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STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JACK BRADJES, d/b/a )

JACK'S FLOWERS, )

)

Petitioner, )

)

vs. ) CASE NO. 78-1045

)

STATE OF FLORIDA )

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was held before Charles C. Adams, a Hearing Officer with the Division of Administrative Hearings at Room 101, Courthouse,

300 N. Dixie Highway, West Palm Beach, Florida, at 9:30 A.M., October 4, 1978.

APPEARANCES

For Petitioner: Jack Brandjes c/o Jack's Flowers

Ixora Market

4700 Canal 14 Road

Lake Worth, Florida 33463

For Respondent: Cecil Davis, Esquire

State of Florida

Department of Legal Affairs The Capitol

Tallahassee, Florida 32304 ISSUE

Whether or not the Petitioner, Jack Brandjes, d/b/a Jack's Flowers is responsible for the payment of tax, penalty and interest in the amount of

$3,129.77, as set forth in the First Revised Notice of Proposed Assessment, dated October 17, 1978, which has been prepared by the Respondent, State of Florida, Department of Revenue.

FINDINGS OF FACT

1. This cause comes on for consideration based upon the Petitioner's challenge to the Notice of Proposed Assessment of Tax, Penalties and Interest under Chapter 212, Florida Statutes, that was filed by the Respondent March 13, 1978. A copy of the Notice of Proposed Assessment together with the attendant work papers may be found as the Respondent's composite Exhibit #3, admitted into evidence. (By stipulation of the parties, in view of certain evidence presented by the Petitioner in the course of the hearing a First Revised Notice of Proposed Assessment of Tax, Penalties and Interest under Chapter 212. Florida

   Statutes, has been filed and it is this First Revised Notice of Proposed Assessment of Tax, Penalties and Interest which is in dispute between the parties. A copy of the First Revised Notice of Proposed Assessment of Tax, Penalties and Interest, dated October 17, 1978 may be found as Hearing Officer's composite Exhibit #1, admitted Info evidence. That composite exhibit contains the First Revised Notice of Proposed Assessment, together with the applicable work sheets and Petitioner's Exhibits #1 through 3, admitted into evidence in the course of the hearing. These Petitioner's exhibits are those referred to as constituting the basis of the stipulation previously mentioned.)

   
   

2. The Petitioner is registered with the State of Florida, Department of Revenue as a wholesale business, for purposes of Florida taxes. A copy of the certificate which shows this regis- tration may be found as Respondent's Exhibit #1 admitted into evidence.

   
   

3. The Respondent, State of Florida, Department of Revenue is an agency of the State of Florida that audits business record, to include the Petitioner's records. Specifically, in this instance, an audit was conducted in accordance with Chapter 21, Florida Statutes, to ascertain whether or not the Petitioner was responsible for the payment of sales and use tax under the authority of Chapter 212, Florida Statutes.

   
   

4. The tax examiner assigned to conduct the audit was carrying out that function as a follow-up to an audit performed on a business known as Quail Ridge located in Delray Beach, Florida. The audit of Quail Ridge led the Respondent to believe that the Petitioner had made certain retail sales to Quail Ridge without collecting sales tax. If this were true, then the Petitioner would become responsible for the payment of those sales taxes under the provision of Section 212.07(2), Florida Statutes.

   
   

5. There ensued an audit of the Petitioner's books and records, which were constituted of certain bank statements and a ledger book together with invoices and signed resale certificates that were made available. In the course of this audit process, the Petitioner was allowed a period of two months within which time to collect certain invoices and signed resale certificates. The significance of the invoices and resale certificates was, assuming the sales had been made for purposes of resale; thereby constituting a wholesale transaction, no sales tax would be due because the collection of that sales tax would become the responsibility of the purchaser who had obtained the item from the Petitioner in a wholesale transaction. That purchaser would become the "dealer", within the meaning of Chapter 212, Florida Statutes, and therefore would be responsible for the collection of the sales tax upon a further sale to a third party in a retail transaction.

   
   

6. After the Petitioner had been given time to establish those wholesale transactions in his flower business and given credit for certain months in which no business income was gained, the calculations were made by the tax examiner of the Respondent and the March 13, 1978, Notice of Proposed Assessment of Tax, Penalties and Interest under Chapter 212, Florida Statutes, was issued. This Notice of Proposed Assessment taxed the Petitioner for all business transactions arising from the sale of flowers which could not be established as exempt sales in the capacity of a wholesaler. (This requirement for the establishment of an exemption by the proof of the petitioner is found in Chapter 212, Florida Statute and in accordance with Rule 12A-1.38, Florida Administrative Code.)

