STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOHN MARSHALL BRUMLEY, )

)

Petitioner, )

)

vs. ) CASE NO. 89-6841

) DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice a formal hearing was held in this case on April 5, 1990, in Miami, Florida, before Stuart M. Lerner, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Stanley B. Erskine, Esquire

420 Lincoln Road Suite 251

Miami Beach, Florida 33139

Michael A. Levin, Esquire 2780 Douglas Road, Suite 300 Coral Gables, Florida 33133

For Respondent: Vern D. Calloway, Jr., Esquire

Assistant Attorney General Tax Section, Capitol Building

Tallahassee, Florida 32399-1050 STATEMENT OF THE ISSUE

The ultimate issue in the instant case is whether Petitioner's challenge to the October 13, 1989, jeopardy assessment issued him by Respondent pursuant to Section 212.0505, Florida Statutes, should be sustained.

PRELIMINARY STATEMENT

On October 13, 1989, Respondent issued a Notice of Assessment and Jeopardy Findings in this matter. Respondent asserted in the notice that, on or about August 16, 1989, Petitioner had "engaged in the unlawful sale, use, consumption, distribution, manufacture, derivation, production, transportation, or storage" of 27 kilograms of cocaine and that, pursuant to Section 212.0505, Florida Statutes, Petitioner therefore owed $394,257.58 in taxes, penalties, and interest through September 21, 1989. A warrant for the collection of these monies was subsequently issued and recorded.

On or about December 8, 1989, Petitioner filed a petition with Respondent challenging the assessment and requesting an administrative hearing on his challenge. In his petition, Petitioner denied that he had engaged in any unlawful, taxable activity on August 16, 1989. Petitioner's petition was referred to the Division of Administrative Hearings on December 13, 1989.

At the commencement of the hearing in the instant case on April 5, 1990, Petitioner brought to the Hearing Officer's attention that two days prior to hearing Respondent had issued and recorded a "corrected" warrant alleging that Petitioner owed Respondent $56,319.91, as of April 2, 1990, as a result of a transaction he had engaged in on January 15-17, 1989. Having advised the Hearing Officer of the foregoing, Petitioner sought a ruling as to whether matters pertaining to the "corrected" warrant would be litigated at hearing.

The Hearing Officer responded that, inasmuch as the petition which had been referred to the Division of Administrative Hearings challenged the allegations made in the Notice of Assessment and Jeopardy Findings issued on October 13, 1989, 1/ he would only consider evidence bearing on those allegations.

The only evidence offered at hearing was the testimony of the two witnesses called to the stand by Respondent: Idaliza Roman, an employee of Respondent's, and Detective Franklin Adderley of the Fort Lauderdale Police Department.

At the close of the evidentiary portion of the hearing, the Hearing Officer advised the parties on the record that their post-hearing submittals had to be filed no later than ten days following the Hearing Officer's receipt of the transcript of the hearing. The Hearing Officer received the transcript on May 1, 1990. Respondent filed a proposed recommended order on May 14, 1990. Its proposed recommended order contains proposed findings of fact. These proposed findings of fact have been carefully considered and are specifically addressed in the Appendix to this Recommended Order. Petitioner has not filed any post- hearing submittal.

FINDINGS OF FACT

Based upon the record evidence, the following Findings of Facts are made:

1. Idaliza Roman is employed by Respondent as a Collections Specialist II. She is assigned to Respondent's Plantation, Florida office. As part of her job responsibilities, she issues assessments against persons suspected of having engaged in illicit drug activity made taxable by Section 212.0505, Florida Statutes.

   
   

2. On October 13, 1989, Roman issued such an assessment against Petitioner. She also issued and filed a tax warrant based on the assessment. The assessment alleged that, on or about August 16, 1989, Petitioner had engaged in a taxable transaction involving 27 kilograms of cocaine.

   
   

3. In making this allegation, Roman relied exclusively upon information she had gleaned from a probable cause affidavit contained in a court file, as well as a laboratory report and a property room receipt. She conducted no further investigation into the matter before issuing the assessment.

   
   

4. The probable cause affidavit upon which Roman relied reflected that Petitioner had been arrested on August 16, 1989, for a cocaine-related offense. It did not reveal, however, when the alleged offense had been committed. Roman assumed, erroneously, that it had been committed on or about the date of Petitioner's arrest.

5. The arrest actually had been for an offense, involving substantially less than 27 kilograms of cocaine, that Petitioner had allegedly committed in January, 1989. The authorities had no information that Petitioner had been involved in any illicit, drug-related activity on or about August 16, 1989.

   
   

6. On April 3, 1990, Roman discovered that the October 13, 1989, assessment against Petitioner and the tax warrant she had issued based on the assessment were incorrect. She thereupon issued and filed a "corrected" tax warrant.

