, and the Department assigned the following internal case/file numbers to the requests: Audit No. 200286831 - September 1, 2012, through August 31, 2015; Audit Nos. $000187063/5000203 180 - September 1, 2015, through February 28, 2018; Audit No, 200286779 - September 1, 2015, through February 28, 2018; Audit Nos, 5000244566/5000249017 - March 1, 2018, through May 31, 2020. 6. The refund amounts requested by Delta for the overpayment of use tax in cach request is as follows: Audit No, 200286831 - $452,854.48; Audit Nos, 5000187063/5000203 180 ~ $539,314.86; Audit No, 200286779 ~ $204,185.23; Audit Nos, 5000244566/5000249017 - $587,363.16. 7. The Department issued its initial Notice of Decision of Refund Denial(s) (“NOD”) on April 7, 2022. Within the document, the Department appears to erroneously refer to the tax at issue asa sales tax, instead of a use tax accrued by Delta. 8. Delta timely protested the Department’s denials by submitting a Petition for Reconsideration on May 6, 2022. Delta disputed the Department's contention that the refund claims lacked sufficient documentation, alleged that the Department's conduct placed Delta in a position where Delta could neither obtain confirmation that the items at issue were indeed exempt nor obtain. validation by the Department of the amounts requested for refund by Delta, and provided additional facts and argument in support of its refund claims.9. The Department responded to the Petition for Reconsideration filed by issuing a Notice of Reconsideration of Refund Denial (“Notice”) pursuant to chapter 12-6, F.A.C, on November 1, 2023. The Notice is attached as Exhibit A to this complaint. 10. Within the Notice, the Department approved partial refund amounts for tax accrued on the use of certain food items purchased by Delta, which the Department determined to be exempt (such as prepacked snacks, unprepared coffee and tea, milk and dairy products sold in sealed containers, and 100% juice sold in sealed containers), and also approved an additional refund amount representing use tax erroneously accrued on exempt engine oil. The Department ultimately denied Delta’s refund requests relating to use tax paid or accrued on the remaining transactions identified by Delta. 11. Delta contests the factual and legal basis of the Department's refund denials as set forth by the Department in the Notice. alurisdiction and Venue 12, Section 215.26(1), Florida Statutes, reads in pertinent part The Chief Financial Officer 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 overpayment of any tax, license, or account due; (b) A payment where no tax, license, or account is due; and (©) Any payment made into the State Treasury in error; ... 13. Applications for the refunds at issue were timely filed pursuant to section 215.26(2), Florida Statutes. 14. This action contesting the denial of refunds of tax erroneously paid to the State is filed within the sixty-day timeframe provided by section 72.011, Florida Statutes, as referenced in section. 215.26(6), Florida Statutes. 15. Venue is proper in Leon County pursuant to section 72.011(4)(b), Florida Statutes. 16. All conditions precedent to the filing of this complaint have been satisfied.17, 18, Count I - Failure to Refund Taxes Paid Exempt Grocery Items Delta realleges paragraphs 1-16 as if set forth fully herein Florida sales and use taxes generally apply to the sale of tangible personal property. 212.05, Fla. Stat. 19, Section 212.08, Florida Statutes, sets forth exemptions to the generally applicable state sales tax. Section 212.08(1), Florida Statutes, is the basis for the sales tax exemption on general grocery items, and reads in pertinent part: (1) EXEMPTIONS; GENERAL GROCERIES.— (a) Food products for human consumption are exempt from the tax imposed by this chapter. (b) For the purpose of this chapter, as used in this subsection, the term “food products” means edible commodities, whether processed, cooked, raw, canned, or in any other form, which are generally regarded as food. This includes, but is not limited to, all of the following: 1. Cereals and cereal products, baked goods, oleomargarine, meat and meat products, fish and seafood products, frozen foods and dinners, poultry, eggs and egg products, vegetables and vegetable products, fruit, and fruit products, spices, salt, sugar and sugar products, milk and dairy products, and products intended to be mixed with milk, 2. Natural fruit or vegetable juices or their concentrates or reconstituted natural concentrated fruit or vegetable juices, whether frozen or unfrozen, dehydrated, powdered, granulated, sweetened or unsweetened, seasoned with salt or spice, or unseasoned; coffee, coffee substitutes, or cocoa; and tea, unless it is sold in a liquid form. 3. Bakery products sold by bakeries, pastry shops, or like establishments that do not have eating facilities. (c) The exemption provided by this subsection does not apply to: 1. Food products sold as meals for consumption on or off the premises of the dealer. 2. Food products furnished, prepared, or served for consumption at tables, chairs, or counters or from trays, glasses, dishes, or other tableware, whether provided by the dealer or by a person with whom the dealer contracts to furnish, prepare, or serve food products to others. 