STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

A.C.E. PROPERTY MANAGEMENT, Petitioner,

vs.

DEPARTMENT OF REVENUE,

Respondent.

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) Case Nos. 03-0759

) 03-0760

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RECOMMENDED ORDER

Administrative Law Judge (ALJ) Daniel Manry conducted the administrative hearing of this proceeding on May 13, 2003, in Orlando, Florida, on behalf of the Division of Administrative Hearings (DOAH).

APPEARANCES

For Petitioner: No Appearance

For Respondent: Carrol Y. Cherry, Esquire

Martha F. Barrera, Esquire

Office of the Attorney General, Tax Section The Capitol, Plaza Level 01

Tallahassee, Florida 32399-1050 STATEMENT OF THE ISSUES

The issues for determination are whether Petitioner paid sales and use tax on rental income from transient housing in Osceola and Polk counties, and whether Petitioner paid sales and use tax on the purchase of fixed assets in accordance with the requirements of Sections 212.03 and 212.06, Florida

Statutes (1995). (Statutory references are to Florida Statutes (1995) unless otherwise stated.)

PRELIMINARY STATEMENT

Respondent assessed Petitioner for sales and use tax in the amount of $314,468.84, plus penalty and interest for the period of September 1, 1995, through August 31, 2000 (the audit period). Petitioner denied liability and requested an administrative hearing.

At the hearing, Petitioner made no appearance and submitted no evidence. Respondent called two witnesses and submitted

16 exhibits for admission into evidence. The identity of the witnesses and exhibits and any attendant rulings are reported in the Transcript of the hearing, which was filed with DOAH on

May 27, 2003.

The ALJ granted Respondent's Motion for Extension of Time to File Proposed Recommended Order (PRO). Respondent timely filed its PRO on June 27, 2003. Petitioner did not file a PRO.

FINDINGS OF FACT

1. Petitioner is a Florida corporation with its principal place of business located at 3501 West Vine Street, Suite 387, Kissimmee, Florida. Petitioner primarily engages in the business of renting and managing transient property in the Orlando-Disney World area for absentee owners.

2. Respondent is the state agency responsible for the administration of the Florida sales and use tax pursuant to Section 213.05. Respondent selected Petitioner for audit because Petitioner filed several sales and use tax returns reporting no taxable income (zero returns). Zero returns are unusual for a tourist-based business in the Orlando-Disney area.

3. Osceola County, Florida (Osceola), also audited Petitioner for the period December 1994 through December 1999. Osceola is a political subdivision of the state and is responsible for administering and assessing the Tourist Development Tax authorized in Section 212.03 and Section 13-16, Osceola County Code of Ordinances (Code). Osceola audited Petitioner because Petitioner failed to file any tax returns with Osceola.

4. Osceola correctly assessed Petitioner $394,378.39 for tax, penalty, and interest. The mathematical computations in the Osceola audit are correct. Osceola conducted its audit in accordance with generally accepted auditing principals.

5. The Osceola audit revealed that Petitioner began doing business on January 1, 1995, but reported that it began doing business on both November 16, 1999, and March 12, 1998. The Osceola audit revealed that Petitioner failed to maintain required tax records, including guest registration forms; cash receipts; a general ledger; and documents necessary to verify

   amounts reported in tax returns. Petitioner did not reconcile its bank statements and did not maintain records necessary to verify that all receipts from guest registrations were properly entered into Petitioner's computer system of record keeping.

6. Respondent began its audit on January 8, 2001.

   
   

   However, Respondent was unable to examine most of Petitioner's books and records due to a lack of cooperation from Petitioner. Respondent made several attempts to obtain Petitioner's books and records, but Petitioner provided Respondent with only consumable purchase invoices.

7. Respondent and Osceola have an agreement to share information. Respondent relied on information obtained by Osceola in the course of the Osceola audit.

8. Osceola provided Respondent with copies of Osceola's work papers including a spreadsheet of undeclared revenue compiled from Petitioner's books and records. Osceola also provided Respondent with a list of 102 properties managed by Petitioner during the audit period. Approximately 61 properties are located in Osceola County and 41 are located in Polk County.

9. Respondent bases its assessment on an estimate derived from the Osceola assessment, records, and work papers. Respondent conducted its audit in accordance with applicable law. The mathematical computations in Respondent's audit are correct.

10. Petitioner owes sales and use tax in the respective amounts of $218,152.88 and $125,680.72, due on rentals derived from transient housing in Osceola and Polk counties. Petitioner also owes sales and use tax in the amount of $2,100 from the sale of fixed assets. Interest accrues at the daily rate of

    $98.13.

    
    

    CONCLUSIONS OF LAW

    
    

11. DOAH has jurisdiction over the subject matter and parties to this proceeding. Sections 120.569 and 120.57(1). The parties received adequate notice of the administrative hearing.

12. The ultimate burden of proof is on Petitioner.

Florida Department of Transportation v. J.W.C. Company, Inc.,

396 So. 2d 778 (Fla. 1st DCA 1981); Balino v. Department of

Health and Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 1977). Petitioner must satisfy its burden of proof by a preponderance of the evidence. Section 120.57(1)(h).

Petitioner failed to satisfy its burden of proof, and Respondent made a prima facie showing that the proposed assessment is correct.

RECOMMENDATION

Based upon the findings of fact and the conclusions of law, it is

RECOMMENDED that Respondent enter a Final Order assessing Petitioner for tax, penalty, and accrued interest.

DONE AND ENTERED this 11th day of July, 2003, in Tallahassee, Leon County, Florida.

S

DANIEL MANRY

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 11th day of July, 2003.

COPIES FURNISHED:

Carrol Y. Cherry, Esquire

Office of the Attorney General, Tax Section The Capitol, Plaza Level 01

Tallahassee, Florida 32399-1050

Martha F. Barrera, Esquire

Office of the Attorney General, Tax Section The Capitol, Plaza Level 01

Tallahassee, Florida 32399-1050

A.C.E. Property Management of Orlando, Inc. 3501 West Vine Street, Suite 387

Kissimmee, Florida 34741

Bruce Hoffmann, General Counsel Department of Revenue

204 Carlton Building Tallahassee, Florida 32399-0100

James Zingale, Executive Director 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 within

15 days from the date of 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: 03-000759

Orders for Case No: 03-000759