   
   

   CONCLUSIONS OF LAW

   
   

7. Section 212.0505(1), Florida Statutes, provides:

   
   

   1. Every person is exercising a taxable privilege who engages in this state in the unlawful sale, use, consumption, distribution, manufacture, derivation, production, transportation, or storage of any medicinal drug as defined in chapter 465, cannabis as defined in s. 893.02, or controlled substance enumerated in s . 893.03. For the exercise of such privilege, a tax is levied on each taxable transaction or incident, including each occasional or isolated unlawful sale, use, consumption, distribution, manufacture, derivation, production, transportation, or storage, at the rate of 50% of the estimated retail price of the medicinal drug, cannabis, or controlled substance involved in the transaction or incident.

   2. In addition to any other tax there shall also be a 25 percent surcharge on the estimated price of the transaction or incident taxable under paragraph (a).

      
      

8. "The taxes imposed [under Section 212.0505, Florida Statutes] are subject to the same interest and penalties and the same procedures for collection and enforcement as other taxes imposed under [Chapter 212, Part I, Florida Statutes], except that a dealer's credit under 212.12(1) is not allowed." Section 212.0505(3), Fla. Stat.

   
   

9. A taxpayer may contest an assessment made by the Department of Revenue under Section 212.0505, Florida Statutes, by filing a circuit court action or, alternatively, by filing a petition for administrative review pursuant to Chapter 120, Florida Statutes. Regardless of the avenue of review selected, the challenge must be initiated no later than 60 days following the date that the assessment became final. Section 72.011(1) and (2), Fla. Stat.; Fla. Admin. Code Rule 12-6.004. It is the responsibility of the Department to notify the taxpayer of the assessment so that the taxpayer will have an opportunity to initiate a timely challenge. Section 72.011(2), Fla. Stat.

10. In any judicial or administrative proceeding involving a challenge to an assessment made pursuant Section 212.0505, Florida Statutes, the assessment "shall be deemed prima facie correct." Section 212.0505(5), Fla. Stat.

    
    

11. In the instant case, by notice dated October 13, 1989, the Department notified Petitioner that he was being assessed $394,257.58 in taxes, penalties and interest through September 21, 1989, for having engaged, on or about August 16, 1989, in an unlawful transaction involving 27 kilograms of cocaine, a controlled substance enumerated in Section 893.03(2)(a), Florida Statutes. The notice indicated that the assessment was final as of the date of the notice and it described the procedure that had to be followed to challenge the assessment.

    
    

12. Petitioner challenged the Department's October 13, 1989, assessment by filing with the Department a petition for an administrative hearing. The petition was referred to the Division of Administrative Hearings for the assignment of a

    Hearing Officer to conduct a formal hearing on the petition. 3/

    It is this petition which frames the issues to be resolved in the instant case. Because the petition has not been amended and challenges only the allegations made by the Department in its October 13, 1989, assessment, it would be inappropriate for the Hearing Officer to go beyond the scope of these allegations and - consider the merits of subsequent allegations that the Department may have made against Petitioner which Petitioner has yet to challenge.

    
    

13. By operation of Section 212.0505(5), Florida Statutes, the assessment that Petitioner is challenging in the instant case must be deemed "prima facie correct." The evidence adduced at hearing, however, is sufficient to overcome this presumption of correctness and to establish that the assessment was based upon an erroneous allegation that Petitioner had engaged in unlawful drug- related activity on or about August 16, 1989. Accordingly, Petitioner's challenge to the assessment should be sustained and the assessment should be rescinded. 4/

RECOMMENDATION

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

RECOMMENDED that a final order be issued sustaining Petitioner's challenge to the October 13, 1989, jeopardy assessment issued against him and rescinding the assessment.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 21st day of May, 1990.

STUART M. LERNER

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 21st day of May, 1990.

ENDNOTES

1/ At no time has Petitioner sought to amend his petition.

2/ The Hearing Officer, however, allowed Respondent to proffer evidence Concerning the allegations made in its "corrected" warrant.

3/ An agency, like the Department, which refers a matter to the Division is without authority to take any "further action with respect to the formal proceeding, except as a party litigant, as long as the division has jurisdiction over the formal proceeding." Section 120.57(1)(b)3, Fla Stat.

4/ If Petitioner prevails in the instant case, as the Hearing Officer suggests he should, the Department will not be foreclosed from issuing another assessment against him alleging that he was involved in unlawful drug-related activity at a time other than on or about August 16, 1989. See State v. Brown, 404 So.2d 805, 806 (Fla. 2d DCA 1981) (Acquittal of defendant on charges that he had committed offenses on December 26 and 27, 1979, did not bar state from subsequently pursuing charges that defendant had committed these offenses on December 25, 1979).

