STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF REVENUE, )
)
Petitioner, )
)
vs. ) CASE NO. 95-2803
) STELLMAN ENTERPRISES, INC., ) d/b/a CITGO FOOD MART, )
)
Respondent. )
)
RECOMMENDED ORDER
Final hearing was held in Naples, Florida, on September 26, 1995, before Robert E. Meale, Hearing Officer of the Division of Administrative Hearings.
APPEARANCES
The parties were represented at the hearing as follows: For Petitioner: Francisco Negron, Jr.
Assistant Attorney General
Office of the Attorney General The Capitol, Tax Section Tallahassee, Florida 32399-1050
For Respondent: Christian B. Felden
Felden and Felden
2590 Golden Gate Parkway, Suite 101
Naples, Florida 33942 STATEMENT OF THE ISSUE
The issue in this case is whether Petitioner may revoke Respondent's retail dealer's fuel license. Subsidiary issues are whether Respondent owes Petitioner motor fuel taxes, penalty, and interest; if so, how much; and, if so, whether Respondent is entitled to pay the deficiencies in installments.
PRELIMINARY STATEMENT
By Administrative Complaint and Emergency Order of Suspension, both dated May 1, 1995, Petitioner suspended Respondent's retail dealer's fuel license, which eliminates Respondent's privilege to sell fuel at retail in Florida.
By Petition for Formal Proceedings filed May 26, 1995, Respondent demanded a formal hearing.
At the hearing, Petitioner called three witnesses and offered into evidence two exhibits. Respondent called one witness and offered into evidence nine exhibits. All exhibits were admitted.
The transcript was filed October 2, 1995. Rulings on timely filed proposed findings of fact are in the appendix.
FINDINGS OF FACT
Respondent owns and operates a Citgo Food Mart in Naples at which it sells gasoline and diesel fuel at retail, provides limited motor vehicle service, and sells food and beverage items. Petitioner issued Respondent retail dealer's fuel license #21- 000828, which authorizes Respondent to sell motor fuel at retail and requires Respondent to collect and remit to Petitioner motor fuel taxes.
The principal of Respondent is Jack Stellman. He caused Respondent to purchase the business in April 1993 from the fuel wholesaler, which had purchased it from the previous retailer. The previous retailer had suffered business and personal setbacks that necessitated the sale.
Mr. Stellman and his wife, Phyllis, who claims not to be an officer or employee of Respondent despite her considerable involvement, have contributed much personal capital and labor to the new business. Immediately after taking over the business, Mr. and Mrs. Stellman discarded outdated inventory, fired a number of dishonest employees, eliminated prostitution that had been taking place on the premises, added new equipment such as a pressure fryer and hood system, and started advertising.
Cash flow was a problem for Respondent from the start. The major improvements were completed by the fall of 1994. By early 1994, however, Mr. Stellman had quit taking a salary from Respondent. Over the 19-month period from August 1993 through March 1995, Mr. and Mrs. Stellman borrowed $140,000 from a variety of sources, including from their retirement plan, from relatives, and on property that they own individually.
Despite these infusions of cash, Respondent was unable to stay current with certain important creditors, such as their fuel supplier, the Internal Revenue Service, and Petitioner.
In August 1993, the fuel wholesaler began to demand payment on delivery, instead of in 30 days, as it had done previously. The wholesaler shortened the credit terms on fuel after Respondent fell behind in payments shortly after beginning operations. In any event, the change in credit terms involved monthly volumes of typically 40,000-50,000 gallons. The loss of use of money corresponding to the wholesale purchase of this amount of fuel does not begin to explain the tax deficiencies that Respondent ran up.
Respondent's deficiencies on its motor fuel tax also began in August 1993. Returns are filed the month following the month for which the motor fuel tax is due.
For August 1993, Respondent filed a return in which it underremitted the motor fuel tax by $62.15. The next month, Respondent filed a return in which it remitted $2000 and left an unremitted balance of $2867.49. The next month, Respondent filed a return, but remitted none of the $6077.28 of motor fuel tax due. For November 1993, the next month, Respondent filed a return and remitted $2000, leaving an unremitted balance of $3278.78.
For December 1993 through July 1994, Respondent filed returns but remitted no tax. The total tax deficiency for this eight-month period was
$58,300.87, or an average of $7287.61.
In the 12-month period ending with the July 1994 return, Respondent had failed to remit a total of $70,586.57.
For the August, September, and October 1994 returns, Respondent made partial remittances. For August and September, Respondent left unremitted balances of only $15.34 and $84.30, respectively, remitting a total of
$11,315.49. For October, Respondent remitted $4827.90, leaving an unremitted balance of $2623.98. For November 1994, Respondent filed a return, but failed to remit any of the $5983.74 due.
