The Issue The ultimate issue is whether Olcott Dairy is exempt from permitting requirements regarding treatment and disposal of wastewater from its dairy operation. If it is not exempt, the remaining issue is whether Olcott Dairy must apply for a wastewater treatment and disposal permit from the Department of Environmental Regulation (DER) in order to continue operation.
Findings Of Fact During the early part of 1990, Earl Olcott proposed to construct and operate the Olcott Dairy in Gilchrist County, Florida, near the intersection of State Road 138 and U.S. Highway 129. In response to Olcott's proposal, DER sent Olcott a letter dated February 26, 1990, which advised that he could "either apply for a construction permit covering the treatment and disposal of dairy wastes using the enclosed industrial waste application or pursue an exemption from permitting." Based on the options given to him by DER, Olcott submitted a request for an exemption on March 23, 1990. The request included all the necessary engineering information and drawings. Essentially Olcott proposed a concrete lined waste storage pit sized to prevent the 25-year 24-hour storm event from overflowing and spray irrigation system for distributing the wastes to a hayfield. By letter dated March 26, 1990, DER exempted the proposed dairy from permitting requirements subject to certain conditions. Based on the exemption, Olcott purchased and constructed the proposed dairy, including the waste storage pit. Olcott Dairy commenced operations on January 26, 1991, and continues to operate. On November 8, 1990, the Petitioners wrote to DER about the Olcott Dairy, inquiring about the granting of the exemption to Olcott and seeking a point of entry to challenge the exemption. DER advised that "because these facilities are exempt by rule, the Department does not believe it has taken any action that would be subject to the provisions of Section 120.57 or 403.412(5), F.S." Mr. Olcott was copied on this letter. The Petitioners filed their Petition for Formal Administrative Proceedings on January 3, 1991. NFPOA is comprised of 45 members who live in the area of Olcott Dairy. On April 11, 1991, NFPOA incorporated as a Florida corporation not-for-profit. The purpose of the group, as stated in the Articles of Incorporation, is to protect "the environmental health of the land, air and water in North Florida." Petitioner Eron Carver lives directly across the road from Olcott Dairy and relies for drinking water on wells that pump from the groundwater aquifer lying beneath his home as well as beneath the Olcott Dairy. He also fishes in the Santa Fe River, an Outstanding Florida Water (OFW). After the filing of the Petition, DER wrote to Olcott on February 5, 1991, advising that the decision on the exemption was proposed agency action only and that "no action may be taken on the above exemption" until DER issued a Final Order on entitlement to the exemption. Regrettably for Mr. Olcott, action had already been taken based on the exemption and on DER's letter of December 7, 1990, which had indicated that the exemption was already granted and not subject to challenge by the Petitioners. The dairy was already in operation. The March 26, 1990, letter which found Olcott entitled to an exemption did not advise that the action was proposed and not final. Instead the letter clearly authorized Olcott to proceed with construction and operation of the wastewater management system as proposed and subject to the stated conditions because the proposed project was exempt from DER's permitting requirements. The December 7, 1990, letter clearly reinforced that the exemption was granted and not subject to challenge. On March 1, 1991, DER inspectors went to Olcott Dairy to review the wastewater management system in use. They found that the storage pit had overflowed and that no spray irrigation system had been built. Instead, the wastes were being applied to the field from a tank truck which was being driven slowly over the same 10-foot wide area with its tank valve open. On April 29, 1991, DER advised Olcott by letter that it was no longer supporting the exemption because an exemption was not appropriate and a groundwater discharge permit was necessary. The reasons given for this change in position were New information which shows that dairy activities pose a threat of groundwater contamination; Condition 4 was being violated by Olcott's waste application rates; Condition 7 was violated because the system design engineer failed to certify that the system was constructed to meet the design criteria; The waste management system being operated differed from the proposed design because the wastes were being applied by a tank truck; and The storage pit had apparently overflowed. The primary reason for DER's change was the new information derived from a study of dairies in North Central Florida. This study of dairies similar to Olcott indicated that existing waste management practices of dairies in the Suwannee River Basin have a potential to contaminate groundwater with elevated levels of nitrates and to cause off-site contamination. Specifically, the study found that groundwater beneath more than 45% of the dairies studied had nitrate levels exceeding the state standard of 10 mg/l, with nitrate levels as high as 140 mg/l recorded. Nitrate is a pollutant that can cause health problems in humans, particularly children. The area in which Olcott Dairy is located is highly vulnerable to groundwater contamination because of the underlying Karst geology. Additionally the aquifer under the dairy flows, under normal conditions, toward the Santa Fe River, an OFW. The ground application of wastes by Olcott Dairy allows percolation of wastes, which threatens violation of groundwater standards beyond the boundaries of the dairy. It also threatens to impair the water quality of the Santa Fe River, a contiguous water body. The only way these threats can be evaluated is to require that the waste management system undergo a complete review as part of the permit application process. By its letter of March 26, 1990, DER led Olcott to believe that the exemption was final and that the dairy could operate indefinitely pursuant to the exemption from permitting. Olcott has taken all of its actions in reliance on DER's representations regarding permitting requirements and DER's authority to determine entitlement to exemptions. In reliance on the exemption given in the March 26, 1990, letter, Mr. Olcott expended sums in purchasing the property for the dairy and in building the dairy, including the waste management system currently in place. He will be required to expend additional sums for preparation and filing of a permit application and for installation of monitoring wells and other equipment which may be required to qualify for a permit.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Environmental Regulation enter a Final Order and therein: Deny Olcott Dairy's request for an exemption from permitting requirements. Waive permit application fees from Olcott for its permit application and cooperate with Olcott in processing and conditioning for intended approval the permit for which Olcott must apply. RECOMMENDED this 26th day of July, 1991, in Tallahassee, Florida. DIANE K. KIESLING 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 26th day of July, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-0750 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted Jointly by Petitioners, North Florida Property Owners Association and Eron W. Carver and by Respondent Department of Environmental Regulation Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1(1); 2(5); 3(6); 5(13); 6- 8(14); 9&10(15); 12(16); 13&14(17); and 15(9). Proposed finding of fact 4 is subordinate to the facts actually found in this Recommended Order. Proposed finding of fact 11 is unsupported by the competent, substantial evidence. COPIES FURNISHED: John K. McPherson Attorney at Law McPherson & Coffey, P.A. 22 South Main Street Gainesville, FL 32601 Earl Olcott Olcott Dairy Route 2, Box 417 Brandford, FL 32008 William H. Congdon Assistant General Counsel Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400 Carol Browner, Secretary Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400 Daniel H. Thompson General Counsel Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400
The Issue Does Petitioner, Target, have standing to challenge proposed rule 61A-3.055, Items Customarily Sold in a Restaurant (proposed rule or proposed restaurant rule), (Case No. 19- 4913RP)? Does Petitioner, Walmart, have standing to challenge the proposed restaurant rule (Case No. 19-4688RP)? Does Intervenor, ABC, have standing to participate in these challenges to the proposed rule? Does Intervenor, FISA, have standing to participate in these challenges to the proposed rule? Does Intervenor, Publix, have standing to participate in these challenges to the proposed rule? Is the proposed restaurant rule an invalid exercise of delegated legislative authority as defined in section 120.52(8), Florida Statutes (2019)?1/
