The Issue The issue presented is whether Petitioners are responsible for unpaid taxes as alleged in the Notices of Final Assessment issued in this cause.
Findings Of Fact At all times material hereto, Petitioner Nana's Petroleum, Inc. (hereinafter "Nana's"), has been licensed by the Department to sell special fuel (diesel) and gasoline. At all times material hereto, Emilio Perez has been the vice president of Nana's, and Edilia Perez has been the secretary. At all times material hereto, Nana's has been required to file with the Department on a monthly basis, and Nana's did so file, Special and Alternative Fuel Tax Returns, including Local Option Tax Schedules, and Refiner, Importer and Jobber Gasoline Tax Returns. Although the Department cannot locate its copy of Nana's May 1988 return, the Department does have copies of the other returns for the six years in question. If the Department had not received the May 1988 return from Nana's, it would have sent a delinquency notice at that time, and no delinquency notice was sent to Nana's. Nana's purchased its fuel from two suppliers at Port Everglades: Belcher Oil Co., n/k/a Coastal States Refinery and Marketing, and Union Oil Co. of California under the same procedures. Nana's sent its trucks to Port Everglades. The driver used a loading card (similar to a credit card) which carried the identification number of the purchaser. The driver put the loading card in the loading rack and received a manifest, which the driver signed and dated, noting the time on it. After the truck was loaded and left the Port, an invoice was issued by the supplier, referencing the manifest and specifying the amount of fuel obtained and when, and whether the fuel was diesel or gasoline. The invoice also specified the amount and kind of taxes charged, or if the purchase was tax exempt, and provided a total purchase figure. The invoices were then sent by the suppliers to Nana's, and Nana's paid those invoices within ten days in order to obtain a 1 percent discount. Nana's kept each invoice, using each to provide the detailed information required on its monthly tax returns. Also, when the Department audits a license holder such as Nana's, the Department audits the invoices against the invoice numbers shown on the tax returns. Each Special and Alternative Fuel Tax Return filed by Nana's itemized fuel acquired or received in Florida by invoice number, the date received, the point of origin, the point of delivery, the name and license number of the supplier, and the invoiced gallonage. Nana's computed any tax due by county for local option taxes. It itemized any gallonage exempt from taxes and why. It further included an itemization of the number of gallons sold, the purchaser's name and license number, the point of delivery, and the invoice number and date. The Refiner, Importer and Jobber Gasoline Tax Returns filed by Nana's were similar and contained a detailed listing of fuel acquired or received in Florida tax paid, specifying the county of origin, the county of destination, the supplier's name and license number, the date, the invoice number, and the number of gallons. Nana's was audited by the Department in 1987, with the audit running through November of that year. As a result of that audit, Nana's hired an accountant in January of 1988 in order to assure that its books and records were properly kept. In 1992, the Department began another audit by sending an employee to the office of Nana's for one day. The Department then contacted Nana's and advised that it was too far for them to come from Ft. Pierce to the office of Nana's in Pahokee and told Nana's to bring its books and records to the Department. Nana's took boxes of records to the Ft. Pierce office. Two weeks later, the Department contacted Nana's, advising that the Department would not be completing the audit and that Nana's should come and pick up its records. In April of 1994, pursuant to a subpoena, Nana's supplied 35 or 36 boxes of records to the Department. Those boxes contained Nana's original invoices from 1987 forward and the original certificates it had obtained from its purchasers reflecting tax exempt status. On April 25, 1994, the Department issued to Edilia Perez as secretary of Nana's its Notice of Final Assessment for Fuel Tax, Penalty and Interest Due for the period of December 1987 through June 1990 in the amount of $414,714.67. That Notice of Final Assessment was accompanied by a Notice of Jeopardy Findings. On April 25, 1994, the Department issued to Emilio Perez as vice president of Nana's its Notice of Final Assessment for the period of December 1987 through June 1990 in the amount of $515,240.25. That Notice of Final Assessment was accompanied by a Notice of Jeopardy Findings. On April 25, 1994, the Department issued to Nana's its Notice of Final Assessment for the period of April 1992 through August 1993 in the total amount of $27,947.84. That total figure represented tax due in the amount of $18,083.17, interest of $2,786.23, and penalty of $7,078.44. That Notice of Final Assessment was accompanied by a Notice of Jeopardy Findings. On September 13, 1990, the Department had previously issued to Nana's its Notice of Final Assessment for the period of December 1987 through June 1990 in the total amount of $573,988.67. That total figure represented tax due of $414,714.67, penalty of $97,201.36, and interest of $62,072.64. That Notice of Final Assessment was accompanied by a Notice of Jeopardy Findings. On September 13, 1990, the Department had previously issued to Emilio Perez d/b/a Nana's Stations its Notice of Final Assessment for the period April 1988 through June 1989 in the amount of $147,291.20. That total figure represented tax due of $100,625.58, penalty of $25,156.43, and interest of $21,509.19. That Notice of Final Assessment was accompanied by a Notice of Jeopardy Findings. On May 23, 1994, an evidentiary hearing was conducted by the Circuit Court of the Fifteenth Judicial Circuit of Florida in and for Palm Beach County on a Petition for Review of the Jeopardy Findings filed by the Petitioners in this cause. In a detailed Order Reversing the Department of Revenue's Jeopardy Findings and Releasing Seizure of Assets, entered June 2, 1994, Circuit Judge Lucy Brown analyzed the deficiency of the notice given by the Department in its two groups of Jeopardy Findings and