In the summer of 1994, the Stellmans finally sold their house in New York, but realized less cash than they had expected. In October 1994, the Stellmans applied for a loan on their Florida residence. During the same month, they began negotiations with Texaco to convert their Citgo convenience store into a Texaco outlet. The Stellmans believed that they would receive $225,000 from Texaco, which would be sufficient to pay their fuel wholesaler and Petitioner, convert their service operation into more store space, and acquire additional inventory and working capital. The record does not permit a finding whether $225,000 would cover all of these items.
In any event, the Texaco negotiations did not proceed quickly. The fuel wholesaler threatened litigation over the prospective cancellation of its contract to supply Respondent with fuel and oil. And Petitioner's representatives were increasingly unsatisfied with Respondent's lack of progress in paying back taxes. Repeatedly, the Stellmans promised payments that did not materialize. At the same time, Respondent was not remitting motor fuel taxes currently.
For December 1994 through March 1995, Respondent did not even file returns. During this four-month period, motor fuel taxes due and unremitted totalled $32,106.59. The total of unremitted motor fuel taxes for August 1993 through March 1995 was now $111,400.52, exclusive of penalties and interest.
Penalties for the underremittances for the period August 1993 through March 1995 totalled $60,284.67. Interest for the same period totalled
$14,042.88. The total of tax, penalties, and interest was thus $185,728.07.
Respondent later reduced this deficiency by paying a total of $323.48 of penalties and $4154.52 of interest, so the current totals are tax of
$111,400.52, penalties of $59,961.19, and interest of $9888.36, for a total of
$181,250.07. The interest is current through August 1, 1995, and the daily interest thereafter is calculated by multiplying the tax deficiency by 0.000328767.
Mr. and Mrs. Stellman claim that the $185,728.07 deficiency arose due to business setbacks, but the business setbacks that they have shown do not account adequately for the deficiency. The Stellmans clearly began the business badly undercapitalized.
Mr. and Mrs. Stellman attribute part of the financial problems to bad debts suffered by Respondent. From August 1993 through the end of 1993, the Stellmans pursued seasonal business by offering liberal credit terms, which
eventually resulted in worthless accounts receivable. However, the total bad debt was only $15,000.
Although hardly meriting mention, except perhaps to reveal their lack of insight, the Stellmans also complain that they lost cash flow due to ill- advised advertising deals into which they entered where they traded fuel for advertising. Even ignoring the benefits derived from such agreements, Respondent traded only about $4000 worth of fuel under these arrangements.
Together, these claimed business setbacks of no more than $20,000 constitute less than 18 percent of the taxes, penalties, and interest owed Petitioner. The amount of motor fuel tax that Respondent would have collected on $20,000 worth of fuel would be around $1500.
With more zeal than business acumen, the Stellmans attacked the challenge of a new business. Their lack of business sophistication, not fraud, led the Stellmans to convert the motor fuel taxes from current payables to long- term debt, to underreport the amount of fuel pumped on 12 of 19 returns filed with Petitioner during the period in question, and repeatedly to file returns late, so as to lose the collection allowance normally given retail dealers.
The unwillingness of Petitioner to become a long term creditor was manifested dramatically when, on May 4, 1995, Petitioner issued an emergency order suspending Respondent's retail dealer's fuel license.
The emergency suspension took place after a meeting of Petitioner's Emergency Response Group, which, after reviewing the facts, determined that this was the best course of action to prevent the loss of motor fuel tax.
The Stellmans complain that Petitioner did not give them enough time to try to pay the tax deficiencies. However, the record does not justify the Stellmans' demand that Petitioner share their confidence in their ability to take care of this substantial debt. As late as mid-February 1995, the Stellmans were still making unfulfilled promises to pay, as when they assured a Naples employee of Petitioner that Respondent would pay $10,000 by mid-April. This sum was not paid, nor were the motor fuel taxes that Respondent collected at the time even paid currently. In other words, Respondent was still taking the motor fuel tax that it was collecting from customers and applying it to other debts.
The Stellmans never told Petitioner what they expected to net from the Texaco agreement. They never explained why the negotiations took so long to conclude. In early 1995, Petitioner's representatives justifiably saw: 1) new financing never resulted in any reduction of the outstanding deficiencies and 2) the outstanding deficiencies continued to grow as Respondent continued to collect motor fuel tax and apply it to other purposes.
The record is not entirely clear as to the status of Respondent with respect to unremitted or unpaid taxes in April 1995 and following. Respondent owed $34,861.20 in unremitted sales tax, as of May 1, 1995. However, it appears more likely than not that, during at least part of the period subsequent to May 1, 1995, Respondent remitted and paid to Petitioner its currently accruing tax obligations. With the cessation of fueling operations, these obligations arose from sales of convenience store items, as these sales were unaffected by Petitioner's action against Respondent's retail dealer's fuel license.
