STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS
REID B. HUGHES )
)
Petitioner, )
)
vs. ) CASE NO. 88-3562
)
STATE OF FLORIDA, )
DEPARTMENT OF REVENUE, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, this cause came on for administrative hearing before P. Michael Ruff, duly designated Hearing Officer in Daytona Beach, Florida. The appearances were as follows:
APPEARANCES
For Petitioner: Steven T. Vasilaros, Esquire
Post Office Drawer 2140 Daytona Beach, FL 32015
For Respondent: Ralph R. Jaeger, Esquire
Department of Legal Affairs The Capitol - Tax Section Tallahassee, FL 32399-1050
STATEMENT OF THE ISSUES
The issues to be resolved in this proceeding concern whether the Petitioner should be assessed special fuel taxes together with interest thereon and a penalty relating to an audit period of from August 1, 1977 through July 31, 1980. In order to resolve that ultimate question, it must be decided whether proper notice of the transfer of the business of Mattick Oil Company to the Petitioner, pursuant to Section 206.18, Florida Statutes was given the department, such that the transferee, the Petitioner, would not be liable for the taxes, interest and penalty incurred by the transferor Mattick Oil Company. Regardless of the question of the timeliness of the notice to the Department of the transfer of the business, it must be decided whether Reid B. Hughes is indeed a "transferee" as contemplated by Section 206.18, Florida Statutes, and is therefore liable for the tax, interest and penalty, if timely notice of the transfer was not given the department.
PRELIMINARY STATEMENT
This cause concerns an administrative proceeding brought by Reid B. Hughes, Petitioner, to challenge the attempted assessment of special fuel taxes, related interest and penalty against him by the Respondent, the Department of Revenue (Department). The taxes, interest and penalty involved relate to the operations
of Mattick Oil Company, Inc. for an audit time period of August 1, 1977 through July 31, 1980. The Department contends that special fuel tax of $5,411.04 as well as $4,428.70 of interest through the date of August 12, 1985 have accrued and is owing, together with interest accrued from that date forward at the rate of $1.78 per day. The parties have stipulated that this is the correct audit period, the correct amounts involved and the correct per diem rate of interest accruing. The only remaining issue is thus whether Reid B. Hughes, who purchased certain assets of Mattick Oil Company, is liable for the tax, interest and penalties pursuant to Section 206.18, Florida Statutes, as mentioned above.
The cause came on for hearing as noticed at which Petitioner presented three witnesses and one exhibit and the Respondent presented one witness and had exhibits 1, 2, 3, 5, 6, 7, and 8 admitted into evidence. Respondent's exhibit four was withdrawn. Subsequent to the hearing, the parties obtained a transcript of the proceedings and elected to file proposed findings of fact and conclusions of law which were timely filed. Those pleadings are addressed in this Recommended Order and again in the Appendix attached hereto and incorporated by reference herein.
FINDINGS OF FACT
Mattick Oil Company, Inc. is a wholesaler and retailer of fuel oil, motor oil, gasoline and other petroleum products and auto accessories. On May 8, 1980, Mattick Oil Company, Inc. entered into a contract called an "Agreement for Sales and Purchase of Business" with Hughes Oil Company, also a Florida corporation. By this agreement, Reid B. Hughes, doing business as Hughes Oil Company was to purchase certain assets of Mattick Oil Company.
It was stipulated by the parties that for the period of August 1, 1977 through July 31, 1980, Mattick Oil Company, Inc. failed to pay certain special fuel taxes in the amount of $5,411.04 of actual tax, $4,428.70 of interest through August 12, 1985 with interest accruing from that day forward at a rate of $1.78 per day. It was also stipulated that the relevant penalty, if applicable, would be $541.10.
The purchase price pursuant to the agreement, was $225,900, with the buyer to pay the seller's actual delivered cost of inventory.
The agreement provided that Hughes would purchase assets consisting of real estate and a bulk storage facility on South Seagrave Street in South Daytona, Florida; certain real estate and a service station located in New Smyrna Beach, as well as miscellaneous pumps, tanks, and other equipment, consumer and customer accounts and customer lists. The agreement to purchase also included certain contractual distributorship rights with Gulf Oil Company and Phillips Petroleum Company, prepaid expenses, vehicles and leasehold improvements, any covenants against competition which the seller held as transferrable rights, all jobberships, supply sale and purchase agreements owned by the seller, as well as city and county licenses, furniture, fixtures, signs, hoses, meters, registers and other personal property. The agreement also provided that the buyer, Hughes, would assume the seller's commitment for the 1980 yellow page advertising already purchased and the seller agreed not to engage in any business activity which involves the wholesale distribution of petroleum products and other auto accessories in Volusia County for a period of five years from the date of closing of the sale. This transfer of assets took effect on June 1 or June 2, 1980.
Thereafter, on June 9, 1980, a notice was sent from Gene L. Mattick of Mattick Oil Company to the Department notifying it that he had sold his business to Hughes, giving the
address and informing the Department that Hughes would be doing business as "Mattick Oil". Mr. Mattick indicated in the notice that this was his "final return". He also requested that a sales tax certificate be cancelled.