3. Food products ordinarily sold for immediate consumption on the seller’s premises or near a location at which parking facilities are provided primarily for the usc of patrons in consuming the products purchased at the location, even though such products are sold on a “take out” or “to go” order and are actually packaged or wrapped and taken from the premises of the dealer4. Sandwiches sold ready for immediate consumption on or off the sellers premises. 5. Food products sold ready for immediate consumption within a place, the entrance to which is subject to an admission charge. 6. Food products sold as hot prepared food products. 7. Soft drinks, including, but not limited to, any nonalcoholic beverage, any preparation or beverage commonly referred to as a “soft drink,” or any noncarbonated drink made from milk derivatives or tea, iff sold in eans or similar containers. 8. Ice cream, frozen yogurt, and similar frozen dairy or nondairy products in cones, small cups, or pints, popsicles, frozen fruit bars, or other novelty items, whether or not sold separately. 9. Food that is prepared, whether on or off the premises, and sold for immediate consumption. This does not apply to food prepared off the premises and sold in the original sealed container, or the slicing of products into smaller portions. 10. Food products sold through a vending machine, pusheart, motor vehicle, or any other form of vehicle. 11. Candy and any similar product regarded as candy or confection, based on its normal use, as indicated on the label or advertising thereof. 12. Bakery products sold by bakeries, pastry shops, or like establishments having eating facilities, except when sold for consumption off the seller’s premises. 13. Food products served, prepared, or sold in or by restaurants, lunch counters, cafeterias, hotels, taverns, or other like places of business. (@)_ As.used in this subsection, the term: 1, “For consumption off the seller's premises” means that the food or drink is intended by the customer to be consumed at a place away from the dealer’s premises. 2. “For consumption on the seller’s premises” means that the food or drink sold may be immediately consumed on the premises where the dealer conducts his or her business. In determining whether an item of food is sold for immediate consumption, the customary consumption practices prevailing at the selling facility shall be considered. 3. “Premises” shall be construed broadly, and means, but is not limited to, the lobby, aisle, or auditorium of a theater; the seating, aisle, or parking area of an arena, rink, or stadium; or the parking area of a drive- in or outdoor theater. The premises of a caterer with respect to catered meals or beverages shall be the place where such meals or beverages are served. 4. “Hot prepared food products” means those products, items, or components which have been prepared for sale in a heated condition and. which are sold at any temperature that is higher than the air temperature of the room or place where they are sold. “Hot prepared food products,” for the purposes of this subsection, includes a combination of hot and. cold food items or components where a single price has been establishedfor the combination and the food products are sold in such combination, such as a hot meal, a hot specialty dish or serving, or a hot sandwich or hot pizza, including cold components or side items. 20. Rule 12A-1.011, F.A.C., reads in pertinent part: (1) SCOPE (a) The purpose of this rule is to clarify the application of tax on the sale of food products generally sold in or by grocery stores, convenience stores, supermarkets, bakeries, fish markets, produce markets, and other like places of business. This rule is also intended to clarify the application of tax on the sale of bakery products by bakeries, pastry shops, or like establishments and on the sale of drinking water or ice. (b) Rule 12A-1.0115, F.A.C,, is intended to clarify the application of tax on food products generally served, prepared, or sold in or by restaurants, lunch counters, cafeterias, caterers, hotels, taverns, or other like places of business. (2) Tax-exempt food products. (a) Food products for human consumption, whether processed, cooked, raw, canned, or in any other form that is generally regarded as food, are exempt. The following is a nonexhaustive list of exempt food products:. 21 Rule 12A-1.0115(6), F.A.C., sets forth the taxability of food purchases made by a “transportation company” in Florida to be served to passengers while in transit out of state. The rule reads as follows: (6) Transportation companies. (a) Food products sold ready for immediate consumption by airlines, railroads (except Amtrak), vessels, or other transportation companies to their passengers, while within Florida, are subject to tax. A transportation company may extend a copy of its Annual Resale Certificate to the selling dealer instead of paying tax on the purchase of food products ready for immediate consumption for purposes of resale to its passengers. (b)L. Transportation companies, except Amtrak, are required to pay tax on their purchases of meals and food products ready for immediate consumption when: a. The food products are delivered to the transportation company in this, state, whether consumed in this state or outside this state; b. The food products are furnished to the passengers; and, c. There is no separately itemized charge to the passenger for the food product.2. For the partial exemption available to airlines, see Section 212.0598, ES. For the partial exemption available to vessels engaged in interstate or foreign commerce under Section 212.08(8), F.S., see Rule 12A- 1.0641, F.A.C. (c) The purchase or sale of food products ready for immediate consumption by Amtrak, an instrumentality of the United States government, is not subject to tax. 22. Delta purchases food and beverages from a small group of vendors, such as Gate Gourmet and Sky Chefs, and serves the purchased products to its airline passengers on flights departing from Florida airports. 