Oracle America, Inc. v. Department of Revenue

FIRST DISTRICT COURT OF APPEAL

STATE OF FLORIDA

_____________________________

Nos. 1D2023-0987

1D2023-1075

1D2023-1077

_____________________________

ORACLE AMERICA, INC.,

Appellant,

v.

FLORIDA DEPARTMENT OF

REVENUE,

Appellee.

_____________________________

On appeal from the Department of Revenue.

Mark S. Hamilton, General Counsel.

December 4, 2024

LONG, J.

Appellant, Oracle America, Inc. (“Oracle”), appeals a final

order entered by the Florida Department of Revenue denying its

application to refund excess sales taxes and local surtaxes it

collected from its customer, Nielson Company, Inc. (“Nielson”); and

two final orders entered by the Department dismissing its

application to refund excess sales taxes and local surtaxes it

collected from its customers, Fidelity Information Services, LLC

(“Fidelity”), and Del Monte Fresh Produce Company (“DMF”). For

the reasons below, we affirm the final orders.

I. Facts

Oracle provides computerized business technology to

commercial customers and sells computer software, including

future maintenance and support services. Through certain

purchases, Oracle collected sales taxes and local surtaxes from its

customers and remitted the collected taxes to the Department. It

surfaced that Oracle had collected both excess local surtaxes and

sales taxes on purchases that were tax exempt.

At its customers’ requests, Oracle filed three similar claims

with the Department for refunds of sales taxes and local surtaxes

it collected from Nielson, Fidelity, and DMF, and remitted to the

Department. The Department issued “Notice[s] of Decision of

Refund Denial,” which denied the claimed amounts because Oracle

had not refunded the collected excess taxes to its customers.

Oracle subsequently petitioned for reconsideration, asserting it

erroneously collected sales taxes and local surtaxes from its

customers, which it remitted to the Department, and that Oracle

need not refund the tax to its customers before the Department

grants the refund application.

The Department denied all three petitions for reconsideration

for the same reasons. The only basis for denial that remains in

dispute is the Department’s position that Oracle had to refund the

taxes to its customers before its refund application could be

approved. 1

Oracle filed three petitions for a formal administrative

hearing contesting the denial of the refund applications. Because

all three petitions presented similar issues, the parties agreed that

the Nielsen matter would be heard at the Division of

Administrative Hearings, and the Department would hold the

Fidelity and DMF petitions in abeyance pending the outcome of

that proceeding.

1 The Department also initially denied the refund, in part, by

disputing whether the transactions were tax exempt. The

Department, however, now concedes that they were.

2

An Administrative Law Judge held a formal hearing on the

petition for the Nielsen matter. Although the ALJ found that the

electronically delivered software was exempt from sales tax and

that Oracle collected local surtax in excess, the ALJ entered a

recommended order that the Department deny the refund claim.

The ALJ agreed with the Department that Oracle needed to refund

the taxes to Nielsen before the Department approved the refund

application. The Department entered a final order adopting the

ALJ’s recommended order.

The Department then entered separate, yet nearly identical,

orders dismissing the petitions with prejudice in both the Fidelity

and DMF matters. The Department concluded that Oracle lacked

standing because it was neither the taxpayer nor the party that

bore the burden of the sales tax, thus it did not have subject matter

jurisdiction over the petitions. This consolidated appeal follows.

II. Analysis

We review the ALJ’s conclusions of law and interpretations of

statutes de novo. MB Doral, LLC v. Dep’t of Bus. & Pro. Regul.,

Div. of Alcoholic Beverages & Tobacco, 295 So. 3d 850, 853 (Fla.

1st DCA 2020). We review the Department’s interpretation of the

applicable statutes and rules de novo. Id.; see also Art. 5 § 21, Fla.

Const.

On appeal, Oracle asserts that the sole issue is whether it has

the right to apply for a refund and have its application adjudicated

before it refunds the taxes at issue to its customers. In response,

the Department maintains that Oracle was not entitled to a refund

because it was not the taxpayer. We agree with the Department.

We first lay the regulatory and statutory framework that

govern collecting, remitting, and refunding taxes. We then turn to

Oracle’s inability to both seek a refund and contest the refund

denial. Finally, we address Oracle’s argument that it need not

refund its customers before Oracle applies for a refund.

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A. Regulatory Framework

In Florida, a tax is levied on the sale price of each item or

article of tangible personal property sold at retail. §

212.05(1)(a)1.a., Fla. Stat. A customized software package is

considered a service and therefore exempt from taxation, but

prepackaged software sold in tangible form is taxable. Fla. Admin.

Code R. 12A–1.032. If the prepackaged program is modified or

altered and the customer is charged for a single transaction, then

the charge is treated as a customized software package exempt

from taxation. Id. Florida law also authorizes counties to impose

local option discretionary surtaxes on the first $5,000 of an item of

tangible personal property sold. § 212.054(1), (2)(a)–(b), Fla. Stat.

