The Issue The issue posed herein is whether or not the Petitioner remitted to Respondent, pursuant to Chapter 212.05(1), Florida Statutes, the, proper amount of sales tax on the boat "Captain Deebold" which was purchased on November 29, 1976. A related issue, assuming that the proper sales taxes were not remitted by Petitioner, is whether or not a levy of penalty and interest is warranted under the circumstances.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received, legal memoranda submitted by the parties and the entire record compiled herein, the following relevant facts are found. Petitioner purchased the vessel "Captain Deebold" on November 29, 1976, and alleged that the purchase price of the boat was $20,000.00. Accordingly, Petitioner remitted to the Department sales taxes based on the declared value of $20,000.00. Respondent maintained that the subject boat was purchased for the sum of $75,000.00 and has, therefore, issued an assessment against Petitioner for the additional taxes, penalty and interest. By letter dated November 29, 1978, Respondent's Revenue Investigator, Leslie J. Smithling, advised Petitioner that a routine verification concerning his purchase of the subject boat revealed a transaction amount of $75,000.00 upon which the four percent Florida Sales Tax is $3,000.00. Petitioner was further advised therein that his remittance in the amount of $4,202.00 was due no later than December 15, 1979. Taxes, penalties and interest were calculated as follows: Purchase Price $75,000.00 Tax Rate 4% Tax $ 3,000.00 Minus Tax Paid (Based on $20,000.00) $ 800.00 Tax Due $ 2,200.00 Administrative Penalty (Ch. 212.12[2], F.S.) $ 550.00 Fraud Penalty (Ch. 212.12[2], F.S.) $ 1,100.00 Interest: 1% per month from 8/1/77 to 12/1/77 16% Plus $.72 daily thereafter Total Interest Accrued $ 352.00 Total Tax, Penalties & Interest Due $ 4,202.00 In support of its position that the true purchase price of the boat was only $20,000.00, Petitioner points out that the seller of the boat, Frank Deebold, had neglected the boat and had only made repairs that were absolutely necessary to operate the vessel. Thus, when Petitioner purchased the vessel, numerous repairs were made to make it seaworthy including 1) repaired electrical wiring; 2) sealed the deck seams; 3) reconnected the port fuel tank; 4) repaired the clutch in the port engine; 5) repaired leaks in the starboard stern quarter; 6) replaced and rebolted the chines; 7) replaced a section of the keel; 8) rebuilt the main clutch; 9) caulked deck; 10) replaced or repaired the winch on the anchor; 11) reworked and/or repaired the engine room, including insulation, lighting, lining, painting and hauling. To perform these repairs, Petitioner places the value on materials utilized at approximately $18,000.00. Additionally, Petitioner estimated that the value of his labor involved in making the approximately $25,000.00. The articles of agreement for the purchase of the boat provides in pertinent part as follows: Witnesseth, that if the said party of the second part shall (purchaser) first make the payments and perform the covenants hereinafter mentioned on his part to be made and performed, the said party of the first part (seller) hereby covenants and agrees to convey and assure to the said party of the second part, his heirs, personal represent- atives or assigns, clear of all encumbrances, whatever by a good and sufficient bill of sale the Oil Screw vessel, Captain Deebold, o/n294675, gross tons-36, its equipment, hull, machinery, present insurance policies and business including fifty or more used rods and reels, one 3.5 KW Lister auxiliary generator, used and in need of repair, spare Jabsco water pump (used and in need of repair), spare 24 volt DC alternator, spare 24 volt DC main engine starter, spare stub shaft, three spare propellers (used and in need of repair) and a spare UHF Pierce- Simpson radio transceiver (used and in need of repair) and the said party of the second part hereby covenants and agrees to pay to the said party of the first part the sum of seventy-five thousand and 00/100 ($75,000.00) dollars in the manner following. . . . Nevertheless, Petitioner stressed that inasmuch as the Articles of Agreement provided that the seller only required Petitioner to maintain insurance coverage in the amount of $50,000.00 indicating that the purchase price was something less than $75,000.00 and in fact was no more than $50,000. Pursuant to the Articles of Agreement, the amount insurance coverage required was $50,000.00. Petitioner also declared that included in the $75,000.00 purchase price were other items which included the business (dock space), and reduced prices for miscellaneous supplies and fuel prices. In this regard, an examination of the Articles revealed that these items were provided Petitioner on a cost plus basis and the dock space was leased for an amount based on a rebate of the percentage of ticket sales or charter fees received. Petitioner ultimately sold the boat for 95,000.00. Petitioner initially tried to sell the boat for the sum of $105,000.00 of which $10,000.00 represented the value he (Petitioner) placed on the business. An examination of the accounting records introduced indicated that Petitioner placed the sum of $75,000.00 as the purchase price for the boat. Petitioner thought that his estimation of the labor and materials necessary to properly repair the boat were items that could be used as a setoff to reduce the amount of taxes due. Petitioner testified that he, in no way, intended to defraud the Respondent of taxes properly due and owing. Petitioner's testimony in this regard is credited.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that: Petitioner remit to the Respondent the proper interest as set forth herein in paragraph 4 of the Conclusions of Law. Petitioner remit to the Respondent an administrative penalty of 5 percent of the aggregate taxes due as set forth herein in Paragraph 5 of the Conclusions of Law. Petitioner not be held liable for payment of for allegedly filing a "false or fraudulent" return for reasons set forth herein in Paragraph 6 of the Conclusions of Law. RECOMMENDED this 27th day of February 1981, in Tallahassee, Florida. JAMES E. BRADWELL 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 27th day of February 1981.
The Issue By stipulation of the parties, at issue is whether the definition of "amusement machine operator" in Emergency Rule 12AER91-2(1)(a), Florida Administrative Code, and the effective tax rate prescribed in Emergency Rule 12AER91-2(2), Florida Administrative Code, constitute invalid exercises of delegated authority.