Findings Of Fact Parties Division The Legislature has charged the Division with administration of Florida's Alcoholic Beverage and Tobacco Laws, including Chapters 562 through 568, Florida Statutes, known collectively as the "Beverage Law." 561.01(6), Fla. Stat. This charge includes licensing and regulation, as well as enforcement of the governing laws and rules. Title XXIV of the Florida Statutes governs sale of alcoholic beverages and tobacco. It includes chapters regulating beer (chapter 563), wine (chapter 564), and liquor (chapter 565). Among other things, these similarly structured chapters impose license fees, with the amounts determined by the population size of the county where the business is located. Section 565.02 creates fee categories for "vendors who are permitted to sell any alcoholic beverages regardless of alcoholic content." Section 565.02(1)(b)-(f) establishes the license fees based upon county population for licenses for places of business where consumption on premises is permitted. These are referred to as "COP" licenses. A number preceding COP, such as 4COP, indicates the county population range and therefore license fee amount for a particular license holder. Section 565.045, Florida Statutes, also permits COP license holders to sell sealed containers of alcoholic beverages for consumption off the premises (packaged goods). Walmart Walmart is a multinational corporation. It owns subsidiaries that own and operate retail stores, warehouse clubs, and an e-commerce website operated under the "Walmart" brand. Walmart does not own or operate stores. It holds them through wholly owned subsidiaries. For instance, Walmart is the parent company of its wholly owned subsidiary Wal-Mart East. Stores of Walmart subsidiaries have three primary formats. They are Supercenters, Discount Stores, and Neighborhood Markets. The record is silent about the nature and degree of day- to-day control, policy control, and marketing control that Walmart exercises or has authority to exercise over the subsidiaries. It is also silent about the nature and structure of the fiscal relationship between Walmart and its wholly owned subsidiaries. Walmart does not have a license issued by the Division pursuant to section 565.02(1)(b)-(f). Walmart has not applied for a license from the Division issued under section 565.02(1)(b)-(f). The record does not prove that Walmart intends to apply for a COP license. Wal-Mart East Wal-Mart East owns and operates "Walmart" branded stores at approximately 337 Florida locations. They include approximately 231 "Supercenters," nine "Discount Stores," and 97 "Neighborhood Markets." All of these stores sell food items. Depending on the store category, the items may include baked goods, deli sandwiches, hot meals, party trays, and to-go food items, such as buckets of fried chicken and pre-made salads. The areas adjacent to the departments of Wal-Mart East that sell food do not have seats and tables for diners. There are some benches, but not tables, scattered around inside the stores. None of the stores holds a license from the Florida Division of Hotels and Restaurants or the Florida Department of Health. They hold "retail food store" or "food establishment" licenses from the Florida Department of Agriculture and Consumer Services. In his deposition, Tyler Abrehamsen, assistant manager for Wal-Mart East Store #705 in Mt. Dora (Store 705), aptly described Walmart as "more than just a store." Walmart sells "anything you can think of from sporting goods to deli to candy." A Supercenter sells, among other things, general merchandise, golf balls, fishing gear, socks, motor oil, ammunition, groceries, deli goods, electronics, home furnishings, groceries, and hot food. Supercenters may house specialty shops such as banks, hair and nail salons, restaurants, or vision centers. Walmart Supercenters offer 142,000 items for sale. Many house McDonalds or Subway restaurants. Discount Stores are smaller than Supercenters. They sell electronics, clothing, toys, home furnishings, health and beauty aids, hardware, and more. Discount Stores offer about 120,000 items. A Neighborhood Market is smaller than a Discount Store. Neighborhood Markets sell fresh produce, meat and dairy products, bakery and deli items, household supplies, health and beauty aids and pharmacy products. Walmart Neighborhood Markets offer about 29,000 items. Store 705 is a Supercenter. The store holds a food permit issued by the Florida Department of Agriculture and Consumer Services under Chapter 500 to operate as a retail food store or food establishment. There are four picnic tables with seating in a pavilion outside the store. Some benches, but not tables, are scattered around the store. Store 705 holds a 2APS license permitting beer and wine package sales only. Wal-Mart East applied to the Division to change the license to a COP license. The Division processed the application and issued Store 705 a temporary license on May 13, 2019. Two days later the Division advised Store 705 that it issued the temporary license erroneously and that the license was void. Shortly afterwards a Division employee recovered the license from Store 705. On June 7, 2019, the Division issued its Notice of Intent to Deny License, relying in part on section 565.045.3/ Section 565.045, which the proposed rule implements, prohibits issuing a COP license to a place of business that sells items not "customarily sold in a restaurant." The floor plan Store 705 provided with its COP license application does not delineate an area for serving and consuming alcoholic beverages. When asked about plans to serve alcohol by the drink, the Wal-Mart East representative testified, "However, I'm not suggesting that in the future at some point we wouldn't be interested in selling drinks by the glass at Store 705." The witness went on to say, "What I'm saying today is I don't know if there are future plans and I don't think that we're prepared to say one way or another whether this would be our plan for this location for eternity." (TR. Vol. 1, p. 161) Wal-Mart East only plans to sell alcohol by the container at Store 705. If issued a COP license, however, it would be permitted to sell alcohol by the drink. Lake County Property Appraiser records identify the land use of Store 705 as "Warehouse Store." There is no evidence about the significance of this, how the categorization is determined, or what purpose it serves. Several credit card companies categorize Wal-Mart East stores as "grocery stores" and "supermarkets" or discount stores. There is no evidence about the significance of these categorizations, their meaning, how the categorization is determined, or for what purpose the categorizations are applied. The lack of relevant information about how and why the property appraiser and credit card companies determine these categorizations make them meaningless for any determination of whether Wal-Mart East stores are restaurants. Wal-Mart East leases space within Store 705 to a separate entity doing business as Wayback Burgers. Wayback Burgers has a kitchen, a service counter, a fountain drink dispenser, and seats and tables for dining. The Division of Hotels and Restaurants issued the owner of Wayback Burgers, under the authority of Chapter 509, a license titled "Seating Food Service License." The definitions section of Chapter 509 does not contain a definition for "Seating Food Service." The license does not identify the physical area covered by the license, although it refers to 22 seats. The Division of Hotels and Restaurants inspects only the area identified by signage, seating, food preparation area, and service area when inspecting Wayback Burgers. The Division of Hotels and Restaurants does not license the rest of Store 705 or any other Wal-Mart East store in Florida. The Department of Agriculture and Consumer Services issued Store 705 an Annual Food Permit denominated as for Food Entity Number: 33995. The license does not describe the physical area to which it applies. A January 4, 2019, document titled Food Safety Inspection Report for Store 705 lists "111/Supermarket" in a field of the report titled Food Entity Type/Description. The record does not explain the designation. The Department of Agriculture, Bureau of Food Inspection, Division of Food Safety, maintains a food inspection data base of permitted entities. That list identifies Store 705 as a supermarket. The Department of Agriculture often must decide whether it should license an establishment serving food or if the Division of Hotels and Restaurants should issue the license. The Department regulates food establishments and retail food stores. It does not have authority over food service establishments. Sometimes the Department consults with the Division of Hotels and Restaurants to determine what a business should be licensed as. When a vendor like McDonald's or Subway is located in a Walmart store the agriculture department bases its licensing category decision on ownership. If the store owns the McDonald's or Subway, the Department will license it. If a separate entity owns and operates the McDonald's or Subway, the department looks to the Division of Hotels and Restaurants to license it. Target The parties stipulated that Target is an upscale discount retailer that provides high quality, on-trend merchandise at attractive