STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF REVENUE, )

)

Petitioner, )

)

vs. )

) WORLDWIDE EQUIPMENT GROUP LLC, )

)

Respondent. )

Case No. 07-1710

)

RECOMMENDED ORDER

Upon due notice, a disputed-fact hearing was convened in this cause on July 10, 2007, in Defuniak Springs, Florida, before Ella Jane P. Davis, a duly-assigned Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Warren J. Bird, Esquire

Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050

For Respondent: No Appearance

STATEMENT OF THE ISSUE

Does the taxpayer owe sales tax, penalty, and interest as assessed by the Department of Revenue.

PRELIMINARY STATEMENT

The Department of Revenue conducted an audit, which assessed sales tax, penalty, and interest against Worldwide

Equipment Group LLC, on the basis of a discrepancy between income reported by Worldwide Equipment Group, LLC (Worldwide) to the Department for sales tax purposes and a greater amount of income reported to the federal government for income tax purposes.

Worldwide timely requested a disputed-fact hearing. The cause was initially referred to the Division of Administrative Hearings on or about August 30, 2006, and assigned DOAH Case No. 06-3287. From its inception, this case should have been, but was not, styled to reflect that before the Division of Administrative Hearings, the duty to go forward is upon the Agency. To correct that oversight, the style of the case is hereby amended as set out above. Therefore, the Agency is the "Petitioner" and the taxpayer is the "Respondent."

By a Notice of September 15, 2006, DOAH Case No. 06-3287 was scheduled for final hearing on November 16, 2006. On November 1, 2006, a Joint Motion for Provisional Closing Order was filed. On November 2, 2006, an Order Closing File with leave to re-open was entered.

On April 4, 2007, a Motion to Re-open Case and Notice for Trial was filed by the Department. On April 19, 2007, an Order to Re-Open Case File was entered.

The case was re-opened as the instant DOAH Case No.

07-1710.

At hearing, Petitioner presented the oral testimony of David Collins and had Composite "A-DOR" admitted in evidence.

No one on behalf of Respondent appeared at the commencement of hearing. When it was time for Respondent's case-in-chief, Respondent still had not appeared. The undersigned sounded the docket in the hallway and consulted the Deputy Sheriff in the room originally assigned. No one in the hallway responded for Respondent, and the Deputy Sheriff informed the undersigned that no one had entered the original room during the course of the hearing.

Petitioner requested, and was granted, 15 days' post-filing of the transcript for submission of its proposed recommended order.

A Transcript was filed on August 13, 2007, and on August 14, 2007, a Post-Hearing Order was mailed to both parties, informing them of the date the Transcript had been filed and explaining how to prepare a proposed recommended order.

Petitioner timely-filed a Motion for Extension to File Proposed Recommended Order, and an Order was entered August 23, 2007, permitting both parties to file their respective proposed recommended orders by September 7, 2007.

Petitioner filed its Proposed Recommended Order late by 12 days. Respondent filed neither a proposal nor a motion to

strike, so Petitioner's Proposed Recommended Order has been considered in preparation of this Recommended Order.

FINDINGS OF FACT

1. Petitioner, Department of Revenue, is an agency of the State of Florida, lawfully created and organized pursuant to Section 20.21, Florida Statutes. By law, the Department is vested with the responsibility of regulating, controlling and administering the revenue laws of the State of Florida, including, specifically, the laws relating to the imposition and collection of the state's sales and use tax, pursuant to Chapter 212, Florida Statutes.

2. Respondent, Worldwide Equipment Group, LLC, is a Florida limited liability company, whose principal address is Post Office Box 1050, Freeport, Florida 32439. Respondent sells and leases heavy equipment.

3. In early 2006, Petitioner, Department of Revenue, conducted an audit of the books and records of Petitioner, pursuant to statutory notice. The period covered by the audit was March 1, 2002, through February 28, 2005.

4. The audit was conducted by Department of Revenue auditor David Collins and addressed three issues.

5. Issue A-01 addressed misclassified exempt sales, i.e. failure to collect appropriate sales and use tax or lack of documentation to prove tax exempt status of certain sales.

   Issue A-03 addressed discrepancies in sales for 2003 as reported for federal income tax returns and for state sales and use tax returns. Issue A-03 addressed interest owed due to a timing difference between actual transactions and the filing of state returns: basically a manipulation of the grace period for payment of sales and use taxes.

