Findings Of Fact For the period of time from January 1, 1986, through December 31, 1989, Co-Op Oil Company, Inc., was a wholesaler and retailer of motor fuel (gasoline) and special fuel (diesel) in the Florida west coast area and held Motor Fuel License Number 09_000447 and Special Fuel License No. 10-003477. During this time, each month Co-Op reported and paid motor fuel and special fuel tax based on the number of "net" gallons purchased during the preceding month. "Net" gallons are an industry standard. They are measured at a temperature of 60 degrees Fahrenheit. Meanwhile, during the same month, Co-Op sold motor fuel and special fuel through metered pumps and charged customers motor fuel and special fuel tax on the metered gallons sold through the pumps. Both motor fuel and special fuel are volatile. They expand and contract significantly as temperatures rise and fall. Since the temperature in an underground storage tank generally is around 71-72 degrees Fahrenheit, the "gross" gallons of motor fuel and special fuel stored in Co-Op's underground tanks and for resale to customers generally exceeds the "net" gallons it purchased by approximately one percent. Additional expansion, or some contraction, of the fuels can occur in transit from the tank to the metered pump, depending on outside temperature. As a result, the "gross" gallons pumped through the meter and sold to customers can differ from the "net" gallons purchased by Co-Op Oil. "Losses" due to contraction in cold tempertures also can occur, but a reasonable "shrinkage" allowance was factored into the Department's calculations. (Additional losses can occur due to spillage and evaporation. However, tax is still due on fuel lost to spillage and evaporation.) Except for Chapters 206 and 212, Part II, motor fuel taxes after January 1, 1988, the Department has interpreted the applicable statutes to: (1) require Co-Op to report and pay motor fuel and special fuel taxes monthly on the "gross" gallons it sells to its customers, plus any fuel it loses to spillage or evaporation; (2) hold Co-Op, as a licensee who collects more tax on motor fuel and special sold than was paid on the same gallons purchased, to be liable for the difference; and (3) hold Co-Op, as a licensee who purchased gasoline tax free, recorded such purchases at "net," and adjusted sales on its tax returns to "net," and sold such fuel at "gross," to be liable for the difference in tax. The Sampling Method The parties agreed that, due to the voluminous records that would be the subject of a detailed audit of all pertinent transactions, an audit using a sampling method is not only appropriate but also a practical necessity. The parties agreed that it would be appropriate to average the months of July, a hot month, and December, cold month, to obtain a valid and accurate average for the amount of gains (or losses) in volume of motor and special fuel due to expansion (or contraction) from the "net" gallonage purchased for resale through the metered pumps. An audit of the sample months reveals the following pertinent information (expressed in gallons): Month Motor Fuel Special Fuel JULY, 1986 Beginning Inventory 139,777 37,263 Amount of Fuel Purchased 622,543 124,809 Amount of Fuel Sold 639,640 125,591 Ending Inventory 126,740 37,167 DECEMBER, 1986 Beginning Inventory 103,046 33,648 Amount of Fuel Purchased 644,966 112,297 Amount of Fuel Sold 627,361 106,795 Ending Inventory 119,169 39,608 JULY, 1987 Beginning Inventory 88,937 30,769 Amount of Fuel Purchased 485,783 66,382 Amount of Fuel Sold 471,823 73,261 Ending Inventory 109,542 24,378 DECEMBER, 1987 Beginning Inventory 85,210 30,678 Amount of Fuel Purchased 552,977 76,584 Amount of Fuel Sold 535,767 78,667 Ending Inventory 102,497 28,311 JULY, 1988 Beginning Inventory 17,863 Amount of Fuel Purchased 61,499 Amount of Fuel Sold 52,380 Ending Inventory 27,197 DECEMBER, 1988 Beginning Inventory 24,195 Amount of Fuel Purchased 52,492 Amount of Fuel Sold 47,242 Ending Inventory 29,293 JULY, 1989 Beginning Inventory 19,829 Amount of Fuel Purchased 45,817 Amount of Fuel Sold 42,834 Ending Inventory 25,386 DECEMBER, 1989 Beginning Inventory 20,114 Amount of Fuel Purchased 54,323 Amount of Fuel Sold 55,520 Ending Inventory 18,824 (Under Chapters 206 and 212, Part II, motor fuel was taxed on purchases, as reported and paid by Co-Op, after December 31, 1987, so only special fuel totals are shown after that date.) Additional Taxable Gallons: Motor Fuel Adding the beginning inventory and purchases yields the "available fuel" for the month. Subtracting the ending inventory from this figure yields the month's "inventoried fuel accounted for." "Gain" from expansion of fuel above the "net" gallons purchased would equal the difference between a larger amount of fuel sold through the meters, the "metered sales," and a smaller "inventoried fuel accounted for." "Loss" from contraction of fuel below the "net" gallonage purchased (plus other possible losses from spillage, leakage or evaporation) would equal the difference between a larger "inventoried fuel accounted for" and a smaller amount of fuel sold through the meters, the "metered sales." Using the arithmetic operations described in the preceding paragraph on the samples of motor fuel, it can be calculated that Co-Op had gains of: 4,060 gallons for July 1986; 6,645 gallons for July 1987; and 77 gallons for December 1987. In the month of December 1986, there was a loss of 1,482 gallons. The net gain in motor fuel for those months was 9,300 gallons. Meanwhile, the total purchases of motor fuel for those months was 2,306,269 gallons. Comparing the net gain with the total purchases yields a gain or error ratio of .004032487 for motor fuel. The total number of gallons of motor fuel purchased by Co-Op during 1986 and 1987 was 14,190,105. Application of this gain ratio to the total number of gallons purchased yields 57,223 "additional taxable gallons" of motor fuel for 1986 and 1987. Computation of Additional Motor Fuel Tax, Penalty and Interest Multiplying each month's additional taxable gallons by .057 for the Chapter 212, Part II, motor fuel tax, and by .04 for the Chapter 206 motor fuel tax, the total taxes due for motor fuel are $3,262.29 for Chapter 212, Part II, and $2,288.92 for Chapter 206. Computed at 12 percent per annum or 1 percent monthly, interest or motor fuel taxes under Chapter 212, Part II, Fla. Stat., was $2,592.51 through July 28, 1993, with daily interest accruing at $1.07 per day from that day forward. Also computed at 12 percent per annum or 1 percent monthly, interest on the motor fuel tax under Chapter 206, Fla. Stat., was $1,500.15 through July 28, 1993, with daily interest accruing at $.75 per day from that day forward. To calculate the penalty for motor fuel for both Chapter 212, Part II, and Chapter 206, the tax due is multiplied by 25 percent to arrive at total amounts for penalties of $815.57 and $572.23, respectively. Additional Taxable Gallons: Special Fuel Using the same arithmetic operations described for motor fuel, the taxable gains