STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS ) AND PROFESSIONAL REGULATION, ) DIVISION OF ALCOHOLIC )

BEVERAGES AND TOBACCO, )

)

Petitioner, )

)

vs. ) Case No. 08-1707

)

ARISTEN GROUP, LLC, d/b/a )

PANGAEA GRYPHON, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice a formal hearing was held in this case by video teleconference on June 17, 2008, with the parties appearing from Lauderhill, Florida, before J. D. Parrish, a designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Michael J. Wheeler, Esquire

Assistant General Counsel Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-2202

For Respondent: James Napolitano, C.P.A.

404 Jerusalem Avenue Hicksville, New York 11801

STATEMENT OF THE ISSUE

Whether the Respondent, Aristen Group, L.L.C., d/b/a Pangaea Gryphon (Respondent or Licensee), failed to remit monies owed to

the Petitioner, Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (Department or Petitioner) pursuant to the surcharge provisions found in Section 561.501(2), Florida Statutes (2007). If so, the Department seeks to discipline the licensee pursuant to Section 561.29, Florida Statutes (2007).

PRELIMINARY STATEMENT

On October 30, 2007, the Petitioner entered an Administrative Complaint against this Licensee that alleged for the audit period September 23, 2004, through August 31, 2006, the Respondent failed to remit surcharge principle in the amount of

$7,975.70. Based upon that amount, the Petitioner alleged surcharges penalties ($4,217.87) and interest ($1,409.54) were also owed the State. In addition to the collection of the amounts owed, the Petitioner seeks to impose disciplinary action against the Respondent as a result of its failure to comply with the surcharge law. On behalf of the Respondent, James Napolitano, C.P.A., filed a Request for Hearing that disputed the facts relied upon by Petitioner. The matter was referred to the Division of Administrative Hearings for formal proceedings on April 8, 2008.

The case was originally scheduled for hearing for June 10, 2008. To accommodate the Respondent, a request for continuance was granted and the case was rescheduled to June 17, 2008.

At the hearing, the parties entered two stipulations: that the Licensee's business address is 5711 Seminole Way, Hollywood, Florida; and, the Respondent's beverage license number is 16- 16908, series 4-COP. The Department presented the testimony of Julio Cesar Torres, a senior tax audit administrator, employed by the Petitioner, who was offered as the agency's representative in this matter. Mr. Torres was charged to review the audit and to present the Department's information pertinent to this case.

The Petitioner's Composite Exhibit 1 and Exhibit 2 were admitted into evidence but were not filed until August 25, 2008.

A Transcript of the proceedings was filed on July 29, 2008. The parties were granted ten days within which to file proposed recommended orders. The Petitioner's Proposed Recommended Order was filed on August 1, 2008. The Respondent did not file a proposed order.

FINDINGS OF FACT

1. At all times material to the allegations of this case, the Petitioner is the state agency charged with the responsibility of regulating persons holding alcoholic beverage licenses. See § 561.02, Fla. Stat. (2007).

2. At all times material to the allegations of this matter the Respondent has been a licensee holding license number 1616908, series 4-COP. When the Licensee filed its surcharge audit questionnaire it elected to file its surcharge tax based upon the "purchase method."

3. The Department offers alcoholic licensees two methods to compute the alcoholic beverage surcharge tax. The methods are known as the "purchase method" and the "sales method." The "purchase method" calculates the surcharge due to the Department based upon everything purchased during a given month. For the "sales method" the surcharge tax is computed based upon the actual cash register records for the sales during the reporting period.

4. The Department may audit any licensee to compare the amounts remitted with the records maintained by the licensee to verify the correct surcharge tax was paid. In this case, the Licensee was audited for the period September 23, 2004 through August 31, 2006. To verify the surcharge amount was properly remitted, the Department reviewed the records of the beverage distributors used by the Licensee.

5. When the Surcharge Audit Questionnaire was submitted the Respondent identified five suppliers of alcoholic beverages from whom the Licensee purchased beverages for the audit period.

   Those suppliers then provided their records to establish the beverages sold to the Respondent during the audit period. Based upon those records the Department compared the volume purchased and calculated the surcharge tax due and owing to the state versus the surcharge tax paid to the Petitioner during the audited period. Based upon that comparison, the Department found

   that the Licensee had failed to remit the correct surcharge payment.

6. More specifically, the Department calculated that the Respondent owed the State a surcharge principle in the amount of

   $7,975.70. Based upon that amount the Department assessed a penalty in the amount of $4,217.87 along with interest in the amount of $1,409.54. The Respondent does not dispute the calculations for penalty and interest if the principle amount is correct.