In fact, Mr. Mattick had not sold his entire business to Mr. Hughes and Hughes Oil Company. Mattick Oil Company, Inc. continued to do business in other parts of Florida, especially the Tampa Bay area. It only sold to Hughes its distributorship contracts with Phillips Petroleum Company and Gulf Oil Company and the other assets described above. Hughes did not buy Mattick's distributorship contracts with Eastern Oil Company, Ashland Oil Company, or Colonial Oil Company. Hughes only purchased the Volusia County assets from Mattick Oil Company, Inc., in which location Mattick had been Hughes' competitor. In fact, Mr. Hughes was primarily interested in purchasing the service station in New Smyrna Beach in Volusia County. Mattick Oil Company, Inc. continued to engage in the petroleum business in its own right and, with the transfer of the Volusia County assets at issue, it did not cease to do business in Florida.
It is true that the Department received a surety bond (Bond NO. 112789) bearing the name "Reid B. Hughes, d/b/a Mattick Oil of Daytona Beach, Florida, as principal, d/b/a Mattick Oil". Mr. Hughes testified that he had not executed the signature shown on that bond, purporting to be his signature. That possibly was done by a former controller of the company, who was terminated. In any event, it was offered to show that Reid B. Hughes was using the Mattick Oil Company name or variation thereof and was operating and using the assets purchased from Mattick Oil Company, Inc. and had essentially supplanted that entity entirely. The mere fact of the filing of the surety bond, aside, from the question of who actually executed the bond, does not establish, even with the use of the Mattick name, that Mattick Oil Company, Inc. had ceased doing business in Florida, and had transferred its entire assets and business operations to Hughes. In fact, Mattick Oil Company, Inc. continued thereafter to do business in Florida and did not transfer all its assets to Hughes, as found above.
The same consideration is true concerning the document entitled "Gasoline Distributor-Confidential Questionnaire and Required Sales Information" which was provided to the Department on July 8, 1980 with a notarized signature of Reid B. Hughes depicted thereon. This document indicated that the business would operate as Mattick Oil Company, but the operations under the Mattick name were for the Volusia County area only and this, again, does not establish that Mattick Oil Company had ceased engaging in the petroleum business in Florida and transferred all assets and operations to Reid B. Hughes, the Petitioner.
A new special fuel license, license No. 9454 was issued on June 18, 1980 to Reid B. Hughes, d/b/a Mattick Oil, with an alternate principal place of business listed thereon as South Daytona Florida, County of Volusia. The record does not establish that any special fuels license held by Mattick Oil Company, Inc. was correspondingly cancelled, however. Only the specific sales tax certificate number 74252470445 was returned for cancellation with the notice mentioned above, filed by Gene A. Mattick as president of Mattick Oil Company, Inc. on June 9, 1980.
In summary, none of the above-mentioned facts establish that Mattick Oil Company, Inc. ceased doing business elsewhere in the state of Florida. In
fact, the Petitioner established that Mattick Oil Company, Inc. is still doing business in the state, specifically the Tampa Bay area. The Petitioner never negotiated the purchase or purchased any of the business rights or assets owned and operated by Mattick in the Tampa Bay area.
In any event, an audit was conducted by the Department for the period August 1, 1977 through July 31, 1980. A "Notice of Decision" was ultimately issued by the Department on September 30, 1985 and a petition for reconsideration of that decision, which had assessed the above-mentioned tax and interest, was filed on October 30, 1985. Finally, pursuant to a "Notice of Reconsideration" dated May 19, 1988, the Department sought to assess Reid B. Hughes, d/b/a Mattick Oil Company for the above-discussed unpaid taxes and interest due originally from Mattick Oil Company, Inc., and representing a period of time and audit period occurring before the transfer to Reid B. Hughes of the above-mentioned assets. The tax period involved thus ended July 31, 1980. It was at this point that the Petitioner then sought a formal proceeding pursuant to Section 120.57, Florida Statutes.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57(l), Florida Statutes.
The Department is seeking to impose a tax on Reid B. Hughes, pursuant to the provisions of Section 206.18, Florida Statutes. The audit period in question for which the taxes are allegedly due, is August 1, 1977 through July 31, 1980, with interest accrued during and since that time. Section 206.18, Florida Statutes, provides as follows:
206.18 Discontinuance or Transfer of Business; Penalty.
Whenever a person ceases to engage in business as a distributor within the state by reason of discontinuance, sale or transfer of the business of such distributor, such person shall notify the Department in writing at least 10 days prior to the time the discontinuance, sale, or transfer takes effect. Such notice shall give the date of discontinuance and, in the event of a sale or transfer of the business, the date thereof and the name and address of the purchaser or transferee. All gas taxes, penalties, and interest not due and payable under the provisions of the laws of this state shall, notwithstanding such provisions, become due and payable concurrently with such discontinuance, sale, or transfer; and in any such person shall, concurrently with such discontinuance, sale, or transfer, make a report, pay off such taxes, interest, and penalties, and surrender to the department the license certificate theretofore issued to said person by the department.
