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Right, it depends, and wrong directions


Florida law has a specific definition for the term "rule". In the context of administrative law and state tax rulings, the term is defined as follows:

"Rule means each agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the procedure or practice requirements of an agency and includes any form which imposes any requirement or solicits any information not specifically required by statute or by an existing rule." See: s. 120.52( 16) F.S.

Florida taxpayers may be unknowingly subject to audit or enforcement action which rely upon agency policies that are not plainly spelled out in the rules ( regulations) promulgated to implement Florida statutes. In Coventry First, LLC v. State, Office of Ins. Regulation, 38 So.3rd 200 ( Fla. 1st DCA 2010), Judge Rowe wrote on behalf of the court in the context of a Final Order dismissing a rule challenge by Coventry First, LLC. While the context dealt with the Florida Viatical Settlement Act, the opinion illuminates the area of Chapter 120 dealing with rulemaking. Quoting earlier case law originally attributed to McDonald v. Dep't of Banking & Fin., 346 So.2d 569, 581 (Fla. 1st DCA 1977), the Coventry opinion identified basic contextual circumstances in which the courts or the statutes mandate rulemaking stating:

An administrative agency is required to promulgate rules on "those statements which are intended by their own effect to create rights, or to require compliance, or otherwise to have the direct and consistent effect of law."

TheCoventry opinion also relies upon a 1991 Fifth District opinion involving Florida tax audits known as Department of Revenue of State of Fla. v. Vanjaria Enterprises, Inc, 675 So.2d 252 ( Fla. 5th DCA 1996). Because of its nexus to tax issues, the decision reveals the focus of the courts in the context of audit issues. The Vanjaria decision introduces the view that agency statements which qualify as rules, but are not promulgated as such, are unenforceable. (" An agency statement that meets the Chapter 120 definition of a rule, but which has not been promulgated …..constitutes an invalid exercise of delegated legislative authority and, therefore, is unenforceable.") Id. In Vanjaria Enterprises, supra, the 5th DCA determined that the Department of Revenue's training manual used in tax assessment procedure was a statement of general applicability and an unpromulgated rule. The court's reasoning focused on the fact that the audit manual was the singular guide for training the auditors, it was not applied on a case-by-case basis, and the auditors had no discretion to act outside of the procedure. Clearly, the lack of discretion and the uniform application of procedure produced a "rule". The legislature has specifically defined an "unadopted rule" as "an agency statement that meets the definition of the term 'rule,' but that has not been adopted pursuant to the requirements of s. 120.54." § 120.52(20), Fla. Stat.

Distinguishing Simple Statutory Interpretation

Not infrequently, District court opinions remind Petitioners and other parties of the basic tenant of Administrative law which holds that an agency's interpretation of a statute is entitled to considerable deference, and "[a] reviewing court properly defers on questions of statutory interpretation to the agency to which the Legislature has given the responsibility and authority to administer the statute, unless the interpretation is clearly erroneous." State Bd. of Admin. v. Huberty, 46 So.3d 1144 (Fla. 1st DCA 2010) (Quoting: Okeechobee Health Care v. Collins, 726 So.2d 775, 778 (Fla. 1st DCA 1998). In the State Board decision, the agency interpreted an undefined term "electronic" , as stated in the statutory phrase, "be made in writing or by electronic means" , to include telephonic elections rather than solely computer based communication. The court did so in reversing the DOAH decision in the case which ascribed a non-rule policy. In so doing, the court reiterated the definition of a rule used by the court :

We have held that " '[a]n agency statement that either requires compliance, creates certain rights while adversely affecting others, or otherwise has the direct and consistent effect of law is a rule.' " (quoting Fla. Dep't of Fin. Servs. v. Capital Collateral Reg'l Counsel–Middle Region, 969 So.2d 527, 530 (Fla. 1st DCA 2007))).

Thus, this decision reiterated that a simple and reasonable interpretation of a term in a statute, not defined, will not itself result a finding of a non-rule policy. However, this decision is in contrast to the facts and circumstance in Vanjaria Enterprises, supra, In Vanjaria, the statute directed the Department of Revenue to determine the portion of a property's rental revenue that was exempt from taxation The Fifth DCA explained…." the department's decision to use a square-footage formula, rather than another method, such as a revenue-percentage formula, was not direct application of the statute. " It was a statement interpreting and applying the statute which had to be adopted as a rule. The contrast between the two cases and the reasoning supplied by the Fifth DCA as explanation are useful beyond the decision. The Fifth DCA description and explantion are particularly helpful in tax cases involving audits. In such cases, attention should be focused on whether the assessment is based upon a judgement of the auditor and whether there is reasonable explanation available from the agency that is attributable to the plain words of a statute or an existing agency rule. If neither of these circumstances exist, it would be advisable to ask for clarification from the agency. Absent clarification, please consult your tax professional.


  1. An agency statement ,not proscribed in a rule, which requires compliance, creates certain rights while adversely affecting others, or otherwise has a direct and consistent effect will likely be considered a non-rule policy. See: Amerisure Mut. Ins. Co. v. Florida Dept. of Financial Services, Div. of Workers' Compensation, 156 So.3d 520 (Fla. 1st DCA 2015).
  2. An agency interpretation of an undefined term in a statute, which the agency administers, will not be considered a non- rule policy when agency interpretation does not place upon the statute an interpretation which is not readily apparent from a literal reading of the statute. State Bd. of Admin. v. Huberty, 46 So.3d 1144 (1st DCA 2010)
  3. Audit results which cannot be explained by the statute itself and for which no rule exists may be considered a non-rule policy and should be the subject of further discussion and consultation.

Florida sales tax audit; Florida sales tax attorney; Florida sales tax help; James McAuley; Jim McAuley; Florida sales tax litigation; Florida Tax LitigationAbout the Author: James (Jim) F. McAuley is an experienced attorney, joining the firm in 2015 after an exemplary career with the state of Florida. Holding the Florida Bar board certification as a specialist in State and Federal Administrative Law, Mr. McAuley represented the State of Florida for more than 20 years in the area of state and local taxation and administrative law with an emphasis on litigation. Mr. McAuley is Board Certified by the Florida Bar in the area of State and Federal Government Administrative Practice. Mr. McAuley holds the highest rating given to lawyers by Martindale Hubbell (Av) and has maintained that rating for more than 15 years. He is also a published legal author in both State taxation and Administrative law. He is an alumni & author of the Nova Law Review (Fall 2007). You can read more about Mr. McAuley in his firm bio.


BURDEN OF PROOF & PERSUATION IN FL TAX CASES, published May 31, 2015, by James McAuley, Esq.

PLETHORA OF SALES TAX LITIGATION IN FLORIDA, published June 8, 2015, by James Sutton, CPA, Esq.