prices in clean, spacious, and guest- friendly stores. Target owns and operates approximately 126 general merchandise stores in Florida. Target does not hold a license issued by the Division under section 565.02(1)(b)-(f). The Florida Department of Agriculture and Consumer Services licenses all Target locations in Florida as retail food stores or food establishments under chapter 500. The licenses are for the entire store, including the food service portions discussed below. No Target store holds a license from the Florida Division of Hotels and Restaurants. The Florida Department of Health does not license any Target stores as food service establishments. Target sells beer and wine by the container in 124 of its Florida stores. At three store locations, Target sells beer, wine, and liquor from a separate liquor store with a separate entrance. Target operates Starbucks and Pizza Hut facilities under licensing agreements within 118 of its stores. Coffee, espresso, banana bread, chocolate chip cookies, ham and cheese croissants, oatmeal, and biscotti are representative examples of food sold at Target Starbucks. Target Pizza Huts typically sell carbonated drinks, smoothies, pretzels, popcorn, hot dogs, pizzas, chicken wings, and french fries. Some Target stores also have a Target Café selling limited food and beverage items. Target stores also sell items such as packaged, pre- made salads, fruit, and frozen meals. "Super Target" stores have delis, which sell cooked items like chicken fingers and rotisserie chicken. The cafés, Starbucks, and Pizza Huts occupy separate areas within the larger Target stores. They have their own cash registers. Customers may pay for retail items from the store at those cash registers. The inventory of all Target stores is subject to daily change. Location, geography, supply, and other factors affect a store's inventory. Target stores sell a gamut of items. They include groceries, frozen foods, furniture, rugs, garden tools, clothing, toys, sporting goods, health products, beauty products, electronics, office supplies, kitchen appliances, diapers, pet food, cell phones, and luggage. A Target store in Delray Beach has applied to the Division to change its beer and wine package license to a COP license. Target seeks the COP license in order to make package sales of liquor. Like the Walmart representative, Target's representative refused to state whether Target planned to offer alcohol by the drink at any of its stores. If it held a COP license, the store would be permitted to sell alcohol by the drink. ABC ABC stores retail alcoholic beverages in Florida. The stores hold a number of alcoholic beverage licenses issued by the Division. ABC holds 25 4COP licenses issued by the Division. In his deposition, the ABC corporate representative testified that he "would not be able to answer" if the proposed rule would have any impact on ABC. His testimony, however, proved that ABC stores seek clear guidance about what they can and cannot sell. Also, the proposed rule imposes limits upon what ABC stores can sell that the invalidated rule and the statute alone do not impose. FISA FISA is an independent association of alcoholic beverage retailers. It has 206 members. The Division licenses and regulates FISA's members. ABC is a FISA member. Including ABC, FISA members hold 61 4COP licenses. There is no evidence proving that any FISA member intends to apply for a COP license. Only the FISA members holding COP licenses would be affected by the proposed rule. This is not a substantial number of members. The other 145 members hold 3PS licenses (package sales) which the proposed rule does not affect. Neither the officers, the governing board, nor the members of FISA voted or took any other official action to authorize FISA to intervene in this proceeding. The evidence does not prove that the association is acting as a representative of its members in this proceeding. There is also no evidence, such as the FISA articles of incorporation, by-laws, or other association formation documents, proving the association's general scope of interest and activity or the authority of its President to act on its behalf. The evidence does not prove that participating in this proceeding is within the authority of the President or FISA. FISA President, Chris Knightly, testified in deposition that any change in where liquor could be sold could have an extreme financial impact on small family-owned businesses. But FISA offered no evidence to show the impact on its members or, for that matter, that any FISA members were actually small, family-owned businesses. The President also testified that the impact of the rule on FISA members would be minimal because the non-alcoholic items the stores sold were just conveniences for customers, not significant revenue sources. In light of the President's statement about minimal impact on FISA members and the number of members who hold COP licenses, the record does not prove that the proposed rule would have a substantial effect on FISA or a substantial number of its members. Publix Publix is a supermarket chain in Florida. It also operates a number of liquor stores throughout Florida. Publix holds two 4COP licenses and ten 2COP licenses (beer and wine only) issued by the Division.4/ The proposed rule imposes limits upon what Publix can sell at its 4COP licensed stores that the invalidated rule and the statute alone do not impose. Rulemaking The Division seeks to implement section 565.045. The pertinent parts of the statute provide: Vendors licensed under s. 565.02(1)(b)- (f) shall provide seats for the use of their customers. Such vendors may sell alcoholic beverages by the drink or in sealed containers for consumption on or off the premises where sold. (2)(a) There shall not be sold at such places of business anything other than the beverages permitted, home bar and party supplies and equipment (including but not limited to glassware and party-type foods), cigarettes, and what is customarily sold in a restaurant. The Division, both in the invalid rule and in the proposed rule, seeks to provide clarity about the meaning of "customarily sold in a restaurant" as it is used in the statute. That desire was the reason it adopted the original rule, now invalidated, in 1994. The review by the Joint Administrative Procedures Committee (JAPC) back then observed, "Absent explanatory criteria, use of the word 'customarily' vests unbridled discretion in the department." The Division responded: "As mentioned in our meeting, all of proposed rule 61A-3.055 [1994 version] is, in itself, the division's attempt to define the admittedly vague phrase 'items customarily sold in a restaurant', as used in s. 565.045." The invalidated rule provided: 61A-3.055 Items Customarily Sold in a Restaurant. As used in Section 565.045, F.S., items customarily sold in a restaurant shall only include the following: Ready to eat appetizer items; or Ready to eat salad items; or Ready to eat entree items; or Ready to eat vegetable items; or Ready to eat dessert items; or Ready to eat fruit items; or Hot or cold beverages. A licensee may petition the division for permission to sell products other than those listed, provided the licensee can show the item is customarily sold in a restaurant. This petition shall be submitted to the director of the division at Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, 2601 Blair Stone Road, Tallahassee, Florida 32399-1020, and must be approved prior to selling or offering the item for sale. For the purpose of consumption on premises regulations set forth in Section 565.045, F.S., items customarily sold in a restaurant shall include services or sales authorized in the "Florida Public Lottery Act", Section 24.122(4), F.S. The Final Order invalidating the earlier rule concluded: A rule is arbitrary if it is not supported by logic or necessary facts and is capricious if irrational. Dep't of Health v. Bayfront Med. Ctr., Inc., 134 So. 3d 1017 (Fla. 1st DCA 2012). Despite the Division representative's best efforts at deposition to avoid answering direct questions, the record proved that restaurants customarily sell at least T-Shirts and branded souvenirs. The Division, through the deposition testimony of its representative, acknowledged this. The record offers no explanation why subsection (1) of the Restaurant Rule does not include these items. Excluding an item that the Division acknowledges is customarily sold in restaurants from a list of items customarily sold in restaurants is illogical. Rule 61A-3.055 is arbitrary and capricious. In 2018, while the challenge to the existing rule in Case No. 18-5116RX was underway, the Division began proceeding to amend rule 61A-3.055. This was a response to the challenges to the existing rule. The Division conducted six public hearings to receive public comment on various proposed amendments to the rule and to solicit input from the public. Petitioners did not participate in the hearings. There is no evidence that Petitioners suggested rule language, such as items to be listed as "customarily sold in a restaurant" or identifying characteristics of items "customarily sold in a restaurant" to the Division. Representatives of Intervenors