Findings Of Fact On November 2, 1979, petitioner's Officer Favitta visited respondent's premises in order to notify respondent that his beverage license had been suspended for failure to pay a civil penalty. While on the premises, Officer Favitta discovered a display rack full of cigarette packages stamped in red ink with a certain meter number. He confiscated 936 packages of cigarettes so stamped from the display rack. Other packages of cigarettes in a storage room nearby were similarly imprinted. The meter number appearing on each cigarette package had been assigned to Barone Sales, a wholesale dealer in cigarettes who sells cigarettes marked in this fashion to the Seminole Indians. Red ink is used to signify that cigarette tax has not been paid and that the cigarettes are destined for the reservation. Respondent admitted to Officer Favitta buying the cigarettes on the reservation, but argued that this was lawful so long as no more than three cartons were purchased at one time.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent dismiss the notice to show cause. DONE and ENTERED this 29th day of July, 1980, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: James M. Watson, Jr., Esquire 725 South Bronough Street Tallahassee, Florida 32301 Michael R. Shinn 244 S.W. 3rd Place Dania, Florida 33004
Findings Of Fact At all times relevant hereto, respondent, Willie Coachman, was a licensed beer vendor having been issued license number 39-02165 by petitioner, Department of Business Regulation, Division of Alcoholic Beverages and Tobacco (Division). Respondent uses his license at a business known as Willie's Fina Station located at 1312 East Columbus Drive, Tampa, Florida. The license is a Series 1-APS which authorizes Coachman to sell beer by package only for consumption off premises. On August 17, 1988 a Division investigator, Keith B. Hamilton, conducted an investigation of Coachman's licensed premises to determine if respondent was selling beer. He did so since Coachman's license was then under a suspension. After finding the beer coolers sealed with tape, Hamilton left the premises and stood outside the front door. He then observed a black male enter the premises carrying two boxes filled with cartons of cigarettes. The black male gave them to the store clerk, and Hamilton observed the clerk pay the male $80 from the cash register for the cigarettes. The cigarettes were then placed on the floor near Coachman's office. The male was not driving a vendor's truck nor was he dressed in a vendor's uniform. Hamilton telephoned another Division investigator, William P. Fisher, who came to the premises some ninety minutes later. The two entered Coachman's store, identified themselves to a clerk and inspected the stock room. According to Hamilton, Coachman is authorized to buy cigarettes from two area cigarette wholesale distributors, Costco Wholesale Corporation (Costco) and Eli Witt Corporation (Eli Witt). Each wholesaler has a distinctive stamp on its cigarette packages so that an investigator can easily determine from which wholesaler a vendor obtained cigarettes. Upon examining the cigarettes in Coachman's stock room, including the two boxes just sold to the cashier, Hamilton and Fisher noted that approximately 3,137 packs did not have a Costco or Eli Witt stamp. After the clerk could not produce invoices to verify that the cigarettes were purchased from a licensed wholesale dealer, the 3,137 packs were seized and taken to an evidence vault. At that time, the clerk acknowledged that Coachman had authorized her to make cigarette purchases from patrons. Coachman arrived at the premises as the investigators were leaving. He objected to the seizure saying that some of the cigarettes being taken were "good." Coachman was told the cigarettes would be returned if he could produce invoices establishing that they were validly purchased. During the course of the inspection on August 17, investigator Fisher observed nine bottles of Chivas Regal Scotch on a desk in Coachman's office. The bottles were unopened. According to Hamilton, it is unlawful for a beer vendor to have such alcoholic beverages on the premises even for personal consumption. Thus, even though Coachman maintained, without contradiction, that the scotch was for his own use, it was improper for him to store the same on his premises. After the cigarettes were placed in the evidence vault, Coachman produced certain invoices for the Division and also had several wholesalers telephone the Division to confirm various sales to Coachman. This resulted in 540 packs being returned to Coachman. Some 2,502 packs still remain in the Division's custody. At hearing, Coachman indicated that he normally buys some $30,000 to $40,000 of cigarettes monthly from various wholesalers. Also, he offered into evidence various receipts for purchases made in July and August 1988 and documentation verifying that a large quantity of cigarettes was obtained through transfers (exchanges) of cigarettes with other vendors. This latter situation occurs whenever one vendor has a slow-moving brand and exchanges them for a different brand with another vendor. However, each transfer must be documented with paperwork. The Division did not inventory the seized cigarettes by brand or dealer. Its evidence vault receipt, which has been received in evidence as petitioner's exhibit 3, reflected only that 2502 packs of cigarettes were taken. However, by credible testimony it was established that none of the confiscated cigarettes had indicia to show that they were purchased from Costco or Eli Witt. This was not contradicted. On the evening of August 31, 1988 investigator Turner and two informants carried fifteen cases of beer to another licensed premises operated by Coachman. The beer was transported in an unmarked, private vehicle. They offered to sell the beer to Coachman for $4.00 per case but then agreed to sell it for $3.00 per case, which is substantially below the fair and wholesale market value. The sale took place at the house of Coachman's children but Turner was paid with monies from respondent's cash register. Prior to the sale, Division personnel placed special markings on the bottom of the cans for identification purposes so that they could be later identified. On September 6, 1988 investigator Freese went inside respondent's premises and purchased a six pack of Busch beer for $2.69. The package was one of those previously sold to Coachman on August 31. Coachman denied reselling the Busch beer and contended it was purchased for personal consumption and use by his children. However, this testimony is not accepted as being credible. Also, he contended that all cigarettes were legally purchased from wholesalers or by exchange with other dealers and that he had appropriate documentation on hand at all times. However, such documentation was not on hand on the night the cigarettes were taken, and Coachman did not show that any of the cigarettes referred to on the documents supplied at hearing were the same that were seized by the investigators on August 17. Thus, the documentation was not sufficient. Coachman's license has been subject to disciplinary action on two other occasions. It was first suspended for thirty days effective January 6, 1987 for Coachman dealing in stolen property and purchasing cigarettes from other than a wholesale dealer. It was suspended a second time for a twenty day period effective August 9, 1988 for respondent (a) purchasing cigarettes from other than a wholesale dealer, (b) failing to maintain invoices of cigarette purchases on the premises, (c) possessing beverages not permitted to be sold under his license, (d) gambling and possession of gambling paraphernalia, and (e) conducting a prohibited lottery. Under petitioner's policy, as explicated at hearing, a license is revoked after repeat violations occur.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty as charged in the notice to show cause, as amended, and that his APS license number 39-02165 be REVOKED. DONE and ENTERED this 23rd day of March, 1989, in Tallahassee, Florida. DONALD R. ALEXANDER 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 23rd day of March, 1989.
