Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Respondent Cavalier Group filed applications for and obtained orders of registration from petitioner for Miami's Green Acres, Units I and II, in 1967 and 1968. Miami's Green Acres is located in the far western portion of Dade County and consists of 488 lots, ranging from 2 1/2 to 10 acres in size. Most of the lots have been sold by way of Agreement for Deed, and the last sale to the public occurred in 1974. Well over 200 lots have been deeded to the purchasers. The Florida Public Offering Statement, effective April 1, 1969, filed with the petitioner provides in pertinent part that "Miami's Green Acres presently has a mile and one-half of graded access roads. All other similar roads within the subdivision will be completed at the time the deed is required to be delivered to the purchasers." It further provides that "Access to the individual tracts will be pro- vided by graded access roads composed of compacted sand and rock .... These streets have been dedicated to Dade County for public use, but have not been accepted for maintenance." With respect to real estate taxes, the Public Offering Statement provides that "Real estate taxes will be advanced by seller as per contract and purchaser billed therefor prior to deeding of property. Seller retains possession until contract is paid in full and title is conveyed." The Agreements for Deed contain similar provisions. Tommy Farrell, a securities examiner with the petitioner, inspected the subject Miami Green Acres on May 22, 1979. Out of approximately eighteen (18) miles of road promised in the Public Offering Statement, Ms. Ferrell observed only 1 1/4 miles of drivable roads and approximately 6 miles of road which had been originally cut through, but were currently impassable by automobile. The road work has been completed for Unit I of the subdivision. According to Eugene R. Melton, respondent's president, the road work for Unit II has not been completed for various reasons. Initially, the construction of roads was held back because respondent's mortgagee, Arvida Corporation, refused to join in the declaration of easements. This fact concerning Arvida's refusal was made known to the petitioner at the time petitioner approved respondent's registration. Without any further notice to the petitioner concerning the promised road completion, respondent did not begin construction on the roads for Unit II until November, 1974. Approximately two weeks of work was accomplished when Dade County issued a cease and desist order. In February or March of 1975, the cease and desist order was lifted and construction recommenced. In May or June, 1975, heavy rains occurred and construction stopped. At this time, according to Mr. Melton, the road work was approximately 25 to 30 percent complete. No further work was done on the roads until May of 1976, when respondent entered into a contract with a company for the remainder of the work. This work continued only for a few months, bringing the completion up to 40 percent, according to respondent. Except for cleaning up, no further work occurred in 1976 or thereafter. Apparently, the Department of Environmental Regulation and the Army Corps of Engineers became involved in the project and all work ceased. Again, except for the 1968 failure of the mortgagee to join in the dedication of easements, respondent has never advised the petitioner of the problems it was having in the construction of the roads. Kenneth Harris, who was accepted as an expert witness in agricultural road construction, estimated that the cost of completing the remaining road work would be $16,400.00. This estimate was based upon a view of the premises and the assumption that the fill materials could be obtained at a price substantially below market price. Mr. Harris could not recall which roads he traversed while making his physical inspection and he underestimated the amount of road work needed to be done. The last subdivider's annual report submitted to the petitioner by the respondent indicates that approximately $75,000.00 remains to be spent on road work. Respondent did not pay the real estate taxes that accrued on lots within the subdivision during the years 1977 and 1978 prior to the date such taxes became delinquent. These taxes, with the exception of two or three parcels still unpaid, were not paid by respondent until March of 1980. 1/ Prior to March of 1980, respondent had collected from purchasers monies for reimbursement for taxes that had not been timely paid. Respondent did issue warranty deeds to some purchasers at the time that the 1977 and 1978 real estate taxes were delinquent. It is not clear from the evidence how many such deeds were issued, whether the purchasers were aware that the taxes were outstanding at the time they received their warranty deeds, or whether those purchasers had indeed already paid respondent for the taxes. The quarterly encumbrance reports filed by respondent with the petitioner covering the period from January 1, 1978, through June 30, 1979, do not inform the petitioner that the taxes were unpaid and delinquent. After the filing of the Notice to Show Cause, respondent included the unpaid taxes as an encumbrance on the quarterly encumbrance reports.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is RECOMMENDED that: the respondent be found guilty of violating Sections 478.121(3) and 478.052(2), Florida Statutes (1977), (now ss. 498.033(3) and 498.039(3)); a civil penalty be imposed against the respondent for such violations in the total amount of $5,000.00; the respondent submit to the Petitioner within thirty (30) days of the final order a new estimate from a duly licensed engineer of the cost of constructing all roads promised in the Florida Public Offering Statement; the respondent enter into an improvement trust account based upon the estimated cost of completion of the promised road work; and the respondent be ordered to immediately pay all delinquent real estate taxes. Respectfully submitted and entered this 28th day of April, 1980, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675
