STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HIGH-TECH YACHT & SHIP,INC., )

)

Petitioner, )

)

vs. ) CASE NO. 95-1791

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on November 30, 1995, in Hollywood, Florida, before Errol H. Powell, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Olivia P. Klein 1/

Assistant Attorney General Office of the Attorney General The Capitol-Tax Section Tallahassee, Florida 32399-1050

For Respondent: N. Denis Crowther, President

High-Tech Yacht & Ship, Inc. 1535 Southeast 17th Street

Fort Lauderdale, Florida 33316 STATEMENT OF THE ISSUE

The issue for determination at final hearing is whether Petitioner owes sales tax, plus interest and penalties, and if so, what amount is owed.

PRELIMINARY STATEMENT

In January 1994, the Department of Revenue (Respondent) issued to High-Tech Yacht & Ship, Inc. (Petitioner) a notice of tax action for assessment of additional tax due in the amount of $4,680, plus interest and penalty.

Petitioner responded to the notice indicating that the amount in question represented the sales tax on a purchase for which the buyer's check was dishonored and that the buyer owes the money to Respondent, not Petitioner. On March 12, 1994, Respondent issued a notice of assessment and jeopardy finding which, in essence, requested payment from Petitioner of the sales tax, plus interest and penalty, totalling $7,052.61. By letter dated March 22, 1994, Petitioner protested the assessment. On February 8, 1995, Respondent issued its notice of reconsideration in which Respondent determined, among other things, that Petitioner was responsible and liable for the sales tax, plus interest and penalty. By letter dated March 15, 1995, Petitioner requested a formal hearing.

On April 12, 1995, this matter was referred to the Division of Administrative Hearings. A hearing was scheduled pursuant to written notice.

At the hearing, Petitioner presented the testimony of four witnesses and entered 13 exhibits into evidence. Respondent presented the testimony of one witness and entered one composite exhibit into evidence.

A transcript of the hearing was ordered. At the request of the parties, the time for filing post-hearing submissions was set for more than ten days following the filing of the hearing transcript. Respondent filed proposed findings of fact which are addressed in the appendix to this recommended order. Petitioner did not file proposed findings of fact.

FINDINGS OF FACT

1. High-Tech Yacht & Ship, Inc. (Petitioner) is a Florida corporation engaged in the business of retail sales of marine vessels. Also, Petitioner is a registered retail dealer in the State of Florida.

   
   

2. The President of Petitioner is its only corporate officer.

   
   

3. On or about September 2, 1993, Petitioner, in the capacity of a broker, sold a motor yacht at retail to Regency Group, Inc. (purchaser), through its representative, for $78,000. The motor yacht is described as a 1988, 41' Amerosport Chris Craft, hull Number CCHEU075E788, and called the "Motivator".

   
   

4. At the closing of the sale, on or about September 2, 1993, the purchaser refused to pay the sales tax on the purchase, which was $4,680. However, the purchaser agreed to pay the sales tax after being informed by Petitioner that, without the payment of the sales tax, there could be no closing.

   
   

5. The purchaser's representative submitted, at closing, a personal check in the amount of $4,680 for the sales tax.

   
   

6. All of the necessary documents were completed for ownership and registration to be transferred to the purchaser.

   
   

7. Subsequently, Petitioner received notice from its bank that the check for the sales tax had been dishonored by the purchaser's bank. The purchaser's representative had stopped payment on the check.

   
   

8. In October 1993, Petitioner submitted its sales and use tax return for the month of September 1993 to Respondent in which the sale of the yacht was reported. Respondent automatically reviews sales and use tax returns. Respondent's review of Petitioner's return revealed a shortage of sales tax collected in the amount of $4,680..

   
   

9. In January 1994, Respondent issued a notice of tax action for assessment of additional tax in the amount of $4,710, plus interest and penalty, to Petitioner. The $4,710 included the loss of Petitioner's collection allowance of $30, which loss resulted from Petitioner's failure to timely remit all taxes due.