Findings Of Fact Petitioner, the Florida Amusement Vending Association, Inc. (FAVA), is a Florida corporation comprised of members of the amusement, game and vending industry. FAVA is primarily composed of businesses operating in the State of Florida. Respondent is the statutory entity with authority for administration of revenue laws of the State of Florida. General authority for that administration is set forth in Chapter 213, Florida Statutes. Section 213.05 of that Chapter provides specific authority for administration of the sales and use taxes at issue in this proceeding. Pursuant to enactment of Chapter 91-112, Laws of Florida, a sales tax was imposed on charges for the use of coin- operated amusement machines, effective July 1, 1991. A new paragraph (j) was added to subsection 212.05(1), Florida Statutes, codifying the imposition of the sales tax at the statutory rate of 6 percent on each taxable transaction or incident related to use of coin-operated amusement machines. Respondent adopted Emergency Rules 12AER91-2 and 12AER91-3, Florida Administrative Code, pursuant to authority in section 171 of Chapter 91-112, Laws of Florida. The emergency rules were filed with the Secretary of State by Respondent on June 27, 1991 and became effective July 1, 1991. AMUSEMENT MACHINE OPERATOR The term "operator" with regard to coin-operated amusement machines is defined in Section 171 of Chapter 91-112, Laws of Florida, and reads as follows: The term "operator" means any person who possesses a coin-operated amusement machine for the purpose of generating sales through that machine and who is responsible for removing the receipts from the machine. Emergency Rule 12AER91-2(1)(a), defines the term "operator" in identical language, with exception of the words "amusement machine", as follows: The term "amusement machine operator" means any person who possesses a coin-operated amusement machine for the purpose of generating sales through that machine and who is responsible for removing the receipts from the machine. Both statute and rule state that an "operator" means the person possessing the coin-operated amusement machine for the purpose of generating sales through the machine and empowered with responsibility for removal of receipts from the machine. While industry practices vary regarding the individual responsible for removal of receipts from these machines, the machine owner often retains a key and responsibility for removal of money from the machine. EFFECTIVE TAX RATE The tax imposed on charges for the use of coin- operated amusement machines at the statutory rate of 6 percent is levied on each taxable transaction or incident related to use of coin-operated amusement machines. In Florida, and nationally, these machines are typically operated based upon payment of charges of 25 cents, 50 cents, 75 cents, and one dollar. Respondent's effective tax rate is based upon the prices typically charged for use of the machines. Effective tax rates are prescribed in the case of businesses or industries where it is impractical to separately state the tax on each transaction. Brackets have been established by legislative enactment in Section 212.12(09), Florida Statutes, stating the tax due on charges due on other than even multiples of a dollar. The rates reported in Section 212.12(09) are for prices of less than one dollar and are stated in terms of amount or cents of tax, rather than percentages. For a transaction greater than nine cents, up to one dollar, the effective tax rate almost always exceeds the nominal rate of six percent. Sometimes that tax rate may be as high as 11.76 percent. Emergency Rule 12AER91-2(2)(c), Florida Administrative Code, in pertinent part, states: Operators of coin-operated amusement machines into which money is inserted will be considered to be remitting tax at the rate prescribed by law if their remittances on the charges for the use of the machines do not fall below the effective tax rates established by this rule. These rates recognize the variations resulting from multiple charges. It is presumed that the charge for use of the coin-operated amusement machine was adjusted to include tax. The rule goes on to state the effective tax rates for counties with a nominal tax rate of 6 percent, 6.5 percent and seven percent. Where these tax rates are in effect, the effective tax rates are, respectively, 7.81 percent, 8.38 percent and 8.46 percent. 1/ While a dealer or operator is considered to be remitting tax at the rate prescribed by law, he should be prepared to demonstrate, in the event an audit by Respondent reveals remittance at a lesser rate, that his remittance is correct. As established by Section 212.12(9), Florida Statutes, a nominal 6 percent tax rate, for a transaction totalling 25 cents, presumes that the selling price was 23 cents with 2 cents tax (an effective tax rate of 8.7 percent). Likewise, the statute also establishes the presumption that a fifty cent transaction consists of a selling price was 47 cents, with 3 cents tax (an effective tax rate of 6.38 percent). If the transaction totals 75 cents, the statutory presumption is that 5 cents of the total is tax (an effective tax rate of 7.14 percent). Transactions totalling one dollar are statutorily presumed under Section 212.12(9), Florida Statutes, to include 6 cents tax within that total (an effective tax rate of 6.38 percent). When Respondent exercises its statutory authority 2/ to establish effective tax rates for an industry, in the absence of documentation of transactions establishing the amount of tax in accordance with the statutory rates set forth in Section 212.12(9), Florida Statutes, a determination of financial and economic characteristics of the whole industry is made. In the amusement vending machine industry, price per play is known, but no data exists on the number of transactions occurring in Florida at a particular machine. As an example, a customer could put multiple quarters in a machine for multiple plays constituting one transaction, or many individuals could put one quarter each in a machine for many transactions. Effective tax rates will not give the same economic result for each taxpayer, e.g., the rate may be high or low for a particular taxpayer. However, the rate is calculated in such a manner that it is correct for the industry as a whole, i.e., the effective rate is set so that the industry as a whole remits taxes on gross receipts in the same manner as would occur if the industry remitted taxes on each individual transaction. While no specific data applicable to the amusement game industry in Florida exists regarding number of transactions occurring at specific prices, Florida's amusement and game industry is not significantly different or atypical of the national industry. National data on the industry is available and was considered by Respondent in formulating the effective rates in the emergency rules challenged in this proceeding. Data reported in the publication Vending Times is generally accepted by the amusement game industry within Florida and nationwide. Game revenues by type of game for the entire United States were published in 1989 in that publication. That data was adjusted by Respondent and used to predict 1991 estimated sales in Florida and nationwide. Total game sales revenue estimated for Florida in 1991 by Respondent was $425,420,000. National sales revenue was predicted to be $9,529,890,000. Data developed by Playmeter Magazine, a publication generally accepted in the national and local state industry, supports a conclusion that 44 percent of all operators of pinball machines have no plays costing more than 25 cents and 52 percent of all electronic games operate for only 25 cents. There is no data establishing the amount of national revenue generated by these machines. Respondent's amusement game sales data study separated revenue by categories of amusement machine. The categories were derived from the census of the industry reported in Vending Times. Study data incorporated typical price points or sales prices used in the industry as well as the categories of coin- operated amusement games reported in the national survey. Respondent's study derived an estimate of revenues by type of game by relying upon typical price points or sale prices in the industry, national survey results, and independent consultations with persons responsible for the national surveys. The estimate of the share of those revenues predicted to be generated in the State of Florida from the amusement vending machine industry was based upon Florida personal income and Florida population as a share of national personal income and national population. After determining revenue estimates for the State of Florida, Respondent adjusted the estimates to reflect inflation; the State of Florida's general share of economic activity, as modified by retirees and transient population; and a minor adjustment reflecting that dart playing is notably weaker in Florida than in other states. Respondent's estimate of revenues was necessary due to the lack of industry revenue data categorized by price and play volume. As previously noted, the machines typically operate upon payment of charges of 25 cents, 50 cents, 75 cents, and one dollar. Respondent estimated revenues at each of these price points for 1991 in order to establish effective industry wide tax rates for each price amount. Respondent derived revenue estimates for each price point from projections of revenue expected to be received from each type of game. Adjustments for multiple 25 plays were made. Respondent's industry average effective tax rate of 7.81 percent set forth in Rule 12AER91-2 is derived from a calculation of a weighted average of effective tax rates for typical sales prices within the industry. Petitioner basically takes issue with Respondent's findings that the vast majority of industry revenue results from 25 cent transactions. While asserting that the data relied upon by Respondent in arriving at revenue estimates is out-dated, testimony presented by Petitioner that newer, higher revenue generating machines have taken the market in the State of Florida (thereby dictating application of a lower effective rate on the basis that most revenues now allegedly come from 50 cent or higher priced game play) was unsupported by any alternative documentation or research from any disinterested third party source and is not credited.
Findings Of Fact Florida Export Tobacco Co., Inc., Petitioner, operates, as a concessionaire, duty-free stores at Miami International Airport. The premises are owned by the Dade County Aviation Department and the stores are leased to Petitioner pursuant to the terms of a lease and concession agreement dated 19 July 1977, effective 1 August 1977 and continuing until 30 September 1987. (Exhibit 1 to Deposition) Pursuant to this agreement Petitioner occupies six stores and additional warehouse space at the Terminal Building and the International Satellite Facility. Article II in Exhibit 1 entitled Rental Charges and Payments provides for rental payments for each store and space occupied based upon a fixed fee of $X per square foot per year with the dollar per square foot cost varying with the space occupied. In addition to this minimal rental fee, Section 2.03 of this agreement provides: County Profit Participation: As additional consideration for the rights and privileges granted Concessionaire herein, Concessionaire shall pay the County a portion of its profits. As a convenience and in order to eliminate requirements for detailed auditing of expenditures, assets and liabilities and in order to provide an even flow of annual revenues for budgeting and bond financing purposes, said portion of the profits of the Concessionaire shall be calculated as the amount by which sixteen percent of the monthly gross revenues, as defined in Arti- cle 2.07, exceeds the sum of monthly rental payments required by Articles 2.01 and 2.04. Concessionaire shall pay such portion of its profits to County by the twentieth (20th) day of the month following the month in which the gross revenues were received or accrued. For the period October 1, 1982 through September 30, 1987, the percent of monthly gross revenues to be paid by Concessionaire as a portion of its profits shall be eighteen percent, payable and calculated in the same manner as above. The lessor provides air conditioning, garbage and sewage disposal facilities, security, and many other services to the lessee in addition to the space leased. From October 1976 through September 1977 Petitioner paid $40,499.66 in additional sales tax over the guaranteed minimum amount; for the year ending September 1978 this additional sales tax was $66,284.85; for the year year ending September 1979 this additional sales tax was $93,837.15; and for the year ending September 1980 this additional sales tax was $137,521.87. (Exhibit 2 to the Deposition) As the owner of the facility Dade County has the option of operating the various facilities and services available to the public or having these operated by a concessionaire. Dade County has opted for the manner it believed more profitable to the county and in the case of the duty free stores this has resulted in leasing the space to a concessionaire. The hotel at the airport is operated by the Aviation Department under a management contract. It is Petitioner's and Dade County's position that a sales tax should not be paid on the county profit participation charges because, if the Aviation Department operated the stores there would be no sales tax on any rental income and the County operates the facilities at the airport so as to maximize profits to the county. Therefore by requiring the concessionaire to pay sales tax, this reduces the profit available to share with the County.