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
Findings Of Fact The following facts were stipulated to by both Petitioner and Respondent: The Petitioner is a Delaware corporation with its principal office at Toledo, Ohio. The Petitioner qualified to do business in Florida December 31, 1970, and was assigned #825570. The Petitioner did incur a net operating loss for the Fiscal Year ending December 31, 1974, which resulted in a carry forward to 1975 and 1976 for Florida purposes. The 1974 net operating loss for federal income tax purposes amounted to $5,432,905 (as adjusted). For Florida return purposes, net 1974 "Schedule I" additions to federal income were $27,817. Net 1974 "Schedule II" subtractions from federal income per the Florida return as filed were $1,451,951. The apportionment factor for 1974 was 1.5645 percent for Florida tax purposes. The 1975 federal taxable income was $1,295,459. For Florida purposes, net 1975 "Schedule I" additions to federal income were $26,276. Net 1975 "Schedule II" subtractions from federal income per the Florida return as filed were $2,313,813. The apportionment factor for 1975 was 1.5197 percent for Florida tax purposes. The assessment of additional income tax for Fiscal Year ending December 31, 1976, by the Department of Revenue, which is the subject of Petitioner's protest, totals $1,889 resulting from the interpretation of the Florida statutes concerning the amounts mentioned in items 4 through 10 preceding. Total disallowed operation loss carry forward to the year 1976 after apportionment was $37,792. The issue of law involved herein is the interpretation of Section 220.13, Florida Statutes, which section is deemed to control the assessment for Fiscal Year ending December 31, 1976.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the State of Florida, Department of Revenue, upholding the assessment made by the Department of Revenue, and denying the relief requested herein by Petitioner. DONE AND ENTERED this 14th day of September 1979 in Tallahassee, Florida. WILLIAM E. WILLIAMS Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of September 1979. COPIES FURNISHED: J. W. Neithercut, Vice President Questor Corporation Post Office Box 317 Toledo, Ohio 43691 William D. Townsend, Esquire Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32301 Shepard King, Esquire Steel, Hector & Davis 1400 S.E. First National Bank Building Miami, Florida 33131 Joseph Z. Fleming, Esquire 25 Southeast Second Avenue Ingraham Building, Suite 620 Miami, Florida 33131
Findings Of Fact The Petitioner, G. H. Johnson Construction Company, Inc., is a general contractor with an office in, and doing business in, the State of Florida. During the period from June 1, 1984, through May 31, 1987, the Petitioner did not pay State of Florida use tax on $244,916.62 of items purchased for use in the State of Florida. During the period from July 1, 1987, through July 31, 1988, the Petitioner did not pay State of Florida use tax on $4,344.88 of items purchased for use in the State of Florida. During the period from April 1, 1985, through March 31, 1987, the Petitioner did not pay Hillsborough County local option indigent health care tax and discretionary sales surtax on $37,083.77 of items purchased or used in Hillsborough County, Florida. The tax rate established by Hillsborough County for those taxes was 0.0328767 percent. The tax due was $92.71. The Petitioner did not pay State of Florida intangible tax on $622,634 of accounts receivable on the books of the company as of January 1, 1984. The Petitioner paid State of Florida intangible tax on only $516,690 of $743,865 of accounts receivable on the books of the company as of January 1, 1986. The Petitioner did not pay State of Florida intangible tax on $1,615,661 of accounts receivable and $225,000 of loans to stockholders on the books of the company as of January 1, 1987. The Petitioner did not pay State of Florida intangible tax on $942,449 of accounts receivable and $225,000 of loans to stockholders on the books of the company as of January 1, 1988. On or about March 12, 1989, the Petitioner made a partial payment in the amount of $11,394.14. The letter transmitting the payment both stated that "we wish to contest the interest and penalties which have been accrued" and also requested "that the interest and penalties be waived." The letter concluded: "It is understood that acceptance of this payment constitutes acceptance of the above proposal that the interest and penalties be waived." The DOR accepted the payment without direct comment on the closing remarks in the letter.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Petitioner, the Department of Revenue, enter a final order assessing against the Petitioner, G. H. Johnson Construction Company, Inc.: (1) sales and use tax in the amount of $5,025.05; (2) interest in the amount of $8,236.36 as of September 24, 1992, and accruing at the rate of one percent per month on the $5,025.05 of tax due from that date forward; and (3) penalty in the amount of $5,512.42. RECOMMENDED this 30th day of November, 1992, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 30th day of November, 1992. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-0285 To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. Rejected as contrary to the greater weight of the evidence. The DOR uses additional available information to ascertain, as best it can, where purchases are delivered and used. Those means include, but are not limited to, conferring with the taxpayer and requesting evidence showing delivery and use elsewhere. Rejected as subordinate to facts contrary to the greater weight of the evidence. Rejected as not supported by any competent evidence and as subordinate to facts contrary to the greater weight of the evidence. Rejected in part as conclusion of law and in part as contrary to facts found and to the greater weight of the evidence. Subordinate clause, rejected as contrary to facts found and to the greater weight of the evidence. Main clause, rejected as conclusion of law. Accepted but subordinate and unnecessary. In part, accepted and incorporated to the extent not subordinate or unnecessary; in part, rejected as paraphrasing the letter. Accepted and incorporated. Rejected as not supported by the evidence why the taxpayer sent the March 12, 1989, letter and check. 10.-11. Rejected in part as conclusion of law and in part as contrary to facts found and to the greater weight of the evidence. 12. Not a proposed finding of fact. Respondent's Proposed Findings of Fact. Accepted and incorporated. Accepted but unnecessary. Accepted but subordinate and unnecessary. Largely subordinate to facts found. In part, conclusion of law. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. 5.-8. Largely subordinate to facts found. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. 9.-10. In part, conclusion of law. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. 11. Accepted and incorporated to the extent not subordinate or unnecessary. 12.-13. In part, conclusion of law. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. In part, argument. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. In part, argument. Otherwise, subordinate and unnecessary. COPIES FURNISHED: Matias Blanco, Jr., Esquire 701 North Franklin Street Tampa, Florida 33602 James McAuley, Esquire Assistant Attorney General Tax Section Department of Legal Affairs The Capitol Tallahassee, Florida 32399-1050 Linda Lettera, Esquire General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Dr. James Zingale Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue Whether petitioner taxpayer is liable for delinquent sales tax, penalties, and interest under Chapter 212, Florida Stat utes, as alleged by respondent Department in its notice of proposed assessment.
Findings Of Fact The Taxpayer Taxpayer is a family-operated Florida corporation which has engaged in retail sales at the Tampa Port Authority since 1975 or 1976; it is a licensed dealer registered with the Department. (Testimony of Roberts, Marylis.) Taxpayer's Sales During Audit Period From June 1, 1977, through July 31, 1980 (the audit period covered by the Department's proposed assessment), Taxpayer had gross sales in the approximate amount of $691,013.46. (Testimony of Roberts; Exhibit 2.) During that period, Taxpayer filed the required DR-15 monthly sales tax reports and paid taxes on all retail sales transactions which took place on the premises of its store located at 804 Robinson Street, (Tampa Port Authority) Tampa, Florida. (Testimony of Roberts.) During the same audit period -- in addition to sales on its store premises -- Taxpayer sold goods to merchant seamen on board foreign vessels temporarily docked at the Port of Tampa. These vessels operated in foreign commerce, entering the port from and returning to international waters outside the territorial limits of the United States. Taxpayer did not report these sales on its monthly sales tax reports; neither did it charge or collect sales tax from the on-board purchasers. (Testimony of Marylis.) Taxpayer failed to charge or collect sales tax in connection with its on-board sales because it relied on what it had been told by Department representatives. Prior to forming Taxpayer's corporation Thomas Marylis went to the local Department office to obtain a dealer's certificate. While there, he asked Manuel Alvarez, Jr., then the Department's regional audit supervisor, whether he was required to collect sales tax on ship-board sales. Alvarez replied that he didn't have to collect sales taxes on sales made to seamen when he delivered the goods to the ship. 1/ (Testimony of Marylis.) The on-board sales transactions took place in the following manner: Taxpayer (through its owner, Thomas Marylis) would board the foreign vessel and accept orders from the captain, chief mate, or chief steward. (Earlier, one of these persons would have taken orders from the rest of the crew.) If individual crewmen tried to place orders, Marylis would refer them to the captain, chief mate, or chief steward. After receiving orders from one of these three persons, Marylis would return to Taxpayer's store, fill the order, and transport the goods back to the vessel. Whoever placed the order would then examine the goods and give Marylis the money /2 collected from the crew. (Testimony of Roberts, Marylis.) The goods sold in this manner were ordinarily for the personal use of individual crew members; typical items were: shoes, underwear, working clothes, small radios, watches, suitcases, soap, paper towels, and other personal care products. (Testimony of Marylis.) Department Audit of Taxpayer In 1980, the Department audited Taxpayer's corporate books to determine if sales tax had been properly collected and paid. Taxpayer could produce no dock or warehouse receipts, bills of lading, resale certificates from other licensed dealers, or affidavits verifying that its on-board sales were made to out-of-state purchasers for transportation outside of Florida. (Testimony of Roberts, Marylis.) Due to Taxpayer's failure to supply documentation demonstrating that its ship-board sales from June 1, 1977, to July 31, 1980, were exempt from sales tax imposed by Chapter 212, Florida Statutes, the Department issued a proposed assessment on September 23, 1980. Through that assessment, the Department seeks to collect $21,201.01 in delinquent sales tax, $5,131.39 in penalties, and $3,892.18 in interest (in addition to interest at 12 percent per annum, or $6.97 per day, accruing until date of payment). (Exhibit 5.) Informal