STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RECOMMENDED ORDER

This case was heard by video teleconference at sites in West Palm Beach, and Tallahassee, Florida, on May 12, 2009, before Claude B. Arrington and Administrative Law Judge of the Division of Administrative Hearings (DOAH).

APPEARANCES

For Petitioner: Joshua B. Moye, Esquire

Michael John Wheeler, Esquire Department of Business and

Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32303

For Respondent: No appearance

STATEMENT OF THE ISSUE

Whether Respondent, Neighborhood Grill, Inc., d/b/a Neighborhood Sports Grill (Respondent), failed to remit monies owed to Petitioner, Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (the Department) pursuant to the surcharge provisions found in Section 561.501, Florida Statutes (2006). If so, whether the Department should impose discipline against Respondent for that failure.

PRELIMINARY STATEMENT

On November 14, 2008, the Department filed an Administrative Complaint against Respondent that alleged for the audit period October 1, 2006, through June 30, 2007 (the subject audit period), Respondent failed to remit surcharge taxes in the principal amount of $6,265.06. Based upon the principal amount of surcharge taxes owed by Respondent, the Department alleged interest on the surcharge taxes in the amount of $589.93 and penalties in the amount of $3,467.05 for failing to timely pay the surcharge taxes. The Department alleged that the total amount Respondent owed the Department was $10,322.04. In addition to the collection of the amounts owed, the Department seeks to impose disciplinary action against Respondent as a result of its failure to comply with the surcharge law.

On January 7, 2009, Respondent submitted to the Department a Request for Hearing form that indicated that there were no disputed issues of fact and requested an informal hearing.

Subsequently, Respondent disputed the amounts in issue, the matter was referred to DOAH for formal proceedings, and this proceeding followed.

Pursuant to Notice of Hearing entered April 24, 2009, and an Amended Notice of Hearing (changing the hearing from a live hearing to a video hearing) entered May 8, 2009, the hearing was convened on May 12, 2009. Respondent made no appearance at the formal hearing and has had no contact with the Division of Administrative Hearings, either before or after the formal hearing.

At the hearing, Petitioner presented the testimony of Julio Cesar Torres, a senior tax audit administrator employed by the Department, and Manuel A. Marrero, a tax auditor employed by the Department. Mr. Marrero prepared the audit at issue.

Mr. Torres reviewed the audit to assure its accuracy. The Department’s Composite Exhibit 1 (the license file for Respondent’s license) and Exhibit 2 (the subject surcharge audit summary) were admitted into evidence.

At the request of the Department, the undersigned took official recognition of Chapter 561, Florida Statutes.

Reference is made to Section 561.501, Florida Statutes (2006),

because that statute was in effect at all times relevant to the subject audit.1

A Transcript of the proceedings was filed on May 22, 2009. The parties were granted ten days within which to file proposed recommended orders. Respondent did not file a proposed order. The Department's Proposed Recommended Order, filed on June 1, 2009, has been duly considered by the undersigned in the preparation of this Recommended Order.

FINDINGS OF FACT

1. At all times material to the allegations of this case, the Department has been the state agency charged with the responsibility of regulating persons holding alcoholic beverage licenses.

2. At all times material to the allegations of this matter Respondent has held license number 60-13254, series 4-COP., which was duly issued Respondent by the Department.

3. At all times material to the allegations of this matter, Respondent was obligated to pay monthly surcharge taxes to the Department pursuant to the provisions of Section 561.501, Florida Statutes (2006). Respondent elected to have these surcharge taxes based on the "purchase method," i.e., based on the volume of alcohol Respondent purchased from its suppliers during the month.2

4. The Department routinely audits licensees to compare the surcharge taxes remitted by the licensee with the records maintained by the licensee’s suppliers and/or by the licensee. The purpose of the audit is to verify that surcharge tax paid by a licensee was based on a correct calculation of its surcharge tax obligation. In this case, the Department audited Respondent for the subject audit period of October 1, 2006, through

   June 30, 2007.

   
   

5. Mr. Marrero began the subject audit by issuing an engagement letter to Respondent that included a questionnaire. In addition to other information, the questionnaire requested Respondent to identify its beverage suppliers. Respondent did not respond to the engagement letter or to the questionnaire.

6. Based on records available to him, including information as to Respondent’s beverage suppliers gathered during prior audits, Mr. Marrero was able to identify Respondent’s major beverage suppliers. Consistent with the Department’s policies, Mr. Marrero contacted Respondent’s beverage suppliers to obtain records of all sales of alcoholic beverages those suppliers had made to Respondent during the subject audit period. Those beverage suppliers then provided their records to establish the beverages sold to Respondent during the subject audit period.

7. Based upon those records Mr. Marrero determined the volume of alcoholic beverages purchased by Respondent during the subject audit period and calculated the surcharge tax due and owing to the Department for the subject audit period.

   Mr. Marrero compared the amount of the surcharge tax he calculated with the surcharge tax paid by Respondent to the Department for the subject audit period. Based upon that comparison, Mr. Marrero determined that Respondent had failed to remit the correct surcharge taxes payment based on underpayment, non-payment, and late payment.

8. More specifically, Mr. Marrero calculated that the Respondent owed the Department additional surcharge tax in the principal amount of $6,265.06; surcharge interest in the amount of $589.93; and surcharge penalties in the amount of $3,467.05. Mr. Marrero determined that Respondent owed the Department the total amount of $10,322.04.

