STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MARK BENSON, d/b/a )

B.I. SUB SHOP AND B.I. ) AUTO PARTS, )

)

Petitioner, )

)

vs. ) CASE NO. 89-2437

)

STATE OF FLORIDA, ) DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Jane C. Hayman, held a formal hearing in the above- styled case on July 19, 1989, in Miami, Florida.

APPEARANCES

For Petitioner: Mark Benson, d/b/a B.I. Sub

Shop and B.I. Auto Parts, pro se

8250 N.W. 58th Street Miami, Florida 33166

For Respondent: Linda G. Miklowitz, Esquire

Department of Legal Affairs Tax Section, The Capitol Tallahassee, Florida

32399-1050

STATEMENT OF THE ISSUE

Whether Respondent's tax assessment against Petitioner should be sustained.

PRELIMINARY STATEMENT

On August 11, 1987 and on August 13, 1987, Respondent issued a Notice of Proposed Assessment of sales and use tax against Petitioner's enterprises, B.I. Auto Parts and B.I. Sub Shop, respectively. Petitioner contested the assessments on March 30, 1988, and on August 18, 1988, Respondent issued its Notice of Decision upholding the Notices of Proposed Assessment. Petitioner requested reconsideration on August 29, 1988, and on February 22, 1989, Respondent issued its Notice of reconsideration denying Petitioner's claim. By letter received by Respondent on April 21, 1989, Petitioner asserted his right to an administrative hearing and on May 1, 1989, Respondent requested that the Division of Administrative Hearings appoint a Hearing Officer to conduct a formal hearing on the matter.

At the formal hearing, Petitioner testified on his own behalf and offered one late filed exhibit. Respondent presented the testimony of one witness and offered eight exhibits, six of which were admitted into evidence.

A transcript of the hearing was not ordered, and the parties were granted leave until July 27, 1989 to file proposed findings of fact. Petitioner did not so file; however, Respondent did file proposed findings of fact and conclusions, but the filing was untimely.

FINDINGS OF FACT

1. Petitioner, Mark Benson, was the owner of both B.I. Sub Shop and B.I. Auto Parts which were small business enterprises in Miami, Florida. B.I. Sub Shop was in the business of selling retail food, while B.I. Auto Parts sold retail automobile parts. Neither business is currently in operation. In December 1986, sales and use tax collections by the enterprises had not been received by Respondent.

   
   

2. When Petitioner was notified in December 1986 by Respondent that he had not submitted the required sales tax collections, he contacted Respondent. An audit by Respondent ensued in the first quarter of 1987 resulting in the issuance of a Notice of Assessment against B.I. Auto Parts totalling $9,237.42 and a Notice of Assessment against B.I. Sub Shop totalling $1,421.33.

   
   

3. To record sales for B.I. Auto Parts, Petitioner kept copies of sequentially numbered invoices of his sales, some of which were missing at the time of the audit, and of vendor receipts. For B.I. Sub Shop, Petitioner calculated sales by subtracting the amount of money in the cash drawer at the beginning of the day from the amount remaining at the end of the day. The amount was then entered in a daily log. Invoices of vendor sales were also maintained. Petitioner admitted that the records he kept did not meet acceptable business standards but contended that his records were adequate for his needs.

   
   

4. Finding that the bookkeeping practices of both of Petitioner's enterprises were inadequate, Respondent made an estimate of the sales and use taxes owed. During the audit, Respondent requested certain records, including bank statements and certain income tax returns from Petitioner. Petitioner was given a date certain in which to provide the records but failed to timely comply with the request.

   
   

5. To calculate the estimate for B.I. Auto Parts, Respondent calculated a gross taxable sales amount by adding an additional taxable sales amount to the gross sales amount noted on the invoices. The additional taxable sales amount was found by a calculation of an average monthly sales figure determined from the deposits noted on the available bank statement (10 months). The average monthly sales figure was then applied to the number of months covered in the estimate yielding an estimated gross sales amount. The gross sales taken from the invoices was subtracted from the estimated gross sales amount, resulting in additional taxable sales.

