STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

THEODORE E. MORAKIS, )

)

Petitioner, )

)

vs. ) Case No. 06-3168

)

DEPARTMENT OF JUVENILE )

JUSTICE, )

)

Respondent. )

______ )

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division of Administrative Hearings, conducted the final hearing by videoconference in Tallahassee, Florida, on September 25, 2006. Counsel for Respondent and Respondent's witness attended the hearing in Tallahassee. Petitioner and the court reporter attended the hearing in Fort Myers, Florida.

APPEARANCES

For Petitioner: Theodore E. Morakis, pro se

11904 Southwest 9th Manor Davie, Florida 33325

For Respondent: Michael B. Golen

Assistant General Counsel Department of Juvenile Justice 2737 Centerview Drive

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

The issue is whether Petitioner owes money to Respondent due to an overpayment of compensation.

PRELIMINARY STATEMENT

By letter dated April 10, 2006, Respondent informed Petitioner that it had overpaid him salary in the amount of

$10,946.41. By letter dated July 28, 2006, Respondent informed Petitioner that the correct amount of overpayment was $8614.41.

At the hearing, Respondent called one witness and offered into evidence three exhibits: Respondent Exhibits 1-3.

Petitioner called one witness and offered into evidence one exhibit: Petitioner Exhibit 3. All exhibits were admitted.

The parties did not order a transcript or file proposed recommended orders.

FINDINGS OF FACT

1. At all relevant times, Respondent has employed Petitioner. By Stipulation, the parties agree that Respondent overpaid Petitioner the sum of $6282.41 by check dated February 14, 2005. The dispute is whether Respondent is

   entitled to repayment of an additional $2332 in withheld federal income taxes associated with the agreed-upon overpayment.

2. On the date of the overpayment in February 2005, Respondent credited Petitioner with the gross sum of $9328. The net payment to Petitioner was $6282.41. The difference between

   the gross and the net was $2332 in withheld federal income taxes and $713.59 in employee-paid FICA and Medicaid. Respondent is not seeking repayment of the employee-paid FICA and Medicaid.

3. Respondent discovered the error on December 31, 2005, so it was unable to process the paperwork necessary correct the situation with the tax withholding in the same tax year of 2005. By failing to discover the error in time to process the paperwork in the same tax year, Respondent was unable to effectively reverse the withholding transaction with the Internal Revenue Service. Thus, when Petitioner filed his 2005 federal income tax return, his gross income included this overpayment, and the amount of tax already paid included the

   $2332 that was erroneously withheld in Respondent's overpayment in February 2005.

4. It is thus clear that Respondent overpaid Petitioner

   
   

   $6282.41 in net pay plus $2332 in income taxes that it withheld from Petitioner and submitted, to Petitioner's credit, to the Internal Revenue Service. The total overpayment is therefore

   $8614.41.

   
   

   CONCLUSIONS OF LAW

   
   

5. The Division of Administrative Hearings has jurisdiction over the subject matter. §§ 120.569 and 120.57(1), Fla. Stat. (2006). New v. Department of Banking and Finance, 554 So. 2d 1203 (Fla. 1st DCA 1989).

6. Florida Administrative Code Rule 69I-22.003(7) provides:

In the event a direct deposit by Electronic Funds Transfer results in an improper payment to a Beneficiary or other person, the Section [the Electronic Funds Transfer Section within the Department of Financial Services] should be notified immediately by the employing agency if the Beneficiary is receiving wages, or the Section of Administration if the Beneficiary is receiving retirement benefits or both, as applicable. The Section will attempt to recover such improper payment but in the event recovery by the Department is not possible, the agency that authorized payment to the beneficiary will be notified that it shall pursue collection pursuant to Chapter 69I-21 or Rule 69I-31.309, F.A.C., as

appropriate.

1. Florida Administrative Code Rule 69I-21.003(1) requires the state to exercise due diligence to pursue all of its receivables and claims. Rule 69I-21.003(6) provides, in

   part:

   
   

   Where the delinquent account receivable is due from a . . . state employee, . . . the Department [of Financial Services] shall offset such delinquent account receivable against such other sums due from the state

   . . .

   
   

2. Florida Administrative Code Rule 69I-31.309 no longer exists, but previously provided the agency that overpaid an employee with considerable flexibility as to whether to recover gross pay or some version of net pay. New, supra. However, it is unlikely that Respondent will suffer an economic loss by

having to deduct the repayment in a taxable year other than 2005, when he first appeared to have an unrestricted right to the payment. Pursuant to Title 26 U.S.C. Section 1341, Petitioner will likely be able to apply the deduction to income in the year of repayment or in 2005, whichever produces the greater tax savings, provided Petitioner meets all applicable timeframes and eligibility criteria set forth in the Internal Revenue Code of 1986, as amended. See, e.g., Missouri Pacific Railroad Company v. United States, 423 F.2d 727, mod. on different ground, 433 F.2d 1324 (Ct. Cl. 1970), cert. denied, 402 U.S. 944, 91 S. Ct. 1618 (1971).

1. Consequently, Petitioner owes Respondent the $6282.41 that he admits that he was overpaid, as well as the federal income taxes of $2332 erroneously withheld and for which he has already received credit.

2. The Administrative Law Judge declined to receive evidence from Petitioner concerning the term of a repayment plan because the Administrative Law Judge determined that he lacked the authority to recommend such a plan to Respondent. However, Respondent should not construe the omission of any discussion concerning the term of a repayment plan as a recommendation that Respondent not enter into such a plan. Such a recommendation is neither expressed nor implied in this Recommended Order.

RECOMMENDATION

It is

RECOMMENDED that the Department of Juvenile Justice enter a final order determining that, due to an overpayment in 2005, Petitioner shall repay $8614.41, upon such terms, if any, as the department shall determine.

DONE AND ENTERED this 24th day of October, 2006, in Tallahassee, Leon County, Florida.

S

ROBERT E. MEALE

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 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 24th day of October, 2006.

COPIES FURNISHED:

Anthony J. Schembri, Secretary Department of Juvenile Justice Knight Building

2737 Centerview Drive

Tallahassee, Florida 32399-3100

Jennifer Parker, General Counsel Department of Juvenile Justice Knight Building

2737 Centerview Drive

Tallahassee, Florida 32399-1300

Michael B. Golen Assistant General Counsel

Department of Juvenile Justice 2737 Centerview Drive

Tallahassee, Florida 32399

Theodore E. Morakis 11904 Southwest 9th Manor Davie, Florida 33325

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this recommended order. Any exceptions to this recommended order must be filed with the agency that will issue the final order in this case.

Docket for Case No: 06-003168

Orders for Case No: 06-003168