for special fuel can be calculated for the sample months. (Special fuel was taxable upon resale at the pump for the entire audit period, and the sample months are examined for the entire audit period.) These calculations show the total net gain for the eight month sample period to be 3,892 gallons, as follows: Month Gain/Loss Gallons 686 458 488 284 215 152 July, 1986 December, 1986 July, 1987 December, 1987 July, 1988 December, 1988 July, 1989 Gain Gain Gain Loss Gain Loss Gain + + + - + - +2,574 December, 1989 93 Loss - (net gain) +3,892 Meanwhile, the total purchases of special fuel for those months was 594,203 gallons. Comparing the net gain with the total purchases yields a gain or error ratio of .00655 for special fuel. The total number of gallons of special fuel purchased by Co-Op during the years 1986 through 1989 was 3,910,608. Application of the gain ratio for special fuel to the total number of gallons purchased yields 25,614 "additional taxable gallons" of special fuel for 1986 through 1989. Computation of Additional Special Fuel Tax, Penalty and Interest Multiplying each month's additional taxable gallons of special fuel by $.057 per gallon for the Chapter 212, Part II, special fuel tax, and by $.04 per gallon for the Chapter 206 special fuel tax (except for the months July, 1987, through December, 1987, for which they are multiplied by the $.09 per gallon tax during that period of time), yields Chapter 212, Part II, special fuel tax due in the amount of $1,460.32, and Chapter 206 special fuel tax due in the amount of $1,171.76. Computing interest using exactly the same method as for the motor fuel taxes yields interest on the special fuel tax due under Chapter 212, Part II, in the amount of $1,067.32 through July 28, 1993, with daily interest accruing at $.48 per day from that day forward, and in the amount of $858.69 for the special fuel tax due under Chapter 206 through July 28, 1993, with daily interest accruing at $.39 per day from that day forward. The penalty for overdue special fuel tax for both Chapter 212, Part II, and Chapter 206 is calculated at 25 percent of the tax due, for total amounts of penalty of $365.08 and $292.94, respectively. The total of special fuel tax, interest and penalty due as of July 28, 1993, was $2,892.72 for special fuel under Chapter 212, Part II, and $2,323.29 for special fuel under Chapter 206. Rejection of Co-Op's Proposed Alternative Method Co-Op pointed out that for the month of July, 1986, it sold 17,097 gallons more than it purchased, but that for the subsequent sample months it was actually purchasing more gallons than it was selling. Co-Op argues that this demonstrates the payment of tax on 31,695 gallons more than it actually sold. However, a review of each month shows that, although purchases did exceed sales in several months, the ending inventories generally were larger than the number calculated by subtracting metered sales for the month from the total of beginning inventories plus purchases for the month. Actual dip stick measurements of the inventory in the tanks demonstrates a net increase over the computed book inventory of 9,300 gallons for motor fuel and 3,892 gallons for special fuel. In addition, sales of motor fuel for 1986 and 1987 totalled 14,247,541 gallons (8,228,593 for 1986, and 6,018,948 for 1987), while total purchases for that same period were only 14,190,105 gallons. For special fuel, sales of special fuel for 1986 through 1989 totalled 3,962,263 gallons (1,685,959 for 1986, 945,775 for 1987, 721,547 for 1988, and 608,982 for 1989), while total purchases of special fuel were only 3,910,608 gallons. In each case, due to expansion gains in the fuels, sales always exceeded purchases. Local Option Taxes The Chapter 336 local option taxes on motor fuel were not affected by the amendments to Chapters 206 and 212, Part II, effective January 1, 1988. The total that Co_Op reported for motor fuel purchases for the period January 1, 1986, through December 31, 1989, was 24,798,440. Multiplying by the gain ratio for motor fuel of .004032487 yields 100,000 gallons of additional taxable motor fuel. Adding the additional taxable gallons of motor fuel to the 25,614 gallons of additional taxable special fuel yields of 125,614 additional taxable gallons or net gain for the period. Throughout the audit period, the local option tax rate under Section 336.025 was $.04 per gallon for Lake and Lee County and $.06 per gallon for Manatee and Orange County. Polk County started with a $.04 per gallon rate and increased that to a $.06 per gallon rate in September, 1986. Pinellas and Citrus County increased the tax rate from the beginning figure of $.04 per gallon to $.06 per gallon in September, 1987. Because of the difference in rates between counties and the changes of rates within counties, it is necessary to calculate effective tax rates and compute the percentage of reported taxable gallons for Co-Op's business in each of the respective counties, as follows: Ratio of Reported Effective Tax County Gallons Rate .051 .040 .040 .060 Citrus 21 percent Lake 01 percent Lee 03 percent Manatee 11 percent .060 .050 .055 Orange 02 percent Pinellas 37 percent Polk 25 percent Taking the total net gain of 125,614 gallons and multiplying it by the appropriate percentage (i.e., the ratio of fuel sold in an individual county) yields the total taxable gains in each county. To ascertain the additional local option taxes due under Section 336.025, Fla. Stat., the total taxable gains calculated for each county option tax must be multiplied by each county, as follows: County for the purposes of the local effective tax rate for Tax Due Citrus $1,345.33 Lake 50.25 Lee 150.74 Manatee 829.05 Orange 150.74 Pinellas 2,323.86 Polk 1,727.19 Total $6,577.14 The statutory 25 percent penalty on the past due local option taxes amounts to $1,644.29. The statutory interest due on the past due local option taxes amounted to $4,415.33 through July 28, 1993, and has been accruing at a daily rate of $2.16 from that date (the date of the hearing). In sum, as of July 28, 1993, Co-Op owed local option tax under Section 336.025, penalty follows: and interest as Tax $6,577.14 Penalty 25 percent 1,644.29 Interest thru 7/28/93 4,415.33 Total $12,636.76 Interest continues to accrue at the $2.16 daily rate. Of the seven counties in which Co_Op was doing business that had enacted the local option tax under Section 336.025, Fla. Stat., only Lake, Lee and Manatee Counties had enacted the Section 336.021, Fla. Stat., tax of $.01 per gallon. They had only approximately 14.26 percent of the 125,614 additional taxable gallon (net gain) for purposes of local option taxes, or 17,913 additional taxable gallons. Using the statutory 1 percent taxable rate, Co-Op owes the following additional taxes: County Total Tax Percent Ratio Tax Due 8.60 Lake 171.93 5 Lee 171.93 28 48.14 Manatee 171.93 67 115.19 The statutory 25 percent penalty on the additional Section 336.021 local option tax amounts to $42.98. At the statutory rate, interest owing on the additional Section 