   
   

10. Having received the notice of tax action, by letter dated January 20, 1994, Petitioner generally informed Respondent of the circumstances regarding the sales tax shortage, including the dishonored check. Petitioner pointed out,

    among other things, that Respondent had the authority and the means to collect the tax, while it (Petitioner) had limited means, and suggested, among other things, that Respondent cancel the purchaser's Florida registration of the yacht.

    
    

11. On or about January 31, 1994, approximately three months after the check for sales tax was dishonored, Petitioner issued a notice of dishonored check to the purchaser, in which Petitioner requested payment of the sales tax. The notice provided, among other things, that Petitioner could seek criminal prosecution and civil action if the monies were not paid to Petitioner.

    
    

12. Having not received the $4,680, Petitioner contacted the local law enforcement agency. After investigation, the law enforcement agency informed Petitioner that a civil action would have to be instituted because the purchaser, through its representative, had indicated that it was not satisfied with the yacht.

    
    

13. Although Petitioner engaged the services of an attorney for civil action, no civil action was commenced.

    
    

14. Additionally, Petitioner did not engage the services of a collection agency for assistance in collecting the sales tax.

    
    

15. Subsequent to its notice of tax action, on or about March 12, 1994, Respondent issued a notice of assessment to Petitioner. The notice of assessment provided, among other things, that Petitioner was being assessed taxes in the amount of $4,710, plus penalty and interest in the amount of

    $2,342.61, totalling $7,052.61.

    
    

16. Petitioner protested the assessment.

    
    

17. On February 8, 1995, Respondent issued its notice of reconsideration in which Respondent determined, among other things, that the assessment was appropriate and affirmed the assessment of $7,052.61, plus interest and penalty. The interest accrues at the rate of $1.55 per day.

    
    

18. Petitioner has not remitted any of the assessed tax, including interest and penalty, to Respondent.

    
    

19. Petitioner has not identified on its federal tax return the noncollection of the sales tax from the purchaser as a bad debt.

    
    

20. Sales tax is part of the total sale price for an item. Respondent considers the sales tax as collectable by a seller in the same manner as any other debt owed by a purchaser to a seller.

    
    

21. A retail dealer, who is also a seller, is considered to be an agent for the State in the collection of sales tax. The burden of collecting the sales tax is placed upon the retail dealer by Respondent.

    
    

22. Some of Respondent's employees have been sympathetic to Petitioner's tax assessment matter. However, none of the employees indicated to or advised Petitioner that Respondent was or is in error.

    CONCLUSIONS OF LAW

    
    

23. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.

    
    

24. This matter is a taxpayer contest proceeding. Respondent's burden of proof is limited to showing that an assessment was made against Petitioner and to showing the factual and legal grounds upon which the assessment was made. Subsection 120.575(2), Florida Statutes. Respondent has met its burden of proof.

    
    

25. Petitioner, as challenger, has the burden of proof in showing that the assessment is improper, whether in whole or in part. Homer v. Dadeland Shopping Center, Inc., 229 So.2d 834, 837 (Fla. 1969). A tax assessment has a presumption of correctness and in its proof, Petitioner must exclude every reasonable hypothesis of a valid assessment, i.e., Petitioner must show the assessment to be so unreasonable as to be arbitrary and capricious. Homer, supra; and District School Board of Lee County v. Askew, 278 So.2d 272, 277 (Fla. 1973).

    
    

26. Petitioner has failed to meet its burden of proof. Petitioner has failed to demonstrate that the assessment is improper.

    
    

27. Further, Petitioner contends that Respondent should look to the purchaser of the vessel, instead of to it, for payment of the assessment. Petitioner bases its position on the purchaser failing or refusing to pay the sales tax through the purchaser's action of stopping payment on the check given to Petitioner for payment of the sales tax. Petitioner's contention is not persuasive.