attended each of the public hearings. There is no evidence that they suggested language for the rule either. During the May 6, 2019, rule development hearing, a representative of the Florida Restaurant and Lodging Association suggested that the Division conduct an investigation, study, or survey to determine what merchandise or services restaurants customarily provide. During the rule development proceedings, the Division did not conduct any investigation, study, or survey to determine what is customarily sold in a restaurant. The Division did not examine a sampling of establishments that it considered restaurants to determine what is customarily sold in restaurants. The Division did not use any of the data collected in 50,000 inspections each year to perform any studies, surveys, or analyses of what is customarily sold in restaurants or by COP license holders. It only sought comment from the restaurant industry and Division licensees through the public hearing process.5/ As required by law, the Division submitted various iterations of the proposed rule to JAPC for review. For each version of the proposed rule that it reviewed, JAPC observed that the rule appeared to be overly restrictive and that it may be arbitrary and capricious. On August 16, 2019, the Division published the final version of the proposed amended rule in Volume 45, Issue Number 160 of the Florida Administrative Register. It states: 61A-3.055 Items Customarily Sold in a Restaurant. As used in section 565.045, Florida Statutes, items customarily sold in a restaurant shall only include the following: Food cooked or prepared on the licensed premises; or Hot or cold beverages; or Souvenirs bearing the name, logo, trade name, trademark, or location of the licensed vendor operating the licensed premises; or Gift cards or certificates pertaining to the licensed premises. For the purpose of consumption on premises regulations set forth in section 565.045, Florida Statutes, items customarily sold in a restaurant shall include services or sales authorized in the "Florida Public Lottery Act", section 24.122(4), Florida Statutes. The Division explains the wording of section (1)(c) of the proposed rule as being based on the conclusion " the record proved that restaurants customarily sell at least T-Shirts and branded souvenirs" in the Final Order invalidating the original rule. It also removed from the original rule language permitting a licensee to petition the Division to show an unlisted item is customarily sold at a restaurant. This change is also a reaction to the Final Order. As of the day of the hearing, the Division, in the person of its Deputy Director, could not state what a "restaurant" was. The Deputy Director testified: "The Department [Division] doesn't take a position on what is or isn't a restaurant in this instance [applying the proposed rule]. We didn't define it, so we don't have a position." (Tr. Vol. 1, p. 45). As of the hearing date, the Deputy Director for the Division could not state whether Walmart is a restaurant. (Tr. Vol. I, p. 84). On October 26, 2018, testifying in the earlier rule challenge, Thomas Philpot, the then Director of the Division and acting Deputy Secretary for the Department of Business and Professional Regulation, similarly said that the Division had no formal policy or procedure for deciding if a business was a restaurant. (Ex. 30, p.48). A clear definition of "restaurant" is the necessary predicate to determining what is customarily sold in a restaurant. Throughout the rule development and through the hearing, the Division did not have a clear definition of restaurant. The Division's representative testified that "[t]he Division does not have a definition that it can cite to either in statute or in rule for the term restaurant." (Ex. 20, p. 62). The Division's Proposed Final Order seems to take the position that a "restaurant" is either a public food service establishment licensed by the Florida Division of Hotels and Restaurants or a restaurant as defined in authoritative dictionaries. None of the parties, including the Division, offered results from any survey, study, or investigation, of either a statistically significant random sample or survey of all "restaurants," however they may be delineated, to determine what "restaurants" customarily sell.6/ Much of the evidence revolved around the theory advanced by Target and Wal-Mart East that because they offer areas where customers can purchase prepared food; because vendors like McDonalds, Pizza Hut, or Starbucks sell food in sections where the consumer can pay for the food and sit down to consume it; or because the stores sell deli and baked goods that could be consumed at the store; that Target stores and Walmart stores are restaurants. From that, Wal-Mart East and Target reason that everything they sell including toys, clothes, stereos, cleaning supplies, pet food, electronics, books, and sporting goods are items commonly sold at restaurants. The Division concentrated its presentation on countering that theory. The Division of Hotels and Restaurants licenses approximately 56,000 businesses as "public food service establishments." It refers to these businesses as "restaurants." Assuming the 463 Walmart-East and Target stores are also considered restaurants, adding them to 56,000 results in approximately 56,463 "restaurants" in the State of Florida. The combined Target and Walmart facilities would be .82 percent of the total number of Florida "restaurants." This does not establish that what Wal-Mart East stores and Target stores sell is what restaurants customarily sell. Wal-Mart East offered the testimony of John Harris, who worked 28 years for the Division. He served as Director of the Division and served as Secretary of the Department of Business and Professional Regulation. At the direction of counsel for Walmart and Wal-Mart East, Mr. Harris visited nine Florida establishments to view the premises and identify items sold at the establishments. Eight of the establishments hold current COP licenses. One is a Cracker Barrel restaurant. Mr. Harris' testimony proved that the items listed below were for sale at the selected establishments identified. None are listed as customarily sold at a restaurant in the proposed rule: Biltmore Hotel (holds a 4COP license): clothing, jewelry, sports attire, golf clubs, over-the-counter medications, art, golf clubs, golf club bags, tennis equipment, and skin treatments. Buster's Beer & Bait (holds a 4COP License): cigars and fish bait. CMX movie theater in Tallahassee, Florida (holds a 4COP license): movie tickets. Cracker Barrel (does not hold a COP license): apparel, hats, toys, stuffed animals, audio books, books, musical instruments, rocking chairs, hand lotions, jewelry, quilts, small tools, and cooking utensils. Neiman Marcus department store in Coral Gables, Florida (holds a 4COP license): jewelry, watches, sunglasses, handbags, clothing, shoes, wallets, pens, luggage, and fine china. Nordstrom department store in Coral Gables, Florida (holds a 4COP license): items similar to those for sale in the Neiman Marcus department store, makeup, grills, record players, and baby strollers. PGA National Hotel and Golf Resort (holds a 4COP license): clothing, shoes, cosmetics, spa services, haircuts, golf clubs, and golf attire. Saks Fifth Avenue (holds a 4COP license): items similar to those sold at the Neiman Marcus department store. Slater's Goods & Provisions (holds a 4COP license): razor blades, lip balm, prepackaged food items, cleaning supplies, aluminum foil, canned goods, and batteries. Daytona Speedway (holds a 4COP license issued for this location to Americrown Services): golf clubs, T-shirts, other clothing items, key chains, tires, specialized motorcycle mufflers, and event tickets. For each of the identified COP licensees, the identified items were for sale in areas for which there was free passage to and from areas where alcohol is stored or sold. Mr. Harris did not use his experience and expertise to identify the establishments as representative of COP license holders. Mr. Harris was not attempting to inspect a random, representative sample of Florida restaurants. A party's attorney selected the locations. There was no expert testimony establishing the validity of Mr. Harris' ad hoc survey. Mr. Harris also did not know which parts of the premises the COP licenses of the places that he visited covered. The evidence did not prove that the establishments were a representative sample of anything. In addition, Mr. Harris is not an objective or impartial witness. Mr. Harris is an advocate for Walmart and Target. He wants the proposed rule to be invalidated. Mr. Harris also represents Target as a lobbyist. There is no evidence that the sample size of nine is significant or representative of all COP license holders. All the exercise proves is that the Division has allowed establishments that contain areas holding COP licenses to sell a variety of items that the Division's proposed rule and the invalidated rule would not permit. The small number of establishments, the witness's allegiance, and the fact that the establishments were selected for use in this proceeding make the evidence wholly unpersuasive.