The Issue The issue is whether Petitioner is entitled to a refund of motor fuel taxes paid for motor fuel exported from Florida when Petitioner was not licensed as an exporter at the time of the transactions.
Findings Of Fact Petitioner is a Florida corporation engaged in the business of purchasing and reselling motor fuel. Petitioner, whose principle place of business is 1201 Oakfield Drive, Brandon, Florida 33509, does business within and without the State of Florida. Petitioner currently has a Florida Fuel Tax License, which is number 59-2150510. On April 5, 2004, and May 7, 12, and 13, 2004, upon Petitioner's orders, Kenan Transport loaded diesel fuel at the Marathon facility in Jacksonville, Florida, and delivered the fuel to Petitioner's Kingsland, Georgia, location. Daniel Way, the driver employed by Kenan Transport, delivered the April 5, 2004; May 7, 2004; May 12, 2004; and May 13, 2004, fuel loads to Petitioner's Kingsland, Georgia, location. 6. For the April 5, 2004; May 7, 2004; May 12, 2004; and May 13, 2004, fuel deliveries to Petitioner's Kingsland, Georgia, facility, Petitioner paid a total of $8,775.16 in Florida fuel taxes. The amount of Florida fuel taxes paid for each delivery was as follows: $2,192.99, for the April 5, 2004, delivery; $2,187.77, for the May 7, 2004, delivery; $2,187.20, for the May 12, 2004, delivery; and $2,187.20, for the May 13, 2004, delivery. At the time the four fuel deliveries noted in paragraphs 4 and 5 above were made to Petitioner's Kingsland, Georgia, facility, Petitioner did not have an exporter fuel license. Petitioner obtained an exporter fuel license that became effective December 1, 2004. The parties stipulated to the findings in paragraphs 1 through 9. Petitioner asserts that the Department should refund the fuel taxes it paid because, in the four transactions, Petitioner's account was mistakenly billed for the fuel. Gowan Oil Company (Gowan) is a distributor based in Folkston, Georgia, and has contracts with many fuel terminals in Jacksonville. Pursuant to an arrangement between Petitioner and Gowan, Petitioner did not usually buy fuel from any of the terminals in Jacksonville. Instead, Petitioner bought fuel for its truck stop in Georgia from Gowan, since Gowan could buy fuel at the Jacksonville terminals for less than Petitioner could. Depending on the price of fuel on a particular day, Petitioner would call Kenan Transport and tell the company to pick up fuel from a particular terminal in Jacksonville. The instructions relative to the above transactions were for the driver to pick up BP fuel and to put it on Gowan's account. Notwithstanding the specific instructions given to the driver, he made two mistakes with respect to the four fuel purchases. He not only mistakenly picked up the wrong fuel, Marathon fuel, but he also put the fuel he picked up on Petitioner's account, not on Gowan's account. The mistake made by the Kenan Transport driver is a common mistake made by transport drivers, who are "hauling out of multiple terminals every day." Drivers have loading cards for all of the accounts on which they pick up fuel. When picking up fuel, the driver should use the loading card which corresponds to the account for that particular load. In the four transactions that are at issue in this proceeding, the driver "loaded" the card for Petitioner's account, not the card for Gowan's account. Petitioner did not have an export license at the time of the transactions. Therefore, Marathon properly billed Petitioner for the Florida fuel taxes on the fuel that was picked up in Jacksonville, Florida, charged on Petitioner's account, and delivered to Petitioner's truck stop in Kingsland, Georgia. Petitioner tried unsuccessfully to have Marathon bill the subject fuel purchases to Gowan. If Gowan had been billed, it would not have been required to pay Florida fuel taxes on the four fuel purchases because it had an export license.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order denying Petitioner's application for a refund of fuel taxes. DONE AND ENTERED this 28th day of April, 2006, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD 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 28th day of April, 2006.
The Issue The issue in this case is whether Respondent failed to pay tax surcharges, penalties, and interest owed on the sale of cigarettes, and, if so, the amount that is currently due and owing.
