The Issue At issue herein is whether or not the Respondent's certificate to practice as a certified public accountant in the State of Florida should be revoked based on conduct which will be set forth hereinafter in detail for alleged violations of Chapter 473, Florida Statutes, and the rules and regulations promulgated and adopted thereunder in Chapter 21A, Florida Administrative Code.
Findings Of Fact Based on the testimony of witnesses and their demeanor while testifying, the documentary evidence introduced at the hearing, and the entire record compiled herein, the following relevant facts are found. Mark Finkel, Respondent, is the holder of certificate No. 2327 as a certified public accountant in the State of Florida. As such, the Respondent is subject to the provisions of Chapter 473, Florida Statutes, and the rules and regulations promulgated in Chapter 21A, Florida Administrative Code. The Respondent has been so registered as a certified public accountant since 1968. During early 1973, Respondent was engaged by David E. Wells, M.D., P.A., to prepare and file individual and corporate tax returns for the entity, David E. Wells, M.D., P.A., for the three years ending June 30, 1975. Respondent's engagement stamped from a referral of Dr. Wells' former C.P.A., Tom Williams, who relocated from Florida during late 1972. At the outset of his engagement by Dr. Wells, Respondent was briefed on the nuances of Dr. Wells' cardiology practice by Tom Williams. Respondent, according to Dr. Wells, was told that his duties would include those of filing corporate and individual tax returns and proper accounting for the administration and payment of pension plan taxes. During 1973, Respondent made quarterly visits to Dr. Wells' office to review records and billing information. The record reveals that Respondent filed quarterly payroll tax returns through September of 1976 and individual income tax returns for the years ending 1973 and 1974. Respondent failed to file individual income tax returns for the year ending December, 1975, or corporate returns for the years ending June 30, 1973, through 1976, and pension tax returns for the years ending 1973 through 1976. However, Respondent represented to Dr. Wells that all necessary returns were filed with the Internal Revenue Service and the other governmental agencies charged with the collection of taxes. For the years 1973 through 1976, Dr. Wells received inquiries from the Internal Revenue Service requesting information as to why corporate tax returns had not been filed for his corporation for the three years ending June 30, 1975. Based on the correspondence received from the Internal Revenue Service, Dr. Wells attempted to communicate with Respondent to either get the necessary forms filed or to request a return of Respondent's working papers which would assist another C.P.A. in preparing and filing the pertinent returns, to no avail. In this regard, after repeated calls, Dr. Wells obtained what records Respondent had which were of little use to his newly retained accountant, Myron Kahn, a certified public accountant who, since 1959, has been licensed in Florida and North Carolina. Messr. Kahn was retained by Dr. Wells in December of 1976 and established that the Respondent had only filed an individual income tax return for Dr. Wells for the calendar year 1973, plus quarterly payroll tax returns filed which were current. (See Petitioner's Exhibits 1 and 2.) Based on the available records, Messr. Kahn reconstructed the necessary accounting data based on cash receivables and disbursement vouchers for the prior four-year period. Messr. Kahn, after diligent search, found no control sheets, financial summaries, analyses, etc., which would have been kept if the pertinent income tax returns had been filed as required. Because Messr. Kahn had to reconstruct the necessary accounting data, he spent an inordinate amount of time compiling the returns he needed to file. Evidence reveals that due to Dr. Wells' late filing of tax returns for the fiscal year ending June 30, 1974, he incurred an additional penalty of $12,600, plus approximately $2,700 in interest and for his state corporate return, a penalty of $1,700 was assessed, plus $325 for interest. For the year ending June 30, 1975, Dr. Wells paid a Federal penalty of $5,618, plus $878 in interest, and a state penalty of $1,052, plus $132 in interest. Douglas H. Thompson, Jr., the Board's Executive Director, has been a certified public accountant since April, 1968. Director Thompson is the Board's chief administrative officer and custodian of records. On approximately December 16, 1976, Director Thompson received a complaint from David E. Wells, M.D., based on Respondent's "failure to file requested corporate returns and to return certain documents."
Recommendation Based on the foregoing findings of fact and conclusions of law, and in the absence of any effort on Respondent's part to refute or otherwise mitigate the evidence presented, it is hereby, RECOMMENDED: That the Respondent's license to practice as a certified public accountant (certificate No. 2327) be REVOKED. DONE and ENTERED this 6th day of August, 1979, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675
The Issue The issue presented is what is Peaches' basis in the Sterling stock?
Findings Of Fact There is no dispute as to the material facts in the instant case, Exhibit 1 presented at the hearing is a composite exhibit which is comprised of the Petitioner's U.S. Corporate Income Tax Return and Florida Corporate Income Tax Return for the fiscal year ending June 30, 1973. Exhibit 3 is the Respondent's document entitled "Income Tax Audit Changes" which reflects the adjustments made by the Respondent based upon a review of the Petitioner's return and the reasons for assessing the deficiency. Exhibit 2 is a composite exhibit comprised of the Petitioner's Amended Protest of the proposed deficiency and the Respondent's letter denying the same. Petitioner's federal return (Exhibit 1) Schedule D, Part II, reflects the 31,500 shares were acquired in 1958 at a cost basis of $10,191.00. These shares were subsequently sold by Peaches in 1972 for $1,160,131.00 or a gain of $1,149,940.00. This gain was reported on line 9(a) of the federal tax return as a portion of the "net capital gains." On its 1973 Florida Corporate Income Tax Return, Petitioner computed the income using the basis for the stock as of January 2, 1972, thereby reducing its reported income by $1,013,040.00 from the federal tax. The $1,013,040.00 reflects the amount of appreciation in the value of the stock between the transferrer's acquisition and January 1, 1972, the effective date of the Florida corporate income tax code. The shares of stock of Sterling Drugs were acquired by Peaches in 1971 from the controlling stockholder who made a contribution to capital to the corporation.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer recommends that the Petitioner's petition be denied and that the assessment against the Petitioner in the amount of $29,435.00 together with interest be assessed. DONE and ORDERED this 22nd day of January, 1979, in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Edwin J. Stacker Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 James S. Moody, Jr., Esquire Trinkle and Redman, P.A. 306 West Reynolds Street Plant City, Florida 33566 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA, DEPARTMENT OF REVENUE TALLAHASSEE, FLORIDA PEACHES OF FLORIDA, INC. Petitioner, vs. CASE NO. 78-1433 STATE OF FLORIDA, DEPARTMENT OF REVENUE, Respondent. / NOTICE TO: JAMES S. MOODY, JR., ESQUIRE ATTORNEY FOR PETITIONER TRINKLE AND REDMAN, P. A. 306 WEST REYNOLDS STREET PLANT CITY, FLORIDA 33566 E. WILSON CRUMP, II, ESQUIRE ATTORNEY FOR RESPONDENT ASSISTANT ATTORNEY GENERAL POST OFFICE BOX 5557 TALLAHASSEE, FLORIDA 32304 You will please take notice that the Governor and Cabinet of the State of Florida, acting as head of the Department of Revenue, at its meeting on the 5th day of April, 1979, approved the Recommended Order of the Hearing Officer dated January 22, 1979, with paragraph 3 of the "Findings of Fact" therein amended to read as follows: "The shares of stock of Sterling Drugs were acquired by Peaches in 1972 from the controlling stockholder who made a contribution to capital to the corporation", in accordance with Stipulation of the Petitioner and Respondent filed in the case on March 1, 1979. This constitutes final agency action by the Department of Revenue. JOHN D. MORIARTY, ATTORNEY DIVISION OF ADMINISTRATION DEPARTMENT OF REVENUE STATE OF FLORIDA ROOM 104, CARLTON BUILDING TALLAHASSEE, FLORIDA 32304 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing Notice was furnished by mail to James S. Moody, Jr., Esquire, Trinkle and Redman, P. A., 306 West Reynolds Street, Plant City, Florida 33566, Attorney for Petitioner; by hand delivery to Wilson Crump, II, Esquire, Assistant Attorney General, Post Office fox 5557, Tallahassee, Florida 32304, Attorney for Respondent and Stephen F. Dean, Hearing Officer, Division of Administrative Hearings; Room 530, Carlton Building, Tallahassee, Florida this 5th day of April, 1979. JOHN D. MORIARTY, ATTORNEY
Findings Of Fact On September 30, 2010, Petitioner submitted an online application for a tax registration as a new business entity. Respondent began the process of creating an internal "account" for Petitioner on October 1, 2010. On October 2, 2010, Respondent's database system created a delinquency notice advising Petitioner that sales and use tax returns for calendar years 2007, 2008, and 2009 had not been received. On October 4, 2010, Respondent received an envelope from Petitioner containing sales and use tax returns for calendar years 2007, 2008, 2009, and 2010, as well as Petitioner's signed Tax Amnesty Agreement. No remittance accompanied the tax returns (or the remittance check was misplaced), so the Department's system generated a billing notice to Petitioner dated December 10, 2010, and a Notice of Final Assessment dated January 25, 2011. Petitioner advised Respondent that a check had been sent along with the tax returns. Discussions between the parties ensued, and Petitioner was asked to provide a replacement check. On or about March 11, 2011, Respondent received a replacement payment from Petitioner. Petitioner, by way of his replacement check, paid the Department the sum of one thousand eighty-nine dollars and forty-three cents ($1,089.43) in full settlement of all amounts due and owing under Petitioner's sales and use tax returns for calendar years 2007, 2008, 2009, and, although not included in the initial petitions, 2010. Respondent accepted the payment made by Petitioner in full settlement of the sales and use taxes owed for the years in question. Petitioner is not liable for any further penalties, interest, or other payments on the aforementioned tax returns.