The Issue The issue presented is whether Petitioner is liable for payment of sales and use taxes.
Findings Of Fact The Department conducted an audit of the business records of Petitioner, a Florida corporation operating a food catering business, covering the audit period of June 1, 1985 through May 31, 1990. As a result of that audit, the Department determined that Petitioner had failed to collect and remit sales taxes due to the Department and was liable for the payment of those unpaid sales taxes. The Department issued an assessment determining that Petitioner owed the amount of $213,683.87 in unpaid taxes, interest, and penalty for the audit period. On October 9, 1992, the Department issued its second revised audit assessment based upon its redetermination of Petitioner's tax liability. On that date, the Department reduced Petitioner's liability to the amount of $147,924.45, which sum includes the unpaid tax, the penalty therefor, and interest through that date. Based on its revised calculations, the Department also determined that interest would accrue at the rate of $27.06 per day until the date of payment. Through the date of the final hearing in this cause, Petitioner has made no payments to satisfy or reduce the amount of assessment.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Petitioner liable for the payment of sales tax, penalty, and interest through October 9, 1992, in the amount of $147,924.45 together with the amount of $27.06 interest per day until the date of payment. DONE and ENTERED this 18th day of August, 1994, at Tallahassee, Florida. LINDA M. RIGOT 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 18th day of August, 1994. APPENDIX TO RECOMMENDED ORDER The Department's proposed findings of fact numbered 1 and 6-8 have been adopted in substance in this Recommended Order. The Department's proposed findings of fact numbered 2-5 and 9-16 have been rejected as not constituting findings of fact but rather as constituting conclusions of law or recitation of the procedural context of this case. COPIES FURNISHED: Eric J. Taylor, Esquire Assistant Attorney General Office of the Attorney General The Capitol, Tax Section Tallahassee, Florida 32399-1050 Richard J. Hays, Esquire 7100 West Commercial Boulevard Suite 109 Lauderhill, Florida 33319 Mark D. Cohen, Esquire 121 Southeast First Street Suite 600 Miami, Florida 33131 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact At all times pertinent to this cause, Robert W. Pope, has been the holder of license no. 62-600, series 4-COP, SRX, held with the State of Florida, Division of Beverage to trade as The Wedgewood Inn, located at 1701, 4th Street, South, St. Petersburg, Pinellas County, Florida. When the Respondent, Pope, began to operate the licensed premises he was given a registration sales tax number by the State of Florida, Department of Revenue. This number was provided in accordance with 212, F.S. That law required the remittance of the collected sales tax on a month to month basis, the period beginning with the first day of the month and ending with the last day of the month. The remittance was due on the first day of the following month and payable by the 20th day of the following month. Failure to pay by the 20th would result in a 5 percent penalty and 1 percent interest per month. The sales tax remittance due from the licensed premises for September, 1976 through December, 1976 was not made and a lien was recorded to aid collection of the tax. Payment of the amount of $4,500.00 was paid in February or March, 1977 to satisfy the Department of Revenue lien claims. At present all taxes due and owing under 212, F.S. are current. The above facts established that the Respondent failed to comply with the provisions of 212, F.S. pertaining to the remittance of sales tax from the Respondent to the State of Florida, Department of Revenue. This violation, thereby subjects the Respondent to the possible penalties of 561.29, F.S.
Recommendation It is recommended that the Respondent, Robert W. Pope, be required to pay a civil penalty in the amount of $500.00 or have the license no. 62-600, series 4- COP, SRX, suspended for a period of 20 days. DONE AND ENTERED this 28th day of July, 1977, in Tallahassee, Florida. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: William Hatch, Esquire Division of Beverage 725 South Bronough Street Tallahassee, Florida 32304 Robert W. Pope, Esquire 611 First Avenue, North St. Petersburg, Florida 33701
The Issue The two issues for determination are: (1) whether Rhinehart Equipment Co. (Rhinehart) a foreign corporation domiciled in Rome, Georgia, during the period July 1, 2002, through June 30, 2005, had "substantial nexus" with the state of Florida through its advertising, sale, and delivery into Florida of new and used heavy tractor equipment, sufficient to require it to collect and remit sales tax generated by these sales to the Florida tax authorities; and (2) Whether the applicable statute of limitations for assessing sale tax had expired when DOR issued its "final assessment" on September 11, 2009.
Findings Of Fact The Parties Rhinehart Equipment Co. (“Rhinehart”) is a retail heavy equipment dealer located in Rome, Georgia, and does not own or maintain a showroom or office location in Florida or directly provide financing to any Florida resident for any of its sales. Rhinehart does not provide Florida customers with any after-sale services such as assembly, technical advice, or maintenance. Rhinehart does not have any employees residing in Florida. Respondent is an agency of the State of Florida charged with the regulation, control, administration, and enforcement of the sales and use tax laws of the state of Florida embodied in Chapter 212, Florida Statutes, and as implemented by Florida Administrative Code Chapter 12A-1. Background In early March 2005, the Department received an anonymous tip pursuant to section 213.30, Florida Statutes. The caller alleged that Rhinehart was selling equipment to Florida residents without including sales and use tax in the sales price and was delivering the equipment to Florida customers using its own trucks. The tipster also alleged that Rhinehart was advertising in a commercial publication Heavy Equipment Trader, Florida Edition. By letter dated March 31, 2005, Respondent contacted Rhinehart and advised that its business activities in the state might be such as to require Rhinehart to register as a “dealer” for purposes of assessing Florida sales and use tax, and that it could be required to file corporate income tax returns, potentially subjecting it to liability for other Florida taxes. Included with this letter was a questionnaire for Rhinehart to complete and return to the Department "to assist us in determining whether Nexus exists between your company and the State of Florida." On May 2, 2005, Rhinehart, without the advice of counsel, responded to the Department’s inquiry by returning the completed questionnaire, which was signed by its president, Mark Easterwood. By letter addressed to Mr. Easterwood dated May 4, 2005, the Department advised that it had determined that Rhinehart had nexus with the state of Florida and that therefore Rhinehart was required to register as a dealer to collect and remit Florida sales and use tax. According to the letter, the Department's determination was "based on the fact that your company makes sales to Florida customers and uses the company's own truck to deliver goods to customers in the State of Florida." By application effective July 1, 2005, Rhinehart registered to collect and/or report sales and use tax to the state of Florida, In a letter dated June 8, 2005, the Department invited Rhinehart to self-disclose any tax liability that it may have incurred during the three-year period prior to its registration effective date, to wit, July 1, 2002, through June 30, 2005 (the audit period). Specifically, the letter stated: At this time, we would like to extend an opportunity for you to self-disclose any tax liability that you may have incurred prior to your registration effective date (for the period July 1, 2002, through June 30, 2005). This Self-Disclosure Program affords you an opportunity to pay any applicable tax and interest due for the prior three-year period (or when Nexus was first