Unless the above notice shall have been given to the Department as above
provided, such purchaser or transferee shall be liable to the State for the amount of all taxes, penalties, and interest under the laws of Florida accrued against any such distributor selling or transferring his business on the date of such sale or transfer, but only to the extent of the value of the property and business thereby acquired from such distributor.
Nothing in this section shall be construed as releasing the distributor for so transferring or discontinuing his business from liability for any gas taxes or any interest or penalty due under the gas tax laws.
The parties have stipulated that for the audit period of August 1, 1977 through July 31, 1980, Mattick Oil Company, Inc. had, through its operations, incurred a tax liability for special fuel taxes consisting of
$5,411.04 of actual tax and $4,428.70 of interest through the date of August 12, 1985, with interest continuing to accrue at a $1.78 per day from that date forward. The penalty sought by the Department, pursuant to Sections 206.44 and 206.94, Florida Statutes, is in the amount of $541.10.
Two issues must be resolved in order to adjudicate the dispute. The first concerns whether the notice referenced in the above-quoted statutory provisions was timely given to the Department by the transferor Mattick Oil Company, Inc.. The second concerns whether, aside from the question of the timeliness of the notice, the distributor or transferor, Mattick Oil Company, Inc. has actually continued business or transferred its business such that the original Mattick Oil Company, Inc., or its principal, has ceased to engage in business in the state.
Concerning the first question to be resolved, the evidence reveals, as found above, that the notice sent from Gene E. Mattick to the Department was dated June 19, 1980, informing the Department that as of June 1, 1980, he had "sold my business to Reid B. Hughes". Although it is true that the parties stipulated that the tax and interest allegedly due resulted from the operations of Mattick Oil Company, Inc. up through July 31, 1980, that does not belie the evidence which shows that the notice was sent June 9, 1980 in reference to a June 1, 1980 alleged "transfer" of the business. In view of the above statutory provision which requires that such a notice be sent to the Department at least ten days prior to the transfer or discontinuance of a business, the notification sent in terms of the above-quoted statute, was clearly not timely. The content of the notice was, however, adequate to provide the Department notice of the intention of the transferor, Gene A. Mattick and Mattick Oil Company, Inc. however. Since the notice of the discontinuance of business or transfer was not timely made under the terms of the above-quoted statutes, the transferee, Reid
B. Hughes, would ordinarily be liable for the tax and interest involved, to an amount not exceeding the value of the property and business acquired from the distributor, by the terms of the statute. In point of fact, however, turning to the second issue to be addressed herein, it has not been proven that Hughes was a transferee as contemplated by the statute.
The unrebutted testimony and evidence adduced by the Petitioner demonstrates that, essentially, the Petitioner bought the Volusia County assets of Mattick Oil Company, Inc. The evidence clearly shows that the seller, Mattick Oil Company, Inc. and Gene A. Mattick retained some of its contracts or jobber agreements with supplying oil companies. Hughes did not buy any assets related to Mattick Oil Company's operations in other areas of the state. Hughes did not buy Mattick's Eastern Oil Company, Ashland Oil Company, and Colonial Oil Company distribution contracts. In essence, Hughes bought only the assets of Mattick Oil Company in Volusia County. Mattick never represented that Hughes had bought all of the assets of Mattick Oil Company and that entity continued in business after the transfer of the subject assets. It thus has been established that Reid B. Hughes did not buy all of the assets or the "business" of Mattick Oil Company, Inc. or Gene A. Mattick and that there was no discontinuance of business by Mattick Oil Company, Inc. after the assets sale to Hughes.
Thus, even though the notice of the transfer, referenced above, was provided the Department by Mattick in a tardy fashion, in view of the terms of the above statute, the Petitioner is still not liable for the disputed tax, interest and penalty, because Hughes is not a "transferee" as contemplated by the statute at issue. This is because Mattick does not constitute a "person who has ceased to engage in business as a distributor within the state by reason of discontinuance, sale or transfer [of his business]". Mattick continued his special fuels and related products business. In view of this state of affairs, the Petitioner, Reid B. Hughes, is not liable for the disputed amount of tax, interest and penalty, described above.
Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record and the candor and demeanor of the witnesses, it is therefore,
RECOMMENDED that a Final Order be entered finding that the Petitioner, Reid
B. Hughes, is not liable to pay the tax, accrued interest and related penalty, referenced above and that his petition to be relieved of this assessment be GRANTED. Case No. 88-3562
DONE AND ENTERED this 5th day of September, 1989, in Tallahassee, Leon County, Florida.
P. MICHAEL RUFF 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 5th day of September, 1989.
APPENDIX PETITIONER'S PROPOSED FINDINGS OF FACT:
1-5. Accepted.
Rejected as not materially dispositive and subordinate to the Hearing Officer's findings of fact on the subject matter.
Rejected as constituting a recitation of the statute instead of a finding of fact.
Accepted.
Accepted.
Accepted.
Accepted.
12-14. Rejected as subordinate to the Hearing Officer's findings of fact on this subject matter.