Since the suspension of the license, the Stellmans have supplied Petitioner with accurate, current information concerning Respondent's tax liabilities, at least to the extent that they possess such information.
Respondent's financial condition is precarious, at best. Even assuming that the Stellmans were willing to continue to contribute more money to Respondent, there is nothing in the record to suggest that they have the financial resources to contribute substantial sums beyond a large fraction of the total currently due Petitioner in this case. Such a payment would probably come from a combination of the Stellmans' assets and the assets of friends and family. Their obvious failure to prepare and follow a feasible business plan does not bode well for Respondent's future ability to operate and, at the same time, retire what has become a substantial financial liability owed to Petitioner.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter. Section 120.57(1), Florida Statutes. (All references to Sections are to Florida Statutes.)
Petitioner is seeking to revoke Respondent's retail dealer's fuel license. Petitioner thus must prove the material allegations against Respondent by clear and convincing evidence. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).
Sections 206.055(1), 336.025, and 336.026 authorize Petitioner to cancel a retail dealer's fuel license if the dealer fails to file required monthly returns, fails to remit the motor fuel tax, or knowingly files false returns.
Petitioner has not proved by the requisite standard that Respondent knowingly filed false returns. However, Petitioner has proved by clear and convincing evidence that Respondent failed to file required returns and failed to pay motor fuel tax in the amount of $111,400.52, plus penalties and interest, for a total deficiency of $181,250.07.
Section 213.015(10) gives the taxpayer:
The right to procedures for retirement of
tax obligations by installment payment agree- ments which recognize both the taxpayer's financial condition and the best interests of the state, provided that the taxpayer gives accurate, current information and meets all other tax obligations on schedule (see s.
213.21(4)).
As stated at the hearing, the right to procedures for retiring tax obligations by installment payments does not mean merely that the Legislature directed Petitioner to adopt rules covering such important issues as the conditions under which installment payments would be permitted, the term of such an installment agreement or note, and whether and under what conditions installment obligations would have to be secured and, if so, by what. Although rules covering such issues would be helpful, Section 213.015(10) does not await such rules, but instead is self-activating. The "procedures" mentioned in the
statute may be informal nonrule policies or even the installment agreements themselves, but in no event does Section 213.015(10) remain ineffective until Petitioner adopts rules.
Section 213.015(10) authorizes Respondent to require Petitioner to enter into installment obligations for the retirement of tax obligations if certain conditions are met. Nothing in the statute suggests that tax obligations should exclude remittances that a dealer collects and remits to the state. So the remaining threshold issue in this case is whether the conditions have been satisfied.
Respondent provided Petitioner accurate, current information, at least after the fueling operation was closed. Although the issue is far from clear, it appears more likely than not that Respondent is currently meeting its tax obligations to Petitioner.
Even after the conditions are satisfied, however, the structuring of the installment obligation requires consideration of the financial condition of Respondent and the best interests of the state. The financial condition of Respondent is poor, even after giving due consideration to the financial condition of its principal and his wife. The best interests of the state demand timely remittance of this tax. There is little justification in allowing any dealer to ignore its obligation to remit motor fuel tax that it has collected from its customers, who, if the nonremitting dealer were closed, would have bought that gasoline and diesel fuel from a dealer that would have remitted the tax. The best interests of the state, in structuring the installment payments, require consideration of Respondent's poor record in the past, not only in not remitting motor fuel taxes as they were collected but in failing to live up to promises to pay deficiencies.
Under the circumstances, Section 213.015(10) requires Petitioner to accept a promissory note, bearing interest at the legal rate, for the retirement of the $181,250.07, plus interest from August 1, 1995, through the date of the note. However, Petitioner is obligated to accept a note only if it contains the terms and conditions set forth in this and the following paragraphs. First, Respondent shall pay in a single payment one- half of the total deficiency, including interest accruing since August 1, 1995. Upon receipt of this payment, Petitioner shall reinstate Respondent's license. Second, Respondent shall pay the remaining balance in 60 equal monthly payments. If Respondent fails to pay any installment payment when it first falls due under the note, the entire balance shall become due and owing immediately, without notice or demand, and Petitioner may, in its sole discretion, revoke the license at that time. Additional conditions shall provide that the entire balance shall become due and owning without notice or demand if Respondent fails to pay or remit timely to Petitioner any tax, fails to file timely with Petitioner any return for any tax, or knowingly files a false return with Petitioner of any tax.
Petitioner may add such additional conditions as are reasonably necessary to serve the best interests of the state, as long as those conditions do not conflict with the terms and conditions set forth in the preceding paragraph. Such conditions may include the inclusion of unpaid sales tax deficiencies in the same promissory note on the same terms and conditions, including the retirement of half the total sale tax deficiencies, including penalties and interest, in a down payment before the retail dealer's fuel license is reissued.