23. The denied purchases remaining in the refund claim relate to food products provided to travelers on aircraft operated by Delta at no additional charge to the customers. The food products are initially prepared, packaged, and kept cold for delivery to Delta. Once on the plane and in the air, Delta crew heats the individual food products and plates the food products as specified, before serving to the travelers. 24. Delta’s vendors do not sell or deliver the food products to Delta in a heated condition. 25. The food and beverage items purchased by Delta were not “ready for immediate consumption” when purchased, and therefore remain exempt pursuant to section 212.08(1), Florida Statutes, 26. The food products purchased and received from the vendors are neither prepared nor plated as a meal. Instead, the individual food components are sold and separately delivered to Delta, For example, multiple servings of precooked and chilled chicken breasts will be delivered together. Separately, multiple serving of cooked and chilled vegetables will be delivered. The same with starches, breads, and desserts. All separate. These food products are sold as components, similar to a customer purchasing exempt food products in a neighborhood grocery store, and the food productsrequire additional steps of heating and plating by the Delta crew before any dish can be provided to the traveler. 27. Delta provided detailed use tax reconciliation information to the Department for the periods at issue during the initial review process. Delta also provided documentation sufficient to support the refund claims to the Department in advance of the issuance of the Department’s initial decision. 28. The transactions at issue are placed, filled, and invoiced through the use of an indust specific electronic data interchange (“EDI”) software service. Recognizing that the transactions in dispute numbered over 700,000 lines of data, Delta initially provided the Department with examples of the EDI documentation and requested that samples be drawn for audit verification of the refund schedules because the data was voluminous. The Department initially refused to do so. 29. Following the issuance of the Departments initial proposed denial, Delta timely filed informal protests and secured and provided additional documentation that further explained the nature of the food and beverage items purchased and supported its argument that these items were exempt from the tax as they were neither hot prepared food, ready for immediate consumption when purchased, nor packaged as meals from the vendors. 30. Delta provided t formation to the Department while the informal protest was under review by the Department’s Technical Assistance and Dispute Resolution (“TADR”) component. Between the time the information was provided to TADR and the NOD was issued, the Department assigned three different conferees to these claims, Delta held an in-depth conference with the first conferee assigned to these cases, and as a result of that conferee’s questions, Delta provided additional records to support the claims that the food and beverage items purchased were exempt.31. When issued, the NOD did not address either taxability issue as argued by Delta in its, informal protests, instead cit ng a lack of documentation as its reason for sustaining the auditor's denials. The NOD stated that “the reexamination of the documents submitted [by Delta] concluded there was no supporting documentation provided to warrant a revision to the proposed refund denial” and “{TJhe documentation submitted is inconclusive and does not show proof that sales tax was erroneously accrued and remitted to the Department.” 32. Delta worked in good faith to answer all the Department’s questions and provide more additional documentation relevant to the question of the taxability of these disputed items. 33. AtDelta’s request, the Department had its audit staff complete a detailed review of the detailed records submitted, which was concluded in the Fall of 2023. 34. Ultimately, the Department denied the remaining refund claim on legal grounds. The November 2023 Notice cites to several exclusions from the general exemption for grocery items set forth in section 212.08(1), Florida Statutes, as the basis for sustaining the refund denial. Specifically, the Department relies on paragraphs (1)(c)1, (1)(€)3, (1)(€)4, and (1)(c)9 of section 212.08, Florida Statutes to support its contention that the statutory exemption for grocery items does not apply to the transactions at issue. 