accompanying Notices of Final Assessments: the September 13, 1990, group and the April 25, 1994, group. In her factual determinations, Judge Brown determined that the Department had not provided notice as required of the Department as to its September 13, 1990, Notices of Final Assessment and Notices of Jeopardy Findings issued to Nana's and to Emilio Perez d/b/a Nana's Stations in that the Department knew at the time that Emilio Perez was the principal of Nana's and that Perez was not at the time present at the address used by the Department to serve notice on him and on Nana's, that no officer or director or employee of Nana's was shown to have received notice of the issuance of the Notices of Final Assessment and Notices of Jeopardy Findings, and that the Department made no attempt to effectuate personal service. It was further found that no notice or knowledge of the outstanding September 19, 1990, Notices of Final Assessment and of Jeopardy Findings was received prior to April 1994. After concluding that the Department did not fulfill its obligation to provide notice of its September 13, 1990, Notices of Final Assessment and Notices of Jeopardy Findings, and after concluding that the Department had not shown the existence of jeopardy upon which its April 25, 1994, Notices of Jeopardy Findings were based, Judge Brown reversed both groups of Notices of Jeopardy Findings and further set aside and vacated the Department's seizure of Petitioners' assets. The Department did not file an appeal from that Order. Accordingly, the Circuit Court determination that Petitioners were not notified that the Department was seeking additional taxes from them until April 1994 cannot be disputed herein. The Special and Alternative Fuel Tax Returns filed with the Department by Nana's for the months of February 1990 through June 1990 each declared that money was due from Nana's to the Department. The Department has no record of payment being received with each of those returns or thereafter. The Department's summary sheet itemizes the tax due with penalty and interest computed through August 1990 as follows: Nana's Petroleum 10011605 DATE TAX DUE AS REPORTED PENALTY THRU 8/19/90 INTEREST THRU 8/14/90 TOTAL DUE 2/90 26,376.57 6,594.14 1,274.75 34,245.46 3 16,459.04 3,291.81 627.70 20,378.55 4 8,287.07 1,243.06 234.31 9,764.44 5 11,339.26 1,133.93 205.04 12,678.23 6 11,822.56 591.13 97.17 12,510.86 74,284.50 12,854.07 2,438.97 89,577.54 Accordingly, Nana's is responsible for unpaid taxes in the amount of $74,284.50, together with the increasing penalty and interest until date of payment.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered sustaining Petitioners' contest of the assessments issued against them but for that portion of the September 13, 1990, Notice of Final Assessment issued to Nana's encompassing the months of February 1990 through June 1990 wherein Nana's reported tax due in the total amount of $74,284.50 but failed to pay that amount to the Department, together with the statutory penalty and interest on that amount through date of payment. DONE and ENTERED this 16th day of May, 1995, at Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of May, 1995. APPENDIX TO RECOMMENDED ORDER Petitioners' six un-numbered paragraphs in that portion of its proposed recommended order entitled "Factual Findings" have been adopted to the extent that they include any findings of fact which were intermingled with Petitioners' conclusions of law and argument of counsel contained within those un-numbered paragraphs. Respondent's proposed findings of fact numbered 1-6, 8, 9, 12, 21, and 34 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 7, 10, 13-18, 20, 22- 27, 29, 39-47, 49, and 50 have been rejected as not being supported by the weight of the competent evidence in this cause. Respondent's proposed finding of fact numbered 11 has been rejected as being irrelevant. Respondent's proposed findings of fact numbered 19, 28, 30-33, 35-38, and 48 have been rejected as being subordinate to the issues in this cause. COPIES FURNISHED: Andrew Helgesen, Esquire Harris, Kukey, and Helgesen 11380 Prosperity Farms Road, Suite 201 Palm Beach Gardens, Florida 33410 Dean L. Willbur, Jr., Esquire 319 Clematis Street, Suite 600 Post Office Box 6917 West Palm Beach, Florida 33405-0917 Lealand L. McCharen, Esquire Francisco M. Negron, Jr., Esquire Office of the Attorney General Capitol Building - Tax Section Tallahassee, Florida 32399-1050 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact At all times pertinent to the allegations herein, the Petitioner, the Department, was the state agency responsible for the licensing and monitoring of the operation of interstate motor carriers in this state. The Respondent, PAT, was an interstate motor carrier of automobiles operating over the roads of this state. On October 10, 1991, Officer Ralph Vargas, an officer with the Department's Office of Motor Carrier Compliance stopped the Respondent's automobile carrier being operated by an employee of the Respondent in Boynton Beach, Florida, going north on US Highway #1. The stop was a random routine Level III safety inspection. Review of the documents carried by the driver reflected that the driver's driver license and the vehicle registration were in order. However, a review of the outside of the cab revealed that there was no required fuel decal being displayed. The driver showed Officer Vargas the cab card issued by the State of Florida for the fuel decal reflecting a decal had been issued for this vehicle. However, the decal was not displayed on the outside of the vehicle even though Mr. Vargas could see an area where an decal had been affixed. He can not recall whether he felt the area to see if it was sticky and he was unable to determine whether the former decal had been issued by the State of Florida or not. He did not see a CVSA, (Commercial Vehicle Safety Alliance) decal either. As a result of this infraction, Mr. Vargas assessed a penalty in the amount of $50.00 and issued a temporary permit at a cost of $45.00, both of which were paid by the driver at the scene. It is this penalty and permit which the Respondent contests. The pertinent statute in issue here required a vehicle of this kind to have both a cab card and a fuel decal which must be affixed to the vehicle. Mr. Vargas also issued the driver a warning