STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PBS BUILDING SYSTEMS, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 92-5765

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, final hearing in the above-styled case was held in Tallahassee, Florida, on February 11, 1993, before Robert E. Meale, Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

The parties were represented at the hearing as follows: For Petitioner: no appearance

For Respondent: Attorney Lisa Raleigh

Department of Legal Affairs Tax Section, Capitol Building Tallahassee, FL 32399-1050

STATEMENT OF THE ISSUE

The issue in this case is whether Petitioner is liable for corporate income and excise taxes that have been assessed by Respondent.

PRELIMINARY STATEMENT

On December 19, 1990, Respondent issued a notice of proposed assessment against Petitioner in the amount of $75,734, including interest through September 15, 1990, for unpaid corporate income tax. On the same date, Respondent issued a notice of proposed assessment against Petitioner in the amount of $11,071, including interest through September 15, 1990, for unpaid corporate excise tax.

By letter dated September 16, 1992, Petitioner requested a formal hearing on the proposed assessments.

Petitioner failed to appear at the hearing. Respondent called no witnesses, but offered into evidence eight exhibits, which were all admitted. Respondent waived its right to file a proposed recommended order, and no transcript was ordered

FINDINGS OF FACT

1. Petitioner is a subsidiary of PBS Building Systems America, Inc. (PBS- A). PBS-A and Petitioner filed consolidated Florida income and excise tax returns during the time in question.

   
   

2. During the years in question, PBS-A had no tax nexus with Florida, but incurred losses that were available to offset gross income. During the years in question, Petitioner had nexus with Florida and incurred taxable income. The filing of the consolidated return reduced the taxable income of Petitioner by the losses of PBS-A.

   
   

3. On December 19, 1990, Respondent issued two notices of proposed assessment for years ending December 31, 1985, through March 31, 1989. One notice identifies $8273 of unpaid corporate excise tax, plus $2798 of interest through September 15, 1990. The notice states that interest would continue to accrue at the daily rate of $2.27.

   
   

4. The second notice of proposed assessment identifies $55,480 of unpaid corporate income tax, plus $20,254 of interest through September 15, 1990. The notice states that interest continues to accrue at the daily rate of $15.20.

   
   

5. Petitioner filed a notice of protest dated February 15, 1991. By notice of decision dated October 17, 1991, Respondent rejected the protest and sustained the proposed deficiencies. The claimed deficiency for unpaid corporate income tax, however, was revised to $75,039. A notice of reconsideration dated July 21, 1992, restates the conclusions of the notice of decision.

   
   

6. By petition for formal hearing dated September 16, 1992, Petitioner requested a formal hearing concerning the tax liabilities in question and specifically the conclusion that PBS- A was ineligible to file a consolidated return in Florida due to the absence of tax nexus with Florida.

   
   

7. The September 16 letter recites facts to establish tax nexus with Florida through the establishment of financing relationships. However, it is unnecessary to consider the sufficiency of these factual assertions because they represent mere allegations. Petitioner failed to produce any evidence in the case and, when noticed for a corporate deposition, failed to appear. Additionally, Petitioner's failure to respond to requests for admission results in admissions that, during the relevant period, PBS-A was not a bank, brokerage house, or finance corporation and did not lend money to Petitioner.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties. Sections 120.57(1) and 120.575(2), Florida Statutes. (All references to Sections are to Florida Statutes.)

   
   

9. Under Section 120.575(2), the burden on Respondent is to show that "an assessment has been made against the taxpayer and the factual and legal grounds

   . . . [of] the assessment."

   
   

10. Respondent has shown that two assessments have been made against Petitioner. The assessment for unpaid corporate excise tax is for $11,071, plus interest at the daily rate of $2.27 from September 16, 1990. The assessment for unpaid corporate income tax is for $75,039, plus interest at the daily rate of

    $15.20 from September 16, 1990.

11. Respondent has also made a prima facie showing of the factual and legal grounds for deconsolidating the returns of Petitioner from those of its parent, PBS-A.

RECOMMENDATION

Based on the foregoing, it is hereby

RECOMMENDED that the Department of Revenue enter a final order sustaining the above-described assessments against Petitioner.

ENTERED on February 12, 1993, in Tallahassee, Florida.

ROBERT E. MEALE

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 12th day of February, 1993.

COPIES FURNISHED:

Dr. James Zingale, Executive Director Department of Revenue

104 Carlton Building Tallahassee, FL 32399-0100

Linda Lettera, General Counsel Department of Revenue

204 Carlton Building Tallahassee, FL 32399-0100

Attorney Lisa Raleigh Department of Legal Affairs Tax Section, Capitol Building Tallahassee, FL 32399-1050

Kathryn M. Jaques Arthur Andersen & Co. Suite 1600

701 B Street

San Diego, CA 92101-8195

Docket for Case No: 92-005765

Orders for Case No: 92-005765