336.021 local option tax totalled $127.97 through July 28, 1993, with interest accruing at the rate of $.06 per day thereafter. In sum, as of July 28, 1993, Co-Op owed local option tax under Section 336.021, penalty and interest in the amount of $342.88, with interest accruing at $.06 per day from that day forward. Estoppel Since 1957, each month Co-Op reported and paid motor fuel and special fuel tax based on the number of "net" gallons purchased during the preceding month. Four years before the audit which is the subject of this case, Co-Op was audited and was not told that it was in error in reporting and paying motor fuel and special fuel tax based on the number of "net" gallons purchased. However, at all times when Co-Op reported and paid motor fuel and special fuel tax based on the number of "net" gallons purchased, it also collected tax from the ultimate purchasers on the number of "gross" gallons pumped through the meter. Offer to Compromise Penalty The Department, in its Notice of Decision and Notice of Reconsideration offered to compromise the penalty on all taxes from the 25 percent level to a 5 percent level, but Co-Op protested both of these notices. The offer of compromise was only good for the duration of the Closing Agreement which was attached to the Notice of Reconsideration. In light of the prior audit, which did not alert Co-Op that it was reporting and paying taxes incorrectly, it could perhaps initially have been argued by Co-Op that its failure to report and pay these taxes when due was reasonable, and not fraudulent or willful neglect or negligence. But the prior audit cannot justify its decision to contest its liability for these taxes through formal administrative proceedings.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Revenue enter a final order finding the Petitioner, Co- Op Oil Company, Inc., liable for the following taxes: Ch. 212, Part II, Motor Fuel.--$6,670. 37, with interest accruing at $1.07 per day from July 29, 1993. Ch. 212, Pt. II, Special Fuel.-- $2,892.72, with interest accruing at $.48 per day from July 29, 1993. (3) Ch. 206, Motor Fuel.--$4,361.30, with interest accruing at $.75 per day from July 29, 1993. (4) Ch. 206, Special Fuel.--$2,323.39, with interest accruing at $.39 per day from July 29, 1993. Ch. 336.025, Motor/Special Fuel.-- $12,636.76, with interest accruing at $2.16 per day from July 29, 1993. Ch. 336.021, Motor/Special Fuel.-- $342.88, with interest accruing at $.06 per day from July 29, 1993. TOTAL - $29,277.42, with interest accruing at $4.91 per day from July 29, 1993. RECOMMENDED this 22nd day of September, 1993, in Tallahassee, Florida. 1550 J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399- (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of September, 1993. COPIES FURNISHED: James E. Smith, President Co-Op Oil Company, Inc. 4911 - 8th Avenue South Gulfport, Florida 33707 Ralph R. Jaeger, Esquire Assistant Attorney General Department of Legal Affairs Tax Section, Capitol Building Tallahassee, Florida 32399-1050 Linda Lettera, Esquire General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs Executive Director Department of Revenue 102 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact Petitioner Auto/Truck Plaza Specialists, Inc., a Florida Corporation, (formerly GHM, Inc. of Baldwin) operates a "truck stop" in Baldwin, Florida, which sells special fuel and motor fuel under a dealer's license issued by the respondent. The firm leases the buildings under an agreement with the Union Oil Company of California. Part of the rental for the leased premises consists of one cent per gallon on sales of special fuels based on monthly reports that reflect fuel inventory at the beginning of the month, gallons acquired during the month, and the amount sold during the month based on manual measurement of the storage tanks. In like manner, the required state monthly tax return is based upon gallons to be accounted for" and consists of basically the same method as used in accounting to Union Oil Company. However, in preparing bimonthly excise tax returns to the Internal Revenue Service, it is unnecessary to show the number of gallons sold, but just the dollar amount of sales. Petitioner used pump meter readings to arrive at federal tax figures computed from daily reports of station personnel who read the pump meters at the beginning and end of each of three eight-hour shifts. The daily reports are recapitulated by petitioner's bookkeepers into monthly reports that take certain adjustments into account, such as fuel that is pumped by mistake into trucks and then replaced in the tanks. The daily reports are subject to mathematical mistakes by station attendants and the meters themselves periodically become defective, thus necessitating repair or replacement. This type of report is used by petitioner also as a comparison of months to see how the business is progressing and to attempt to detect theft by employees. (Testimony of Hires, Morris, Petitioner's Exhibits 2-5) Although petitioner normally purchases all of its special fuel from Union Oil Company, there was a period from June, 1973, through February, 1974, when, due to a shortage of fuel, purchases of some 500,000 gallons were made from five other distributors. Petitioner was under the impression that it paid tax on these purchases because none of the firms asked for its license number and the price charged for the fuel appeared to be an amount sufficient to include the state tax. No taxes were separately stated on the invoices from these firms, but petitioner's license number appeared on some of them. All such purchases were made by checks drawn on petitioner's bank account. The state tax due on later resales of this special fuel was not collected or paid to the state by petitioner. Nevertheless, it is found that petitioner's explanation that it was unaware that tax had not been previously paid to distributors is credible and that there was no intent to purposely evade payment of state taxes. (Testimony of Hires) In the summer of 1976, respondent's tax examiner Heyward R. Steinhauser, learned that sales of special fuels had been made to petitioner without the payment of tax and had not been reported to his agency. Petitioner explained the situation concerning outside purchases to Steinhauser, and the latter thereafter conducted an audit of the firm's books covering the period June, 1973, through June, 1976. He examined petitioner's check register to determine how much excise tax had been paid to the federal government and determined that this amount corresponded substantially with the number of gallons sold as reflected on the monthly meter reading reports. During this audit, Steinhauser found no evidence of outside purchases except that reflected by checks issued by petitioner to the five firms during the latter half of 1973 and 1974. However, Steinhauser made no effort to verify the totals set forth on the monthly meter reports as far as accuracy of computation. Petitioner made all of its records available for the audit and