It is
RECOMMENDED that the Department of Revenue enter a final order: 1) suspending Respondent's retail dealer's fuel license for the lesser of six months from the date of the final order or until Respondent pays the sums described in paragraphs 38 and 39 and executes a promissory note with the conditions set forth in paragraphs 38 and 39 and 2) revoking Respondent's retail dealer's fuel license at the expiration of six months from the date of the final order unless Respondent has paid the above-described sums and entered into the above-described promissory note.
ENTERED on October 27, 1995, in Tallahassee, Florida.
ROBERT E. MEALE
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 on October 27, 1995.
APPENDIX
Rulings on Petitioner's Proposed Findings
1-4: adopted or adopted in substance.
5-7: rejected as recitation of evidence and subordinate. 8: adopted or adopted in substance.
9-10: rejected as subordinate.
11: adopted or adopted in substance. 12-18: rejected as subordinate.
19-21: adopted or adopted in substance. 22-23: rejected as subordinate.
24-26: adopted or adopted in substance except the taxpayer is Respondent, not Mr. Stellman individually.
27: rejected as subordinate.
28: adopted or adopted in substance. 29-35: rejected as subordinate.
36-37: adopted or adopted in substance. 38: rejected as subordinate.
39: rejected as unsupported by the appropriate weight of the evidence. 40-43: adopted or adopted in substance.
44: rejected as recitation of evidence.
Rulings on Respondent's Proposed Findings
1-7: adopted or adopted in substance, although the "great expense" in paragraph 7 is rejected as unsupported by the appropriate weight of the evidence.
8-10: rejected as unsupported by the appropriate weight of the evidence.
The financial problems were minor.
11: adopted or adopted in substance to the extent relevant. 12-13: rejected as subordinate.
14: rejected as speculative.
15: rejected as unsupported by the appropriate weight of the evidence. 16: rejected as irrelevant.
17: adopted or adopted in substance. 18-19: rejected as subordinate.
20: adopted or adopted in substance.
21: rejected as unsupported by the appropriate weight of the evidence except that the filings is rejected as irrelevant.
COPIES FURNISHED:
Larry Fuchs, Executive Director Department of Revenue
104 Carlton Building Tallahassee, FL 32399-0100
Linda Lettera, General Counsel Department of Revenue
204 Carlton Building Tallahassee, FL 32399-0100
Francisco Negron, Jr. Assistant Attorney General Office of the Attorney General The Capitol, Tax Section Tallahassee, FL 32399-1050
Christian B. Felden Felden and Felden
2590 Golden Gate Parkway Suite 101
Naples, FL 33942
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.
================================================================= AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA DEPARTMENT OF REVENUE
DEPARTMENT OF REVENUE,
Petitioner,
vs. CASE NO. 95-2803
STELLMAN ENTERPRISES, INC., d/b/a CITGO FOOD MART,
Respondent.
/
FINAL ORDER
This cause came before me, as Executive Director of the Department of Revenue, on an Order Declining Remand Without Prejudice entered January 24, 1996. The Department had previously entered an Order Remanding Proceedings to the Division on January 19, 1996. This followed entry of a Recommended Order issued on October 27, 1995, by the hearing officer assigned to conduct the final hearing. The Respondent's exceptions were received on November 29, 1995.
Copies of these documents are attached to this Order.
FINDINGS OF FACT
The Department adopts the Findings of Fact set forth in the Recommended Order.
CONCLUSIONS OF LAW
The Department adopts the following Conclusions of Law set forth in the Recommended Order: Numbers 29, 30, 31 and 32. The remainder are stricken as being based on a misapprehension of the law as described below.
The issue in this case is whether the Department may revoke Respondent's license to sell fuel at retail. According to the Hearing Officer, the Department met the burden of proof necessary to revoke the Respondent's license to sell fuel at retail since it proved by clear and convincing evidence that Respondent failed to timely file required returns and to pay motor fuel tax as required by law.
According to the Recommended Order, the licensee repeatedly promised to make payments that did not materialize and it made those promises during a time when the motor fuel tax collected from customers was still being applied to other debts. The licensee failed to establish that there had been a good faith offer to pay the delinquency, or that any such offer was arbitrarily denied.
The Hearing Officer originally recommended a conclusion that the licensee was entitled to be given an opportunity to enter into a payment plan as an alternative to license revocation. The Hearing Officer's recommended conclusion was premised solely on Section 213.015(10), Florida Statutes, which grants taxpayers:
The right to procedures for the retirement of tax obligations by installment payment
agreements which recognize both the taxpayer's financial condition and the best interests of the state, provided that the taxpayer gives accurate, current information and meets all other tax obligations on schedule (see s.