Conference with Department; Alvarez's Representations to Taxpayer In October 1980 -- after the audit -- Taxpayer (through Marylis) informally met with Manuel Alvarez, the Department's regional audit supervisor, to discuss the tax status of the shipboard sales. Specifically, they discussed the Department auditor's inability to confirm that Taxpayer delivered the items to the ships, as opposed to the buyers picking up the goods at the store. Alvarez told him: [I]f the buyers would come and just pick them up and take them. And I [Alvarez] think I told him that, if that was the case, it was taxable. But, if they just placed their orders there -- like we have had other ship supplies -- and they them- selves, or one of their employees, would take the items aboard ships, that would be an exempt sale. I did make that state ment. If we had any type of confirmation to that effect, when it comes to that. (Tr. 61.) 3/ (Testimony of Alvarez.) Alvarez then told Marylis to obtain documentation or verification that the sales were made on foreign vessels, i.e., proof that Taxpayer delivered the goods to the vessels. He assured Marylis that if he could bring such verification back, such sales "would come off the audit." (Tr. 62.)(Testimony of Alvarez.) Alvarez was an experienced Department employee: he retired in 1980, after 30 years of service. It was Alvarez's standard practice -- when dealing with sales tax exemption questions -- to reiterate the importance of documentation. He would always give the taxpayer an opportunity -- 30 days or more -- to obtain documentation that a sale was exempt from taxation. (Testimony of Alvarez.) Taxpayer's Verification In response to the opportunity provided by Alvarez, Taxpayer (through Marylis) obtained affidavits from numerous captains of foreign vessels and shipping agents. Those affidavits read, in pertinent part: I, [name inserted] , am the Captain aboard the vessel [name inserted] from [place of origin]. I am personally aware that Speros International Ship Supply Co., Inc. sells various commodities, supplies, clothing, and various sundry items to for eign ship personnel by delivering the said items to the ships docked at various termi- nals inside the Tampa Port Authority and other locations in Tampa, Florida from [date] to the present. (Testimony of Marylis; Exhibit 8.) Moreover, in an attempt to comply with the tax law and avoid similar problems in the future, Taxpayer printed receipt books to be used in all future on-board sales. The receipts reflect the type of goods sold, the date of delivery to the vessel, the foreign vessel's destination, and the total purchase price. Also included is a signature line for the individual who delivers and receives the goods. (Testimony of Marylis; Exhibit 7.)
Recommendation Based on the foregoing, it is RECOMMENDED: That Department's proposed assessment of Taxpayer for delinquent sales tax, penalties, and interest, be issued as final agency action. DONE AND RECOMMENDED this 17th day of February, 1982, in Tallahassee, Florida. R. L. CALEEN, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of February, 1982.
Findings Of Fact At all times pertinent to these proceedings, Respondent, Daughtin J. Rhue, operated a business, J's Cut Rate Variety Center, in Fort Lauderdale, Florida, under a Series 2-APS beverage license, No. 16-731, issued by Petitioner. On May 26, 1983, Beverage Officer D'Ambrosia entered Respondent's place of business on a matter unrelated to the offenses charged here (nonpayment of Florida sales tax). While there, he noticed several packs of cigarettes on the shelf behind the counter which appeared to be nontaxed cigarettes. These cigarettes, which he knew to be untaxed because of the red meter stamp imprinted on the bottom of the packs (tax-paid cigarettes have a black metered stamp on the bottom of the pack), were mixed in with the tax-paid cigarettes offered for sale by Respondent. Mr. D'Ambrosia said nothing about this to Respondent at that time, but then conducted a search elsewhere in the store for other nontaxed cigarettes and could find none. When he came back to the counter again, he found that those packs which bore the red, nontaxed stamp had been reversed on the shelf so that the stamps were not facing outward as they had been previously. Along with Respondent, he examined all the cigarettes on the shelves and found 12 packs that bore the red, nontaxed stamp. There were 7 packs of Lark Lights 100s, 3 packs of Kool Super Lights, 1 pack of Benson & Hedges Menthol and 1 pack of Marlboro. The stamp these packs bore is issued only to the Indians, and cigarettes so marked and stamped are not for resale to non-Indian consumers. No other nontaxed cigarettes were found at that time either on the shelves or elsewhere in the store. However, review of the file on Respondent's license indicates that in April, 1979, Respondent was previously found to have 254 packs of untaxed cigarettes in his store for resale. Action was taken at that time pursuant to stipulation between the parties. Respondent admits the nontaxed cigarettes were on his shelves on May 26, 1983, but denies having known it prior to it being pointed out to him by the beverage agent. He contends that he orders all cigarettes for the store from only two vendors, Pueblo and Wholesale Plus, Inc., and that his employee picks them up from the wholesaler and stocks the shelves. Further, he denies purchasing or stocking the brands untaxed on his shelves. He also denies that the untaxed packs were touched during the visit by Mr. D'Ambrosia, indicating that they were not turned around as alleged. Notwithstanding Respondent's protestations, the untaxed cigarettes were, by his own admission, offered for sale on his shelves The dispute as to whether he knew the untaxed cigarettes were there is resolved against him. He states he worked there every day. It is unlikely he was not aware of their presence.