The Issue The issue for determination is whether Petitioner is liable for the Local Option Tourist Development Tax assessment as set forth by Respondent's Notice of Reconsideration and Notice of Final Assessment, dated March 10, 2005, for the audit period October 1, 2000 through September 30, 2003.
Findings Of Fact At all times material hereto, the Resort operated as a hotel licensed under the provisions of Chapter 509, Florida Statutes, and was located at 501 East Camino Real, Boca Raton, Palm Beach County, Florida 33432. At all times material hereto, the Resort’s taxpayer identification number was 65-0762249 and Florida tax registration number was 60-03-1871843-99. No dispute exists that Palm Beach County enacted the TDT, authorized by Section 125.0204, Florida Statutes. No dispute exists that TDT is levied on room rental revenues in Palm Beach County pursuant to Section 125.0104, Florida Statutes. The Resort is subject to and is a dealer under the TDT. Pursuant to an ordinance enacted by Palm Beach County, the Resort is obligated to collect and remit to Palm Beach County the TDT due on taxable transactions. A TDT audit of the Resort’s business was performed by the Tax Collector covering the period from October 1, 2000 through September 30, 2003. The Tax Collector relied upon the information and documents provided by the Resort in performing the audit. During the audit period, guests desiring to reserve and book a room at the Resort were required to pay a deposit, which guaranteed the reservation, of one night’s room within 10 days of making the reservation. No matter what the length of stay, the deposit did not vary. The Resort did not collect any sales tax or TDT on the deposits. A deposit confirmation form (Confirmation Form) always confirmed the deposit. The front of the Confirmation Form contained the abbreviation “Guar” for guaranteed and, among other things, referred the guest to the reverse side of the Confirmation Form for important information (“PLEASE SEE REVERSE SIDE FOR IMPORTANT ADDITIONAL INFORMATION”). The guarantee, as indicated on the back of the Confirmation Form, was that the accommodations were guaranteed to the confirming-guest from the scheduled date of arrival through 2:00 a.m. of the next day. The back of the Confirmation Form provided in pertinent part: DEPOSITS – A deposit of one night’s room revenue is required within 10 days of making a reservation. Advance deposits made via credit card will be billed at the time of booking. Your deposit will hold a room until 2 A.M. of the day following your scheduled arrival date. Upon arrival, the deposit is applied to your last confirmed night of the reservation. In the event of an early departure, the deposit is non- refundable unless the Resort is notified prior to or at check-in. CANCELLATIONS – Deposits are refundable in the event of cancellation, providing notice is received at least 14 days prior to scheduled arrival date between January 4th to April 30th, 7 days between May 1st to May 27th and October 1st to December 19th, and 72 hours between May 28th to September 30th. Cancellations, without penalty, for the Holiday/Christmas period (December 19th through January 3, 2004), must be received prior to November 30, 2003 or deposit will be subject to full forfeiture, in accordance with established resort policies. Please be sure to record your cancellation number to insure proper return. ACCOMMODATIONS – We will make every effort to meet requests for specific room types, views, and bedding preferences, however, on occasion, we cannot always accomplish such requests, and reserve the right to provide alternate accommodations. For the majority of the audit period, forfeited deposits were identified as “no-show” revenue. A block of rooms may be held available and reserved for a group. Fees are charged for unused rooms within a reserved room block. These fees are “attrition fees.” The Resort was unable to separately identify no-show revenue attributable to reservations for which persons failed to check-in by the cutoff day and time, as opposed to reservations for which persons canceled but failed to cancel within the required time-period. Furthermore, the Resort was unable to separately identify the general category of no-show revenue attributable to unused rooms within a reserved room block. For the first four months of the audit period, the Resort asserted that it mistakenly included attrition fees in the no-show revenue. For the remainder of the audit period, the Resort asserts that attrition fees were not included in the no- show revenue. The Resort was unable to separately identify attrition fees in the no-show revenue. Therefore, the attrition fees could not be separately factored out of the no-show revenue. Consequently, an inference is drawn and a finding of fact is made that, as to the first four months of the audit period, all revenue shown as no-show revenue is considered as no-show revenue. During the audit period, the Resort identified no-show revenue in its monthly financial reports totaling $2,139,252.00. No TDT was collected by the Resort on the no-show revenue of $2,139,252.00 collected during the audit period. No dispute exists that, during the audit period, the TDT was due on the rental of the Resort’s rooms and that the TDT was collected and remitted to the Tax Collector by the Resort. Having conducted the audit, on March 1, 2004, the Tax Collector issued a “DRAFT” Notice of Intent to Make Audit Changes (Draft Notice). The Draft Notice indicated, among other things, that $88,775.28 in TDT was due, which included TDT in the amount of $85,570.08 on the no-show revenue of $2,139,252.00 and included denied exempt rental in the amount of $3,205.20; and that a credit in the amount of $19,583.64 was due, as an overpayment of tax, discovered by the auditor. Furthermore, the Draft Notice indicated that, as a result, a proposed total tax assessment was due in the amount of $149,252.07, which included penalties in the amount of $44,387.64 and interest in the amount of $35,672.79 as of March 31, 2004, with additional interest of $57.74 per day through the date of the Resort’s payment. After the issuance of the Draft Notice, the Tax Collector’s auditor met with a representative of the Resort. Of particular interest to the Resort was to return to its monthly financial reports and to separately indicate in the monthly financial reports the categories of no-show revenue representing failure to check-in, failure to timely cancel, and failure to use rooms in block (attrition revenue). However, the Resort was unable to identify and separately indicate these categories of revenue. Subsequently, the Resort was to provide the Tax Collector’s auditor with an eight-month sample of financial records “to address the issue of no show revenues versus cancellation fees.” The eight-month sample would “represent the transactions for the entire audit period.” However, the Resort was unable to provide data that would allow for the separation of the categories. The sample was not provided. After the sample was not provided by the Resort, the Resort took the position that none of its no-show revenue was subject to the TDT. On June 7, 2004, after the Resort changed its position, the Tax Collector issued a Notice of Intent to Make Audit Changes (Notice). The Notice indicated, among other things, that, as of June 21, 2004, the tax assessment for the audit period was in the amount of $153,986.75, which represented TDT on no-show rentals in the amount of $85,570.08, a denial of exempt rentals in the amount of $3,205.20, a credit for overpayment of TDT in the amount of $19,583.64, penalties in the amount of $44,387.64, and interest in the amount of $40,407.47, plus additional interest of $57.74 per day through the date of payment. As to no-show revenues, the Notice indicated that such revenues were taxable and also cited, as supporting authority, Florida Administrative Code Rules 12A-1.061(5)(b) and 12A- 1.061(5)(b)2. Citing Florida Administrative Code Rule 12A- 1.061(5)(b), the Notice provided the following: “Rental charges or room rates include deposits or prepayments that guarantee the guest or tenant the use or possession, or the right to the use or possession, of transient accommodations during a specified rental period under the provisions of an agreement with the owner or owner’s representatives of transient accommodations. The owner or owner’s representative is required to provide transient accommodations to any guest or tenant that enters into such an agreement and pays the required prepayment or deposit, even when the guest or tenant does not occupy the accommodation.” Citing Florida Administrative Code Rule 12A-1.061(5)(b), the Notice provided the following: “Example: A hotel guarantees that it will provide room accommodations on a designated date to potential guests that make reservations and pay a required room deposit. To receive a refund of the required room deposit, the potential guest must cancel his or her reservation by 4:00pm of the designated date. A potential guest that has made reservations and has paid the required room deposit fails to arrive at the hotel on the designated date to use the reserved room accommodations. Because the potential guest fails to cancel the reservations, the guest forfeits the room deposit. Even though the guest did not occupy a room at the hotel, the forfeited room deposit is subject to tax.” Further, the Tax Collector indicated in the Notice that the “stated policy of [the Resort] that a guest’s deposit will hold a room (which is a guarantee to the guest that they will have a room available) until the day following their scheduled arrival date. . . whether or not the guest shows up. It is irrelevant whether the guest shows up or not on the scheduled date of arrival, their deposit has paid for a room and this is a taxable transaction.” As to attrition and cancellation fees, the Notice indicated that such fees were considered "penalties" and were, therefore, "not taxable" revenue “because if a guest cancels their