Pursuant to notice, a formal hearing was conducted in this proceeding before Diane Cleavinger, Administrative Law Judge, Division of Administrative Hearings on November 28, 2007, in Shalimar, Florida.
For Petitioner: Warren J. Bird, Esquire
Office of the Attorney General The Capitol, Plaza Level 101 Revenue Litigation Bureau Tallahassee, Florida 32399-1050
For Respondent: Glen M. Swiatek, Esquire
The issue in this case is whether the Respondent's certificate of registration to collect sales tax should be revoked.
On August 2, 2007, the Department of Revenue (Department or Petitioner) issued an Administrative Complaint to revoke Linda Arnette's (Respondent) certificate of registration as a dealer to collect taxes on behalf of the State of Florida. The Administrative Complaint was based on Respondent’s alleged failure to comply with Chapter 212, Florida Statutes, to collect and remit sales taxes to the State and failure to comply with the terms of a compliance agreement regarding that tax liability. Respondent timely requested a formal administrative hearing. The case was forwarded to the Division of Administrative Hearings.
At the hearing, the Department presented the testimony of one witness and offered three exhibits into evidence.
Respondent testified on her own behalf and offered two exhibits into evidence.
After the hearing, the Respondent filed a Proposed Recommended Order on January 25, 2008. The Department filed a Proposed Recommended Order on January 15, 2008. The Department also submitted a Motion to Strike on January 29, 2008. The
Motion was denied.
In 1996, the Respondent and Lance Arnette were engaged in a dissolution of marriage action in the circuit court, Case
No. 96-1185-FD. On June 20, 1997, the business known as Giff’s Sub Shop was awarded to Respondent, Linda Arnette. The circuit court transferred the business to Respondent free of any and all liabilities. Later, Respondent discovered that there was an undisclosed sales tax liability. The amount of that liability was not clear from the record. However, the Department was not a party to the Arnette’s dissolution of marriage action.
On March 3, 1998, Respondent filed an application for a certificate of registration with the Department. The reason for the application was due to the change of ownership from Respondent’s ex-husband to Respondent. The application reflected an opening date for the business of June 1, 1997. Linda Arnette was reflected as the owner of the business. Respondent was the only person who signed the application. No other person was listed as having an interest in the sub shop.
The certificate of registration was issued to Respondent and she became the registered dealer for the sub shop. As such, she was under a legal duty to collect and remit all taxes collected by the sub shop to the Department. She was also responsible to file tax returns for the business with the Department. Her first return would have been due on July 20, 1997.
A tax warrant or lien for unpaid taxes was filed against Respondent on October 26, 2005. It is unclear what happened with the 2005 warrant.
Department records reflect that the sub shop did not file returns for November 2006, December 2006, January 2007, and February 2007.
A second tax warrant for unpaid taxes was filed against Respondent on April 4, 2007. The warrant covered the period from August 2003 to February 2007. The amount of tax due under the warrant was $14,658.07, plus interest and penalties. The 2003 date was well after Respondent had taken over operation of the sub shop from her ex-husband. The evidence did not show that the amount included any taxes which may have been due prior to her award of the sub shop in 1997 or prior to the August 2003 date. Moreover, the warrant did not include months for which Respondent had timely paid the tax due.
Data from the Department revocation worksheet showed that Respondent owed only interest for the months of August 2003 and March through August, 2006. The fact she owed only interest in those months indicates that the taxes were paid late. The Department’s data showed the month of December 2005 with zero tax due and zero interest due. It is not clear from the evidence why the Department claimed the month of December 2005 was out of compliance. However, even without the month of
December 2005, the Department’s data showed 30 months of noncompliance by Respondent either by not filing timely or not paying the tax.
On March 2, 2007, the Department sent Respondent a notice of its intent to revoke her certificate of registration. An informal meeting was scheduled for April 17, 2007. The purpose of the meeting was to permit Respondent to present evidence on why her certificate of registration should not be revoked and to show that the amount of taxes due was incorrect.
Respondent attended the meeting on April 17, 2007. The Department waived the penalties due on her tax liability. Interest due totaled $2,857.68. Respondent did not raise any issue regarding her ex-husband’s past tax liability or any payments she had allegedly made thereon. Indeed, Respondent’s argument regarding payment on her ex-husband’s past tax liability did not make sense and was not borne out by the evidence. Respondent did file her tax returns for November 2006, December 2006, January 2007, and February 2007.
It was unclear, if Respondent brought her account books for the sub shop to the meeting. Respondent’s own books reflect that she reported tax liability for the period August 2003 through August, 2006 in the amount of $25,133.97, and through December 2006, she owed $27,620.97. Respondent’s records did not reflect the return amounts for 2007. Her
records also reflect that for the period August 2003 through August 2006, she paid $13,311.68 and through December 2006, she paid $16,029.68 to the Department. Returns filed with the Department for 2007 totaled $1,379.78 though February 2007. In 2007, Respondent’s records reflect that through April 2007, she paid $1,912.08 to the Department. In short, Respondent’s own records reflect that for the period August 2003 through August 2006, she owed past due taxes in the amount of $11,822.19 and through December 2006, she owed past due taxes in the amount of
$11,591.29. Her own records reflect she had repeatedly not complied with the requirements of Chapter 212, Florida Statutes, to timely remit and pay taxes.
More importantly, Respondent entered into a compliance agreement with the Department at the April 17, 2007, meeting.
