The Issue Whether the Respondent, Holiday Inn Oceanside/Cleveland Caribbean, Inc., is liable for the payment of $10,176.18, together with a penalty of 5 percent and interest accruing daily as claimed in the audit by the Petitioner, State of Florida, Department of Revenue, for the period September 1, 1975, through August 31, 1970.
Findings Of Fact This cause comes on for consideration based upon the Respondent, Holiday Inn Oceanside/Cleveland Caribbean, Inc.`s challenge to the tax audit conducted by the Petitioner, State of Florida, Department of Revenue, covering the period September 1, 1975, through August 31, 1978. The claim of the audit is for sales tax due pursuant to Chapter 212, Florida Statutes, and its supporting rules found in the Florida Administrative Code. The audit document showing the Proposed Notice of Assessment of Tax, Penalties and Interest may be found as the Petitioner's Exhibit A admitted into evidence. Although the audit document originally claimed tax in the amount of $29,600.37, at the commencement of the hearing the amount remaining in dispute was $15,288.75, together with a penalty of 5 percent and interest accruing until date of payment. During the hearing, a stipulation was entered into between the parties to the effect that, of the remaining disputed tax, penalty and interest, $5,112.57, together with the applicable penalty and interest was acknowledged to be owed by the Respondent. Therefore, there remains in dispute the amount of $10,176.18, with a 5 percent penalty and interest accruing until date of payment. This amount of tax, penalty and interest claimed represents the difference between the tax rate which the Petitioner has applied in this assessment process and the tax rate that the Respondent claims to be applicable. The Petitioner claims that a tax rate of 4.5 percent against total receipts, in keeping with the authority of Rule 12A-1.57(3), Florida Administrative Code. The Respondent counters that position by offering its own formula arrived at in view of the nature of its prices charged its customers, and that tax rate is 4.1666667 percent. The sales in question during the audit period pertain to sales of alcoholic and malt beverage in the lounges of the Respondent's licensed premises located in Dade County, Florida. The facts reveal that the sale of all alcoholic beverages in the time period at issue were made in increments of a quarter dollar ($.25). These quarter-dollar increments included the imposition of sales tax. As example: SALES PRICE TAX TOTAL $ .48 $.02 $ .50 .72 .03 .75 .96 .04 1.00 1.20 .05 1.25 1.44 .06 1.50 1.68 .07 1.75 Although the tax was computed on the sales price and this system was made known to the public by prominently displaying the price list, which list indicated that the beverage prices included tax; the Respondent did not separate the increment of the total price into categories of sales price and tax at the time of each transaction. Consequently, the books audited in the process of making the claim for assessment only demonstrated the total sales price of a given day's alcoholic beverage sales as an aggregate and did not reflect the tax as a separate item from the sales price. To this aggregate amount the Respondent applied its tax rate formula of 4.166667 by taking the amount of total receipts for the day and dividing by 1.04666667 to get gross sales. The gross sales were then subtracted from the amount of total receipts to obtain the figure for tax collected. This method was rounded off to the nearest penny on each day of computation. The Petitioner, as stated before, relies on Rule 12A-1.57(3), Florida Administrative Code, as a basis for its claim that the rate of tax should be 4.5 percent. That provision states: (3) Dealers in alcoholic and malt beverages are required to remit the actual tax collected to the State. In some instances, however, it may be impractical for such dealers to separately record the sales price of the beverage and the tax collected thereon. In such cases, dealers may elect to report tax on the following basis. Package stores who sell no mixed drinks should remit the tax at 4.3 percent of total receipts and dealers who sell mixed drinks or a combination of mixed drinks and packaged goods should remit the tax at the rate of 4.5 percent of total receipts. In those instances where the sales price and the tax have not been separately recorded but where it can be demonstrated that the public has been put on notice by means of price lists posted prominently throughout the establishment that the total charge includes tax, the dealer may deduct the tax from the total receipts to arrive at the appropriate tax and gross sales figures using the method shown below: Total receipts divided by the tax rate = gross sales. For example, a package store which sells no mixed drinks and whose total receipts are $2,000 would compute sales as follows: $2,000 divided by 1.043 percent = gross sales $1,917.54 tax collected 82.46 A dealer who sells drinks or a combination of drinks and package goods and whose total receipts are $2,000 would compute sales as follows: $2,000 divided by 1.045 percent = gross sales $1,913.87 tax collected 86.12 When the public has hot been put on notice through the posting of price lists that tax is included in the total charge, tax shall be computed by multiplying total receipts by the applicable rates referred to in this rule. In the mind of the Petitioner, by failing to segregate the total amounts collected into the categories of sales price and tax and then to remit the tax collected as a separate item, the Respondent is relegated to the utilization of Rule 12A-1.57(3), Florida Administrative Code, in remitting its tax. Under its theory, the Petitioner has taken the total receipts recorded in the Respondent's work sheets and divided those total receipts by the formula 1.045 percent to get gross sales and then subtracted the gross sales from the amount of total receipts to get the amount of tax that should have been collected, and then made a further subtraction of the tax which the Respondent remitted, from the tax formula which the Petitioner claims to be due on the transactions to arrive at the tax presently outstanding. This amount being the figure referenced above. From that computation, the amount of penalty and interest has been claimed. (By its position the Petitioner does not seem to question the fact that the public has been put on notice by price lists posted throughout the establishment that the total charge reflected on the price lists includes tax, as referred to in the subject Rule 12A-1.57(3), Florida Administrative Code.) According to the Respondent, the reason for the utilization of the rate of 4.1666667 percent was the fact that all beverages having a break in price increments of a quarter-dollar ($.25), it is mathematically impossible for the proper effective rate being charged on all beverages sold in the lounges to vary from their tax rate of 4.1666667 percent