Recommendation Based on the foregoing Findings of Fact, it is RECOMMENDED that the petitions for administrative hearing in this case be dismissed, as there are no further disputed issues of material fact. DONE AND ENTERED this 15th day of April, 2011, 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 15th day of April, 2011. COPIES FURNISHED: Lisa Vickers, 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 Patrick John McGinley, Esquire Law Office of Patrick John McGinley, P.A. 2265 Lee Road, Suite 100 Winter Park, Florida 32789 John Mika, Esquire Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050
The Issue The issue is whether the Department of Revenue (the "Department") may revoke the Certificate of Registration issued to Petitioner for failure to post a $10,000 cash deposit, surety bond, or irrevocable letter of credit.
Findings Of Fact The Department is the agency of the state of Florida charged with the duty to enforce the collection of taxes imposed pursuant to chapter 212, Florida Statutes, to issue warrants for the collection of taxes, interest, and penalties and, where necessary, to require a cash deposit, bond, or other security, as a condition to a person obtaining or retaining a dealer‘s certificate of registration under chapter 212. Petitioner is a Florida corporation with its principal and mailing address at 5800 Phillips Highway, Jacksonville, Florida 32216. Petitioner is a "dealer" as defined in section 212.06(2), Florida Statutes. Petitioner holds Dealer's Certificate of Registration No. 26-8015523525-2. As a dealer, Petitioner was required to collect sales and use taxes from customers and to submit monthly tax returns and collected taxes to the Department. Sales and use taxes for any given month are due on the first day of the succeeding month, and must be paid to the Department on or before the 20th day of that succeeding month. Petitioner failed to file the required sales and use tax returns for January through March 2011. In a delinquent tax warrant dated May 18, 2011, the Department assessed Petitioner estimated tax of $3,000 for the three months in question, along with $32.79 in interest, $300.00 in penalties, and fees in the amount of $20.00, for a total of $3,352.79. The Department estimated the tax due for the months of January through March 2011 based on historical data, i.e., Petitioner's previous sales and use tax returns. The Department issued the Notice on May 18, 2011. The Notice was served on Petitioner on May 20, 2011. The Notice required Petitioner to post a $10,000 cash deposit, surety bond, or irrevocable letter of credit as a condition to retaining its Certificate of Registration. The Notice further advised Petitioner of an informal conference, commonly referenced as a "bond hearing," to be conducted on June 21, 2011, for the purpose of affording the Petitioner an opportunity to resolve the delinquent tax issue. The Notice also stated as follows, in relevant part: This Notice of Intent to Revoke Registration will become final on the date of the informal conference if the required security has not been posted, or an agreement is not reached at the informal conference, or you fail to attend the informal conference.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order that declines to revoke Dealer's Certificate of Registration No. 26-8015523525-2 held by Jacksonville Entertainment Company, LLC, until such time as the Department fully complies with the requirements of subsection 212.18(3)(d), Florida Statutes by issuing an Administrative Complaint. DONE AND ENTERED this 19th day of March, 2012, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 19th day of March, 2012. COPIES FURNISHED: Marshall Stranburg, Esquire Department of Revenue The Carlton Building, Room 204 501 South Calhoun Street Tallahassee, Florida 32314-6668 Carrol Y. Cherry, Esquire Office of the Attorney General The Capitol, PL-01 Revenue Litigation Bureau Tallahassee, Florida 32399 carrol.cherry@myfloridalegal.com Bechara Richa Jacksonville Entertainment Company, LLC 8474 Papelon Way Jacksonville, Florida 32217 Nancy Terrel, Acting General Counsel Department of Revenue The Carlton Building, Room 204 501 South Calhoun Street Post Office Box 6668 Tallahassee, Florida 32314-6668 Lisa Vickers, Executive Director Department of Revenue The Carlton Building, Room 104 501 South Calhoun Street Tallahassee, Florida 32314-6668
The Issue Whether factual and legal grounds support the Department of Revenue’s jeopardy findings and assessment, dated May 26, 2017.
Findings Of Fact Parties and People The Department is the state agency responsible for implementing and administering the revenue laws of the State of Florida, including the laws relating to the imposition and collection of the state’s sales and use tax, pursuant to chapter 212, Florida Statutes. VMOB is a Florida limited liability company with its principal address at 317 South Howard Avenue, Tampa, Florida 33606; and its mailing address and tax registration address as Post Office Box 342681, Tampa, Florida 33694. For the purposes of these proceedings VMOB is the taxpayer. Verna Bartlett is, and has been since its inception, VMOB’s managing member responsible for collecting and remitting VMOB's sales and use tax. Lewis Mustard became VMOB’s Power of Attorney (POA) in October of 2016. Notice to VMOB Pursuant to the Department’s “Power of Attorney and Declaration of Representative” form submitted by VMOB (POA form), receipt of notices or other written communications “by either the representative or the taxpayer will be considered receipt by both.” The POA form further provides that “[c]ertain computer- generated notices and other written communications cannot be issued in duplicate due to certain system constraints. Therefore, [the Department] will send these communications to only the taxpayer at his or her tax registration address.” The notices of the Jeopardy Finding and Final Assessment in this case were mailed together to VMOB’s mailing address via certified mail and regular USPS mail. The certified mailing was returned unclaimed; the regular USPS mailing was not returned. Ms. Bartlett acknowledged receiving the notices and eventually brought this protest. The undersigned finds VMOB received notice of the Jeopardy Finding and Assessment. VMOB’s Electronic Filings Beginning January 2016, VMOB was required to file and pay its sales tax electronically, unless it received a waiver. See § 213.755(1), Fla. Stat.; Fla. Admin. Code R. 12-24.003. The Department established at the hearing that it repeatedly made VMOB aware of the electronic filing requirement. For example, each tax bill sent to VMOB indicated payment was to be made electronically; and Department staff explained the electronic filing and payment requirements to Ms. Bartlett on August 18, 2015. On April 29, 2016, the Department sent a fax to Ms. Bartlett, which included a reminder of the electronic filing and payment requirement. In response, Ms. Bartlett stated, “I will begin filing electronically with the May [2016] sales tax return.” On December 29, 2016, the Department also notified VMOB’s POA of the electronic filing and payment requirement. Ms. Bartlett believed that as long as she paid a penalty, she did not have to file tax returns or tax payments electronically. However, there was insufficient evidence to support this belief. The undersigned finds VMOB has never filed or paid its sales tax electronically. VMOB’s Tax Jeopardy VMOB issued worthless checks for sales tax due for the periods of June 2016, July 2016, and September 2016 through February 2017. As of May 26, 2017, the date of the Jeopardy Finding, the dishonored checks for these time periods had not been satisfied, and VMOB had an outstanding tax liability totaling $104,853.60. VMOB’s April 2017 sales tax payment was due no later than May 20, 2017. See § 212.15(1), Fla. Stat. The April 2017 payment had not been received by the Department as of May 26, 2017. The competent and credible evidence establishes that as of May 26, 2017, payment of the March 2017 and April 2017 sales tax was jeopardized by delay. Payment of VMOB’s sales tax remains in jeopardy given that VMOB has yet to submit payment requirements through electronic filing, and as of the date of the hearing, these liabilities were still outstanding. As a result, the undersigned finds the Department properly issued the Jeopardy Finding. VMOB’s Tax Liability The sales tax reporting periods at issue in the Jeopardy Findings and Assessment are March 2017 and April 2017. The total tax due for the March 2017 reporting period, as reflected on VMOB’s sales tax return and as reflected on the