213.21(4)
The Hearing Officer mistakenly concluded that Section 213.015(10) is self- executing. The section is intended to compile in one document the obligations of the Department and rights of taxpayers provided for elsewhere. The introductory paragraph provides:
The rights afforded taxpayers to assure their privacy and property are safeguarded and protected during tax assessment and collection are available only insofar as they are implemented in other parts of the Florida Statutes or rules of the Department. The rights so guaranteed Florida taxpayers in the Florida Statutes and the departmental rules are:. . . (10)(the section relied on by the Hearing Officer). .
Chapter 12-17, Florida Administrative Code, contains the Department's policies regarding payment scheduling and was not considered by the Hearing Officer when he issued his Recommended Order. Because the Recommended Order's finding that the licensee was entitled to a payment plan was based upon a misapprehension of the law, the matter was remanded to the Division.
The Hearing Officer then entered an Order Declining Remand Without Prejudice. This Order reconfirms that the licensee owes $181,205.07 through August 1, 1995, plus interest thereafter. The Order confirms that the Hearing Officer's recommended conclusion that the licensee was entitled to a payment plan was based on a misapprehension of law. The Order finds that nothing in Section 213.21(4), Florida Statutes, imposes a duty on the Department to exercise its discretion in accepting installment agreements.
CONCLUSION
Based upon the foregoing it is therefore ORDERED: That the Petitioner's license number 21-000828 is hereby revoked.
Any Party to this Order has the right to seek judicial review of the Order pursuant to Section 120.68, F.S., by filing a Notice of Appeal pursuant to Rule 9.110, Fla. R. App. Pro., with the Clerk of the Department in the Office of General Counsel, P.O. Box 6668, Tallahassee, Florida 32314-6668 and by filing a copy of the Notice accompanied by the applicable filing fee with the appropriate District Court of Appeal. The Notice 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 9th day of February, 1996.
STATE OF FLORIDA DEPARTMENT OF REVENUE
L. H. FUCHS Executive Director
Certificate of Filing
I HEREBY CERTIFY that the foregoing Order has been in the official records of the Department of Revenue this 9th day of February, 1996.
Judy Langston Agency Clerk
Copies to:
L. H. Fuchs Executive Director
Department of Revenue Room 104
Carlton Building
Tallahassee, Florida 32399-0100
Linda Lettera General Counsel
Department of Revenue
201 Carlton Building Tallahassee, Florida 32399-0100
Francisco Negron, Jr. Assistant Attorney General Office of the Attorney General The Capitol - Tax Section
Tallahassee, Florida 32399-1050
Christian B. Felden Felden and Felden
2590 Golden Gate Parkway Suite 101
Naples, Florida 33942
Sharyn L. Smith Director
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
Robert E. Meale Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
=================================================================
AGENCY ORDER REMANDING
=================================================================
STATE OF FLORIDA DEPARTMENT OF REVENUE
DEPARTMENT OF REVENUE,
Petitioner,
vs. D.O.A.H. Case No. 95-2803
DOR No. DOR 96-1-0
STELLMAN ENTERPRISES, INC., d/b/a CITGO FOOD MART,
Respondent.
/
ORDER REMANDING PROCEEDING
TO THE DIVISION OF ADMINISTRATIVE HEARINGS
This cause came before me, as Executive Director of the Department of Revenue, on a Recommended Order issued on October 27, 1995, by the hearing officer assigned to conduct the final hearing. The Respondent's exceptions were received on November 29, 1995. Copies of these documents are attached to this Order.
The issue in this case is whether the Department may revoke Respondent's license to sell fuel at retail. According to the Hearing Officer, the Department met the burden of proof necessary to revoke the Respondent's license to sell fuel at retail since it proved by clear and convincing evidence that Respondent failed to timely file required returns and to pay motor fuel tax as required by law.
According to the Recommended Order, the licensee repeatedly promised to make payments that did not materialize and it made those promises during a time when the motor fuel tax collected from customers was still being applied to other debts. The licensee failed to establish that there had been a good faith offer to pay the delinquency, or that any such offer was arbitrarily denied.
The Respondent has raised exceptions to the Recommended Order which, while not material to the claim that it made an offer to pay the tax debt which was arbitrarily denied, point to the exceptional circumstances requiring remand of
this case to the Division of Administrative Hearings. Essentially, the licensee seeks modification of a recommended conclusion which was based on a misapprehension of the law.
The Hearing Officer recommends a conclusion that the licensee is entitled to be given an opportunity to enter into a payment plan as an alternative to license revocation. The Hearing Officer's recommended conclusion is premised solely on Section 213.015(10), Florida Statutes, which gives taxpayers:
The right to procedures for the retirement of tax obligations by installment payment
agreements which recognize both the taxpayer's financial condition and the best interests of the state, provided that the taxpayer gives accurate, current information and meets all other tax obligations on schedule (see s.