APPENDIX TO RECOMMENDED ORDER

The following are the Hearing Officer's specific rulings on the findings of fact proposed by Respondent:

First paragraph, first sentence: Rejected because it is not supported by persuasive competent substantial evidence; 1/ First paragraph, second sentence: Accepted and incorporated in substance, but not necessarily repeated verbatim, in this Recommended Order; First paragraph, third sentence: Rejected because it is not supported by persuasive competent substantial evidence. 2/

Second paragraph: Accepted and incorporated in substance.

Third Paragraph, first through fourth sentences: Rejected because they are more in the nature of conclusions of law than findings of fact.

APPENDIX ENDNOTES

1/ Petitioner was arrested in August, not July, 1989.

2/ The tax warrant reflected that Petitioner owed $253,125.00, not $153,125.00, in taxes.

COPIES FURNISHED:

Stanley B. Erskine, Esquire

420 Lincoln Road Suite 251

Miami Beach, Florida 33139

Michael A. Levin, Esquire 2780 Douglas Road

Suite 300

Coral Gables, Florida 33133

Vern D. Calloway, Jr., Esquire Assistant Attorney General

The Capitol, Tax Section Tallahassee, Florida 32399-1050

J. Thomas Herndon Executive Director Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

William D. Moore, Esquire General Counsel Department of Revenue

203 Carlton Building Tallahassee, Florida 32399-0100

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA, DEPARTMENT OF REVENUE TALLAHASSEE, FLORIDA

John Marshal Brumley Petitioner,

vs. CASE NO. 89-6841

Department of Revenue, Respondent

/

FINAL ORDER PRELIMINARY STATEMENT

This case came before the Department of Revenue for the purpose of considering a recommended order. The hearing officer assigned by the Division of Administrative Hearings submitted a recommended order to the Department of Revenue dated May 21, 1990. A copy of that recommended order is attached hereto.

The hearing officer recommends that this assessment should be dismissed.

Essentially, to summarize the theory underlying this recommendation, the Department assessed the taxpayer under section 212.0505 F.S., indicating a transaction date of August 16, 1989 and an amount of cocaine of 27 kilograms. The assessment's "prima facie correctness" was rebutted at the hearing by testimony establishing that August 16, 1989 was in fact the arrest date and that the drug transaction was in fact committed in January, 1989 and involved an amount of cocaine less than 27 kilograms. The hearing officer held that the "prima facie correctness"of the assessment had been rebutted and that no credible evidence was submitted to establish that the August 16, 1989 and 27 kilogram assessment, was accurate. Therefore, the hearing officer deemed that the Department failed to meet its burden to prove the validity of that assessment by a preponderance of the evidence, and the assessment should be rescinded.

FINDINGS OF FACT

1. through 6. The Department hereby adopts and incorporates by reference the findings of fact set forth in paragraphs 1 through 6 of the recommended order.

CONCLUSIONS OF LAW

1. through 7. The Department hereby adopts and incorporates by reference the Conclusions of law set forth in paragraphs 1 through 7 of the recommended order, except for footnote number 3 of the conclusions of law which the Department rejects as it purports to limit the Department's authority to revise an erroneous assessment.

CONCLUSION

The Department is of the opinion that the hearing officer's recommended order be adopted except as above indicated and based upon the foregoing, it is ORDERED:

That the subject assessments against Petitioner be withdrawn.

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 ENTERED in Tallahassee, Leon County, Florida this 27 day of August, 1990.

STATE OF FLORIDA DEPARTMENT OF REVENUE

J. Thomas Herndon Executive Director

Filed with the Agency Clerk this 27th day of August, 1990.

Copies furnished to:

Stuart M. Lerner Hearing Officer

Division of Administrative Hearings DeSoto Building

1230 Apalachee Parkway

Tallahassee, Fla. 32399-1550

Stanley Erskine, Esq.

410 Lincoln, Road Suite 251

Miami Beach, Fla. 33139

Michael A. Levin, Esq. 2780 Douglas Road

Suite 300

Coral Gables, Fla. 33133

Vern D. Calloway, Jr. Esq. Assistant Attorney General The Capitol, Tax section Tallahassee, Fla. 32399-1050

Victoria Weber, Esq. General Counsel Department of Revenue

P.O. Box 6668

Tallahassee, Fla. 32314-6668

Eric de Moya, Esq. Assistant General Counsel Department of Revenue

P. O. Box 6668

Tallahassee, Fla. 32314-6668

Docket for Case No: 89-006841

Orders for Case No: 89-006841