Assessment, is $6,668.73. The total tax due for the April 2017 reporting period, as established at the hearing, is $5,651.75.2/ VMOB issued check number 40552 in the amount of $6,668.73 from a Suntrust Bank account on April 20, 2017. VMOB issued check number 40553 in the amount of $5,651.75 from a Suntrust Bank account on May 22, 2017. Both of these checks (for VMOB’s March and April 2017 sales tax payments) were dishonored by Suntrust Bank with the notation “Return Reason – Unable to Locate Account.” Ms. Bartlett contends she was unaware worthless checks were being issued for the June 2016 through April 2017 periods until late May or early June of 2017. Given the undisputed evidence regarding the efforts by the Department to obtain payment, this contention is implausible. For example, for each returned check (June 2016, July 2016, September 2016 through February 2017, March 2017 and April 2017), the Department automatically mailed out a bill to VMOB at its mailing address. There was no evidence VMOB did not receive these bills. On November 28, 2016, the Department explained to VMOB’s POA that VMOB was writing worthless checks to the Department. On December 28, 2016, the Department informed VMOB’s POA that Ms. Bartlett continued to pay with worthless checks. Even if it is true that Ms. Bartlett was not aware of the worthless checks being used to pay VMOB’s taxes, any lack of knowledge was due to her own misfeasance. Ms. Bartlett admits that from October 2016 through April 2017, she did not have adequate oversight over or involvement with VMOB. She did not monitor its checking accounts or finances; she left pre-signed blank checks for her staff, and she did not ask staff for an accounting. Ms. Bartlett’s testimony is further undermined by her own correspondence to the Department, dated January 30 and February 27, 2017, in which Ms. Bartlett acknowledges notices of assessment of personal liability and personal jeopardy. She, therefore, had to be aware at that point there was a problem with VMOB’s banking accounts and the methods of paying its tax liabilities. Even after Ms. Bartlett discovered the checks used to make the March and April 2017 tax payments had not been honored by the bank, VMOB made no efforts to pay the tax liability amount.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order: (1) Sustaining the May 26, 2017, Notice of Jeopardy Finding; and (2) Issuing an Assessment for March and April 2017 in the amount of $12,320.48 with penalties and interest. DONE AND ENTERED this 22nd day of May, 2019, in Tallahassee, Leon County, Florida. S HETAL DESAI 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 22nd day of May, 2019.
The Issue The issue in this case is whether Callagy Tires, Inc. (Petitioner), collected and remitted the correct amount of sales and use tax on its operations for the audit period.
Findings Of Fact DOR is the state agency charged with the responsibility of administering and enforcing the tax laws of the state of Florida. In conjunction with that duty, DOR performs audits of business entities conducting sales and use transactions. At all times material to the issues of this case, Petitioner conducted business in Palm Bay, Florida, and was obligated to collect and remit sales and use tax in connection with the activities of its business enterprise. Petitioner’s Federal Identification Number is 59-2221722. Petitioner sells tires (wholesale and retail), provides tire services such as installation, and performs other repair and towing services subject to sales or use taxes. In order to properly perform its audit responsibilities, DOR requires that businesses maintain and present business records to support the collection of sales and use taxes. In this case, DOR notified Petitioner that it intended to audit the business operations for the audit period, June 1, 2004, through May 31, 2007. After the appropriate notice to Petitioner, the audit was initiated on or about July 18, 2007. Employees of DOR went to Petitioner’s place of business, requested business records, and attempted to audit and reconcile Petitioner’s reported tax payments with the amounts and types of taxes that should have been remitted, based upon the records kept by Petitioner. Theoretically, the sums remitted to the Department should match the records of the business entity. In this case, the amount remitted by Petitioner could not be reconciled with the business records maintained by the business entity. As a result of the audit, DOR sent Petitioner a Notice of Intent to Make Audit Changes that claimed Callagy Tires, Inc., owed sales and use tax in the amount of $121,707.41. By letter dated August 13, 2009, Petitioner filed a protest of the audit findings. Thereafter, the parties exchanged information that Petitioner claimed should require reconsideration of the audit results. Nevertheless, the Department could not reconcile the bank and audit information based upon the documentation submitted by Petitioner. The amounts of the Notice of Reconsideration remain at issue. As of the time of the hearing in this cause, Petitioner had not provided documentation to refute the findings of the Department’s audit. At hearing, DOR maintained that Petitioner owes $173,718.66, together with accruing interest. Specifically, the audit found that there was a difference between the gross sales reported by Petitioner on its federal return and the amounts reported on its state forms. The difference between the two returns constituted unreported sales for state tax purposes. Secondly, the Department determined that certain sales were not “exempt” as maintained by Petitioner. Based upon a sample of invoices provided by Petitioner, DOR found that Petitioner did not remit the full sales tax due on certain types of services. For example, the correct sales tax was not remitted on machining brake rotors, truing brake rotors, or making repairs that included the use of tangible personal property. The taxable event required a calculation of sales tax on the entire amount, not a percentage of the cost. The third area of discrepancy identified by the audit, related to unpaid sales tax on machinery, equipment, supplies, and services purchased by Petitioner for use in the operation of its business. Throughout the audit process, and, subsequently, Petitioner never presented documentation to dispute the Department’s audit findings. DOR gave Petitioner every opportunity to present records that would establish that the correct amounts of sale and use taxes were collected and remitted. Petitioner timely challenged the audit findings, but, has not, through its principal owner or its agents, provided documentation that show the taxes were appropriately calculated and paid. Petitioner maintains that an amended federal tax return verifies the state return previously filed is accurate. Notwithstanding that assertion, Petitioner has not presented the underlying documentation to support the state or federal return. Further, Petitioner refused to allow DOR to review all of its electronically stored records, and did not make the records available to DOR.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is recommended that the Department of Revenue enter a final order sustaining the audit findings, and require the Petitioner to remit the unpaid sales and use taxes in the amount of $173,718.66, together with accrued interest, as provided by law. DONE AND ENTERED this 22nd day of March, 2011, in Tallahassee, Leon County, Florida. S J. D. PARRISH 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 22nd day of March, 2011. COPIES FURNISHED: Marshall Stranburg, General Counsel Department of Revenue The Carlton Building, Room 204 501 South Calhoun Street Tallahassee, Florida 32314-6668 Eugene M. Callagy, Jr. Callagy Tires, Inc. 6625 Babcock Street, Southeast Malabar, Florida 32950 Patrick Hanley, Esquire 185 Forest Road Troy, Montana 59935-9572 John Mika, Esquire Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 Lisa Vickers, Executive Director Department of Revenue The Carlton Building, Room 104 501 South Calhoun Street Tallahassee, Florida 32314-6668
The Issue The issue to be resolved in this proceeding concerns whether the Petitioner's application for licensure as a nonresident life, health and variable annuities insurance agent should be denied on the basis of his having pled guilty and been convicted of a felony. Embodied within that general issue are the issues of whether the felony involved is one of moral turpitude and whether the conviction, and the circumstances surrounding it, demonstrate that the Petitioner lacks fitness or trustworthiness to engage in the business of insurance.