35. Delta contests the Department's application of the identified provisions, believing the referenced sections to be inapplicable in their entirety or that the Department improperly expands the statutory language, either in the Department’s rule or as unpromulgated nonruled policy, in an effort to capture tax-exempt transactions. 36. Thus, the proper application of the relevant statutes and rules results in the purchases at issue being exempt from taxation and demonstrates Delta’s entitlement to the requested refund.Accordingly, each refund request for the return of remainder of the use tax improperly paid by Delta on the should be approved in full. Count 11 - Interest 37. Section 213.255, Florida Statutes, reads as follows: Interest.—Interest shall be paid on overpayments of taxes, payment of taxes not due, or taxes paid in error, subject to the following conditions: (1) Arefund application must be filed with the department within the time specified by s. 215.26. (2) A refund application shall not be processed until it is determined complete. A refund application is complete if it is filed on a permitted form and contains: (a) The taxpayer’s name, address, identifying number, and signature. (b) Sufficient information, whether on the application or attachments, to permit mathematical verification of the amount of the refund (c) The amount claimed. (4) The specific grounds upon which the refund is claimed, (e) The taxable years or periods involved. (3) Within 30 days after receipt of the refund application, the department shall examine the application and notify the applicant of any apparent errors or omissions and request any additional information the department is permitted by law to require. An application shall be considered complete upon receipt of all requested information and correction of any error or omission for which the applicant was timely notified, or when the time for such notification has expired, whichever is later. (4) Interest shall not commence until 90 days after a complete refund application has been filed and the amount of overpayment has not been refunded to the taxpayer or applied as a credit to the taxpayer's account. 38. Delta provided complete applications as defined in section 213.255(2), Florida Statutes, more than 90 days prior to the filing of this action 39. DOR’s requests for additional information beyond what is lawfully required or otherwise necessary to permit the mathematical verification of the amount of the refund do not toll or reset the 90 day timeframe, Nor does DOR’s request for additional redundant information in the format DOR prefers when the information was provided by the taxpayer and readily available to be 10accessed by DOR at the time of an additional request. DOR is unable to constantly reset the 90 day window by simply contacting a taxpayer and asking for information it already has. 40. As such, Delta is entitled to the calculation and payment of interest accruing on any refund amount due but not refunded to Delta within 90 days from the date this court determines that its applications were complete. WHEREFORE, Plaintiff Delta Air Lines Inc., respectfully requests that this Court: a. Enter an order finding that DOR improperly denied Delta’s refund requests for tax incorrectly paid or accrued to the state; b. Enter an order determining when Delta’s refund applications were complete and ordering DOR to pay Delta interest on any refund amount Delta is entitled to pursuant to section 213.255, Florida Statutes; ©. Grant any other relief deemed appropriate. Respectfully submitted, 4 Roe H. French Brown, IV Florida Bar No. 0040747 fhrown@joneswalker.com Daniel J. McGinn Florida Bar No. 121596 dmeginn@joneswalker.com JONES WALKER LLP 106 East College Ave. Suite 1200 Tallahassee, Florida 32301 Telephone: 850.459.0992 Facsimile: 850.577.0095 Attorneys for Plaintiff uara Ft 2 FLORIDA 5050 West Tennessee Street, Tallahassee, FL 32399 November 01, 2023 Mr. Damon N. Chronis Ryan ‘Three Galleria Tower, Suite 100 Dallas, TX 75240-5090 Re: Notice of Reconsideration of Refund Denial DELTA AIR LINES INC. (“Taxpayer”) a Audit #: 200286779 Sales and Use Tax Florida Department of Revenue Technical Assistance and Dispute Resolution Period: 09/01/2015 through 02/28/2018 Refund Claimed: Proposed Refund Denial: Refund Approved Additional Refund Allowed: Audit #: 200286831 Sales and Use Tax Period: 09/01/2012 through 08/31/2015 Refund Claimed: Proposed Refund Denial: Refund Approved: Additional Refund Allowed: Audit #: 5000244566 / 500024917 Sales and Use Tax Period: 03/01/2018 through 05/31/2020 Refund Claimed: Proposed Refund Denial: Refund Approved Additional Refund Allowed: Exhibit A Jim Zingate Executive Director Rorigarevenve.com 204,185.23 31,168.04 173,022.19 13,605.37 452,854.48 402,570.13 50,284.35 38,202.06 587,363.16 587,363.16 0.00 44,343.23Notice of Reconsideration of Refund Denial Page 2 Audit #: $000187063/5000203180 Sales and Use Tax Period: 09/01/2015 through 02/28/2015 Refund Claimed: $ 539,314.86 Proposed Refund Denial: $ 539,314.86 Refund Approved: $ 0.00 Additional Refund Allowed: $ 48,512.87 Dear Mr. Chronis: This is the Department's response to the petition for reconsideration dated May 06, 2022, filed ‘against the referenced refund denial, The petition for reconsideration, the case file, and other available information have been carefully reviewed. This reply constitutes the issuance of our