Case Name: DEPARTMENT OF REVENUE of the State of Florida and Gerald A. Lewis, as Comptroller of the State of Florida, Appellants, v. PARKER BANANA COMPANY, a Florida Corporation, Appellee
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 1980-12-24
Citations: 391 So. 2d 762
Docket Number: No. 79-581
Parties: DEPARTMENT OF REVENUE of the State of Florida and Gerald A. Lewis, as Comptroller of the State of Florida, Appellants, v. PARKER BANANA COMPANY, a Florida Corporation, Appellee.
Judges: RYDER, J., concurs.
Reporter: Southern Reporter, Second Series
Volume: 391
Pages: 762–767

Head Matter:
DEPARTMENT OF REVENUE of the State of Florida and Gerald A. Lewis, as Comptroller of the State of Florida, Appellants, v. PARKER BANANA COMPANY, a Florida Corporation, Appellee.
No. 79-581.
District Court of Appeal of Florida, Second District.
Dec. 24, 1980.
Jim Smith, Atty. Gen., and E. Wilson Crump, II, Asst. Atty. Gen., Tallahassee, for appellants.
J. Rex Farrior, Jr., Stephen A. Crane, and Charles P. Schropp of Shackleford, Farrior, Stallings & Evans, Tampa, for appellee.

Opinion:
DANAHY, Judge.
For purposes of the tax imposed on corporations and other artificial entities by the Florida Income Tax Code, tax base net income is determined in accordance with an apportionment formula which reflects the legislative view of how much of the net income of a domestic or foreign corporation should fairly be taxed by Florida. Among other things, the formula requires a determination of the total sales of the taxpayer in this state during the taxable year or period. That determination is the subject of the dispute in this case.
Appellee Parker Banana Company (Parker Banana) is a domestic corporation which imports bananas to Tampa in refrigerated ships and sells them to wholesalers, some of whom are from out of state. Bananas sold to purchasers from out of state are transported to points outside Florida. All of Parker Banana's purchasers arrange their own pickup and transportation. Parker Banana conveys the boxes of bananas by conveyer belt from the ship's hold directly into refrigerated trucks sent by or on behalf of the purchasers. Some purchasers send trucks owned or rented by them. Others use common carriers or contract carriers.
The Florida apportionment statute provides that "sales of tangible personal property are in this state if the property is delivered or shipped to a purchaser within this state, regardless of the f.o.b. point or other conditions of the sale" (emphasis ours). In computing its Florida corporate income tax, Parker Banana treated all sales to purchasers from outside Florida as sales not in this state. Appellants (herein collec tively called "the Department") took the position that only those sales to out-of-state purchasers who used common carriers to pick up their bananas could properly be characterized as sales not in this state for purposes of the apportionment formula. The Department assessed a deficiency against Parker Banana accordingly, which Parker Banana paid under protest. In this suit for refund, the trial judge ruled that the Department's position was incorrect and entered a final summary judgment for Parker Banana. We affirm.
In the phrase "property delivered or shipped to a purchaser within this state," to what do the words "within this state" refer? That is the simple question which confronts us, and neither party has cited to us any authority which specifically addresses that question. Our own extensive research has produced none.
The Department reaches its position in this case by applying the words "within this state" to the word "delivered." The Department contends that those out-of-state purchasers from Parker Banana who arrange to pick up their bananas other than by common carrier take delivery as a matter of law at dockside in Tampa. Therefore, says the Department, in each such case there is a delivery within this state and the sale is within this state.
We disagree with the Department's construction of the statute. In our view, the words "within this state" must refer to the word "purchaser" if the legislative intent is observed. Under our construction of the apportionment statute, a sale is in this state if the sale is to a Florida purchaser and that, in turn, depends on the destination of the goods sold. It matters not whether delivery or shipment occurs in Florida or out of Florida. Our interpretation of the statute accords with the legislative intent to assign to Florida for tax purposes a portion of net income attributable to sales by the taxpayer in the Florida market as determined by the destination of the goods. A. England, Florida Corporate Income Taxation: Background, Scope and Analysis, in An Introduction to Florida Corporate Income Taxation 4, 14 (1972).
