Findings Of Fact In a letter dated March 12, 1990, the Department informed the Petitioner, Howard Miller, that it was denying the Petitioner's request that the assessment of $2,150.00 which he had previously paid to the Department be refunded to him. In a letter received by the Department on April 12, 1990, the Petitioner requested an administrative hearing to contest the Department's decision . The address included on the Petitioner's letter was the address used by the Department to notify the Petitioner of its decision to deny his request for a refund. A Notice of Assignment and Order was issued on June 1, 1990, giving the parties an opportunity to provide the undersigned with suggested dates and a suggested place for the formal hearing. The information was to be provided within ten days of the date of the Notice. This Notice was sent by United States mail to the Petitioner at the address listed in his letter requesting a formal hearing. Neither party responded to the Notice. On July 12, 1990, a Notice of Hearing was issued setting the formal hearing for 10:00 a.m., September 11, 1990. The location of the hearing was listed in the Notice. The Notice of Hearing was sent by United States mail to the Petitioner at the address listed in his letter requesting a formal hearing. The Petitioner did not appear at the place set for the formal hearing at the date and time specified on the Notice of Hearing. The Department was present at the hearing. The Petitioner did not request a continuance of the formal hearing or notify the undersigned that he would not be able to appear at the formal hearing. After waiting fifteen minutes for the Petitioner to appear, the hearing was commenced. At the commencement of the formal hearing the Department was informed that it could proceed with the formal hearing or, since Petitioner had the burden of proof in this case, move for dismissal of the case. The Department elected to make an ore tenus motion for dismissal. The Department was informed that a Recommended Order would be issued recommending dismissal of this case.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department enter a Final Order dismissing the Petitioner's request for hearing in this case for failure to appear at the final hearing. RECOMMENDED this 18th day of October, 1990, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of October, 1990. COPIES FURNISHED: Howard Miller Route 2, Box 123 A Buffalo, MO 65622 Vernon L. Whittier, Esquire Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0450 Ben G. Watts, Secretary Attn: Eleanor F. Turner, M.S. 58 Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0458 Thornton J. Williams, Esquire 562 Haydon Burns Building Tallahassee, Florida 32399-0458
Findings Of Fact In a letter dated April 13, 1990, the Department informed the Petitioner, Cherokee Rental And Construction Co., Inc., that it was denying the Petitioner's request for refund of the $95.00 fuel tax and civil penalty assessment it had previously paid to the Department. In a letter received by the Department on February 13, 1990, the Petitioner requested an administrative hearing to contest the Department's decision. The address included on the Petitioner's letter was the address used by the Department to notify the Petitioner of its decision to deny its request for a refund. A Notice of Assignment and Order was issued on June 1, 1990, giving the parties an opportunity to provide the undersigned with suggested dates and a suggested place for the formal hearing. The information was to be provided within ten days of the date of the Notice. This Notice was sent by United States mail to the Petitioner at the address listed in its letter requesting a formal hearing. Neither party responded to the Notice. On July 12, 1990, a Notice of Hearing was issued setting the formal hearing for 11:00 a.m., September 11, 1990. The location of the hearing was listed in the Notice. The Notice of Hearing was sent by United States mail to the Petitioner at the address listed in his letter requesting a formal hearing. The Petitioner did not appear at the place set for the formal hearing at the date and time specified on the Notice of Hearing. The Department was present at the hearing. The Petitioner did not request a continuance of the formal hearing or notify the undersigned that he would not be able to appear at the formal hearing. After waiting fifteen minutes for the Petitioner to appear, the hearing was commenced. At the commencement of the formal hearing the Department was informed that it could proceed with the formal hearing or, since Petitioner had the burden of proof in this case, move for dismissal of the case. The Department elected to make an ore tenus motion for dismissal. The Department was informed that a Recommended Order would be issued recommending dismissal of this case.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department enter a Final Order dismissing the Petitioner's request for hearing in this case for failure to appear at the final hearing. RECOMMENDED this 18th day of October, 1990, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of October, 1990. COPIES FURNISHED: Bill Read Cherokee Rental & Construction Co., Inc. Post Office Box 850606 Mobile, Alabama 36685 Vernon L. Whittier, Esquire Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0450 Ben G. Watts, Secretary Attn: Eleanor F. Turner, M.S. 58 Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0458 Thornton J. Williams, Esquire 562 Haydon Burns Building Tallahassee, Florida 32399-0458
The Issue The issue is whether Petitioner is entitled to a refund of motor fuel taxes paid for motor fuel exported from Florida when Petitioner was not licensed as an exporter at the time of the transactions.
Findings Of Fact Petitioner is a Florida corporation engaged in the business of purchasing and reselling motor fuel. Petitioner, whose principle place of business is 1201 Oakfield Drive, Brandon, Florida 33509, does business within and without the State of Florida. Petitioner currently has a Florida Fuel Tax License, which is number 59-2150510. On April 5, 2004, and May 7, 12, and 13, 2004, upon Petitioner's orders, Kenan Transport loaded diesel fuel at the Marathon facility in Jacksonville, Florida, and delivered the fuel to Petitioner's Kingsland, Georgia, location. Daniel Way, the driver employed by Kenan Transport, delivered the April 5, 2004; May 7, 2004; May 12, 2004; and May 13, 2004, fuel loads to Petitioner's Kingsland, Georgia, location. 6. For the April 5, 2004; May 7, 2004; May 12, 2004; and May 13, 2004, fuel deliveries to Petitioner's Kingsland, Georgia, facility, Petitioner paid a total of $8,775.16 in Florida fuel taxes. The amount of Florida fuel taxes paid for each delivery was as follows: $2,192.99, for the April 5, 2004, delivery; $2,187.77, for the May 7, 2004, delivery; $2,187.20, for the May 12, 2004, delivery; and $2,187.20, for the May 13, 2004, delivery. At the time the four fuel deliveries noted in paragraphs 4 and 5 above were made to Petitioner's Kingsland, Georgia, facility, Petitioner did not have an exporter fuel license. Petitioner obtained an exporter fuel license that became effective December 1, 2004. The parties stipulated to the findings in paragraphs 1 through 9. Petitioner asserts that the Department should refund the fuel taxes it paid because, in the four transactions, Petitioner's account was mistakenly billed for the fuel. Gowan Oil Company (Gowan) is a distributor based in Folkston, Georgia, and has contracts with many fuel terminals in Jacksonville. Pursuant to an arrangement between Petitioner and Gowan, Petitioner did not usually buy fuel from any of the terminals in Jacksonville. Instead, Petitioner bought fuel for its truck stop in Georgia from Gowan, since Gowan could buy fuel at the Jacksonville terminals for less than Petitioner could. Depending on the price of fuel on a particular day, Petitioner would call Kenan Transport and tell the company to pick up fuel from a particular terminal in Jacksonville. The instructions relative to the above transactions were for the driver to pick up BP fuel and to put it on Gowan's account. Notwithstanding the specific instructions given to the driver, he made two mistakes with respect to the four fuel purchases. He not only mistakenly picked up the wrong fuel, Marathon fuel, but he also put the fuel he picked up on Petitioner's account, not on Gowan's account. The mistake made by the Kenan Transport driver is a common mistake made by transport drivers, who are "hauling out of multiple terminals every day." Drivers have loading cards for all of the accounts on which they pick up fuel. When picking up fuel, the driver should use the loading card which corresponds to the account for that particular load. In the four transactions that are at issue in this proceeding, the driver "loaded" the card for Petitioner's account, not the card for Gowan's account. Petitioner did not have an export license at the time of the transactions. Therefore, Marathon properly billed Petitioner for the Florida fuel taxes on the fuel that was picked up in Jacksonville, Florida, charged on Petitioner's account, and delivered to Petitioner's truck stop in Kingsland, Georgia. Petitioner tried unsuccessfully to have Marathon bill the subject fuel purchases to Gowan. If Gowan had been billed, it would not have been required to pay Florida fuel taxes on the four fuel purchases because it had an export license.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order denying Petitioner's application for a refund of fuel taxes. DONE AND ENTERED this 28th day of April, 2006, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of April, 2006.