213.21(4)
The Hearing Officer mistakenly concludes that Section 213.015(10) is self- executing. The section is intended to compile in one document the obligations of the Department and rights of taxpayers provided for elsewhere. The introductory paragraph provides:
The rights afforded taxpayers to assure their privacy and property are safeguarded and protected during tax assessment and collection are available only insofar as they are implemented in other parts of the Florida Statutes or rules of the Department. The rights so guaranteed Florida taxpayers in the Florida Statutes and the departmental rules are: . . . (10)(the section relied on by the Hearing Officer). . .
Chapter 12-17, Florida Administrative Code, contains the Department's policies regarding payment scheduling and was apparently not considered by the Hearing Officer. It lists certain factors that must be considered if a payment proposal is to be made in compliance with the procedures outlined in the rule.
The recommended finding that the licensee is entitled to a payment plan is based upon a misapprehension of the law. There is' no entitlement to a payment plan as such. Facts were not placed into the record in light of the factors specified in Chapter 12-17. The present record does not support a conclusion that the licensee is entitled to a payment plan under the rule. The conclusion that events occurring subsequent to service of the administrative complaint may be relied upon to show an entitlement to a payment plan is unsupported. Before a payment schedule is recommended, the record must reflect a consideration of the factors specified in Chapter 12-17.
WHEREFORE, the Department finds that the proceeding below did not comply with the essential requirements of law and that exceptional circumstances exist requiring a remand.
CONCLUSION
Based upon the foregoing it is therefore ORDERED: That the matter is remanded to the Division of Administrative Hearings to conduct such proceedings as are deemed necessary in light of the directions above.
DONE AND ENTERED in Tallahassee, Leon County, Florida this 17th day of January, 1996.
STATE OF FLORIDA DEPARTMENT OF REVENUE
L. H. FUCHS Executive Director
Certificate of Filing
I HEREBY CERTIFY that the foregoing Order has been filed in the
official records of the Department of Revenue this 17th day of January, 1996.
Judy Langston Agency Clerk
COPIES FURNISHED:
L. H. Fuchs Executive Director
Department of Revenue Room 104
Carlton Building
Tallahassee, Florida 32399-0100
Linda Lettera General Counsel
Department of Revenue
201 Carlton Building Tallahassee, Florida 32399-0100
Francisco Negron, Jr. Assistant Attorney General Office of the Attorney General The Capitol - Tax Section
Tallahassee, Florida 32399-1050
Christian B. Felden Felden and Felden
2590 Golden Gate Parkway Suite 101
Naples, Florida 33942
Sharyn L. Smith Director
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
Robert E. Meale Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
================================================================= ORDER DECLINING REMAND WITHOUT PREJUDICE
=================================================================
STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF REVENUE, )
)
Petitioner, )
)
vs. ) CASE NO. 95-2803
) STELLMAN ENTERPRISES, INC., ) d/b/a CITGO FOOD MART, )
)
Respondent. )
)
ORDER DECLINING REMAND WITHOUT PREJUDICE
By Order Remanding Proceeding to the Division of Administrative Hearings filed January 19, 1996, Petitioner remanded the case to the Division of Administrative Hearings for further proceedings consistent with the remand order. The remand order corrects a misunderstanding of the hearing officer as to the law, but directs further proceedings that do not appear to be authorized or, if authorized, necessary.
Respondent owes Petitioner $181,205.07 through August 1, 1995, plus interest thereafter, for unpaid motor fuel taxes, interest, and penalties arising out of the retail sale of fuel by Respondent's convenience store. Petitioner entered an emergency order of suspension of Respondent's license as a motor fuel dealer, after which Respondent lawfully continued to make nonfuel- related sales. The remand order does not involve these findings of the recommended order.
The recommended order finds that Respondent cooperated with Petitioner after the suspension of Respondent's license and that, although the record is
not entirely clear, it is more likely than not that Respondent timely paid all taxes following the suspension. During this period, Respondent offered installment payments, which Petitioner refused to accept. The recommended order finds that Respondent's financial condition is precarious and its ability to continue to operate and simultaneously retire a substantial tax liability is doubtful. Based on these facts, the hearing officer, misreading Section 213.015(10), Florida Statutes, concluded in the recommended order that Petitioner was obligated to accept a downpayment of half of the deficiency and the remainder in 60 equal monthly installments.
The flush language of Section 213.015 explains that the section "compiles, in one document, . . . the rights . guaranteed Florida taxpayers in the Florida Statutes and the department rules [including]"
(10) The right to procedures for retirement of tax obligations by installment payment agreements which recognize both the taxpayer's financial condition and the best interests of the state, provided that the taxpayer gives accurate, current information and meets all other tax obligations on schedule (see s. 213.21(4)).