Findings Of Fact The Department is the state agency responsible for monitoring the sale of tobacco products and for assuring that all businesses selling such products pay the requisite surcharges on each pack of cigarettes sold. Respondent is a convenience store which is licensed to sell tobacco products. The store also sells alcoholic beverages, food items, and miscellaneous other products. The sales tax associated with the sale of tobacco products (only) is at issue in this proceeding. The 2009 Florida Legislature enacted legislation imposing a $1.00 per pack surcharge on each pack of cigarettes sold in this state beginning July 1, 2009. Retailers having a cigarette inventory and, as of that date, would be required to pay a "floor tax" of $1.00 per pack in their inventory. In February 2010, the Department received a letter from an anonymous source (who identified himself as "A Good Civilian (Business Owner) (Who always pays tax)[sic]." The letter had a flyer attached to it which had been distributed by Respondent. The flyer identified a number of products for which buyers could realize "[t]he lowest prices in Polk County." Included in the list of products were various tobacco items, including cigarettes. The anonymous source's letter suggested that anyone who could sell the tobacco products at those prices must be doing something illegal. Based on the allegations in the anonymous letter, the Department decided to investigate. A team was sent to one of Respondent's stores (hereinafter referred to as "Store 1") on February 18, 2010. The team did an inventory of tobacco products at Store 1. There were 2,855 packs of cigarettes at Store 1. Some of the cigarettes were in individual packs; some were still in cartons (which contain ten packs each). The cigarette packs had the requisite state stamp on them. However, most of the packs had a stamp which had been in existence prior to the change in law on July 1, 2009. The fact that most of Store 1's cigarette packs had the old stamp meant that the cigarettes had been around for a while. The inventory eventually formed the basis for an audit performed on Respondent's other store ("Store 2"). Store 2 had just recently opened and was stocked with cigarettes brought over from Store 1. There were, therefore, no invoices available at Store 2 as to the purchase of the cigarettes it had on hand. The audit process involved a determination of distributors from which Respondent purchased its cigarettes. The two primary distributors were Sam's Club and Dosal. The Department ascertained from those distributors how many packs of cigarettes Respondent had purchased over a given span of time. Sam's Club provided records seeming to indicate the purchase of 37,770 packs between February 1 and June 29, 2009; another 9,090 packs were purchased between July 4, 2009, and January 29, 2010. Dosal said 65,490 packs had been purchased between March 3 and June 23, 2009; another 17,800 were purchased between July and December 2009. An audit investigation was commenced at Store 2 on March 17, 2010. The auditors did not ascertain the actual number of packs of cigarettes on hand at the store on that date. The auditors talked with the owners of the stores (Salah Rabi and his brother, Mohammed Rabi) about their sales history. Pursuant to requests of the auditors, the owners also sent in some additional records reflecting their sale of cigarettes. In order to calculate the number of cigarette packs sold by Store 2 during a four-month period, the auditors determined how much business the store had done in all products (including non-tobacco products) for that period. Respondent gave the Department a list of daily sales on all products sold and the taxes paid on those products for the period February 2009 through January 2010. The average monthly sales amount for the store during the audit period was $25,000. However, the Department found the information provided by Respondent to be incomplete and, thus, unreliable. The auditors then assumed that 80 percent of the store's sales were for cigarettes1/ and that the average price per pack was $4.50. Using this formula, the auditors found that approximately 4,444 packs of cigarettes were sold each month, which the auditors rounded up to 4,500. Thus, for the audit period, the auditors estimated that 18,000 packs of cigarettes were sold. Neither of the auditors testified at final hearing as to the reasonableness of the formula or as to their alleged conversations with the owners. Based on their findings, the auditors concluded that Respondents owe a balance of $77,798.23. That figure was derived as follows: Total packs purchased 3/09 - 6/09 from Dosal 65,490 from Sam's 37,770 Total purchases prior to 7/1/09 103,260 Estimated monthly sales at 4,500 packs per month for four months 18,000 Total estimated inventory on 7/1/09 85,260 Floor tax due on estimated inventory $85,260 Floor tax paid $ 4,963,09 Unpaid floor tax $80,296.91 Overpayment on other tobacco product $(2,498.54) Total cigarette floor tax due $77,798.37 Missing from the evidence presented was any statement by the Department as to whether, on March 17, 2010, or any other date, there were 80,000-plus packs of cigarettes visible at the store. It seems plausible that so many packs, even if in cartons of 10 packs apiece, would be easy to identify. Respondent refutes the basic premise of the auditor's findings. Using cash register receipts (called Z Tapes) from March and May 2009 (two of the four months at issue), Respondent was able to establish a more accurate percentage of cigarette sales versus all products sold. The Z Tapes are printed out each day by way of turning a key on the cash register. The tapes print out a receipt showing the date, the number of packs of cigarettes sold, the number of food items sold, and the number of taxable items sold. According to the Z Tapes, close to 90 percent2/ of Store 2's total sales for those months were cigarette sales, i.e., a much higher percentage than used by the auditors. The evidence presented by the owners is credible and persuasive. Respondent also provided a calculation of its price per pack of cigarettes. The price depends, in part, on how much they pay the distributors for each pack or carton of cigarettes. Of its four best selling cigarettes, the following costs were determined for the period March through June 2009: Brand Cost Markup Markup% Price 305's 2.93 .06 2 2.99 Marlboro 4.66 .08 1.7 4.74 Romy 2.75 .21 7.0 2.96 Newport 4.45 .34 7.6 4.79 Then, using the inventory of products on hand, a weighted average markup percentage was calculated as follows: Brand Weighted Number Weighted Cost Weighted Price Markup 305's 5,900 17,287 $17,641 Marlboro 1,957 9,394 9,276 Romy 1,611 4,430 4,769 Newport 108 454 517 TOTAL 31,565 $32,203 2.02% Based on the foregoing calculation, the owners estimated an average price per pack of $3.00, i.e., much less than the $4.50 per pack figure utilized by the auditors. The unrefuted