Court Opinion

ID: 9945768
Source: CourtListenerOpinion
Date Created: 2024-02-28 16:04:13.416763+00
Date Added: 2024-06-11T14:25:39.984947
License: Public Domain

FIRST DISTRICT COURT OF APPEAL
                STATE OF FLORIDA
                  _____________________________

                         No. 1D2022-2094
                  _____________________________

VERIZON COMMUNICATIONS INC.
& AFFILIATES,

    Appellant,

    v.

FLORIDA DEPARTMENT OF
REVENUE,

    Appellee.

                  _____________________________

On appeal from the Circuit Court for Leon County.
J. Layne Smith, Judge.

                        February 28, 2024

OSTERHAUS, C.J.

    Appellant Verizon Communications appeals the circuit court’s
award of partial summary judgment in favor of Appellee the
Florida Department of Revenue. In a corporate tax dispute
involving deductions from more than twenty years ago, the circuit
court determined that certain federal tax mitigation rules that
would benefit Verizon and its year 2000 tax return do not apply
under Florida law. We agree and affirm.
                                I.

     Earlier this millennium, Verizon acquired some companies
and began filing consolidated annual tax returns with them. Some
of these companies carried net operating losses (NOLs) with them
that could be deducted for federal and state tax purposes. 1 But
under a Department rule in effect at the time, some NOL
deductions were not fully utilized on tax returns filed with the
state. 2

     The present case arose out of the Department’s audit of
Verizon’s 2011-2013 corporate income tax returns. In 2017 the
Department issued Verizon a Notice of Proposed Assessment
indicating that, based on its audit, Verizon was due a refund for
certain over-paid taxes made between 2005 and 2013. In turn,
Verizon filed a tax protest arguing that it was entitled to utilize
pre-2000 NOLs from the companies it had acquired and to revise
its year 2000 tax return. The Department, however, rejected
Verizon’s argument about these NOLs finding them to be barred
by the three-year statute of limitations provided in § 215.26,
Florida Statutes.

     Verizon took the issue to circuit court and contended that
Florida law incorporated federal corporate tax mitigation
provisions that applied in Verizon’s favor here. These more
equitable federal mitigation rules would allow Verizon to utilize
NOL deductions even after the ordinary statute of limitations had
run. After analyzing Florida corporate tax provisions, the circuit
court determined that Florida has not adopted the federal
mitigation provisions. Verizon then appealed.

    1 A net operating loss is defined as the excess of deductions

allowed under the Internal Revenue Code over gross income. 26
U.S.C. § 172.
    2 Florida’s separate return limitation year (SRLY) rule was in

effect until invalidated by this court in Golden West Fin. Corp. v.
Dep’t of Revenue, 975 So. 2d 567 (Fla. 1st DCA 2008).

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                                 II.

     “A trial court’s order granting final summary judgment is
reviewed de novo . . . .” Crapo v. Univ. Cove Partners, Ltd., 298 So.
3d 697, 700 (Fla. 1st DCA 2020). “An issue of statutory
interpretation is also reviewed de novo.” Id. (citing Coastal Creek
Condo. Ass’n v. Fla. Tr. Servs. LLC, 275 So. 3d 836, 838 (Fla. 1st
DCA 2019)).

     Federal mitigation provisions allow for the correction of errors
that would otherwise be barred. 26 U.S.C. § 1311. Verizon
contends that Florida law adopts federal corporate tax law
concepts and thus has implicitly adopted the federal mitigation
provisions found in 26 U.S.C. §§ 1311-14. In 1971 the Florida
Legislature added Chapter 220 to the Florida Statutes for the
purpose of imposing a corporate income tax in Florida. Ch. 71-984,
Laws of Fla. The tax was designed substantially to mirror federal
income tax laws. See Dep’t of Revenue v. Am. Tel. & Tel. Co., 431
So. 2d 1025, 1027 (Fla. 1st DCA 1983) (chapter 220 “enabl[es]
Florida taxpayers to ‘piggyback’ on the provisions of the IRC”).
Indeed, § 220.02(3), Florida Statutes, includes a “Legislative
intent” provision that reads:

    (3) It is the intent of the legislature that the income tax
    imposed by this code shall utilize, to the greatest extent
    possible, concepts of law which have been developed in
    connection with the income tax laws of the United States,
    in order to:

         (a) Minimize the expenses of the Department of
         Revenue and difficulties in administering this code;
         (b) Minimize the costs and difficulties of taxpayer
         compliance; and
         (c) Maximize, for both revenue and statistical
         purposes, the sharing of information between the
         state and the Federal Government.