Recommendation Based on the foregoing, it is RECOMMENDED: That Respondent's alcoholic beverage license, Series 2-APS, No. 16-731, be suspended for thirty (30) days and that Respondent pay an administrative fine of $500. RECOMMENDED this 8th day of November, 1983, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of November, 1983. COPIES FURNISHED: John A. Boggs, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Mr. Daughtin J. Rhue 1415 N.W. Fifth Street Fort Lauderdale, Florida Mr. Gary Rutledge Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Mr. Howard M. Rasmussen Director, Division of Alcoholic Beverages and Tobacco Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
Findings Of Fact Prior to May, 1983, Camelot Gulfside Interval Vacations, Inc. routinely made monthly payments of the Florida sales and use tax. Apparently during this period of time, the Department of Revenue sent preprinted forms to Camelot on a monthly basis and Camelot used these forms for remittance of the tax. During the months May, 1983, through April, 1985, inclusive, Camelot made no monthly payments of the Florida sales and use tax. During this same period of time, Camelot did not receive forms from the Department of Revenue for the monthly remittance. It cannot be determined from the record whether the cessation of receipt of forms occurred because Camelot failed to send in the monthly payments, or whether the forms ceased to be received independently of Camelot's failure to pay. The total amount of taxes due and paid late was $11,481.69. Ms. Margaret Thompson became the office manager of Camelot in May of 1983. The prior office manager failed to tell her that she had to pay the Florida sales and use tax on a monthly basis. Ms. Thompson was supervised by Mr. Alex Minden, who was present in the St. Petersburg Beach office on a day-to- day basis both prior to May, 1983, and during the period when no sales and use tax was paid. The books of Camelot Gulfside Interval Vacations, Inc. are kept in Toronto, Canada, pursuant to information sent to Toronto by the office in St. Petersburg Beach. In May, 1985, the Toronto office discovered that sales and use tax had previously been routinely paid, but had not been paid for the above periods. Upon investigation, it further discovered that such tax was due and owing. By letter from Mr. Minden, Camelot thus wrote the Department of Revenue on June 11, 1985, to advise it that it owed back taxes. Accompanying the letter was a check for $11,481.69 in full payment. Hearing Officer's Ex. 1. In December, 1985, the Department of Revenue gave notice to Camelot that $3,788.53 was due as penalties and interest. The computation of this amount is not in dispute. Camelot immediately paid the amount assessed as penalties and interest, but previously had requested waiver and timely requested a formal administrative hearing to seek a waiver of penalties and interest. During the period of time that it failed to make monthly sales and use tax payments, Camelot was not notified by the Department of Revenue that payments were overdue and owing. As discussed above, it was Camelot itself that brought the problem to the attention of the Department of Revenue.