The Issue The issues for determination are whether the emergency suspension of Respondents' licenses was proper and whether revocation of those licenses is required.
Findings Of Fact Respondent Robinson, an authorized Chevron representative, is the sole proprietor of Jack A. Robinson, Distributor. Respondent R&R Partnership (R&R) is a partnership between Jack A. Robinson and Dee Ann Rich (Rich). Respondent I-10 Corporation (Stacks) is a subchapter S corporation in which Respondent Robinson is a 50 percent shareholder. Rich is the general manager of Jack A. Robinson, Distributor and exercises administrative responsibilities with regard to Respondents Stacks and R & R Corporation. Robinson holds Special Fuel Dealer's License No. 10 Wholesaler's License No. 09000950/9356 issued by Petitioner. Robinson sells diesel fuel and gasoline at wholesale to I unrelated parties. I products at retail. Robinson admits in response to Counts III, IV, VI, VII, VIII, IX, X, XI, XII, XVI, XIX, XXII, XXIII, XXIV, XXVII, and XXX, of the Notice To Show Cause in DOAH Case No. 93-1563 that $210,876.19 of tax remains due and owing. Rich is Jack A. Robinson's step supervising and preparing tax returns for Robinson. With regard to the $210,876.19 admitted as due and owing, these state funds were collected by Respondent Jack A. Robinson as an agent for the State of Florida but, instead of being remitted to the state, these funds were spent by Respondent in the course of business operation. DOAH Case No. 93-1563 In response to Counts I, II, V, XV, XVII, XXI, XVI, XXVIII, and XXIX of the Notice To Show Cause in DOAH Case No. 93 that $103,452.71 tax is due. As to Count I, the balance for the tax return period of February 1990, for motor fuel tax due is $2,524.14. In regard to Count II, Respondent also owes motor fuel tax in the amount of $26,839.71 for the tax return period of March, 1990. Although Rich requested Respondent's bank to make the appropriate electronic funds transfer to Petitioner, the amount was not received by Petitioner and no explanation was provided by Respondent for the failure of Petitioner to receive this amount. As to Count V, Respondent owes a total motor fuel tax of $12,900.27. The previous total of $36,232.69 was reduced by a late partial payment of $11,562.53, and an additional payment of $11,769.87 on September 25, 1991. No payment of tax was made for the period of March 1992. As to Count XIV, Respondent Robinson filed a tax return for January 1993, motor fuel local option tax in the month of February 1993. The return showed a total tax due of $21,044.62. A collection allowance of $148.56 is shown deducted. No proof of payment of the tax was presented. In regard to Count XVII, a return for the tax period of March 1990, was filed on behalf of Respondent Robinson, declaring a total special fuel tax due of $23,572.82. No evidence was presented that payment was actually made, although Rich testified that a wire transfer payment of that amount was requested by Respondent. With regard to Respondent Robinson, the amounts of tax admitted in responsive pleading together with all counts of the Notice To Show Cause where no evidence or allegation of payment was presented total: Admitted in pleading $210,876.19 Admitted owing for March of 1990 in Motor Fuel and Special Fuel Tax $ 50,412.53 Copies of Returns introduced and alleged to have been filed, but unsupported by Petitioner's records and otherwise unsubstan- tiated by proof (for August of 1992 and January of 1993). $ 35,655.06 No proof of payment presented for balance of November of 1990 tax. $ 12,900.27 Admitted, paid less than due for January 1990; August 1990; and November, 1990. $ 8,058.52 This amount does not include applicable penalties and interest. DOAH Case No. 93-1565 Counts I through IV are admitted by Respondent R & R Partnership as to the amounts owned for a total tax due of $9,189.12. This amount does not include applicable penalties and accrued interest. While R & R reported taxes due on Respondent Robinson's returns, no proof was submitted that these taxes were paid to Petitioner. For the tax period of January, 1993, Rich maintained that a return was filed on behalf of R & R partnership and payment made. However, the copy of the payment check presented at hearing had "2/93" written in pencil as the date of the check and no evidence was presented that the check was presented for payment to Respondent's bank. DOAH CASE NO. 93-1564 With regard to I allegations of Counts I, II, III, IV, V, VII, VIII, X, XI, and XII. As to Counts VI and IX, Respondent denies only that there was improper reporting, not that the amount of tax is not due. Respondent maintains that all taxes collected by Stacks were paid to Respondent Robinson and reported on those returns. The periods of January 1990; February 1990; March 1990; April 1990; August 1990; November 1990; February 1992; correspond to the counts of the Notice To Show Cause to which Stacks denies all allegations. These periods and denied counts match precisely with periods in Counts IX, X, XI, XII, XV, XVI, XVII, XVIII, XIX, XX, XXI, XXII, of the Notice To Show Cause filed against Respondent Robinson. Robinson admits Counts IX, X, XI, XII, XVI, XVII, XIX, XX, and XXII and presented no proof of payment at hearing with regard to Count XV and XVII. This fact, coupled with testimony that Stacks and R & R taxes were paid to Robinson and reported as line items on his returns, show that Stacks does owe the taxes claimed by Petitioner in the amount of $36,029.45 exclusive of interest and penalties. Debra Swift, a Certified Public Accountant, employed by Petitioner, personally reviewed records of Petitioner in determining the amounts of tax, penalty and interest due from each Respondent. All payments received by Petitioner were credited by Swift in performing her calculations.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered revoking the fuel licenses of all three Respondents. DONE AND ENTERED this 13th day of May, 1993, in Tallahassee, Leon County, Florida. DON W. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of May, 1993. APPENDIX The following constitutes my rulings pursuant to Section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties. Petitioner's Proposed Findings: 1.-12. Adopted, though not verbatim. 13.-15. Accepted. 16.-22. Accepted. Respondent's Proposed Findings: 1. Rejected, no record citation. 2.-3. Adopted. 4. Accepted, except for last sentence which is rejected as legal conclusion. 5.-7. Adopted. 8.-9. Rejected, subordinate to HO findings on this point. 10.-12. Rejected, weight of the evidence. 13. Rejected, relevancy. 14.-16. Rejected, subordinate to HO findings. 17. Adopted by reference. 18.-21. Rejected, subordinate to HO findings. 22.-24. Rejected, weight of the evidence, no citation. 25._38. Rejected, subordinate to HO findings. 39.-40. Rejected, weight of the evidence. 41.-42. Adopted by reference. 43.-44. Rejected, subordinate, misconstruction of testimony. 45. Rejected, conclusion of law, weight of the evidence. 46.-48. Rejected, subordinate, argumentative, relevancy. COPIES FURNISHED: Lealand L. McCharen Assistant Attorney General Department of Legal Affairs The Capitol-Tax Section Tallahassee, FL 32399-1050 Timothy J. Warfel Messer, Vickers Suite 701 First Florida Bank Building 215 South Monroe Street Post Office Box 1878 Tallahassee, FL 32302 Linda Lettera General Counsel 204 Carlton Building Tallahassee, FL 32399-0100 Larry Fuchs Executive Director 104 Carlton Building Tallahassee, FL 32399-0100
The Issue Was the amendment to Section 12B-5.01, Florida Administrative Code adopted on November 8, 1978, adopted in violation of the procedural requirements of Section 120.54, Florida Statutes? Is the amendment to Section 12B-5.01, Florida Administrative Code an invalid exercise of the Department's delegated legislative authority?
