STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FUEL MART, INC.,

Petitioner,

vs.

DEPARTMENT OF REVENUE,

Respondent.

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) Case No. 10-0425

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RECOMMENDED ORDER

Pursuant to notice to all parties, a final hearing was conducted in this case by video conference on April 23, 2010, with sites in Tallahassee and St. Petersburg, Florida, before Administrative Law Judge R. Bruce McKibben of the Division of Administrative Hearings. The parties were represented as set forth below.

APPEARANCES

For Petitioner: Robert Spence, pro se

Fuel Mart, Inc.

250 North Belcher Road, No. 100 Clearwater, Florida 33765-2622

For Respondent: John Mika, Esquire

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

STATEMENT OF THE ISSUE

The issue in this case is whether Petitioner is liable to Respondent for fuel taxes, and, if so, whether Respondent's levy on Petitioner's bank deposits is warranted and proper.

PRELIMINARY STATEMENT

On November 3, 2009, Respondent, Department of Revenue, notified Petitioner, Fuel Mart, Inc., of its intention to levy Petitioner's bank account at Synovus Bank to satisfy delinquent tax liabilities. Respondent timely filed a request for hearing, but the initial request was dismissed by Respondent with leave to amend. The amended request for hearing was forwarded to the Division of Administrative Hearings ("DOAH") so that a formal administrative hearing could be conducted. The hearing was held on the date set forth above, and both parties were in attendance.

At the final hearing, Petitioner called Robert Spence, secretary of Fuel Mart, Inc., to testify. No exhibits were offered into evidence by Petitioner. Respondent called two witnesses, Mary Vaughn, revenue administrator, and Robert Spence. Respondent's Exhibits 1 through 16 were admitted into evidence.

A transcript of the final hearing was ordered by the parties. The Transcript was filed at DOAH on May 6, 2010. By rule, the parties were allowed ten days, i.e., until May 16,

2010, to submit proposed recommended orders. Respondent timely submitted a proposed recommended order, and it was duly considered in the preparation of this Recommended Order.

Petitioner did not file a Proposed Recommended Order as of the date of this Recommended Order.

FINDINGS OF FACT

1. Petitioner was at all times relevant to this proceeding an active corporation in the State of Florida. Petitioner operated as a motor fuel dealer from its inception in 1984, but in 1996, its application for licensure as a motor fuel dealer was not renewed by Respondent due to the existence of fuel tax delinquencies.

2. Respondent is the state agency responsible for collecting taxes paid by motor fuel dealers.

3. On July 3, 1996, Respondent issued a Notice of Final Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of

   $74,423.25; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office.

4. On July 3, 1996, Respondent issued another Notice of Final Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of

   $12,625.64; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office.

   
   

5. On July 3, 1996, Respondent issued another Notice of Final Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of

   $15,245.84; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office.

6. On June 28, 1996, Respondent issued a Notice of Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of

   $90,317.87; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office.

7. On June 28, 1996, Respondent issued another Notice of Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of

   $57,864.24; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office.

8. On November 27, 1996, Respondent issued a Notice of Final Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of

   $81,094.54; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office.

9. Another Warrant was filed in the Pasco County Clerk's Office on May 24, 1996, reflecting delinquent taxes, penalties, and interest owed Respondent due to failure of an electronic transfer by Petitioner because of insufficient funds. The

   
   

   amount of that Warrant was $9,918.92. (A filing fee of $32.00 was assessed for each of the filed Warrants.)

10. The time for challenging the assessments set forth in the notices and Warrants has passed. No credible evidence was presented at final hearing to suggest the assessed amounts were incorrect.

11. Petitioner made some payments on the assessed amounts from time to time. Payments were applied to the outstanding balance in accordance with governing statutes: Filing fees, then accrued interest, then penalties, and then the tax liabilities. After applying the payments and taking into account accruing interest, Petitioner owes Respondent

    $377,074.29 as of the date of the final hearing.

    
    

12. On September 13, 1996, Petitioner wrote a letter to Respondent asking that all penalties and interest on the outstanding balance be waived. The basis of the request was that only one officer of the corporation had actual knowledge of the unpaid fuel taxes. Once the other two officers were made aware, they immediately paid the current taxes and discontinued operation of the business. All assets of the business were sold, and the proceeds provided to Respondent to apply against the outstanding balance. Some revenue was being held by the corporation to provide for orderly termination of the business and upkeep of the real property owned by the corporation.

    
    

13. Respondent denied Petitioner's request for compromise of the outstanding debt by letter dated December 19, 1996. Respondent requested from Petitioner evidence that Petitioner had exercised "ordinary care and prudence" in complying with state revenue laws. No evidence of a response by Petitioner was identified at final hearing.

14. On August 27, 2009, Respondent, in recognition that the Warrants would expire after a period of time, notified Petitioner of the need to satisfy all the Warrants immediately. Upon Petitioner's failure to pay, Respondent issued a Notice of Freeze on October 8, 2009, to Synovus Bank where Petitioner's funds were being held. At that time there was $52,990.21 being held by the bank for Petitioner.

15. On November 3, 2009, Respondent issued a Notice of Intent to Levy, advising Petitioner of its intent to seize the money being held at Synovus Bank. Petitioner timely filed a contest to the Notice of Intent to Levy. Respondent notified Synovus Bank of the contest.

16. Petitioner was formed by three individuals: Earl Radcliff, president; Robert Spence; and R. Michal Marston. Spence and Marston were merely investors; Radcliff operated and controlled the business. Neither Spence, nor Marston was involved in the payment of fuel taxes during the period the

    
    

    business was operating. That duty was left entirely up to Radcliff.