testimony of the owners is credible and seems reasonable based upon the facts. Inasmuch as neither of the auditors was available to provide further justification for their price-per-pack estimation, the owners' calculation is accepted for use in this proceeding. Respondent purchased 91,520 packs of cigarettes during the period of March 2009 through June 2009. Respondent sold 55,634 packs of cigarettes during that same period. The average price per pack sold was $3.00 (three dollars). Based on the foregoing, Respondent had a floor inventory of 35,886 packs of cigarettes on July 1, 2009. Respondent paid a cigarette surcharge floor tax of $4,963.09 on July 15, 2009. Respondent also overpaid its floor tax for other tobacco products by $2,948.54 for a total of $7,815.83 in payments to the Department. That amount should be credited against any tax liability determined in this proceeding. The Department provided bank statements for Store 1 and Store 2 showing much larger monthly transactions than evidenced by the stores' sale of products. That fact raised a red flag justifying further investigation into Respondent's business. However, the discrepancy was explained by the fact that Respondent does a large amount of check-cashing business at its stores. The large bank transactions are not relevant to the issue in this proceeding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, imposing a cigarette surcharge in the amount of $35,886 (thirty-five thousand, eight hundred and eighty-six dollars) against Respondent, Discount Zone, Inc., d/b/a Lakeland Discount Beverage, Inc., minus $7,815.83 already paid. DONE AND ENTERED this 12th day of May, 2011, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of May, 2011.
The Issue Whether Petitioner's claim for refund under Chapter 210, Florida Statutes, pursuant to Section 215.26, Florida Statutes, should be approved. The Petition herein was originally filed solely against the Comptroller of the State of Florida. Thereafter, pursuant to nation of the Respondent for a more definite statement, an amended petition was filed on July 27, 1979. Subsequently, pursuant to stipulation, Department of Business Regulation, Division of Alcoholic Beverages and Tobacco was joined as a party respondent. This case was consolidated for purposes of hearing with the case of Eli Witt Company, as successor to Havatampa Corporation, Petitioner, v. Department of Business Regulation, Division of Alcoholic Beverages and Tobacco, Respondent, Case No. 79-1984R. The said petition alleged the invalidity of the Division of Alcoholic Beverages and Tobacco's Rule 7A- 10.25, Florida Administrative Code. A Final Order in that case has been issued on this date.
Findings Of Fact Petitioner Eli Witt Company is a wholesale dealer in cigarettes in some eight states, including Florida. During the year 1976 and at the present time, Petitioner acts under the authorization of the Division of Alcoholic Beverages and Tobacco as an agent to buy or affix tax stamps pursuant to Section 210.05, Florida Statutes, and to collect and remit cigarette tax to the Division after sale to various retailers in the State. Petitioner has some twenty-five branch offices located throughout the State who place orders for cigarettes with Petitioner on a daily basis. The cigarettes are invoiced by Petitioner to each branch and, upon arrival, the various branch offices affix the tax stamps upon the cigarette packages, primarily by means of a stamping machine. Each of Petitioner's stamping offices maintains its own records and files required reports, and are audited Individually by employees of the Division. Each branch office is listed separately on a rider to the surety bond of Petitioner which is required under Chapter 210. Monthly checks are signed by each branch manager to remit tax collected to the Division. (Testimony of Hoyland) Since at least 1962, Petitioner had stamped cigarettes and collected cigarette taxes for the State of Florida. It had been allowed a discount as compensation for its services and expenses pursuant to Section 210.05(3)(a), Florida Statutes, of 2.9 percent on the first two million cigarette packs stamped at each of its stamping locations. On March 1, 1976, the Division promulgated Rule 7A-10.25, Florida Administrative Code, which provided that a wholesaler who stamps cigarettes at more than one location would only be entitled to receive the maximum discount for a single agent doing business at a single location. Accordingly, although each of Petitioner's twenty-five stamping locations purchased more than two million stamps from the Division during the fiscal year July 1, 1976 through June 30, 1977, Petitioner retained the 2.9 percent discount as if it had done business at only one location. It filed a protest against the effect of the rule with the Division on July 1, 1976. A refund claim was filed with the State Comptroller on March 16, 1979, and denied on June 12, 1979. (Testimony of Hoyland, case pleadings, Exhibits 2-3, 5) In 1977, the state legislature enacted Chapter 77-421, Laws of Florida, effective June 29, 1977, which provided in part in Section B thereof that: "Stamping locations approved by the division shall be responsible for computing the discount provided for each aid every stamping location by ss. 210.05(3)(a), Florida Statutes . . ." The Division thereafter permitted discounts under the policy in effect prior to the promulgation of Rule 7A-10.25, but did net repeal the rule. On March 16, 1979, Petitioner requested the State Comptroller to refund the $64,900 paid under protest in fiscal year 1976-77 which represented the amount it could have retained as a discount if Rule 7A-10.25 had not been in effect. (Case pleadings, Exhibits 1, 4)
Recommendation That the Comptroller, State of Florida, deny Petitioner's claim for refund. DONE and ENTERED this 14th day of November, 1979, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings Room 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: E. Wilson Crump, II Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32301 Harold F.X. Purnell General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Ronald C. LaFace, Esquire Post Office Drawer 1838 Tallahassee, Florida 32302 John D. Moriarty, Esquire Department of Revenue Room 104, Carlton Building Tallahassee, Florida 32304
The Issue The issue in this case is whether Respondent, Department of Business and Professional Regulation, Division of Alcoholic Beverages & Tobacco (the “Department”), is operating under an unadopted rule in its application of sections 210.276 and 210.30, Florida Statutes, which impose a surcharge and an excise tax, respectively, on tobacco products other than cigarettes or cigars, commonly known as other tobacco products (“OTP”), by calculating “wholesale sales price” as the full invoice price charged by OTP manufacturers to distributors, including any federal excise taxes (“FET”) and shipping charges reflected in the invoice price.