“Dealers,” are those who sell tangible personal property at

retail, § 212.06(2)(c), Fla. Stat., and who collect sales taxes owed

from their purchaser or customer. § 212.07(1)(a), Fla. Stat. In

turn, dealers remit the taxes collected to the Department. §

212.06(1)(a), Fla. Stat. At the moment of collection, the taxes

become state funds that are due to the Department the following

month. § 212.15(1)(a), Fla. Stat. And dealers are compensated for

collecting and remitting the taxes to the Department. § 212.12(1),

Fla. Stat.

B. Procedure for Refund

Both Florida law and the Florida Administrative Code provide

instructions for seeking a refund from the state treasury. But, as

we will see, the two are, at times, in tension. Florida law identifies

who may be refunded. It provides “[t]he 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.” § 215.26(1), Fla. Stat. That person must file an

application for refund with the Chief Financial Officer. § 215.26(2),

Fla. Stat. And “applications for refund must be filed within three

years after the right to the refund accrued.” Id.

The Florida Administrative Code provides that “[w]henever a

dealer credits a customer . . . for tax erroneously collected, the

dealer must refund such tax to the customer before the dealer’s

claim to the State for credit or refund will be approved.” Fla.

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Admin. Code R. 12A–1.014(3). Similarly, Florida law provides that

“[f]unds collected from a purchaser under the representation that

they are taxes provided for under the state revenue laws are state

funds from the moment of collection and are not subject to refund

absent proof that such funds have been refunded previously to the

purchaser.” § 213.756(1), Fla. Stat.

However, even though the statute only permits the taxpayer

to receive the refund, the Code requires that “[a] taxpayer who has

overpaid tax to a dealer, or who had paid tax to a dealer when no

tax is due, must secure a refund of the tax from the dealer and not

from the Department of Revenue.” Fla. Admin. Code R. 12A–

1.014(4). The Code then instructs dealers to file an application to

seek a refund from the Department of Revenue. Fla. Admin. Code

R. 12A–1.014(5).

But when an application for refund is denied, the statute

permits only the “taxpayer” to “contest a denial of refund of tax . .

. paid under a section or chapter specified in section 72.011(1)

pursuant to the provisions of section 72.011.” § 215.26(6), Fla.

Stat. 2 Section 72.011 also provides that it is the “taxpayer” who

may contest a refund denial in circuit court or by petitioning under

chapter 120. § 72.011(1)(a), Fla. Stat. And “the requirements of

[section 72.011(1)] are jurisdictional.” § 72.011(5), Fla. Stat. Then

section 120.80(14)(b) tells us that “in any administrative

proceeding brought pursuant to this chapter as authorized by

section 72.011(1), the taxpayer shall be designated as the

‘petitioner.’” (emphasis supplied).

And so we see that, unlike the Code which says a dealer is the

proper party to seek a refund from the Department, Florida law

only allows the taxpayer to receive a refund or to contest a refund

denial. See § 215.26(1) and (6), Fla. Stat. Meanwhile, the Code

states a “taxpayer” who paid excess taxes “must secure a refund

2 Section 215.26 is a jurisdiction statute of non-claims.

Victor

Chem. Works v. Gay, 74 So. 2d 560, 562 (Fla. 1954). Thus, it bars

claims that do not comply with its requirements. Id. (“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.”).

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from the dealer and not from the Department of Revenue.” Fla.

Admin. Code R. 12A–1.014(4). 3

It is no surprise then that Oracle argues on appeal that it is

entitled to a refund, especially since rule 12A–1.014 sets out a

refund process for a “dealer,” “purchaser,” “lessee,” “customer,” and

“taxpayer.” 4 The code does not define these terms, nor does it

apply the terms consistently. That said, we adjudicate disputes

based on the language of Florida law, even where it may be in

conflict with a promulgated rule. See Dep’t of Bus. Regul. v.

Salvation Ltd., 452 So. 2d 65, 66 (Fla. 1st DCA 1984) (“It is

axiomatic that an administrative rule cannot enlarge, modify or

contravene the provisions of a statute.”). With this in mind, we

turn to the merits.

C. Oracle is Not the Taxpayer

At each juncture, Oracle’s tax refund requests were denied or

dismissed for the same looming defect in its applications—the

failure to first refund its customers. But Oracle asserts that it

need not refund the taxes to its customers before seeking a refund

from the Department. The texts of the governing statutes say

otherwise.

“The words of a governing text are of paramount concern, and

what they convey, in their context, is what the text means.”