Findings Of Fact The Petitioner, Preston Hursey, Jr., filed an application for qualification in Florida as a nonresident life, health and variable annuities agent. The application was filed on November 13, 1989. On April 9, 1990, the Department of Insurance issued a letter of denial with regard to that application based upon a felony conviction of the Petitioner in the past. The Respondent is an agency of the State of Florida charged, in pertinent part, with enforcing the licensure, admission and continuing practice standards for insurance agents of all types, embodied in Chapter 626, Florida Statutes, and with regulating the admission of persons to licensure as insurance agents in the State of Florida. On August 12, 1988, an Information was filed with the United States District Court for the District of Columbia, charging the Petitioner with three felony counts involving "aiding or assisting presentation of false income tax return". That is a felony violation of Title 26 U.S.C., Sections 7206(2). On November 15, 1989, the Petitioner was found guilty of three counts of aiding or assisting presentation of false income tax return in violation of that statutory section. The actual conduct for which he was convicted occurred prior to the charges. Prior to 1984, the Petitioner worked for some years as a medical examiner for insurance companies, taking medical histories, blood pressures, pulses and the like, for purposes of establishing insurance coverage for clients of the companies. Some time in early 1984, the Petitioner approached American Dynamics Corporation, as a client, with the intent of availing himself of the financial planning services of that company with the intent of saving on income taxes. The company was apparently counseling clients as to tax shelters in which they could invest or which they could claim, as a means of' avoidance of federal income tax. The Petitioner became very interested in that tax saving procedure and sometime in 1984 became involved with the firm as one of its financial counselor employees. The firm trained him in the service they offered to taxpayers, which involved financial planning by using trusts to defer taxes, as well as other means of sheltering income from tax liability. The company and the Petitioner counseled numerous clients and assisted them in taking advantage of alleged tax shelters, including the final act of preparing their tax returns. During the course of going to hearings with his clients, when their tax returns came under question by the Internal Revenue Service, the Petitioner became aware that apparently the service would not accept the tax shelter devices being used by his company and him as a legitimate means of avoiding taxes. He then sought legal advice from a tax attorney and received an opinion from him that the tax avoidance counseling methods, devices and tax return preparation the Petitioner and his employer were engaging in were not legal, and that the Petitioner should advise anyone he knew involved in such schemes to terminate their relationship. The Petitioner acted on that advice, terminated his relationship with the company and recommended to his clients that they terminate their relationship with the company and the tax avoidance devices being used. Through hindsight and learning more about relevant tax law in the last four to five years since the conduct occurred, the Petitioner realizes that the tax shelter schemes marketed by his employer at that time and, by himself, did not make financial or legal sense. The Petitioner at that time had very little training in financial counseling or advising and very little training in the Federal income tax laws arid regulations. In retrospect, after receiving much more such training as an agent of New York Life Insurance Company since that time, he realized the significance of the error he and his former employer committed. When the tax returns were prepared by the Petitioner and others employed with the firm involved, the tax return accurately reflected the gross income of he taxpayer, the "W2 forms", and all appropriate documentation. Then, the gross income of the taxpayer was shown as reduced by the amount of funds affected by the tax shelter system marketed by the Petitioner's former employer and the Petitioner. There was a statement on the tax return itself explaining the disparity in taxable income so that basically the Internal Revenue Service had the facts and circumstances of such situations disclosed to it. It, however, deemed anyone marketing such tax shelters as engaged in marketing "abusive tax shelters", in effect, in violation of the Internal Revenue Code. Ultimately, the Petitioner was prosecuted along with others involved in the transactions and suffered a felony conviction of three counts of violation of the statute referenced above. The Petitioner has steadfastly maintained both before and after his conviction that he had no intent to violate the tax laws of the United States, but rather believed, until he sought a legal opinion from a qualified attorney, that the service he was marketing was a legal one. After he came under prosecution by the Justice Department for the violation, the Petitioner cooperated fully with the Internal Revenue Service and the Justice Department. The felony violation of which he was convicted, by guilty plea, carried a sentence of three years imprisonment, one year for each tax return involved. That sentence was reduced by the court; however, in consideration of the circumstances of the Petitioner's offense and his cooperation with the prosecuting authorities, to one month of "work release", which he served by working during the day for senior citizens organizations and returning to a confinement facility in the evening. He also was required to render 200 hours of community service, which he has completed, and three years probation. Because of his excellent attitude and behavior and his demonstrated activities designed to further his education in the insurance and securities field, his successful pursuit of the insurance and securities marketing profession in other states and his obviously-positive motivation, his probation officer has recommended that his probation be terminated early, after only two years of it would have been completed in November, 1990. The sentence was reduced because of the Petitioner's positive record in his community, the fact that he had no prior criminal history and because of widespread support by responsible members of the community and by the probation officers who reviewed his case and situation. The judge, upon sentencing, also noted that he was impressed by the fact that the Petitioner wanted to continue to work in the insurance and securities field and was the sole support of a young son whom he was supporting and caring for as an active parent. He continues to do that. The record establishes that the Petitioner's conviction was the result of a guilty plea. That plea resulted from a negotiated "plea bargain" settlement with the prosecuting authorities. The Petitioner established with unrefuted testimony, that he never had any willful intent to commit a crime or defraud the Federal government and the Internal Revenue Service. While he had a general intent to offer the tax advice involved to clients and assist them in engaging in tax shelter arrangements and in preparing the related tax returns, he had no specific intent to commit acts which he knew to be illegal when he committed them, nor which he believed amounted to fraud or deceit of the Internal Revenue Service. Although he pled guilty to a crime involving, by the language of the above--cited statute, the element of falsity, which bespeaks of deceit or fraud, the evidence shows that the Petitioner harbored no such fraudulent or deceitful intent. This is corroborated by the fact that the Petitioner and his clients disclosed all income on the tax return and simply disclosed that a portion of it was sheltered, which procedure was determined by the Internal Revenue Service to be illegal. There was no evidence of record to indicate that the Petitioner sought to conceal income or otherwise commit a false or fraudulent act in the course of his financial and tax advice to these clients, nor in the preparation of their tax returns for submittal. While the statute he is convicted of violating appears to involve the element of moral turpitude because it refers to false or fraudulent tax returns, it is a very general type of charge which can cover many types of activities or conduct. Consequently, one should consider the specific conduct involved in a given instance, such as this one, to determine whether the crime committed factually involved moral turpitude. Based upon the unrefuted evidence of record culminating in the findings of fact made above, it is clear that the Petitioner committed no conduct involving moral turpitude at the time the activity in question was engaged in for the above reasons. The Petitioner has been in no legal altercation, criminal or otherwise, before or since the instance which occurred in 1984. He has become licensed in Washington DC, Maryland and Virginia as an insurance agent and as a broker agent. He represents numerous insurance companies, including, for approximately five years, the New York Life Insurance Company and other reputable companies. He has pursued his continuing education requirements and has earned more requirements than he needs for licensure in Florida and Maryland. He is actively seeking to improve his professional standing and competence in the insurance and securities field and is highly motivated to continue doing so. A great deal of his motivation comes from the fact that he is the sole support of his young 11-year-old son. He enjoys the insurance profession because it gives him time to participate in his son's many school-related and extracurricular activities, such as football. The Petitioner's testimony, and the proven circumstances of the situation, establish without question that he is an honest, forthright person who has candidly admitted a past mistake and who has worked actively, in the approximate six years which have elapsed since the conduct was committed, to rectify that blemish on his record. His efforts to rehabilitate himself personally and professionally involved his active participation as a parent for his son in his son's school life and otherwise, and participation in church and community activities. During the time period which has elapsed since the conduct in question occurred, he has sufficiently rehabilitated himself both personally and professionally so as to justify the finding that he has demonstrated trustworthiness and fitness to engage in the business of insurance. Indeed, three other states, after having the circumstances of his conviction fully disclosed to them, have licensed him or retained him as a licensee insurance agent. The Petitioner is a navy veteran of Vietnam, having served three tours in the Vietnam war, for which service he was decorated. He had a number of security clearances, including a top secret security clearance based upon his work in the field of communications and cryptology during that war. This honorable service, the efforts he has made to improve himself personally and professionally before and since the subject conduct occurred, the fact that it was an isolated incident on his record, the fact that it did not involve any established intent to defraud or deceive on his part, the fact that he is an active, positive parental role model, community member and church member, and his general demeanor at hearing of honesty and forthrightness convinces the Hearing Officer that the isolated incident of misconduct he committed did not involve a demonstrated lack of fitness and trustworthiness to engage in the business of insurance. Quite positively, the Petitioner has demonstrated his fitness and trustworthiness to engage in that business.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore, RECOMMENDED that the Petitioner's application for licensure as a nonresident life, health and variable annuities insurance agent should be granted. DONE AND ENTERED this 7th day of February, 1991, in Tallahassee, Leon County, Florida. P. MICHAEL RUFF 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 7th day of February, 1991. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 90-3069 Petitioner's Proposed Findings of Fact 1-4. Accepted. 5. Rejected, as not clearly established by the evidence of record. 6-14. Accepted. Respondent's Proposed Findings of Fact 1-4. Accepted. 5. Rejected, as not clearly established by the evidence of record. COPIES FURNISHED: Mr. Tom Gallagher State Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 Don Dowdell, Esq. General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 Preston Hursey, Jr., pro se Post Office Box 43643 Washington, DC 20010 Willis F. Melvin, Jr., Esq. Andrew Levine, Esq. Department of Insurance Division of Legal Services 412 Larson Building Tallahassee, FL 32399-0300
The Issue Whether the Department of Revenue properly denied Petitioner's March 10, 2000, Application For Refund of Sales and Use Tax, Petitioner having asserted that the Department of Revenue obtained the Closing Agreement through misrepresentation and intimidation.