RESPONDENT'S PROPOSED FINDINGS OF FACT:
1-3. Accepted.
4-7. Accepted.
8. Accepted.
9-10. Rejected as subordinate to the Hearing Officer's findings of fact on the subject matter.
11. Accepted, but not itself dispositive of material issues. 12. Accepted.
Accepted.
Accepted, but not dispositive.
Accepted, but not dispositive.
Accepted, although not at issue.
COPIES FURNISHED:
Steven T. Vasilaros, Esq. Post Office Drawer 2140 Daytona Beach, FL 32015
Ralph R. Jaeger, Esq. Department of Legal Affairs The Capitol - Tax Section Tallahassee, FL 32399-1050
William D. Moore, General Counsel Department of Revenue
203 Carlton Building Tallahassee, FL 32399-0100
Katie D. Tucker, Executive Director Department of Revenue
104 Car1ton Building Tallahassee, FL 32399-0100
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA DEPARTMENT OF REVENUE
REID B. HUGHES,
Petitioner,
vs. CASE NO.: 88-3562
STATE OF FLORIDA, DEPARTMENT OF REVENUE,
Respondent.
/
FINAL ORDER
The hearing officer has submitted a recommended order in this case, and it is attached to this order for reference. A hearing was held on November 29, 1989, to consider the entry of a final order at which both, parties appeared and submitted oral argument. The following appearances were entered:
For the Petitioner:
Keith C. Warnock, Esquire Post Office Drawer 2250 Daytona Beach, Florida 32115
For the Respondent:
Ralph R. Jaeger, Esquire Department of Legal Affairs Tax Section, The Capitol
Tallahassee, Florida 32399-1050
The Department has filed timely exceptions to the recommended order. The Department has taken exception to findings of fact in the recommended order in paragraphs 1, 6, 7, and 10. All exceptions relate to the finding that Mattick Oil Company continued to do business separately after its Volusia County assets were purchased by Reid B. Hughes under an Agreement for Sale and Purchase of Business dated May 8, 1980.
At this stage of this case, in reviewing these exceptions, the Department must determine, and must state with particularity, after a review of the complete record, whether the applicable findings of fact are supported by competent substantial evidence in the record. See section 120.57(1)(b)10., Florida Statutes. After considering the recommended order, the oral argument of the parties, and after reviewing the entire record, the Department accepts without change the opening paragraph, statement of the issues, and preliminary statement of the recommended order. The findings of fact, paragraphs 1, 6, 7,
and 10 are either modified or deleted as set out below. The conclusions of law have been rejected starting with the last sentence of the first partial paragraph on page 10.
FINDINGS OF FACT
Finding of fact number 1 set forth in the recommended order is modified based upon the following. A review of the entire record shows the only testimony or evidence presented to show that Mattick Oil Company continued to do business separately was Mr. Hughes' statements:
Through two sources I knew that he was doing business in generally the Tampa Bay area. I believe the two sources were his statement to me and industry people at meetings had told me that.
(Transcript, page 88, lines 5-8). Mr. Hughes continued to testify that "maybe" Mattick dealt in special fuels. (Transcript pages 88, 100). He stated he "believed" Mattick Oil continued to do business. (Transcript pages 97-98, 100, 102, 107). He did not testify to the time frames in which Mattick allegedly engaged in this business.
The testimony of Mr. Hughes, that Mattick told him Mattick was engaged in business, is not an exception to the hearsay rule, and the recommended order does not make a finding that it was such an exception. Because Mr. Mattick was not present to testify, any statement he may have made to Mr. Hughes is hearsay. Mr. Hughes' testimony that Mattick told him is hearsay and is unreliable testimony because Mattick was not available for cross examination. There has been demonstrated no interest Mattick may have had in not making such a statement; therefore, the Department finds the statement is not a declaration against Mr. Mattick's interest. It is not admissible into evidence as a declaration against interest under section 90.804(2)(c), Florida Statutes.
There was no showing that the declarant, Mr. Mattick was unavailable and that counsel was unable to procure his attendance or testimony by process or other reasonable means. See section 90.804(1)(e), Florida Statutes.
The testimony of Mr. Hughes is based on hearsay and shows that he had no actual knowledge himself of whether Mattick Oil Company continued to operate separately. Further, from Mr. Hughes own testimony, it is impossible to determine whether the statements concerned Mr. Mattick in his individual capacity or Mattick Oil Company. As provided in section 12O.58(1)(a), Florida Statutes,
Hearsay evidence may be used for purpose of supplementing or explaining other evidence, but it shall not be sufficient in itself to support a finding unless it would be admissible over objection in civil actions.
Thus, hearsay evidence alone cannot support a finding of fact. Section 120.58, Florida Statutes. Under this statute, failure to object at trial to the hearsay does not mean the hearsay is sufficient evidence to support a finding of fact where there is no other corroborating evidence in the record. Harris v. Florida Game and Freshwater Fish Commission, 495 So.2d 806 (Fla. 1st DCA 1986). Mr.