   
   

7. After the Notice of Proposed Assessment of March 13, 1978, had been served on the Petitioner, an informal conference was held between the tax

   examiner and the petitioner. This conference was held on April 26, 1978, and at that time the Petitioner offered to introduce further invoices and resale certificates. Brandjes claimed that these invoices and resale certificates established further exemptions. The invoices and resale certificates were not accepted at that time because the tax examiner felt that the case was to be submitted for formal hearing and he was not of the opinion that he could make further adjustments to the proposed assessment at that juncture.

   
   

8. The same invoices and resale certificates which were of fered at the April 26, 1978 conference were produced in the course of the hearing before the undersigned. After such production, the Exhibits, 1 through 3, were submitted to the Respondent's tax examiner for review to establish possible further reduction of the proposed assessment, through the process of showing other exempt sales, or wholesale transaction. That review led to the First Revised Notice of Proposed Assessment of October 17, 1978, which reduces the amount of tax, penalties and interest claimed by the Respondent. The amount claimed, effective October 17, 1978, was $3,129.77. This included tax, penalties and interest computed to that date. The audit period is November 1, 1974 through October, 1978.

   
   

9. The Petitioner in this cause has pled ignorance to the requirements of law in the question of collecting sales and use taxes under Chapter 212, Florida Statutes, and the necessity to establish exempt sales which were made as wholesale transactions. He makes his contention premised upon the belief that his registration as an inactive business relieved him of the necessity to collect the taxes and to establish an exemption from tax. Notwithstanding this belief on the part of the Petitioner, it is clear that Chapter 212, Florida Statutes through its provisions places an obligation on the Petitioner to collect sales and use taxes for a retail transaction and the failure to meet that obligation places the responsibility for that payment of sales and use taxes on business transactions entered into by the Petitioner, with the Petitioner. This carries with it the potentiality of the assessment of penalties and interest for the failure to collect and remit those taxes under Chapter 212, Florida Statutes. The only possibility to escape the payment of the sales and use taxes under Chapter 212, Florida Statutes exists with the ability of the Petitioner to establish that the sales were sales at wholesale and not taxable under Chapter 212, Florida Statutes. To the extent that the Petitioner has established the exemptions in keeping with Chapter 212, Florida Statutes and Rule 12A-1.38, Florida Administrative Code, the Petitioner has been given credit for those exemptions. The balance of the sales transactions in the audit period November 1, 1974 through October 1978, as reflected in the First Revised Notice of Proposed Assessment of Tax, Penalties and Interest, under Chapter 212, Florida Statutes, becomes the responsibility of the Petitioner for his failure to collect the taxes for the sales. Therefore, the Petitioner is responsible for the payment of tax, penalties and interest through October 17, 1978 in an aggregate amount of $3,129.77.

CONCLUSIONS OF LAW

10 . The Division of Administrative Hearings has jurisdiction in this cause.

1. The Respondent's composite Exhibits #5, which is con- stituted of copies of Rules 12A-1.38, Florida Administrative Code and Rule 12A-1.39, Florida Administrative Code, is hereby accepted and those rules are admitted into evidence for purposes of this hearing.

2. Upon a full consideration of the facts in this cause, it is concluded as a matter of law that the Petitioner, Jack Brandjes, d/b/a Jack's Flowers is responsible for the payment of tax, penalties and interest through October 17, 1978 in the amount of $3,129.77, as set forth in the October 17, 1978 First Revised Notice of Proposed Assessment of Tax, Penalties and Interest under Chapter 212, Florida Statutes.

RECOMMENDATION

It is recommended that the Petitioner, Jack Brandjes, d/b/a Jack's Flowers be required to pay the tax, penalties, add interest under Chapter 212, Florida Statutes in the amount of $3,129.77 as set forth in the October 17, 1978 First Revised Notice of Proposed Assessment of Tax, Penalties and Interest.

DONE AND ENTERED this 31st day of October, 1978.

CHARLES C. ADAMS

Hearing Officer

Division of Administrative Hearings

530 Carlton Building Tallahassee, Florida 32399-1550 (904) 488-9675

COPIES FURNISHED:

Jack Brandjes

c/o Jack's Flowers Ixora Market

4700 Canal 14 Road

Lake Worth, Florida 33463

Cecil Davis, Esquire State of Florida

Department of Legal Affairs The Capitol

Tallahassee, Florida 32304

John D. Moriarty, Esquire

Attorney, Division of Administration Department of Revenue

Tallahassee, Florida 32304

Docket for Case No: 78-001045

Orders for Case No: 78-001045