The hearing officer mistakenly concluded that the right to a installment payments was self-executing, but additional flush language in Section 213.015 leaves no doubt that the rights enumerated in Section 213.015 are only rights to the extent that they are so provided elsewhere in the statutes or rules:
The rights afforded taxpayers to assure that their privacy and property are safeguarded and protected during tax assessment and
collection [are available only insofar as they are implemented in other parts of the Florida Statutes or rules of the Department of Revenue]. (Emphasis supplied.)
As the remand order points out, the fact is that there is no right of a taxpayer to insist that Petitioner accept installment payments. The "right" compiled in Section 213.015(10) is based on Section 213.21(4), which states in its entirety: "The department is authorized to enter into agreements for scheduling payments of taxes, interest, and penalties." This substantive provision confers no rights upon taxpayers. Rather, it confers a right upon Petitioner to enter into installment agreements for unpaid taxes, penalties, and interest. Nothing in Section 213.21(4) imposes a duty on Petitioner to exercise its discretion in accepting installment agreements--reasonably or unreasonably.
This much of the remand order is clear and correct. However, the remand order concludes that the case must be remanded to the Division of Administrative Hearings. The reasoning for the remand is expressed largely in the following paragraphs:
Chapter 12-17, Florida Administrative Code, contains the Department's policies regarding payment scheduling and was apparently not considered by the Hearing Officer. It lists certain factors that must be considered if a payment proposal is to be made in compliance
with the procedures outlined in the rule. The recommended finding that the licensee is entitled to a payment plan is based upon a misapprehension of the law. There is no
entitlement to a payment plan as such. Facts were not placed into the record in light of the factors specified in Chapter 12-17. The present record does not support a conclusion that the licensee is entitled to a payment plan under the rule. The conclusion that events occurring subsequent to service of the administrative complaint may be relied upon to show an entitlement to a payment plan is unsupported. Before a payment plan is recommended, the record must reflect a consideration of the factors specified in Chapter 12-17.
It does not follow from Petitioner's correction of the hearing officer's misreading of Section 213.015(10) that there is any issue left to be tried. To the contrary, there appear to be no disputed issues of material fact for two reasons.
First, Chapter 12-17 does not apply to this case. In the formal hearing, Respondent claimed that it did not owe all or part of the assessed deficiency and, if a deficiency were determined to exist, that Petitioner was obligated accept installment payments.
The purpose of Chapter 12-17 is to guide Petitioner in formulating installment agreements when Petitioner chooses to accept installment payments. See Rule 12-17.001. Nothing in Chapter 12-17 suggests that Petitioner can be compelled by a taxpayer to accept installment payments or accept taxpayer- specified terms and conditions.
Rule 12-17.003(1) and (3) condition the availability of an installment agreement upon concessions from the taxpayer that preclude an administrative hearing of the type that was conducted in this case. Rule 12-17.003(1) requires the taxpayer to "admit liability" for the deficiency finally determined by Petitioner, and Rule 12-17.003(3) requires the taxpayer to "waive the right to institute administrative or judicial proceedings under s. 72.011, F.S., with respect to the liability."
Other rules in Chapter 12-17 similarly underscore Petitioner's absolute authority as to whether to accept installment agreements. Rule 12-17.006(4) requires an internal agency recommendation as to "whether the Department should exercise its authority to enter in a payment agreement pursuant to s.
213.21(4), F.S." Rule 12-17.006(6) emphasizes the flexibility given Petitioner by providing: "After consideration of the taxpayer's request for relief, the Department may make a counterproposal, may reject the request in whole or in part, or may accept the request . .
The only possible restrictions upon the exercise of Petitioner's discretion are in Rule 12-17.005, whose heading negates any sense of the obligatory: "Factors Which May Be Considered by the Department." Implementing Section 213.21(4), Rule 12-17.005 recites nine factors that Petitioner "will consider" in deciding whether to accept installment payments. These nine factors do not, on their face, require Petitioner to exercise its discretion, or to exercise its
discretion reasonably, in accepting installment payments. The nine factors merely advise taxpayers of the issues that Petitioner will consider in deciding whether to exercise its discretion to accept installment payments and, if so, the terms and conditions that Petitioner will decide to accept.
It is possible that Petitioner, as a matter of policy, interprets Rule 12-
17.005 to entitle taxpayers to formal hearings on Petitioner's many decisions whether to accept installment payments and, if so, what terms and conditions to accept. Even so, the remand would be unjustified in the present case due to the failure of Respondent to satisfy the above-cited preconditions of Rule 12- 17.003(1) and (3).