offered the daily reports to Steinhauser which he declined to use due to their bulk. (Testimony of Hires, Steinhauser). An informal meeting was held between petitioner and representatives of respondent on September 28, 1976, based on a proposed assessment resulting from the audit. At this meeting, certain credits were allowed to petitioner. The meeting was followed by a formal Notice of Proposed Assessment, dated November 22, 1976, wherein respondent claimed tax due in the amount of $48,016.22, interest in the amount of $15,248.30, and penalties of $6,196.76, for a total of $69,461.01. After deducting a $10,000 payment made by petitioner on September 28, 1976, the total amount due as stated in the assessment letter was $60,316.07. This was followed by a subsequent meeting on February 2, 1977, whereby petitioner sought further adjustment of the proposed assessment. A letter of February 15, 1977, from respondent's audit supervisor of the Motor Fuel Tax Bureau reasserted the original assessment, plus additional interest making the total allegedly due, as of February 10, 1977, $61,582.00. In that letter, petitioner was advised that since the daily pump readings or reports had not been made available to reconcile any discrepancies in the monthly reports, no adjustment could be made as to the proposed assessment. The reason for the unavailability of the daily records was that they had been inadvertently destroyed by an employee of the petitioner several months after the audit. Another meeting was held on March 29, 1977, which apparently was unsuccessful because a further letter of respondent, dated March 31, 1977, again asserted the previous amount of tax due, plus additional interest, making a total due of $62,198.07. Thereafter, on April 28, 1977, petitioner filed its petition for an administrative hearing. (Testimony of Steinhauser, Hires, Morris, Petitioner's Exhibits 1, 9-10) At the hearing, petitioner submitted its own audit based on fuel purchases, its check register, and invoices from Union Oil Company and outside suppliers. After computing exempt purchases, collection fees, and taxes already paid to the state, petitioner admitted that taxes had been due in the total amount of $42,342, based on sales of 541,825 gallons of fuel. The state's figures had based tax due on 592,587 gallons sold. After deductions of the $10,000 payment made on September 28, 1976, and a further payment of $30,000 on August 11, 1977, plus penalties and interest, petitioner admits that a sum of $11,390 is still due and owing. A further audit presented by respondent at the hearing reflects a total due at the end of September, 1977, of $47,699.44. Petitioner pointed out at the hearing that various mistakes in addition had been made in the monthly meter reports utilized by respondent in arriving at its assessment. However, neither petitioner nor respondent had verified the accuracy of these figures. Accordingly, the Hearing Officer requested that this be accomplished subsequent to hearing and that a report be furnished as a late- filed exhibit. Petitioner submitted such a report on November 15, 1977, which shows that mathematical mistakes in the reports were made to the extent that they reflected 56,595.5 more gallons sold during the audit period than was actually the case. This figure corresponds favorably with petitioner's contention based on its audit that it had sold some 51,000 gallons less than that asserted by respondent. Respondent has not contested the late-filed exhibit of petitioner and it is found that the figures reflected therein are correct. (Testimony of Morris, Petitioner's Exhibits 6, 7, 11, Respondent's Exhibits 1, 2)
Recommendation That petitioner be held liable for special fuels tax, penalty and interest in the amount of $11,390. DONE and ENTERED this 29th day of November, 1977, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 COPIES FURNISHED: Linder Smith, Jr. Esquire 1320 Atlantic Bank Building Jacksonville, Florida 32202 Harold F.X. Purnell, Esquire Assistant Attorney General Department of Legal Affairs The Capital Tallahassee, Florida 32304
Findings Of Fact The following findings of fact are based upon the stipulation of the parties and the evidence presented: During a routine inspection on June 11, 1986 at Ron's Chevron #4, 1790 North Hercules, Clearwater, Florida, samples of all grades of gasoline were taken. A sample was taken from each side of a pump labeled "Chevron Unleaded". Using a field method for measuring lead content, it was determined that both samples contained more than 0.11 grams of lead per gallon, which exceeds the standard of 0.05 grams per gallon. The results of the field measurement were confirmed at the Department's main laboratory by Nancy Fischer on June 16, 1986. A stop sale notice was issued on June 12, 1986, and the contaminated product was withheld from sale to the public. On June 17, 1986, Petitioner was required to post a bond in the amount of $1,000 in lieu of the Department confiscating 5,850 gallons of fuel. The product was released for sale as Chevron Regular, a leaded fuel. New product was placed in the tank and proved lead free. Lead in gasoline is detrimental to a car designed to run on unleaded fuel. The lead can cause serious damage to the emission system and possibly the engine by stopping up the catalytic converter. The parties stipulated that the sole issue in this case is the amount of the bond. There is no evidence that Petitioner intentionally contaminated the fuel for financial gain. The cause appears to have been carelessness at some point between, or at, wholesale and retail. The Department accepted a bond of $1,000 and allowed Petitioner to retain the fuel for relabeling and sale as leaded fuel. The Department's penalty imposed in this case is consistent with its past practice in factually similar cases.
Recommendation Based upon the foregoing, it is recommended that the Department enter a Final Order requiring Petitioner to post a $1,000 refundable bond. DONE AND ENTERED this 23rd day of October 1986 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 23rd day of October 1986. COPIES FURNISHED: Ronald Trimm Ron's Chevron #4 1790 North Hercules Clearwater, Florida 33515 William C. Harris, Esquire Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32301 The Honorable Doyle Conner Commissioner of Agriculture The Capitol Tallahassee, Florida 32301
The Issue The issues for determination are whether the emergency suspension of Respondents' licenses was proper and whether revocation of those licenses is required.