established) without penalty assessments. In response to the Department's June 8, 2005, letter, Rhinehart's legal counsel sent a letter dated August 8, 2005, requesting a meeting or conference call to discuss a "few legal issues" concerning the Department’s determination regarding nexus. Thereafter, Rhinehart began filing the required tax returns relating to its Florida sales, noting in writing by cover letter that the returns were being filed “under protest.” Rhinehart began collecting and remitting sales and use tax starting in July 2005. However, Rhinehart declined to provide any information regarding sales made prior to July 1, 2005. On September 30, 2005, Rhinehart's legal counsel sent the Department a detailed protest letter and advised that, in Rhinehart's view: (1) the Department had not established “substantial nexus” with Florida as interpreted under the Commerce Clause of the United States Constitution; and (2) Rhinehart was not required to register as a Florida dealer for sales and use tax purposes. On May 23, 2008, the Department issued a "Notice of Intent to Make an Assessment," and on September 11, 2009, a "Notice of Final Assessment," for the audit period. The assessment totaled $354,839.30, which was comprised of $229,695.00 in taxes and $125,144.30 in interest. The assessment was calculated by Respondent using Rhinehart’s sales tax returns filed from July 2005 through March 2008. The Notice of Final Assessment advised Rhinehart that the final assessment would become binding agency action unless timely protested or contested through the informal protest process, or by filing a complaint in circuit court or petition for an administrative hearing. Rhinehart unsuccessfully sought to resolve the matter through informal review and then ultimately filed its petition seeking an administrative hearing to challenge the Department's September 11, 2009, assessment. Based on sales records and other information provided by Rhinehart, on March 9, 2011, the Department revised its September 11, 2009, assessment. The revised assessment totaled $380,967.89, which included the past due sales and use tax liability, and interest accrued through that date. Rhinehart's Florida Activities Rhinehart produced records of its sales to Florida customers during the audit period. Those records reflected sales to 116 different Florida customers as follows: one sale in the second-half of 2002; 12 sales in 2003; 84 sales in 2004; and 19 sales thorough June 2005. The total value of the merchandise sold to Florida residents was $2,928,981.00. The majority of Rhinehart's sales during the audit period were "sight unseen" by the customer, and were negotiated by telephone. Numerous hurricanes made landfall in Florida during the 2004 and 2005 hurricane season. Since 2005, Rhinehart’s sales to Florida customers have substantially dropped, with no sales occurring in some quarters. During the audit period Rhinehart accepted a number of trade-ins toward the purchase of new equipment. The records showed trade-in transactions as follows: none (0) in 2002; five (5) in 2003; eleven (11) in 2004; and none in 2005. Concurrent with the delivery of the new equipment purchased from Rhinehart, used equipment taken in trade was transported by Rhinehart employees using Rhinehart transport equipment back to Rhinehart’s location in Georgia. In these instances, the trade-in equipment remained with the Florida customer following negotiation of the sale and prior to Rhinehart physically taking possession of it. During the audit period the equipment accepted as trade-ins had a total value of $168,915.00. The valuation of trade-in equipment was done based on a customer’s representations (i.e. sight unseen, with no Rhinehart employee personally inspected the equipment) and pursuant to industry guidelines. Rhinehart’s drivers would deliver the purchased equipment, load any trade-in equipment, and return to Georgia, if possible, on the same day. To the extent that the Department of Transportation regulations mandated that they cease driving in a given day, the drivers would rest in the back of their trucks for the required amount of time, sometimes overnight, and then complete their journey back to Georgia. Rhinehart's dealership is located approximately 300 miles north of the Florida state line. Sales invoices reflect that Rhinehart's customers were located throughout the state of Florida, as far south as Miami on the east coast and Naples on the west coast. During the audit period, Rhinehart placed advertisements with with the Trader Publishing Company, located in Clearwater, Florida. The Trader Publishing Company is the publisher of the Heavy Equipment Trader magazine which is distributed in Georgia, Alabama, Florida, and Tennessee. Trader Publishing Company publishes a "Florida Edition" of the magazine which is directed to potential heavy equipment customers located in Florida. Stipulated Exhibit 19 consists of advertising invoices for advertisements placed by Rhinehart in the Florida Edition of Heavy Equipment Trader magazine during the audit period. These invoices establish that Rhinehart regularly and systematically purchased advertising for its products which was targeted toward potential customers located in Florida.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Revenue: Confirming that substantial nexus existed during the audit period and that Petitioner was therefore subject to the taxing authority of the state of Florida; Confirming that the assessment at issue is not time- barred; Allowing Petitioner a reasonable period of time to determine whether any of the sales it made during the audit period would have qualified as exempt sales pursuant to section 212.08(3) and if so, to obtain the required certifications from the purchasers; and Imposing on Petitioner an assessment for the unpaid taxes, with accrued interest, for all sales during the audit period not qualifying for exemption. DONE AND ENTERED this 27th day of August, 2012, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS 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 27th day of August, 2012.
The Issue Whether or not, on or about December 2, 1976, investigation revealed that Robert W. Pope, licensed under the Beverage Laws of the State of Florida, failed to file and pay his State Sales Tax for the licensed premises, known as Kitty's, located at 1020, 4th Street, South, St. Petersburg, Florida, in violation of 212, F.S., thereby violating 561.29, F.S.
Findings Of Fact Robert W. Pope is and at all times pertinent to this cause has been the holder of license no. 62-512, series 4-COP, held with the State of Florida, Division of Beverage to trade as Kitty's, located at 1020, 4th Street, South, St. Petersburg, Pinellas County, Florida. When the Respondent, Pope, began to operate the licensed premises he was given a registration sales tax number by the State of Florida, Department of Revenue. This number was provided in accordance with 212, F.S. That law required the remittance of the collected sales tax on a month to month basis, the period beginning with the first day of the month and ending with the last day of the month. The remittance was due on the first day of the following month and payable by the 20th day of the following month. Failure to pay by the 20th would result in a 5 percent penalty and 1 percent interest per month. The sales tax remittance due from the licensed premises for July, 1976 through November, 1976 was not made to the Department of Revenue. In December, 1976 the Department of Revenue filed a lien against the licensed premises to collect an amount due at that time of $2,200.66. As an aid to the collection of the account, the Department of Revenue levied the subject liquor license. Subsequently, in February, 1977 the Respondent made a $10,000 initial payment and three monthly installments to satisfy the lien on this licensed premises and another licensed premises which the Respondent owned. At present all taxes due and owing under 212, F.S. are current. The above facts establish that the Respondent failed to comply with the provisions of 212, F.S. pertaining to the remittance of sales tax from the Respondent to the State of Florida, Department of Revenue. This violation, thereby subjects the Respondent to the possible penalties of 561.29, F.S.