Findings Of Fact Miami Tiresoles, Inc. sells both new and retreaded tires for cars and trucks. The company also sells gasoline and diesel fuel. It is licensed by the Department as a dealer in special fuels. As far as this case is concerned special fuel is number 2 diesel oil. Unless an exemption is met each gallon of special fuel sold by MTS is taxed by the Department at a rate of 8 cents per gallon. The Department has given MTS a revised notice of proposed assessment of tax for the sale of special fuel in the amount of $4,551.88 plus a penalty of $455.48 and interest in the amount of $735.11 (through April 21, 1980). The tax figure on the assessment appears to reflect a typographical error. The Department's records (Exhibit A) indicate that for the period in question 2/ MTS sold 56,936 gallons of special fuel subject to tax according to the Department's interpretation of the law. If a tax at a rate of 8 cents per gallon is due, then the amount due should be $4,554.88 and not $4,551.88. The correct tax figure is reflected on the Department's work sheets but was probably misread when the figure was transferred to the revised Notice of Assessment issued on April 21, 1980. The foregoing assessment is based on MTS' invoices which reflect sales of special fuel to customers in amounts of more than 110 gallons at one time. Those sales were made to MTS customers who have filed with MTS a document called "Purchaser's Exemption Certificate". A typical example of such a certificate states: PURCHASER'S EXEMPTION CERTIFICATE The undersigned hereby certifies that the motor duel (sic) and/or special fuel pur- chased on 1-19-79 is for the following purpose as checked in the space provided. (X) Purchased for home, industrial, com- mercial, agricultural or marine purposes for consumption other than for the propul- sion of a motor vehicle. ( ) Purchased at bulk plant or terminal in volumes of not more than 110 gallons for delivery into a receptacle not connected to the fuel supply system of a motor vehicle for consumption other than for the pro- pulsion of a motor vehicle. Purchaser is aware that if this exemption if (sic) falsely claimed, or if this certi- ficate is not rescinded at the time he fails to quality (sic) for the exemption, he shall be liable for the taxes imposed under Chapter 206, F.S. Furthermore, by issuing this certificate the purchaser also certifies that he does not have any motor vehicles which use special fuel for propulsion. This certificate is to continue in force until revoked by written notice to MIAMI TIRESOLES, INC. Purchaser: Trade Name: A ACME SANDBLASTING, INC. Street Address: 9521 W. Oakmont Dr., Hialeah, Fla. 33015 BY: /s/ The industrial customers of MTS (that is those who have filed an exemption certificate) are engaged in the construction business. They use the diesel fuel to operate bulldozers, front-end loaders, back hoes, sandblasters and similar equipment. None of the fuel is used for the operation of motor vehicles on the public highways of Florida. All the fuel in question is sold on the premises of MTS. At the time of sale it is placed either in the fuel tank of a particular piece of equipment such as a back hoe, or it is placed in a fuel storage tank mounted on the back of a truck. The storage tanks are not connected so they can provide fuel for the propulsion of the truck. They are used to transport fuel to the purchaser's particular job site. The storage tanks have a capacity of between 100 to 300 gallons. MTS does not have delivery trucks of its own and has no facilities for taking fuel to its customers job sites. A single invoice of MTS which indicates a sale of 110 gallons of special fuel to an individual customer is frequently the result of a sale where multiple fuel tanks are filled at one time. For instance, the customer may have a back hoe sitting on the rear of a flat-bed truck. He will fill the fuel tank in his back hoe and then perhaps fill an additional 55 gallon drum or two which would be on the truck. This would occur all in one transaction. The reason why the Department seeks to tax special fuel sold by MTS to its industrial customers in an amount exceeding 110 gallons is because the fuel was placed in the customers' own fuel tanks on the premises of MTS and not on the premises of the customer or at the customer's job site. The amendment to Section 12B-5.01, Florida Administrative Code challenged by Petitioner here was adopted by the Governor and Cabinet, sitting as the head of the Department of Revenue, on November 8, 1978. No hearing was held on the amendment's adoption because no person requested one. Notice of the Department's intent to adopt the rule was given in the October 13, 1978 issue of the Florida Administrative Weekly. At the time the notice was published a copy of the amendment was available for inspection and copying by the public. The notice published in the Florida Administrative Weekly stated: DEPARTMENT OF REVENUE, DIVISION OF MISCELLANEOUS TAX, MOTOR FUEL TAX Rule 12B-5.01 TITLE: Specific Exemption PURPOSE AND EFFECT: To amend the rule which implements Subsection 206.87(4)(a) & (b), F.S. to clarify interpretation of the law. SUMMARY: Provides specifically the requirements necessary in order for the licensed dealer of special fuel to make an exempt sale for home, industrial, commercial, agricultural, or marine purposes and exempt sales of not more than 110 gallons at his place of business, and by cross reference, the records needed to be maintained by the licensed dealer to substantiate the sale. SPECIFIC LEGAL AUTHORITY UNDER WHICH THE ADOPTION IS AUTHORIZED AND THE LAW BEING IMPLEMENTED, INTERPRETED OR MADE SPECIFIC: SPECIFIC AUTHORITY: 206.14(1), 206.59, FS. LAW IMPLEMENTED: 206.87(4)(a)(b), FS. ESTIMATE OF ECONOMIC IMPACT ON ALL AFFECTED PERSONS: There will be no significant economic impact. IF REQUESTED, A HEARING WILL BE HELD AT: TIME: 10:00 A.M. PLACE: The New Capitol, Lower Level 3 DATE: November 9, 1978 A COPY OF THE PROPOSED RULE AND THE ECONOMIC IMPACT STATEMENT MAY BE OBTAINED BY WRITING TO: L. N. Thomas, Chief, Motor Fuel Tax Bureau, Department of Revenue, Carlton Building, Tallahassee, Florida 32304 Individual notices of the proposed rule making were not sent to licensed special fuel dealers in Florida. On October 10, 1978, the Department sent the following items to the Joint Administrative Procedures Committee: A copy of the proposed amendment to Rule l2B-5.01. The notice to appear in the Florida Administrative Weekly. The Economic Impact Statement. The "Summary and Justification Sheet" (apparently the Department's term for the facts and circumstances justifying the proposed rules). The following shows how the Department's amendment adopted on November 8, 1978, changed Section 12B-5.01, Florida Administrative Code. Words stricken were deleted; words underlined were added. 12B-5.01 Specific Exemptions. (1) - (2) - No change. HOMES, INDUSTRIAL. COMMERCIAL, AGRICULTURAL OR MARINE. Any sale of special fuel by a licensed dealer, regardless of quantity, when such fuel is to be consumed exclusively for home, industrial, commercial, agricultural, or marine purposes, is exempt from tax, provided the sale is made by a licensed dealer who delivers the fuel into the customer's storage facility, which must be located on the customer's premises, place of business, or job site. (Cross Reference - Rule 12B-5.03(1). (7)(b) - (6) - No change. (7) SALES OF 110 GALLONS OR LESS. A licensed dealer may deliver, at his place of business, tax free, not more than 110 gallons of special fuel to a person who is not a licensed dealer of special fuel, provided the fuel is placed into a receptacle which is furnished by the purchaser and which is not connected to the fuel supply system of a motor vehicle. (Cross Reference - Rule 12B-5.03(1), (7)(b) Any licensed dealer of special fuel who, at his place of business, delivers more than 110 gallons of special fuel to a person who is not a licensed dealer of special fuel, shall be liable for and shall pay to the state taxes, penalties and interest on the total quantity sold even though the fuel may not be ultimately used to propel a motor vehicle on the highway.