Gentempo, another witness called by Petitioner, testified that he knew Mr. Mattick personally, and that Mattick never mentioned any other operations anywhere other than Volusia County. (Transcript page 113). Gentempo said
Mattick's brother had some other operations. (Id). This testimony further detracts from the substantiality of Mr. Hughes' hearsay testimony.
Also, there was testimony that Mr. Hughes did not purchase the contracts that Mattick Oil Company had with Eastern, Colonial, and Ashland, some independent petroleum suppliers, (Transcript, pages 113-116). However, Petitioner's own witnesses testified that Petitioner purchased all the assets of Mattick Oil (Transcript page 113, lines 22- 25, and page 114, line 1) as a going concern in Volusia County, that the three contracts with the independents were not assets (Transcript page 114, lines 15-18), and that the accounts were not profitable to operate (Transcript page 115, lines 23-25, and page 116, line 12). Based on the above there is no evidence, other than that based on hearsay inadmissible over objection in a civil action, to support the findings that Mattick Oil Company continued to operate as a separate entity after the sale.
In fact, all evidence submitted shows that the business was sold as a going concern and that Mattick Oil Company was submitting its final return as of June 9, 1980. Therefore, the exceptions of the Department are well-taken. The first sentence under Paragraph 1 of the findings of fact of the recommended order is modified to read that Mattick Oil Company, Inc., was a wholesaler and retailer of fuel oil, motor oil, gasoline and other petroleum products and auto accessories. A review of the entire record, including the transcript of the proceedings, indicates a reasoned finding that Mattick Oil ceased doing business under the applicable special fuels dealer's license, which was canceled. (See Respondent's Exhibit 8; also see Respondent's Exhibit 2). Exhibit 2 was read into the record by Petitioner's counsel (Transcript page 80), and the recommended order states it is admitted into evidence (Recommended Order page 3). The document was authenticated by the Department's witness, Mr. Zych. (Transcript pages 12-18). The weight of this exhibit is great because it was read by and relied upon by Petitioner and does not further Petitioner's interest as does Hughes' testimony that Mattick continued in business. To the contrary, Respondent's Exhibits 2, 3, 5, 6, and 7 indicate Mattick ceased doing business as a distributor under the special fuels dealer's license. This finding that Mattick ceased doing business is based on the clear unrebutted weight of the evidence that Mattick sold his going concern in Volusia County, and agreed in writing not to, and did not, continue such business in Volusia County. Mattick also canceled his sales tax license. (Transcript pages 57-58, 68-69). There is further no competent substantial evidence in the record that Mattick later engaged in business as a distributor with such special fuels dealer's license in Florida or otherwise. Because finding of fact number 1 is not consistent with the entire record and does not consider the sufficiency of Respondent's Exhibit 2, under the provisions of Section 120.57(1)(b)10., Florida Statutes, the Department finds that finding of fact number 1 is not based upon competent substantial evidence in the record, and it is accordingly modified as set forth above.
2 through 5. Findings of fact numbers 2 through 5 set forth in the recommended order are adopted and incorporated by reference in this final order as if fully set forth.
Paragraph 6 is modified, as follows, where it contains findings that Mattick had not sold his entire business to Mr. Hughes, and where it contains findings that Mattick Oil Company continued to do business in other parts of Florida, especially the Tampa Bay area. Although Mr. Reid B. Hughes testified that he knew Gene Mattick was doing business in generally the Tampa Bay area, a review of his testimony shows that this "knowledge" was based on statements by other individuals and not from his own knowledge. (Transcript page 88). Further, from Hughes' testimony, it was not clear whether he had been told that
Mr. Mattick was doing business in his individual capacity or as Mattick Oil Company. The Petitioner's own witness testified that Hughes had purchased all Mattick's assets and that the remaining contracts and accounts either had no value or would not be profitable to operate. (Transcript Page 116). Mr.
Hughes' comptroller, Mr. Burke, testified that he was not the comptroller of the company at the time the contract and sale of the business were executed. (Transcript Page 109). His testimony regarding the contracts retained by Mattick is therefore not based on personal knowledge. Hughes also testified that he bought only the distributorship contracts with Phillips Petroleum Company and Gulf Oil Company and the other assets described above, (Transcript pages 87, 89, 92-93). Although Mr. Hughes was primarily interested in purchasing the service station in New Smyrna Beach in Volusia County, and the contract did not contain a covenant not to compete outside Volusia county (Petitioner's Exhibit 1), there is no competent substantial evidence in the record to show that there were valuable assets retained by Mattick outside Volusia County or that Mattick continued to do business with those assets. The record is consistent with a contrary finding that Hughes was not interested in Mattick's assets outside Volusia County because there were no such assets, and that Hughes did not seek to restrict Mattick's competition outside Volusia County because Mattick was not doing business outside Volusia County. Mr.
Hughes testified he was not concerned with, and did not personally know of, Mattick's business outside Volusia County (Transcript page 102). Accordingly, the Department finds that Mattick did not do business as a special fuel dealer or distributor after the sale of Mattick Oil Company to Mr. Hughes and paragraph
6 is modified accordingly.