Notice of Reconsideration of Refund Denial, pursuant to the provisions of Rule Chapter 12-6, Florida Administrative Code (F.A.C.). It represents our position based on applicable law to the issues under protest. FACTS RELEVANT TO ALL ISSUES Taxpayer is a commercial interstate and international airline carrier that transfers passengers ‘and cargo to various destinations throughout the world. There are airport locations throughout the State of Florida, with its headquarters located in Atlanta, Georgia. As part of its operations, ‘Taxpayer serves meals, snacks, beverages, and other items at no charge, and sells various taxable and nontaxable products to its customers/passengers during flights. Taxpayer also purchases goods and services for its own use, including the free items served and provided to passengers. There are four (4) separate refund cases involved in this Notice of Reconsideration of Refund Denial. Taxpayer filed refund applications (DR-26S) in each of these cases and filed separate protest letters to protest the Departments denial in each case. Taxpayer is requesting refunds of sales tax it claims was erroneously accrued and remitted to the Department or paid in error to the vendor, on tax-exempt purchases. The refund periods are referenced above for each protest case. ‘The Department of Revenue (Department) received each refund application and examined the supporting documentation to determine whether a refund was warranted. In each case, on specified dates, the Department issued a “Notice of Proposed Refund Denial for the Refund Claim” (DR-832R), notifying Taxpayer that its refund claim was denied either in total or in part, as detailed above. The reason for the denial is stated in an “Attachment to Notice of Proposed Refund Denial” which was also issued by the Department. Taxpayer disagreed with the Department’s denial of the refund claim and timely submitted its protest letters with the Department.Notice of Reconsideration of Refund Denial Pages The Department issued the Notice of Decision of Refund Denial (NOOR), incorporated herein by reference, dated April 6, 2022, sustaining the denied amounts identified in the DR-832R’s in full, on the grounds that Taxpayer failed to provide valid documentation that it paid sales tax on tax exempt purchases, or that the purchases were tax-exempt (e.g., for resale) at the time of purchase. Subsequent to the NODR, Taxpayer provided documents related to the use tax accruals along with other documentation, including catering contracts related to in-flight food and beverage provisioning and catering services supplied by the caterers. Other documentation related to the catering contracts include detailed food preparation and serving guidelines, meal plating instructions, recipe reports, and other documentation related to the meals provided by the caterers. Based on the additional documentation provided with the petition for reconsideration, the case files were returned to the Department's refund audit section for further consideration. ISSUE Whether Taxpayer is entitled to an additional refund of sales tax it erroneously accrued and remitted to the Department or paid to its vendors in error, on tax-exempt purchases, FACTS In each of the above referenced protested refund cases, Taxpayer is seeking a refund in sales tax it claims was erroneously accrued and remitted to the Department or paid to vendors for purchases. The items purchased include food products, meals, and beverages (alcoholic and nonalcoholic) which were served to passengers during scheduled flights; repair parts purchased to repair and maintain aircrafts greater than 15,000 pounds maximum certified takeoff weight, and rotary wing aircrafts of more than 10,300 pounds, and tax-exempt grocery items served free of charge or sold to passengers. The majority (85%) of the protested amounts identified in the protest relate to lunch/dinner entrées, breakfast entrées, and “Entrees”, Ancillary items include prepackaged charter snacks, coffee and tea (dry/unprepared), fruit, milk, 100% juice, baked goods, bottled water, and engine oil As noted above, subsequent to the issuance of the NODR, Taxpayer provided additional documentation related to the prepared meals and snacks. Specifically, Taxpayer provided two contracts styled "Catering Agreement” from two vendors, Inc. Per the [IEEE agreement, Taxpayer desires to engage Caterer to provide or cause to be provided in-flight food, beverages, and related supplies and services as needed for all flights serving the locations in accordance with the terms and conditions of the agreement. The term “catering goods and services” includes preparing, assembling and packaging meals, beverages, and customary incidentals, packing those meals in approved carts and carriers, transporting the meals directly to the aircraft; installing the meals in the galleys, removing carts, carriers and incidental catering equipment from the aircraft for cleaning, disposing of waste and storing, purchasing the food products and supplies necessary to produce the meals, and other requested services as mutually agreed. See Catering Goods and Services at 2.1.Notice of Reconsideration of Refund Denial Page a ‘Additionally, the contract provides that Taxpayer shall provide, or cause third parties to provide the caterer with sufficient