Findings Of Fact Respondent owns and operates a Citgo Food Mart in Naples at which it sells gasoline and diesel fuel at retail, provides limited motor vehicle service, and sells food and beverage items. Petitioner issued Respondent retail dealer's fuel license #21- 000828, which authorizes Respondent to sell motor fuel at retail and requires Respondent to collect and remit to Petitioner motor fuel taxes. The principal of Respondent is Jack Stellman. He caused Respondent to purchase the business in April 1993 from the fuel wholesaler, which had purchased it from the previous retailer. The previous retailer had suffered business and personal setbacks that necessitated the sale. Mr. Stellman and his wife, Phyllis, who claims not to be an officer or employee of Respondent despite her considerable involvement, have contributed much personal capital and labor to the new business. Immediately after taking over the business, Mr. and Mrs. Stellman discarded outdated inventory, fired a number of dishonest employees, eliminated prostitution that had been taking place on the premises, added new equipment such as a pressure fryer and hood system, and started advertising. Cash flow was a problem for Respondent from the start. The major improvements were completed by the fall of 1994. By early 1994, however, Mr. Stellman had quit taking a salary from Respondent. Over the 19-month period from August 1993 through March 1995, Mr. and Mrs. Stellman borrowed $140,000 from a variety of sources, including from their retirement plan, from relatives, and on property that they own individually. Despite these infusions of cash, Respondent was unable to stay current with certain important creditors, such as their fuel supplier, the Internal Revenue Service, and Petitioner. In August 1993, the fuel wholesaler began to demand payment on delivery, instead of in 30 days, as it had done previously. The wholesaler shortened the credit terms on fuel after Respondent fell behind in payments shortly after beginning operations. In any event, the change in credit terms involved monthly volumes of typically 40,000-50,000 gallons. The loss of use of money corresponding to the wholesale purchase of this amount of fuel does not begin to explain the tax deficiencies that Respondent ran up. Respondent's deficiencies on its motor fuel tax also began in August 1993. Returns are filed the month following the month for which the motor fuel tax is due. For August 1993, Respondent filed a return in which it underremitted the motor fuel tax by $62.15. The next month, Respondent filed a return in which it remitted $2000 and left an unremitted balance of $2867.49. The next month, Respondent filed a return, but remitted none of the $6077.28 of motor fuel tax due. For November 1993, the next month, Respondent filed a return and remitted $2000, leaving an unremitted balance of $3278.78. For December 1993 through July 1994, Respondent filed returns but remitted no tax. The total tax deficiency for this eight-month period was $58,300.87, or an average of $7287.61. In the 12-month period ending with the July 1994 return, Respondent had failed to remit a total of $70,586.57. For the August, September, and October 1994 returns, Respondent made partial remittances. For August and September, Respondent left unremitted balances of only $15.34 and $84.30, respectively, remitting a total of $11,315.49. For October, Respondent remitted $4827.90, leaving an unremitted balance of $2623.98. For November 1994, Respondent filed a return, but failed to remit any of the $5983.74 due. In the summer of 1994, the Stellmans finally sold their house in New York, but realized less cash than they had expected. In October 1994, the Stellmans applied for a loan on their Florida residence. During the same month, they began negotiations with Texaco to convert their Citgo convenience store into a Texaco outlet. The Stellmans believed that they would receive $225,000 from Texaco, which would be sufficient to pay their fuel wholesaler and Petitioner, convert their service operation into more store space, and acquire additional inventory and working capital. The record does not permit a finding whether $225,000 would cover all of these items. In any event, the Texaco negotiations did not proceed quickly. The fuel wholesaler threatened litigation over the prospective cancellation of its contract to supply Respondent with fuel and oil. And Petitioner's representatives were increasingly unsatisfied with Respondent's lack of progress in paying back taxes. Repeatedly, the Stellmans promised payments that did not materialize. At the same time, Respondent was not remitting motor fuel taxes currently. For December 1994 through March 1995, Respondent did not even file returns. During this four-month period, motor fuel taxes due and unremitted totalled $32,106.59. The total of unremitted motor fuel taxes for August 1993 through March 1995 was now $111,400.52, exclusive of penalties and interest. Penalties for the underremittances for the period August 1993 through March 1995 totalled $60,284.67. Interest for the same period totalled $14,042.88. The total of tax, penalties, and interest was thus $185,728.07. Respondent later reduced this deficiency by paying a total of $323.48 of penalties and $4154.52 of interest, so the current totals are tax of $111,400.52, penalties of $59,961.19, and interest of $9888.36, for a total of $181,250.07. The interest is current through August 1, 1995, and the daily interest thereafter is calculated by multiplying the tax deficiency by 0.000328767. Mr. and Mrs. Stellman claim that the $185,728.07 deficiency arose due to business setbacks, but the business setbacks that they have shown do not account adequately for the deficiency. The Stellmans clearly began the business badly undercapitalized. Mr. and Mrs. Stellman attribute part of the financial problems to bad debts suffered by Respondent. From August 1993 through the end of 1993, the Stellmans pursued seasonal business by offering liberal credit terms, which eventually resulted in worthless accounts receivable. However, the total bad debt was only $15,000. Although hardly meriting mention, except perhaps to reveal their lack of insight, the Stellmans also complain that they lost cash flow due to ill- advised advertising deals into which they entered where they traded fuel for advertising. Even ignoring the benefits derived from such agreements, Respondent traded only about $4000 worth of fuel under these arrangements. Together, these claimed business setbacks of no more than $20,000 constitute less than 18 percent of the taxes, penalties, and interest owed Petitioner. The amount of motor fuel tax that Respondent would have collected on $20,000 worth of fuel would be around $1500. With more zeal than business acumen, the Stellmans attacked the challenge of a new business. Their lack of business sophistication, not fraud, led the Stellmans to convert the motor fuel taxes from current payables to long- term debt, to underreport the amount of fuel pumped on 12 of 19 returns filed with Petitioner during the period in question, and repeatedly to file returns late, so as to lose the collection allowance normally given retail dealers. The unwillingness of Petitioner to become a long term creditor was manifested dramatically when, on May 4, 1995, Petitioner issued an emergency order suspending Respondent's retail dealer's fuel license. The emergency suspension took place after a meeting of Petitioner's Emergency Response Group, which, after reviewing the facts, determined that this was the best course of action to prevent the loss of motor fuel tax. The Stellmans complain that Petitioner did not give them enough time to try to pay the tax deficiencies. However, the record does not justify the Stellmans' demand that Petitioner share their confidence in their ability to take care of this substantial debt. As late as mid-February 1995, the Stellmans were still making unfulfilled promises to pay, as when they assured a Naples employee of Petitioner that Respondent would pay $10,000 by mid-April. This sum was not paid, nor were the motor fuel taxes that Respondent collected at the time even paid currently. In other words, Respondent was still taking the motor fuel tax that it was collecting from customers and applying it to other debts. The Stellmans never told Petitioner what they expected to net from the Texaco agreement. They never explained why the negotiations took so long to conclude. In early 1995, Petitioner's representatives justifiably saw: 1) new financing never resulted in any reduction of the outstanding deficiencies and 2) the outstanding deficiencies continued to grow as Respondent continued to collect motor fuel tax and apply it to other purposes. The record is not entirely clear as to the status of Respondent with respect to unremitted or unpaid taxes in April 1995 and following. Respondent owed $34,861.20 in unremitted sales tax, as of May 1, 1995. However, it appears more likely than not that, during at least part of the period subsequent to May 1, 1995, Respondent remitted and paid to Petitioner its currently accruing tax obligations. With the cessation of fueling operations, these obligations arose from sales of convenience store items, as these sales were unaffected by Petitioner's action against Respondent's retail dealer's fuel license. Since the suspension of the license, the Stellmans have supplied Petitioner with accurate, current information concerning Respondent's tax liabilities, at least to the extent that they possess such information. Respondent's financial condition is precarious, at best. Even assuming that the Stellmans were willing to continue to contribute more money to Respondent, there is nothing in the record to suggest that they have the financial resources to contribute substantial sums beyond a large fraction of the total currently due Petitioner in this case. Such a payment would probably come from a combination of the Stellmans' assets and the assets of friends and family. Their obvious failure to prepare and follow a feasible business plan does not bode well for Respondent's future ability to operate and, at the same time, retire what has become a substantial financial liability owed to Petitioner.
