STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FOREST HILL CONVENIENCE, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 95-3588

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was held in this case on November 16, 1995, in West Palm Beach, Florida, before Patricia Hart Malono, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Samson Abraham Francis, President

Forest Hill Convenience, Incorporated 2791 South Congress Avenue

Lake Worth, Florida 33461

For Respondent: Francisco Negron, Jr.

Assistant Attorney General Office of the Attorney General The Capitol-Tax Section Tallahassee, Florida 34399-1050

STATEMENT OF THE ISSUES

Whether the Department of Revenue can levy on petitioner's bank accounts where the petitioner failed to challenge the final sales tax assessment and failed to remit the tax, penalties, and interest due pursuant to the assessment.

PRELIMINARY STATEMENT

In a Notice of Intent to Levy dated June 13, 1995, the Department of Revenue ("Department") informed Forest Hill Convenience, Inc., d/b/a Kwik Stop number 320 ("Forest Hill") that the Department intended to levy on certain of its bank accounts and certificates of deposits to satisfy a sales tax delinquency. Forest Hill timely challenged the proposed levy, and the case was forwarded to the Division of Administrative Hearings for formal proceedings. By Notice of Hearing, this case was set for final hearing on November 9, 1995; the hearing was continued and rescheduled for November 16, 1995.

Forest Hill called one witness, its president, Samson Abraham Francis, and offered Petitioner's Exhibits 1 through 6 in support of its case-in-chief and Petitioner's Exhibits 7 and 8 on rebuttal; these exhibits were admitted into

evidence. The Department called two witnesses, Van T. Ho, Tax Auditor IV with the Department of Revenue, and William Moore, a Revenue Specialist III with the Department.

The transcript was filed, and the Department submitted a Proposed Recommended Order. A ruling on each of the Department's proposed findings of fact is contained in the Appendix to this Recommended Order.

FINDINGS OF FACT

Based on the oral and documentary evidence presented at the final hearing and the entire record of this proceeding, the following findings of fact are made:

1. Petitioner, Forest Hill Convenience, Inc., is a Florida corporation. It owns one convenience store in Palm Beach County, Kwik Stop number 320, and owned a second convenience store in Palm Beach County, One-Stop Food Mart, during the time relevant to this proceeding.

   
   

2. Samson Abraham Francis is Forest Hill's President and only corporate officer.

   
   

3. In December 1993, at the request of Forest Hill and a third party which was interested in purchasing the convenience stores, Van T. Ho, a Tax Auditor IV with the Department, performed an audit of Forest Hill's books and records for the period October 1, 1992 through November 31, 1993.

   
   

4. As a result of the audit, the Department identified sales tax deficiencies. Forest Hill was notified on January 10, 1994, that the audit had revealed a tax deficiency of $1,046.78, exclusive of penalties and interest. On January 11, 1994, Mr. Francis met with Ms. Ho to go over the audit results.

   
   

5. On January 13, 1994, Ms. Ho telephoned Mr. Francis and notified him that she had discovered an error in the initial audit and that Forest Hill's sales tax deficiency was $5,217.45, for a total tax liability of $7,354.86, with penalties and accrued interest. Mr. Francis did not object to the revision during this telephone conversation, and Ms. Ho sent Forest Hill the revised audit papers, together with a Notice of Intent to Make Audit Changes dated January 18, 1994. In this Notice, Forest Hill was advised that it must submit any objections to the proposed audit changes, in writing, by February 17, 1994, and that, if no objections were filed, a Proposed Notice of Deficiency would issue on March 21, 1994.

   
   

6. In a letter dated February 22, 1994, Mr. Francis requested an extension of time to allow Forest Hill's accountant time to review the Notice and the audit papers. Mr. Francis did not register a protest to the tax deficiency identified in the revised audit papers in this letter. A two-week extension was granted.

   
   

7. Even though the Department did not receive an objection to the proposed audit changes, it offered, in a letter dated March 25, 1994, to schedule a meeting to resolve any objections Mr. Francis might have to the proposed tax liability.

   
   

8. The Department did not receive a response to this letter, and, in a letter dated September 9, 1994, Mr. Francis was advised that the audit file was being forwarded to Tallahassee.

9. A Notice of Proposed Assessment dated October 6, 1994, was sent to Forest Hill via certified United States mail to Mr. Francis's then-current home address.

