Could an electric utility assign its refund rights to a customer instead of directly refunding allegedly overpaid Florida sales tax?

Plain-English summary

A municipal utility customer claimed that electricity had been used exclusively for residential purposes and that the utility had collected sales tax in error. The utility offered to assign its refund rights rather than give an immediate cash refund or bill credit.

Florida explained that the Department generally refunds the person who paid tax into the State Treasury—the dealer—or that person's assigns. The Department could not require the utility to refund the customer directly.

The utility could choose a direct refund or credit, or issue an Assignment of Rights allowing the customer to seek a refund from the Department. The utility should retain proof that the customer paid the tax and other records substantiating the refund claim.

What this means for you

A customer who paid tax to a seller may need the seller's cooperation to reach the Department directly. An assignment transfers the dealer's procedural refund right; it does not by itself prove that the underlying tax was overpaid.

Common questions

Could the Department force a direct utility refund? No.

What alternatives did the utility have? Cash refund, bill credit, or an assignment allowing the customer to file directly.

What records should the dealer keep? Proof of the customer's tax payment and documents supporting refund eligibility.

Citations and references

• Fla. Stat. §§ 212.08(7)(j) and 215.26 and Fla. Admin. Code rr. 12A-1.014 and 12A-1.053, as listed or discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 10A-048

Original ruling text

SUMMARY
QUESTION: Is a dealer required to refund tax to a customer directly or may the dealer give the
customer an assignment of rights so that the customer may seek a refund from the Department?
ANSWER: The Department is without authority to require a dealer to refund tax directly to a
customer. If the dealer declines to give the customer a refund, the dealer may give the customer an
assignment of rights so that the customer may seek a refund directly from the Department.

November 17, 2010

XXX
XXX
XXX
Re:

Technical Assistance Advisement 10A-048
Assignment of Rights for a Refund Request
Subsection 212.08(7)(j) and Section 215.26, Florida Statutes (F.S.)
Rules 12A-1.014 and 12A-1.053, Florida Administrative Code (F.A.C.)

Dear :
This is a response to your letter dated September 29, 2010, in which you have requested a Technical
Assistance Advisement on the requirement of an assignment of rights when requesting a refund
directly from the Department.
Stated Facts
Your letter states in part:
[“Utility”] … is a retail electric utility serving customers in [n]ortheast Florida. One
of [Utility’s] customers, [“Customer”] … has recently notified [Utility] that
electricity it purchases is exclusively used for residential purposes. Prior to this
notification[, Utility] had charged and collected sales tax on the customer’s account.
Now the customer claims the sales tax has been erroneously paid and has submitted
to [Utility] a request for refund and a certificate of exemption (copies of both are
enclosed), certifying that all electricity it has purchased has been exclusively for
residential purposes since May 2007.
[Utility] does not have any reason to doubt the customer’s claim that the electricity it
has purchased from [Utility] has been exclusively used for residential purposes.
[Utility] also acknowledges that electricity sold for exclusive residential use is
exempt from sales tax [pursuant to] §212.08(7)(j), [F.S.], and that the customer is
entitled, upon submission of the appropriate written documentation, [pursuant to

Rule 12A-1.053, F.A.C.], to secure a refund from [Utility] for erroneously paid tax.
[Rule 12A-1.014(4), F.A.C.]; see also §215.26, [F.S.]
However, a dispute has arisen between [Utility] and the customer that gives rise to
this request. [Utility] has offered the customer an assignment of right of refund
(which would secure the customer’s right to seek a refund directly from the
Department of Revenue … in lieu of paying the customer a cash refund or giving the
customer a credit on future billings. The customer’s agent has disputed [Utility]’s
right to give such an assignment of right to refund and is insisting the customer be
given a cash refund. (copies of the correspondence evidencing the dispute are
enclosed.)
It has been the policy of [Utility] since April 2004 to issue assignments of right to
refund to customers in response to refund requests such as the one received from
[Customer]. As a municipality, [Utility] operates it[s] electric utility on a cost basis.
Issuing assignments of right to refund in lieu of cash refunds or credit protects
[Utility’s] ratepayers from the impact of significant refund requests….
Based upon [Utility’s] review of the Department’s previous TAAs and the longstanding policy of [Utility], [Utility] believes it has the right to issue an assignment
of right to refund to [Customer] in lieu of paying a direct monetary refund or giving
the customer a credit against future charges.
Taxpayer’s Position
Your letter requests the following advisement:
Where a customer properly requests a refund of sales tax the customer has overpaid,
or paid when no sales tax was due, the dealer has the option of either (1) paying the
refund to the customer, including issuing a credit to the customer against future
charges, or (2) issuing the customer an assignment of right to refund to secure the
customer’s right to seek the refund directly from the Department.
Applicable Authority and Discussion
Rule 12A-1.014(4), F.A.C., provides that a taxpayer who has overpaid tax to a dealer must secure a
refund from the dealer and not from the Department of Revenue. However, reliance solely on this
Rule provision overlooks the reason behind the provision. Subsection 215.26(1), F.S., authorizes the
repayment of tax by the state in the case of an overpayment of tax, a payment where no tax was due,
or a payment made in error, only to the person who paid the tax into the State Treasury. A dealer
who collected sales tax on his or her taxable transactions and remitted the tax to the Department is
the person who paid the tax into the State Treasury and thus is the only person to whom the
Department may issue a refund. The statute goes on to provide that the money may be refunded to
the dealer’s “heirs, personal representatives, or assigns.” (Emphasis supplied). This provision
therefore allows a dealer to assign his or her right to a refund of tax to another, including the
consumer from whom the tax was collected. To establish that the dealer did so assign his or her

right, the Department has determined that the dealer must document the assignment by issuing to the
consumer an Assignment of Rights.
Advisements
Based on the clear language of s. 215.26, F.S., the Department may issue a refund to a dealer or the
dealer’s assigns. A dealer who receives a request for refund of tax from a customer may either
refund the tax directly to the customer, through either a direct refund or a credit, or may provide the
customer with an assignment of right so that the customer may seek the refund directly from the
Department. The dealer should maintain documentary proof that the tax was paid by the customer
to the dealer, such as an invoice or a cancelled check, and should also maintain any other
documentation the dealer may have that is necessary to substantiate the customer’s right to a refund
of the tax.
Closing Statement
This response constitutes a Technical Assistance Advisement under s. 213.22, F.S., which is binding
on the Department only under the facts and circumstances described in the request for this advice as
specified in s. 213.22, F.S. Our response is predicated on those facts and the specific situation
summarized above. You are advised that subsequent statutory or administrative rule changes or
judicial interpretations of the statutes or rules upon which this advice is based may subject similar
future transactions to a different treatment than expressed in this response.
You are further advised that this response, your request and related backup documents are public
records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions of s.
213.22, F.S. Confidential information must be deleted before public disclosure. In an effort to
protect confidentiality, we request you provide the undersigned with an edited copy of your request
for Technical Assistance Advisement, the backup material and this response, deleting names,
addresses and any other details which might lead to identification of the taxpayer. Your response
should be received by the Department within 15 days of the date of this letter.
If you have any further questions with regard to this matter and wish to discuss them, you may
contact me directly at (850) 717-7105.
Sincerely,

Tammy S. Miller
Senior Attorney
Technical Assistance & Dispute Resolution
Records ID:

90644