Findings Of Fact Respondent Robinson, an authorized Chevron representative, is the sole proprietor of Jack A. Robinson, Distributor. Respondent R&R Partnership (R&R) is a partnership between Jack A. Robinson and Dee Ann Rich (Rich). Respondent I-10 Corporation (Stacks) is a subchapter S corporation in which Respondent Robinson is a 50 percent shareholder. Rich is the general manager of Jack A. Robinson, Distributor and exercises administrative responsibilities with regard to Respondents Stacks and R & R Corporation. Robinson holds Special Fuel Dealer's License No. 10 Wholesaler's License No. 09000950/9356 issued by Petitioner. Robinson sells diesel fuel and gasoline at wholesale to I unrelated parties. I products at retail. Robinson admits in response to Counts III, IV, VI, VII, VIII, IX, X, XI, XII, XVI, XIX, XXII, XXIII, XXIV, XXVII, and XXX, of the Notice To Show Cause in DOAH Case No. 93-1563 that $210,876.19 of tax remains due and owing. Rich is Jack A. Robinson's step supervising and preparing tax returns for Robinson. With regard to the $210,876.19 admitted as due and owing, these state funds were collected by Respondent Jack A. Robinson as an agent for the State of Florida but, instead of being remitted to the state, these funds were spent by Respondent in the course of business operation. DOAH Case No. 93-1563 In response to Counts I, II, V, XV, XVII, XXI, XVI, XXVIII, and XXIX of the Notice To Show Cause in DOAH Case No. 93 that $103,452.71 tax is due. As to Count I, the balance for the tax return period of February 1990, for motor fuel tax due is $2,524.14. In regard to Count II, Respondent also owes motor fuel tax in the amount of $26,839.71 for the tax return period of March, 1990. Although Rich requested Respondent's bank to make the appropriate electronic funds transfer to Petitioner, the amount was not received by Petitioner and no explanation was provided by Respondent for the failure of Petitioner to receive this amount. As to Count V, Respondent owes a total motor fuel tax of $12,900.27. The previous total of $36,232.69 was reduced by a late partial payment of $11,562.53, and an additional payment of $11,769.87 on September 25, 1991. No payment of tax was made for the period of March 1992. As to Count XIV, Respondent Robinson filed a tax return for January 1993, motor fuel local option tax in the month of February 1993. The return showed a total tax due of $21,044.62. A collection allowance of $148.56 is shown deducted. No proof of payment of the tax was presented. In regard to Count XVII, a return for the tax period of March 1990, was filed on behalf of Respondent Robinson, declaring a total special fuel tax due of $23,572.82. No evidence was presented that payment was actually made, although Rich testified that a wire transfer payment of that amount was requested by Respondent. With regard to Respondent Robinson, the amounts of tax admitted in responsive pleading together with all counts of the Notice To Show Cause where no evidence or allegation of payment was presented total: Admitted in pleading $210,876.19 Admitted owing for March of 1990 in Motor Fuel and Special Fuel Tax $ 50,412.53 Copies of Returns introduced and alleged to have been filed, but unsupported by Petitioner's records and otherwise unsubstan- tiated by proof (for August of 1992 and January of 1993). $ 35,655.06 No proof of payment presented for balance of November of 1990 tax. $ 12,900.27 Admitted, paid less than due for January 1990; August 1990; and November, 1990. $ 8,058.52 This amount does not include applicable penalties and interest. DOAH Case No. 93-1565 Counts I through IV are admitted by Respondent R & R Partnership as to the amounts owned for a total tax due of $9,189.12. This amount does not include applicable penalties and accrued interest. While R & R reported taxes due on Respondent Robinson's returns, no proof was submitted that these taxes were paid to Petitioner. For the tax period of January, 1993, Rich maintained that a return was filed on behalf of R & R partnership and payment made. However, the copy of the payment check presented at hearing had "2/93" written in pencil as the date of the check and no evidence was presented that the check was presented for payment to Respondent's bank. DOAH CASE NO. 93-1564 With regard to I allegations of Counts I, II, III, IV, V, VII, VIII, X, XI, and XII. As to Counts VI and IX, Respondent denies only that there was improper reporting, not that the amount of tax is not due. Respondent maintains that all taxes collected by Stacks were paid to Respondent Robinson and reported on those returns. The periods of January 1990; February 1990; March 1990; April 1990; August 1990; November 1990; February 1992; correspond to the counts of the Notice To Show Cause to which Stacks denies all allegations. These periods and denied counts match precisely with periods in Counts IX, X, XI, XII, XV, XVI, XVII, XVIII, XIX, XX, XXI, XXII, of the Notice To Show Cause filed against Respondent Robinson. Robinson admits Counts IX, X, XI, XII, XVI, XVII, XIX, XX, and XXII and presented no proof of payment at hearing with regard to Count XV and XVII. This fact, coupled with testimony that Stacks and R & R taxes were paid to Robinson and reported as line items on his returns, show that Stacks does owe the taxes claimed by Petitioner in the amount of $36,029.45 exclusive of interest and penalties. Debra Swift, a Certified Public Accountant, employed by Petitioner, personally reviewed records of Petitioner in determining the amounts of tax, penalty and interest due from each Respondent. All payments received by Petitioner were credited by Swift in performing her calculations.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered revoking the fuel licenses of all three Respondents. DONE AND ENTERED this 13th day of May, 1993, in Tallahassee, Leon County, Florida. DON W. DAVIS 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 13th day of May, 1993. APPENDIX The following constitutes my rulings pursuant to Section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties. Petitioner's Proposed Findings: 1.-12. Adopted, though not verbatim. 13.-15. Accepted. 16.-22. Accepted. Respondent's Proposed Findings: 1. Rejected, no record citation. 2.-3. Adopted. 4. Accepted, except for last sentence which is rejected as legal conclusion. 5.-7. Adopted. 8.-9. Rejected, subordinate to HO findings on this point. 10.-12. Rejected, weight of the evidence. 13. Rejected, relevancy. 14.-16. Rejected, subordinate to HO findings. 17. Adopted by reference. 18.-21. Rejected, subordinate to HO findings. 22.-24. Rejected, weight of the evidence, no citation. 25._38. Rejected, subordinate to HO findings. 39.-40. Rejected, weight of the evidence. 41.-42. Adopted by reference. 43.-44. Rejected, subordinate, misconstruction of testimony. 45. Rejected, conclusion of law, weight of the evidence. 46.-48. Rejected, subordinate, argumentative, relevancy. COPIES FURNISHED: Lealand L. McCharen Assistant Attorney General Department of Legal Affairs The Capitol-Tax Section Tallahassee, FL 32399-1050 Timothy J. Warfel Messer, Vickers Suite 701 First Florida Bank Building 215 South Monroe Street Post Office Box 1878 Tallahassee, FL 32302 Linda Lettera General Counsel 204 Carlton Building Tallahassee, FL 32399-0100 Larry Fuchs Executive Director 104 Carlton Building Tallahassee, FL 32399-0100
The Issue The issue in this case is whether Petitioner is liable to Respondent for fuel taxes, and, if so, whether Respondent's levy on Petitioner's bank deposits is warranted and proper.