28. Section 212.07, Florida Statutes, provides in pertinent part: (1)(a) The privilege tax herein levied

    measured by retail sales shall be collected

    by the dealers from the purchaser or consumer.

    * * *

    (2) A dealer shall, as practicable, add the amount of the tax imposed under this chapter to the sale price, and the amount of the tax shall be separately stated as Florida tax on any . . . invoice, or other tangible evidence of sale. Such tax shall constitute a part of such price, charge, or proof of sale which shall be debt from the purchaser or consumer

    to the dealer until paid, and shall be recover- able at law in the same manner as other debts

    . . . Except as otherwise specifically provided, any dealer who neglects, fails, or refuses to collect the tax herein provided upon any, every, and all retail sales made by him or his agents or employees of tangible personal property or services which are subject to the tax imposed

    by this chapter shall be liable for and pay the tax himself.

29. Sales tax is a tax on the privilege of engaging in business and is levied against the business person, not the consumer. Ryder Truck Rental, Inc. v. Bryant, 170 So.2d 822, 825 (Fla. 1964).

    
    

30. Subsection 212.07(2) provides that the sales tax is a debt from the purchaser to the seller. However, this provision of Subsection 212.07(2) is conditional upon the seller's compliance with the requirement to separately state the tax on the invoice, or other tangible evidence of sale. Donoghue v. Wallach, 455 So.2d 1085 (Fla. 2d DCA 1984); Advanced Mobilehome Systems of Tampa, Inc. v. Alumax Fabricated Products, Inc., 666 So.2d 166, 167 (Fla. 2d DCA 1995).

    
    

31. Petitioner complied with the requirements of Subsection 212.07(2) in that it separately stated the sales tax, and, therefore, the sales tax became a debt from the purchaser to Petitioner. As an agent for the State in the collection of sales tax, Petitioner had the responsibility to collect the sales tax. Petitioner failed to collect the sales tax, and as such, Petitioner is liable for and must pay the sales tax.

    
    

32. Petitioner's circumstances are unfortunate. However, the sales tax is a debt from the purchaser to Petitioner and such debt is recoverable at law by Petitioner as any other debt owed to Petitioner.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order affirming

the assessment of sales tax against High-Tech Yacht & Ship, Inc. in the amount

of $7,052.61, plus interest and penalty.

DONE AND ENTERED this 7th day of August 1996, in Tallahassee, Leon County, Florida.

ERROL H. POWELL, 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 7th day of August 1996.

ENDNOTE

1/ Francisco M. Negron, Jr., Assistant Attorney General was counsel of record for the Department of Revenue during the hearing. Also, he filed the proposed findings of fact on behalf of the Department. Subsequently, Olivia P. Klein, Assistant Attorney General was substituted as counsel of record.

APPENDIX

The following rulings are made on Respondent's proposed findings of fact: Respondent's Proposed Findings of Fact

1. Partially accepted in finding of fact 1.

2. Partially accepted in finding of fact 2.

3. Partially accepted in finding of fact 3.

4. Partially accepted in finding of fact 3.

5. Partially accepted in findings of fact 4 and 18.

6. Rejected as being subordinate.

7. Partially accepted in findings of fact 5 and 7.

8. Partially accepted in finding of fact 11.

9. Partially accepted in findings of fact 13 and 14.

10. Partially accepted in finding of fact 12.

11. Partially accepted in finding of fact 12.

12. Partially accepted in finding of fact 8.

13. Rejected as being subordinate.

14. Partially accepted in finding of fact 8.

15. Partially accepted in findings of fact 9 and 17.

16. Partially accepted in findings of fact 16 and 17.

17. Rejected as being subordinate.

18. Partially accepted in finding of fact 20.

19. Partially accepted in finding of fact 21.

20. Partially accepted in finding of fact 19.

21. Partially accepted in finding of fact 22.

22. Partially accepted in finding of fact 22.

23. Partially accepted in finding of fact 22.

24. See Preliminary Statement.

NOTE: Where a proposed finding has been partially accepted, the remainder has been rejected as being irrelevant, unnecessary, cumulative, not supported by the more credible evidence, not supported by the greater weight of the evidence, argument, or a conclusion of law.