reservation too late, their deposit is not refunded even though a room is not held for them.” The Resort requested an audit conference. On August 6, 2004, an audit conference was held at which the parties were unable to reach an agreement. On August 9, 2004, the Tax Collector issued a Notice of Proposed Assessment (Proposed Assessment). The Proposed Assessment indicated that the total assessment, including tax, penalty and interest accrued through August 20, 2004, was in the amount of $157,451.15. Additionally, the Proposed Assessment contained, among other things, a re-citation of Florida Administrative Code Rules 12A-1.061(5)(b) and 12A-1.061(5)(b)2. The Resort protested the Proposed Assessment. By letter dated August 8, 2004, the Resort requested from the Department of Revenue (DOR) a Letter of Technical Advice (LTA) regarding the taxation of cancellations and no- shows.2 By letter dated October 27, 2004, a representative of DOR issued a LTA on the facts and circumstances presented to DOR by the Resort, providing that the LTA was “not an official statement or opinion of this Department [DOR] but, instead, represents the opinion of the writer” and that if the Resort wished “an official binding statement on the issues, you may file a written request for a Technical Assistance Advisement . . . .”3 A finding of fact is made that the LTA was not binding on the parties. The LTA was not an opinion of DOR or a statement of policy by DOR on the taxation of cancellations and no-shows. The Resort did not request a Technical Assistance Advisement from DOR. On January 4, 2005, the Tax Collector issued a Notice of Decision (Decision) denying the Resort’s protest and a Notice of Final Assessment (Final Assessment). The Decision contained, among other things, a part of the provision of Florida Administrative Code Rule 12A- 1.061(3)(a)—“Rental charges or room rates for the use or possession, or the right to the use or possession, of transient accommodations are subject to tax. . .”—and the provisions of Florida Administrative Code Rule 12A-1.061(5)(b). The Final Assessment indicated that the total assessment was in the amount of $141,515.48, plus additional interest of $19.40 per day, as of January 1, 2005, through the date of payment. The total assessment was reduced due to the Tax Collector discovering an error in the calculation of the interest. The Resort requested a reconsideration of the Final Assessment. The Tax Collector denied the request for reconsideration. The Resort requested a hearing pursuant to Chapter 120, Florida Statutes (2005).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Palm Beach County Tax Collector enter a final order affirming the final assessment of Local Option Tourist Development Tax against Boca Raton Resort and Club, for the audit period October 1, 2000 through September 30, 2003, in the total amount of $141,515.48 (which includes tax, penalties, and interest), plus additional interest of $19.40 per day, as of January 1, 2005, through the day of payment. DONE AND ENTERED this 1st day of June, 2006, in Tallahassee, Leon County, Florida. S ERROL H. POWELL 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 1st day of June, 2006.
Findings Of Fact Wet 'N Wild operates a water-oriented recreational amusement park known by the same name. The park is situated on about twelve acres of land, including a portion of a small lake, in Orange County, Florida. The park consists primarily of several in-ground pools and waterslides, as well as a beach on the lake. By a Purchase and Lease Agreement dated March 15, 1976, Wet 'N Wild agreed to sell to Mark IV Properties, Inc. (hereafter Mark IV), a California corporation, the subject twelve acres of land, including all buildings, improvements and fixtures attached to that land. Mark IV simultaneously agreed to lease the improved land back to Wet 'N Wild for a period of twenty years with an option to renew the lease for an additional ten years. The conveyance subsequently took place, pursuant to the terms of the Purchase and Lease Agreement. By a Lease Agreement dated February 28, 1977, Mark IV then leased the park to Wet 'N Wild, as had been agreed. The Lease Agreement requires that Wet 'N Wild pay rent in accordance with a monthly rental schedule incorporated as an exhibit to the Lease Agreement. Additionally, the Lease Agreement requires Wet 'N Wild to pay the ad valorem taxes on the land. Wet 'N Wild leases the park from Mark IV on a turnkey basis. All of the pools and the waterslides now present on the land were conveyed by Wet 'N Wild to Mark IV pursuant to the Purchase and Lease Agreement. The only significant addition to the park since that conveyance is the so-called Kamikaze Slide. This waterslide was separately conveyed to Mark IV upon its completion in November 1978. Two provisions in the Lease Agreement at least implicitly acknowledge Mark IV's ownership interest in the pools and waterslides. First, the lease requires Wet 'N Wild to maintain fire and extended hazard insurance on the improvements. Second, Mark IV is obligated to replace or repair the improvements in the event of their partial or total destruction, and, pending completion of the repairs or replacements, the rent is proportionately reduced. All of the pools and waterslides are fixed to the land in such a fashion that their removal would cause substantial injury to the premises. For example, the Kamikaze Slide is a six-story high waterslide emptying into a concrete pool of water built into the ground. The slide is supported by large steel beams and poles anchored deeply into the ground. The other pools and waterslides, all of similar physical dimensions, are equally affixed to the property. Wet 'N Wild derives its primary source of income from entrance fees which guests pay to enter, use and occupy the park. Once having paid this fee, a guest is entitled to the use and occupancy of the park without further charge. The sole exception is a rental fee paid for the use of small boats on the lake, for which rental of tangible personal property Wet 'N Wild collects and remits to the DOR a separate tax. The guest is denied access to incidental areas of the park, such as those reserved for operating machinery or maintenance. From its inception, Wet 'N Wild has duly collected and remitted to the Department an excise tax on entrance fees. The revised proposed assessment is computed exclusively on the basis of the lease payments, including ad valorem tax payments, made by Wet 'N Wild under the Lease Agreement.
Recommendation DONE AND ENTERED this 31st day of October 1979 in Tallahassee, Florida. MICHAEL R. N. McDONNELL Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of October 1979. COPIES FURNISHED: W. Kelly Smith, Esquire Robert E. Meale, Esquire Suite 1444, CNA Tower 255 South Orange Avenue Orlando, Florida 32801 Barbara Staros Harmon, Esquire Assistant Attorney General Room LL04, The Capitol Tallahassee, Florida 32301
Findings Of Fact The Tax-Credit Allocation Program Section 42(h)(3) of the Internal Revenue Code of 1986, as amended, provides for federal income tax credits for the development of low income housing. The tax credits are allocated among the states based on state population. Respondent allocates the low income housing federal income tax credits available in Florida. The present case involves the 1992 tax credit- allocation cycle, which was unusual in one respect. The relevant provisions of Section 42 of the Internal Revenue Code are due to expire on June 30, 1992. Respondent expedited the application and evaluation process for the 1992 cycle because of uncertainty concerning whether credits not allocated by June 30 can be allocated after the expiration of Section 42. As in past cycles, applicants in the 1992 cycle sought more tax credits than Respondent had to allocate. In some categories, the sum of tax credits sought by applicants is four times greater than the total available tax credits. Since 1990, as a result of changes in the Internal Revenue Code, Respondent has implemented a competitive process to determine which applicants should be awarded tax credits. In general, the selection process consists of an application and evaluation process followed by an underwriting process involving only those applicants and projects that were determined to be in the funding range after completion of the application and evaluation process. The objective of both stages is to identify proposed projects that offer the best opportunities for the development of affordable housing in Florida. This case involves only the first stage in which Respondent evaluates the application. The Subject Applications General Each Petitioner is a limited partnership formed to develop a low income rental housing project in Osceola County. The Ravenwood project is in the unincorporated county, and the Oakcrest project is in St. Cloud. Ronnie C. Davis is the general partner of both partnerships and controls the activities of these entities. His accountant, Steven Scott, has worked closely with Mr. Davis in connection with these and numerous other similar projects. As it had done successfully in past cycles, Petitioners applied to obtain federal income tax credits and sell the limited partnership interests (with tax credits) to a third party. The third party would combine Petitioners' projects with others like them and syndicate limited partnership interests to individual investors seeking, among other things, the available tax credits in order to lower their federal income tax liability. This indirect federal subsidy of development costs is intended to encourage the development of affordable housing. The application completed by Petitioners and other applicants in the 1992 cycle consists of numerous questions divided into 16 Forms. Each applicant receives a maximum of 1285 points based on the answers to the questions. Varying amounts of points are available for 12 of the 16 Forms. (Four Forms seek background information or constitute request forms.) The Ravenwood Application Form 1 of the Ravenwood