for having an unauthorized passenger, (his son) on board and for not having his log book current. Mr. Hurley contends that just one week prior to this stop, the vehicle and driver were in California where a CVSA inspection was accomplished. While this was being done, Mr. Hurley personally inspected the vehicle to insure that all required decals were affixed. Again, before the truck left New Jersey on the instant trip, he again checked to insure the required decals were there. They were. Because he is aware of the extended time required to get a replacement decal for a vehicle, Mr. Hurley routinely purchases several extra $4.00 cab card and fuel decal sets for his trucks so that if, as here, one is lost or removed, he can, upon notice, get a replacement to the driver overnight. Here, he claims the decal must have been peeled off by someone while the vehicle was on this trip. It is his experience that Florida's decals are easily pulled off and, unlike the decals in some other states, there is no built in voiding process which would void the decal in the event it is stolen. Here, Mr. Hurley claims, the driver did not know the decal was gone. Had he known, he could have called the home office on the truck phone and have it delivered. It is so found.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be entered herein denying Professional Auto Transport, Inc.'s request for a refund of the $50.00 civil penalty and $45.00 permit fee. RECOMMENDED this 12th day of June, 1992, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of June, 1992. COPIES FURNISHED: Vernon L. Whittier, Jr. Assistant General Counsel Department of Transportation 605 Suwannee Street, MS 58 Tallahassee, Florida 32399-0458 Richard L. Hurley President Professional Auto Transport, Inc. Box 492 Lakewood, N.J. 08701 Ben G. Watts Secretary Department of Transportation Haydon Burns Bldg. 605 Suwannee Street Tallahassee, Florida 32399-0458 Thornton J. Williams General Counsel Department of Transportation 562 Haydon Burns Bldg. 605 Suwannee Street Tallahassee, Florida 32399-0458
Findings Of Fact Respondent owns and operates a Citgo Food Mart in Naples at which it sells gasoline and diesel fuel at retail, provides limited motor vehicle service, and sells food and beverage items. Petitioner issued Respondent retail dealer's fuel license #21- 000828, which authorizes Respondent to sell motor fuel at retail and requires Respondent to collect and remit to Petitioner motor fuel taxes. The principal of Respondent is Jack Stellman. He caused Respondent to purchase the business in April 1993 from the fuel wholesaler, which had purchased it from the previous retailer. The previous retailer had suffered business and personal setbacks that necessitated the sale. Mr. Stellman and his wife, Phyllis, who claims not to be an officer or employee of Respondent despite her considerable involvement, have contributed much personal capital and labor to the new business. Immediately after taking over the business, Mr. and Mrs. Stellman discarded outdated inventory, fired a number of dishonest employees, eliminated prostitution that had been taking place on the premises, added new equipment such as a pressure fryer and hood system, and started advertising. Cash flow was a problem for Respondent from the start. The major improvements were completed by the fall of 1994. By early 1994, however, Mr. Stellman had quit taking a salary from Respondent. Over the 19-month period from August 1993 through March 1995, Mr. and Mrs. Stellman borrowed $140,000 from a variety of sources, including from their retirement plan, from relatives, and on property that they own individually. Despite these infusions of cash, Respondent was unable to stay current with certain important creditors, such as their fuel supplier, the Internal Revenue Service, and Petitioner. In August 1993, the fuel wholesaler began to demand payment on delivery, instead of in 30 days, as it had done previously. The wholesaler shortened the credit terms on fuel after Respondent fell behind in payments shortly after beginning operations. In any event, the change in credit terms involved monthly volumes of typically 40,000-50,000 gallons. The loss of use of money corresponding to the wholesale purchase of this amount of fuel does not begin to explain the tax deficiencies that Respondent ran up. Respondent's deficiencies on its motor fuel tax also began in August 1993. Returns are filed the month following the month for which the motor fuel tax is due. For August 1993, Respondent filed a return in which it underremitted the motor fuel tax by $62.15. The next month, Respondent filed a return in which it remitted $2000 and left an unremitted balance of $2867.49. The next month, Respondent filed a return, but remitted none of the $6077.28 of motor fuel tax due. For November 1993, the next month, Respondent filed a return and remitted $2000, leaving an unremitted balance of $3278.78. For December 1993 through July 1994, Respondent filed returns but remitted no tax. The total tax deficiency for this eight-month period was $58,300.87, or an average of $7287.61. In the 12-month period ending with the July 1994 return, Respondent had failed to remit a total of $70,586.57. For the August, September, and October 1994 returns, Respondent made partial remittances. For August and September, Respondent left unremitted balances of only $15.34 and $84.30, respectively, remitting a total of $11,315.49. For October, Respondent remitted $4827.90, leaving an unremitted balance of $2623.98. For November 1994, Respondent filed a return, but failed to remit any of the $5983.74 due. In the summer of 1994, the Stellmans finally sold their house in New York, but realized less cash than they had expected. In October 1994, the Stellmans applied for a loan on their Florida residence. During the same month, they began negotiations with Texaco to convert their Citgo convenience store into a Texaco outlet. The Stellmans believed that they would receive $225,000 from Texaco, which would be sufficient to pay their fuel wholesaler and Petitioner, convert their service operation into more store space, and acquire additional inventory and working capital. The record does not permit a finding whether $225,000 would cover all of these items. In any event, the Texaco negotiations did not proceed quickly. The fuel wholesaler threatened