17. Upon Radcliff's failure to pay the taxes that were due, Respondent began issuing notices. Finally, in 1996, Respondent refused to renew Petitioner's motor fuel dealer's license, effectively terminating the business. Spence and Marston were not immediately made aware of this fact, but upon learning that the license had not been renewed, they began attempting to make the appropriate tax payments. When it became obvious there was not enough money available to pay the tax liabilities, Spence began taking steps to protect the real estate owned by Petitioner so that it could be sold to meet the tax liabilities. The funds held by Synovus Bank are being used solely to protect the existing real property. Neither Spence, nor Marston, was ever repaid for their initial investment to the corporation.

18. The real property has not been sold due to many reasons, including the downturn in the economy, the existence of environmental problems on the site, and general deterioration of the property. The property is in two parcels: one is an empty lot and the other is being used as an automobile dealership.

    CONCLUSIONS OF LAW

    
    

19. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this

    
    

    proceeding pursuant to Section 120.569 and Subsection 120.57(1), Florida Statutes (2009).

20. Respondent has the burden of proof in this matter as it is asserting the affirmative of the issue. Balino v.

    Department of Health and Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 1977).

21. The Warrants issued against Petitioner were pursuant to Subsection 206.075(1), Florida Statutes (1995), which is identical in language to the 2009 codification and says,

    1. Upon the determination and assessment of the amount of unpaid taxes and penalties due, the department may issue a warrant, under its official seal, directed to the sheriff of any county of the state, commanding said sheriff to levy upon and sell the goods and chattels of such person found within the sheriff's jurisdiction for the payment of the amount of such delinquency, with the added penalties and interest and the cost of executing the warrant and conducting the sale, and to return such warrant to the department and pay the department the money collected by virtue thereof. However, any surplus resulting from said sale after all payments of costs, penalties, and delinquent taxes have been made shall be returned to the person in default. If there is jeopardy to the revenue and jeopardy is asserted in or with an assessment, the department shall proceed in the manner specified for jeopardy assessment in s. 213.732.

       
       

22. Subsection 95.091(1), Florida Statutes (2009), states in pertinent part:

    
    

    (b) Any tax lien granted by law to the state or any of its political subdivisions for any tax enumerated in s. 72.011 or any tax lien imposed under s. 196.161 shall expire 20 years after the last date the tax may be assessed, after the tax becomes delinquent, or after the filing of a tax warrant, whichever is later. An action to collect any tax enumerated in s. 72.011 may not be commenced after the expiration of the lien securing the payment of the tax.

    
    

23. Section 213.67, Florida Statutes (2009), states:

    
    

    1. If a person is delinquent in the payment of any taxes, penalties, and interest owed to the department, the executive director or his or her designee may give notice of the amount of such delinquency by registered mail to all persons having in their possession or under their control any credits or personal property, exclusive of wages, belonging to the delinquent taxpayer, or owing any debts to such delinquent taxpayer at the time of receipt by them of such notice. Thereafter, any person who has been notified may not transfer or make any other disposition of such credits, other personal property, or debts until the executive director or his or her designee consents to a transfer or disposition or until 60 days after the receipt of such notice, except that the credits, other personal property, or debts which exceed the delinquent amount stipulated in the notice shall not be subject to the provisions of this section, wherever held, in any case in which the taxpayer does not have a prior history of tax delinquencies. If during the effective period of the notice to withhold, any person so notified makes any transfer or disposition of the property or debts required to be withheld hereunder, he or she is liable to the state for any indebtedness owed to the department by the person with respect to whose obligation the notice was

       
       

       given to the extent of the value of the property or the amount of the debts thus transferred or paid if, solely by reason of such transfer or disposition, the state is unable to recover the indebtedness of the person with respect to whose obligation the notice was given. If the delinquent taxpayer contests the intended levy in circuit court or under chapter 120, the notice under this section remains effective until that final resolution of the contest. Any financial institution receiving such notice will maintain a right of setoff for any transaction involving a debit card occurring on or before the date of receipt of such notice.

       
       

24. The Warrants issued by Respondent were done pursuant to its legal authority and were still valid at the time it took action to enforce them. The garnishment action was a proper and timely action to enforce payment for the existing Warrants. The Notice of Intent to Levy issued by Respondent on November 3, 2009, was in accordance with its rights and responsibilities. See Fla. Admin. Code R. 12-21.104.

25. While it is clear that Petitioner (through its secretary) has attempted to preserve property for the purpose of ultimately satisfying its tax liabilities, such attempts do not prohibit Respondent from pursuing enforcement actions.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that a final order be entered by Respondent, Department of Revenue, upholding the Notice of Intent to Levy issued by Respondent as to property owned by Petitioner, Fuel Mart, Inc.

DONE AND ENTERED this 28th day of May, 2010, in Tallahassee, Leon County, Florida.

R. BRUCE MCKIBBEN 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 28th day of May, 2010.

COPIES FURNISHED:

Lisa Echeverri, Executive Director Department of Revenue

The Carlton Building, Room 104

501 South Calhoun Street Tallahassee, Florida 32399-0100

Marshall Stranburg, General Counsel Department of Revenue

The Carlton Building, Room 204

501 South Calhoun Street Post Office Box 6668

Tallahassee, Florida 32314-6668

John Mika, Esquire

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

Robert Spence Fuel Mart, Inc.

250 North Belcher Road, No. 100 Clearwater, Florida 33765-2622

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: 10-000425

Orders for Case No: 10-000425