But the remand order is deficient on another basis. The hearing officer labored under the misconception that Section 213.015(10) required fact finding as to the "taxpayer's financial condition," the "best interests of the state," the taxpayer's cooperativeness, and the taxpayer's satisfaction of current tax obligations (measured as of when the taxpayer offered installment payments).
The hearing officer advised the parties at the hearing that they needed to address these issues, so the record includes evidence and findings of fact as to these issues, which overlap considerably with the nine factors of Rule 12- 17.005.
If Petitioner concludes that certain findings are irrelevant, such as Respondent's compliance following the issuance of the emergency order of suspension, Petitioner can strike those findings. But the record and findings are sufficient to permit Petitioner to prepare a final order, even if Petitioner concludes as a matter of law that the exercise of its discretion whether to accept installment payments and, if so, on what terms and conditions, are proper subjects of a Section 120.57(1) hearings.
For the foregoing reasons, it is hereby
ORDERED that the Division of Administrative Hearings respectfully declines the Order of Remand without prejudice to consideration of an Amended Order of Remand addressing the issues in this order with detailed instructions as to the scope of the factual issues to be tried and the law or guidelines to be applied.
ENTERED on January 24th, 1996 in Tallahassee, Florida.
ROBERT E. MEALE, 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 24th day of January, 1996.
COPIES FURNISHED:
Larry Fuchs, Executive Director Department of Revenue
104 Carlton Building Tallahassee, Florida 32399-0100
Linda Lettera, General Counsel Department of Revenue
204 Carlton Building Tallahassee, Florida 32399-0100
Francisco Negron, Jr. Assistant Attorney General Office of the Attorney General The Capitol, Tax Section
Tallahassee, Florida 32399-1050
Christian B. Felden Felden and Felden
2590 Golden Gate Parkway, Suite 101
Naples, Florida 33942
| Issue Date | Proceedings |
|---|---|
| Sep. 03, 1996 | BY ORDER of THE COURT (Motion for Extension of time to file initial brief is granted, filed in the 2nd DCA) filed. |
| Sep. 03, 1996 | Appellant's Initial Brief filed. |
| Aug. 26, 1996 | Response to Appellee`s Opposition to Appellant`s Extension of time to file it`s Initial Brief filed. |
| Aug. 16, 1996 | Motion for Further Extension of Time to File Appellant's Initial Brief filed. |
| Jun. 17, 1996 | Motion for Extension of Time to File Appellant's Initial Brief filed. |
| Jun. 17, 1996 | Motion for Extension of Time to file Appellant's Initial Brief filed. |
| May 28, 1996 | Notice of Appearance filed. |
| May 28, 1996 | (Robert Hines) Notice of Appearance filed. |
| May 03, 1996 | (Respondent) Stipulated Notice of Withdrawal as Counsel filed. |
| Mar. 13, 1996 | Second DCA acknowledgement of Notice of Administrative Appeal, $250.00 filing fee and notification of DCA 2-96-974 Case Number filed. |
| Mar. 12, 1996 | Notice of Appeal filed. (filed by: Respondent) |
| Feb. 12, 1996 | Final Order filed. |
| Jan. 24, 1996 | Order Declining Remand without Prejudice sent out. |
| Jan. 19, 1996 | Order Remanding Proceeding to Division of Administrative Hearings filed. |
| Jan. 19, 1996 | (Respondent) Order Remanding Proceeding to the Division of Administrative Hearings filed. |
| Oct. 27, 1995 | Recommended Order sent out. CASE CLOSED. Hearing held 9/26/95. |
| Oct. 18, 1995 | Respondent`s Proposed Recommended Order filed. |
| Oct. 11, 1995 | (Respondent) Final Order After Administrative Hearing (for Hearing Officer signature) filed. |
| Oct. 02, 1995 | (Transcript) filed. |
| Sep. 28, 1995 | Exhibits filed. |
| Sep. 26, 1995 | CASE STATUS: Hearing Held. |
| Sep. 22, 1995 | (Respondent) Amended Petition for Formal Proceedings w/cover letter filed. |
| Sep. 15, 1995 | (Petitioner) Notice of Taking Corporate Deposition Duces Tecum filed. |
| Jun. 27, 1995 | Notice of Hearing sent out. (hearing set for 9/26/95; 9:00am; Naples) |
| Jun. 21, 1995 | Department of Revenue`s Response to Initial Order; Answer to Petition filed. |
| Jun. 07, 1995 | Initial Order issued. |
| Jun. 01, 1995 | Agency referral letter; Petition for Formal Proceedings; Administrative Complaint; Emergency Order of Suspension filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Feb. 09, 1996 | Agency Final Order | |
| Jan. 17, 1996 | Remanded from the Agency | |
| Oct. 27, 1995 | Recommended Order | Department of Revenue entitled to revoke retail dealer's fuel license after offering note required by taxpayer's bill of rights. |