Recommendation It is RECOMMENDED that the Department of Revenue enter a final order: 1) suspending Respondent's retail dealer's fuel license for the lesser of six months from the date of the final order or until Respondent pays the sums described in paragraphs 38 and 39 and executes a promissory note with the conditions set forth in paragraphs 38 and 39 and 2) revoking Respondent's retail dealer's fuel license at the expiration of six months from the date of the final order unless Respondent has paid the above-described sums and entered into the above-described promissory note. ENTERED on October 27, 1995, in Tallahassee, Florida. ROBERT E. MEALE 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 on October 27, 1995. APPENDIX Rulings on Petitioner's Proposed Findings 1-4: adopted or adopted in substance. 5-7: rejected as recitation of evidence and subordinate. 8: adopted or adopted in substance. 9-10: rejected as subordinate. 11: adopted or adopted in substance. 12-18: rejected as subordinate. 19-21: adopted or adopted in substance. 22-23: rejected as subordinate. 24-26: adopted or adopted in substance except the taxpayer is Respondent, not Mr. Stellman individually. 27: rejected as subordinate. 28: adopted or adopted in substance. 29-35: rejected as subordinate. 36-37: adopted or adopted in substance. 38: rejected as subordinate. 39: rejected as unsupported by the appropriate weight of the evidence. 40-43: adopted or adopted in substance. 44: rejected as recitation of evidence. Rulings on Respondent's Proposed Findings 1-7: adopted or adopted in substance, although the "great expense" in paragraph 7 is rejected as unsupported by the appropriate weight of the evidence. 8-10: rejected as unsupported by the appropriate weight of the evidence. The financial problems were minor. 11: adopted or adopted in substance to the extent relevant. 12-13: rejected as subordinate. 14: rejected as speculative. 15: rejected as unsupported by the appropriate weight of the evidence. 16: rejected as irrelevant. 17: adopted or adopted in substance. 18-19: rejected as subordinate. 20: adopted or adopted in substance. 21: rejected as unsupported by the appropriate weight of the evidence except that the filings is rejected as irrelevant. COPIES FURNISHED: Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Francisco Negron, Jr. Assistant Attorney General Office of the Attorney General The Capitol, Tax Section Tallahassee, FL 32399-1050 Christian B. Felden Felden and Felden 2590 Golden Gate Parkway Suite 101 Naples, FL 33942
Findings Of Fact The Petitioner was acquired by Mr. Farish in November 1985. The Petitioner is a Georgia corporation. In December 1985, the Petitioner bid on a federal contract to provide fuel to federal installations in the southeastern United States. The Petitioner was awarded a contract to provide fuel oil for off-road use at Patrick Air Force Base, which is located in Florida. The Petitioner requested an application from the Department of Revenue for a special fuel license. The Petitioner was sent a motor fuel license application instead of a special fuel license application. The Petitioner filed the motor fuel license application with the Department of Revenue. The Petitioner subsequently filed a special fuel license application. It was received and validated by the Department of Revenue on June 24, 1986. The Petitioner was informed on July 9, 1986, that in order to receive the license, the Petitioner needed to file a copy of a certification to do business in Florida, which could be obtained from the Secretary of State's office. On or about January 9, 1987, the Petitioner forwarded to the Department of Revenue the certification from the Secretary of State's office needed to complete the Petitioner's license application. The Petitioner's special fuel license was issued and became effective January 9, 1987. The Petitioner began purchasing and selling special fuel in Florida on or about April 1, 1986. Between April 1, 1986 and January 9, 1987, the Petitioner paid $7,995.86 in Florida fuel tax liability for purchases of special fuel in Florida. On or about February 25, 1987, the Petitioner filed an application for special fuel tax refund in the amount of $7,995.86. The Respondent denied the tax refund application filed by the Petitioner by Order dated March 18, 1987.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order denying the Petitioner's application for refund be issued by the Respondent. DONE and ENTERED this 18th day of August, 1987, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of August 1989. APPENDIX TO RECOMMENDED ORDER CASE No. 87-1641 Only the Respondent filed a proposed Recommended Order containing proposed findings of fact. The Respondent failed to number its proposed findings of fact. The Respondent has, however, only proposed essentially 3 proposed findings of fact: that the Respondent denied the Petitioner's claim for refund and the justification therefore, the Petitioner made four admissions and the Petitioner is a Georgia corporation. The Respondent's first proposed finding of fact has been accepted in paragraph 12, the second proposed finding of fact has been accepted in paragraphs 6-8 and the third proposed finding of fact has been accepted in paragraph 1. COPIES FURNISHED: Honorable Gerald Lewis, Comptroller Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0305 James E. Farish, Jr. President Lincoln Oil Co., Inc. Post Office Box 2904 Gainesville, Georgia 30503-0294 Edwin A. Bayo, Esquire Assistant Attorney General Department of Legal Affairs Tax Section The Capitol Tallahassee, Florida 32399-1050
Findings Of Fact The Petitioner holds a valid special fuel dealer's license issued by the Respondent. The license was issued during approximately March, 1972. The Respondent conducted an audit of Petitioner's sales operations, and assessed special fuel taxes, plus penalty, on approximately 264,973 gallons of special fuel for which the Respondent contended inadequate account was given. 29,166 gallons of the special fuel involved in the assessment was sold to local oil field drillers. These sales are reflected in invoices which were received in evidence as Joint Exhibit 1. This fuel was used for industrial and commercial purposes, and not for the propulsion of motor vehicles on the public highways of the State of Florida. 161,900 gallons of the special fuel involved in this assessment was sold to Ard Oil Company, Summerdale, Alabama. Petitioner had every reason to believe that Ard Oil Company held a valid license as a dealer of special fuels in the State of Florida. Petitioner took reasonable steps to insure himself as to Ard's status, and received no instructions from the Respondent as to steps that could be taken to identify persons who were not properly licensed as special fuel dealers. 11,700 gallons of the special fuel involved in this assessment was sold to Hagler Grocery. All subsequent sales made by Hagler Grocery were for off- road, agricultural uses. During July, 1973, 5,000 gallons of the Petitioner's special fuel was mistakenly mixed with gasoline. The mixing rendered the special fuel unusable, and it was emptied onto Petitioner's property. This 5,000 gallons of fuel was never sold by the Petitioner, and was never used. On one occasion during the period of the audit, 5,000 gallons of special fuel leaked from one of the Petitioner's storage tanks due to a valve being left open erroneously. This fuel was never sold by the Petitioner, and was never used. During the period covered by the audit involved in this case, the Petitioner sold more than 5,000,000 gallons of special fuel. The Petitioner donates approximately 2,000 - 3,000 gallons of fuel yearly to the local fire department for training purposes. The Petitioner rinses his tanks periodically to keep down the lead content, and this results in some loss in special fuel. The Petitioner loses approximately 5 gallons of special fuel in each loading operation. The Petitioner made effort to account for all special fuel which came into his possession. Less than one percent of the fuel that came into his possession during the audit period has not been accounted for. It is reasonable to conclude, that 52,207 gallons of the Petitioner's special fuel was lost due to spillage, flushing operations, and donations to the local fire department. There was no evidence offered at the hearing from which it could be determined that any unaccounted fuel was used for a taxable purpose, or for any purpose.
