STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DANE W. LUCAS, d/b/a RIVER ) ENTERTAINMENT, and RIVER ) CRUISES, INC., )

)

Petitioners, )

)

vs. ) Case No. 99-0246

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this matter was heard before the Division of Administrative Hearings by its assigned Administrative Law Judge, Donald R. Alexander, on June 2, 1999, in Jacksonville, Florida.

APPEARANCES

For Petitioners: Dane W. Lucas, pro se

1511 Montana Avenue

Jacksonville, Florida 32207-8642

For Respondent: Eric J. Taylor, Esquire

Department of Legal Affairs

28 West Central Boulevard, Suite 310 Orlando, Florida 32801

STATEMENT OF THE ISSUE

The issue is whether Petitioners are liable for the sales and use tax audit assessment and charter transit system surtax audit assessment, as reflected in Respondent's Notices of Reconsideration dated March 17, 1998.

PRELIMINARY STATEMENT

This matter began on January 28, 1997, when Respondent, Department of Revenue, issued two Notices of Proposed Assessment of tax, penalty, and interest on deficiencies revealed by an audit on the records of Petitioner, Dane W. Lucas, d/b/a River Entertainment. The audits covered the period from October 1, 1991, through December 31, 1993. On July 22, 1997, Respondent issued another two Notice of Proposed Assessments of tax, penalty, and interest on deficiencies after conducting an audit on the records of River Cruises, Inc., the successor corporation to Dane W. Lucas' unincorporated business. That audit covered the five year period from March 1, 1990, through February 28, 1995. After informal efforts to resolve the matters were unsuccessful, Petitioners requested a formal hearing under Section 120.569, Florida Statutes, to contest the assessment.

The matter was referred by Respondent to the Division of Administrative Hearings on January 15, 1999, with a request that an Administrative Law Judge be assigned to conduct a formal hearing.

By Notice of Hearing dated February 1, 1999, a final hearing was scheduled on June 2, 1999, in Jacksonville, Florida. On June 1, 1999, the case was transferred from Administrative Law Judge Don W. Davis to the undersigned.

At final hearing, Petitioners' owner and president, Dane W. Lucas, represented the taxpayers and presented testimony on their

behalf. Respondent presented the testimony of Ralph E. Roland, a former tax auditor III. Also, the parties offered Joint Exhibits 1-6, which were received in evidence.

The Transcript of the hearing was filed on June 21, 1999. Proposed Findings of Fact and Conclusions of Law were filed by Petitioners and Respondent on June 24 and July 3, 1999, respectively, and they have been considered by the undersigned in the preparation of this Recommended Order.

FINDINGS OF FACT

Based upon all of the evidence, the following findings of fact are determined:

1. From 1988 through 1993, Petitioner, Dane W. Lucas (Lucas), operated the Annabelle Lee, a cruise boat, under the name of River Entertainment. On January 1, 1994, Lucas incorporated his business under the name of River Cruises, Inc. (the corporation), which is also a Petitioner in this cause. In 1996, Respondent, Department of Revenue (DOR), conducted an audit of the records of both Petitioners to determine whether all sales and use taxes and charter transit system surtaxes had been properly reported and paid.

2. As a result of the audit, DOR issued two proposed assessments dated January 28, 1997, against Lucas individually and two assessments dated July 22, 1997, against the corporation. However, the latter two assessments reflect the combined liability of both Lucas individually as well as the corporation

   and cover the five-year audit period from March 1, 1990, through February 28, 1995. After a protest letter was filed by Petitioners, DOR issued two Notices of Reconsideration on March 17, 1998.

3. As to Lucas individually, the Notice of Reconsideration reflects that as of March 11, 1998, he owed $44,083.56 for sales and use taxes, with interest to accrue from that date at the rate of $7.26 per day. It further asserted that he owed $3,290.35 in charter transit system surtaxes as of the same date, with interest to accrue at the rate of $.058 per day.

4. As to the corporation, the Notice of Reconsideration reflects that as of March 11, 1998, it was liable for $17,906.53, with interest to accrue as of March 11, 1998, at the rate of

   $2.97 per day. Also, it asserts that as of March 11, 1998, the corporation was liable for $5,839.94 for charter transit system surtaxes, with interest to accrue at the rate of $0.25 per day.

5. On April 24, 1998, Petitioners remitted a check in the amount of $9,626.92, which represented what they believed was the proper tax assessment. As to the remaining portion, they deny that any moneys are owed; alternatively, they have requested that the amounts be compromised on the basis that they have no ability to pay the amount claimed by DOR.

CONCLUSIONS OF LAW

1. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto

   pursuant to Sections 120.569 and 120.57(1), Florida Statutes.

   
   

2. Section 120.80(14)(b)2., Florida Statutes (Supp. 1998), provides that in a tax assessment proceeding such as this, the "department's burden of proof . . . shall be limited to a showing that an assessment has been made against the taxpayer and the factual and legal grounds upon which the . . . department made the assessment." The ultimate burden of persuasion, however, rests upon the taxpayer to show that it is not liable for the proposed assessment.

3. In this case, DOR has satisfied the requirement that it provide the "factual and legal grounds" upon which the assessment has been made. Conversely, the taxpayer failed to adduce any proof that the assessment is without merit. This being so, the assessment should be sustained.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that the Department of Revenue enter a final order sustaining its original assessment against Petitioner.

DONE AND ENTERED this 12th day of July, 1999, in Tallahassee, Leon County, Florida.

DONALD R. ALEXANDER

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 12th day of July, 1999.

COPIES FURNISHED:

Linda Lettera, General Counsel Department of Revenue

204 Carlton Building Tallahassee, Florida 32399-0100

Eric J. Taylor, Esquire Department of Legal Affairs

28 West Central Boulevard, Suite 310 Orlando, Florida 32801

Dane W. Lucas

1511 Montana Avenue

Jacksonville, Florida 32207-8642

Larry Fuchs, Executive Director Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order within fifteen days of this order. Any exceptions to this Recommended Order should be filed with the Department of Revenue.

Docket for Case No: 99-000246

Orders for Case No: 99-000246