application, which is dated January 30, 1992, consists of summarized information, which, where important, is requested elsewhere in the application. Due to its background nature, Form 1 involves no points. Form 1 of the Ravenwood application describes the proposed project as consisting of 181 units with eight units each in 23 different buildings. (Three units are reserved for on- site workers.) The project is situated on 11 acres and is projected to cost $9,537,049. Petitioner Ravenwood seeks $858,334 in federal income tax credits. Form 1 states that there is federal, state, or local financing "committed or to be committed to this Project." The financing is SAIL financing in the amount of $1.3 million representing 13.6% of the total project cost. Form 1 also states that the present owner acquired the property by gift on November 18, 1991. Form 4 addresses project feasibility and ability to proceed. Form 4 offers a maximum of 225 points. With Form 5, which concerns project funding, Form 4 is worth the most points of all the Forms. Form 4 of the Ravenwood application states, among other things, that the developer controls the site by County deed, which is intended to serve the purpose of a warranty deed. Attached as an exhibit to Form 4 is a letter dated November 20, 1991, from the Osceola County Administrator to Mr. Davis accompanying the delivery of a deed to the property from Osceola County to Ravenwood of Kissimmee, Ltd. The deed, which is dated November 18, 1991, recites as consideration "general benefit of the public." The deed conveys title to 11 acres "conditioned upon the grantee being awarded a state apartment incentive loan and tax credits no later than December 31, 1992. If this condition is not met by December 31, 1992, the property described herein shall revert to the grantor." The manner by which the limited partnership acquired the property is also covered in Form 6, which addresses local government contributions and planning efforts. Form 6 is worth 155 points, which is more than any other Form except Forms 4 and 5. The first part of Form 6 is directed to local government contributions. The first portion of the first part states: Attach evidence of any contribution or recommendation. Maximum points shall be awarded only when evidence of a contribution includes a signed statement from a chief elected official or his designee detailing the contribution from the appropriate local government. The value of the contribution must be stated in terms of a percentage of cost savings to the project. . . . Form 6 of the Ravenwood application answers affirmatively the question, "Has this project received any contributions from a local government?" In response to the request, "Describe the type of contribution," the application states: "Land as well as other government support and assistance." Form 6 states that the value of the contribution is $1,089,000. In response to a question as to how the value was calculated, the application reports that the value was calculated by a "local realtor." The application notes that the total project cost is $9,537,049. Form 6 contains a scoring sheet that awards points based on the ratio of the value of the local government contribution to the total project cost. If the local government contribution amounts to at least 10% of the total project cost, then the maximum of 75 points are earned for the first part of Form 6. Lower percentages earn fewer points, as follows: 9%-- 67.5 points, 8% 60 points, 7%--52.5 points, 6%--45 points, 5%-- 37.5 points, 4%--30 points, 3%-- 22.5 points, 2%--15 points, and 1%--7.5 points. As support for the information provided in the first part of Form 6, the application contains various attachments in the back of Form 6. One attachment is a letter dated November 18, 1991, from Barney Veal, Broker/President of ERA--Osceola Brokerage Co., Realtor. The Veal letter, which is addressed to Mr. Davis, states in its entirety: Per your request, and after careful consideration, I have reviewed the value of the land donated to you by the Osceola County Board of County Commissioners. Weighted consideration was given for the following: *Development Improvements to the municipal water system *Development Improvements to the municipal sewer system *Development Improvements to the transportation system *Superior site use through off-site drainage *Ease of access via the John Young Parkway Extension to the "high tech" corridor of neighboring Orange County *Property aesthetics This property contains 11 acres, and has a current density of 18 units per acre, thus allowing construction of 198 multi-family units. Therefore, the estimated valuation is approximately $5500 per residential unit, which equals a total amount of 1,089,000 [sic]. Another attachment to Form 6 is a letter from Ron Howse, P.A., an engineering and land planning firm. Mr. Howse, whose office is in St. Cloud, incorporates Mr. Veal's letter and provides the above-described responses to the questions contained in the first part of Form 6. The remaining attachments to Form 6 address the second part, which involves local government planning efforts with respect to affordable housing. This part of Form 6 is not relevant to the subject case. The Oakcrest Application The Oakcrest application, which is also dated January 30, 1992, is similar to the Ravenwood application. Form 1 of the Oakcrest application describes the proposed project as consisting of 189 units with eight units each in 24 different buildings. (Three units are reserved for on-site workers.) The project is situated on 19.4 acres and is projected to cost $10,164,207. Petitioner Oakcrest seeks $914,778 in federal income tax credits. Form 1 states that there is federal, state, or local financing "committed or to be committed to this Project." The financing is SAIL financing in the amount of $1.4 million representing 13.8% of the total project cost. Form 1 also states that the present owner acquired the property by gift on November 21, 1991. Form 4 of the Oakcrest application states, among other things, that the developer controls the site by warranty deed. Attached as an exhibit to Form 4 is a letter dated November 21, 1991, from Larry F. Hopper, Executive Director of the St. Cloud Area Chamber of Commerce. The letter is to Mr. Davis and accompanies the delivery of a deed to the property from the St. Cloud Housing & Revitalization Agency, Inc. to Oakcrest of St. Cloud, Ltd. The deed, which is dated November 21, 1991, conveys title to 19.4 acres conditioned upon the grantee being awarded a state apartment incentive loan and tax credits to construct no less than 193 units, with construction thereon to commence no later than December 31, 1992. If the above cited incentive loan and tax credits are not received and construction not begun by December 31, 1992, the property described herein shall revert to the grantor. Form 6 of the Oakcrest application answers affirmatively the question, "Has this project received any contributions from a local government?" In response to the request, "Describe the type of contribution," the application states: "Land Contribution, as well as other government support and assistance." Form 6 states that the value of the contribution is $1,018,000. In response to a question as to how the value was calculated, the application reports that the value was calculated by a "local realtor." The application notes that the total project cost is $10,164,207. As support for the information provided in the first part of Form 6, the application contains various attachments in the back of Form 6. One attachment is a letter dated November 18, 1991, from Barney Veal, Broker/President of ERA--Osceola Brokerage Co., Realtor. The Veal letter, which is addressed to Mr. Davis, states in its entirety: Per your request, and after careful consideration, I have reviewed the value of the land donated to you by the St. Cloud Housing and Revitalization Agency, Inc. Weighted consideration was given for the following: *Development Improvements to the municipal water system *Development Improvements to the municipal sewer system *Development Improvements to the transportation system *Location Proximity to a new growth area *Property Aesthetics This property contains 19.4 acres, and has a current density of 10 units per acre, thus allowing construction of 194 multi-family units. Therefore, the estimated valuation is approximately $5250 per residential unit, which equals a total amount of $1,018,500. Another attachment to Form 6 is a letter from Ron Howse, P.A., an engineering and land planning firm. Mr. Howse, whose office is in St. Cloud, incorporates Mr. Veal's letter and provides the above-described responses to the questions contained in the first part of Form 6. Another attachment to Form 6 of the Oakcrest application is a copy of the first two pages of the Articles of Incorporation of the St. Cloud Housing & Revitalization Agency, Inc., a not-for-profit corporation. According to the articles, the not-for-profit corporation was incorporated by the St. Cloud Area Chamber of Commerce, Inc. Relevant Practices of Respondent The head of Respondent is its Board of Directors. Each review cycle, the Board appoints a Review Committee, which normally consists of five or six persons. Different employees of Respondent serve on the Review Committee each year. The Review Committee assigns scores for each Form of each application. These determinations are then submitted to the Board of Directors for further action. Certain practices have evolved in connection with the scoring of applications. To the extent that any of these practices may constitute nonrule policy, Respondent has amply explicated the practices, which appear to be necessary and proper to the discharge of its responsibilities in the allocation of low income housing federal tax credits. First, the Review Committee generally limits its review of an application to the material contained within the four corners of the application. The reason for this practice is that the Review Committee is typically