litigation over the prospective cancellation of its contract to supply Respondent with fuel and oil. And Petitioner's representatives were increasingly unsatisfied with Respondent's lack of progress in paying back taxes. Repeatedly, the Stellmans promised payments that did not materialize. At the same time, Respondent was not remitting motor fuel taxes currently. For December 1994 through March 1995, Respondent did not even file returns. During this four-month period, motor fuel taxes due and unremitted totalled $32,106.59. The total of unremitted motor fuel taxes for August 1993 through March 1995 was now $111,400.52, exclusive of penalties and interest. Penalties for the underremittances for the period August 1993 through March 1995 totalled $60,284.67. Interest for the same period totalled $14,042.88. The total of tax, penalties, and interest was thus $185,728.07. Respondent later reduced this deficiency by paying a total of $323.48 of penalties and $4154.52 of interest, so the current totals are tax of $111,400.52, penalties of $59,961.19, and interest of $9888.36, for a total of $181,250.07. The interest is current through August 1, 1995, and the daily interest thereafter is calculated by multiplying the tax deficiency by 0.000328767. Mr. and Mrs. Stellman claim that the $185,728.07 deficiency arose due to business setbacks, but the business setbacks that they have shown do not account adequately for the deficiency. The Stellmans clearly began the business badly undercapitalized. Mr. and Mrs. Stellman attribute part of the financial problems to bad debts suffered by Respondent. From August 1993 through the end of 1993, the Stellmans pursued seasonal business by offering liberal credit terms, which eventually resulted in worthless accounts receivable. However, the total bad debt was only $15,000. Although hardly meriting mention, except perhaps to reveal their lack of insight, the Stellmans also complain that they lost cash flow due to ill- advised advertising deals into which they entered where they traded fuel for advertising. Even ignoring the benefits derived from such agreements, Respondent traded only about $4000 worth of fuel under these arrangements. Together, these claimed business setbacks of no more than $20,000 constitute less than 18 percent of the taxes, penalties, and interest owed Petitioner. The amount of motor fuel tax that Respondent would have collected on $20,000 worth of fuel would be around $1500. With more zeal than business acumen, the Stellmans attacked the challenge of a new business. Their lack of business sophistication, not fraud, led the Stellmans to convert the motor fuel taxes from current payables to long- term debt, to underreport the amount of fuel pumped on 12 of 19 returns filed with Petitioner during the period in question, and repeatedly to file returns late, so as to lose the collection allowance normally given retail dealers. The unwillingness of Petitioner to become a long term creditor was manifested dramatically when, on May 4, 1995, Petitioner issued an emergency order suspending Respondent's retail dealer's fuel license. The emergency suspension took place after a meeting of Petitioner's Emergency Response Group, which, after reviewing the facts, determined that this was the best course of action to prevent the loss of motor fuel tax. The Stellmans complain that Petitioner did not give them enough time to try to pay the tax deficiencies. However, the record does not justify the Stellmans' demand that Petitioner share their confidence in their ability to take care of this substantial debt. As late as mid-February 1995, the Stellmans were still making unfulfilled promises to pay, as when they assured a Naples employee of Petitioner that Respondent would pay $10,000 by mid-April. This sum was not paid, nor were the motor fuel taxes that Respondent collected at the time even paid currently. In other words, Respondent was still taking the motor fuel tax that it was collecting from customers and applying it to other debts. The Stellmans never told Petitioner what they expected to net from the Texaco agreement. They never explained why the negotiations took so long to conclude. In early 1995, Petitioner's representatives justifiably saw: 1) new financing never resulted in any reduction of the outstanding deficiencies and 2) the outstanding deficiencies continued to grow as Respondent continued to collect motor fuel tax and apply it to other purposes. The record is not entirely clear as to the status of Respondent with respect to unremitted or unpaid taxes in April 1995 and following. Respondent owed $34,861.20 in unremitted sales tax, as of May 1, 1995. However, it appears more likely than not that, during at least part of the period subsequent to May 1, 1995, Respondent remitted and paid to Petitioner its currently accruing tax obligations. With the cessation of fueling operations, these obligations arose from sales of convenience store items, as these sales were unaffected by Petitioner's action against Respondent's retail dealer's fuel license. Since the suspension of the license, the Stellmans have supplied Petitioner with accurate, current information concerning Respondent's tax liabilities, at least to the extent that they possess such information. Respondent's financial condition is precarious, at best. Even assuming that the Stellmans were willing to continue to contribute more money to Respondent, there is nothing in the record to suggest that they have the financial resources to contribute substantial sums beyond a large fraction of the total currently due Petitioner in this case. Such a payment would probably come from a combination of the Stellmans' assets and the assets of friends and family. Their obvious failure to prepare and follow a feasible business plan does not bode well for Respondent's future ability to operate and, at the same time, retire what has become a substantial financial liability owed to Petitioner.