Recommendation For these reasons, it is recommended that the Department of Revenue enter its final order denying any waiver of interest paid, but granting a waiver to the taxpayer of 50 percent of the amount of the penalties paid as an overpayment of such tax, and crediting such amount on future assessments. DONE and RECOMMENDED this 9th day of April, 1987, in Tallahassee, Florida. WILLIAM C. SHERRILL, JR. 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 9th day of April, 1987. COPIES FURNISHED: Randy Miller, Executive Director Department of Revenue 102 Carlton Building Tallahassee, Florida 32399-0100 William D. Townsend, Esquire General Counsel Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 J. Gordon Alexander, President Camelot Gulfside Interval Vacations, Inc. 1801 Gulf way St. Petersburg Beach, Florida 33706-4297
Findings Of Fact Petitioner is engaged in the cattle business and sells these cattle to in-state and out-of-state buyers who purchase the cattle at Clewiston, Florida, and have them transported either by the purchaser's own equipment or by a commercial carrier to their in-state or out-of-state destination. Those sales determined to be out-of-state sales are not included in the numerator of the fraction used to compute what percentage of Petitioner's income results from Florida sales and is therefore subject to Florida income tax. In making the determination respecting out-of-state sales Respondent applies the destination test if the cattle are shipped by common carrier but treats all other carriers as agents of the buyer to whom the cattle are delivered at Clewiston, thereby making such sales in-state sales. It is this policy determination which Petitioner contends is a rule. The policy has not been promulgated in accordance with Chapter 120, Florida Statutes, and, if this interpretation constitutes a rule, it is invalid because it was never promulgated as required. In determining whether certain sales are subject to the Florida sales tax, the Legislature in Section 212.06(5)(a), Florida Statutes, excluded from tax that tangible property imported or manufactured for export and provided such tangible property shall not be considered as being manufactured for export unless the manufacturer delivers the same to a licensed exporter for exporting or to a common carrier for shipment outside the State or mails the same by United States Mail to a destination outside the State. The rationale of the sales tax provision is used by Respondent in determining whether the sales are in-state sales for the purpose of computing Florida income tax. Respondent has promulgated, to its auditors, as a policy and as an interpretation of the statute, the directive to apply the destination test in determining out-of-state sales only when the merchandise sold is shipped by common carrier to a destination out of state. It is this policy determination or interpretation of the statutes that Petitioner contends is a rule and attacks in these proceedings. In the testimony Respondent acknowledged that this policy determination is uniformly applied. It also has application both within and outside the agency. Respondent further testified that if the merchandise (here cattle) had been delivered by Petitioner to the buyer outside the State of Florida by any means of transportation Petitioner chose, it would have treated the sale as an out-of-state sale.
The Issue Broadly stated, the issue in this proceeding the validity of the proposed deficiency in petitioner's corporate income in the amount of $25,712.80 for the 1972 fiscal year. More specifically, the issue is whether Florida may lawfully tax for the gain it realized on the sale of securities in the of $941,418.00. Included within this issue is the question of whether the apportionment formula set forth in Florida Statutes is applicable to petitioner.
Findings Of Fact Upon consideration of the pleadings, the stipulations the parties and the record in this proceeding, the following relevant During the calendar year 1972, petitioner was a foreign " Corporation subject to the Florida Corporate Income Tax, imposed Chapter 220, Florida Statutes. Petitioner also operated a business in St. Louis, Missouri. January 1, 1972, petitioner held a 95 percent interest in Bal Harbour Joint Venture, which owned and operated the Ivanhoe Hotel and Restaurant in Bal Harbour, Florida. On December 15, 1972, petitioner was the sole owner of the Ivanhoe Hotel and Restaurant. November 16, 1972, the petitioner acquired by merger 100 percent interest in the Clearwater Beach Hilton, a motel and restaurant business located in Clearwater, Florida, and continued to own this interest on December 31, 1972. The Clearwater and Ivanhoe hotel and restaurant businesses in Florida and the petitioner's business in Missouri have separate, individual general managers. There is no central purchasing by the hotels and no centralized operating records are maintained by petitioner. There are no central reservation services available between the hotels and the hotels advertise separately and unilaterally in local publications in the cities in which they are located. No standardized product lines exist. On November 2, 1972, petitioner sold certain securities which resulted in a realized gain to petitioner for federal income tax purposes of $941,418.00. Said securities were purchased, located and sold in the State of Missouri, and had no relationship to petitioner's Florida transactions. Petitioner timely filed its 1972 Florida corporate income tax return on which it subtracted from its federal taxable income the gain realized from the sale of the securities. Its "Florida net income" and its "total tax due" were thus reported as "none." On or about May 8, 1974, respondent advised petitioner of a proposed deficiency in petitioner's 1972 tax in the amount of $29,392.00. In accordance with the provisions of Florida Statutes Sec. 214.11, petitioner timely filed with respondent its protest of the proposed deficiency assessment. After a hearing, respondent issued to petitioner its Notice of Decision in which the proposed, deficiency was reduced to $25,712.80, and the reasons therefor were set forth. Petitioner requested reconsideration by respondent. On March 11, 1975, the parties stipulated that further proceedings in this cause would be, processed under the Florida Administrative Procedures Act. The petition for hearing was forwarded by respondent to the Division of Administrative Hearings, the undersigned was duly assigned as the Hearing Officer.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that: the proposed deficiency assessment in the amount of $25,712.80 be vacated and set aside; and The respondent permit petitioner to file an amended 1972 return utilizing, within the discretion of the respondent, the employment of either separate accounting, a monthly averaging formula or another method which would effectuate an equitable apportionment of petitioner's income to the State of Florida. Respectfully submitted and entered this 8th day of August, 1977, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Donald A. Pleasants Shackleford, Farrior, Stallings and Evans Post Office Box 3324 Tampa, Florida 33601 Louis de la Parte, Jr. 725 East Kennedy Boulevard Tampa, Florida 33602 Patricia S. Turner Assistant General The Capitol Tallahassee, Florida 32304 ================================================================= AGENCY FINAL ORDER =================================================================
The Issue 1. Whether the Emergency Rules on Sales and Use Tax on Services and Other Transactions adopted by the Respondent effective July 1, 1987, were adopted pursuant to Section 33, Chapter 87-6, l987 Laws of Florida, and Section 120.54(9), Florida Statutes (1987)? 2. Whether Rules 12AER87-31(1)(c), (5), (7)(i)(7)(k), (10), (12) and (13), Florida Administrative Code, constitute an invalid exercise of delegated legislative authority?