   
   

10. In the Notice, the Department advised Forest Hill that it owed the Department $8,320.21, consisting of $5,217.45 in sales tax, $2,284.02 in penalties, and $818.74 in interest, with additional interest accruing at the rate of $1.72 per day. The Department further advised Forest Hill that, if it did not request informal proceedings, the assessment would become final on December 5, 1995, and that no relief could be granted by the Department, the Division of Administrative Hearings, or the courts beyond sixty days from the date the assessment became final, that is, by February 3, 1995. The Notice was returned to the Department unclaimed after two attempts at delivery.

    
    

11. Forest Hill did not timely file a request for informal proceedings to challenge the proposed assessment, and the proposed assessment became a final assessment on December 5, 1994.

    
    

12. On January 24, 1995, a Tax Warrant was filed by the Department with the Clerk of Court in Palm Beach County, Florida, and Forest Hill was so advised in a letter dated January 24, 1995.

    
    

13. Forest Hill did not challenge the final assessment in circuit court or by petition to the Division Administrative Hearings by the date specified in the Notice of Proposed Assessment.

    
    

14. The Department issued a Notice of Delinquent Tax dated March 24, 1995, to Forest Hill's bank.

    
    

15. On April 13, 1995, the Department received a letter from Mr. Francis, dated March 9, 1995, protesting the amount of the assessment.

    
    

16. In a letter dated May 4, 1995, Linda Howe, the Department's West Palm Beach Collection and Enforcement Administrator, notified Forest Hill that the audit could not be reopened because all protest rights had expired. Ms. Howe advised Forest Hill that it could pursue a compromise with the Department, and she stated that a written request for such relief had to be filed with the Department within fourteen days, during which time she would suspend collection and enforcement action on the warrant.

    
    

17. Forest Hill failed to respond to the Department's letter of May 4, 1995, and a Notice to Freeze, dated May 31, 1995, was sent to Great Western Bank in Delray Beach, Florida, freezing Forest Hill's assets in the amount of

    $9,050.25.

    
    

18. Forest Hill did not satisfy the warrant, and, on June 13, 1995, the Department sent the Notice of Intent to Levy via certified United States mail to Forest Hill at its business address.

    
    

19. The only basis on which Forest Hill challenges the Notice of Intent to Levy is that the amount of the assessment is incorrect and unfair. Forest Hill has, however, waived any right to contest the correctness or validity of the assessment. The Department followed the procedures established by statute and rule in proceeding to issue a final tax assessment against Forest Hill. Mr. Francis did not participate on Forest Hill's behalf in the informal proceedings offered by the Department to resolve his objections to the correctness of the

    tax deficiency, nor did he timely request a hearing to contest either the proposed assessment or the final assessment.

    
    

20. The Department has met its burden of showing by a preponderance of the evidence that Forest Hill has an outstanding tax liability in the amount shown on the Notice of Intent to Levy.

    
    

21. Forest Hill has failed to prove any ground upon which the Department's proposed levy is defective or illegal. It has, therefore, failed to establish that the Department cannot properly levy on the bank accounts and certificates of deposit subject to the Notice of Freeze and the Notice of Intent to Levy.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

23. Section 213.67, Florida Statutes, gives the Department the authority to levy "upon credits, other personal property, or debt of any person with respect to any unpaid tax, penalties, and interest" upon adherence by the Department to the procedural requirements set out in that section. See section 213.67(6), Fla. Stat. Rules 21-12.201-.207, Florida Administrative Code, set out additional procedures that the Department must adhere to in proceeding to levy against a taxpayer's assets.

    
    

24. Section 213.67(7) grants the taxpayer the right to challenge the Notice of Intent to Levy by filing either in circuit court or under chapter 120, Florida Statutes. The statute does not, however, allocate the burden of proof, specify the degree of proof, or explicate the grounds on which the notice may be challenged.

    
    

25. The degree of proof in this proceeding is, therefore, a preponderance of the evidence. See Florida Department of Health & Rehabilitative Services, Division of Health v. Career Service Commission, 289 So. 2d 412, 415 (Fla. 4th DCA 1974); cf. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987)(burden of proof in a license revocation proceeding is clear and convincing evidence).

