STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NORMAN E. FRICK, )

)

Petitioner, )

)

vs. ) CASE NO. 94-0938

) DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, final hearing in the above-styled case was held on September 12, 1994. The parties, attorneys, witnesses, and court reporter attended the hearing in Ft. Myers. Robert E. Meale, Hearing Officer of the Division of Administrative Hearings, participated by videoconference from Tallahassee.

APPEARANCES

The parties were represented at the hearing as follows: For Petitioner: James G. Decker

Decker and Smith, P.A. Post Office Box 9208

Ft. Myers, Florida 33902-9208

For Respondent: Lealand L. McCharen

Assistant Attorney General Department of Legal Affairs The Capitol--Tax Section

Tallahassee, Florida 32399-1050 STATEMENT OF THE ISSUE

The issue in this case is whether Petitioner owes sales tax in connection with the sale of appurtenances to mobile homes and, if so, how much.

PRELIMINARY STATEMENT

On August 2, 1991, Respondent sent Petitioner a Notice of Intent to Audit regarding sales tax from August 1, 1986, through July 31, 1991. Following an audit, on November 16, 1992, Respondent sent Petitioner a Notice of Decision proposing an additional assessment of $11,930.04, plus interest. Following receipt of a Petition for Reconsideration, on May 12, 1993, Respondent sent Petitioner a Notice of Reconsideration proposing an additional assessment of

$9751.74, rather than $11,930.04, plus interest at the rate of $2.87 daily from January 16, 1992.

By Petition for Administrative Hearing, Petitioner demanded a formal hearing on his liability for the sales tax.

At the hearing, Petitioner called three witnesses and offered into evidence five exhibits. Respondent called one witness and offered into evidence two exhibits. All exhibits were admitted.

The transcript was filed October 6, 1994. Rulings on timely filed proposed findings are in the appendix.

FINDINGS OF FACT

1. Petitioner is a real estate broker. After 18 years in the business in Michigan, Petitioner moved to Florida in August, 1988. After about one and one- half years working in residential real estate, Petitioner devoted his efforts exclusively to the sale of mobile homes. He soon began to specialize in the resale of mobile homes.

   
   

2. In June 1990, Petitioner became self-employed and registered, or was required to register, as a dealer. He engaged in two types of mobile home sales: mobile homes with land and mobile homes without land. This case involves solely the sale of mobile homes without land.

   
   

3. From June 20, 1990, through April 26, 1991, Petitioner was involved in the sale of 11 mobile homes without land, and these sales are the subject of the present case. In each transaction, Petitioner never took title or possession of the mobile homes; they remained on a rented lot in a mobile home park.

   
   

4. In each transaction, Petitioner stated, on a notarized bill of sale, the sales price of the mobile home and the sales price of associated tangible personal property, such as sheds, carports, and furniture. The associated tangible personal property is typically referred to as "appurtenances."

   
   

5. In most transactions, Petitioner listed the mobile home and found the buyer. At these closings, he collected a $2000 commission.

   
   

6. In one transaction, which closed March 18, 1991, Petitioner did not secure the buyer, nor did he have the listing. The buyer and seller approached Petitioner and asked him to prepare the closing papers. In this case, Petitioner charged only $250. The sales price of this transaction was $18,900 with $7560 allocated to the appurtenances. The resulting additional tax liability was $453.60.

   
   

7. In another transaction, Petitioner did not secure the buyer so he charged a reduced commission.

   
   

8. In a third transaction, which closed April 5, 1991, Petitioner was not the listing agent, but agreed to prepare the closing documents because the listing broker was under sales tax audit and evidently did not wish to increase his potential liability. Only one more transaction followed the April 5 closing.

   
   

9. The total sales price allocated to appurtenances in the 11 transactions is $145,280. The sales tax arising from these 11 transactions is $8716.80.

   
   

10. On January 15, 1992, Respondent mailed to Petitioner a Notice of Intent to Make Sales and Use Tax Audit Changes. The notice sought to impose

    additional sales taxes of $8716.80, penalties of $2179.20, interest through said date of $1034.94, and per diem interest thereafter of $2.87. Respondent maintained this position through subsequent informal conferences.

    
    

11. Petitioner acted in the capacity of a dealer in all transactions except the one on March 18, 1991, when he closed the transaction as an accommodation and charged a nominal fee. After deducting the sales tax on the appurtenances from the March 18 transaction, the remaining sales tax liability is $8263.20.

    
    

12. There is no doubt that at all material times the Lee County Tax Collector's Office misinformed Petitioner and other dealers that they were not required to collect the sales tax on the casual sale of appurtenances in connection with the casual sale of a mobile home on a rented lot.