Findings Of Fact Petitioner was at all times relevant to this proceeding an active corporation in the State of Florida. Petitioner operated as a motor fuel dealer from its inception in 1984, but in 1996, its application for licensure as a motor fuel dealer was not renewed by Respondent due to the existence of fuel tax delinquencies. Respondent is the state agency responsible for collecting taxes paid by motor fuel dealers. On July 3, 1996, Respondent issued a Notice of Final Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of $74,423.25; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office. On July 3, 1996, Respondent issued another Notice of Final Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of $12,625.64; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office. On July 3, 1996, Respondent issued another Notice of Final Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of $15,245.84; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office. On June 28, 1996, Respondent issued a Notice of Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of $90,317.87; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office. On June 28, 1996, Respondent issued another Notice of Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of $57,864.24; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office. On November 27, 1996, Respondent issued a Notice of Final Assessment and Jeopardy Finding to Petitioner indicating taxes, penalties, and interest due to Respondent in the sum of $81,094.54; a Warrant was issued in that amount and filed with the Pasco County Clerk's Office. Another Warrant was filed in the Pasco County Clerk's Office on May 24, 1996, reflecting delinquent taxes, penalties, and interest owed Respondent due to failure of an electronic transfer by Petitioner because of insufficient funds. The amount of that Warrant was $9,918.92. (A filing fee of $32.00 was assessed for each of the filed Warrants.) The time for challenging the assessments set forth in the notices and Warrants has passed. No credible evidence was presented at final hearing to suggest the assessed amounts were incorrect. Petitioner made some payments on the assessed amounts from time to time. Payments were applied to the outstanding balance in accordance with governing statutes: Filing fees, then accrued interest, then penalties, and then the tax liabilities. After applying the payments and taking into account accruing interest, Petitioner owes Respondent $377,074.29 as of the date of the final hearing. On September 13, 1996, Petitioner wrote a letter to Respondent asking that all penalties and interest on the outstanding balance be waived. The basis of the request was that only one officer of the corporation had actual knowledge of the unpaid fuel taxes. Once the other two officers were made aware, they immediately paid the current taxes and discontinued operation of the business. All assets of the business were sold, and the proceeds provided to Respondent to apply against the outstanding balance. Some revenue was being held by the corporation to provide for orderly termination of the business and upkeep of the real property owned by the corporation. Respondent denied Petitioner's request for compromise of the outstanding debt by letter dated December 19, 1996. Respondent requested from Petitioner evidence that Petitioner had exercised "ordinary care and prudence" in complying with state revenue laws. No evidence of a response by Petitioner was identified at final hearing. On August 27, 2009, Respondent, in recognition that the Warrants would expire after a period of time, notified Petitioner of the need to satisfy all the Warrants immediately. Upon Petitioner's failure to pay, Respondent issued a Notice of Freeze on October 8, 2009, to Synovus Bank where Petitioner's funds were being held. At that time there was $52,990.21 being held by the bank for Petitioner. On November 3, 2009, Respondent issued a Notice of Intent to Levy, advising Petitioner of its intent to seize the money being held at Synovus Bank. Petitioner timely filed a contest to the Notice of Intent to Levy. Respondent notified Synovus Bank of the contest. Petitioner was formed by three individuals: Earl Radcliff, president; Robert Spence; and R. Michal Marston. Spence and Marston were merely investors; Radcliff operated and controlled the business. Neither Spence, nor Marston was involved in the payment of fuel taxes during the period the business was operating. That duty was left entirely up to Radcliff. Upon Radcliff's failure to pay the taxes that were due, Respondent began issuing notices. Finally, in 1996, Respondent refused to renew Petitioner's motor fuel dealer's license, effectively terminating the business. Spence and Marston were not immediately made aware of this fact, but upon learning that the license had not been renewed, they began attempting to make the appropriate tax payments. When it became obvious there was not enough money available to pay the tax liabilities, Spence began taking steps to protect the real estate owned by Petitioner so that it could be sold to meet the tax liabilities. The funds held by Synovus Bank are being used solely to protect the existing real property. Neither Spence, nor Marston, was ever repaid for their initial investment to the corporation. The real property has not been sold due to many reasons, including the downturn in the economy, the existence of environmental problems on the site, and general deterioration of the property. The property is in two parcels: one is an empty lot and the other is being used as an automobile dealership.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Respondent, Department of Revenue, upholding the Notice of Intent to Levy issued by Respondent as to property owned by Petitioner, Fuel Mart, Inc. DONE AND ENTERED this 28th day of May, 2010, in Tallahassee, Leon County, Florida. 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 28th day of May, 2010. COPIES FURNISHED: Lisa Echeverri, Executive Director Department of Revenue The Carlton Building, Room 104 501 South Calhoun Street Tallahassee, Florida 32399-0100 Marshall Stranburg, General Counsel Department of Revenue The Carlton Building, Room 204 501 South Calhoun Street Post Office Box 6668 Tallahassee, Florida 32314-6668 John Mika, Esquire Office of the Attorney General The Capitol - Tax Section Tallahassee, Florida 32399-1050 Robert Spence Fuel Mart, Inc. 250 North Belcher Road, No. 100 Clearwater, Florida 33765-2622
Findings Of Fact The Petitioner was acquired by Mr. Farish in November 1985. The Petitioner is a Georgia corporation. In December 1985, the Petitioner bid on a federal contract to provide fuel to federal installations in the southeastern United States. The Petitioner was awarded a contract to provide fuel oil for off-road use at Patrick Air Force Base, which is located in Florida. The Petitioner requested an application from the Department of Revenue for a special fuel license. The Petitioner was sent a motor fuel license application instead of a special fuel license application. The Petitioner filed the motor fuel license application with the Department of Revenue. The Petitioner subsequently filed a special fuel license application. It was received and validated by the Department of Revenue on June 24, 1986. The Petitioner was informed on July 9, 1986, that in order to receive the license, the Petitioner needed to file a copy of a certification to do business in Florida, which could be obtained from the Secretary of State's office. On or about January 9, 1987, the Petitioner forwarded to the Department of Revenue the certification from the Secretary of State's office needed to complete the Petitioner's license application. The Petitioner's special fuel license was issued and became effective January 9, 1987. The Petitioner began purchasing and selling special fuel in Florida on or about April 1, 1986. Between April 1, 1986 and January 9, 1987, the Petitioner paid $7,995.86 in Florida fuel tax liability for purchases of special fuel in Florida. On or about February 25, 1987, the Petitioner filed an application for special fuel tax refund in the amount of $7,995.86. The Respondent denied the tax refund application filed by the Petitioner by Order dated March 18, 1987.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order denying the Petitioner's application for refund be issued by the Respondent. DONE and ENTERED this 18th day of August, 1987, in Tallahassee, Florida. LARRY J. SARTIN 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 18th day of August 1989. APPENDIX TO RECOMMENDED ORDER CASE No. 87-1641 Only the Respondent filed a proposed Recommended Order containing proposed findings of fact. The Respondent failed to number its proposed findings of fact. The Respondent has, however, only proposed essentially 3 proposed findings of fact: that the Respondent denied the Petitioner's claim for refund and the justification therefore, the Petitioner made four admissions and the Petitioner is a Georgia corporation. The Respondent's first proposed finding of fact has been accepted in paragraph 12, the second proposed finding of fact has been accepted in paragraphs 6-8 and the third proposed finding of fact has been accepted in paragraph 1. COPIES FURNISHED: Honorable Gerald Lewis, Comptroller Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0305 James E. Farish, Jr. President Lincoln Oil Co., Inc. Post Office Box 2904 Gainesville, Georgia 30503-0294 Edwin A. Bayo, Esquire Assistant Attorney General Department of Legal Affairs Tax Section The Capitol Tallahassee, Florida 32399-1050
The Issue Whether the Department properly issued a warning letter for selling gasoline that failed to meet state standards regarding end point temperature contrary to Section 525.037, Florida Statutes.