Findings Of Fact Petitioner, Tuskawilla Learning Center, is a Florida corporation which operates a private Montessori School in Oviedo, Seminole County, Florida. Petitioner has elected to be an "S" corporation for federal income tax reporting purposes. Tuskawilla Learning Center is owned by its shareholders, Thomas E. Phillips; his wife, Lois; his daughter, Terry Lynn DeLong; and his son-in-law, Daniel F. DeLong. At all times material to this matter, a partnership comprised of the above-named owners of the Tuskawilla Learning Center also owned the real property upon which the Tuskawilla Learning Center operated. In early July 1997, Respondent audited Petitioner's corporate transactions for the period from July 1, 1992, through June 30, 1997, for compliance with sales and use tax and the local government infrastructure surtax. During the audit Petitioner was requested to provide all information and documents which Petitioner felt supported its business activities. Respondent issued a Notice Of Intent To Make Audit Changes on September 25, 1997, which advised Petitioner that the audit revealed that Petitioner had failed to pay use tax on purchases Petitioner made from out-of-state vendors, which Petitioner acknowledged and paid. The audit also revealed that Petitioner failed to pay sales tax on the monthly rental charges that Petitioner paid to the property owner on which the Tuskawilla Learning Center operated. Petitioner did not agree with Respondent's position on the sales tax on monthly rental charges. On October 28, 1997, an audit conference was held in Orlando, Florida, where the tax assessment on the monthly rental charges was discussed. The parties were unable to resolve the issue, and Petitioner requested that the issue be referred to Tallahassee for further review. The review in Tallahassee essentially confirmed the original audit findings, and a Notice of Proposed Assessment was issued on January 26, 1998. Petitioner filed a protest and requested a further review of the Notice of Proposed Assessment. As a result, the entire audit was reviewed, and Petitioner was allowed to provide additional documentation to support its position. On August 4, 1998, Respondent issued a Notice of Decision which essentially confirmed the findings of the original audit. At this point, Petitioner had certain rights of appeal which had to be exercised within specific time limits, or Petitioner could elect to pay the taxes and interest as set forth in a Closing Agreement in which Respondent waived the penalties which had accrued for failure to pay the tax. The various time deadlines passed without Petitioner electing one of the avenues of appeal nor did Petitioner execute the Closing Agreement. After all deadlines for appeal had passed, Petitioner contacted Respondent through an attorney seeking relief. Respondent found no basis for relief but renewed the opportunity for Petitioner to sign the Closing Agreement. On February 5, 1999, Petitioner executed the Closing Agreement and paid $71,693.87 (a $285.31 overpayment). The Closing Agreement clearly states: The taxpayer waives any and all rights to institute any judicial or administrative proceedings, including the remedies provided by ss. 213.21(2)(a) and 72.011(1), F.S., to recover, compromise, or avoid any tax, penalty or interest paid or payable pursuant to this agreement. This agreement is for the sole purpose of compromising and settling taxpayer's liability to the State of Florida . . . This agreement is final and conclusive with respect to the audit assessment or specific transaction/assessment and period described . . . and no additional assessment may be made by the Department against the taxpayer for the specific liability referenced above, except upon showing of fraud or misrepresentation of material fact . . . . On March 10, 2001, Petitioner filed an Application for Refund of the taxes and interest paid with the Closing Agreement. Attached to the Application for Refund was Petitioner's four-page "position paper," which outlined facts and arguments related to the sales tax issue. Petitioner's Application for Refund states that "the State has misled us." The Application for Refund went through the review process. On May 5, 2000, Respondent issued a Notice of Proposed Denial for the refund claim. Petitioner sought an informal review of the proposed refund denial. After an informal review of the proposed refund denial, on June 16, 2000, Respondent issued a Notice of Decision denying Petitioner's Application for Refund. On August 12, 2000, Petitioner forwarded a letter to Respondent, which was interpreted as a request for an administrative hearing to review the decision to deny the Application for Refund which resulted in the instant administrative hearing. Thomas E. Phillips has a Ph.D. in accounting from the University of Nebraska, is a Certified Public Accountant, and had taught accounting at the University of Central Florida for 23 years prior to his retirement. He and his family founded the Tuskawilla Learning Center. On behalf of Petitioner, Dr. Phillips maintains that the tax audit and subsequent review process were "intimidating" and that Respondent "misled" Petitioner. Notwithstanding Dr. Phillips' assertion that the audit and review process were "intimidating," he testified that he found the auditor and her supervisor "not intimidating, but were very pleasant." Dr. Phillips testified about several aspects of the audit and review process and activities that occurred during the audit and review process that he found objectionable. For example, Dr. Phillips testified that Respondent failed to respond to his inquiries in an appropriate way and that Respondent had misinterpreted certain case law that he felt applicable. Nothing offered by Dr. Phillips suggests any impropriety or misrepresentation by Respondent.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that Respondent enter a final order denying Petitioner's Application for Refund. DONE AND ENTERED this 26th day of April, 2001, in Tallahassee, Leon County, Florida. JEFF B. CLARK 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 26th day of April, 2001. COPIES FURNISHED: Joseph C. Mellichamp, III, Esquire Office of the Attorney General Department of Legal Affairs The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 John Mika, Esquire Office of the Attorney General Department of Legal Affairs The Capitol, Tax Section Tallahassee, Florida 32399-1050 Thomas E. Phillips 1625 Montessori Point Oviedo, Florida 36527 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 James Zingale, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue The issues to be determined in this case are whether Respondent violated Article II, Section 8, Florida Constitution (“Article II, Section 8”), and section 112.3144, Florida Statutes, by filing an inaccurate CE Form 6: Full and Public Disclosure of Financial Interests (“Form 6”) in 2013, 2015, or 2017; and, if so, what penalty should be imposed.