In the agreement, Respondent admitted she owed taxes in the amount of $14,658.07, plus interest in the amount of $2,857.68, for a total of $17,515.75, to the Department. She admitted she had not complied with Sections 212.14(1), 212.14(2) and 212.15(1), Florida Statutes, regarding timely filing of returns and timely payment of taxes. These failures were repeated.
Additionally, Respondent agreed to timely file all tax returns for the period April 2007 through March 2008, timely pay all tax due for the same period, as well as, comply with the payment schedule for the past due amount referenced above. Failure to
abide by the terms of the compliance agreement would permit the Department to initiate revocation of the Respondent’s certificate of registration and the use of the compliance agreement to establish the facts of the earlier noncompliance with Chapter 212, Florida Statutes.
Respondent made the payments required under the payment schedule in the compliance agreement, but did not make such payments timely. Her most current return was late. Respondent also paid the current taxes due each month, but did not timely pay those taxes. Thus, Respondent has accrued
$2,519.96 in interest and $214.22 in penalties through July 18, 2007, in addition to the amount she agreed was due in the compliance agreement. Given this history, Respondent has clearly not complied with the requirements of Chapter 212, Florida Statutes, and her certificate of registration should be revoked.
CONCLUSION OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. § 120.57(1), Fla. Stat.
The Department is the agency responsible for enforcing the revenue laws of the state of Florida. See Ch. 212, Fla. Stat.
Section 212.05, Florida Statutes, provides that:
(1). . . every person is exercising a taxable privilege who engages in the business of selling tangible personal property at retail in this state. . .
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(2) The tax shall be collected by the dealer, as defined herein, and remitted by the dealer to the state at the time and in the manner as hereinafter provided.
In return for the privilege of engaging in business in this state, the general sales tax statutes require retailers to collect and remit certain taxes. See Cash v. State, 628 So. 2d 1100 (Fla. 1993). Section 212.06(1)(a), Florida Statutes, provides:
(1)(a) The aforesaid tax . . . as of the moment of sale . . . shall be collectable from all dealers as herein defined on the sale at retail . . .
(2)(a) The term “dealer,” . . . includes every person who manufactures or produces tangible personal property for sale at retail; for use, consumption, or distribution; . . .
* * *
(c) The term dealer is further defined to mean every person, . . . who sells at retail or offers for sale at retail . . . tangible personal property . . .
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(3)(a) . . . every dealer making sales, . .
. of tangible personal property . . . shall at the time of making sales, collect the tax imposed by this chapter from the purchaser.
Section 212.11(1)(e), Florida Statutes, provides that tax returns are timely if postmarked on or before the 20th day of the month in which the return is due. The statute also provides
that, if the 20th day falls on a Saturday, Sunday, or legal holiday, tax returns are timely if postmarked on the next succeeding workday.
Section 212.18, Florida Statutes, authorizes the Department to issue certificates of registration to dealers to collect and remit taxes. The application for the certificate of registration must include the names of all persons who have an interest in the business. § 212.18(3)(a), Fla. Stat.
The certificates issued by the Department grant dealers the privilege of engaging in or conducting business in Florida. § 212.18, Fla. Stat. The dealer acts as the agent of the state and all taxes collected by a dealer become state funds upon their collection. § 212.15, Fla. Stat. Said taxes are due on the first day of the month succeeding their collection and are considered delinquent on the 21st day of that month.
Section 212.18, Florida Statutes, further authorizes the Department to revoke a dealer’s certificate of registration for the dealer’s failure to comply with Chapter 212, Florida Statutes. Section 212.18(d), Florida Statutes, states:
The department may revoke any dealer’s certificate of registration when the dealer fails to comply with this chapter. Prior to revocation of a dealer’s certificate of registration, the department must schedule an informal conference at which the dealer may present evidence regarding the department’s intended revocation or enter into a compliance agreement with the department . . . The Department shall issue
an administrative complaint under § 120.60 if the dealer fails to . . . or fails to comply with the executed compliance agreement.
Additionally, if a dealer fails to report and remit collected taxes as provided in Chapter 212, Florida Statutes, the Department may assess the dealer based on the best information available to the Department for the taxable period. Any such assessment is prima facie correct unless the dealer timely demonstrates the assessment to be incorrect. § 212.12(5)(b), Fla. Stat.
In this case, the evidence showed that Linda Arnette was and remains the dealer for Giff's Sub Shop since 1997. Respondent’s registration as a "dealer" with the Department
created an obligation for her under Chapter 212, Florida Statutes, to collect and remit the appropriate sales taxes on sales made at the sub shop. See §§ 212.05, 212.06(1)(a), and 212.06(2), Fla. Stat. See also Nick and Sue Farrah, d/b/a Farah Gazebo Restaurant v. Department of Revenue, DOAH Case No. 96-5977 (1998). More importantly, however, Respondent entered into a
Compliance Agreement with the Department. The agreement established the amount of her tax liability up to February 2007, and established a schedule of payments to pay off that liability. The agreement also required her to comply with Chapter 212, Florida Statutes, in the future. Since 2003, she has failed to timely file returns with the Department and has
failed to timely remit the taxes she has collected on behalf of the state.
RECOMMENDED that the Department of Revenue enter a final order revoking Respondent’s certificate of registration pursuant to Section 212.18, Florida Statutes.
DONE AND ENTERED this 14th day of March, 2008, in Tallahassee, Leon County, Florida.
Filed with the Clerk of the Division of Administrative Hearings this 14th day of March, 2008.
Warren J. Bird, Esquire
Office of the Attorney General The Capitol, Plaza Level 101 Revenue Litigation Bureau Tallahassee, Florida 32399-1050
Glen M. Swiatek, Esquire
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.