Finding of fact number 7 is modified as follows. In fact, the evidence establishes that Mattick Oil Company, Inc. ceased doing business as a distributor in Florida under the special fuels dealer's license in Volusia County. There is no competent substantial evidence in the record that Mattick continued to do business elsewhere. Accordingly, for these reasons and the reasons expressed in paragraphs 1 and 6 of this final order, paragraph 7 of the recommended order is modified to delete the last sentence of that paragraph.
8 through 9. Findings of fact numbers 8 through 9 set forth in the recommended order are adopted and incorporated by reference in this final order as if fully set forth.
Finding of fact number 10 is a summary of the preceding paragraphs, and for the reasons set forth above in paragraphs 1, 6 and 7, it is deleted in its entirety.
Finding of fact number 11 set forth in the recommended order is adopted and incorporated by reference in this final order as if fully set forth.
In the appendix to the recommended order, that order rejected as subordinate to the findings of fact the Respondent's Proposed Finding of Fact Number 10 which stated as follows:
10. A form entitled: GASOLINE DISTRIBUTOR - CONFIDENTIAL QUESTIONNAIRE AND REQUIRED SALES INFORMATION. (Respondent's Exh. 6) was provided to the Department. This form stated:
Name under which business is to operate Mattick Oil Company.
Also, the form was dated July 8, 1980 and had the notarized signature of Reid B. Hughes. Mr. Hughes denied that the signature on the bond (Respondent's Exhibit 5) was his, but never denied that the signature on the Confidential Questionnaire (Respondent's Exhibit 6) was his. Therefore, there is no basis for denial of this proposed finding of fact. The findings in the recommended order accept uncorroborated hearsay to the effect that Mattick Oil Company continued to operate separately, but reject Respondent's Exhibit 6, documentary evidence that shows Reid B. Hughes was operating and doing business as Mattick Oil Company after the sale. Accordingly, the Department finds that Hughes operated Mattick Oil Company after purchasing it as a going concern from Mr.
Mattick.
CONCLUSIONS OF LAW
Having made the above findings of fact, the Department must now review the legal provisions which apply to these factual circumstances. Based upon the findings of fact set forth above, and as stated in the opening paragraph of this final order, the conclusions of law in the recommended order have been rejected starting with the last sentence of the first partial paragraph on page 10 of the recommended order. Those conclusions of law which have been accepted have been renumbered and that paragraph has been renumbered in this final order as paragraph 5. For ease of reading, the conclusions of law are set out in their entirety in this portion of the order. The conclusions of law numbered below are accordingly set forth in place of those in the recommended order.
The Division of Administrative Hearings has jurisdiction of the parties to, and subject matter of, this proceeding. Section 120.57(1), Florida Statutes.
The Department is seeking to impose a tax on Reid B. Hughes, pursuant to the provisions of Section 206.18, Florida Statutes (1979). The audit period in question for which the taxes are allegedly due, is August 1, 1977, through July 31, 1980, with interest accrued during and since that time. Section 206.18, Florida Statutes, provides as follows:
206.18 Discontinuance or transfer of business; Penalty.
Whenever a person ceases to engage in business as a distributor within the state by reason of discontinuance, sale, or transfer of the business of such distributor, such person shall notify the Department in writing at least 10 days prior to the time the discontinuance, sale, or transfer takes effect. Such notice shall give the date of discontinuance and, in the event of a sale or transfer of the business, the date thereof and the name and address of the purchaser or transferee. All gas taxes, penalties, and interest not due and payable under the provisions of the laws of this state shall, notwithstanding such provisions, become due and payable concurrently with such discontinuance, sale, or transfer; and any such person shall concurrently with such discontinuance, sale, or transfer, make a report, pay off such taxes, interest, and penalties, and surrender to the department the license certificate theretofore issued to said person by the Department.
Unless the above notice shall have been given to the department as above provided, such purchaser or transferee shall be liable to the State for the amount of all taxes, penalties, and interest under the laws of Florida accrued against any such distributor selling or transferring his business on the date of such sale or transfer, but only to the extent of the value of the property and business thereby acquired from such distributor.
Nothing in this section shall be construed as releasing the distributor for so transferring or discontinuing his business from liability for any gas taxes or any interest or penalty due under the gas tax laws.
The parties have stipulated that for the audit period of August 1, 1977, through July 31, 1980, Mattick Oil Company, Inc., had, through its operations, incurred a tax liability for special fuel taxes consisting of
$5,411.04 of actual tax and $4,428.70 of interest through the date of August 12, 1985, with interest continuing to accrue at a $1.78 per day from that date forward. The penalty sought by the Department, under sections 206.44 and 206.94, Florida Statutes (1979), is in the amount of $541.10.
Two issues must be resolved in order to adjudicate the dispute. The first concerns whether the notice referenced in the above-quoted statutory provisions was timely given to the Department by the transferor Mattick Oil Company, Inc. The second concerns whether, aside from the question of the timeliness of the notice, the distributor or transferor, Mattick Oil Company, Inc., has actually continued business or transferred its business such that the original Mattick Oil Company, Inc., or its principal, has ceased to engage in business in the state.