    But Florida’s tax code also contains substantive provisions
that can differ from the federal code. Turning specifically to
Verizon’s NOL argument, Florida’s tax code includes a statute of
non-claim that fixes a definitive three-year time period in which

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refunds can be requested for taxes or payments made in error:
“Application for refunds as provided by this section must be filed
with the Chief Financial Officer, except as otherwise provided in
this subsection, within 3 years after the right to the refund has
accrued or else the right is barred.” § 215.26(2), Fla. Stat; Victor
Chem. Works v. Gay, 74 So. 2d 560, 563 (Fla. 1954) (noting § 215.26
to be a statute of nonclaim that “while partaking of the nature of a
statute of limitations is not wholly such. It constitutes part of the
procedure of the court, . . . and, where no exemption from the
provisions of a statute exist, the court is powerless to create one.”
(quoting Brooks v. Fed. Land Bank of Columbia, 143 So. 749, 753
(Fla. 1932))); C&S Wholesale Grocers, Inc. v. Fla. Dep’t of Bus. &
Pro. Regul., 375 So. 3d 943, 948 (Fla. 1st DCA 2023) (recognizing
that “[j]urisdictional statutes of nonclaim are distinct in that they
operate to deprive a court of the power to adjudicate an untimely
claim”).

      Verizon argues, however, that federal mitigation provisions
supersede § 215.26 and authorize its old refund claim because
§ 220.02(3) states the legislative intention that Florida utilize
federal corporate income tax law to the greatest extent possible,
which would include federal mitigation rules allowing for the
correction of errors that would otherwise be barred. The problem
with this argument is that § 215.26 expressly applies to refund
claims like Verizon’s here. And no state statute makes an
allowance for a federal mitigation exception to the non-claim
statute. Verizon’s argument also relies upon a statement of
“Legislative intent” expressed in § 220.02(3) but courts don’t
typically construe substantive rights from such statements. See,
e.g., Barati v. State, 198 So. 3d 69, 77 (Fla. 1st DCA 2016)
(concluding that a “statement of legislative intent cannot authorize
this court to insert new language into the statute not authorized
by the Legislature.”). Deriving a substantive right from an intent
statute is particularly problematic where, as here, the statement
isn’t supported by other substantive law. Indeed, Verizon’s
legislative intent argument conflicts outright with the claim bar
set forth in § 215.26(2).

    Furthermore, the legislative intention expressed in
§ 220.02(3) targets efficiency-oriented goals that don’t fit the

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circumstances here. Specifically, § 220.02(3) aims to utilize the
federal code for a specific purpose, “in order to”:

         (a) Minimize the expenses of the Department of
         Revenue and difficulties in administering this code;
         (b) Minimize the costs and difficulties of taxpayer
         compliance; and
         (c) Maximize, for both revenue and statistical
         purposes, the sharing of information between the
         state and the Federal Government.

But the procedure Verizon advocated here isn’t efficient at all.
Rather, it attempts to reopen its year 2000 tax return and claim
deductions against that year’s income on the basis of NOLs from
even earlier tax years. Recovering and reviewing voluminous aged
tax records for claims more than twenty years old wouldn’t be
administratively efficient for anyone, especially in comparison to
following Florida’s non-claim statute. Indeed, § 215.26 handles
untimely claims with a most efficient rule that provides
administrative finality, it provides a clear deadline and a claim
bar. In view of § 220.02(3)’s stated efficiency goals, Verizon’s
argument for displacing Florida’s clear and efficient non-claim
statute, in favor of a federal tax concept that would keep tax
deadlines open indefinitely and not suitably minimize and
maximize the various goals set forth in that statute’s text, cannot
be correct.

     In conclusion, Florida law explicitly bars older tax refund
claims like those Verizon asserted. To elevate federal mitigation
rules over the express state standard would create an exception to
§ 215.26 where none currently exists in the statute. And “where no
exemption from the provisions of a statute exist, the court is
powerless to create [such an exception].” Victor Chem., 74 So. 2d
at 563. We therefore agree with the trial court that Verizon is not
entitled to its requested relief based on the federal mitigation
provisions.

    AFFIRMED.

KELSEY and M.K. THOMAS, JJ., concur.

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                 _____________________________

    Not final until disposition of any timely and
    authorized motion under Fla. R. App. P. 9.330 or
    9.331.
               _____________________________

Michael J. Bowen and Peter O. Larsen of Akerman LLP,
Jacksonville; and Kristen M. Fiore of Akerman LLP, Tallahassee,
for Appellant.

Ashley Moody, Attorney General, and Timothy E. Dennis, Chief
Assistant Attorney General, and Clifton Cox, Office of the Attorney
General, Revenue Litigation Bureau, Tallahassee, for Appellee.

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