Findings Of Fact The Respondent is an agency of the State of Florida. It is charged with the responsibility to implement, enforce and collect the taxes levied by the State of Florida, including Chapter 212, Florida Statutes (1987). During the 1987 Legislative Session the Legislature enacted Committee Substitute for Senate Bill 777, which is codified as Chapter 87-6, 1987 Laws of Florida (hereinafter referred to as "Chapter 87-6"). This act, which amended Chapter 212, Florida Statutes, was signed into law by the Governor on April 23, 1987. Section 5 of Chapter 87-6, created Section 212.0594, Florida Statutes. This new Section of Chapter 212 imposed a sales tax on construction services performed on or after July 1, 1987. Section 33 of Chapter 87-6, authorized the Respondent to adopt emergency rules pursuant to Section 120.54(9), Florida Statutes, to implement the new law. In authorizing the adoption of emergency rules, the Legislature determined that the failure to promptly implement the provisions of Chapter 87-6 would present an immediate threat to the welfare of the State because revenues needed for the operation of the State would not be collected. On June 6, 1987, the Legislature enacted Committee Substitute for House Bill 1506, which is codified as Chapter 87-101, 1987 Laws of Florida (hereinafter referred to as "Chapter 87-101"). Chapter 87-101 is commonly known as the Sales Tax Glitch Bill. Chapter 87-101 was passed by the Legislature on June 6, 1987, signed into law by the Governor on June 30, 1987, and was effective beginning July 1, 1987. Section 5 of Chapter 87-101 repealed Section 5 of Chapter 87-6. Section 6 of Chapter 87-101, created a new Section 212.0594, Florida Statutes, taxing construction services, in replace of the Section 212.0594, Florida - Statutes, previously created by Section 5 of Chapter 87-6. Thus the Legislature substantially changed the manner in which sales tax was to be imposed upon construction services. Section 20 of Chapter 87-101 amended Section 33 of Chapter 87-6 but continued the authorization to adopt emergency rules and the justification for doing so. On May 8, 1987, the Respondent published notice in the Florida Administrative Weekly of its intent to hold public meetings and workshops on May 19 and 26, 1987, and June 6, 1987. Proposed rules relating to Chapter 87-6 were to be considered at these meetings and workshops. On May 22, 1987, the Respondent published notice in the Florida Administrative Weekly of its intent to hold public meetings and workshops on May 26, 1987, and June 26, 1987. Proposed rules relating to Chapter 87-6 were to be considered at these meetings and workshops. On May 29, 1987, the Respondent published notice in the Florida Administrative Weekly of its intent to hold a public meeting and workshop on June 6, 1987, to consider proposed rules relating to Chapter 87-6. On June 5, 1987, the Respondent published notice in the Florida Administrative Weekly of its intent to hold a public meeting and workshop on June 12, 1987, to consider proposed rules relating to Chapter 87-6. Ultimately, the Respondent held four workshops concerning the emergency rules: May 19 and 26, 1987, and June 6 and 12, 1987. The workshop conducted on June 12, 1987, was conducted to consider Rules 12AER87-31, Florida Administrative Code. The rules considered at the June 12, 1987, workshop had been redrafted to implement Chapter 87-101. The rules considered at the workshop were available for a short period of time before the workshop and during the workshop. Comments were received by the Department at the June 12, 1987, workshop from the public, including representatives of the construction industry. As a result of these comments, changes in the Emergency Rules were made following the workshop. The Emergency Rules took into account the method of taxing construction services provided for in Chapter 87-101 rather than the method previously provided for in Chapter 87-6. The Respondent's emergency rules, including Rule 12AER87-31, Florida Administrative Code, were certified by the Executive Director of the Respondent and delivered to the Secretary of State for publication on June 18, 1987. The Respondent delivered the full text of the emergency rules, a statement of the specific reasons for finding an immediate danger, a statement of the reasons for concluding that the procedure followed to adopt the rules was fair under the circumstances and a summary of the purpose of the rules for publication in the first available issue of the Florida Administrative Weekly. The emergency rules had to be filed with the Secretary of State no later than June 18, 1987, in order to be published in the Florida Administrative Weekly by July 1, 1987, the effective date of Chapters 87-6 and 87-101 and the emergency rules. The full text of the emergency rules was published in the Florida Administrative Weekly on June 26, 1987. The text of this notice, which was accepted into evidence as Petitioner's exhibit 4, is hereby incorporated into this Final Order. The Emergency Rules had an effective date of July 1, 1987. Initially the Emergency Rules were to expire January 1, 1988, six months after their effective date, as