expendable and rotable equipment, including but not limited to dishes, glassware, eating utensils, linens, service tray carriers, carts, aircraft ovens, and related items to enable caterer to prepare, supply and deliver catering goods and services for Taxpayer's flights. See Service Equipment and Provisioning Items at 11.1 Per the MMIII agreement, the listed catering services include preparing, assembling, and packaging “Catering Deliverables” (other than Delta Nominated Items that are prepared, assembled or packaged by a third-party manufacturer); packing Catering Deliverables in carts and carriers; transporting the Catering Deliverables to Taxpayer's aircraft or passenger loading areas; installing the Catering Deliverables in the galleys of the aircraft or passenger loading areas; removing carts, carriers and incidental catering equipment from the aircraft for cleaning, washing and disposing of waste; procuring and purchasing food products and supplies necessary for preparing, assembling and packaging Catering Deliverables; storing service equipment and provisioning items in safe and secure areas and performing other services as directed. Catering Service at 2.(). TAXPAYER ARGUMENT ‘Taxpayer argues that sales tax was paid or accrued in error on various transactions which are exempt from sales tax. It is argued these transactions include nontaxable food products and grocery items, such as peanuts, pretzels, cookies, chips, crackers cereals, salt, pepper, sugar, unbrewed beverages (i.e,, coffee, creamer, cocoa and tea), milk, water, condiments, fresh fruits, baked goods, sliced meats and cheese, bread, vegetables and other nontaxable groceries and food items. Taxpayer references s. 212.08(1)(b), F-S., and Rule 12A-1.011(2)(a), F.A.C,, to support its argument. Taxpayer further contends that meals served free of charge to passengers during scheduled flights are not ready for immediate consumption when purchased, and thus, tax-exempt under s. 212.08(1), F.S., a5 a food product for human consumption. As presented by Taxpayer, once the meals are cooked, they are packed in foil pans, “flash cooled” and loaded onto entrée’ oven inserts and transferred to the aircraft in a chilled galley cart or carrier separate from any utensils or serving plates. Taxpayer owns the oven insert equipment, carriers, galley carts, serving equipment, and utensils. During the inflight meat service, the entrée’ is heated in its foil pan by the flight attendant inside the aircraft oven according to the meal and plating sheet. Once the entrée’ is heated to the required temperature, the flight attendant removes the entrée’ from the foil pan, plates it and serves it to the passenger. Sliced items such as meats, cheeses, breads, vegetables, fruit salads, and green salads are chilled and packed in dry ice as well. The sliced items are plated by Taxpayer in accordance with the instructions presented by the vendors. Taxpayer maintains that the meals purchased from are not considered ready for immediate consumption and are exempt under s. 212.08(1], F.S., as a general grocery item.Notice of Reconsideration of Refund Denial Pages LAW & DISCUSSION Section 212.05, F.S., provides every person is engaged in a taxable privilege when engaging in the business of selling, at retail, tangible personal property in the State. [See s. 212.02(19), F.S.] Section 212.06(1){a), F.S. Tangible personal property is defined as “personal property which may be seen, weighed, measured, or touched or is in any manner perceptible to the senses . as defined in s. 320.01(1) ....” Section 212.08, F.S., provides specific exemptions from sales tax for sales and purchases of tangible personal property and services. ‘When sales tax has been erroneously paid on exempt sales or purchase transactions, taxpayers may obtain a refund pursuant to Section 215.26, F.S., for the tax. [See Rule 12A-1.014(4), F.A.C.] Section 215.26, FS,, moreover, Rule 12A-1.014(4), F.A.C,, clarifies when sales tax has been ‘overpaid to a dealer (i.e, seller), or has paid tax to a dealer when no tax is due, the purchaser must secure a refund of the tax from the dealer and not from the Department of Revenue. Repayment of funds paid into State Treasury through error, provides in pertinent part: (1) The Chief Financial Officer 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 constitutes: (a) An overpayment 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; [Emphasis Added} Section 212.08(1), F.S., exempts “food products” for human consumption. The statute defines “food products” as commodities, whether processed, cooked, raw, canned, or in any other form, which are generally regarded as food and includes frozen foods and dinners. Therefore, under the basic terms of the exemption granted for food products, frozen foods and dinners are exempt from sales tax. In construing statutory exemptions from tax, the Department must follow the fundamental rule of statutory construction established by the Florida Supreme Court, ‘which mandates that exemptions from, or exceptions to, taxing statutes are special privileges granted by the legislature and must be strictly construed, “with any doubt being resolved in favor of the state.” State v. Dickinson, 286 So, 2d 259 (Fla, 1974). Florida courts have consistently held that exemptions must not be expanded