Recommendation It is recommended that the Respondent, Robert W. Pope, be required to pay a civil penalty in the amount of $750.00 or have the license no. 62-512, series 4- COP, suspended for a period of 20 days. DONE AND ENTERED this 28th day of July, 1977, in Tallahassee, Florida. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: William Hatch, Esquire Division of Beverage 725 South Bronough Street Tallahassee, Florida 32304 Robert W. Pope, Esquire 611 First Avenue, North St. Petersburg, Florida 33701
Findings Of Fact This cause comes on for consideration based upon the Petitioner's challenge to the Notice of Proposed Assessment of Tax, Penalties and Interest under Chapter 212, Florida Statutes, that was filed by the Respondent March 13, 1978. A copy of the Notice of Proposed Assessment together with the attendant work papers may be found as the Respondent's composite Exhibit #3, admitted into evidence. (By stipulation of the parties, in view of certain evidence presented by the Petitioner in the course of the hearing a First Revised Notice of Proposed Assessment of Tax, Penalties and Interest under Chapter 212. Florida Statutes, has been filed and it is this First Revised Notice of Proposed Assessment of Tax, Penalties and Interest which is in dispute between the parties. A copy of the First Revised Notice of Proposed Assessment of Tax, Penalties and Interest, dated October 17, 1978 may be found as Hearing Officer's composite Exhibit #1, admitted Info evidence. That composite exhibit contains the First Revised Notice of Proposed Assessment, together with the applicable work sheets and Petitioner's Exhibits #1 through 3, admitted into evidence in the course of the hearing. These Petitioner's exhibits are those referred to as constituting the basis of the stipulation previously mentioned.) The Petitioner is registered with the State of Florida, Department of Revenue as a wholesale business, for purposes of Florida taxes. A copy of the certificate which shows this regis- tration may be found as Respondent's Exhibit #1 admitted into evidence. The Respondent, State of Florida, Department of Revenue is an agency of the State of Florida that audits business record, to include the Petitioner's records. Specifically, in this instance, an audit was conducted in accordance with Chapter 21, Florida Statutes, to ascertain whether or not the Petitioner was responsible for the payment of sales and use tax under the authority of Chapter 212, Florida Statutes. The tax examiner assigned to conduct the audit was carrying out that function as a follow-up to an audit performed on a business known as Quail Ridge located in Delray Beach, Florida. The audit of Quail Ridge led the Respondent to believe that the Petitioner had made certain retail sales to Quail Ridge without collecting sales tax. If this were true, then the Petitioner would become responsible for the payment of those sales taxes under the provision of Section 212.07(2), Florida Statutes. There ensued an audit of the Petitioner's books and records, which were constituted of certain bank statements and a ledger book together with invoices and signed resale certificates that were made available. In the course of this audit process, the Petitioner was allowed a period of two months within which time to collect certain invoices and signed resale certificates. The significance of the invoices and resale certificates was, assuming the sales had been made for purposes of resale; thereby constituting a wholesale transaction, no sales tax would be due because the collection of that sales tax would become the responsibility of the purchaser who had obtained the item from the Petitioner in a wholesale transaction. That purchaser would become the "dealer", within the meaning of Chapter 212, Florida Statutes, and therefore would be responsible for the collection of the sales tax upon a further sale to a third party in a retail transaction. After the Petitioner had been given time to establish those wholesale transactions in his flower business and given credit for certain months in which no business income was gained, the calculations were made by the tax examiner of the Respondent and the March 13, 1978, Notice of Proposed Assessment of Tax, Penalties and Interest under Chapter 212, Florida Statutes, was issued. This Notice of Proposed Assessment taxed the Petitioner for all business transactions arising from the sale of flowers which could not be established as exempt sales in the capacity of a wholesaler. (This requirement for the establishment of an exemption by the proof of the petitioner is found in Chapter 212, Florida Statute and in accordance with Rule 12A-1.38, Florida Administrative Code.) After the Notice of Proposed Assessment of March 13, 1978, had been served on the Petitioner, an informal conference was held between the tax examiner and the petitioner. This conference was held on April 26, 1978, and at that time the Petitioner offered to introduce further invoices and resale certificates. Brandjes claimed that these invoices and resale certificates established further exemptions. The invoices and resale certificates were not accepted at that time because the tax examiner felt that the case was to be submitted for formal hearing and he was not of the opinion that he could make further adjustments to the proposed assessment at that juncture. The same invoices and resale certificates which were of fered at the April 26, 1978 conference were produced in the course of the hearing before the undersigned. After such production, the Exhibits, 1 through 3, were submitted to the Respondent's tax examiner for review to establish possible further reduction of the proposed assessment, through the process of showing other exempt sales, or wholesale transaction. That review led to the First Revised Notice of Proposed Assessment of October 17, 1978, which reduces the amount of tax, penalties and interest claimed by the Respondent. The amount claimed, effective October 17, 1978, was $3,129.77. This included tax, penalties and interest computed to that date. The audit period is November 1, 1974 through October, 1978. The Petitioner in this cause has pled ignorance to the requirements of law in the question of collecting sales and use taxes under Chapter 212, Florida Statutes, and the necessity to establish exempt sales which were made as wholesale transactions. He makes his contention premised upon the belief that his registration as an inactive business relieved him of the necessity to collect the taxes and to establish an exemption from tax. Notwithstanding this belief on the part of the Petitioner, it is clear that Chapter 212, Florida Statutes through its provisions places an obligation on the Petitioner to collect sales and use taxes for a retail transaction and the failure to meet that obligation places the responsibility for that payment of sales and use taxes on business transactions entered into by the Petitioner, with the Petitioner. This carries with it the potentiality of the assessment of penalties and interest for the failure to collect and remit those taxes under Chapter 212, Florida Statutes. The only possibility to escape the payment of the sales and use taxes under Chapter 212, Florida Statutes exists with the ability of the Petitioner to establish that the sales were sales at wholesale and not taxable under Chapter 212, Florida Statutes. To the extent that the Petitioner has established the exemptions in keeping with Chapter 212, Florida Statutes and Rule 12A-1.38, Florida Administrative Code, the Petitioner has been given credit for those exemptions. The balance of the sales transactions in the audit period November 1, 1974 through October 1978, as reflected in the First Revised Notice of Proposed Assessment of Tax, Penalties and Interest, under Chapter 212, Florida Statutes, becomes the responsibility of the Petitioner for his failure to collect the taxes for the sales. Therefore, the Petitioner is responsible for the payment of tax, penalties and interest through October 17, 1978 in an aggregate amount of $3,129.77.
Recommendation It is recommended that the Petitioner, Jack Brandjes, d/b/a Jack's Flowers be required to pay the tax, penalties, add interest under Chapter 212, Florida Statutes in the amount of $3,129.77 as set forth in the October 17, 1978 First Revised Notice of Proposed Assessment of Tax, Penalties and Interest. DONE AND ENTERED this 31st day of October, 1978. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32399-1550 (904) 488-9675 COPIES FURNISHED: Jack Brandjes c/o Jack's Flowers Ixora Market 4700 Canal 14 Road Lake Worth, Florida 33463 Cecil Davis, Esquire State of Florida Department of Legal Affairs The Capitol Tallahassee, Florida 32304 John D. Moriarty, Esquire Attorney, Division of Administration Department of Revenue Tallahassee, Florida 32304
The Issue The issue for determination is whether Respondent committed the offenses set forth in the Administrative Complaint for Revocation of Certificate of Registration issued on November 16, 2009, and, if so, what action should be taken.