Findings Of Fact Each of the Petitioners is a licensed business in the State of Florida engaged in the business of distributing tobacco products. The Department is the government agency responsible for, inter alia, administering and enforcing chapter 210, Florida Statutes, related to the taxation of tobacco products other than cigarettes and cigars. By way of general background, tobacco products are taxed at both the federal and state levels. The first company to produce or import the tobacco products into the United States must pay the federal government a federal excise tax which is based on weight. 26 U.S.C. § 5702. Similarly, when the tobacco is produced or brought into Florida, Florida OTP tax applies at the rate of 85 percent of the “wholesale sales price.” Technically, Florida OTP tax has two components: an excise tax and surcharge as defined by sections 210.30 and 210.276. Section 210.30 was first enacted in 1985; it imposes a 25-percent tax on OTP. Section 210.276 was enacted in 2009; it levies a 60-percent surcharge on OTP. For convenience, the excise tax and surcharge will be referred to collectively as the OTP tax. The phrase “wholesale sales price” is defined as “the established price for which a manufacturer sells a tobacco product to a distributor, exclusive of any diminution by volume or other discounts.” § 210.25, Fla. Stat. Section 210.25(11) defines "tobacco products" as follows: [L]oose tobacco suitable for smoking; snuff; snuff flour; cavendish; plug and twist tobacco; fine cuts and other chewing tobaccos; shorts; refuse scraps; clippings, cuttings, and sweepings of tobacco, and other kinds and forms of tobacco prepared in such manner as to be suitable for chewing, but ‘tobacco products’ does not include cigarettes . . . or cigars. In 2012, the Second DCA interpreted “wholesale sales price” to apply to the price at which the manufacturer sells tobacco products to the distributor. Micjo, 78 So. 3d at 127. In that case, in which the Second DCA described the dispute as “not complicated,” the Court determined that OTP tax applies only to the charge for tobacco and not to other charges to bring the tobacco to market, such as FET and shipping charges. Id. at 126-127. There are no relevant adopted rules in which the Department has interpreted “wholesale sales price.” State agencies are required to follow the Courts’ interpretations of statutes. See Costarell v. Fla. Unemplmt. App. Comm’n, 916 So. 2d 778, 782 (Fla. 2005). Subsequent to the ruling in Micjo, the Department followed the ruling set forth by the Second DCA and stopped imposing a tax on distributors based upon on FET or shipping charges. Beginning in 2013, the Department commenced enforcing a new “policy” interpreting Micjo to exclude FET and shipping charges only when such charges were separately stated. As a result of this policy, the Department paid some refunds and did not assess OTP tax if the FET and shipping charges were separately stated. The Department began relying upon a new policy in mid- 2013 to the effect that if the domestic manufacturer of the tobacco paid FET when it produced the product, Micjo did not apply and the phrase “wholesale sales price” included non- tobacco charges, such as FET and shipping charges. This was due to the fact that the manufacturer would pass down the cost of the FET and shipping charges to the distributor as part of the “wholesale sales price.” As for foreign manufacturers who did not pay FET, Micjo operated to exclude FET and shipping charges from the taxable base. That is because the distributor who purchased the tobacco products would be responsible for paying the FET separately; it would not be part of the “wholesale sales price.” In other words, the Department’s policy was that “wholesale sales price,” as interpreted by Micjo, applies differently depending on whether the tobacco is manufactured foreign or domestically. The Petitioners seek to invalidate this non-rule policy. The Department confuses wholesale sales price (i.e., “the established price for which a manufacturer sells a tobacco product to a distributor”) with the invoice amount, which may or may not include something other than the price for the tobacco product. The Micjo decision clearly delineates the cost of the tobacco from “the various other distributor invoice costs for reimbursement of FET, shipping costs, and other charges [which are] not part of tobacco.” Micjo, 78 So. 3d at 127. After the Micjo ruling, the Department determined that it would not include FET and shipping charges in its determination of “wholesale sales price” for purposes of calculating OTP taxes. It did not promulgate a rule to that effect, but began nonetheless using the policy uniformly. In early October 2013, when the Department decided to rescind its policy in favor of a new statement of general applicability, it again failed to promulgate the policy as a rule. Instead, it unilaterally began to impose the new policy on all distributors of OTP in the state. It is clear from the record that the current policy is applicable to all distributors and that the policy delineates which distributors must pay taxes based on total invoice amounts, including FET and shipping charges, and which distributors do not have to pay taxes based on those items. It is not clear from the record how the domestic versus foreign manufacturer dynamic was argued to the Micjo Court or in the case from which the appeal arose. Micjo specifically addressed the domestic distributors, but did not make a distinction between domestic and foreign manufacturers. To the extent the Department’s position in the instant case seeks to revise the facts of Micjo, that argument is rejected.