Antonin Scalia & Bryan A. Garner, Reading Law: The

Interpretation of Legal Texts § 2 at 56 (2012). To reiterate, Florida

law provides that the Chief Financial Officer may only issue a tax

refund to “the person who paid same, or his or her heirs, personal

representatives, or assigns.” § 215.26(1), Fla. Stat.

3 The Code does permit a dealer to assign this purported right

to seek a refund to its “customers.” Fla. Admin. Code R. 12–26.008.

4 Nor is it a surprise that Oracle argues this case “is a story of

bureaucratic dysfunction in administering a refund process that,

by law, should be simple.”

6

The court in Dep’t of Revenue v. Daystar Farms, Inc., 803 So.

2d 892, 896 (Fla. 5th DCA 2002), determined that the lessor in a

lessor-lessee transaction lacked standing to initiate a refund

action because it was not the “person or entity bearing the tax

burden.” Similarly, the court in State ex rel. Szabo Food Services,

Inc. of N. Carolina v. Dickinson, 286 So. 2d 529, 532 (Fla. 1973),

determined that the dealer lacked standing to seek a refund for

taxes “paid by the purchaser or consumer.” While both Daystar

and Szabo are procedurally distinguishable, the decisions show

that section 215.26 means what it says—that the person who paid

the tax is the proper person or entity to be refunded.

Further, after an application has been denied, Florida law

unequivocally states the “taxpayer” is the person or entity who

may contest the refund denial. § 72.011(1)(a), Fla. Stat. The

relevant statutes leave “taxpayer” undefined. But we need not

overcomplicate it. Black’s Law Dictionary defines a taxpayer as

“someone who pays or is subject to a tax.” Taxpayer, BLACK’S LAW

DICTIONARY (11th ed. 2019). And there is nothing in the statutes

that suggest any other meaning. Reading section 215.26(1) and

section 72.011(1)(a) together, therefore, requires that the refund

be paid to the person who paid the tax (i.e., the person who bore

the tax burden), and that taxpayer is the person entitled to contest

a refund denial.

Applying the text here, we agree with the Department that

Oracle could not receive a refund or contest the refund denials.

Oracle is not “the person who paid same, or his or her heirs,

personal representatives, or assigns;” that is, Oracle is not the

“taxpayer.” Without first returning the collected excess taxes to

its customers, Oracle acts only within its prescribed duties as a

dealer—collecting taxes from its customers and remitting those

taxes to the state. See §§ 212.07(1)(a), 212.06(1)(a), Fla. Stat. It

did not pay the tax. But it collected taxes, which upon collection

became state funds that must be remitted. §§ 212.06(1)(a),

212.15(1), Fla. Stat.

Simply put, Oracle is acting “as the state’s agent.”

Blackshears II Aluminum, Inc. v. Dep’t of Revenue, 641 So. 2d 928,

929 (Fla. 5th DCA 1994) (holding that the dealer was properly

subject to penalties and interest for collecting money for

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nontaxable transactions from its customers, which the dealer

needed to either remit to the state or refund to its customers).

What’s more, under the statutory framework, Oracle may be

compensated for serving the State as a dealer. See § 212.12(1), Fla.

Stat. This too demonstrates that Oracle acted as a dealer, not the

taxpayer.

Oracle, therefore, could not receive a refund, nor could it

challenge the refund denials under Florida law.

D. Oracle’s Argument

Oracle argues that, because the parties agree a refund is due,

the Department should conditionally approve Oracle’s refund

application, and once approved, Oracle can then refund its

customers to become entitled to the refund. We first note that this

argument essentially concedes that Oracle is not now entitled to

the refund. Instead, the thrust of Oracle’s argument is that it

should not be forced to assume the risk. That is, if a dealer refunds

a customer and the Department then denies the application, the

dealer will lose the money refunded to the customer. In the

Nielsen matter, for example, $739,145.49 is at risk.

But this is a policy argument. It does not matter if we think

there may be a better way to skin the proverbial cat. Oracle

provides no basis in Florida law that would permit an application

for a tax refund to be conditionally approved. Instead, Florida law

expressly states that the taxes Oracle collected are “state funds

from the moment of collection and are not subject to refund absent

proof that such funds have been refunded previously to the

purchaser.” § 213.756(1), Fla. Stat.

At no time has Oracle stepped into the shoes of the taxpayer

by bearing the tax burden or paying the taxes. It is, therefore, not

the taxpayer. It is only a dealer, who collected taxes paid by its

customers and remitted those taxes to the Department. Therefore,

the ALJ properly determined that Oracle was not entitled to a

refund. And the Department properly concluded that Oracle could

not contest the refund denials.

AFFIRMED.

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ROBERTS, J., concurs; WINOKUR, J., concurs with opinion.

_____________________________

Not final until disposition of any timely and

authorized motion under Fla. R. App. P. 9.330 or

9.331.

_____________________________

WINOKUR, J., concurring.