    
    

13. However, there is no evidence that the Lee County Tax Collector's Office is an agent of Respondent. Petitioner failed to prove that Respondent misinformed him as to his liability as a dealer to collect the tax on the sale of the mobile home and appurtenances.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

15. Prior rules preserved the casual-sale exemption for various types of sales made by brokers for disclosed owners. However, Rule 12A-1.037(2)(a)5, which was in effect at all material times, provides that the isolated sales exemption does not apply to:

    
    

    Sales made by or through an auctioneer, agent, broker, factor, or any other person registered or required to be registered as a dealer to

    engage in, conduct, or hold itself out as engaged in business, regardless of whether the sale of such items by the owner would have qualified the sale as an isolated sale.

    
    

16. Also in effect at all material times, Rule 12A- 1.007(11)(f) addresses the occasional or isolated sale of mobile homes specifically. The rule states:

    
    

    The occasional or isolated sale of a mobile home, when such mobile home is tangible personal property within the meaning of this subsection, is taxable.

    . . . However, the tax does not apply to the occasional or isolated sale of carports, utility sheds, furniture, freezers, refrigerators, drapes, air condition compressor/condenser units located outside the mobile home, or other appurtenances which are sold in conjunction with the mobile home, provided the selling party to the occasional or isolated sale separately itemizes the sales price of each appurtenance on his sales invoice and the sales invoice is sworn to before a notary. .. .

    Sales of appurtenances by a person registered or required to be registered as a dealer are taxable.

17. Respondent has proved a prima facie case of Petitioner's liability for sales tax in the amount of $8263.20, together with penalties and interest.

    
    

18. For several reasons, Petitioner has failed to show sufficient grounds for estoppel. The evidence does not establish that Respondent's employees or agents incorrectly stated the law at any time. The misstatements of employees of the Lee County Tax Collector's Office, who were not agents of Respondent, were misstatements of law, not fact. And Petitioner failed to show reasonable reliance on such statements. See, e. g., Harris v. Department of Administration, 577 So. 2d 1363 (Fla. 1st DCA 1991) and Lopez v. Prager, 625 So. 2d 1240 (Fla. 3d DCA 1993).

    
    

19. The abatement of interest and penalties authorized in the Taxpayer's Bill of Rights is applicable, under Section 213.015(4), to "reasonable reli[ance] upon binding written advice furnished to the taxpayer by [Respondent]." Petitioner is not entitled to relief under the Taxpayer's Bill of Rights because he did not receive written misinformation from Respondent.

    
    

20. However, Respondent is given broad authority under Section 213.21(2) to settle or compromise a taxpayer's liability for "any tax, interest, or penalty assessed under any of the chapters specified in s. 72.011(1)." Chapter

    212 is one of the cited chapters. Section 213.21(3) provides that a taxpayer's liability for penalties "may be settled or compromised if it is determined by [Respondent] that the noncompliance is due to reasonable cause and not to willful negligence, willful neglect, or fraud." Section 213.21(3) limits the grounds for settling a taxpayer's liability for interest or tax to cases of doubt as to liability or collectability.

    
    

21. Under the cited law, Respondent should waive any and all penalties due to Petitioner's cooperativeness and receipt of incorrect information from the Lee County Tax Collector's Office.

RECOMMENDATION

Based on the foregoing, it is hereby

RECOMMENDED that the Department of Revenue enter a final order assessing Respondent for $8263.20 in sales tax, plus interest, but waiving all penalties.

ENTERED on October 18, 1994, 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 on October 18, 1994.

APPENDIX

Rulings on Petitioner's Proposed Findings

1-2: adopted or adopted in substance. 3: rejected as subordinate.

4: adopted or adopted in substance.

5: rejected as unsupported by the appropriate weight of the evidence. 6: adopted or adopted in substance.

7: rejected as unsupported by the appropriate weight of the evidence and irrelevant.

8: adopted or adopted in substance. 9: rejected as subordinate.

10: rejected as subordinate and recitation of evidence. 11-13: rejected as subordinate and irrelevant.

Rulings on Respondent's Proposed Findings

1-2: adopted or adopted in substance.

3-4: rejected as subordinate and recitation of evidence. 5: adopted or adopted in substance.

6-16: rejected as subordinate.

17: rejected as unsupported by the appropriate weight of the evidence. 18: rejected as subordinate.

COPIES FURNISHED:

Larry Fuchs, 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

James G. Decker

Decker and Smith, P.A.

P.O. Box 9208

Ft. Myers, FL 33902-9208

Lealand L. McCharen Assistant Attorney General Department of Legal Affairs The Capitol--Tax Section Tallahassee, FL 32399-1050

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 94-000938

Orders for Case No: 94-000938