operating under time pressures. However, there are two circumstances in which the Review Committee may refer to information not contained within the application. The first and more frequent exception to the general rule is if something is unclear in the application. In this case, a member of the Review Committee or staff of Respondent may contact the applicant to obtain a clarification. Sometimes, the contact may be with a third party, such as a third-party lender to whom questions concerning the scope of a commitment letter may be directed. By limiting these inquiries to clarifications, Respondent avoids the possibility of the eliciting information that constitutes post-deadline amendments of material aspects of the application. The second exception to the general rule is when a third party informs the Review Committee that certain information contained in an application is inaccurate. To a great extent, the accuracy of the contents of the application is checked in the underwriting stage of the allocation process. But, if time permits, the Review Committee or other representatives of Respondent may, if they so choose, undertake a necessarily limited investigation of statements in an application. In the couple of years that the allocation process has been competitive, the only application rejected as "untrue," aside from Ravenwood and Oakcrest, was an application for a project known as Woodside. Ironically, this application appears to have been challenged by Mr. Davis and Mr. Ginsburg, 1/ who alerted Respondent to the fact that, contrary to representations contained in the application, the Resolution Trust Corporation, not the developer, owned the site. 2/ It appears that, due to timing, the Board itself rejected the Woodside application because the true facts were uncovered during the underwriting stage, rather than the application and evaluation stage. It appears that, also during underwriting, another application was rejected due to ineligibility, if not actual untruthfulness. In that case, an application for a project known as Golden Acres was rejected when representatives of the Board checked the project site and confirmed that the buildings had already been placed in service and thus would not be eligible for any or a full tax credit. Except for one case in which the wrong application form was used, the record does not disclose if other applications have been summarily rejected for reasons other than satisfying a scoring threshold described in the application form and irrelevant to this case. Rather than reject an application, at least prior to the underwriting process, the Review Committee and Board will often rescore an application. Not infrequently, a developer submits an application containing information that may be described, in the words of one witness, as optimistic in nature. If the application contains sufficient material for the Review Committee or Board to rescore a Form, possibly with the assistance of a clarification from the applicant or a third party, the application will be rescored so that a lower score results. It is not always easy to describe what renders an application "untrue." One example of an untrue application would be if an applicant fabricated a loan commitment letter when no such commitment had been made. On the other hand, if the applicant claimed more points than the letter, on its face, justified due to its numerous contingencies and conditions, the application would clearly be rescored. Although it may contain inaccuracies, a true application must disclose all material facts so that each Form may be scored reasonably accurately. The materiality of an omitted fact depends largely on the importance and purpose of the requested information. The decisions as to what information is important, material, or untrue and when to reject and when to rescore an application must be based on a balancing of at least two considerations. The first is that the purpose of the application and evaluation and underwriting processes is to ensure that the available tax credits go to the best projects, in terms of meeting the critical needs of low income persons for affordable housing. Superior applications should not be rejected too readily. The second is that the integrity of the evaluation process would be compromised if the "untrue application" language is interpreted so that all instances of applicant untruthfulness are reduced to over-optimism, thus meaning that untrue applications would be always rescored and never rejected. Without the potential penalty of rejection, the process by which applications are evaluated and projects underwritten would become increasingly burdened by the chore of detecting growing numbers of misrepresentations. At some point, the resources of Respondent would become overtaxed, misrepresentations would probably escape detection, and the overall objective of the entire program--facilitating the availability of affordable housing--would eventually be defeated. V. Preliminary Scoring of the Applications in the 1992 Cycle In the present case, on or about February 27, 1992, the Review Committee tentatively scored all of the applications. For medium counties, 3/ eight applications fell within the funding range, one application fell partly in the funding range, 16 applications meeting the scoring threshold fell outside the funding range, and one application failed to meet the scoring threshold. The tentative scoring assigned Ravenwood 1190 points and Oakcrest 1153.87 points for the two highest scores among the nine projects tentatively allocated, in whole or in part, the tax credits requested. On March 6, 1992, the Board of Directors reviewed the tentative scoring determined by the Review Committee. By this time, representatives of Respondent had determined that the contribution of the land from the local governments, as asserted in both applications, was not as represented. The Board decided to reject both applications. If the Ravenwood and Oakcrest applications had been merely rescored so as to lose all 75 points for the first part of Form 6, they would have remained in the funding range. In fact, Ravenwood would have remained first, and Oakcrest would have been third, tied with another project. Respondent has implemented an appeal process by which scores set by the Board, following review of the tentative scoring of the Review Committee, may be re-evaluated by the Board. In the 1992 cycle, 36 applicants took advantage of this process. The appeals hearing, which took place on May 1, 1992, resulted in the issuance of the final scoring tabulation, which is Petitioner Exhibit 14. However, no material changes took place with respect to medium counties, and the Ravenwood and Oakcrest applications remained rejected. Facts Not Disclosed on Applications Ravenwood The basic problem with the Ravenwood application is that it states that the local government, Osceola County, contributed the raw land to the applicant. In substance, the County has conveyed nothing to the Ravenwood limited partnership. Through a series of step transactions, Mr. Davis, using an agent, obtained title to the land from a genuine third party, conveyed the land to the County, and caused the County to convey the land to the Ravenwood limited partnership. The few details of the transactions that are relevant begin with the fact that, by contract dated April 9, 1991, Mr. Davis agreed to pay the original owners $300,000 for 12.5 acres. On October 30, 1991, Mr. Davis assigned the contract to his accountant's brother, Jimmy Alan Scott. By quitclaim deed acknowledged November 9, 1991, Mr. Scott quitclaimed any interest he had in the land to Osceola County. On November 18, 1991, Mr. Davis, Mr. Scott, and Osceola County entered into a trilateral agreement. The parties agreed that Mr. Scott would convey the property to the County, which would convey the property to the Ravenwood limited partnership. Also, the County agreed that if the property reverted to it under the condition to be contained in its deed to the partnership, then it would reconvey the property to Mr. Scott. Another significant aspect of the trilateral agreement is that the deeds from Mr. Scott to the County and the County to the Ravenwood limited partnership are to be "held in escrow pending the County's negotiations with [other parties including the original owners of the subject land] to acquire additional property for the recreational complex." By letter dated March 2, 1991, the attorney for the Ravenwood limited partnership discloses that the escrow had not been broken, inferentially because escrow conditions remained unsatisfied, and the deeds had not been recorded. On November 16, 1991, Mr. Davis lent Mr. Scott the funds necessary to purchase the land from the original owners. A note for the amount was to be forgiven if Mr. Scott donated the land to Osceola County. By warranty deed dated January 6, 1992, the original owners conveyed the land to Mr. Scott, who, on the same date, conveyed the land to the County. The two deeds were identical except that deed into the County contains a reverter clause covering all but a small part of the property. The condition is that the majority of the land reverts to Mr. Scott if construction of no less than 184 units of affordable housing does not begin by December 31, 1991. The only deed from the County to the Ravenwood limited partnership is dated November 14, 1991. Copies of the deed were produced at the hearing and attached to the Ravenwood application in Form 4. In the instrument, the County "has granted, bargained and sold" the subject land to the Ravenwood limited partnership conditioned upon the partnership "being awarded a state apartment incentive loan and tax credits no later than December 31, 1992. If this condition is not met by December 31, 1992, the property described herein shall revert to the grantor." There are no warranties, such as a warranty of title, contained in this deed. The underlying problem with the Ravenwood application is as basic as the problem in the Woodside application, where