Findings Of Fact For the period of time from January 1, 1986, through December 31, 1989, Co-Op Oil Company, Inc., was a wholesaler and retailer of motor fuel (gasoline) and special fuel (diesel) in the Florida west coast area and held Motor Fuel License Number 09_000447 and Special Fuel License No. 10-003477. During this time, each month Co-Op reported and paid motor fuel and special fuel tax based on the number of "net" gallons purchased during the preceding month. "Net" gallons are an industry standard. They are measured at a temperature of 60 degrees Fahrenheit. Meanwhile, during the same month, Co-Op sold motor fuel and special fuel through metered pumps and charged customers motor fuel and special fuel tax on the metered gallons sold through the pumps. Both motor fuel and special fuel are volatile. They expand and contract significantly as temperatures rise and fall. Since the temperature in an underground storage tank generally is around 71-72 degrees Fahrenheit, the "gross" gallons of motor fuel and special fuel stored in Co-Op's underground tanks and for resale to customers generally exceeds the "net" gallons it purchased by approximately one percent. Additional expansion, or some contraction, of the fuels can occur in transit from the tank to the metered pump, depending on outside temperature. As a result, the "gross" gallons pumped through the meter and sold to customers can differ from the "net" gallons purchased by Co-Op Oil. "Losses" due to contraction in cold tempertures also can occur, but a reasonable "shrinkage" allowance was factored into the Department's calculations. (Additional losses can occur due to spillage and evaporation. However, tax is still due on fuel lost to spillage and evaporation.) Except for Chapters 206 and 212, Part II, motor fuel taxes after January 1, 1988, the Department has interpreted the applicable statutes to: (1) require Co-Op to report and pay motor fuel and special fuel taxes monthly on the "gross" gallons it sells to its customers, plus any fuel it loses to spillage or evaporation; (2) hold Co-Op, as a licensee who collects more tax on motor fuel and special sold than was paid on the same gallons purchased, to be liable for the difference; and (3) hold Co-Op, as a licensee who purchased gasoline tax free, recorded such purchases at "net," and adjusted sales on its tax returns to "net," and sold such fuel at "gross," to be liable for the difference in tax. The Sampling Method The parties agreed that, due to the voluminous records that would be the subject of a detailed audit of all pertinent transactions, an audit using a sampling method is not only appropriate but also a practical necessity. The parties agreed that it would be appropriate to average the months of July, a hot month, and December, cold month, to obtain a valid and accurate average for the amount of gains (or losses) in volume of motor and special fuel due to expansion (or contraction) from the "net" gallonage purchased for resale through the metered pumps. An audit of the sample months reveals the following pertinent information (expressed in gallons): Month Motor Fuel Special Fuel JULY, 1986 Beginning Inventory 139,777 37,263 Amount of Fuel Purchased 622,543 124,809 Amount of Fuel Sold 639,640 125,591 Ending Inventory 126,740 37,167 DECEMBER, 1986 Beginning Inventory 103,046 33,648 Amount of Fuel Purchased 644,966 112,297 Amount of Fuel Sold 627,361 106,795 Ending Inventory 119,169 39,608 JULY, 1987 Beginning Inventory 88,937 30,769 Amount of Fuel Purchased 485,783 66,382 Amount of Fuel Sold 471,823 73,261 Ending Inventory 109,542 24,378 DECEMBER, 1987 Beginning Inventory 85,210 30,678 Amount of Fuel Purchased 552,977 76,584 Amount of Fuel Sold 535,767 78,667 Ending Inventory 102,497 28,311 JULY, 1988 Beginning Inventory 17,863 Amount of Fuel Purchased 61,499 Amount of Fuel Sold 52,380 Ending Inventory 27,197 DECEMBER, 1988 Beginning Inventory 24,195 Amount of Fuel Purchased 52,492 Amount of Fuel Sold 47,242 Ending Inventory 29,293 JULY, 1989 Beginning Inventory 19,829 Amount of Fuel Purchased 45,817 Amount of Fuel Sold 42,834 Ending Inventory 25,386 DECEMBER, 1989 Beginning Inventory 20,114 Amount of Fuel Purchased 54,323 Amount of Fuel Sold 55,520 Ending Inventory 18,824 (Under Chapters 206 and 212, Part II, motor fuel was taxed on purchases, as reported and paid by Co-Op, after December 31, 1987, so only special fuel totals are shown after that date.) Additional Taxable Gallons: Motor Fuel Adding the beginning inventory and purchases yields the "available fuel" for the month. Subtracting the ending inventory from this figure yields the month's "inventoried fuel accounted for." "Gain" from expansion of fuel above the "net" gallons purchased would equal the difference between a larger amount of fuel sold through the meters, the "metered sales," and a smaller "inventoried fuel accounted for." "Loss" from contraction of fuel below the "net" gallonage purchased (plus other possible losses from spillage, leakage or evaporation) would equal the difference between a larger "inventoried fuel accounted for" and a smaller amount of fuel sold through the meters, the "metered sales." Using the arithmetic operations described in the preceding paragraph on the samples of motor fuel, it can be calculated that Co-Op had gains of: 4,060 gallons for July 1986; 6,645 gallons for July 1987; and 77 gallons for December 1987. In the month of December 1986, there was a loss of 1,482 gallons. The net gain in motor fuel for those months was 9,300 gallons. Meanwhile, the total purchases of motor fuel for those months was 2,306,269 gallons. Comparing the net gain with the total purchases yields a gain or error ratio of .004032487 for motor fuel. The total number of gallons of motor fuel purchased by Co-Op during 1986 and 1987 was 14,190,105. Application of this gain ratio to the total number of gallons purchased yields 57,223 "additional taxable gallons" of motor fuel for 1986 and 1987. Computation of Additional Motor Fuel Tax, Penalty and Interest Multiplying each month's additional taxable gallons by .057 for the Chapter 212, Part II, motor fuel tax, and by .04 for the Chapter 206 motor fuel tax, the total taxes due for motor fuel are $3,262.29 for Chapter 212, Part II, and $2,288.92 for Chapter 206. Computed at 12 percent per annum or 1 percent monthly, interest or motor fuel taxes under Chapter 212, Part II, Fla. Stat., was $2,592.51 through July 28, 1993, with daily interest accruing at $1.07 per day from that day forward. Also computed at 12 percent per annum or 1 percent monthly, interest on the motor fuel tax under Chapter 206, Fla. Stat., was $1,500.15 through July 28, 1993, with daily interest accruing at $.75 per day from that day forward. To calculate the penalty for motor fuel for both Chapter 212, Part II, and Chapter 206, the tax due is multiplied by 25 percent to arrive at total amounts for penalties of $815.57 and $572.23, respectively. Additional Taxable Gallons: Special Fuel Using the same arithmetic operations described for motor fuel, the taxable gains for special fuel can be calculated for the sample months. (Special fuel was taxable upon resale at the pump for the entire audit period, and the sample months are examined for the entire audit period.) These calculations show the total net gain for the eight month sample period to be 3,892 gallons, as follows: Month Gain/Loss Gallons 686 458 488 284 215 152 July, 1986 December, 1986 July, 1987 December, 1987 July, 1988 December, 1988 July, 1989 Gain Gain Gain Loss Gain Loss Gain + + + - + - +2,574 December, 1989 93 Loss - (net gain) +3,892 Meanwhile, the total purchases of special fuel for those months was 594,203 gallons. Comparing the net gain with the total purchases yields a gain or error ratio of .00655 for special fuel. The total number of gallons of special fuel purchased by Co-Op during the years 1986 through 1989 was 3,910,608. Application of the gain ratio for special fuel to the total number of gallons purchased yields 25,614 "additional taxable gallons" of special fuel for 1986 through 1989. Computation of Additional Special Fuel Tax, Penalty and Interest Multiplying each month's additional taxable gallons of special fuel by $.057 per gallon for the Chapter 212, Part II, special fuel tax, and by $.04 per gallon for the Chapter 206 special fuel tax (except for the months July, 1987, through December, 1987, for which they are multiplied by the $.09 per gallon tax during that period of time), yields Chapter 212, Part II, special fuel tax due in the amount of $1,460.32, and Chapter 206 special fuel tax due in the amount of $1,171.76. Computing interest using exactly the same method as for the motor fuel taxes yields interest on the special fuel tax due under Chapter 212, Part