because each increment of increase has the same ratio of sales price to tax. The Respondent argues that to claim a rate of 4.5 percent causes the collection in excess of the amount allowed by Chapter 212, Florida Statutes. After considering the position of the parties, the Respondent is found to be correct in its position. The overall scheme of Chapter 212, Florida Statutes, calls for the taxation of sales of tangible personal property at a rate of 4 percent, see Section 212.05, Florida Statutes. A further refinement of that theory is found in Subsection 212.12(10), Florida Statutes, which creates a bracketing system for sales representing the various fractions of a dollar in amount. This bracketing system thereby causes imposition of a sales tax greater than 4 percent in some transactions. The Petitioner is granted further authority to refine the system of taxation by those provisions of Subsections 212.17(6) and 212.18(2), Florida Statutes, which state in turn: 212.17(6) The department shall have the power to make, prescribe and publish reasonable rules and regulations not inconsistent with this chapter, or the other laws, or the constitution of this state, or the United States, for the enforcement of the provisions of this chapter and the collection of revenue hereunder, and such rules and regulations shall when enforced be deemed to be reasonable and just. 212.18(2) The department shall administer and enforce the assessment and collection of the taxes, interest, and penalties imposed by this chapter. It is authorized to make and publish such rules and regulations not inconsistent with this chapter, as it may deem necessary in enforcing its provisions in order that there shall not be collected on the average more than the rate levied herein. The department is authorized to and it shall provide by rule and regulation a method for accomplishing this end. It shall prepare instructions to all persons required by this chapter to collect and remit the tax to guide such persons in the proper collection and remission of such tax and to instruct such persons in the practices that may be necessary for the purpose of enforcement of this chapter and the collection of the tax imposed hereby. The use of tokens in the collection of this tax is hereby expressly forbidden and prohibited. It can be seen that the Petitioner has the authority to promulgate the necessary rules for the accomplishment of the purpose of Chapter 212, Florida Statutes, but is restricted in this task by being prohibited from making rules and regulations which are inconsistent with this chapter or other statutes within the laws of the State of Florida or the Constitution of the United States or the Constitution of the State of Florida and it is further restricted from imposing rules or regulations which cause the tax to be collected on the average more than the rate levied in Chapter 212, Florida Statutes. While it is clear that the legislature intended to keep the effective rate of tax as near the 4 percent level as possible, it is also evident that the system contemplated a segregation of the amount collected in a sale as sales price, and the amount of tax applied to the sale at the point of the transaction. This is a means of accountability that helps insure that the proper remittance of tax due on each and every retail sales occurs. However, the preeminent charge to the Petitioner is the duty to collect the tax at a rate which most closely approximates the 4 percent called for, without abandoning responsibility or the close monitoring of the records of a given taxpayer. When considered in the overall context of the purpose of Chapter 212, Florida Statutes, the method which the Respondent used to collect and remit tax, does not violate the conditions of Chapter 212, Florida Statutes, nor the rules designed to enforce that chapter. The tax rate of 4.1666667 percent has been proven to be correct, in the sense of more closely approximating the 4 percent tax rate called for than the application of a tax rate of 4.5 percent. The correctness is established because the increments charged for alcoholic beverages are always in the amount of a quarter-dollar ($.25) and each increment of increase carries the same tax rate. This fact, when considered with the additional fact that the break-out of the tax in the price structure as established by the Respondent, is in keeping with the tables of the bracket system found in Subsection 212.12(10), Florida Statutes, is sufficiently convincing to demonstrate the propriety of the Respondent's position. Nonetheless, a further examination of the Petitioner's argument is indicated. The focus of the Petitioner's position is Rule 12A-1.57(3), Florida Administrative Code, and a detailed reading of this rule reveals that dealers who have properly put the public on notice that their sales prices include tax, "may" elect to remit tax by using the formula of the rate of 4.5 percent of total receipts as the tax due. The use of the word "may" in this instance creates an option on the part of the Respondent, an option which it has elected not to proceed under and by the facts of this case, the alternate method which the Respondent used in computing this tax, i.e., the rate 4.1666667 percent is efficacious. Finally, the Petitioner has advanced the argument that the formula found in Rule 12A-1.57(3), Florida Administrative Code, is unique to that rule and may not be utilized unless the prerequisite factors are shown and unless the tax rate factor 4.5 percent is part of the formula. Even though the formula as expressed in Rule 12A-1.57(3), Florida Administrative Code, may have legitimate application to some cases, it is not preemptive in its scope and it would not prohibit the Respondent in this case from using the formula and substituting the rate of tax of 4.1666667 percent for the rate of 4.5 percent in that part of the formula. In summary, the Petitioner has failed to demonstrate its entitlement to the tax, penalty and interest under its claim founded on Rule 12A-1.57(3), Florida Administrative Code. (Petitioner in this cause had submitted Proposed Findings of Fact, Conclusions of Law and a Recommendation in the case styled, Holiday Inn Oceanside/Cleveland Caribbean, Inc., Petitioner, vs. State of Florida, Department of Revenue, Respondent, D.O.A.H. Case No. 70-1003R, and in doing so made reference to matters which have been considered in the present case. Therefore, to the extent that those matters are not inconsistent with this Recommended Order they have been utilized. To the extent that those proposals are inconsistent with this Recommended Order they are specifically rejected. The Respondent has also submitted Proposed Findings of Fact, Conclusions of Law and a Recommended Order and to the extent that those matters are not inconsistent with this Recommended Order they have been utilized. To the extent that those proposals are inconsistent with this Recommended Order they are specifically rejected.)