Mr. Davis objected that the RTC, not the applicant, owned the land, contrary to the assertions contained in the application. The County has not contributed anything to the Ravenwood limited partnership because the partnership does not own the land. First, unspecified escrow conditions have left uncompleted the conveyances to the County and the Ravenwood limited partnership. Tied up in escrow, the deeds have not been delivered, which is as basic an aspect to the conveyance of property as is their execution. Second, the application shows that the limited partnership owns the land as a result of a deed from Osceola County. The deed predates the date on which the original owners conveyed the land to Mr. Scott and he purportedly, using an escrow arrangement, conveyed the land to Osceola County. In a deed without any warranties, it is questionable whether the doctrine of after- acquired interest or estoppel by deed would operate here. In light of the problems identified in the preceding two paragraphs, the overstatement problem is less substantial. Although the County has contributed something in the way of services, there is no evidence that the contribution of such services anywhere approaches the claimed amount of $1,089,000, which is more than three times the value of the land as of April, 1991. However, in view of the failure of the Ravenwood limited partnership to obtain any title to the land, the value of the contribution is not $1,089,000, but zero. Oakcrest The basic problem with the Oakcrest application also involves the contribution of raw land to the partnership. The land has not yet been conveyed to the partnership. The relevant details of the Oakcrest transactions are similar to those of the Ravenwood transactions. On November 18, 1991, Mr. Scott and a genuine third party entered into an agreement for deed for 19.4 acres for payment of $300,000. The condition of a closing, which is set for no later than January 5, 1993, is that the Oakcrest limited partnership be awarded tax credits no later than December 31, 1992. Notwithstanding its title as an agreement for deed, the subject instrument operates like a purchase and sales contract, in part because Mr. Scott has not placed any money unconditionally at risk and a closing is set at a point in the future once certain contingencies have been satisfied. On November 19, 1991, Mr. Scott conveyed by warranty deed to the St. Cloud Housing and Revitalization Agency, Inc. the same 19.4 acres subject to the condition that the "grantee [i.e., the Agency] being awarded a state apartment incentive loan and tax credits to construct no less than 193 units with construction thereon to commence no later than December 31, 1992." If the condition is unsatisfied, it provides for the property to revert to Mr. Scott. On November 21, 1991, the St. Cloud Housing and Revitalization Agency, Inc. conveyed by warranty deed to the Oakcrest limited partnership the same 19.4 acres subject to the same condition concerning 193 units. The Oakcrest transfers are ineffective and leave the Oakcrest limited partnership with no interest in the land and thus in receipt of no contribution from a local government. The application, which adequately discloses the nature of the St. Cloud Housing and Revitalization Agency, Inc. as other than a local governmental entity, contains only the warranty deed from the Agency to the Oakcrest limited partnership. The omission of the sales contract (i.e., Agreement for Deed) leaves the incorrect impression that the Agency had an interest to convey to the Oakcrest limited partnership. The Agency had no such interest because Mr. Scott had no such interest. 4/ But the valuation problem is greater in the Oakcrest case. Unlike the Ravenwood case, in which months passed between the contract and the date on which the applicant asserted the value of the land, the Oakcrest sales contract calling for a $300,000 purchase price was signed just three days before the deed purportedly conveying the land from the Agency to the Oakcrest limited partnership. Unlike the Ravenwood case, the Agency was making no other contributions to the partnership. Even assuming an effective conveyance, the application thus grossly overstates the value of the contribution at $1,018,500, when the original sellers only three days earlier agreed to sell the property, under substantial conditions favorable to the buyer, for only $300,000. Whether the Applications are Untrue For the reasons set forth above, the Ravenwood and Oakcrest applications were untrue at the time that they were submitted and were properly rejected by Respondent. The materiality of the omissions is indisputable. Contrary to the assertions in both applications, the applicant in each case not only had not received a contribution of the land from a local government, but the applicant had not even obtained an interest in the land.
Recommendation Based on the foregoing, it is hereby recommended that the Florida Housing Finance Agency enter a final order rejecting the Ravenwood and Oakcrest applications as untrue. RECOMMENDED this 9th day of June, 1992, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of June, 1992.
The Issue The issue in this case is whether Petitioner owes additional sales and use tax, plus penalties and interest, on the purchase of bowling equipment during the audit period August 1, 1987 to July 31, 1992.
Findings Of Fact The Parties. Petitioner, Beverly Hills Bowl, Inc., is a Florida corporation. Petitioner was formed by Charles and Evelyn Gill, the shareholders of Petitioner. Petitioner was formed to own and operate a bowling alley. Respondent is an agency of the State of Florida charged with, among other things, responsibility for assessing and collecting sales and use taxes in Florida pursuant to Chapter 212, Florida Statutes. The Respondent's Audit. Between July 23, 1992 and October 8, 1992, Respondent performed a sale and use tax audit of Petitioner for the period August 1, 1987 through July 31, 1992. Respondent concluded that Petitioner's books and records were reasonable except for documentation to support the payment of sales and use tax on a purchase by Petitioner of bowling equipment. Respondent issued a Notice of Proposed Assessment on October 29, 1992. Respondent proposed the assessment of $31,609.05 in sales and use tax. Petitioner paid $8,137.05 of the additional tax. The parties stipulated that the additional tax liability at issue in this proceeding amounts to $23,472.00. Respondent also assessed a penalty of $7,888.96 and interest of $5,264.15. Disputed Purchase. Petitioner purchased bowling lane equipment from United Bowling Products, Inc. (hereinafter referred to as "United"), a Florida corporation, during the audit period. Petitioner paid $391,200.00 to United for bowling lanes and equipment described on Petitioner's exhibit 1. Before consummating an agreement to sale bowling lanes to Petitioner, United gave Petitioner a "Proposal" offering to sell bowling lanes to Petitioner for $391,200.00. See Petitioner's exhibit 1. The Proposal states, among other things, the following: * WE OFFER THE ABOVE EQUIPMENT FOR $16,300.00 PER LANE INCLUDING INSTALLATION, FREIGHT, AND FLORIDA SALES TAX. . . . [Emphasis added]. Petitioner accepted the Proposal and purchased the bowling lanes for $391,200.00. Oral communications between Petitioner and United were also consistent with the Proposal concerning the inclusion of sales tax in the purchase price. No written documentation of the agreement between United and Petitioner was entered into. Petitioner received the bowling lanes and paid United $391,200.00. No written documentation or invoices were provided Petitioner by United upon consummation of the sale. The additional assessment at issue in this case is attributable to this sale of bowling equipment by United to Petitioner. Respondent's Treatment of the Purchase. Respondent concluded that, since the amount of sales tax was not separately stated on the Proposal, additional documentation of the payment of the sales tax by Petitioner to United was required. Respondent requested additional documentation but Petitioner was unable to provide it to Respondent's satisfaction. Respondent concluded that Petitioner was responsible for the payment of use tax on the equipment because it could not be proved to Respondent's satisfaction that sales tax had been paid to United. Respondent is also attempting to collect sales tax on the purchase from the primary dealer responsible for the collection and remittance of sales tax.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered dismissing the assessment dated October 29, 1992 against Beverly Hills Bowl, Inc. DONE AND ENTERED this 26th day of September, 1995, in Tallahassee Florida. LARRY J. SARTIN, 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 26th day of September, 1995. APPENDIX The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. Petitioner's Proposed Findings of Fact Accepted in 2-3, 5-6 and 11. Accepted in 9-11. Accepted in 1, 10 and 12. See 14. What Mr. Aliff may have said during the hearing may not form the basis of a finding of fact. Mr. Aliff was not sworn and did not testify. See 13. Respondent's Proposed Findings of Fact 1 Accepted in 1. 2-3 Accepted in 3. Accepted in 4. The last sentence is a conclusion of law. Hereby accepted. Accepted in 9-10 and 12. Hereby accepted. See 12-13. What the Citrus County Property Appraiser may have reported is hearsay. Accepted in 5. Not relevant. COPIES FURNISHED: Peter C. Johnston, CPA, P.A. 6 Beverly Hills Boulevard Beverly Hills, Florida 34465 Mark T. Aliff Assistant Attorney General Tax Section, Capitol Building Department of Legal Affairs Tallahassee, Florida 32399-1050 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Linda Lettera, Esquire Department of Revenue Legal Office 204 Carlton Building Tallahassee, FL 32399-0100
The Issue The issue for determination is whether Petitioner should be assessed sales and use tax by Respondent, and if so, how much and what penalty, if any, should be assessed.