Recommendation It is RECOMMENDED that the Department of Revenue enter a final order: 1) suspending Respondent's retail dealer's fuel license for the lesser of six months from the date of the final order or until Respondent pays the sums described in paragraphs 38 and 39 and executes a promissory note with the conditions set forth in paragraphs 38 and 39 and 2) revoking Respondent's retail dealer's fuel license at the expiration of six months from the date of the final order unless Respondent has paid the above-described sums and entered into the above-described promissory note. ENTERED on October 27, 1995, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings on October 27, 1995. APPENDIX Rulings on Petitioner's Proposed Findings 1-4: adopted or adopted in substance. 5-7: rejected as recitation of evidence and subordinate. 8: adopted or adopted in substance. 9-10: rejected as subordinate. 11: adopted or adopted in substance. 12-18: rejected as subordinate. 19-21: adopted or adopted in substance. 22-23: rejected as subordinate. 24-26: adopted or adopted in substance except the taxpayer is Respondent, not Mr. Stellman individually. 27: rejected as subordinate. 28: adopted or adopted in substance. 29-35: rejected as subordinate. 36-37: adopted or adopted in substance. 38: rejected as subordinate. 39: rejected as unsupported by the appropriate weight of the evidence. 40-43: adopted or adopted in substance. 44: rejected as recitation of evidence. Rulings on Respondent's Proposed Findings 1-7: adopted or adopted in substance, although the "great expense" in paragraph 7 is rejected as unsupported by the appropriate weight of the evidence. 8-10: rejected as unsupported by the appropriate weight of the evidence. The financial problems were minor. 11: adopted or adopted in substance to the extent relevant. 12-13: rejected as subordinate. 14: rejected as speculative. 15: rejected as unsupported by the appropriate weight of the evidence. 16: rejected as irrelevant. 17: adopted or adopted in substance. 18-19: rejected as subordinate. 20: adopted or adopted in substance. 21: rejected as unsupported by the appropriate weight of the evidence except that the filings is rejected as irrelevant. COPIES FURNISHED: Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Francisco Negron, Jr. Assistant Attorney General Office of the Attorney General The Capitol, Tax Section Tallahassee, FL 32399-1050 Christian B. Felden Felden and Felden 2590 Golden Gate Parkway Suite 101 Naples, FL 33942
The Issue The issue posed for decision herein is whether or not Respondent was selling "polluted" gasoline in violation of the standards set forth in Chapter 525.06, Florida Statutes (1980), and Rule Chapter 5F-2, Florida Administrative Code.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, the following relevant facts are found. The Petitioner, State of Florida, Department of Agriculture and Consumer Services, is an agency of State government which has the obligation to inspect petroleum products in keeping with the provisions of Chapter 525, Florida Statutes (1980). 2/ The Respondent is a corporation which sells products in the State of Florida at an outlet located at 1050 U.S. 98 North in Brooksville, Florida. On November 11, 1981, a sample of three (3) petroleum products, i.e., regular gasoline, unleaded and diesel fuel was taken from Respondent's location which is known as Chuck's Car Wash. A laboratory analysis by Petitioner revealed that the unleaded gasoline showed a lead content above .110 grams per gallon. This reading is above the .05 gram per gallon maximum allowable lead content as set forth in Rule Subsection 5F-2.01(1)5(j), Florida Administrative Code. An analysis of the regular gasoline revealed an End Point of 494 degrees F. This reading is above the 446 degrees F maximum allowable End Point as set forth in Rule Subsection 5F-2.01(1)(c)4, Florida Administrative Code. Finally, an examination of the diesel product revealed a Flash Point below 60 degrees F. This reading is below the 120 degrees F allowable Flash Point as set forth in Rule Subsection 5F-2.01(3)(b), Florida Administrative Code. The results of these analyses were made known to Respondent and he was afforded the option of either immediately halting the sale of the products or to post a cash bond in the amount of $1,000.00 for 5,900 gallons sold of the above- referred products in lieu of confiscation of the remaining 1,681 gallons of the products. (See Release Notice or Agreement dated November 12, 1981.) Respondent posted a bond in the amount of $1,000.00. In the Release Notice, Respondent was advised that all three (3) products were to be removed from its tanks and new products dropped. Respondent was also afforded the opportunity to remove the no-lead which could he sold as leaded regular with the remaining two (2) products to be used in Respondent's private equipment. Petitioner's inspector who works out of portable laboratory No. 3, Jamie Gillespie, removed the samples from Respondent's tanks and conducted the analyses of the products. Inspector Gillespie made Respondent aware of his findings and his decision to post a Stop Sale Notice of the subject products. Inspector Gillespie obtained the cash bond from Respondent. Use of the above-referred products may cause catalytic converters to become contaminated; restrict exhaust systems and release excessive pollutants in the atmosphere. Use of these products also may clog fuel filters and carburetors. The low Flash Point from the diesel product may cause an engine to "run away" and in some instances may blow the head assembly from a diesel engine. Additionally, use of diesel with such a low Flash Point may contaminate dry injector nozzles and shorten the life of a diesel engine. (Testimony of Gillespie and Morris, inspectors and chemists employed by Petitioner, who conducted analyses of the subject products.) As stated, Respondent did not appear at the hearing to contest or otherwise rebut the charges alleged by Petitioner.
Recommendation Based on the foregoing Findings of Fact, Conclusions of Law and the entire record compiled herein, it is RECOMMENDED: That a final order be entered finding the Respondent in violation of Rule Subsections 5F-2.01(1)5(j), 5F-2.01(1)(c)4, and 5F-2.01(3)(b), Florida Administrative Code, and thereby, Respondent should be subjected to the penalties set forth in Section 525.06, Florida Statutes (1980), and the $1,000.00 bond posted be estreated. RECOMMENDED this 16th day of April, 1982, in Tallahassee, Florida. JAMES E. BRADWELL, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of April, 1982.
The Issue Whether Petitioner owes tax in the amount of $4,554.80 plus a penalty and interest on the sale of special fuel between December 1, 1976, and December 31, 1979.