   
   

6. To calculate the estimate for B.I. Sub Shop, Respondent took a sample (4 months) of the invoices of vendor sales. An average of the invoices was taken to obtain estimated purchases per month. The gross was calculated. Then,

   a 20% spoilage factor was deducted from the gross purchase and a 250% markup factor was applied, yielding an estimated gross sales. Certain other appropriate credits were given.

   
   

7. In view of the inadequacy of Petitioner's records, Respondent's methodology to assess the monies owed was reasonable, and Petitioner has failed to demonstrate any error in such assessment.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of these proceedings.

   
   

9. Section 212.12(5)(b), Florida Statutes provides, in pertinent part,

   that

   
   

   (b) In the event-any dealer or other person charged herein fails to make a report and pay the tax as provided by this chapter, then, in such event, it shall be the duty of the department to make an assessment from an estimate based upon the best information then available to it for the taxable period of retail sales of such dealer,...together with interest, plus penalty, if such have accrued, as the case may be. Then the department shall proceed to collect such taxes, interest, and penalty on the basis of such assessment which shall be considered prima facie correct, and the burden to show the contrary shall rest upon the dealer, seller, owner, or lessor, as the case may be.

   
   

10. Section 212.12 (6)(a) and (b), Florida Statutes provides, in pertinent

    part, that

    
    

    (6)(a) The department is given the power to prescribe the records to be kept by all person subject to taxes imposed by this chapter. It shall be the duty of every person required to make a report and pay any tax under this

    chapter, ... to keep and preserve suitable records of the sales,...or purchases, as the case may be, taxable under this chapter; such other books of account as

    may be necessary to determine the amount of the tax due hereunder; and other information as required by the department. It shall be the duty of every such person so charged with such duty, moreover, to keep and preserve as long as required... all invoices and other records of goods... All such book,

    invoices, and other records shall be open to examination at all reasonable hours to the department or any of its duly authorized agents.

    
    

    (b) For the purpose of this subsection, if a dealer does not have

    adequate records of his retail sales or purchases, the department may, upon the basis of a test or sampling of the dealer's available records or the information relating to the sales or purchases made by such dealer for a representative period, determine the proportion that taxable retail sales bear to total retail sales or the proportion that taxable purchases bear to total purchases. This subsection does not affect the duty of the dealer to collect, or the liability of any consumer to pay, any tax imposed by or pursuant to this part.

    
    

11. Rule 12A-1.093, Florida Administrative Code provides

    
    

    1. The Department of Revenue has the power to prescribe the records to be kept by all persons subject to the taxes imposed by Chapter 212, F.S.

    2. Each Dealer defined in Chapter 212, F.S.,...and any other person subject to the tax imposed by Chapter 212, F.S., shall keep and preserve, for a period of three years, a complete record of all transactions, together with invoices, bills of lading, gross receipts from sales, RESALE CERTIFICATES, CONSUMER EXEMPTION

       CERTIFICATES and other pertinent records and papers as may be required by the Department of Revenue for the reasonable administration of Chapter 212, F.S., and such book of account as may be necessary to determine the amount of tax due thereunder....

       
       

12. Petitioner has the-burden to show that the assessments at issue were incorrect, Section 212.12(5)(b), but Petitioner failed to sustain his burden. See 4 FALR 2081A

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent enter a Final Order sustaining the subject

assessments.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 15th day of August 1989.

JANE C. HAYMAN

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 15th day of August 1989.

COPIES FURNISHED:

Mark Benson,

B.I. Sub Shop and B.I. Auto Parts, 8250 N.W. 58th Street

Miami, Florida 33166

Linda G. Miklowitz, Esquire Department of Legal Affairs Tax Section, The Capitol

Tallahassee, Florida 32399-1050

Katie D. Tucker, Executive Director Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

William D. Moore, Esquire General Counsel Department of Revenue

203 Carlton Building Tallahassee, Florida 32399-0100

Docket for Case No: 89-002437

Orders for Case No: 89-002437