Findings Of Fact Aircraft Trading Center, Inc. (Petitioner), is a corporation organized and existing under the laws of the State of Florida, having its principal office at 17885 S.E. Federal Highway, Tequesta, Florida. Petitioner is engaged in the business of purchasing aircraft for resale. During all times material hereto, Petitioner was registered as an aircraft dealer with the United States Department of Transportation, Federal Aviation Administration (FAA) and registered as a retail dealer with the State of Florida, Department of Revenue (Respondent). The selling price of Petitioner's aircraft range from one million to twenty-five million dollars and helicopters from two hundred thousand to three million dollars. Normally, Petitioner purchases an aircraft, without having a confirmed buyer. Petitioner purchases an aircraft based upon in-house research which shows a likelihood that the aircraft can be resold at a profit. Petitioner's aircraft is demonstrated to potential buyers/customers. The customers require a demonstration to determine if the aircraft meets the particular needs of the customer. The demonstration could take one day or as long as two weeks. During the demonstration, the customer pays the expenses associated with flying the aircraft. Petitioner uses two methods to determine the costs of demonstration. In one method, the cost is determined from a reference source utilized in the industry to show the cost of operating a particular type of aircraft. In the other method, the customer pays Petitioner's actual out-of- pocket cost. No matter which method is used, the charges to the customers are listed as income on Petitioner's bookkeeping books and records, per the advice of Petitioner's certified public accounting (CPA) firm. Petitioner remains the owner of the aircraft during the demonstration and until the sale. Also, during demonstration, Petitioner maintains insurance coverage on the aircraft and is the loss payee. In an attempt to make sure "legitimate" customers are engaged in the demonstrations, Petitioner screens potential buyers to make sure that they have the resources to purchase one of Petitioner's aircraft. For sales to buyers/customers residing out-of-state, Petitioner utilizes a specific, but standard procedure. Such customers are provided a copy of the Florida Statute dealing with exempting the sale from Florida's sales tax if the aircraft is removed from the State of Florida within ten (10) days from the date of purchase. Florida sales tax is not collected from the buyer if the buyer executes an affidavit which states that the buyer has read the Florida Statute and that the buyer will remove the plane from Florida within ten (10) days after the sale or the completion of repairs and if the bill of sale shows an out-of-state address for the buyer. When an aircraft is sold, Petitioner's standard procedure is to prepare a purchase agreement and after receiving payment, Petitioner prepares a bill of sale. Petitioner sends the bill of sale to a title company in Oklahoma which handles all of Petitioner's title transfers. The title company records the bill of sale, registers the change of title with the FAA and sends Petitioner a copy of the title. For all sale transactions, Petitioner maintains a file which includes the affidavit, the bill of sale, and a copy of the title. Respondent conducted an audit of Petitioner for the period 2/1/87- 1/31/92 to determine if sales and use tax should be assessed against Petitioner. All records were provided by Petitioner. The audit resulted in an assessment of sales and use tax, penalty, and interest against Petitioner. Respondent assessed tax on the sale of a helicopter and on certain charges made by Petitioner to its customers as a result of demonstrations. Regarding the helicopter, Respondent assessed tax in the amount of $18,000.00 for the helicopter transaction. By invoice dated 7/10/89, Petitioner sold the helicopter to Outerscope, Inc., for $300,000.00. Outerscope was an out-of-state company. Petitioner used its standard procedure for the sale of aircraft and sales to nonresidents. Petitioner did not obtain proof that the helicopter was removed from the State of Florida, and Petitioner has no knowledge as to whether it was removed. As to the charges by Petitioner for demonstrations, Respondent assessed tax in the amount of $72,488.55. Respondent determined the tax by taking an amount equal to 1 percent of the listed value of the aircraft demonstrated and multiplying that number by 6 percent, the use tax rate. Respondent relied upon the records and representations provided by Petitioner's bookkeeper as to determining which aircraft were demonstrated, the value of the aircraft and the months in which the aircraft were demonstrated. Several transactions originally designated as demonstrations have been now determined by Petitioner's bookkeeper not to be demonstrations: The February 4, 1987 transaction with Ray Floyd. The July 10, 1988 transaction involving Trans Aircraft. The May 2 and 12, 1989 items for Stalupi/Bandit. The July 12, 1989 item involving Bond Corp. The July 18, 1989 item involving Seardel. The November 28, 1990 item involving J. P. Foods Service. Petitioner's CPA firm advises it regarding Florida's sales and use tax laws. At no time did the CPA firm advise Petitioner that its (Petitioner's) demonstrations were subject to sales and use tax and that it (Petitioner) was required to obtain proof that an aircraft had been removed from the State of Florida.
Recommendation Based upon the foregoing, Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order assessing sales and use tax for the period 2/1/87 - 1/31/92 against Aircraft Trading Center, Inc., consistent herewith. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 10th day of July 1995. ERROL H. POWELL 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 10th day of July 1995. APPENDIX The following rulings are made on the parties' proposed findings of fact: Petitioner Partially accepted in findings of fact 1 and 2. Partially accepted in findings of fact 2 and 3. Partially accepted in finding of fact 3. Partially accepted in finding of fact 4. Partially accepted in finding of fact 5. Rejected as subordinate. Partially accepted in finding of fact 14. Partially accepted in finding of fact 15. Partially accepted in findings of fact 5 and 14. Rejected as subordinate. Partially accepted in findings of fact 8 and 9. 12 and 13. Partially accepted in finding of fact 13. 14. Partially accepted in findings of fact 5 and 16. Respondent Partially accepted in findings of fact 11 and 12. Partially accepted in finding of fact 12. Partially accepted in finding of fact 13. Partially accepted in finding of fact 13. Also, see Conclusion of Law 20. Partially accepted in finding of fact 4. Partially accepted in finding of fact 5. 7 and 8. Partially accepted in finding of fact 6. 9. Partially accepted in finding of fact 7. 10 and 11. Partially accepted in finding of fact 14. 12. Partially accepted in finding of fact 5. 13-15. Partially accepted in finding of fact 9. NOTE: Where a proposed finding has been partially accepted, the remainder has been rejected as being irrelevant, unnecessary, subordinate, not supported by the more credible evidence, argument, or conclusion of law. COPIES FURNISHED: Robert O. Rogers, Esquire Rogers, Bowers, Dempsey & Paladeno 505 South Flagler Drive, Suite 1330 West Palm Beach, Florida 33401 Lealand L. McCharen Assistant Attorney General Office of the Attorney General The Capitol-Tax Section Tallahassee, Florida 32399-1050 Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Linda Lettera General Counsel Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact Petitioner is a state licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the State of Florida, in particular, Section 20.30, Florida Statutes, Chapters 120, 455 and 475, Florida Statutes and the rules promulgated pursuant thereto. The Respondent, Patricia Sue Shelley, is now and was at all times material hereto a licensed real estate salesperson in the State of Florida having been issued license number 0454282 in accordance with Chapter 475, Florida Statutes. The last license issued was effective 3/10/92, with a home address of 2413 Euston Road, Winter Park, Florida 32789-3416. From July 9, 1990 to December 5, 1990, the Respondent was licensed as a real estate salesperson with Don Gallagher, Inc. t/a The Prudential Gallagher Properties (Petitioner's Exhibit #4). Her status was property manager. While employed as the property manager the Respondent collected $1,450 in rental funds during November and December 1990, but failed to deliver the rental funds to her employing broker. The Respondent and the broker had an ongoing commission dispute and the Respondent kept the $1,450 because she felt that the broker owed her the money. On December 7, 1990, the Respondent delivered a check from her personal account in the amount of $1,450, to the broker notated: "$ rent for Curry Ford and Dover Circle". These were properties being managed by the broker. (Petitioner's Exhibit #1). On December 8, 1990, the broker deposited the Respondent's check into escrow, but the check was returned annotated: "payment stopped do not redeposit." (Petitioner's Exhibit #2). On December 17, 1990, employing broker Don Gallagher sent the Respondent a demand letter, but the Respondent refused to deliver the trust funds to Don Gallagher. (Petitioner's Exhibit #3). Petitioner's husband recommended that she keep the rental money and get with Don Gallagher about the commission. He later recommended that she just give the money back and is not sure why she did not. She has been under a physician's care for manic depression for about 1 1/2 years. Ms. Shelley's license record includes no other alleged violations or discipline.
Recommendation Based on the foregoing, it is hereby, RECOMMENDED: that a Final Order be entered, finding Patricia Sue Shelley violated Sections 475.25(1)(e) and (k), F.S., suspending her license for two years, with the condition that the suspension be lifted anytime after 90 days, if restitution of $1,450 is made to her former employer/broker. After suspension is lifted, Respondent should be placed on probation for one year under such conditions as may be appropriate, including participation in continuing education courses regarding the handling of deposits and other funds received in trust. DONE and ENTERED this 29th day of October, 1992, at Tallahassee, Florida. MARY CLARK 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 29th day of October, 1992. COPIES FURNISHED: Steven W. Johnson, Esquire Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, FL 32802 Patricia Sue Shelley, pro se 2413 Euston Road Winter Park, FL 32789-3416 Jack McRay, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792 Darlene F. Keller, Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, FL 32802-1900