Findings Of Fact Petitioner, D & H Oil and Gas Company, Inc., dba Oasis Food Store, owns and operates an Oasis Food Store located at 2521 Thomas Drive in Panama City Beach, Florida. As part of the operation of that store, Petitioner operates a gasoline station which sells regular unleaded, unleaded plus, and unleaded premium gasoline to the public. On September 14, 1990, James Wood, the Department's inspector, visited the station to conduct an inspection of the gasoline Petitioner was offering for sale to the consuming public from its tanks and related gasoline pumps. Mr. Wood took samples of all three types of gasoline offered for sale by Petitioner. The samples were forwarded to the Department's laboratory in Tallahassee and were tested to determine whether they met Departmental standards for each type of gasoline. The Departmental testing revealed that the unleaded plus gasoline contained 9.3% alcohol. The pump for the unleaded plus gasoline did not have a label or sticker on it indicating that it contained alcohol. Since the pump did not have such a sticker on it, the sale of any unleaded plus gasoline from that pump would be in violation of Departmental standards for such gasoline. 1/ The store placed the appropriate sticker on the unleaded plus pump as soon as it was possible. In light of the above facts, the Department elected to allow the Petitioner to post a $1,000 bored in lieu of confiscation of the gasoline. The bond was posted on September 17, 1990. No evidence of the amount of gasoline sold while the label was absent was submitted at the hearing. 2/ The Department assessed Petitioner $1000.00, which is equal to the amount of the posted bond. This amount was not based on any evidence of the amount of gasoline sold from the unleaded plus pump during the time the label was not on the pump. Such an assessment is clearly outside the Department's authority. See Section 525.06, Florida Statutes. Therefore, Petitioner is entitled to a refund of its bond.
Recommendation It is accordingly, RECOMMENDED: That the request of D & H Oil and Gas Company, Inc., for refund of the bond posted be GRANTED. DONE and ORDERED this 23rd day of May, 1991, in Tallahassee, Florida. DIANE CLEAVINGER 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 23rd day of May, 1991.
Findings Of Fact Upon consideration of the parties' joint stipulation of facts, the following relevant facts are found: The Seminole Indian Tribe is a federally recognized tribe organized under the Indian Reorganization Act of June 18, 1934, (25 U.S.C. Section 475) with an adopted and approved constitution and bylaws. Pursuant to ordinance all cigarette sales are conducted by retail outlets licensed and taxed by the Seminole Tribe of Florida. These retail outlets lease property from the Seminole Tribe on lands which are part of the Seminole Indian Reservation. This is Federal Indian Reservation land held in trust for the Seminole Tribe and managed by the Bureau of Indian Affairs. The Florida Seminole Indian Tobacco Association is a nonprofit association of Seminole Indian merchants who operate cigarette shops on the Seminole Indian Reservation in the State of Florida. These merchants buy cigarettes from wholesalers and sell them at retail to the general public. The members of the association do not collect or pay any cigarette tax to or for the benefit of the State of Florida. In early 1977 certain enrolled members of the Seminole Tribe of Florida contacted the respondent, through the agency hear, Charles A. Nuzum, with respect to the Indian Smoke Shops' sale of untaxed cigarettes to members of the public. At that time the respondent agreed that such sales were legal and were not taxable. The relevant portions of Chapter 210, Florida Statutes, relating to cigarette taxes were then identical to Chapter 210 as it exists today, with the exception of Section 210.05(5), effective June 29, 1979. Prior to 1979, the cigarettes sold to the public by the Indians were shipped in by common carrier from the State of Alabama. The respondent knew that such cigarettes sold to the general public did not bear indicia of the payment of the Florida cigarette excise or privilege tax and knew that the tax was not collected or remitted by the retail dealers or by the Seminole Tribe of Florida. Nor was the tax collected or remitted by wholesalers outside of the State of Florida. The respondent was sued in the Circuit Court of Leon County, Florida, in the case of Vending Limited, Inc., d/b/a Ace Saxon, a Florida corporation, and Edward J. Stack, Plaintiffs, v. State of Florida, Department of Business Regulation, Division of Alcoholic Beverages and Tobacco, and Charles A. Nuzum, Director, Defendants; Case No. 77-1933. The legal position of the Department in that case was that no cigarette tax was due. Senate Bill 981 was introduced in the Florida Legislature on April 20, 1979. It subsequently passed the House and Senate, was approved by the Governor on June 29, 1979, and became Chapter No. 79-317, Laws of Florida. Relevant portions of Chapter 79-317, Laws of Florida, are now codified as Section 210.05(5), Florida Statutes, 1979, which reads as follows: 210.05 Preparation and sale of stamps; discount.