Findings Of Fact Introductory Stipulated Facts Respondent was a candidate for the Florida House of Representatives, District 108, in 2010. Respondent served in the Florida House of Representatives on behalf of District 108 from 2010 through 2016. Respondent was a candidate for the Florida Senate, District 38, in 2016. Respondent served in the Florida Senate on behalf of District 28 from 2016 through 2018. Respondent was a candidate for the Florida Senate, District 28, in 2018. Respondent was required to file a true and accurate Form 6 in each year from 2010 through 2018. Respondent read and understood the instructions to the Form 6 for 2013, 2015, and 2017 prior to completing and filing the forms. 2013 Form 6 On June 17, 2014, Respondent filed her 2013 Form 6. By her signature on the face of the Form 6, Respondent affirmed under oath that the information disclosed, thereon, was “true, accurate, and complete.” Instructions for the 2013 Form 6, Part A, for calculating net worth, include the following relevant directives: In order to determine your net worth, you will need to total the value of all your assets and subtract the amount of all your liabilities. Simply subtracting the liabilities reported in Part C from the assets reported in Part B will not result in an accurate net worth figure in most cases. (emphasis in original). Instructions for the 2013 Form 6, Part C, for calculating liabilities, include the following relevant directives: List the name and address of each creditor to whom you were indebted on the reporting date chosen for your net worth (Part A) in an amount that exceeded $1,000 and list the amount of the liability. Liabilities include: accounts payable; notes payable; interest payable; debts or obligations to governmental entities other than taxes (except when the taxes have been reduced to a judgment); and judgments against you. * * * You do not have to list on the form any of the following: credit card and retail installment accounts, taxes owed (unless the taxes have been reduced to a judgment), indebtedness on a life insurance policy owed to the company of issuance, or contingent liabilities. A “contingent liability” is one that will become an actual liability only when one or more future events occur or fail to occur, such as where you are liable only as a partner (without personal liability) for partnership debts, or where you are liable only as a guarantor, surety, or endorser on a promissory note. If you are a “co-maker” on a note and have signed as being jointly liable or jointly and severally liable, then this is not a contingent liability. (emphasis supplied). Respondent submitted her Form 6 with a reported net worth of $417,094 in Part A, as of her chosen reporting date, June 12, 2014. Mortgage Note Joseph Brennan, bail bondsman and owner of Coral Gables Bail Bonds, Inc., testified that in his business he is typically contacted by either a defendant, or a friend or family member of a defendant, to assist in obtaining a bail bond to secure the defendant’s release from custody after the person’s arrest. When a friend or family member signs for the defendant, Mr. Brennan requires them to pay 10 percent of the bond amount, which is also known as a premium. The premium is a non- refundable payment. It is common in Mr. Brennan’s business for a customer to sign a mortgage note to secure a bond. Respondent and her then-husband, Hubert Campbell, used Coral Gables Bail Bonds to obtain a bail bond for their son, Gregory Campbell, following his arrest. In June of 2011, Gregory Campbell had a bond of $250,000 following his arrest. In order to post a bond for Gregory, Respondent was required to pay a premium of $25,000. Respondent paid $10,000 of the premium, which left an unpaid balance of $15,000. To secure the remaining $15,000, Respondent and her husband executed a mortgage obligating their property as collateral. The property that was mortgaged to secure the bond had an address of 14625 NE 4th Ave., Miami, Florida, 33161 (“Miami Property”). The mortgage was recorded in the public records of Miami-Dade County on June 30, 2011, at book 27740, pages 4740 through 4741. Respondent and her husband also executed a mortgage note, which includes a requirement to remit payment of $400 on the first of each month beginning August 1, 2011. The mortgage note reflects that Respondent and her husband promised “jointly and severally” to pay the $15,000 premium balance to Coral Gables Bail Bonds. This means, as Mr. Brennan explained in his testimony, that Respondent would still be responsible for payment of the full $15,000 to Coral Gables Bail Bonds, even if her husband passed away. Respondent stipulated to the fact that she was responsible for repayment on a $15,000 mortgage, dated June 29, 2011, from Coral Gables Bail Bonds. The $25,000 premium payment was not refunded to Respondent after her son appeared in court. As Mr. Brennan explained, in his business, the premium amount is owed regardless of whether the defendant subsequently appears in court. A satisfaction of the mortgage was signed on June 18, 2018; and was recorded on August 7, 2018, in the public records of Miami-Dade County at book 31091, page 1561. When applying the clear instructions on the face of the Form 6 to the equally clear terms of the mortgage note, it is decidedly obvious that the mortgage note was not a contingent liability exempt from disclosure. Respondent’s testimony that she believed that the mortgage note was a contingent liability within the meaning of the Form 6 instructions is not credible when balanced with the overwhelming weight of evidence to the contrary. The mortgage note was a reportable liability that should have been disclosed on Respondent’s 2013 Form 6. Respondent did not disclose the mortgage note as a liability on her 2013 Form 6. Code Enforcement Lien Cindy Hoskin, legal liaison for the Miami-Dade County Code Compliance Division, handles the interactions between governmental agencies and the County Attorney’s Office on escalated code enforcement matters. As stipulated by the parties, Respondent’s home was cited for code enforcement violations in July of 2011. There are two components to correcting a code enforcement violation: one is payment of the citation; and the other is physical correction of the violation. When a code violation citation is issued, an inspector will assess the property and issue an affidavit of noncompliance if he or she finds that the source of the citation is left uncorrected or the fines due under the citation remain unpaid. Through a “Notice of Assessment of Continuing Penalties,” dated March 6, 2012, Respondent was notified that she owed an assessment stemming from the code enforcement citation on the Miami Property. Respondent had 20 days from March 6, 2012, to appeal the assessment. Respondent submitted an untimely appeal, which was signed and dated on September 18, 2012, and date-stamped as having been received by Miami-Dade County on September 19, 2012. As stipulated by the parties, Respondent did not fulfill payment on the code enforcement fines; and subsequently, a lien was placed on the Miami Property by Miami-Dade Code Enforcement in October of 2012. On October 17, 2012, a lien in the amount of $10,590.16 was recorded against Respondent’s Miami Property in the public records of Miami-Dade County at book 28317, page 1429. When a lien is recorded against real property, the purpose is to notify the public that there is a cloud on the property’s title based on an outstanding debt. The lien on Respondent’s Miami Property is evidence that she owes a debt to Miami-Dade County. At the time of the final hearing, the lien remained unsatisfied. Based on the credible testimony of Ms. Hoskins, Miami-Dade County generally does not consider it necessary to reduce liens to judgments because the lien itself is evidence of the debt. The lien against Respondent’s Miami Property is not a contingent liability as that term is defined by the Form 6 instructions, because it is an existing debt that does not require any future event to occur or fail to occur before it attaches. Rather, it clearly fits within the definition of liabilities on the face of the Form 6, which includes as an example: “debts or obligations to governmental entities other than taxes.” The code enforcement lien was a reportable liability that should have been disclosed on Respondent’s 2013 Form 6. Respondent did not disclose the code enforcement lien as a liability on her 2013 Form 6. Federal Tax Lien Respondent testified that she owes a federal tax lien, which was in existence as of the reporting date for her 2013 Form 6, and that was still outstanding in an amount of at least $10,000 at the time of the final hearing. The lien had not been reduced to a judgment, meaning that it was not required to be specifically disclosed as a liability on Respondent’s 2013 Form 6 based on the instructions. Respondent was required, however, to include the tax lien in the calculation of her net worth. Respondent testified that she did not include the federal tax lien in the calculation of her net worth on her 2013 Form 6. Ultimate Finding of Fact Respondent did not file a full and public disclosure of her financial interests with respect to her 2013 Form 6. 