II, in the amount of $1,067.32 through July 28, 1993, with daily interest accruing at $.48 per day from that day forward, and in the amount of $858.69 for the special fuel tax due under Chapter 206 through July 28, 1993, with daily interest accruing at $.39 per day from that day forward. The penalty for overdue special fuel tax for both Chapter 212, Part II, and Chapter 206 is calculated at 25 percent of the tax due, for total amounts of penalty of $365.08 and $292.94, respectively. The total of special fuel tax, interest and penalty due as of July 28, 1993, was $2,892.72 for special fuel under Chapter 212, Part II, and $2,323.29 for special fuel under Chapter 206. Rejection of Co-Op's Proposed Alternative Method Co-Op pointed out that for the month of July, 1986, it sold 17,097 gallons more than it purchased, but that for the subsequent sample months it was actually purchasing more gallons than it was selling. Co-Op argues that this demonstrates the payment of tax on 31,695 gallons more than it actually sold. However, a review of each month shows that, although purchases did exceed sales in several months, the ending inventories generally were larger than the number calculated by subtracting metered sales for the month from the total of beginning inventories plus purchases for the month. Actual dip stick measurements of the inventory in the tanks demonstrates a net increase over the computed book inventory of 9,300 gallons for motor fuel and 3,892 gallons for special fuel. In addition, sales of motor fuel for 1986 and 1987 totalled 14,247,541 gallons (8,228,593 for 1986, and 6,018,948 for 1987), while total purchases for that same period were only 14,190,105 gallons. For special fuel, sales of special fuel for 1986 through 1989 totalled 3,962,263 gallons (1,685,959 for 1986, 945,775 for 1987, 721,547 for 1988, and 608,982 for 1989), while total purchases of special fuel were only 3,910,608 gallons. In each case, due to expansion gains in the fuels, sales always exceeded purchases. Local Option Taxes The Chapter 336 local option taxes on motor fuel were not affected by the amendments to Chapters 206 and 212, Part II, effective January 1, 1988. The total that Co_Op reported for motor fuel purchases for the period January 1, 1986, through December 31, 1989, was 24,798,440. Multiplying by the gain ratio for motor fuel of .004032487 yields 100,000 gallons of additional taxable motor fuel. Adding the additional taxable gallons of motor fuel to the 25,614 gallons of additional taxable special fuel yields of 125,614 additional taxable gallons or net gain for the period. Throughout the audit period, the local option tax rate under Section 336.025 was $.04 per gallon for Lake and Lee County and $.06 per gallon for Manatee and Orange County. Polk County started with a $.04 per gallon rate and increased that to a $.06 per gallon rate in September, 1986. Pinellas and Citrus County increased the tax rate from the beginning figure of $.04 per gallon to $.06 per gallon in September, 1987. Because of the difference in rates between counties and the changes of rates within counties, it is necessary to calculate effective tax rates and compute the percentage of reported taxable gallons for Co-Op's business in each of the respective counties, as follows: Ratio of Reported Effective Tax County Gallons Rate .051 .040 .040 .060 Citrus 21 percent Lake 01 percent Lee 03 percent Manatee 11 percent .060 .050 .055 Orange 02 percent Pinellas 37 percent Polk 25 percent Taking the total net gain of 125,614 gallons and multiplying it by the appropriate percentage (i.e., the ratio of fuel sold in an individual county) yields the total taxable gains in each county. To ascertain the additional local option taxes due under Section 336.025, Fla. Stat., the total taxable gains calculated for each county option tax must be multiplied by each county, as follows: County for the purposes of the local effective tax rate for Tax Due Citrus $1,345.33 Lake 50.25 Lee 150.74 Manatee 829.05 Orange 150.74 Pinellas 2,323.86 Polk 1,727.19 Total $6,577.14 The statutory 25 percent penalty on the past due local option taxes amounts to $1,644.29. The statutory interest due on the past due local option taxes amounted to $4,415.33 through July 28, 1993, and has been accruing at a daily rate of $2.16 from that date (the date of the hearing). In sum, as of July 28, 1993, Co-Op owed local option tax under Section 336.025, penalty follows: and interest as Tax $6,577.14 Penalty 25 percent 1,644.29 Interest thru 7/28/93 4,415.33 Total $12,636.76 Interest continues to accrue at the $2.16 daily rate. Of the seven counties in which Co_Op was doing business that had enacted the local option tax under Section 336.025, Fla. Stat., only Lake, Lee and Manatee Counties had enacted the Section 336.021, Fla. Stat., tax of $.01 per gallon. They had only approximately 14.26 percent of the 125,614 additional taxable gallon (net gain) for purposes of local option taxes, or 17,913 additional taxable gallons. Using the statutory 1 percent taxable rate, Co-Op owes the following additional taxes: County Total Tax Percent Ratio Tax Due 8.60 Lake 171.93 5 Lee 171.93 28 48.14 Manatee 171.93 67 115.19 The statutory 25 percent penalty on the additional Section 336.021 local option tax amounts to $42.98. At the statutory rate, interest owing on the additional Section 336.021 local option tax totalled $127.97 through July 28, 1993, with interest accruing at the rate of $.06 per day thereafter. In sum, as of July 28, 1993, Co-Op owed local option tax under Section 336.021, penalty and interest in the amount of $342.88, with interest accruing at $.06 per day from that day forward. Estoppel Since 1957, each month Co-Op reported and paid motor fuel and special fuel tax based on the number of "net" gallons purchased during the preceding month. Four years before the audit which is the subject of this case, Co-Op was audited and was not told that it was in error in reporting and paying motor fuel and special fuel tax based on the number of "net" gallons purchased. However, at all times when Co-Op reported and paid motor fuel and special fuel tax based on the number of "net" gallons purchased, it also collected tax from the ultimate purchasers on the number of "gross" gallons pumped through the meter. Offer to Compromise Penalty The Department, in its Notice of Decision and Notice of Reconsideration offered to compromise the penalty on all taxes from the 25 percent level to a 5 percent level, but Co-Op protested both of these notices. The offer of compromise was only good for the duration of the Closing Agreement which was attached to the Notice of Reconsideration. In light of the prior audit, which did not alert Co-Op that it was reporting and paying taxes incorrectly, it could perhaps initially have been argued by Co-Op that its failure to report and pay these taxes when due was reasonable, and not fraudulent or willful neglect or negligence. But the prior audit cannot justify its decision to contest its liability for these taxes through formal administrative proceedings.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Revenue enter a final order finding the Petitioner, Co- Op Oil Company, Inc., liable for the following taxes: Ch. 212, Part II, Motor Fuel.--$6,670. 37, with interest accruing at $1.07 per day from July 29, 1993. Ch. 212, Pt. II, Special Fuel.-- $2,892.72, with interest accruing at $.48 per day from July 29, 1993. (3) Ch. 206, Motor Fuel.--$4,361.30, with interest accruing at $.75 per day from July 29, 1993. (4) Ch. 206, Special Fuel.--$2,323.39, with interest accruing at $.39 per day from July 29, 1993. Ch. 336.025, Motor/Special Fuel.-- $12,636.76, with interest accruing at $2.16 per day from July 29, 1993. Ch. 336.021, Motor/Special Fuel.-- $342.88, with interest accruing at $.06 per day from July 29, 1993. TOTAL - $29,277.42, with interest accruing at $4.91 per day from July 29, 1993. RECOMMENDED this 22nd day of September, 1993, in Tallahassee, Florida. 1550 J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399- (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of September, 1993. COPIES FURNISHED: James E. Smith, President Co-Op Oil Company, Inc. 4911 - 8th Avenue South Gulfport, Florida 33707 Ralph R. Jaeger, Esquire Assistant Attorney General Department of Legal Affairs Tax Section, Capitol Building Tallahassee, Florida 32399-1050 Linda Lettera, Esquire General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs Executive Director Department of Revenue 102 Carlton Building Tallahassee, Florida 32399-0100
The Issue Petitioner's alleged liability for motor fuel and special fuel tax, interest, and penalties, pursuant to Chapter 206, F.S., as set forth in Notice of Proposed Assessments, dated April 1, 1977.