7. James Napolitano is the accountant for the Respondent. He was authorized to appear at the hearing on behalf of the Licensee but was unclear as to how the Department computed the surcharge amounts. Mr. Napolitano did not dispute that the Licensee was to remit the surcharge tax based upon the "purchase method." Mr. Napolitano represented that all purchases were to be signed for and opined that if they were, in fact, received by the Licensee the surcharge computation may be correct.

8. Copies of the documents relied upon by the Department were provided to the Licensee at its business address.

   Mr. Napolitano did not receive them until the date of the hearing. Mr. Napolitano represented he intended to review the invoice records to verify the shipments were actually provided to the Licensee. No further information was offered by the Respondent.

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of these proceedings.

   § 120.57, Fla. Stat. (2008).

   
   

10. The Department bears the burden of proof to establish by clear and convincing evidence the allegations of the complaint. See Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

11. Section 561.501, Florida Statutes (2007), provides:

    
    

    Surcharge on sale of alcoholic beverages for consumption on the premises; penalty.--

    1. The vendor shall report and remit payments to the division each month by the 15th of the month following the month in which the surcharges are imposed. For purposes of compensating the retailer for the keeping of prescribed records and the proper accounting and remitting of surcharges imposed under this section, the retailer shall be allowed to deduct from the payment due the state 1 percent of the amount of the surcharge due. Retail records shall be kept on the quantities of all liquor, wine, and beer purchased, inventories, and sales. However, a collection allowance is not allowed on any collections that are not timely remitted. If by the 20th of the month following the month in which the surcharges are imposed, reports and remittances are not made, the division shall assess a late penalty in the amount of 10 percent of the amount due per month for each 30 days, or fraction thereof, after the 20th of the month, not to exceed a total penalty of 50 percent, in the aggregate, of any unpaid surcharges. The division shall establish, by rule, the required reporting, collection, and accounting procedures. Records must be maintained for 3 years. Failure to accurately and timely remit surcharges imposed under this section is a violation of the Beverage Law.

       (2)(a) The division may compromise a taxpayer's liability for the surcharge imposed by this section upon the grounds of doubt as to liability for or collectability of such tax. A taxpayer's liability for penalties as prescribed by this section may be settled or compromised if the division finds that the noncompliance is due to reasonable cause and not to willful negligence, willful neglect, or fraud. The division shall maintain records of all compromises, and the records must state the basis for the compromise.

       1. The division may enter into agreements for scheduling payments of taxes, interest, and penalties prescribed in this section.

       2. The division shall establish by rule guidelines and procedures for administering this section.

       1. If any vendor fails to remit the surcharge, or any portion thereof, by the 20th of the month following the month in which the surcharges are imposed, there shall be added to the amount due interest at the rate of 1 percent per month of the amount due from the date due until paid. Interest on the delinquent tax shall be calculated beginning on the 21st day of the month following the month for which the surcharge is due.

       2. All penalties and interest imposed by this section are payable to and collectible by the division in the same manner as if they were a part of the tax imposed. The division may settle or compromise any such interest or penalty under paragraph (2)(a).

       
       

12. Section 561.29, Florida Statutes (2007), authorizes the Department to revoke or suspend the license of any person holding a beverage license when a violation of the law is established.

    In this case, the Department maintains it may revoke the

    Respondent's beverage license for the failure to remit the surcharge tax as required by law.

13. It is concluded that the Respondent did not remit the correct surcharge amount. The surcharge deficiency was as alleged by the Department. The Respondent presented no evidence to support a lesser amount. By its own records, the Respondent purchased alcoholic beverages subject to the surcharge tax from five suppliers. Based upon the undisputed records of those suppliers, the Respondent purchased alcoholic beverages during the audit period that would have resulted in a surcharge assessment of $7,975.70 more than the surcharge tax payment actually remitted by the Licensee. Accordingly, penalty and interest computations are appropriate in this case.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, enter a Final Order providing that the Respondent owes the surcharge tax in the amount of $7,975.70, and assessing a penalty and interest based upon that amount. Further, the Final Order should provide a limited time for the repayment of the delinquent amount. Should the Licensee fail to timely remit the full amount, with penalty and interest, it is recommended that the license be suspended until such time as the amount is paid in full.

DONE AND ENTERED this 3rd day of September, 2008, in Tallahassee, Leon County, Florida.

J. D. PARRISH 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 3rd day of September, 2008.

COPIES FURNISHED:

Michael J. Wheeler, Esquire Assistant General Counsel Department of Business and

Professional Regulation Northwood Centre, Suite 40 1940 North Monroe Street

Tallahassee, Florida 32399-2202

Ned Luczynski, General Counsel Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

Cynthia Hill, Director

Division of Alcoholic Beverages And Tobacco

Department of Business and Professional Regulation

Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

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: 08-001707

Orders for Case No: 08-001707