New Sea Escape--Apportioned Tax
The Supreme Court of Florida has affirmed the lower appellate court (reported at 823 So.2d 161) and allowed a prorated use tax on gambling equipment on a ship used for what the Department has referred to as “cruises to nowhere.” Florida Dept. of Revenue v. New Sea Escape Cruises, Ltd., CCH Florida Tax Reports, No. 199, § 204-649. In doing so, the Court disapproved a conflicting appellate court decision. Dream Boat, Inc. v. Dept. of Revenue, 28 Fla. Weekly D837 (Fla. 1st DCA 2003).
The dealer operates a foreign flag vessel that departs Ft. Lauderdale and takes passengers out for gambling in non-territorial waters (more than three miles from shore, but not beyond the 12-mile limit marking the edge of U.S. territorial waters), then returns to Ft. Lauderdale. Florida Statutes § 212.08(8) allows a partial exemption through the proration of sales and use tax on vessels and parts thereof used to transport persons or property “in interstate or foreign commerce.” The proration compares intrastate mileage, the numerator, with interstate or foreign mileage, the denominator. The implementing Department rule makes total miles traveled the denominator. The Department took the position that because the vessel did not (on the gambling cruises) stop at any foreign port or destination, it was not engaged in interstate or foreign commerce. The Court concluded that the travel outside the three-mile limit on Florida territorial waters was in “foreign commerce,” rejecting the contention that a stop at a foreign port was required and that cruises to nowhere were therefore engaged purely in intrastate travel and so ineligible for the partial exemption. It also rejected the dealer’s argument that the Commerce Clause prohibited even an apportioned tax. The case is important as one in which the Court reminds us that the “plain meaning” rule of statutory construction is applicable not just to provisions imposing tax, but to those expressing exemptions as well.
Posted: 2005-03-10 00:00:00.0
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