I agree that the applicable statutes constrain us to affirm the

order below. Because the majority addresses why Oracle is not a

taxpayer, I write separately to address why “standing” is an

improper way to describe the ability of a party to bring an action

before the Division of Administrative Hearings (DOAH) under the

Administrative Procedure Act (APA). *

DOAH is an administrative agency, not a court. See Art. V,

§ 1, Fla. Const. (“No other courts may be established by the state

. . . .”); see also § 120.50, Fla. Stat. (stating that the APA shall not

apply to the Legislature or the courts); § 120.65(1), Fla. Stat.

(stating that DOAH lies “within the Department of Management

Services”). Likewise, administrative law judges hold offices

created by the Legislature; they are not judicial officers holding

positions established by the Constitution. Compare Art. V, § 8, Fla.

Const. (establishing the eligibility criteria for the “office of justice”

and the “office of judge”) with § 120.65(4), Fla. Stat. (“[The Division

of Administrative Hearings] shall employ administrative law

judges to conduct hearings required by [the APA] or other law.”).

Because they do not hold judicial office, administrative law judges

do not wield “judicial power.” See Art. V, § 1, Fla. Const. (“The

* For similar reasons, I disagree with the use of the term

“jurisdiction” to refer to the statutory authority of the DOAH to

make an administrative recommendation or determination.

Similarly, the terms “collateral estoppel” and “res judicata” have

no place in administrative proceeding.

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judicial power shall be vested in a supreme court, district courts of

appeal, circuit courts and county courts.”).

That distinction matters, as the term “standing” has a specific

meaning—it refers to the ability of someone or something to invoke

a court’s judicial power by demonstrating a direct and articulable

stake in the outcome of litigation. See Brown v. Firestone, 382 So.

2d 654, 662 (Fla. 1980) (holding that “a party does not possess

standing to sue unless he or she can demonstrate a direct and

articulable stake in the outcome of a controversy.”); Nedeau v.

Gallagher, 851 So. 2d 214, 215 (Fla. 1st DCA 2003) (noting that

“[s]tanding depends on whether a party has a sufficient stake in a

justiciable controversy, with a legally cognizable interest which

would be affected by the outcome of the litigation.”); cf. Moody v.

NetChoice, LLC, 144 S. Ct. 2383, 2415 (2024) (Thomas, J.,

concurring in the judgment) (noting that “a plaintiff can maintain

a suit in a federal court—and thus invoke judicial power—only if

he has suffered an ‘injury’ with a ‘traceable connection’ to the

‘complained-of conduct of the defendant.’” (quoting Steel Co. v.

Citizens for a Better Env’t, 523 U.S. 83, 103 (1998) (emphasis

supplied)); cf. also TransUnion LLC v. Ramirez, 594 U.S. 413, 423

(2021) (“To demonstrate their personal stake [in the outcome of the

case], plaintiffs must be able to sufficiently answer the question:

‘What’s it to you?’” (citing Scalia, The Doctrine of Standing as an

Essential Element of the Separation of Powers, 17 Suffolk U. L.

Rev. 881, 882 (1983))).

Setting aside the differences between the Florida Constitution

and the Federal Constitution, I nevertheless agree with the

Supreme Court of the United States that standing is a

constitutional requirement. See Food & Drug Admin. v. All. for

Hippocratic Med., 602 U.S. 367, 378 (2024) (“Article III standing is

a ‘bedrock constitutional requirement that this Court has applied

to all manner of important disputes.’” (quoting United States v.

Texas, 599 U.S. 670, 675 (2023))); cf. Planned Parenthood of SW &

Cent. Fla. v. State, 384 So. 3d 67, 93 (Fla. 2024) (Sasso, J.,

concurring) (questioning whether standing in Florida flows from

“article V’s conception of ‘judicial power’” or from “the access to

courts provision of article I, section 21”).

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In stark contrast to the standing doctrine, the ability of a

party to seek an administrative determination under the APA is

controlled by the Legislature, not the Constitution. See, e.g.,

§ 120.56(1)(a), Fla. Stat. (“Any person substantially affected by a

rule or a proposed rule may seek an administrative determination

of the invalidity of the rule on the ground that the rule is an invalid

exercise of delegated legislative authority”); § 120.569(1), Fla.

Stat. (providing an administrative proceeding when “the

substantial interests of a party are determined by an agency”).

While it certainly may be an issue whether a party has an interest

sufficient to invoke the procedures of the APA, as required by

statute, the term “standing” should have no application when

determining whether of a party has the authority to bring an

administrative proceeding under the APA.

_____________________________

Jonathan W. Taylor and Rex D. Ware of Moffa, Sutton, & Donnini,

P.A., Fort Lauderdale, for Appellant.

Jacek P. Stramski, Special Counsel, Tallahassee, for Appellee.

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