CopyCited 7 times | Published | Florida 1st District Court of Appeal | 2005 WL 1544773
...Appellant, the Florida Department of Revenue ("Department"), seeks review of the trial court's Final Judgment in which the court awarded appellee, Lockheed Martin Corporation, a tax refund and interest in the amount of $1,255,182. The Department challenges the trial court's interpretation of section 212.052(2), Florida Statutes (2001), which addresses the tax exemption for certain research and development costs, arguing that because the statute is ambiguous, we should apply the rules of statutory construction and conclude that only labor costs involved in research and development are tax-exempt....
...for refunds of sales and use taxes paid on research and development costs and requesting a declaratory judgment. Specifically, appellee asserted that the cost of materials that it incorporated into prototypes was not subject to taxation pursuant to section 212.052(2)....
...ound that the research and development tax exemption was limited only to labor and other types of direct and indirect manufacturing costs and did not extend to the cost of materials. The Department acknowledges that it has inconsistently interpreted section 212.052(2) since the statute's enactment in 1982. For instance, in its Technical Assistance Advisement ("TAA") 90A-071, the Department explained that "materials (articles of tangible personal property) which become components of the `Products,' as that term is defined by Section 212.052(1)(c), F.S., of research and development, are exempt from sales and use tax." In 1992, appellee's predecessor, Martin Marietta Corporation, received a refund from the Department that included taxes paid on materials that became components of a prototype....
...r, such is not always the case due to changes in leadership, policy, or political climate. In noting that it was not required to rely on agency expertise to properly interpret words of common usage, the court concluded that the language contained in section 212.052(2) was sufficiently straightforward on its face to support appellee's interpretation. The court found that the Department's interpretation added wording to the statute that the Legislature did not include. The court concluded that section 212.052(2) provided an exemption "for tangible personal property actually incorporated or fabricated into a research and development end product, while excluding all other real and personal property employed in the research and development en...
...nufactured, produced, compounded, processed, or fabricated without any deduction therefrom on account of the cost of material used, labor or service costs, or transportation charges, notwithstanding the provisions of s.
212.02 defining "cost price." Section
212.052(2), Florida Statutes (2001), which addresses the tax exemption for research and development costs, provides, in pertinent part: Notwithstanding any provision of this chapter to the contrary, any person ......
...onal property employed in research and development which is subject to the tax imposed by this chapter at the time of purchase or rental. The term "cost" as used in subsection (2) means "cost price" as defined in section
212.02(4), Florida Statutes. §
212.052(1)(b), Fla....
...or or service costs, transportation charges, or any expenses whatsoever." The term "product," as used in subsection (2), is defined as "any time, device, technique, prototype, invention, or process which is, was, or may be commercially exploitable." § 212.052(1)(c), Fla....
...o the ownership thereof, or interest therein, except that it does not include the sale at retail of that property in the regular course of business.. . ." §
212.02(20), Fla. Stat. (2001). The Department relies on its inconsistent interpretations of section
212.052(2) in support of its argument that the statute is ambiguous and worthy of statutory construction....
...However, as the trial court found, the Department's differing interpretations have no bearing on our reading of the statute given its clear and unambiguous meaning. See Donato,
767 So.2d at 1153. Alternatively, the Department urges that, if we were to find that section
212.052(2) is unambiguous, we should conclude that the second sentence of the statute essentially trumps the first sentence....
...Id. at 455. Where possible, a court must give full effect to all statutory provisions and construe related provisions in harmony with each other. Id. (citation omitted). As appellee argues, and as the trial court found, the two sentences contained in section 212.052(2) can be read *1022 together in order to achieve a consistent whole....
...oyed in such. We agree with both the trial court and appellee that tangible personal property incorporated or fabricated into a research and development end product or prototype is directly and solely used in research and development for purposes of section 212.052(2)....
...Our reading of the statute is supported by the fact that the second sentence and the "employed in" language includes the purchase, rental, or repair of real property. Such property, like equipment, cannot be incorporated or fabricated into a prototype. In conclusion, because we find that section 212.052(2) is clear and unambiguous, we need not consider the Department's interpretation or the statute's legislative history....