Recommendation It is recommended that the Respondent, Holiday Inn Oceanside/Cleveland Caribbean, Inc., be relieved from further responsibility to pay the amount of tax, $10,176.18 and the 5 percent penalty and interest accruing on that amount of tax. DONE AND ENTERED this 29th day of June, 1979, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Martha J. Cook, Esquire Department of Revenue Room 422, Fletcher Building Tallahassee, Florida 32301 Richard Watson, Esquire c/o Spieth, Bell, McCurdy & Newell 1190 Union Commerce Building Cleveland, Ohio 44115 Mark J. Wolff, Esquire and Howard E. Roskin, Esquire First Federal Building, 30th Floor One Southeast Third Avenue Miami, Florida 33131
The Issue The issues in this case are whether Respondent or its agent illegally sold alcohol to a minor and, if so, what penalty should be imposed.
Findings Of Fact Respondent, Moe's Petroleum Corp., d/b/a Plantation Texaco, is a small, privately-owned gas station and convenience store. It is owned and operated by Mohammed Shareed. Mr. Shareed and his wife are the primary full-time employees of the business. For the period relevant to this matter, Sharika Salmon was a part-time employee. The business sells both gasoline and commercial items to its customers. Sale of packaged alcoholic beverages (beer and wine) is allowed under the business' alcohol beverage license, No. 16-06936, Series 2 APS. Mr. Shareed has owned and operated the business for about two years. He has not been previously cited for violating the terms of his alcohol beverage license. Ms. Salmon is a college student. She obtained a part- time position at the business following discussions between her aunt and Mr. Shareed. It was decided that Ms. Salmon could work a few hours each afternoon after class whenever possible. She averaged about 12 hours per week while employed at the business. She was trained as to how to operate the cash register and other machines. Part of her training included specific instructions to ask customers for identification when they purchased alcohol. She understood she was not to sell alcohol to anyone under the age of 21 years. Mr. Shareed advised his employees daily about checking for identification when alcohol was purchased. He placed visible written signs in the store advising customers that minors could not purchase alcohol. On November 16, 2006, at approximately 7:50 p.m., Investigative Aide #FL0033 entered the business. He was working for the Division as an underage cooperative. His job was to attempt to purchase alcohol from various businesses. On the night of November 16, 2006, he did about 15 "buys" during the 5:00 p.m. to 10:00 p.m. time frame. The purchase at Mr. Shareed's business was one of those. On the evening in question, Investigative Aide #FL0033 (at that time 18 years old) entered the business, went to the beer cooler in the back, and selected a six-pack of Heineken beer. He took the beer to the front counter and, along with a pack of gum, placed it on the counter. The investigative aide gave the clerk (Ms. Salmon) a ten-dollar bill from investigative funds entrusted to him for that purpose. She took the bill, made change, and handed the change and the beer to the investigative aide. He took his purchases and left the store. No words were exchanged between the investigative aide and the clerk during the sales transaction. Ms. Salmon did not ask the investigative aide for identification in order to ascertain his age. At the time of the transaction, Mr. Shareed was standing just to the clerk's right side concentrating on paperwork related to previous gasoline purchases. He was no more than two or three feet from the clerk. Mr. Shareed was standing at a 90-degree angle from the counter and the clerk. He was not involved in the sale transaction and did not specifically remember it occurring. Mr. Shareed gave his employees the right to act independently once they were trained. He did not monitor or oversee their every move. During the transaction, Special Agent Fisten was also in the store, posing as a customer. He was standing behind the investigative aide during the sale and did not hear any words spoken during the entire transaction. The investigative aide took the beer outside where it was taken by Special Agent Smith, who placed it in a bag, marked it for identification, and initialed the identification receipt. The beer was then placed in the trunk of Special Agent Smith's vehicle. The special agents then went back into the store and notified Mr. Shareed that they were charging him with sale of alcohol to a minor, a violation of his license. He was cited and instructed about the administrative process. The agents took information from Ms. Salmon as well. In fact, they asked her for identification due to the fact that she looked so young. (Ms. Salmon quit her job after this incident because the process upset her.) During the sale transaction, Mr. Shareed was doing paperwork incident to gasoline purchases made earlier in the day. He was preoccupied with that work and did not notice the sale as it occurred. Mr. Shareed's testimony on that fact is credible; it is not likely that he actively watches or participates in every sale that occurs during the day. Mr. Shareed was not involved in the sale; had he been, he would have requested identification from the investigative aide. The policy of the business was to require identification from anyone purchasing beer who looked young. The business had never previously been cited for violation of its license. Nor was the Division investigating the premises on the basis of a complaint or allegation. Rather, the business was simply chosen at random because it was in the area the Division was focusing on that particular day. Mr. Shareed's testimony that he trained his wife and other employees to check identification was credible. Conversely, the testimony of the investigative aide and other agents appears cloudy concerning the distinguishing facts of the sales transaction at issue compared to numerous other transactions during that same evening. Petitioner is seeking to impose a fine of $1,000 and a suspension of Respondent's license for a period of seven consecutive days.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, dismissing the charges against the license of Respondent. DONE AND ENTERED this 6th day of June, 2007, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN 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 6th day of June, 2007.
The Issue The issue in this case is whether the Respondent, Lauderdale Copa, Inc., d/b/a The Copa (Respondent or The Copa) should pay an alcoholic beverage surcharge in the amount of $18,960.48 as alleged by the Administrative Complaint dated March 27, 2006. The Petitioner, Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (Petitioner or Department) claims that the surcharge is owed and due pursuant to Sections 561.502(2) and 561.29, Florida Statutes (2005).