Findings Of Fact There is no dispute that the Department is the state agency charged with the responsibility of regulating, controlling, 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. There is no dispute that Abkey is a Florida corporation whose principal address is 7800 Southwest 104th Street, Miami, Florida 33156. Abkey is a restaurant. At the time of hearing, Abkey had 33 employees and was operating at a deficit. There is no dispute that, at all times material hereto, Abkey possessed Florida sales tax certificate of registration number 23-8012096448-9, issued by the Department on April 18, 1994. There is no dispute that Abkey is a dealer as defined in section 212.06(2), Florida Statutes, and has been a dealer at all times material hereto. For the month of June 2009, Abkey failed to file a sales tax return. As a result of this failure, the Department assessed Abkey an estimated sales tax due in the amount of $9,500.00. For 2005, Abkey failed to remit its self-reported sales tax liability to the Department for the months of July, September, October, November, and December. Abkey self-reported its tax liability, by filing sales tax returns, for the said months. For 2006, Abkey failed to remit its self-reported sales tax liability to the Department for the months of January and May. Abkey self-reported its tax liability, by filing sales tax returns, for the said months. Also, for 2006, Abkey failed to timely remit its sales tax liability for the month of October for which the Department assessed a penalty and an administrative/collection/processing fee. For 2007, Abkey failed to remit its self-reported sales tax liability to the Department for the months of February and August. Abkey self-reported its tax liability, by filing sales tax returns, for the said months. Also, for 2007, Abkey failed to timely remit its sales tax liability for the month of October, for which the Department assessed a penalty and an administrative/collection/processing fee. In total, for 2005, 2006, and 2007, Abkey self- reported sales tax due and failed to remit to the Department sales tax reportedly due in the amount of $122,355.36. As a result of Abkey's failure to file the sales tax return, to remit the $122,355.36 in sales tax, and to remit timely sales tax, the Department assessed Abkey, as of October 29, 2009, $16,287.59 in interest, $4,891.73 in penalties, and $13,845.10 in administrative/collection/ processing fees. Additionally, for the month of February 2007, Abkey issued to the Department a dishonored check (electronic funds transfer) on March 23, 2007, in the amount of $18,254.00. The Department assessed a $150.00 return check fee for the dishonored check. Shortly after being notified of the dishonored check by the Department, Abkey paid the $18,254.00. Abkey has a significant history of delinquency in remitting payments to the Department. The Department made several attempts, unsuccessfully, to collect the delinquent tax liabilities, including issuing Tax Warrants. In January 2007, the Department sought to revoke Abkey's Certificate of Registration for delinquent returns and outstanding liability and engaged in an informal conference with Abkey. As a result of the informal conference, Abkey and the Department entered into a Compliance Agreement executed on February 15, 2010. The Compliance Agreement required Abkey, among other things, to remit all past due payments; for 12 months (January through December 2007), to timely file tax returns and to timely remit all sales tax due; and to make a down payment of $45,000.00 (in three monthly installments but no later than April 1, 2007), 11 monthly payments of $5,000.00 (beginning May 1, 2007), and a balloon payment of $141,982.43 on April 1, 2008. Further, regarding the balloon payment of $141,982.43, the Compliance Agreement provided that the balloon payment might be negotiated for another 12 months. However, in order for Abkey to take advantage of this provision, Abkey was required to be compliant with the terms of the Compliance Agreement and its account was required to be in good standing with the Department. In accordance with the Compliance Agreement, Abkey paid the down payment of $45,000.00 (in three monthly installments) and the 11 payments of $5,000.00 although the 11 payments were late. Additionally, for the period of January through December 2007, Abkey was late filing tax returns and remitting sales tax. Abkey requested a renewal of the Compliance Agreement. Despite the late payments, the Department approved the renewal of the Compliance Agreement. A Compliance Agreement Renewal was executed on May 1, 2008. It required Abkey, among other things, to remit all past due payments and to timely file tax returns and timely remit all sales tax due for the next 12 months (May 1, 2008 through April 30, 2009); and to make 11 monthly payments of $5,000.00 (beginning May 1, 2008), and a balloon payment of $120,749.14 on April 1, 2009. Furthermore, regarding the balloon payment of $120,749.14, the Compliance Agreement Renewal provided that the balloon payment might be negotiated for another 12 months. However, in order for Abkey to take advantage of this provision, Abkey was required to be compliant with the terms of the Compliance Agreement Renewal and its account was required to be in good standing with the Department. Under the Compliance Agreement Renewal, Abkey made four payments of $5,000.00 but the payments were late. Abkey requested a reduction in the amount of the monthly payments from $5,000.00 to $2,000.00. The Department granted Abkey's request. Abkey made 12 payments of $2,000.00 but the payments were late. Additionally, for the period of May 1, 2008 through April 30, 2009, Abkey was late filing tax returns and remitting sales tax. Further, Abkey failed to make the balloon payment of $120,749.14 that was due on April 1, 2009. Abkey did not request a renegotiation of the balloon payment. At that time, Abkey did not request another Compliance Agreement. As of September 28, 2010, Abkey owed the Department $122,355.36 in actual sales tax (per Abkey's sales tax returns), $9,500.00 in estimated tax, $4,419.73 in penalty2, $14,572.80 in administrative/collection/processing fees3, $25,032.28 in interest, and $20.00 in warrant fees; totaling $175,900.17. The Department seeks to revoke Abkey's Certificate of Registration.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order revoking the Certificate of Registration issued to and held by Abkey No. 1 Limited. DONE AND ENTERED this 18th day of February, 2011, in Tallahassee, Leon County, Florida. S ERROL H. POWELL 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 18th day of February, 2011.
The Issue Whether the Petitioner owes sales and use tax (plus interest and penalties) for charges made to its catering customers for the labor of waiters serving complete meals before December 7, 1987.
Findings Of Fact During the period, May 1, 1984 through September 30, 1984, Gourmet To Go did not charge its customers sales tax for labor provided by waiters serving full meals that it catered. Gourmet To Go treated the waiters as subcontractors, and shows charges for waiters on its bill as "Sub Contract Services." During the period May 1, 1984 through December 7, 1987, Gourmet To Go collected sales tax on the services of waiters when the food served was canapes, sandwiches, hors d'oeuvres or party tidbits. Gourmet To Go commonly served both full meals and party tidbits as part of its catering business. The Department of Revenue audited the accounts of Gourmet To Go by reviewing gross receipts, and subtracting any exempt sales Gourmet To Go reported to the Department on form DR- 15. This is the audit method ordinarily used by the Department. The invoices of Gourmet To Go show that it did not charge its clients sales tax upon amounts shown on invoices for labor of waiters serving dinners. The agreed amount due for the period from May 1, 1984 through April 30, 1987, if Gourmet To Go is liable for the taxes is as follows: Tax $6,335.67 Penalty $1,583.92 Interest computed through the date of the hearing, June 23, 1989 - $2,733.50 TOTAL $10,650.09 For the period May 1, 1987 through April 30, 1987, the amount due if Gourmet To Go is liable for the sales tax is: Tax $1,214.70 Penalty $303.67 Interest the date computed through of the hearing, June 23, 1989 - $241.11 TOTAL $1,759.48 Interest would continue to accrue on any unpaid amounts due through the date payment is made.
Recommendation It is RECOMMENDED that a Final Order be entered by the Department of Revenue finding Gourmet To Go, Inc. liable for sales tax on charges to its customers for services of waiters at dinners it catered during the period May 1, 1984, through April 30, 1988, with penalties and interest through the date of payment. DONE and ENTERED this 5th day of September, 1989, at Tallahassee, Florida. WILLIAM R. DORSEY, JR. 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 5th day of August, 1989. APPENDIX TO THE FINAL ORDER IN DOAH CASE NO. 88-6367 Rulings on Proposals Made By The Petitioner, Gourmet To Go, Inc. The substance of all facts proposed by Gourmet To Go, Inc. have been included in the Recommended Order. COPIES FURNISHED: Larry V. Bishins, Esquire 4548 North Federal Highway Ft. Lauderdale, FL 33308 Lealand L. McCharen, Esquire Assistant Attorney General The Capitol Building Tallahassee, FL 32399-1050 William D. Moore, General Counsel Department of Revenue 203 Carlton Building Tallahassee, FL 32399-0100 Katie D. Tucker, Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100