The Department's interpretation of the apportionment statute ignores basic rules of sentence construction and would have the effect of undermining the legislative intent. Surprisingly, the Department argues that the words "within this state" apply to the word "delivered" but not to the word "shipped." It does not treat as sales in Florida those sales by Parker Banana to out-of-state purchasers who arrange for shipment by common carrier. We appreciate the probable reason why the Department insists on such a tortured construction of the statute. Since the statute applies to out-of-state sellers as well as to domestic sellers, applying the words "within this state" to both the word "delivered" and the word "shipped" would result in excluding from Florida taxing jurisdiction a huge portion of sales by otherwise taxable out-of-state sellers to Florida purchasers. Only those in which either delivery or shipment occurs in Florida would be includable. But the Department cannot have its cake and eat it too; we see no way in the world that the statute can logically or grammatically be construed so that the words "within this state" apply only to the word "delivered".
Examples come readily to mind as well of situations in which there can be a sale by a Florida seller to a Florida purchaser with Florida the destination of the goods, yet neither delivery nor shipment occurs in this state. If, for example, Parker Banana imported bananas to New York by refrigerated ships and sold those bananas to Florida purchasers who took delivery at dockside in New York for transportation to Florida, those sales should be considered as sales in this state for purposes of the apportionment statute.
Our position is supported by the Department's own regulations, which refer to the term "purchaser within this state." Fla. Adm.Code Rule 12C-1.15(4)(d)4. The examples in the regulations demonstrate that if the destination of goods sold is Florida, then Florida is considered the consumer state-the market in which the sale is made- and the purchaser, regardless of business location or residence, is the equivalent of a Florida purchaser.
Thus under the destination test, a purchaser from outside this state does not become a "purchaser within this state" merely by sending a representative to pick up the goods in Florida; if, however, the destination of the goods is a point within Florida, then the purchaser is within this state.
The Department has cited to us, in support of its position, the decision in Coulter Electronics, Inc. v. Department of Revenue, 365 So.2d 806 (Fla. 1st DCA 1978). In that case our sister court held that certain inter-company sales were not sales. In reaching that conclusion, the court said that "the inter-company transactions also lack 'delivery,' the factor under Florida Statute Section 214.71 which determines whether a sale of tangible personal property has occurred in Florida." The facts in the Coulter case are clearly distinguishable from the facts here involved, and the court's remark concerning place of delivery was unnecessary to its holding. Therefore, we do not consider the Coulter decision as authority for the proposition urged by the Department in this case.
In fact, the language adopted by Florida in the sales portion of the apportionment statute was chosen specifically because it establishes the "destination" test for determining whether sales are in this state for corporate income tax purposes. England, supra, at 14. The language of the statute is taken from Section 16(a) of the Uniform Division of Income for Tax Purposes Act (UDITPA). Florida did not, however, adopt all the provisions of UDITPA and so we are struggling with language taken out of context. Under UDITPA a corporation apportions net income to a state for income tax purposes only if it has income from business activity which is taxable both within and without the state. UDITPA Sec. 2. That may not be the case with Parker Banana, but Florida law mandates apportionment whether or not a corporation is engaged in a truly multistate business. § 220.15, Fla.Stat. (1979).
UDITPA also contains a "throwback rule" which apportions sales to the state of origin notwithstanding that they are made to an out-of-state purchaser if the taxpayer is not taxable in the state of the purchaser. UDITPA Sec. 16(b). A taxpayer in Florida which follows the practice of delivering goods in this state to representatives of out-of-state purchasers for transportation out of state might not be subject to income taxation in the purchasers' states by reason of those sales because of the jurisdictional barrier. Had Florida adopted the throwback rule, the Department might not have felt constrained to take the contorted position it has taken in this case in order to capture Parker Banana's sales to out-of-state purchasers.
Our failure to find any case interpreting the meaning of "within this state" as used in the Florida statute probably results from the fact that the issue simply does not arise where apportionment is permitted only to a truly multistate business or the throwback rule is adopted. The statutory language barrier faced by the Department in this case may very well be unique to Florida and perhaps is a problem that should be addressed by the legislature. We have no choice but to rule that the apportionment statute does not support the Department's position.
AFFIRMED.
RYDER, J., concurs.
OTT, Acting C. J., dissents with opinion.
. Ch. 220, Fla.Stat. (1979).
. § 214.71, Fla.Stat. (1979).
. The jurisdictional barrier is the nexus required by the federal constitution and federal law for state taxation of the income of a corporation conducting only an interstate business within the state. Without a "throwback rule" such as that provided in UDITPA, the jurisdictional barrier can produce "nowhere income." Corrigan, Interstate Corporate Income Taxation-Recent Revolutions and a Modern Response, 29 Vand.L.Rev. 423, 429 (1976).