6. Respondent was notified of the apparent discrepancies observed by the auditor.

7. The original Notice of Intent To Make Audit Changes was issued February 17, 2006, and started at more than $75,000.00 in taxes, penalty, and interest due.

8. Respondent then filed amended federal income tax returns, reflecting larger sales figures covering a portion of the audit period which reduced the discrepancy.

9. The dispute was originally referred to the Division of Administrative Hearings (DOAH) on or about August 30, 2006. The original facts in dispute surrounded an addendum to the Notice of Proposed Assessment showing a balance due of $31,434.82.

   This was DOAH Case No. 06-3287.

   
   

10. The request for a disputed-fact hearing was made by David R. Johnson CPA, who has a power of attorney on file with Petitioner Agency permitting him to represent Respondent. Throughout these proceedings, Worldwide has been served through Mr. Johnson by Petitioner and by DOAH.

11. The parties filed a Joint Motion for Provisional Closing Order in DOAH Case No. 06-3287 on November 1, 2006. On November 2, 2006, DOAH Case No. 06-3287 was closed with leave to return if the parties' proposed settlement was not finalized.

12. Mr. Johnson met once with counsel for Petitioner during the time the case was returned to the Agency. At some point, Respondent had produced certain accounting entries and supporting documents to the auditor. These were used to adjust the assessment levied by the Department. A Revised Notice Of Intent To Make Audit Changes dated March 13, 2007, was issued with a letter of the same date. The revised, and final Notice included an assessment of tax, penalty and interest totaling

    $15,065.24, as of the date of issue and information that the tax accrues interest at the rate of $3.10 per diem.

13. On April 4, 2007, Petitioner filed before DOAH its Motion to Re-open Case and Notice for Trial. No timely response in opposition was filed by Respondent. By an Order to Re-open Case File, entered April 19, 2007, the case was re-opened as the instant DOAH Case No. 07-1710.

14. Petitioner has established that the amount of

    
    

    $15,065.24 as tax, penalty, and interest was due as of March 13, 2007.

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding, pursuant to Section 120.569 and Subsection 120.57(1), Florida Statutes.

16. Every person desiring to engage in or conduct business in this state as a dealer, as defined in Chapter 212, Florida Statutes, must obtain a certificate of registration from the Department, pursuant to Section 212.18, Florida Statutes, and Florida Administrative Code Rule 12A-1.060. The certificates of registration issued by the Department grant dealers the privilege of engaging in, or conducting business in, this state.

17. Section 212.06, Florida Statutes, provides that sales tax shall be collected and remitted to the Department by all licensed dealers. Respondent has filed returns and remitted such taxes.

18. Pursuant to Chapter 212, the Department is authorized to audit the books and records of registered dealers, and to make an assessment using an estimate based upon the best information then available for the taxable period of retail sales of such dealer. Any such assessment shall be considered prima facie correct and the burden to timely demonstrate otherwise rests upon the dealer. § 212.12(5)(b), Fla. Stat.

19. Petitioner Department has demonstrated that there is a factual and legal basis to assess the amount of $15,065.24, as set forth in its letter of March 13, 2007, plus accrued interest at the rate of $3.01 per diem from that date.

RECOMMENDATION

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

RECOMMENDED that the Department of Revenue sustain the March 13, 2007, assessment of the subject sales tax, penalties and interest to Petitioner.

DONE AND ENTERED this 8th day of October, 2007, in Tallahassee, Leon County, Florida.

S

ELLA JANE P. DAVIS

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 8th day of October, 2007.

COPIES FURNISHED:

Warren J. Bird, Esquire Office of the Attorney General The Capitol, Plaza Level 01

Tallahassee, Florida 32399-1050

Bruce Hoffmann, General Counsel Department of Revenue

The Carlton Building, Room 204

501 South Calhoun Street Tallahassee, Florida 32399-0100

Lisa Echeverri, Executive Director Department of Revenue

The Carlton Building, Room 104

501 South Calhoun Street Tallahassee, Florida 32399-0100

David R. Johnson, CPA 1265 Highway 331 South

Defuniak Springs, Florida 32435

Worldwide Equipment Group LLC Post Office Box 1050 Freeport, Florida 32439

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 should be filed with the agency that will issue the final order in this case.

Docket for Case No: 07-001710

Orders for Case No: 07-001710