9. Mr. Torres reviewed the audit prepared by Mr. Marrero and verified its accuracy.

10. Mr. Marrero and Mr. Torres have the requisite education, training, and experience to conduct the subject audit (in the case of Mr. Marrero) and to review the subject audit to verify its accuracy (in the case of Mr. Torres).

11. The subject audit accurately reflects the amounts Respondent owes the Department.

12. On May 5, 2008, the Department provided Respondent a copy of its audit summary and demanded payment of the amounts due. Respondent has not paid any portion of the total sum ($10,322.04) identified as being due by the audit summary.

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of these proceedings. § 120.57, Fla. Stat. (2008).

14. The Department bears the burden of proof to establish by clear and convincing evidence the allegations of the complaint. See Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

15. At the times relevant to this proceeding, Section 561.501, Florida Statutes (2006), provided, in part, as follows:

    1. . . . a surcharge of 3.34 cents is imposed upon each ounce of liquor and each 4 ounces of wine, a surcharge of 2 cents is imposed on each 12 ounces of cider, and a surcharge of 1.34 cents is imposed on each

       12 ounces of beer sold at retail for consumption on premises licensed by the division as an alcoholic beverage vendor.

       . . .

    2. The vendor shall report and remit payments to the division each month by the 15th of the month following the month in which the surcharges are imposed. For purposes of compensating the retailer for the keeping of prescribed records and the proper accounting and remitting of surcharges imposed under this section, the retailer shall be allowed to deduct from the payment due the state 1 percent of the

       amount of the surcharge due. Retail records shall be kept on the quantities of all liquor, wine, and beer purchased, inventories, and sales. However, a collection allowance is not allowed on any collections that are not timely remitted.

       If by the 20th of the month following the month in which the surcharges are imposed, reports and remittances are not made, the division shall assess a late penalty in the amount of 10 percent of the amount due per month for each 30 days, or fraction thereof, after the 20th of the month, not to exceed a total penalty of 50 percent, in the aggregate, of any unpaid surcharges. The division shall establish, by rule, the required reporting, collection, and accounting procedures. Records must be maintained for 3 years. Failure to accurately and timely remit surcharges imposed under this section is a violation of the Beverage Law.

       
       

       * * *

       
       

       (4) If any vendor fails to remit the surcharge, or any portion thereof, by the 20th of the month following the month in which the surcharges are imposed, there shall be added to the amount due interest at the rate of 1 percent per month of the amount due from the date due until paid. Interest on the delinquent tax shall be calculated beginning on the 21st day of the month following the month for which the surcharge is due. . . .

       
       

16. Section 561.29, Florida Statutes (2008), authorizes the Department to revoke or suspend the license of any person holding a beverage license when a violation of the law is established. Section 561.29(1)(b), Florida Statutes (2008), provides, in relevant part, as follows:

    1. The division is given full power and authority to revoke or suspend the license of any person holding a license under the Beverage Law, when it is determined or found by the division upon sufficient cause appearing of [sic]:

       
       

       * * *

       
       

       (b) Violation by the licensee . . . of any laws of this state or any state or territory of the United States.

       
       

17. Respondent did not remit the correct surcharge amount as required by Section 561.501, Florida Statutes (2006). The Department established by the requisite evidentiary standard that, for the subject audit period, Respondent owes it surcharge taxes in the principal of $6,265.06, surcharge interest in the amount of $589.93, and surcharge penalties in the amount of

$3,467.05, for a total of $10,322.04.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, enter a Final Order providing that the Respondent owes it surcharge taxes in the principal amount of $6,265.06, surcharge interest in the amount of $589.93, and surcharge penalties in the amount of $3,467.05, for a total amount of

$10,322.04. The Final Order should give the Respondent a period of 30 days to remit the full amount $10,322.04 or make

acceptable arrangements for the payment. The Final Order should revoke Respondent’s license if Respondent fails to timely remit the full amount due or make acceptable arrangements for such payment.

DONE AND ENTERED this 5th day of June, 2009, in Tallahassee, Leon County, Florida.

CLAUDE B. ARRINGTON

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675

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

Filed with the Clerk of the Division of Administrative Hearings this 5th day of June, 2009.

ENDNOTES

1/ The provisions of Section 561.501, Florida Statutes (2006), authorizing the surcharge tax were repealed effective July 1, 2007, by the provisions of Chapter 2006-162, Section 5, Laws of Florida.

2/ At the times relevant to this proceeding a licensee had to select one of two methods to compute the alcoholic beverage surcharge tax. The methods are known as the "purchase method" and the "sales method." The "purchase method" calculates the surcharge due to the Department based upon the amount of alcohol a licensee purchased from its suppliers during a given month.

The "sales method" calculates the surcharge tax based upon the actual cash register records for the sales made by the licensee during a given month.

COPIES FURNISHED:

Walter J. Lislewski, Jr. Neighborhood Sports Grill 6450 North Federal Highway Boca Raton, Florida 33487

Joshua B. Moye, Esquire Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 42

Tallahassee, Florida 32303

Michael John Wheeler, Esquire Department of Business and

Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32303

Jerry Geier, Director

Division of Alcoholic Beverages and Tobacco

Department of Business and Professional Regulation

Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-1020

Ned Luczynski, General Counsel Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

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: 09-001670

Orders for Case No: 09-001670