Findings Of Fact The Petitioner is the state agency charged with the responsibility of regulating the alcoholic beverage industry within Florida. § 561.501 Fla. Stat. (2005). At all times material to the allegations of this case, the Respondent was a licensed entity authorized to sell alcoholic beverages pursuant to its license number 16-00516, Series 4-COP. The Copa was authorized to sell liquor, wine, and beer at its licensed premises for on-site consumption. Alcoholic beverage sales are subject to a surcharge. § 561.501 Fla. Stat. (2005). In addition to other sales taxes that may be imposed on the sale of the product, an alcoholic beverages licensee (such as the Respondent) must also collect and remit to the Department a surcharge on the sale of the alcoholic beverage. The amount of the surcharge remittance is computed pursuant to the guidelines set forth in the laws and regulations. To confirm accurate reporting and remittance of the surcharge, the Department conducts after-the-fact audits of licensees. In this case, the Department audited The Copa’s alcoholic beverage sales for period from November 1, 2002, through October 31, 2005 (the audit period). There are two methods to review or audit the sales of alcoholic beverages. The inventory method directs the Department to take the beginning inventory plus purchases for the period and subtract the ending inventory (and a spillage allowance) to calculate the sales for the period. The calculated sales volume is then used to derive the surcharge obligation. The second method is based on the actual sales incurred during the audit period. The sales method requires that the licensee keep records to verify the volume of actual sales. The surcharge is due based on the on-premise consumer’s purchase of the alcoholic beverage at the licensed site. Both of the methods described require that the licensee keep and maintain records. The inventory method is verifiable since licensees purchase their stock from vendors also regulated by the Department. On or about October 24, 2005, Hurricane Wilma struck Florida and crossed to the Atlantic Ocean from the west coast. The storm caused extensive damage to the Respondent's property. The Respondent claims that its beverage records were lost in the storm. The audit in this case used the inventory method to compute the surcharge. By using the distributors’ sales reports the Department calculated a surcharge owed in the amount of $11,257.52. To that amount the Petitioner seeks interest and penalties. The Respondent does not acknowledge that any surcharge is owed. The Respondent maintains that its inventory, records, and package sales information (alcoholic beverages not consumed on the premises) were lost in the storm. The Department gave the Petitioner over five months to obtain records from other sources to refute the audit findings. As of the date of the formal hearing in this case, the Respondent did not have any records to refute the audit findings.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, enter a Final Order sustaining the surcharge liability in the amount of $18,960.48. DONE AND ENTERED this 6th day of December, 2006, in Tallahassee, Leon County, Florida. S J. D. Parrish Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of December, 2006. COPIES FURNISHED: Gregg Bernard Lauderdale Copa, Inc., d/b/a The Copa Post Office Box 22961 Fort Lauderdale, Florida 33335 Michael J. Wheeler, Esquire Department of Business and Professional Regulation Northwood Centre, Suite 6 1940 North Monroe Street Tallahassee, Florida 32399-2202 Steven M. Hougland, Ph.D., Director Division of Alcoholic Beverages And Tobacco Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Josefina Tamayo, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue At issue in this proceeding is whether Respondent committed the offenses set forth in the Administrative action and, if so, what penalty should be imposed.
Findings Of Fact At all times material hereto, Respondent, Ramesh Gordon Kowlessar, held license number 16-12937, series 2APS, authorizing the sale of alcoholic beverages (beer and wine) for consumption off the premises known as K's American & West Indian Grocery & Food, located at 4486 West Hallandale Beach Boulevard, Pembroke Park, Florida (hereinafter "the licensed premises"). On March 25, 1997, Sergeant Carol Owsiany, an agent with the Division of Alcoholic Beverages and Tobacco, and Michael Kaufman, a special agent with the Division of Alcoholic Beverages and Tobacco, operating undercover, visited the licensed premises to investigate a complaint that Respondent was selling alcoholic beverages for consumption on the premises (a practice not permitted by Respondent's license). Sergeant Owsiany and Agent Kaufman entered the premises at or about 10:15 a.m., and were greeted by Respondent who, after assuring the agents that they could dine on the premises, seated them at the counter. Sergeant Owsiany ordered a meal of curry and rice, and Agent Kaufman requested beer with the meal. The Respondent directed Agent Kaufman to the beer cooler. Agent Kaufman selected two cans of "Budweiser" beer (an alcoholic beverage) from the cooler and returned to the counter, where he handed one beer to Sergeant Owsiany. The agents opened their respective beers, and consumed a portion of the beer while seated at the counter in the presence of Respondent. Following service of her meal, Sergeant Owsiany consumed a small portion of food, and requested that the remainder be packaged to go. The agents then proceeded to the check-out counter with the two open and partially consumed beers, as well as the packaged meal. At the counter, the agents observed 52 packages of unstamped, non-Florida-tax-paid cigarettes offered for sale. Sergeant Owsiany paid for her meal and the two beers, and the agents exited the building.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondent guilty of the charges set forth in the Administrative Action; imposing a civil penalty in the total sum of $1,000 for such violations, subject to Respondent's option to substitute a period of suspension in lieu of all or a portion of the civil penalty; and, requiring Respondent to pay to the Department excise taxes in the sum of $17.63. DONE AND ENTERED this 22nd day of April, 1998, in Tallahassee, Leon County, Florida. WILLIAM J. KENDRICK 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 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of April, 1998.
The Issue The issue in this case is whether Respondent failed to pay tax surcharges, penalties and interest owed on the sale of alcoholic beverages, and, if so, the amount that is currently due and owing.