Concerning the first question to be resolved, the evidence reveals, as found above, that the notice sent from Gene E. Mattick to the Department was dated June 9, 1980, informing the Department that as of June 1, 1980, he had "sold my business to Reid B. Hughes." Although it is true that the parties stipulated that the tax and interest alleged due resulted from the operations of Mattick Oil Company, Inc., up through July 31, 1980, that does not belie the evidence which shows that the notice was sent June 9, 1980, in reference to a June 1, 1980 alleged "transfer" of the business. In view of the above statutory provision which requires that such a notice be sent to the Department at least ten days prior to the transfer or discontinuance of a business, the notification sent in terms of the above-quoted statute, was clearly not timely. The content of the notice was, however, adequate to provide the Department notice of the intention of the transferor, Gene A. Mattick and Mattick Oil Company, Inc., however. Since the notice of the discontinuance of business or transfer was not timely made under the terms of the above-quoted statutes, the transferee, Reid
B. Hughes, would ordinarily be liable for the tax and interest involved, to an amount not exceeding the value of the property and business acquired from the distributor, by the terms of the statute.
The tax liability at issue is for the special fuels dealer's license held by Mattick prior to selling the business to Hughes. Even were the Department to accept the fact that Mattick continued "doing business" this does not detract from the fact that Mattick discontinued doing business under the special fuels dealer's license at issue here. The determination of whether Mattick ceased doing business as a distributor under the special fuels dealer's
license and section 206.18 does not require a showing that Mattick ceased doing business. It requires only that Mattick ceased doing business as a distributor under the special fuels dealer's license within section 206.18. "Dealer" and "licensed dealer" are defined at section 206.86(8) and (9), Florida Statutes (1979). Further, section 206.89, Florida Statutes (1979) provides in part "no person shall act as a dealer without a valid dealer registration." Section
206.97 (1979) provides that the terms "distributor" and "dealer" are equivalent. (Transcript page 67). Nowhere in the record is it suggested that Mattick acted as a dealer without a license. Nor is it in the record that Mattick continued doing business as a distributor of special fuels under the dealer's license at issue. The conclusion of law that transferee liability exists therefore does not depend on the fact that Mattick did or did not do business elsewhere in Florida; it suffices that Mattick discontinued acting as a distributor under the special fuels dealer's license at issue within section 206.18, Florida Statutes.
The only issue remaining to be considered is whether Reid B. Hughes is a purchaser or transferee within the provisions of section 206.18(2), Florida Statutes (1979). The Petitioner claims that under the Agreement For Sale and Purchase of Business this was merely a purchase of assets and not of the business. Petitioner's assertion directly contradicts the title of the document. Also, among other things, the agreement provided for (1) the sale of all jobberships, supply sale and purchase agreements owned by seller, all the personal property used by seller in connection with the operation of said business, and all lists of customers and customers cards and files; and (2) that buyer would assume and pay seller's remaining 1980 Yellow Pages advertising commitment. (Respondent's Exhibit 3). The testimony of the Petitioner's own witness indicated that Petitioner purchased all the assets of Mattick Oil Company, or at least, those assets which had any value (Transcript Pages 113 through 116)
Respondent's Exhibit 5 is a surety bond executed on behalf of Reid B. Hughes d/b/a Mattick Oil for compliance with chapter 206, Florida Statutes. This Exhibit indicates Hughes continued the business of Mattick Oil Company under the name of Mattick Oil. Further, Respondent's Exhibit 6, dated July 8, 1980, a form entitled "Gasoline Distributor - Confidential Questionnaire and Required Sales Information," has the notarized signature of Reid B. Hughes, and states in the name under which Hughes would operate the business: Mattick Oil Company. Finally, Respondent's Exhibit 2, the notice dated June 9, 1980, from Gene A. Mattick, President, Mattick Oil Co., Inc., stated:
This letter is to notify you that as of June 1, 1980 I have sold my business to Reid B. Hughes -
D.B.A. Mattick Oil, 1744 S. Segrave, So. Daytona, FL. 32019. This is my Final Return. Please cancel the Sales Tax Certificate which I am returning with this letter. No. 74-25-24704-45 Mattick Oil Company, Inc. 1744 S. Segrave, So. Daytona, FL. 32019 (emphasis supplied).
Based on all the above, and after a review of the entire record, it is concluded that Petitioner purchased substantially all the assets of the business of Mattick Oil Company, Inc., under the special fuels dealer's license in Volusia County, and actually had the contractual right to operate the business as Mattick Oil Company after June 1, 1980. If there were any assets retained by Mr. Mattick, they had no value to the going concern which Mattick Oil company was operating in Volusia County under the special fuels dealer's license, or to the purchaser and transferee of this going concern, Reid B. Hughes. Petitioner
further failed in its burden to prove that Mattick "engaged in business as a distributor in Florida," in Volusia County or elsewhere, after the transfer of this going concern to Hughes. Therefore, Petitioner is a purchaser or transferee under section 206.18(2), Florida Statutes (1979), and timely advance notice of the transfer was not provided as required by section 206.18(1), Florida Statutes (1979). The notice (Respondent's Exhibit 2) was sent approximately 7 days after the sale of the business, and 17 days after the time required by section 206.18, Florida Statutes.