specified in Chapter 87-101. Pursuant to Section 1, Chapter 87-539, 1987 Laws of Florida, the Emergency Rules are effective through June 30, 1988. Representatives of the Respondent and the Petitioner met between the passage of Chapter 87-101 by the Legislature and June 18, 1987, and discussed the act. The Respondent expended a great deal of time and effort in adopting the emergency rules implementing Chapters 87-6 and 87-101, and in providing information to the public. The method of taxation to be implemented was unique and, therefore, the Respondent was unable to look to other jurisdictions for guidance concerning implementation of the tax. The taxation of construction services was one of a multitude of services taxed. Chapter 87-101, required substantial redrafting of the emergency rules, including Rule 12AER87-31, Florida Administrative Code, within a relatively short period of time. The new tax necessitated the registration of 100,000 to 150,000 new sales tax "dealers" by July 1, 1987. Prior to July 1, 1987, the Respondent received thousands of telephone calls and thousands of written requests seeking information concerning the sales tax on services. The Respondent was extensively involved with the Legislature during the period of time when Chapters 87-6 and 87-101 were adopted. Representatives of the Respondent discussed the acts with Legislative members and staff. Dr. James Francis acted as a liaison between the Respondent and the Legislature. Dr. Francis also served on the Revenue Estimating Conference. In his capacity with the Revenue Estimating Conference, Dr. Francis prepared estimates of tax revenues from the services tax. A revenue impact analysis of the services tax was also provided by the Respondent to the Legislature based upon each amendment and proposed amendment to Chapters 87-6 and 87-101. Representatives of the petitioner expressed dissatisfaction with the method of taxation of construction services contained in Chapter 87-6 because of the required itemization of building material costs on each contract. The Respondent prepared a revenue neutral (no loss of tax revenue previously estimated to be generated by Chapter 87-6) method of imposing the services tax on construction services without requiring itemization of building material costs. Pursuant to this method, a set percentage, generally equal to the average percentage of building material costs, is backed out of "contract price" or "cost price." The remainder is treated as the amount of the "contract price" or "cost price" attributable to the construction services. The revenue estimated by the Respondent and provided to the Legislature, based upon the elimination of an average percentage of building material costs, was based upon the inclusion in "contract price" and "cost price" of all expenditures associated with the construction industry, including the total expenditures for building materials supplied by owners to contractors. The Legislature was aware of this fact before it adopted Chapter 87-101. Fiscal notes for Chapter 87-101, which the Respondent had available prior to the adoption of the Emergency Rules, numerically quantified the estimated revenue to be generated by Chapter 87-101. The Respondent also knew what amounts were included in the estimate of revenue contained in the fiscal notes. These amounts were consistent with the revenue estimates provided by the Respondent to the Legislature. The Emergency Rules represent a contemporaneous administrative construction of Chapters 87-6 and 87-101 by an agency charged with responsibility to administer the acts and which was intimately involved in the adoption of the acts. The Petitioner has challenged the validity of Rules 12AER87-31(1)(c), (5), (7)(i), (7)(k), (10), (12) and (13) Florida Administrative Code. The Petitioner withdrew its challenge of other portions of the Emergency Rules. Rule 12AER87-31(7)(i), Florida Administrative Code, defines the terms "contract price" which determines the amount of tax due on construction work performed pursuant to a contract and any speculative construction which is sold within six months of completion. The Petitioner has challenged Rule 12AER87-31(7)(i), Florida Administrative Code, to the extent that contract price is defined to include the fair market value of materials used by a contractor if the value of those materials is not otherwise included in the contract price. The Petitioner's contractor witnesses' understanding of Rule 12AER87- 31(7)(i), Florida Administrative Code, that the fair market value of materials supplied by the owner are to be included in the computation of contract price, is consistent with the Respondent's interpretation of the Rule. Prime contractors often estimate the cost of building materials in their daily business activities. The Respondent's interpretation of Rule 12AER87-31(1)(c), Florida Administrative Code, does not require a contractor or subcontractor who uses building materials which are purchased tax free to remit a tax. The rule simply makes it clear that there is not necessarily any link between the question of whether the purchase of building materials and the provision of construction services are tax exempt.