2015 Form 6 The relevant instructions for the 2015 Form 6, Part A, for calculating net worth; and Part C, for calculating liabilities, are identical to the 2013 Form 6. On her 2015 Form 6, Respondent reported a net worth of $199,091.21, as of June 6, 2016. By her signature on the face of the Form 6, Respondent affirmed under oath that the information disclosed was “true, accurate, and complete.” Although the mortgage note may have remained a reportable liability with respect to Respondent’s 2015 Form 6, the evidence did not conclusively establish whether the balance exceeded the $1,000 threshold specified in the instructions. Even if the balance left on the mortgage was below $1,000, however, the mortgage had not yet been satisfied as of Respondent’s reporting date. Thus, the mortgage was still required to be included in the calculation of Respondent’s net worth regardless of the amount. Respondent testified that she did not include the mortgage note when calculating her net worth. The code enforcement lien against Respondent’s Miami Property remained unsatisfied at the time of the final hearing in this case. Accordingly, the lien should have been reported as a liability on Respondent’s 2015 Form 6. Respondent did not disclose the code enforcement lien as a liability on her 2015 Form 6. Respondent testified that she owes a federal tax lien that was still outstanding in an amount of at least $10,000 at the time of the final hearing. The lien had not been reduced to a judgment, meaning that it was not required to be specifically disclosed as a liability on Respondent’s 2015 Form 6 based on the instructions. Respondent was required, however, to include the tax lien in the calculation of her net worth. Respondent testified that she did not include the federal tax lien in the calculation of her net worth on her 2015 Form 6. Ultimate Finding of Fact Respondent did not file a full and public disclosure of her financial interests with respect to her 2015 Form 6. 2017 Form 6 The relevant instructions for the 2017 Form 6, Part A, for calculating net worth; and Part C, for calculating liabilities, are identical to the 2013 Form 6 and the 2015 Form 6. On her 2017 Form 6, Respondent reported a net worth of $416,642 as of June 15, 2018. By her signature on the face of the Form 6, Respondent affirmed under oath that the information disclosed was “true, accurate, and complete.” Although the mortgage note may have been a reportable liability with respect to Respondent’s 2017 Form 6, the evidence did not conclusively establish that there was any balance left on the mortgage, which was recorded in the public records as being satisfied three days after Respondent’s reporting date. Respondent testified that she did not include the mortgage when calculating her net worth for her 2017 Form 6, but it is uncertain whether she was required to do so. The code enforcement lien against Respondent’s Miami Property remained unsatisfied at the time of the final hearing in this case. Accordingly, the lien should have been reported as a liability on Respondent’s 2017 Form 6. Respondent did not disclose the code enforcement lien as a liability on her 2017 Form 6. Respondent testified that she owes a federal tax lien that was still outstanding in an amount of at least $10,000 at the time of the final hearing. The lien had not been reduced to a judgment, meaning that it was not required to be specifically disclosed as a liability on Respondent’s 2017 Form 6 based on the instructions. Respondent was required, however, to include the tax lien in the calculation of her net worth. Respondent testified that she did not include the federal tax lien in the calculation of her net worth on her 2017 Form 6. Construction Lien Pierre Richard Raymond is a contractor and owner of MPR Construction. Respondent, who was the property owner at the time, contracted with MPR Construction to complete a project to repair water damage at Respondent’s Miami Property. While Mr. Raymond expected Respondent’s insurance company to pay MPR Construction for its work on the project, Respondent was still liable for payment under the contract if the insurance company did not pay. After the construction project was complete, Mr. Raymond filed a claim of lien for $41,000 against Respondent’s Miami Property on March 2, 2018, which was recorded in the public records of Miami-Dade County, at book 30881, page 1013. The construction lien was satisfied on August 7, 2018. The construction lien was a reportable liability that should have been reported on Respondent’s 2017 Form 6 because it was a note payable to MPR Construction in an amount exceeding $1,000 as of the reporting date, June 15, 2018. Respondent did not disclose the construction lien as a liability on her 2017 Form 6. Quit Claim Deeds Respondent’s son, Gregory Campbell, changed his name to Mikel Mittal. A quit claim deed prepared by “MITTAL 2018 BUSINESS HOLDING TRUST,” dated May 19, 2018, was recorded in the public records of Miami-Dade County at book 30987, pages 294 through 296. The deed conveyed Respondent’s Miami Property from Respondent and Hubert Campbell to an entity identified as “14625 NE 4th AVE MIAMI LLC.” The deed included the notarized signatures of Respondent and Hubert Campbell, as well as the signatures of four witnesses. Respondent confirmed that the driver license number attributed to her in the notary block was accurate. Respondent is not a member of the business entity, 14625 NE 4th AVE MIAMI LLC. A second quit claim deed, dated June 20, 2018, was recorded in the public records of Miami-Dade County at book 31026, pages 2331 through 2332. The second deed conveyed the Miami Property from 14625 NE 4th AVE MIAMI LLC to Respondent’s son, Mikel Mittal. Instruments filed in a county’s public records, such as the quit claim deeds at issue in this case, plainly fall within the category of “evidence of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs,” which is the applicable evidentiary standard under section 120.569(2)(g), Florida Statutes. It is undisputed that the quit claim deeds conveying Respondent’s Miami Property were recorded in the public records of Miami-Dade County. It is further undisputed that the driver license number on the first quit claim deed belongs to Respondent. Respondent, however, disputed that she executed the first quit claim deed or had any contemporaneous knowledge of its existence, despite the fact that a notarized signature purporting to be hers appears on the document. Upon testifying to her ignorance of the two quit claim deeds conveying her property up until she saw it on the news, Respondent was questioned as to whether she ever reported the fraudulent conveyance of her property or asked her son about it. Respondent evaded the questions and ultimately did not articulate any direct answers. The inherent reliability of a recorded instrument cannot be overcome by Respondent’s vague and illogical denial of its authenticity. Respondent’s Miami Property was returned to her through a third quit claim deed on August 27, 2018. As of Respondent’s reporting date for her 2018 Form 6, the Miami Property was not in Respondent’s name. Therefore, it was not an asset belonging to her and should not have been included in the calculation of Respondent’s net worth. However, Respondent listed the property as an asset valued at $471,642, and included it in the calculation of her net worth. Ultimate Finding of Fact Respondent did not file a full and public disclosure of her financial interests with respect to her 2017 Form 6.
Conclusions For Advocate: Melody A. Hadley, Esquire Office of the Attorney General Plaza Level 01 The Capitol Tallahassee, Florida 32399-1050 For Respondent: James Jean-Francois, Esquire Law Offices of James Jean-Francois Suite 211-A 6100 Hollywood Boulevard Hollywood, Florida 33024
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order and Public Report be entered finding that Respondent, Daphne Campbell, violated Article II, Section 8, Florida Constitution, and section 112.3144, Florida Statutes, on three separate occasions and recommending the imposition of a public censure and reprimand, and a civil penalty of $15,000 ($5,000 per violation). DONE AND ENTERED this 19th day of November, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: S BRITTANY O. FINKBEINER Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of November, 2021. Millie Wells Fulford, Agency Clerk Florida Commission on Ethics Post Office Drawer 15709 Tallahassee, Florida 32317-5709 Melody A. Hadley, Esquire Office of the Attorney General Plaza Level 01 The Capitol Tallahassee, Florida 32399-1050 James Jean-Francois, Esquire Law Offices Of James Jean-Francois Suite 211-A 6100 Hollywood Boulevard Hollywood, Florida 33024 Christopher Anderson, III Executive Director Florida Commission on Ethics Post Office Drawer 15709 Tallahassee, Florida 32317 Caroline Marsh Klancke, General Counsel Florida Commission on Ethics Post Office Box 15709 Tallahassee, Florida 32317-5709
The Issue The issue in this case is whether the Petitioner owes State of Florida use tax and local government infrastructure tax on the alleged use of three airplanes.
