STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GARY PORTER, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 93-2436

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

) GARY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 93-2437

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

These two causes came on for hearing by telephone on June 21, 1994, before David M. Maloney, Hearing Officer of the Division of Administrative Hearings.

In addition to the parties being on the telephone line, also on the line was the office of Snaith & Rackard Reporting Service, 22 Racetrack Road, N.W., Fort Walton Beach, Florida. Respondent file a proposed recommended order on July 22, 1994. Petitioner filed a proposed recommended order on August 12, 1994. The attached appendix addresses proposed findings of fact by number.

APPEARANCES

For Petitioner: Gary Porter

219 Benning Drive Destin, Florida 32541

For Respondent: Mark T. Aliff

Assistant Attorney General Department of Legal Affairs Tax Section, The Capitol

Tallahassee, Floirda 32399-1050 PRELIMINARY STATEMENT

At hearing, Mr. Porter, as sole stockholder and owner of the two corporate entities, Gary Porter, Inc. and Gary, Inc., the petitioners in these two consolidated cases, testified in behalf of both petitioners. Mr. Porter joined with Respondent in the introduction of a joint exhibit. Accepted into evidence,

Joint Exhibit No. 1, is a composite of stipulated findings of fact together with an attachment of six exhibits, A through F. Neither party offered any other exhibits.

FINDINGS OF FACT

1. Gary Porter, an individual, is the sole stockholder, owner, and decision-maker for the two corporate entities, Gary Porter, Inc., and Gary, Inc., that are petitioners in these consolidated cases.

   
   

2. In early 1990, Mr. Porter reached an oral agreement with Jerry Thompson, a Florida resident, to purchase two boats from Miss Angie, Inc., a Florida corporation owned and operated by Mr. Thompson. The two boats were the only boats owned by Mr. Thompson and his corporation. The purchase price for the two vessels, the "Miss Angie" and the "Christy Lynn", plus related fishing equipment and gear, was $285,000.00 (two hundred eighty-five thousand dollars).

   
   

3. Separate sales agreements were drawn up for the sale of the two boats and a closing was scheduled in the office of an attorney in Destin, Florida, Dana C. Matthews, Esquire. Approximately one week before the closing, the

   $285,000.00 was paid to Mr. Thompson.

   
   

4. On March 19, 1990, the closing took place. The two sales agreements and two bills of sale were executed by Mr. Thompson personally and in his capacity as President of Miss Angie, Inc. In the case of the Miss Angie sales agreement, Gary Porter, in the capacity of president of the corporation, signed the agreement on behalf of Gary, Inc. In the case of the Christy Lynn sales agreement, Gary Porter, as president, signed the agreement on behalf of Gary Porter, Inc. Title to the Miss Angie passed from Miss Angie, Inc., to Gary, Inc. Title to the Christy Lynn passed from Miss Angie, Inc. to Gary Porter, Inc. No reference to payment of taxes is made in the Sales Agreements or the Bills of Sale.

   
   

5. At the closing, Mr. Thompson represented to both Mr. Porter and Mr. Matthews that he would see that all taxes arising from the transactions were paid.

   
   

6. Contrary to his representations to Mr. Porter and Mr. Matthews, no sales or use taxes were paid by Mr. Thompson, Miss Angie, Inc., or anyone else.

   
   

7. The Christy Lynn has been continually berthed in Destin, Florida, both before and after its sale from Mr. Thompson to Gary Porter, Inc. The Miss Angie was also berthed in Destin both before and after the sale by Mr. Thompson. But, the Miss Angie disappeared from its berth about one and one-half years after the purchase by Gary, Inc.

   
   

8. Mr. Porter represented to the Department that, at the time of the sales, the value of the Miss Angie was $275,000.00 and of the Christy Lynn,

   $10,000.00. The Department revised its assessments to conform to Mr. Porter's representations. The revised assessments were received by the Petitioners and are mathematically correct.

   
   

9. Upon the $10,000.00 value of the Christy Lynn, Mr. Porter paid to the Department the sum of $600.00 as sales tax, (6 percent of $10,000.00). But no other taxes, interest or penalties, have been paid on the sales of the Christy Lynn or the Miss Angie.

10. As of June 14, 1994, the total amount due, according to the assessment amended that date, on the sale of the Miss Angie to Gary, Inc., was $24,452.77, the sum of $16,525.00 in total tax due, $4,131.25 as a late filing penalty and

    $3,796.52 in interest. As of June 14, 1994, the total amount due, according to the assessment amended that date, on the sale of the Christy Lynn to Gary Porter, Inc., was $925.00, the sum of $625 in total tax due, $256.25 in a late filing penalty and $143.75 in interest. Of the $925.00 due on the sale of the Christy Lynn, $600.00, as mentioned above, has been paid by Mr. Porter.

    
    

11. Mr. Porter has steadfastly maintained that neither he nor his corporations are liable for sales tax, interest and penalties beyond that which he has already paid because Mr. Thompson had represented that the taxes would be paid.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.

    
    

13. Section 212.05(1)(a)1.b., Florida Statutes, states that "[e]ach occasional or isolated sale of . . . [a] boat . . . shall be subject to tax at the rate provided in this paragraph." Paragraph (a) of Section 212.05(1) in subparagraph 1.a., sets the rate at "6 percent of the sales price of each item .

    . .".

    
    

14. Rule 12A-1.007(1)(a), Florida Administrative Code, is applicable to this proceeding and reads, in pertinent part, as follows:

    
    

    12A-1.007 Aircraft, Boats, Mobile Homes and Motor Vehicles.

    (1)(a) The sale, including occasional or isolated sales, consumption, or storage for use in this state of any . . . boat . . . is taxable on the full sales price without any deductions . . .

    
    

    The rule applies to the sales in this case because both were occasional or isolated sales.

    
    

15. Section 212.07(9), Florida Statutes, makes purchasers of tangible personal property, such as boats, liable for the taxes levied by Chapter 212, Florida Statutes, as well as penalties and interest whenever they "cannot prove that the tax . . . has been paid to his vendor . . . or other person . . .". With the exception of the $600.00 in sales tax paid on the Christy Lynn, Petitioners not only did not prove that sales tax, interest and penalties were paid by the vendor in this case, Miss Angie, Inc., or other persons, but the parties stipulated that the sales tax, interest and penalties were not paid. Petitioners' argument that Mr. Thompson had obligated himself to pay any taxes due on the sales of the two boats is not a defense to the Department's authority to assess the Petitioners for the taxes, penalties and interest due.

RECOMMENDATION

It is, accordingly, RECOMMENDED:

That a final order be entered by the Department of Revenue upholding its assessments of tax, interest, and penalties against the Petitioners and that Gary Porter, Inc. be credited for a payment of $600.00 toward the total assessment due from Gary Porter, Inc.

DONE AND ENTERED this 26th day of September, 1994, in Tallahassee, Leon County, Florida.

DAVID M. MALONEY

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 26th day of September, 1994.

APPENDIX

1. Petitioner's proposed recommended order does not contain any proposed findings of fact.

   
   

2. Respondent's proposed findings of fact are adopted in substance, insofar as material.

COPIES FURNISHED:

Gary Porter

219 Benning Drive Destin, FL 32541

Mark T. Aliff

Assistant Attorney General Department of Legal Affairs Tax Section, The Capitol Tallahassee, FL 32399-1050

Linda Lettera General Counsel

Department of Revenue

204 Carlton Building Tallahassee, FL 32399-0100

Larry Fuchs Executive Director

Department of Revenue

104 Carlton Building Tallahassee, FL 32399-0100

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to 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: 93-002436

Orders for Case No: 93-002436