Findings Of Fact The Department is the state agency responsible for, inter alia, the licensing of establishments that sell alcoholic beverages. During the years 2000 to 2006, a statutory tax surcharge existed on the sale of alcohol consumed on the premises of licensed establishments. The Department was responsible for ensuring that all such surcharges were paid by licensed establishments. Respondent is a licensed purveyor of alcoholic beverages. Respondent's business, known as The Hub, has an area for consumption of alcoholic beverages and a separate, but attached, area for selling alcohol in sealed containers (i.e., in "package"). Alcohol served in package is not subject to the surcharge mentioned above. Alcoholic beverages are stored in five different areas of the establishment: in the bar, in the package store area, in a large storeroom, in a wine room, and in a walk-in cooler. In September 2006, the Department conducted a tax surcharge audit of Respondent's business for the period July 1, 2003 through June 30, 2006 (the "Audit Period"). A surcharge audit is performed to ensure that an establishment has paid the entire tax surcharge owed for the sale of alcohol consumed on the premises. By letter dated September 25, 2006, the Department advised Respondent that it had been selected for the aforementioned audit. The letter included a questionnaire to be filled out by Respondent to provide the Department information to make the audit more accurate. Respondent was asked to complete and mail the questionnaire on or before October 9, 2006. Respondent did not respond to the September 25, 2006, letter as requested. Therefore, an initial desk audit was performed by the Department. A desk audit utilizes information from the department's database in lieu of records and information received directly from a licensee. The Department's database included reports from major alcohol distributors concerning deliveries made to Respondent during the Audit Period. The sale and delivery of alcoholic beverages is reported by distributors to the Department in the form of gallons of alcohol delivered. The report does not list sizes of bottles, numbers of bottles, or brand names. The tax surcharge is based solely on gallons sold. The initial desk audit was completed on or about November 16, 2006. The audit found an unpaid surcharge amount of $33,817.34, plus reporting penalties and interest of $183.02; and underpayment penalties and interest of $23,755.98, for a total liability of $57,810.34. Pursuant to its normal operating procedures, the Department sent a letter by certified mail advising Respondent of the audit findings. The letter also gave Respondent the right to waive the underpayment penalties and interest by paying the remaining balance within 30 days. The letter further provided Respondent the right to make any corrections to errors which it believed to exist within the audit. The letter then asked Respondent to produce certain records so that the audit findings could be confirmed. The desk audit performed by the Department established the number of gallons of beer, wine and liquor delivered to Respondent by major distributors during the audit period. The primary beer distributors were Pep Distributing and JJ Taylor; the primary liquor distributors were Southern, National, and Premiere. Adjustments to the gallonage (as it is referred to by the Department) were made for spillage, alcohol used for cooking, and other reasons. The desk audit revealed that 2.25 gallons of draft beer, 38,340.90 gallons of other beer, 721.19 gallons of wine, and 10,498.34 gallons of liquor had been delivered to The Hub during the Audit Period. Meanwhile, Respondent had been making some tax surcharge payments on a regular basis during the Audit Period. The surcharge payment was mailed in using a printed form supplied by the Department. On the form, a business could elect to pay the surcharge based on its sales or based on its purchases of alcohol. Respondent chose to pay using the sales method, i.e., payments were made on the amount of alcohol sold for consumption on its premises. The Department determined that despite the surcharge payments made by Respondent during the Audit Period, Respondent had underpaid by the sum of $33,871.34. The basis for this finding was that of the 10,000 (plus or minus) gallons of alcohol purchased during the Audit Period, there was proof of consumption on the premises for only about 2,075 gallons. Because The Hub had a 4-COP license (meaning it is allowed to sell alcohol for consumption on the premises), the remainder of the alcohol was presumed to have been consumed without a surcharge being paid. Interest in the amount of $183.02 was assessed, along with underpayment penalties and interest of $23,755.98, for a total statutory liability of $57,810.34, pursuant to the desk audit. By letter dated November 16, 2006, the Department notified Respondent of its findings and conclusions from the desk audit. The letter was sent to The Hub via certified mail and signed for on November 17, 2006, by Jeannie Robinson, an employee (bartender) of Respondent. On or about December 6, 2006, Respondent (through the person of Scott Imrich, a manager of the establishment) contacted the Department and provided answers to the questionnaire that had been sent out with the November 16, 2006, letter to Respondent. The questionnaire contained two pertinent pieces of information: 1) The Hub did not have any draft beer; the draft beer indicated in the distributors' reports was actually a certain kind and size of canned beer that Respondent did not know how to classify, so they placed it in the draft beer column; and 2) The Hub also had a package store and 24-to-25 percent of The Hub's "total sales" were made in the package store. That is, Respondent was saying that the package sales were not subject to the surcharge. Imrich did not specify whether his comments about percentage of sales in the package store were meant to reflect total dollar amounts or total gallons sold. His letter simply stated: "We are currently looking at a 24-25% rate (over the three year audited period) in total beer (container), liquor, and wine sales from our package store, from our total sales." The Department interpreted that statement to mean 25 percent of total gallons sold. Respondent's witnesses at final hearing said that Imrich meant 25 percent of the total dollar amounts of sales. Imrich did not appear at final hearing to clarify what he actually meant. The current owner of The Hub, who was a bartender during the Audit Period, estimated that approximately 30 percent of revenues were generated in the package store at that time, but could not provide any estimation as to percentage of gallons sold. After receipt of Imrich's letter, the Department revised its audit findings. A credit was given to Respondent for package sales. (Respondent was also given credit for spillage amounting to five percent of beer and wine.) Beer gallonage was reduced from 36,423 gallons to 27,319.91 gallons. Wine gallonage actually increased, but that was due to Respondent's identifying one distributor (Johnson Brothers) that the Department had not previously considered. Respondent's wine inventory went from 721 gallons to 997 gallons, minus the 25 percent allowance, for a total of 816.7 gallons.1 Liquor gallonage was also affected by Johnson Brothers deliveries, but liquor went from 9,448.55 gallons to 7,163.77 gallons. The adjustments referred to above reduced the amount of the surcharge to $22,915.48 and reduced the reporting penalties to $121.68. The underpayment penalties and interest calculation was reduced to $16,036.81 for a total statutory liability of $39,073.97. A letter advising Respondent of the revised audit was mailed on December 20, 2006, and again advised that prompt payment could reduce the total amount owed. James Smith, who was a primary owner of The Hub at that time, was notified about the audits, but Smith told his manager, Imrich, to handle the situation. Imrich apparently failed to do so. When no response to the revised audit findings was received by the auditors for the Department, the matter was referred to the Department's Enforcement Division for further action. The Enforcement Division then conducted a visit to The Hub to advise Respondent as to the existing determination of money owed. That visit was made on March 6, 2007. A form memorializing the visit was filled out and signed by Kelly Primo, a bartender at The Hub. Respondent was given 14 