COPIES FURNISHED:

Olivia P. Klein

Assistant Attorney General Office of the Attorney General The Capitol-Tax Section Tallahassee, Florida 32399-1050

N. Denis Crowther, President High-Tech Yacht & Ship, Inc. 1535 Southeast 17th Street

Fort Lauderdale, Florida 33316

Larry Fuchs Executive Director

Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

Linda Lettera General Counsel

Department of Revenue

204 Carlton Building Tallahassee, Florida 32399-0100

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.

================================================================= AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA DEPARTMENT OF REVENUE

HIGH-TECH YACHT & SHIP INC.,

Petitioner,

vs. DOAH. Case No. 95-1791

DOR No. DOR 97-1-1-FOF

DEPARTMENT OF REVENUE,

Respondent.

/

FINAL ORDER

This cause came before me, as Executive Director of the Department of Revenue, on an Recommended Order issued by the Division of Administrative Proceedings. The parties filed a joint stipulation to extend the time to file exceptions to the Recommended Order. The Respondent filed exceptions. Copies of the Recommended Order and the Respondent's exceptions are attached to this Order.

FINDINGS OF FACT

The Department adopts the Findings of Fact set forth in this Recommended Order.

CONCLUSIONS OF LAW

The Department adopts the following Conclusions of Law set forth in the Recommended Order: Numbers 23, 24, 26-32. Number 25 is stricken as being based on a misapprehension of the law.

The Hearing Officer correctly placed the burden of proof on the Petitioner since an assessment was being challenged. Placement of the burden of proof on the Petitioner does not rest on principles developed in the field of ad valorem taxation, however. Section 120.575(2), Florida Statutes, provides that after the Department goes forward with proof of the assessment, the taxpayer must show that it is incorrect by a preponderance of the evidence.

The following conclusion of law is substituted in place of the stricken paragraph:

Having met its statutory burden, Respondent's assessment is valid and prima facie correct. Petitioner, as challenger, has the burden of proof to show by a preponderance of the evidence that the assessment is improper in whole or in part.

The remaining exceptions are not accepted.

CONCLUSION

Based upon the foregoing it is therefore ORDERED: That the assessment of tax, penalty and interest in the total amount of $7,052.61 plus accrued interest is upheld.

Any Party to this Final Order has the right to seek judicial review pursuant to Section 120.68, F.S., by filing a Notice of Appeal pursuant to Rule 9.110, Fla. R. App. Pro., with the Clerk of the Department in the Office of General Counsel, P.O. Box 6668, Tallahassee, Florida 32314-6668 and by filing a copy of the Notice accompanied by the applicable filing fee with the appropriate District Court of Appeal. The Notice must be filed within 30 days from the date this Order is filed with the Clerk of the Department.

DONE AND ENTERED in Tallahassee, Leon County, Florida this 7th day of January, 1997.

STATE OF FLORIDA DEPARTMENT OF REVENUE

L. H. FUCHS Executive Director

Certificate of Filing

I HEREBY CERTIFY that the foregoing Order has been filed in the official records of the Department of Revenue this 7th day of January, 1997.

Judy Langston Agency Clerk

COPIES FURNISHED:

L. H. Fuchs Executive Director

Department of Revenue Room 104

Carlton Building

Tallahassee, Florida 32399-0100

Linda Lettera General Counsel

Department of Revenue

201 Carlton Building Tallahassee, Florida 32399-0100

Olivia P. Klein

Assistant Attorney General Office of the Attorney General The Capitol - Tax Section Tallahassee, Florida 32399-1050

Denis Crowther, President High-Tech Yacht & Ship, Inc. 1535 S.E. 17th Street

Fort Lauderdale, Florida 33316

Docket for Case No: 95-001791

Orders for Case No: 95-001791