Findings Of Fact Petitioner Walker Oil Company is located in Pensacola, Florida and is licensed by the State of Florida under Chapter 206, Florida Statutes, as a dealer in special fuels. The firm is also licensed in the State of Alabama with respect to the sale of both special fuels and motor fuel. The company was formed in 1955 and during ensuing years operated service stations and sold motor fuel and special fuels in the Pensacola and south Alabama area. Its operations were audited yearly during the period 1955 to 1961 by Respondent. In 1972 an audit for the period October 1970 to March 1972 revealed underpayments of special fuel tax in the approximate amount of $600 during the audit period. (Testimony of Walker, Exhibit 5) In July 1975, Respondent's auditor, Clyde Whitehead, commenced an audit of Petitioner's records to determine whether any motor fuel or special fuel taxes were delinquent for the period July 1, 1972 through June 30, 1975. Although Petitioner's records were available to the auditor for the period January 1, 1974 through June 30, 1975, no records were available for the initial 18 month period of the audit from July 1, 1972 through December 31, 1973. Petitioner had filed monthly tax reports with Respondent as to special fuels, but had not submitted any such reports during the audit period for motor fuel. (Testimony of Whitehead, Walker) As a result of the audit, an assessment of $43,356.11, including interest and penalty, for motor fuel taxes incurred during the period January 1, 1974 through June 30, 1975, was asserted against Petitioner. The assessment was based on audit findings that Petitioner had sold 430,866 taxable gallons, but had not remitted the tax to Respondent. Petitioner paid the assessment. C. C. Walker, Petitioner's former president, testified at the hearing that such payment was made in order to secure the dismissal of then pending state criminal charges alleging that Petitioner had "bootlegged" gasoline during the period in question. (Testimony of Walker, Exhibit 2) Pursuant to the audit findings, a Notice of Proposed Assessment for delinquent motor fuel taxes during the period July 1, 1972 through December 1, 1973, in the amount of $20,076.43, including penalty and interest through March 31, 1977, was issued by Respondent on April 6, 1977. On the same date, a Notice of Proposed Assessment for special fuel tax in the amount of $51,022.96, including penalty and interest through March 31, 1977, was also issued to Petitioner. A revised assessment, dated September 19, 1978, deleted certain portions of interest charged on the original proposed assessments. These deletions resulted in the reduction of motor fuel assessment to $12,396.52, and the special fuel assessment to $38,052.90. After the hearing, under date of February 27, 1979, Respondent further reduced the motor fuel assessment to $6,732.22. (Exhibit 1, Hearing Officer Exhibit 1) Due to the absence of Petitioner's records for the first 18 month period of the audit, Respondent based liability for motor fuel and special fuel taxes for that period on an estimate, using audit findings of the second 18 month period of the audit for which Petitioner's records were available. This was the first instance in at least 13 years in which an estimated assessment of fuel tax had been made by Respondent. Respondent had no regulations or established policy for arriving at such an estimate, but its officials testified that they simply tried to be "fair and equitable" in making the determination. (Testimony of Williamson, Thomas, Deposition of Whitehead, Exhibit 3) Respondent's method of estimating Petitioner's motor fuel tax liability was predicated upon relating the known 1974-75 figures on purchases and sales of gasoline and the amount of tax found delinquent during that period, to known purchases of gasoline by Petitioner during the period of the estimated assessment. The audit for the period 1974-75 showed that 60 1/2 percent of Petitioner's gasoline purchases from known suppliers in Florida and Alabama had been sold in Florida. Respondent therefore determined from the sales records of Petitioner's known gasoline suppliers and from tax reports it had submitted to Alabama, that the firm had purchased 4,221,454 gallons of motor fuel during the 1972-73 period. Applying the 60 1/2 percent factor, Respondent's auditor determined that 2,554,259 gallons had been sold in Florida during that period. Since it had been found that Petitioner had sold 430,866 taxable gallons during the 1974-75 period for which tax had not been remitted to the state, which was 7 1/2 percent of its total Florida sales for that period, Respondent applied the same factor to the estimated amount of Florida sales during the 1972-73 period. This resulted in an estimated 191,569 gallons on which Respondent assumed Petitioner had collected but not remitted the motor fuel tax. By multiplying this figure by the 8 cents tax per gallon, it was estimated that Petitioner owed $15,325.52 to the state. This figure was later revised by the February 27th Notice of Adjusted Final Assessment to $10,176.15 plus a 10 percent penalty of $1,017.62. This reduction was based on the fact that approximately 1/3 of Petitioner's total sales of motor fuel during the 1974-75 period was made to one company named Pac-a-Sak, which did not do business with the firm during the first 18 month period of the audit. After deducting the sum of $4,461.55 representing overpayment of interest in the 1974-75 assessment payment, Respondent determined that $6,732.22 was due for motor fuel tax during the 1972- 73 audit period. The original estimated assessment reflects Respondent's acknowledgment that only the lesser amount reflected therein is due. (Testimony of Whitehead, Thomas, Deposition of Whitehead, (Exhibit 3), Exhibits 2, 4B, Hearing Officer's Exhibit 1) Respondent's proposed assessment against Petitioner for special fuel tax and penalty in the total amount of $38,052.90 is derived from audit findings based on availability of Petitioner's records for the 1974-75 portion of the audit period, and on an estimated assessment for the 1972-73 period. Additionally, Petitioner's Florida tax reports for the entire period were used in making the audit. It was determined that Petitioner had purchased 1,510,073 gallons of special fuel in Florida during the 1974-75 period and had sold 1,590,587 gallons in Florida during the same period. The auditor found that Petitioner had sold 156,150 gallons of special fuel for which Petitioner should have collected tax, but did not. The bulk of the untaxed gallonage was sold to Hinesway Trucking Company and Polar Ice Cream Company, neither of which were licensed as special fuel dealers in Florida. Therefore, all of the sales to these two companies were treated as taxable sales, because no resale certificates were obtained by Petitioner when it sold special fuel tax free to those companies. The principal of Hinesway Trucking Company had mistakenly informed Petitioner's office employee that it was licensed as a special fuel dealer when in fact it was not. The audit findings showed that Petitioner had sold a total of 841,855 taxable gallons during the 1974-75 period, for which tax was due in the amount of $67,348.40, but that tax had only been remitted by Petitioner in the amount of $46,809.60, leaving a total tax due of $20,538.80. The total due and payable by Petitioner to Respondent for this period was therefore computed to be $24,443.05, including penalty and interest through June 30, 1975. It is found that the audit correctly reflects Petitioner's special fuel tax liability for the 1974-75 period. (Deposition of Whitehead (Exhibit 3), Exhibit 2, 4A) The estimated special fuel tax for the 1972-73 period was calculated in a manner similar to that of the estimated motor fuel tax assessment. Respondent's auditor determined that Petitioner's taxable sales during the 1974- 75 period were approximately 53 percent of its total sales. He also determined that Petitioner had experienced a 15 percent increase in business in the latter period. It was therefore determined to estimate the sales for the 1972-73 period as being 85 percent of the total sales of 1,590,587 gallons during the later period which resulted in an estimated 1,351,999 gallons sold in Florida during 1972-73. Applying the taxable percentage of approximately 53 percent to this figure led to a finding that 715,577 taxable gallons had been sold by Petitioner. Petitioner had reported the sale of 539,893 taxable gallons; and accordingly, the audit found that additional tax was due on the difference of 175,684 gallons at 8 cents per gallon, resulting in estimated tax due of $14,054.72. Thus, this figure added to the 1974-75 deficiency of $20,538.80 resulted in an alleged special fuel tax deficiency for the audit period in the amount of $34,593.52, plus a 10 percent penalty in the amount of $3,459.38 for a total amount due of $38,052.90. Respondent, in formulating the above estimated assessment for the 1972-73 period, assumed that Petitioner had the same percentage of taxable sales as that for the 1974-75 period. However, approximately 150,000 taxable gallons on which tax had not been collected during the 1974-75 period were sold by Petitioner to Hinesway Trucking Company from about June 1974 through June 1975, under a misapprehension as to its nonlicensed status. Hinesway had not been a customer of Petitioner prior to 1974. Respondent's auditors made no allowances for this unusual situation, nor did it consider the low deficiencies accrued by Petitioner as a result of its 1970-72 audit. (Testimony of Walker, Deposition of Whitehead (Exhibit 3) Exhibit 1-2, 4A) Petitioner's president, C. C. Walker, testified at the hearing that as a result of the "personal vendetta" of an employee of Respondent in harassing Petitioner's customers and releasing unfounded information to the press, plus the instigation of criminal charges against the firm, a great loss of business was caused and severe damage to its reputation in the community. He denied any intentional wrongful acts on the part of the company or any of its personnel and claimed that any Florida sales of fuel for which tax was not paid was due to "human error." (Testimony of Walker)
Recommendation That the proposed assessment of motor fuel tax and penalty, as set forth in Respondent's Notice of Adjusted Final Assessment, dated February 27, 1979, be withdrawn. That Respondent's Notice of Proposed Assessment (adjusted) for special fuel tax and penalty, dated September 19, 1978, be revised to delete inclusion of Petitioner's sales to Hinesway Company as a factor in determining an estimated assessment, and that such revised assessment be asserted against Petitioner. DONE and ENTERED this 16 day of March, 1979, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Cecil Davis, Esquire Department of Legal Affairs The Capitol LL05 Tallahassee, Florida 32304 James R. Green, Esquire Seville Tower 226 South Palafox Street Pensacola, Florida 32501 ================================================================= AGENCY FINAL ACTION NOTICE =================================================================