days to respond to the Department or else an administrative action would be filed to collect the outstanding tax surcharge charges. Imrich thereafter provided cash register tapes (called Z Tapes) to the Department. The Z Tapes were purported, by Imrich, to establish the amount of alcohol actually sold for consumption on the premises. There were thousands of Z Tapes (two tapes per day from the bar during the Audit Period) provided to the Department. Imrich also provided cash register receipts from the package store portion of the establishment. The Z Tapes distinguished purchases for beer versus wine versus liquor. The package store receipts did not identify what kind of alcohol was purchased, only the dollar amount of the purchase. It is, therefore, impossible to ascertain from the cash register receipts how many gallons of alcoholic beverage were sold in the package store. If the Z Tapes are correct and if they reflect all sales during the audit period, then one might extrapolate--using a one ounce per drink assumption--the total gallonage sold at the bar. However, the Z Tapes were not introduced into evidence and cannot be relied upon to make a finding herein. Respondent did prepare some general summaries of the Z Tapes, but no competent evidence was presented to give those summaries any credibility. Thus, they also cannot be relied upon to make a finding herein. The Z Tapes purportedly indicate that 2,075 gallons of alcoholic beverages were sold in the bar portion of the establishment during the Audit Period. There is no disagreement by the Department that at least 2,075 gallons were sold at the bar. Ferrell Melton, who was a bartender during the Audit Period but has since become an owner of The Hub, estimated that approximately 70 percent of the Respondent's revenues generated during the Audit Period were from the bar sales. There was no documentary evidence to support his estimation. Based upon the Z Tapes and further conversations with Respondent, the Department agreed to give Respondent the benefit of the doubt. An allowance for sales in the package store was then increased to 40 percent (from 25 percent) of total sales for purposes of calculating the surcharge.2 The 40-percent revision reduced the surcharge to $16,646.78; the reporting penalties and interest were reduced to $88.02; the underpayment penalties and interest were reduced to $11,630.98, for a total statutory liability of $28,365.78 (as compared to $57,810.34 in the original audit, a 50-percent reduction). A letter dated June 13, 2007, was sent to Respondent setting forth the revised amounts. Converting Dollar Sales to Gallons The package store area constituted a small portion of the entire establishment. There was a door connecting the package store to the bar area, but it was kept locked at all times relevant to this dispute. A sign on the door advised potential customers to ask the bartender for assistance when items needed to be purchased from the package store. When asked, the bartender would leave the bar area, unlock the package store, and ring up the purchase on the cash register located in the package store. The door would then be re-locked until another customer asked for assistance. The package store sold beer, wine and liquor. The liquor in the package store was sold in several bottle sizes: 50 ml, 100 ml, 200 ml, 375 ml, and 1.75 liters. By way of example, Respondent provided an inventory for the week ending May 6, 2007, which showed the following numbers of bottles of liquor in each size: 50 ml--1844 bottles (24.3566 gallons) 100 ml--48 bottles (1.26802 gallons) 200 ml--1766 bottles (93.3055 gallons) 375 ml--925 bottles (91.6346 gallons) 1.75 liters--150 bottles (69.3750 gallons) Total for these bottles: 433.09 gallons 750 ml--773 bottles (153.153 gallons) Liters--743 bottles (196.279 gallons) Total for these bottles: 349.432 gallons The beer inventory was 773 12-ounce bottles (522 gallons) and 743 16-ounce bottles (196.279 gallons). The wine inventory was 666 bottles (131.953 gallons). Gallonage Theory: The larger size bottles were used in the bar area. Thus, a considerably larger number of bottles would have to be sold in the package area to generate 8,000 gallons of liquor. It is difficult to imagine how the small package store, using a bartender as its cashier on an intermittent basis, could generate enough sales of smaller bottles to sell four times as much alcohol as the bar area. Presumably some wine and beer was also sold in the package store. Revenue Theory: A 33-ounce (one liter) bottle of liquor would sell in the package store for a set price. The price of $10.00, although not realistic, was used at final hearing by way of example. That same 33-ounce bottle would generate far more if sold by the drink in the bar area. For example, at $3.00 per drink containing one ounce of alcohol, the bottle would provide $99.00 in revenue at the bar versus $10.00 if sold in the package area. Thus, alcohol sold in the bar area would definitely generate more revenue than package alcohol. Respondent did not have any record as to how many gallons were sold in the package store, but maintains that all liquor, except for what was sold in the bar area, would have been package store sales. For the Audit Period (per findings in the second revised audit), 10,584.32 gallons were purchased, and Respondent paid tax on 2,075.55 gallons. Thus 8,508.77 gallons were presumed to have been sold as package. If, as Respondent asserts, liquor sold in the bar generates ten times as much per ounce more than liquor sold in package, than at a theoretical $1.00 per gallon, the package store would generate $8,508.77 and the bar would generate $20,755.50 (2,075.55 gallons times $10.00). Respondent's primary representative, who had been a bartender at The Hub for 20 years before recently purchasing it, estimates that 60 percent of The Hub's revenue currently comes from sales at the bar area. During the Audit Period, he believes approximately 70 percent of the revenue was generated in the bar area. There is no documentary support for the witness's estimation, and the witness's confusion concerning the facts does not make the testimony very credible. Using the theoretical amounts set forth in paragraph 23 above, $8,508.77 (package) plus $20,755.50 (bar), equates to $29,264.27. Seventy percent of that figure equals $20,484.98, i.e., very close to the amount that the 2,075 gallons of liquor might generate in the bar on a per-drink basis. Using the prior manager's figure of 75 percent of sales (if revenues is what he meant) being from the bar, that would equate to $21,948 of sales from the bar. Thus, theoretically, Respondent's position could be feasible. However, Respondent simply failed to provide competent, substantial evidence to support its theory. The unsubstantiated hearsay as to what Imrich meant or how much alcohol Imrich sold through the package store is insufficient to make a conclusive finding. So, too, is the general assertion by Respondent as to demographics in the area, type of clientele, etc. None of the evidence at final hearing could establish a definitive relationship between the gallonage sold and the revenue received. None of the Z Tapes or cash register receipts were offered into evidence to establish such a relationship. There were apparently no records as to the number of bottles sold in the package store. Rather, the tapes from the package store show only a dollar amount; the gallonage per dollar cannot be ascertained from the tapes. (Mr. Smith did take an inventory each day when he was working at The Hub, but he would throw away his inventory sheet each day. Besides, Mr. Smith was not working full-time at the establishment during the Audit Period.) Respondent's record-keeping for its alcohol sales is inconsistent. For the bar area of its establishment, Respondent's cash register tapes identify whether each purchase is beer, wine or liquor. In the package store, the cash register receipts show only a dollar amount, without identifying what was sold.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco: Upholding the Department's assessment of a surcharge in the amount of $16,646.78; surcharge interest in the amount of $88.02; and surcharge penalties in the amount of $11,3630.98, for a total liability of $28,365.78; and Assessing a penalty in the amount of $4,161.69. DONE AND ENTERED this 15th day of April, 2010, in Tallahassee, Leon County, Florida. R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of April, 2010.