-- * * * (5) Agents or wholesale dealers may sell stamped but untaxed cigarettes to the Seminole Indian Tribe or to members thereof, for retail sale. Agents or wholesale dealers shall treat such cigarettes and the sale thereof in the same manner, with respect to reporting and stamping, as other sales under this chapter, but agents or wholesale dealers shall not collect from the purchaser the tax imposed by s. 210.02. The purchaser hereunder shall be responsible to the agent or wholesale dealer for the services and expenses incurred in affixing the stamps and accounting therefor. Prior to the enactment of this statute, Florida wholesalers were prohibited from offering for sale or use any cigarettes which did not bear a stamp indicating payment of the required state tax. During the time that Senate Bill 981 was pending in the Legislature and after it became law, the respondent interpreted its language to provide that licensed Florida wholesalers could sell stamped but untaxed cigarettes to Seminole Indian retailers. The Respondent knew that such cigarettes would be resold to the general public. Pursuant to its interpretation of Section 210.05(5), Florida Statutes, the Department initiated rulemaking proceedings and adopted Rules 7A-10.26(1) through (7), Florida Administrative Code. Those rules provide that licensed Florida wholesalers can sell stamped but untaxed cigarettes to Seminole Indian retailers. The Division knew at the time the rules were adopted and knows now that such cigarettes would be resold to the general public. Since the enactment of Section 210.05(5), Florida Statutes, and Rules 7A-10.26(1) through (7), Florida Administrative Code, Seminole Indian retailers, with the full knowledge and agreement of the Department, have purchased cigarettes from Florida wholesalers bearing a stamp and the replica of an Indian heard indicating that no tax had been paid on these cigarettes. The cigarettes were stamped and records were kept in order to prevent bootlegging of untaxed cigarettes. Department personnel trained Seminole Indian retailers in the proper record-keeping procedures to be sued by said retailers to ensure that the cigarettes actually received by the Indian retailers were commensurate with the amount of cigarettes listed on the wholesalers reports forwarded to the Department. The number of retail cigarette dealers on the Seminole Indian Reservation has increased from the one initial dealer in 1977 to 18 dealers now licensed by the Seminole Tribe of Florida. The number of cartons sold by said Indian dealers has increased from an average of approximately 120,000 cartons per month in 1977 to approximately 4000,000 cartons per month at the present time. Petitioner Barone Sales Company has been licensed by the respondent as a wholesale dealer of cigarettes in the State of Florida and, since the enactment of Section 210.05, Florida Statutes, has sold stamped but untaxed cigarettes to the Seminole Indian Tribes located in Florida for resale. During this period of time, Barone Sales Company has not remitted any cigarette taxes to the respondent as a result of the sale of cigarettes to the Indians, even though many of the cigarettes were being sold to members of the general public by the Indians. Furthermore, the respondent has not requested Barone Sales Company to remit an cigarette taxes on these sales. Said sales were made with the full knowledge of the respondent. During this same period of time, the Seminole Indian Tribes have sold these cigarettes at retail to Indians and to the general public without collecting any taxes on such sales. The respondent has not requested or demanded that they do so. Said sales were made with the full and complete knowledge of the respondent. Since Section 210.05(5), Florida Statutes, became law and since the adoption of current Rule 7A-10.26(1) through (7), Florida Administrative Code, there has been no change in the Florida statutory law relevant to this matter; there has been no change in Florida case law relevant to this matter; and there have been no factual changes relevant to this matter. On June 10, 1980, the Supreme Court of the United States rendered its decision in the case of Washington v. Confederated Tribes of the Colville Indian Reservation, 447 U.S. , 65 L. Ed. 2d 10, 100 S. Ct. 2069, 48 U.S.L.W. 4668. This decision by the United States Supreme Court is the sole motivating factor for the Respondent's decision to amend Rule 7A-10.26, Florida Administrative Code, as now proposed.
The Issue Whether Petitioner, MB Doral is entitled to attorneys’ fees and costs pursuant to section 120.595(3), Florida Statutes (2019), and Florida Rule of Appellate Procedure 9.400; and if so, the amount.
Findings Of Fact On December 21, 2018, MB Doral filed a Petition Challenging Validity of Existing Rule 61A-4.020 and Determination Regarding Unadopted Rule, in DOAH Case No. 18-6768RX. The undersigned bifurcated the unadopted rule challenge and conducted a final hearing on the existing rule challenge on January 24, 2019. On February 21, 2019, the undersigned entered a final order that concluded that rule 61A-4.020 was a valid exercise of delegated legislative authority. MB Doral appealed the final order to the First District Court of Appeal. On April 27, 2020, the First District Court of Appeal issued an Opinion that reversed the Final Order and concluded that rule 61A-4.020 was an invalid exercise of delegated legislative authority. MB Doral, LLC, d/b/a Martinibar v. Dep’t of Bus. & Prof’l Reg., Div. of Alcoholic Bev. & Tobacco, 2020 WL 1987120 (Fla. 1st DCA April 27, 2020). On May 22, 2020, MB Doral filed a Motion for Attorneys’ Fees and Costs (Motion), seeking an award of attorneys’ fees and costs incurred in the existing rule challenge and subsequent appeal, pursuant to section 120.595(3), Florida Statutes, and Florida Rule of Appellate Procedure 9.400. On June 4, 2020, the Department filed a Notice of Filing Joint Stipulation for Attorneys’ Fees and Costs, which included the Joint Stipulation for Attorneys’ Fees and Costs. The Joint Stipulation states that the Department agrees to the entry of a final order assessing the sum of $24,000.00 for attorneys’ fees and costs in the existing rule challenge and subsequent appeal, which the undersigned bifurcated from the unadopted rule challenge in DOAH Case No. 18-6768RX. The Joint Stipulation further states that the parties agree that the Final Order direct the Department to seek immediate approval for payment within 30 days of the Final Order, and that the undersigned retain jurisdiction to enforce the terms of the Final Order.