    
    

26. The burden of proof is, first, on the Department to show that Forest Hill owes delinquent taxes, penalties, and interest in the amount specified in the notice; 1/ the burden then shifts to the taxpayer to show by a preponderance of the evidence that the Department is not entitled to garnish the specified property. Cf. chapter 77, Florida Statutes (providing procedures for garnishment).

    
    

27. The notice may be challenged on the grounds, inter alia, that the Department failed to adhere to the procedures established by statute and rule, that the amount of the proposed levy does not correspond to the tax liability stated in the Final Assessment, or that certain of the property is exempt from levy pursuant to chapter 222, Florida Statutes. Id.

    
    

28. The Department met its burden of proof by showing by a preponderance of the evidence that delinquent taxes, penalties, and interest are due from Forest Hill. The uncontroverted evidence demonstrated that as of October 6, 1994, Forest Hill was delinquent in its payment of taxes, penalties, and interest totaling $8,320.21, arising out of the uncontested Final Assessment

    issued by the Department on that date. Interest has accrued since October 7, 1994, and continues to accrue at the rate of $1.72 per day.

    
    

29. The only issue raised by Forest Hill in this proceeding is the correctness of the final assessment. That issue is not relevant to the Department's entitlement to levy on the subject property. Forest Hill introduced no evidence tending to show that the Notice of Intent to Levy is defective, that the proper procedures were not followed by the Department, or that any other ground exists which would render the Notice of Intent to Levy invalid or illegal.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is:

RECOMMENDED that the Department of Revenue enter a Final Order upholding the Department's Notice of Intent to Levy and allowing it to proceed with the garnishment of the bank accounts and certificates of deposit owned by Forest Hill Convenience, Inc., in the amount of $8,320.21, including tax, penalties, and interest, together with such interest as has accrued since October 7, 1994.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 12th day of March 1996.

PATRICIA HART MALONO

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 12th day of March 1996.

ENDNOTE

1/ The burden of proof identified in section 120.575(2), Florida Statutes, is not applicable. This proceeding is not brought pursuant to section 72.011(1), Florida Statutes, to challenge the legality of any assessment or denial of refund.

APPENDIX

The following rulings are made on the parties' proposed findings of fact: Respondent's Proposed Findings of Fact.

Paragraphs 1 through 5, 8, 12 through 15, 17, 20, 24 through 27, 29, 36,

38, 39, 42, and 43: Adopted in substance but not verbatim in paragraphs 1 through 13, and 15 through 18 of the Recommended Order.

Paragraphs 6, 7, 9, 11, 19, 23, 30, 31, 33, 37, 40, 41, and 44: Accepted but not incorporated in the findings of fact because subordinate or unnecessary.

Paragraph 10: Adopted and incorporated in substance or subordinate to facts as found in paragraph 5 of the Recommended Order.

Paragraph 16: Adopted and incorporated in substance in paragraph 8 of the Recommended Order except that the letter is dated March 25, 1994.

Paragraph 18: The proposed finding of fact that the petitioner did not state the nature of his objection to the audit is rejected as vague; the remainder of the paragraph is accepted by not incorporated in the findings of fact because subordinate or unnecessary.

Paragraphs 21 and 22: Adopted and incorporated in substance or subordinate to facts as found in paragraphs 9 and 10 of the Recommended Order.

Paragraph 28: Rejected as mere reference to the testimony.

Paragraph 32: Rejected as not supported by the weight of the evidence. Paragraph 34: Adopted and incorporated in substance in paragraph 14 of the

Recommended Order except that the Notice is dated March 24, 1994.

Paragraph 35: Rejected as argumentative.

COPIES FURNISHED:

Sam Francis, President

Forest Hill Convenience, Inc. 2791 South. Congress Avenue Lake Worth, Florida 33461

Francisco M. Negron, Jr. Assistant Attorney General Tax Section

Capitol Building

Tallahassee, Florida 32399-1050

Linda Lettera, Esquire Department of Revenue

P. O. Box 6668

Tallahassee, Florida 32314-6668

Larry Fuchs, Executive Director Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

Joseph Mellichamp, III, Esquire Dept. of Legal Affairs

The Capitol

Tallahassee, Florida 32399-1050

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 ten 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: 95-003588

Orders for Case No: 95-003588