Findings Of Fact Respondent is the state agency authorized to regulate the petroleum products (fuel) offered for sale in Florida for illuminating, heating, cooking, or power purposes. It does so by randomly sampling fuels offered for sale by vendors throughout the state to determine if the fuel meets standards set by the state pursuant to law. Petitioner operates a marina in central Florida where it offers gasoline for sale to its customers. Respondent's inspectors conducted a random sampling of Petitioner's gasoline. Subsequent testing revealed that the end point temperature of the gasoline was not in conformity with the standards for premium gasoline, the only grade sold by Petitioner. On this basis Respondent issued Petitioner a warning letter. It is undisputed that the gasoline sample failed to meet standards. The end point temperature of gasoline is not apparent from its color, smell, or appearance and can only be determined by testing in a laboratory equipped for that purpose. Petitioner has approximately 1,000 gallons of storage for gasoline and reorders when they have approximately 500 gallons on hand. The wholesaler will not hold Petitioner harmless for product that it sells. In order to assure the quality of the gasoline it sells, Petitioner would have to test each delivery. The cost to test a sample is approximately $100. This would add approximately 20 cents to the cost of each gallon sold on a 500-gallon order, and Petitioner asserts that it now loses 10 to 15 cents per gallon on the fuel it sells as a convenience to boaters at its marina. Respondent does free quality testing of gasoline for vendors as a service based upon the availability of its facilities and time. It takes at least 24 hours to test the fuel. These are unofficial, miscellaneous samples, and the results are reported to the person who provided the sample without follow up. The end point temperature of gasoline is typically altered by the addition of another type of petroleum product to the fuel being sold. This can occur at any point during the chain of delivery from the manufacturer to the ultimate vendor. While the standards of the depots have improved, contamination can and does occur there. Similarly, petroleum transporters have improved their standards, but contamination does occur by inadvertently mixing products when filling tank trucks. Lastly, contamination also occurs at the vendors where there are cases of unscrupulous vendors mixing waste oil with product to get rid of the waste oil. There is no evidence of the cause of the contamination in this case. The Department talked with the wholesaler of the gasoline that provided the gasoline to Petitioner, but that wholesaler was reticent to provide documentation for the fuel and to discuss the matter with representatives of the Department. The operation of engines with fuels that have the wrong end point can result in serious damage to a vehicular or marine engine. If Respondent finds Petitioner selling substandard fuel again, Petitioner will be liable to a fine up to $5,000. After three years, warning letters are expunged if there are no other violations, and Petitioner would receive a warning letter for another violation after three years.
Recommendation Based upon the findings of fact and conclusions of law, it is RECOMMENDED: That the Department should enter its final order confirming the issuance of its warning letter. DONE AND ENTERED this 12th day of November, 2004, in Tallahassee, Leon County, Florida. S STEPHEN F. DEAN 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 12th day of November, 2004. COPIES FURNISHED: David W. Young, Esquire Department of Agriculture and Consumer Services 407 South Calhoun Street Mayo Building, Suite 520 Tallahassee, Florida 32399-0800 Joseph T. Lewis Mount Dora Marina Company, Inc. 148 Charles Avenue Mount Dora, Florida 32757 Eric R. Hamilton, Chief Bureau of Petroleum Inspection Division of Standards Department of Agriculture and Consumer Services 3125 Conner Boulevard, Building 1 Tallahassee, Florida 32399-1650
Findings Of Fact The Petitioner holds a valid special fuel dealer's license issued by the Respondent. The license was issued during approximately March, 1972. The Respondent conducted an audit of Petitioner's sales operations, and assessed special fuel taxes, plus penalty, on approximately 264,973 gallons of special fuel for which the Respondent contended inadequate account was given. 29,166 gallons of the special fuel involved in the assessment was sold to local oil field drillers. These sales are reflected in invoices which were received in evidence as Joint Exhibit 1. This fuel was used for industrial and commercial purposes, and not for the propulsion of motor vehicles on the public highways of the State of Florida. 161,900 gallons of the special fuel involved in this assessment was sold to Ard Oil Company, Summerdale, Alabama. Petitioner had every reason to believe that Ard Oil Company held a valid license as a dealer of special fuels in the State of Florida. Petitioner took reasonable steps to insure himself as to Ard's status, and received no instructions from the Respondent as to steps that could be taken to identify persons who were not properly licensed as special fuel dealers. 11,700 gallons of the special fuel involved in this assessment was sold to Hagler Grocery. All subsequent sales made by Hagler Grocery were for off- road, agricultural uses. During July, 1973, 5,000 gallons of the Petitioner's special fuel was mistakenly mixed with gasoline. The mixing rendered the special fuel unusable, and it was emptied onto Petitioner's property. This 5,000 gallons of fuel was never sold by the Petitioner, and was never used. On one occasion during the period of the audit, 5,000 gallons of special fuel leaked from one of the Petitioner's storage tanks due to a valve being left open erroneously. This fuel was never sold by the Petitioner, and was never used. During the period covered by the audit involved in this case, the Petitioner sold more than 5,000,000 gallons of special fuel. The Petitioner donates approximately 2,000 - 3,000 gallons of fuel yearly to the local fire department for training purposes. The Petitioner rinses his tanks periodically to keep down the lead content, and this results in some loss in special fuel. The Petitioner loses approximately 5 gallons of special fuel in each loading operation. The Petitioner made effort to account for all special fuel which came into his possession. Less than one percent of the fuel that came into his possession during the audit period has not been accounted for. It is reasonable to conclude, that 52,207 gallons of the Petitioner's special fuel was lost due to spillage, flushing operations, and donations to the local fire department. There was no evidence offered at the hearing from which it could be determined that any unaccounted fuel was used for a taxable purpose, or for any purpose.
The Issue The issue for determination is whether the Commercial Motor Vehicle Review Board's decision in this matter is proper; a determination that necessarily requires a finding of whether Respondent is liable, in two separate instances, for payment of a civil penalty for commission of the infraction of interstate operation of a commercial motor vehicle without first obtaining a fuel use permit.