Neither the Petitioner nor the Respondent has shown why the penalty of
$541.10 should be changed. Therefore, since the amnesty provisions of Chapter 87-101, Laws of Florida, are no longer applicable, the penalty of $541.10 shall be imposed.
CONCLUSION
Based on the provisions of sections 206.18(1) and (2), Florida Statutes (1979), and the foregoing, it is therefore
ORDERED that the assessment in this case is upheld and that the Petitioner shall pay the following amounts:
$5,411.04 of actual tax;
$541.10 of penalty; and
$4,428.70 of interest through August 12, 1985, with interest to accrue at $1.78 per day from that day forward (until payment is made).
Any party to this order has the right to seek judicial review of the order as provided in Section 120.68, Florida Statutes, by the filing of a notice of appeal as provided in Rule 9.110, Florida Rules of Appellate Procedure, with the clerk of the Department in the Office of General Counsel, Post Office Box 6668, Tallahassee, Florida 32314-6668 and by filing a copy of the notice of appeal accompanied by the applicable filing fees with the appropriate District court of Appeal. The notice of appeal must be filed within 30 days from the date this order is filed with the clerk of the Department.
DONE AND ORDERED this 4th day of December, 1989.
STATE OF FLORIDA DEPARTMENT OF REVENUE
KATIE D. TUCKER
Executive Director
Filed with the Agency Clerk and served on the parties this 4th day of December, 1989.
COPIES FURNISHED:
Ralph R. Jaeger, Esq. Assistant Attorney General Department of Legal Affairs Tax Section, The Capitol
Tallahassee, Florida 32399-1050
Keith C. Warnock, Esq. Post Office Drawer 2250
Daytona Beach, Florida 32115
P. Michael Ruff Hearing Officer
Division of Administrative Hearings
The DeSoto Building 1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
Attachment:
Hearing Officer's Recommended Order
================================================================= DISTRICT COURT OPINION
=================================================================
IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FIFTH DISTRICT JULY TERM 1989
REID B. HUGES,
Appellant, CASE NO. 89-2586
DOAH CASE NO. 88-3562
DEPARTMENT OF REVENUE, STATE OF FLORIDA,
Appellee.
/ Decision filed December 4, 1990
Administrative Appeal from the Department of Revenue State of Florida
Keith C. Warnock and Christopher W. Wickersham, Sr., P.A., Wickersham & Carr, Daytona Beach, for Appellant.
Robert A. Butterworth, Attorney General, and Ralph R. Jaeger, Assistant Attorney General Tallahassee, for Appellee. PER CURIAM.
AFFIRMED.
SHARP, W., COWART and GRIFFIN, JJ., concur.
IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FIFTH DISTRICT
REID B. HUGHES,
Appellant,
v. CASE NO. 89-2586
DOAH CASE NO. 88-3562
DEPARTMENT OF REVENUE, STATE OF FLORIDA,
Appellee.
/ DATE: January 11, 1991
BY ORDER OF THE COURT:
ORDERED that Appellant's MOTION FOR REHEARING, filed December 17, 1990, is denied.
I hereby certifY that the foregoing is
(a true copy of the original court order. FRANK J. HABERSHAW, CLERK
BY:
DEPUTY CLERK
(COURT SEAL)
: Keith C. Warnock, Esq. Ralph J. Jaeger, Esq.
M A N D A T E
from
DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT
THIS CAUSE HAVING BEEN BROUGHT TO THIS COURT BY APPEAL, AND AFTER DUE CONSIDERATION THE COURT HAVING ISSUED ITS OPINION;
YOU ARE HEREBY COMMANDED THAT SUCH FURTHER PROCEEDINGS BE HAD IN SAID CAUSE IN ACCORDANCE WITH THE OPINION OF THIS COURT ATTACHED HERETO AND INCORPORATED AS PART OF THIS ORDER, AND WITH THE RULES OF PROCEDURE AND LAWS OF THE STATE OF FLORIDA.
WITNESS THE HONORABLE JOE A. COWART, JR. CHIEF JUDGE OF THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA, FIFTH DISTRICT, AND THE SEAL OF THE SAID COURT AT DAYTONA BEACH, FLORIDA ON THIS DAY.
DATE: January 30, 1991. FIFTH DCA CASE NO. 89-2586 COUNTY OF ORIGIN: Volusia
TRIAL COURT CASE NO. 88-3632 (Administrative)
FRANK J. HABERSHAW CLERK
| Issue Date | Proceedings |
|---|---|
| Sep. 05, 1989 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Dec. 04, 1990 | Opinion | |
| Dec. 04, 1989 | Agency Final Order | |
| Sep. 05, 1989 | Recommended Order | Petitioner not liable for disputed taxes bec not a ""transferee"" of bus in question for purpose of above statute since transferor continued in same type bus. |