Findings Of Fact Miami Tiresoles, Inc., sells both new and retreaded tires for cars and trucks. The company also sells gasoline and diesel fuel. It is licensed by the Department as a dealer in special fuels. As far as this case is concerned special fuel is number 2 diesel oil. Unless an exemption is met each gallon of special fuel sold by MTS is taxed by the Department at a rate of eight cents per gallon. The Department has given BITS a revised notice of proposed assessment of tax for the sale of special fuel in the amount of $4,551.88 plus a penalty of $455.48 and interest in the amount of $735.11 (through April 21, 1980). The tax figure on the assessment appears to reflect a typographical error. The Department's records (Exhibit A) indicate that for the period in question, 2/ MTS sold 56,936 gallons of special fuel subject to tax according to the Department's interpretation of the law. If a tax at a rate of eight cents per gallon is due, then the amount due should be $4,554.88 and not $4,551.88. The correct tax figure is reflected on the Department's work sheets but was probably misread when the figure was transferred to the revised Notice of Assessment issued on April 21, 1980. The foregoing assessment is based on MTS' invoices which reflect sales of special fuel to customers in amounts of more than 110 gallons at one time. Those sales were made to MTS customers who have filed with MTS a document called "Purchaser's Exemption Certificate". A typical example of such a certificate states: PURCHASER'S EXEMPTION CERTIFICATE The undersigned hereby certifies that the motor duel (sic) and/or special fuel pur- chased on 1-19-79 is for the following purpose as checked in the space provided. (X) Purchased for home, industrial, com- mercial, agricultural or marine purposes for consumption other than for the propul- sion of a motor vehicle. ( ) Purchased at bulk plant or terminal in volumes of not more than 110 gallons for delivery into a receptacle not connected to the fuel supply system of a motor vehicle for consumption other than for the propulsion of a motor vehicle. Purchaser is aware that if this exemption if (sic) falsely claimed, or if this certificate is not rescinded at the time he fails to quality (sic) for the exemption, he shall be liable for the taxes imposed under Chapter 206, F.S. Furthermore, by issuing this certificate, the purchaser also certifies that he does not have any motor vehicles which use special fuel for propulsion. This certificate is to continue in force until revoked by written notice to MIAMI TIRESOLES, INC. Purchaser Trade Name A ACME SANDBLASTING, INC. Street Address 9521 W. Oakmont Dr. ,Hialeah,Fla. 33015 BY /s/ The industrial customers of MTS (those who have filed an exemption certificate) are engaged in the construction business. They use the diesel fuel to operate bulldozers, front-end loaders, back hoes, sandblasters and similar equipment. None of the fuel is used for the operation of motor vehicles on the public highways of Florida. All the fuel in question is sold on the premises of MTS. At the time of sale it is placed either in the fuel tank of a particular piece of equipment such as a back hoe, or it is placed in a fuel storage tank mounted on the back of a truck. The storage tanks are not connected so they can provide fuel for the propulsion of the truck. They are used to transport fuel to the purchaser's particular job site. The storage tanks have a capacity of between 100 to 300 gallons. MTS does not have delivery trucks of its own and has no facilities for taking fuel to its customers' job sites. A single invoice of MTS which indicates a sale of 110 gallons of special fuel to an individual customer is frequently the result of a sale where multiple fuel tanks are filled at one time. For Instance, the customer may have a back hoe sitting on the rear of a flat-bed truck. He will fill the fuel tank in his back hoe and then perhaps fill an additional 55 gallon drum or two which would be on the truck. This would occur all in one transaction. The reason why the Department seeks to tax special fuel sold by MTS to its industrial customers in an amount exceeding 110 gallons is because the fuel was placed in the customers' own fuel tanks on the premises of MTS and not on the premises of the customer or at the customer's job site.
Recommendation Based on the foregoing Findings of Fact and the Conclusions of Law it is recommended that the Department of Revenue enter a final order affirming its assessment for a special fuel tax against the Petitioner in the amount of $4,554.88 plus penalty and interest computed pursuant to Section 206.44, Florida Statutes (1979). DONE and RECOMMENDED this 25th day of March 1981, in Tallahassee, Florida. MICHAEL PEARCE DODSON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 25th day of March 1981.
Findings Of Fact Based upon the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Petitioner William Lineberger, doing business as Jet Oil Company, has, since 1950, continuously used the brand name "Jet" for identifying gasoline sold by him in the State of Florida. At one time, petitioner owned or operated some thirteen stations in various locations in Florida. Since 1980, he has operated only three stations, all located in Pinellas County-- two in St. Petersburg and one in Pinellas Park. Pursuant to Chapter 525, Florida Statutes, the respondent Florida Department of Agriculture and Consumer Services first issued petitioner a liquid fuel brand name registration for the name "JET" in 1973. Pursuant to Chapter 495, Florida Statutes, the Florida Secretary of State issued petitioner mark registration number 922,820 on August 11, 1980, for the mark "JET" as a trademark and a service mark to be used in connection with gasoline and oil product convenience store items. Kayo Oil Company (Kayo) is a Delaware corporation and a wholly-owned subsidiary of Conoco, Inc. Kayo operates a chain of retail gasoline and convenience stores in 22 states. It has approximately 465 locations concentrated mainly in the southeast portion of the country, with 38 locations in Florida, including one in Pinellas Park. Kayo currently has plans for further expansion in Florida. It's fixed asset base in Florida is approximately $10 million. The typical Kayo retail gasoline outlet in Florida has four multiple product dispensers, sells 500 to 600 different convenience items inside an 800 to 1600 square foot building, markets fast food products and employs a color scheme of black on yellow on its signage and building facade. Conoco, Inc. first began using the "JET" trade name in Europe in the 1960's when it acquired a large chain of European retail gasoline outlets selling under that brand name. It currently operates about 2,000 units under the brand name "JET" in Europe. In the United States, Kayo has used various trade names in the operation of its outlets, including "Kayo" and "JET". In the early 1980's, Kayo made the decision to standardize the name it traded under throughout the United States, and selected the name "JET". In most instances, it accomplished the conversion of its stations from "Kayo" to "JET", with the black on yellow color scheme, during the period from the early 1980's through 1984. The intervenor initially sought to obtain from the Florida Department of Agriculture and Consumer Services the liquid fuel brand name "JET". That request was denied for the reason that "JET" had been previously registered to the petitioner. Thereafter, the Department issued to the intervenor the liquid fuel brand name registration, "JET +" on April 27, 1981. Kayo is required to display the "JET +" liquid fuel brand name on its dispensers or pumps. 1/ With the exception of two of its Florida locations, Kayo uses the word "JET" on its street and building signage. At its Pinellas Park and Clearwater stations, it has retained the name "Kayo". Being an independent brand marketer, Kayo attempts to dedicate the majority of its signage to display the price of gasoline, as opposed to the gasoline brand name. It is Kayo's marketing philosophy that the consumer is more influenced by low prices and location than by the fuel brand name. In 1984, the physical appearance of petitioner's three stations did not resemble the physical appearance of the typical Kayo station in Florida. Subsequent to 1984, petitioner did some remodeling work at its Pinellas Park station which included yellow and black signage and the name "JET" in black block letters on a yellow background, resembling Kayo's style of lettering on both its pump decals and its signage in areas outside Pinellas County. The yellow pages of the St. Petersburg telephone directory lists both Kayo's Pinellas Park station and petitioner's Pinellas Park station under the heading of Jet Oil Company. In February or March of 1987, a local cigarette supplier attempted to deliver and present an invoice for cigarettes ordered by Kayo to one of petitioner's facilities. This occurred again with the same supplier in March of 1987. In January of 1987, a Motor Fuel Marketing Complaint against the "Jet" business at 7091 Park Boulevard was filed with the Division of Consumer Services, Department of Agriculture and Consumer Services. Although this is the address of the Kayo station in Pinellas Park, the Consumer Services Consultant, Division of Consumer Services, forwarded the complaint to "Jet Oil Company" at 7879 - 49th Street North, the petitioner's station, for a response. Petitioner presented evidence that other instances of confusion between its stations and Kayo stations had occurred with respect to bills, bank inquiries, and a newspaper article. Also, on one occasion, petitioner was ordered by the Pinellas Park police to close its stations because a bomb threat had been made against Jet Oil. Petitioner did not produce any evidence that the source of any of the incidents related was attributable to the liquid fuel brand names utilized by it or the intervenor.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that petitioner's request for a hearing challenging the issuance of the "JET +" registration to the intervenor be DISMISSED. DONE and ORDERED this 16th day of July, 1987, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of July, 1987.