beyond their express terms and must be strictly and narrowly construed against the taxpayer. See Department of Revenue v. Anderson, 403 So.2d 397 (Fla, 1981); State ex rel, Szabo Food Services. Inc. v. Dickinson, 286 So.2d 529 (Fla. 1973). See also Asphalt Pavers v. Dept. of Revenue, 584 S0.2d 55 (Fla. 1st DCA 1991), at 57 (citing the rule that exemptions from tax are strictly construed against the taxpayer, with any ambiguity resolved in favor of the administrative agency).Notice of Reconsideration of Refund Denial Pages Section 212.08(1)(c), F.S., lists thirteen (13) separate categories/situations for which the exemption for "food products” does not apply. Excluded items include food products sold as meals for consumption on or off the premises of the dealer, sandwiches sold for immediate consumption, soft drinks, candy, and prepared food sold for immediate consumption. Specifically, ss. 212.08(1)(c),1,, F.S., excludes from the exemption, food products sold as meals for consumption on or off the premises of the dealer. The term “premises” shall be construed broadly, and means, but is not limited to, the lobby, aisle, or auditorium of a theater; the seating, aisle, or parking area of an arena, rink, or stadium; or the parking area of a drive-in or ‘outdoor theater. The premises of a caterer with respect to catered meals or beverages shall be the place where such meals or beverages are served. See ss. 212.08(1)(d)3. F.5. narrow reading of this exclusion would apply to all meals furnished to Taxpayer by the caterers since the premises include the place where the catered meals are served, in this case the aircraft. AS noted in the contracts, the caterers are not only delivering partially frozen dinners to Taxpayer, but they are also performing other catering services as required under the catering contracts. Subsection 212.08(1)(c),3., F.S., excludes food products ordinarily sold for immediate consumption on the seller’s premises or near a location at which parking facilities are provided primarily for the use of patrons in consuming the products purchased at the location, even though such products are sold on a “take out” or “to go” order and are packaged or wrapped and taken from the premises of the dealer. This exclusion from the exemption also applies to the food furnished to Taxpayer since the seller’s premises include the place where the catered meats are served, in this case the aircraft. Subsection 212.08(1)(c),4., F.S., excludes sandwiches sold ready for immediate consumption on or off the seller’s premises. This exclusion speaks for itself. Ail sandwiches sold and furnished by the Caterers for immediate consumption are excluded from the exemption. Subsection 212.08(1)(c},9., F.S., excludes food that is prepared, whether on or off the premises, and sold for immediate consumption. This does not apply to food prepared off the premises and sold in the original sealed container, or the slicing of products into smaller portions. As defined in ss. 212.08(1)(d), F. 1. “For consumption off the seller's premises” means that the food or drink is intended by the customer to be consumed at a place away from the dealer's premises. 2. “For consumption on the seller’s premises” means that the food or drink sold may be immediately consumed on the premises where the dealer conducts his or her business. In determining whether an item of food is sold for immediate consumption, the customary consumption practices prevailing at the selling facility shall be considered. 3. “Premises” shall be construed broadly, and means, but is not limited to, the lobby, aisle, or auditorium of a theater; the seating, aisle, or parking area of an arena, rink, or stadium; or the parking area of a drive-in or outdoor theater. TheNotice of Reconsideration of Refund Denial Page? premises of a caterer with respect to catered meals or beverages shall be the place where such meals or beverages are served. This exclusion applies to all the “prepared” food furnished to Taxpayer by the caterers since the term “premises” as construed broadly, includes the place where the catered meals are served, in this case the aircraft, and all prepared food is therefore sold for “immediate consumption.” Section 212.08(1)(c)9., F-S., exempts the unprepared food ie., sealed snacks, chips, nuts, unprepared coffee and tea, milk and dairy products sold in sealed containers, and 100% juice sold in the original sealed container. CONCLUSION Audit #: 200286779 — no additional changes are warranted with respect to Exhibit AO1 - Credit for over-remittance of use tax - and the original amount approved ($173,022.19) stands as held in the Notice of Decision. Subsequent to the NOD, and upon further consideration, it was determined that tax paid on specifically exempt nonprepared food products, including prepackaged snacks, unprepared coffee and tea, milk and dairy products sold in sealed containers, and 100% juice sold in sealed containers shall be approved in the amount of $13,605.37. The denial of the refund amount relating to the inflight meals and other prepared foods is sustained. Audit #: 200286831 - no additional changes are warranted with respect to Exhibit AOI ~ Credit for over-remittance of use tax - and the original amount approved ($50,284.35) stands as held in the Notice of Decision. Subsequent to the