Findings Of Fact Charles and Dorothy Tolbert own and operate American Aircraft International, Inc. (American). American is in the business primarily of selling and brokering aircraft sales. Most of American's business involves brokering in which American earns a commission or fee for putting together a seller and buyer and bringing the transaction to a conclusion. On a much less frequent basis, American will purchase an airplane for resale. American advertises the availability of its airplanes, both brokered and American-owned, for either sale or lease. However, American has not had occasion to lease one of its own aircraft except as part of a lease-purchase agreement. American does not make any other use of airplanes it offers for sale or lease, except as necessary for maintenance and repairs and for demonstration to prospective purchasers or lessees. Such use would be cost-prohibitive. Fuel, crew, and insurance costs would be well in excess of the cost of a ticket on a commercial airline. American's insurance policy only covers the use of the planes for demonstration and maintenance purposes. On February 6, 1990, American traded for a King Air 200, N56GR, serial number 059, at an acquisition value of $650,000. The King Air 200 was delivered to American from Carlisle, Kentucky, and held by American for resale purposes only and was flown only for purposes of maintenance and repairs and for demonstration to prospective purchasers. When it was sold in 1991 to an English company, BC Aviation, Ltd., American had flown the aircraft only 7 hours. The aircraft was delivered out-of- state in May 1991. In July 1991, American bought a kit for a home-built aircraft called the Renegade, serial number 445. The kit was manufactured and sold by a company in British Columbia, Canada. American's intent in purchasing the kit was to build the airplane and decide whether to become a dealer. It took a year and a half to build, and by the time it was completed, American decided not to pursue the dealership. In September of 1991, American sold the Renegage to the Tolberts. The Tolberts registered the Renegade in September 1994, under N493CT. At first, the Tolberts did not pay sales tax on their purchase of the Renegade. They thought that, since they owned American, no sales tax was due. When the Department audited American and pointed out that sales tax was due, the Tolberts paid the tax in December 1994. In 1991, American also purchased a King Air B90, N988SL, serial number LJ438, for $175,000. The King Air B90 was held by American for resale purposes only and was flown only for purposes of maintenance and repairs and for demonstration to prospective purchasers. In July 1991, American sold the aircraft to Deal Aviation of Chicago, Illinois. However, Deal could not qualify for its own financing, so American agreed to lease-sell the aircraft to Deal. Under the lease-purchase agreement entered into on July 21, 1991, the purchase price was $269,000, payable $4,747.85 a month until paid in full. (The agreement actually said payments would be made for 84 months, but that would amount to total payments well in excess of the purchase price; the evidence did not explain this discrepancy.) American continued to hold title to the aircraft and continued to make payments due to the bank on American's financing for the aircraft. The lease- purchase agreement must have been modified, or payments accelerated, because American transferred title to the aircraft in April 1993. The Department asserted that a Dolphin Aviation ramp rental invoice on the King Air B90 issued in August for the month of September 1991 reflected that the aircraft was parked at the Sarasota-Bradenton Airport at the time of the invoice, which would have been inconsistent with American's testimony and evidence. But the invoice contained the handwritten notation of Dorothy Tolbert that the airplane was "gone," and her testimony was uncontradicted that she telephoned Dolphin when she got the invoice and to inform Dolphin that the invoice was in error since the plane had not been at the ramp since Deal removed it to Illinois on July 21, 1991. As a result, no ramp rent was paid after July 1991. Indeed, the Department's own audit schedules reflect that no ramp rent was paid on the King Air B90 after July 1991. The Department also presented an invoice dated September 16, 1991, in the amount of $3400 for engine repairs done on the King Air B90 by Hangar One Aviation in Tampa, Florida. The invoice reflects that the repairs were done for American and that they were paid in full on September 19, 1991, including Florida sales tax. The Department contended that the invoice was inconsistent with American's testimony and evidence. But although American paid for these repairs, together with Florida sales tax, Mrs. Tolbert explained that the repairs were made under warranty after the lease-purchase of the airplane by Deal. A minor engine problem arose soon after Deal removed the airplane to Illinois. Deal agreed to fly the plane to Hangar One for the repairs, and American agreed to pay for the repairs. After the repairs were made, Hangar One telephoned Mrs. Tolbert with the total, and she gave Hangar One American's credit card number in payment. She did not receive American's copy of the invoice until later. She does not recall if she: noticed the Florida sales tax and did not think to question it; noticed it and decided it was not enough money ($179) to be worth disputing; or just did not notice the Florida sales tax. When American's certified public accountant (CPA), Allan Shaw, prepared American's federal income tax return for 1990, he included the King Air 200 as a fixed capital asset on the company's book depreciation schedule and booked $26,146 of depreciation on the aircraft for 1990 on a cost basis of $650,000. For federal tax purposes, he took the maximum allowable depreciation deduction on the aircraft ($92,857) by attributing a seven-year life to the aircraft and using the double declining balance method of calculating depreciation. The next year, 1991, Shaw included the both the King Air B90 and the Renegade as fixed capital assets on the company's book depreciation schedule. He booked $9,378 of depreciation on the B90 on a cost basis of $175,000 and $1,872 on the Renegade on a cost basis of $25,922 for part of the year 1991. For federal tax purposes, he took the maximum allowable depreciation deduction on the B90 ($12,507) by attributing a seven-year life to the aircraft and using the double declining balance method of calculating depreciation. This depreciation was subtracted from the "gross income from other rental activities" on Schedule K of the return in the amount of $22,796, which represented the payments from Deal under the lease-purchase agreement. The Renegade was depreciated for the same amount as its book depreciation, and no income was recorded as having been generated from use of the Renegade. The next year, 1992, Shaw again included the both the King Air B90 and the Renegade as fixed capital assets on the company's book depreciation schedule. He booked $35,613 of depreciation on the B90 and $5,555 on the Renegade. For federal tax purposes, he took the maximum allowable depreciation deduction on the B90 ($25,014) by attributing a seven-year life to the aircraft and using the double declining balance method of calculating depreciation. This depreciation was subtracted from the "gross income from other rental activities" on Schedule K of the return in the amount of $51,737, which again represented the payments from Deal under the lease-purchase agreement. The Renegade was depreciated for the same amount as its book depreciation, and no income was recorded as having been generated from use of the Renegade. It is not clear from the evidence why American's CPA decided American was entitled to claim depreciation on the three aircraft in question. (Shaw also depreciated another airplane in 1989 which was before the period covered by the Department's audit.) Shaw's final hearing and deposition testimony was confusing as to whether he recalled discussing the question with the Tolberts. He may have; if he did, he probably discussed it with Mrs. Tolbert. Meanwhile, Mrs. Tolbert does not recall ever discussing the question of depreciation with Shaw. In all likelihood, Shaw probably made his own decision that American could depreciate the airplanes to minimize income taxes by claiming that they were fixed capital assets used in the business and not just inventory items being held for resale. For the King Air B90, there were lease payments Shaw could use to justify his decision; but there were no lease payments for the King Air 200 or the Renegade. The evidence was not clear whether there were lease payments for the airplane Shaw depreciated in 1989. For the next year, 1993, Shaw included the Renegade as a fixed capital asset on the company's book depreciation schedule and booked $7,712 of depreciation on the Renegade. For federal tax purposes, the Renegade was depreciated for the same amount as its book depreciation, and no income was recorded as having been generated from use of the Renegade. When the Department audited American starting in July 1994, tax auditor William Berger saw the depreciation schedules and tax returns, both of which indicated to him that the three airplanes in question were used by the company, but no sales or use tax was paid on them. (He also pointed out the Tolberts' failure to pay sales tax on the purchase of the Renegade from American, and the Tolberts later paid the tax, as previously mentioned.) As a result, on July 26, 1995, the Department issued two notices of intent. One was to make sales and use tax audit changes which sought to assess American $56,097.77 in use taxes, together with delinquent penalties of $14,657.36 and interest through July 26, 1995, in the amount of $31,752.61, for a total of $102,507.74, with subsequent interest accruing at the rate of $18.44 per day. The second was to make local government infrastructure surtax audit changes which sought to assess American $609.99 in the surtax, together with delinquent penalties of $163.14 and interest through July 26, 1995, in the amount of $256.33, for a total of $1,029.46, with subsequent interest accruing at the rate of $.20 per day. It is not clear from the record how the Department arrived at the use tax and surtax figures. The alleged use tax assessment should have been calculated as $51,061.32 (six percent of the acquisition costs of the airplanes), and the alleged surtax assessment should have been calculated at the statutory maximum of $50 per item, for a total of $150. On August 28, 1995, American made a partial payment of $5,496.44 on the Department's use tax and surtax audit change assessments, intending to leave a disputed assessed amount of $51,061.32 in use tax and $150 in surtax. It is not clear from the record what American intended the $5,496.44 to apply towards. American filed an Informal Protest of the use tax and surtax audit change assessments on February 26, 1996. The Informal Protest contended that the use tax and surtax were not due and that the federal income tax depreciation schedules were "not determinative." On October 6, 1996, the Department issued a Notice of Decision denying American's protest primarily on the ground that the depreciation of the aircraft for federal income tax purposes constituted using them for use tax purposes. After receiving the Notice of Decision, on November 4, 1996, American filed amended tax returns to remove the depreciation of the airplanes (together with the "gross income from other rental activities" on Schedule K of the 1991 return). (Although CPA Shaw refused to admit it, it is clear that American's federal income tax returns were amended in order to improve its defense against the Department's use tax and surtax assessments.) As a result of the amended returns, American had to pay an additional $15,878 in federal income tax on the 1990 return; there was no change in the tax owed on any of the other returns. On November 6, 1996, American filed a Petition for Reconsideration on the ground that the returns had been amended and the additional federal income tax paid. On January 10, 1997, the Department issued a Notice of Reconsideration denying American's Petition for Reconsideration on the ground that "subsequent modifications made to the federal income tax returns will have no affect [sic] upon" the use tax and surtax assessments.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order withdrawing the assessment of use tax and local government infrastructure surtax, delinquent penalties, and interest against American. RECOMMENDED this 3rd day of October, 1997, in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax FILING (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of October, 1997. COPIES FURNISHED: Harold F. X. Purnell, Esquire Rutledge, Ecenia, Underwood, Purnell & Hoffman, P.A. Post Office Box 551 Tallahassee, Florida 32302-0551 Albert J. Wollermann, Esquire Office of the Attorney General The Capitol, Tax Section Tallahassee, Florida 32399-1050 Linda Lettera, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