Findings Of Fact As a licensed wholesale dealer in cigarettes, respondent filed monthly tax returns on forms furnished by petitioner. The return respondent filed for July of 1977, was notarized on August 10, 1977, and received by petitioner on August 16, 1977. Accompanying the return was respondent's check drawn in favor of petitioner in the amount of $11,927.69. The return for August, 1977, was notarized on September 9, 1977, and received by petitioner on September 12, 1977. Accompanying this return was respondent's check drawn in favor of petitioner in the amount of $12,995.94. The September, 1977, return was notarized on October 14, 1977, and received by petitioner, at the latest, on October 18, 1977. Accompanying this return was respondent's check drawn in favor of petitioner in the amount of $11,845.44. The return for October, 1977, was notarized on November 10, 1977, and received by respondent on November 14, 1977. Accompanying this return was respondent's check drawn in petitioner's favor in the amount of $9,891.76. The return for November, 1977, was notarized on December 10, 1977, and received by petitioner on December 13, 1977. Accompanying this return was respondent's check drawn in petitioner's favor in the amount of $10,693.80. The return for December, 1977, was notarized on January 10, 1978, and received by petitioner on January 13, 1978. Accompanying this return was respondent's check drawn in petitioner's favor in the amount of $16,678.00. The return for January, 1978, was notarized on February 10, 1978, and received by petitioner on February 20, 1978. Accompanying this return was respondent's check drawn in petitioner's favor in the amount of $8,657.86. The return for February, 1978, was notarized on March 10, 1978, and received by petitioner on March 13, 1978. Accompanying this return was respondent's check drawn in petitioner's favor in the amount of $7,115.49. Beginning in March of 1978, respondent made tax payments whenever its Pitney-Bowes cigarette stamping meter was reset by petitioner's cashier, and payments did not accompany respondent's tax returns thereafter. Respondent's return for March, 1978, was notarized on April 17, 1978, and received by petitioner the following day. The return for April, 1978, was notarized on May 17, 1978, and received by petitioner the same day. The return for May, 1978, was notarized on June 9, 1978, and received by petitioner on June 12, 1978. The return for June, 1978, was notarized on July 10, 1978, and received by petitioner on July 12, 1978. The August, 1978, return was notarized on September 7, 1978, and received by petitioner on September 13, 1978. The September, 1978, return was notarized on October 9, 1978, and received by petitioner on October 11, 1978. The October, 1978, return was notarized on November 7, 1978, and received by petitioner on November 21, 1978. The November, 1978, return was notarized on December 8, 1978, and received by petitioner on December 11, 1978. The December, 1978, return was notarized on January 10, 1979, and received by petitioner the following day. The January, 1979, return was notarized on February 10, 1979, and received by petitioner on February 13, 1979. The February, 1979, return was notarized on March 10, 1979, and received by petitioner on March 20, 1979. The March, 1979, return was notarized on April 10, 1979, and received by Petitioner the following day. The April, 1979, return was notarized on May 10, 1979, and received by petitioner on May 16, 1979. The May, 1979, return was notarized on June 14, 1979, and received by petitioner the following day. The June, 1979, return was notarized on July 24, 1979, and received by petitioner on August 2, 1979. Respondent's check No. 1843, dated March 10, 1977, drawn in petitioner's favor, in the amount of $11,264.20, was dishonored by the drawee for insufficient funds. Respondent's check No. 1833, dated January 10, 1978, drawn in petitioner's favor in the amount of $16,678.20, was dishonored by the drawee for insufficient funds. Respondent's check No. 1259, dated March 30, 1978, drawn in petitioner's favor, in the amount of $3,187.57, was dishonored by the drawee for insufficient funds. Respondent's check No. 1260, dated March 31, 1978, drawn in petitioner's favor in the amount of $105.00 was dishonored by the drawee for insufficient funds. Respondent's check No. 1203, dated February 20, 1978, drawn in petitioner's favor, in the amount of $2,591.19, was dishonored by the drawee for insufficient funds. Respondent's check No. 1261, dated April 17, 1978, drawn in petitioner's favor, in the amount of $2,159.32, was dishonored by the drawee for insufficient funds. Respondent's check No. 1997, dated November 9, 1978, drawn in petitioner's favor in the amount of $617.40, was dishonored by the drawee for the stated reason that respondent's account had been closed. In a post hearing memorandum, petitioner's counsel conceded that respondent had subsequently made all of its checks drawn in favor of petitioner good.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That Petitioner revoke Respondent's permit as a wholesale cigarette dealer. DONE and ENTERED this 31st day of December, 1979, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Harold F.X. Purnell, Esquire General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Gray Tobacco Company, Inc. 8109 N.W. 33rd Street Miami, Florida