The Issue The issue for determination is whether Petitioner owes sales tax of $15,230.15 plus interest from October 15, 1993.
Findings Of Fact Petitioner is a sole proprietorship organized in this state and doing business at 851 Monterey Road, Stuart, Florida. Respondent is the governmental agency responsible for administering the state sales tax in accordance with Chapter 212, Florida Statutes.1 In 1992, other businesses located at Petitioner's address reported to Respondent that they paid rent to Petitioner. However, Petitioner did not collect and remit sales tax on the rental income and was not registered as a dealer. On February 3, 1992, Respondent mailed a Notice of Intent to Audit Petitioner's books and records ("Notice of Intent to Audit") for the tax period February 1, 1987, through January 31, 1992. The Notice of Intent to Audit included a detailed list of the books and records needed for Respondent to conduct a detailed audit. The Notice also requested that Petitioner provide Respondent with a date on which it would be convenient to begin the audit. On February 11, 1992, Respondent had not heard from Petitioner. The auditor contacted Petitioner to schedule a date on which the audit could begin. At that time, Petitioner stated that he would not provide the auditor with any books and records. Petitioner refused to make available the books and records for 1990 through 1992 because Petitioner incorrectly suspected that Respondent maintained a secret "blacklist." Petitioner based his suspicion, in part, on the fact that he had refused to respond to a questionnaire Respondent had mailed to taxpayers throughout the state prior to the Notice of Intent to Audit. Petitioner also based his suspicion on the erroneous assumption that Respondent's audit was part of a criminal investigation by the Internal Revenue Service ("IRS") into Petitioner's federal taxes for 1987 and 1988. Petitioner refused to make available the books and records for 1987 through 1989 because those records were in the possession of the IRS. Petitioner maintained that the proposed audit was illegal. Respondent sent Petitioner copies of its statutory authority to audit Petitioner and made numerous attempts to arrange a mutually convenient time to begin the audit. Respondent did not commence the audit until March 10, 1993. On March 10, 1993, the auditor and audit group supervisor met with Petitioner and Mr. Eugene Nail, Petitioner's paralegal. Petitioner stated that he did not have the books and records Respondent needed to conduct a detailed audit because the IRS had confiscated them in connection with the pending criminal case. Respondent conducted the audit using the information Petitioner made available to the auditor. Petitioner made available: sales invoices for 1990 and 1991 and one month in 1992 grouped together by calendar month; sales and use tax return booklets; resale and exemption certificates; and commercial lease agreements. No journals and ledgers were available. Respondent determined Petitioner's tax deficiency by sampling the available information. Pursuant to Petitioner's request, the auditor used a six month sample period. The auditor explained to Petitioner that she would use Petitioner's invoices during the sample period to determine tax- exempt sales. She compared the invoices to resale certificates and calculated an error ratio based on discrepancies between the sales invoices and the resale certificates. Respondent determined the actual deficiency in sales tax during the six month sample period based on actual invoices that did not have a resale certificate and for which no sales tax was remitted. Respondent estimated the additional deficiency in sales tax by applying the error ratio to the balance of the audit period. Respondent examined only those invoices provided by Petitioner and previous sales tax returns filed by Petitioner. On April 9, 1993, the auditor conducted a meeting with Petitioner and discussed the audit procedures, results, applicable law, and abatement rules. On June 15, 1993, Respondent issued a Notice of Intent to Make Sales and Use Tax Changes in the amount of $45,469.05 ("Notice of Intent"). The Notice of Intent included a copy of all audit exhibits and workpapers. On August 30, 1993, Petitioner provided additional invoices to Respondent in a meeting with the auditor and audit group supervisor. On October 15, 1993, the auditor adjusted certain items in the audit file, reduced the proposed assessment, and issued a Revised Notice of Intent to Make Sales and Use Tax Changes in the amount of $37,417.45 ("Revised Notice of Intent"). Petitioner requested additional time to provide more information, including additional resale certificates. However, Petitioner failed to provide the additional information. By letter dated December 9, 1993, the audit group supervisor notified Petitioner that she was closing the case and sending it to the Tallahassee office as a contested case. On December 23, 1993, Respondent issued a Notice of Proposed Assessment to Petitioner assessing Petitioner for $37,417.45 in tax, penalty, and interest through October 15, 1993. On February 21, 1994, Respondent received Petitioner's written protest dated February 10, 1994. Respondent revised the audit figures again. On January 20, 1995, Respondent issued its Notice of Decision reducing the assessment against Petitioner to $15,230.15. The Notice of Decision assessed Petitioner for taxes of $8,900.55, penalties of $2,225.14, and interest of $4,104.46 through October 15, 1993. Interest accrues at the per diem rate of $2.93 until paid. On March 16, 1995, Petitioner timely appealed the Notice of Decision by filing a Petition for Formal Hearing with Respondent. Inadequate Records Petitioner failed to maintain adequate books and records within the meaning of Sections 212.12(6), 212.13(2), 212.35, and Florida Administrative Code Rules 12A-1.093(2) and (5).2 Petitioner failed to maintain adequate books and records for the five year audit period prescribed in Section 213.34(2). Petitioner failed to maintain general ledgers and journals for the five year audit period. The only records Petitioner maintained were sales invoices for 1990 and 1991 and one month in 1992. Petitioner was unable to produce adequate records for 1987 through 