Findings Of Fact The Petitioner is licensed as a dealer of special fuel pursuant to Florida Statutes 206 and has been assigned license Number 1627. The pertinent sections of Florida Statutes which are applicable to this case are ss206.86(1), (6), (8), 206.87, 206.89, 206.93, 206.94 and Ch. 212. The pertinent rules of the Department of Revenue applicable to special fuels sales involved herein is 12A-2.03. The deposition of Albert Colozoff and all answers to interrogatories and responses to requests for admissions are admissible as evidence and are to be made a part of the record in this cause. The Petitioner sold special fuels to Zamora Truck and Car Services, Roberts Equipment Company and Florida Petroleum, Inc. Petitioner was assessed by the Respondent for tax on 1,979,201 gallons of special fuel sold by it and paid tax and interest as set forth in the letter attached hereto as Exhibit A. That no penalty paid on any of the tax paid pursuant to that letter. That Petitioner did not remit taxes that were due during the month the sales of special fuel were reported on any of the sale to Zamora, Roberts or Florida Petroleum or the remaining 1,417,263 gallons sold. Zamora and Roberts represented to Belcher that they were purchasing all special fuel from Belcher for exempt agricultural use. Due to past dealings and delivery of the special fuel to a farm, Belcher believed and relied upon the facts represented to it by Zamora and Roberts. However, Belcher did not obtain written documentation of this agricultural use from Zamora or Roberts and did not furnish the Department with any such written documentation. Belcher did not obtain resale certificates or exemption certificates or dealer license numbers from Zamora, Roberts or Florida Petroleum. Nor did the report forms filed by Belcher contain resale certificates, exemption certificates or dealer license numbers from Zamora, Roberts or Florida Petroleum. An employee of the Department advised Belcher that Zamora and Roberts were under investigation for fraudulent failure to report taxes. Belcher paid sales tax on sales of special fuel in the amount of $18,589.53 on the sale of 538,030 gallons of special fuel. Zamora is not a licensed dealer of special fuels. Florida Petroleum is not a licensed dealer of special fuel. Roberts is not a licensed dealer of special fuel. Belcher did not fraudulently file incorrect monthly special fuels reports. The Department of Revenue audited Belcher and computed tax, penalty and interest due as set forth in the documents attached hereto as Exhibit B. The Department of Revenue advised Belcher of its duties regarding reporting requirements in the letters from L. N. Thomas attached as Exhibit C.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is, RECOMMENDED: That Respondent's assessment be upheld with respect to Petitioner's tax deficiency, penalty and interest as set forth in the assessments with adjustments to be made for payments paid by Petitioner under the "sales tax" theory. DONE and ORDERED this 30th day of April, 1979, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings Room 101, Collins Building Mail: 530 Carlton Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: James R. McCachren, Jr., Esquire Ervin, Varn, Jacobs, Odom & Kitchen Post Office Box 1170 Tallahassee, Florida 32302 William D. Townsend, Esquire Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32301
The Issue The issue here presented concerns an alleged violation of Rule Subsection 5F-2.01(1)(c)1, Florida Administrative Code, related to the permissible ten percent (10 percent) evaporated temperature for which gasoline shall not exceed 140F, and penalties to be imposed for such violations, in keeping with Section 525.06, Florida Statutes (1980), and Rule Subsection 5F-2.01(1)(c)1, Florida Administrative Code.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, the following relevant facts are found. The Petitioner, State of Florida, Department of Agriculture and Consumer Services, is an agency of State government which has the obligation to inspect petroleum products in keeping with the provisions of Chapter 525, Florida Statutes (1980). The Respondent is a corporation which sells petroleum products in the State of Florida at an outlet located at 3411 U.S. 19 North, Pasco County, Tarpon Springs, Florida. On November 23, 1981, a sample of the petroleum product, super unleaded gasoline (which was offered for sale) was taken from the Respondent's facility as indicated above. A subsequent analysis of that product by Petitioner's mobile laboratory revealed that the ten percent (10 percent) evaporated temperature was 153F. This reading exceeded the ten percent (10 percent) evaporated temperature of 140F as set forth in Rule Subsection 5F-2.01(1)(c)1, Florida Administrative Code. Petitioner's inspector, Jamie Gillespie, advised Respondent's agent that the premium unleaded gasoline was illegal due to its "stale" condition and the Respondent was given an option of either confiscation of the product or posting of a bond. The product is presently under a Stop Sale Notice and is under seal. (Petitioner's Composite Exhibit No. 1.) A subsequent analysis by Petitioner's laboratory in Tallahassee revealed that the evaporation level of the product was found to be approximately 163F. Ben Bowen, Petitioner's Assistant Bureau Chief in charge of petroleum inspection, indicates that the discrepancy in the evaporation levels as analyzed by the two laboratories was most probably due to the seal which was on the product and the approximate seven (7) day delay in the transfer of the product from Tarpon Springs to the laboratory in Tallahassee. Respondent's supervisor, Mark Ordway, 1/ was shown how the product could possibly become stale due to a "venting" problem from the roof of the storage tank where the product was stored. Sam Puleo, a lab technologist employed in Petitioner's mobile laboratory, analyzed the sample of the product taken from Respondent's facility. According to Mr. Puleo, "stale" products such as that taken from Respondent's tanks would make it difficult to start an automobile engine.