Findings Of Fact On November 18, 1990, Respondent was driving on Interstate Highway 95 (I-95) in a three axle truck powered by motor fuel. He stopped the vehicle at Petitioner's weigh station located on I-95 near Yulee, Florida. Petitioner's station law enforcement personnel observed that there was no fuel tax identification on the truck and no temporary fuel tax permit. Respondent was assessed a civil penalty by weigh station law enforcement personnel of $50 as a result of Respondent's failure to comply with the State of Florida's fuel tax registration requirements. He was also issued a 10 day temporary fuel tax permit for a fee of $45 to enable the vehicle to proceed from the weigh station. On December 4, 1990, Respondent was again driving on Interstate Highway 95 (I-95) in the same three axle truck. Again, he stopped the vehicle at Petitioner's weigh station located on I-95 near Yulee, Florida. Petitioner's station law enforcement personnel again observed that there was no fuel tax identification on the truck and no temporary fuel tax permit. Respondent informed station personnel that an application for the appropriate permit had been made, but offered no documentation to support this claim. Respondent was assessed another civil penalty by weigh station law enforcement personnel of $50 as a result of this second failure to comply with the State of Florida's fuel tax registration requirements. He issued a second 10 day temporary fuel tax permit for a fee of $45 to enable the vehicle to proceed from the weigh station. Respondent requested that the Commercial Motor Vehicle Review Board review the civil penalty assessment. Subsequently, the Board met on May 9, 1991, and reviewed the civil penalty assessed against Respondent on each occasion. The Board determined that a refund of the penalties paid by Respondent was not appropriate. By written request filed with Petitioner on June 10, 1991, Respondent requested a formal hearing regarding the propriety of the penalties assessed against him.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered confirming the imposition of two civil penalties of $50 each upon Respondent and affirming Respondent's two payments of $45 for the two fuel use permits received in conjunction with the assessment of the civil penalties. DONE AND ENTERED this 16th day of October, 1991, in Tallahassee, Leon County, Florida. DON W.DAVIS 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 16th day of October, 1991. Copies furnished: Jay O. Barber, Esq. Department Of Transportation 605 Suwannee Street Tallahassee, FL 32399-0450 Kenneth R. Koozer 5469 Riverbluff Circle Sarasota, FL 34231 General Counsel Department of Transportation 605 Suwannee Street Tallahassee, FL 32399-0450 Ben G. Watts Secretary Haydon Burns Building 605 Suwannee Street Tallahassee, FL 32399-0458
Findings Of Fact Ware Oil and Supply Company, Inc. (hereafter "Petitioner" or "Ware Oil"), is a wholesale and retail dealer of petroleum products. Ware Oil is a licensed dealer of special and motor fuels. Special fuels are primarily diesel and are used to operate off-highway equipment such as boats, farm tractors and industrial machinery. Beginning March 1980, the Department conducted a special fuels tax audit of the records of the Petitioner for the period January 1, 1977, through January 31, 1980. The special fuels tax audit resulted in a levy of a tax deficiency pursuant to Part II, Chapter 206, Florida Statutes. The taxes assessed together with penalty and interest are $6.868.06, with interest accruing at $1.70 per day from April 14, 1980. The assessment was based in sales of special fuels made by the Petitioner to four customers; Hoxie Brothers Circus, Jackson United Shows, Tommy Lynn and Pace's 66 Marina. The assessment relative to the sales of special fuel to Hoxie Brothers Circus and Jackson United Shows was due to the absence of a purchaser's affidavit of exemption from these customers and the Department's belief that they were dual users of special fuel due to the nature of their businesses. The assessment relative to Tommy Lynn was based on the Department's conclusion that Mr. Lynn was a dual user of special fuel and was an unlicensed dealer at the time the sales were made. The assessment relative to Pace's 66 Marina was based on Pace's resale of special fuels for which a dealer's license is required at the time of purchase. The taxes assessed by the Department are derived from the number of gallons of special fuel which was sold by the Petitioner to Hoxie Brothers Circus, Jackson United Shows, Tommy Lynn and Pace's 66 Marina, on which the $.08 per gallon tax was not collected. During 1977 Petitioner sold 550 gallons of special fuel to Hoxie Brothers Circus for purposes of generating electricity in order to operate circus rides and lights. The Petitioner did not have an exemption certificate from Hoxie relative to this sale although the sale invoice indicated that the fuel was for "off-road use". Sales tax of $.04 per gallon was collected by the Petitioner from Hoxie. No testimony or documentary evidence was produced to demonstrate that Hoxie in fact used the special fuel for an exempt purpose, that the special fuel was not placed into a receptacle connected to the fuel supply system of a motor vehicle and that the special fuel was not purchased for resale or far a dual use. In 1978, the Petitioner sold 300 gallons of special fuel to Jackson United a circus which generates its own electricity for circus rides and lights. The Petitioner has no exemption certificates for this sale; however, like Hoxie, the sales invoice has the term "off-road use" noted on its face. No testimony or documentary evidence was introduced to demonstrate that Jackson in fact used the special fuel for an exempt purpose, that the special fuel was not placed into a receptacle to the fuel supply system of a motor vehicle and that the special fuel was not purchased for resale or for a dual use. In 1977 the Petitioner sold 11,200 gallons of special fuel to Tommy Lynn. At that time Mr. Lynn was an independent logger who used all the special fuel purchased from the Petitioner for his logging equipment in the field and for off-road use. At the time of his purchases from the Petitioner, Mr. Lynn was a dual user of special fuels in that he used special fuel for both on and off road equipment. Mr. Lynn bought his off-road special fuels exclusively from the Petitioner and his on-road special fuel from another dealer. When audited by the Department, Petitioner did not have an exemption certificate for Mr. Lynn on file in its records. The Department in the past accepted exemption certificates obtained after sales were made. Mr. Lynn executed two after the fact exemption certificates. The first certificate was erroneously executed and a second drafted and signed in which Mr. Lynn stated that his purchases were for off-road use. The second certificate corroborates Mr. Lynn's direct testimony that the special fuel purchased from the Petitioner was used solely for off-road use. Neither of these certificates demonstrates that Mr. Lynn was a licensed dealer in special fuels. During 1977, 1978 and 1979 the Petitioner sold 52,484 gallons of special fuel to Pace's 66 Marina. Pace's used this special fuel for resale to users of commercial and pleasure boats and therefore, no sales tax was collected. The location of the special fuel pumps at Pace's make it virtually impossible to use the fuel for purposes other than boating. At the time of the fuel's purchase, Pace's presented an exemption certificate to the Petitioner. At that time, Pace's was not a licensed dealer of special fuels and its dealer's license number did not appear on the exemption certificate furnished to the Petitioner. Petitioner was unaware that Tommy Lynn and Pace's 66 Marina were required to be licensed as dealers and the exemption certificates provided by them should have that contained their dealer's license numbers and therefore, had no knowledge that the exemption certificates of Mr. Lynn and Pace's were incomplete. The sales were made by Petitioner in reliance on the certificates supplied by these two customer. The Department imposed the assessment against Hoxie and Jackson due to the lack of appropriate exemption certificates. The assessment was levied against Tommy Lynn and Pace's due to improperly completed exemption certificates which failed to reflect the dealer's license number. The Department did not consider whether the involved special fuels were in fact used for exempt purposes. The unrebutted testimony and documentary evidence regarding the sales to Tommy Lynn and Pace's 66 Marina supports Petitioner's position that the fuels sold to these two customers were in fact used for exempt purposes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department enter a final order upholding the tax assessment against the Petitioner, Ware Oil and Supply Company. DONE and ENTERED this 31st day of August 1981, in Tallahassee, Florida. SHARYN L. SMITH 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 31st day of August 1981. COPIES FURNISHED: Nicholas Yonclas, Esquire Akerman, Senterfitt & Eidson Post Office Box 1794 Tallahassee, Florida 32302 Jeff Kielbasa, Esquire Assistant Attorney General Department of Legal Affairs The Capitol, LLO4 Tallahassee, Florida 32301