NOD, and upon further consideration, it was determined that tax paid on specifically exempt nonprepared food products, including prepackaged snacks, unprepared coffee and tea, milk and dairy products sold in sealed containers, and 100% juice sold in sealed containers shall be approved in the amount of $38,202.06. The denial of the refund amount relating to the inflight meals and other prepared foods is sustained. Audit #: 5000244566 / 500024917. Subsequent to the NOD, and upon further consideration, it was determined that tax paid on specifically exempt nonprepared food products, including prepackaged snacks, unprepared coffee and tea, milk and dairy products sold In sealed containers, and 100% juice sold in sealed containers shall be approved in the amount of $44,343.23. The denial of the refund amount relating to the inflight meals and other prepared foods is sustained. Audit #: 5000187063 / 5000203180. Subsequent to the NOD, and upon further consideration, it was determined that tax paid on specifically exempt nonprepared food products, including prepackaged snacks, unprepared coffee and tea, milk and dairy products sold in sealed containers, and 100% juice sold in sealed containers shall be approved in the amount of $40,715.80. An additional amount of $7,796.87 representing use tax erroneously accrued on engine oil is allowed under this claim number, The denial of the refund amount relating to the inflight meals and other prepared foods is sustained.Notice of Reconsideration of Refund Denial Page 8 ‘TAXPAYER APPEAL RIGHTS You are notified that this Notice of Reconsideration of Refund Denial constitutes the final position of this Department, prior to court action or administrative proceeding, regarding the refund denial you have protested. Pursuant to Sections 72.011(2) and 120.80(14), F.S., and Rule Chapter 12-26, F.A.C,, as of the date of this Notice of Reconsideration of Refund Denial, the refund denial is final for purposes of court action or administrative proceeding. Pursuant to Sections 72.011(2) and 120.80(14), F.S., and Rule Chapter 12-26, F.A.C., no court action or administrative proceeding may be brought to contest the refund denial after sixty (60) days from the date of this Notice of Reconsideration of Refund Denial. The refund denial reflected in the Notice of Reconsideration of Refund Denial is final, and you have three alternatives for further review: 1) Pursuant to Section 72.011, F.S., and Rule Chapter 12-6, F.A.C., you may contest the refund denial in circuit court by filing a complaint with the clerk of the court. THE COMPLAINT MUST BE RECEIVED BY THE CLERK OF THE CIRCUIT COURT WITHIN SIXTY (60) DAYS OF THE DATE OF ‘THIS NOTICE OF RECONSIDERATION. The requirements of Chapter 72, FS. are jurisdictional; 2) Pursuant to Sections 72.011, 120.569, 120.57, and 120.80(14), F.S., you may contest the refund denial in an administrative forum by filing a petition for a Chapter 120 administrative hearing with the Department of Revenue, Office of General Counsel, Post Office Box 6668, Tallahassee, FL 32314-6668, THE PETITION MUST BE RECEIVED BY THE DEPARTMENT WITHIN SIXTY (60) DAYS OF THE DATE OF THIS NOTICE OF RECONSIDERATION OF REFUND DENIAL, The petition should conform to the requirements of the Uniform Rules promulgated pursuant to Section 120.54(5), F.S. Section 120.80(14), FS., provides that before you file a petition under Chapter 120, F.S., you must pay to the Department the amount of taxes, penalties, and accrued interest that are not being contested. Failure to pay those amounts will result in the dismissal of the petition and imposition of an additional penalty in the amount of twenty-five percent of the tax assessed. Mediation pursuant to Section 120.573, FS. is not available. The requirements of Section 72.012(2) and (3)(a}, F.S., are jurisdictional for any action contesting an assessment or refund denial under Chapter 120, F.S.; OR 3) Pursuant to Section 120.68, F.S., you may contest the refund denial in the appropriate district court of appeal by filing a Notice of Appeal meeting the requirements of Rule 9.110, Florida Rules of Appellate Procedure, with i) the Clerk of the Department of Revenue, Office of General Counsel, Post Office Box 6668, Tallahassee, FL 32314-6668 and il) with the clerk of the appropriate district court of appeal, accompanied by the applicable filing fee. THE NOTICE OF APPEAL MUST BE FILED WITH BOTH THE DISTRICT COURT OF APPEAL AND THE DEPARTMENT OF REVENUE WITHIN THIRTY (30) DAYS OF THE DATE OF THIS NOTICE OF RECONSIDERATION OF REFUND DENIAL.Notice of Reconsideration of Refund Denial Pages Should you have any further questions concerning this matter, please do not hesitate to contact, me. Sincerely, Christopher (Chris) Whittier ‘Tax Conferee Technical Assistance & Dispute Resolution (850)717-7576 cc: Mr. French Brown Delta Air Lines, ine. Dean, Mead & Dunbar c/o Department 852 106 East College Avenue, Suite 1200 P.O. Box 48852 Tallahassee, FL 32301 Atlanta, GA 30320-5852 NOTICE UNDER THE AMERICANS WITH DISABILITIES ACT Persons needing an accommodation to participate in any proceeding before the Technical Assistance and Dispute Resolution Office should contact that office at 850-617-8346, or you may also call via the Florida Relay System at 800-955-8770, at least five working days before such proceeding,