Findings Of Fact The Respondent owns and operates the Heart of Florida Truck/Auto Plaza ("Truck-Stop"), on U.S. 27 North, Haines City, Florida. When he purchased the truck-stop in October of 1978, he had no prior experience in the operation of such facilities. (Stipulation, Testimony of Respondent) During September of 1979, the Respondent's fuel supplier notified him that premium gasoline would no longer be delivered. Respondent decided, therefore, to convert his 6,000 gallon premium gasoline tank into a diesel fuel storage tank. (Stipulation, Testimony of Respondent) In order to convert the tank to diesel fuel usage, Respondent pumped out all but a residual consisting of approximately 100 gallons of gasoline and 200 gallons of water. Even with the use of an auxiliary electric pump, the Respondent could not succeed in removing the remaining 238 gallons of residual. (Stipulation, Testimony of Respondent) He, then, sought advice from others on ways to empty the tank, including his jobber, diesel mechanic, truck drivers and trucking firms served by his truck-stop. While no one could suggest a method of removing the residual, they assured Respondent that truckers and diesel mechanics preferred a fuel mixture of 1 gallon of gasoline per 100 gallons of diesel fuel because of improved engine performance. (Testimony of Respondent) Based on such advice, the Respondent filled the tank in question with diesel fuel No. 2 and sold the resulting diesel/gasoline mixture to truckers as diesel fuel No. 2. Because of the presence of gasoline, this diesel fuel had a flash point at 440 F. (Testimony of Respondent, John Whitton, and petitioner's exhibit 3) In mixing the diesel with the gasoline in the tank, Respondent reasonably believed, in good faith, that the resulting mixture would not be hazardous or dangerous to its users. He did not know, and had not been previously notified, that the Department had set standards which strictly regulated the quality of gasoline and diesel fuel sold in Florida. Nor did he know that gasoline and diesel fuel sold in violation of such standards would be subject to confiscation and sale by the Department. (Testimony of Respondent) Although the Department regularly mails freight surcharge information every two weeks to retail gasoline outlets such as Respondent's, it does not periodically disseminate information on its petroleum regulatory program. Copies of the Department's rules, and gasoline standards, are available only on request. (Testimony of Lois W. Thornton and John Whitton) Each month, the Department issues approximately 100 Stop Sale Notices to gasoline retailers in Florida. Approximately 12 percent of these Notices are based on unlawful sale of fuel with flash points below Department standards. In such cases, the Department has consistently followed a practice of allowing the retailer to continue ownership of the fuel (in lieu of Department confiscation) only upon the posting of a bond equal to the value of the substandard fuel. However, notwithstanding the value of the substandard fuel, the Department does not require posting of a bond in excess of $1,000.00. Upon resolution of the administrative enforcement actions in favor of the Department, the bonds are forfeited to the Department, in lieu of confiscation. (Testimony of John Whitton) Since, in this case, the value of the offending fuel far exceeded $1,000.00, the Department allowed, and Respondent willingly posted a $1,000.00 bond with the Department. (Testimony of Respondent and John Whitton, and Petitioner's exhibit 2)
Conclusions Respondent violated the Department's gasoline and oil standards. He should, therefore (in lieu of confiscation) forfeit the cash bond he previously posted.
Findings Of Fact The following findings of fact are based upon the stipulation of the parties and the evidence presented: During a routine inspection on June 11, 1986 at Ron's Chevron #4, 1790 North Hercules, Clearwater, Florida, samples of all grades of gasoline were taken. A sample was taken from each side of a pump labeled "Chevron Unleaded". Using a field method for measuring lead content, it was determined that both samples contained more than 0.11 grams of lead per gallon, which exceeds the standard of 0.05 grams per gallon. The results of the field measurement were confirmed at the Department's main laboratory by Nancy Fischer on June 16, 1986. A stop sale notice was issued on June 12, 1986, and the contaminated product was withheld from sale to the public. On June 17, 1986, Petitioner was required to post a bond in the amount of $1,000 in lieu of the Department confiscating 5,850 gallons of fuel. The product was released for sale as Chevron Regular, a leaded fuel. New product was placed in the tank and proved lead free. Lead in gasoline is detrimental to a car designed to run on unleaded fuel. The lead can cause serious damage to the emission system and possibly the engine by stopping up the catalytic converter. The parties stipulated that the sole issue in this case is the amount of the bond. There is no evidence that Petitioner intentionally contaminated the fuel for financial gain. The cause appears to have been carelessness at some point between, or at, wholesale and retail. The Department accepted a bond of $1,000 and allowed Petitioner to retain the fuel for relabeling and sale as leaded fuel. The Department's penalty imposed in this case is consistent with its past practice in factually similar cases.
Recommendation Based upon the foregoing, it is recommended that the Department enter a Final Order requiring Petitioner to post a $1,000 refundable bond. DONE AND ENTERED this 23rd day of October 1986 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 23rd day of October 1986. COPIES FURNISHED: Ronald Trimm Ron's Chevron #4 1790 North Hercules Clearwater, Florida 33515 William C. Harris, Esquire Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32301 The Honorable Doyle Conner Commissioner of Agriculture The Capitol Tallahassee, Florida 32301