1989. Petitioner asserted that the IRS had those records and that Petitioner could not obtain the records required by Florida law. The federal tax case has been pending against Petitioner since 1990.3 During those seven years, Petitioner was unable to obtain copies of any records in the possession of the IRS. The journals and ledgers for 1987 and 1988 were maintained on computer floppy disks. Petitioner asserts that the floppy disks were lost. Petitioner asserts that his attorney kept the books and records for 1989 in an out-of-state location to avoid producing those records for the IRS. The journals and ledgers for 1990 though 1992 are in the possession of Petitioner's accountants. Petitioner did not produce those records during the audit or at the administrative hearing. Petitioner could have requested the journals and ledgers for 1989 through 1991 from his attorney and accountants, respectively, but chose not to do so. Petitioner made available to Respondent only sales invoices for 1990 and 1991 and one month in 1992. Without the general ledgers and cash journals to cross- reference the sales invoices, Respondent could not corroborate the financial records available for audit. Respondent was required by applicable law to conduct the audit by sampling Petitioner's available records. Exempt Sales: Resale Certificates Certain exempt sales claimed by Petitioner during the six month sample period were not supported by resale certificates. Respondent disallowed the exempt sales that were not supported by resale certificates and allowed the invoices that were supported by resale certificates. For the six month sample period, Respondent assessed an actual sales tax deficiency for those sales that did not have a corresponding resale certificate.4 Respondent prepared audit schedules for the six month sample period that listed the invoices with a sales tax deficiency due to the lack of a resale certificate. Based on the audit schedules, Respondent determined an error ratio and applied the error ratio over the five year audit period to determine the estimated tax deficiency.5 Respondent conducted the audit in accordance with generally accepted audit procedures and with applicable state law. Disallowed exempt sales were listed individually by invoice, name of vendor, and the date and amount of the sale. Disallowed exempt sales were listed for each of the six months in the sample period. Additional Taxable Sales Sales invoices for the six month sample period showed that Petitioner collected more sales tax than he reported to Respondent on his monthly sales tax returns. Respondent treated the collected, but unremitted, sales tax as "additional taxable sales" rather than as an unremitted sales tax. Respondent assessed Petitioner for the sales tax paid on Petitioner's invoices but not remitted to Respondent by Petitioner. The deficiency existed for May and June, 1990, and for January and February, 1991. Taxable Rent Respondent reviewed lease agreements relating to property rented by Petitioner at his business address. Respondent determined that Petitioner failed to collect and remit sales tax on the rental of his property. Respondent assessed Petitioner for sales tax Petitioner failed to collect and remit on taxable rent. Petitioner does not contest that portion of the assessment.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order and therein UPHOLD Respondent's assessment of $15,230.15 plus interest statutorily due from October 15, 1993, until paid.RECOMMENDED this 17th day of February, 1997, in Tallahassee, Florida. DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 17th day of February, 1997.
The Issue The Department hereby adopts and incorporates by reference the Statement of the Issue set forth in the Recommended Order.
Recommendation Based on the foregoing, it is recommended that the Department enter a final order dismissing the subject notice of assessment and jeopardy findings. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 10th day of January 1991. WILLIAM J. KENDRICK 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 10th day of January, 1991.
Findings Of Fact This case is presented for consideration based on the Notice to Show Cause filed by the Petitioner, Division of Alcoholic Beverages and Tobacco, against Rose L. Lee, who trades as Lee's Grocery. The exact details of the allegation are as found in the issue statement of this Recommended Order, which comments are hereby incorporated into the Findings of Fact. The Petitioner, Division of Alcoholic Beverages and Tobacco, is a division of an agency of State Government, namely, a part of the State of Florida, Department of Business Regulation. One of the functions which the Division of Alcoholic Beverages and Tobacco serves is to regulate those individuals who are licensed to sell alcoholic beverages in the State of Florida. The Respondent, Rose L. Lee, who trades as Lee's Grocery in a location at 2210 Central Avenue, Tampa, Hillsborough County, Florida, is a holder of an alcoholic beverage license issued by the Petitioner. That license number is 39- 0292 and all times pertinent to these proceedings the Respondent held such license. On May 23, 1979, Officer Donald Clifford Levengood went to the licensed premises. Officer Levengood is an employes of the Division of Alcoholic Beverages and Tobacco. The purpose of Officer Levengood's visit was twofold. First, Officer Levengood was there to make a routine inspection of the licensed premises, as is authorized by the statutes which regulate the sale of alcoholic beverages. The second reason that Officer Levengood went to the licensed premises was based upon certain information that he had obtained from an informer, to the effect that cigarettes not bearing the proper Florida tax stamp were sold in the vicinity of the Respondent's licensed premises. The testimony did not reveal that the Respondent had sold that class of cigarettes from her store prior to the officer's inspection. When Officer Levengood arrived at the licensed premises, he spoke with the store manager, one Columbus Lee, the husband of the Respondent. Lee had been running the store as manager for a considerable period of time, to include the month of May, 1979. In keeping with a checklist Officer Levengood began to check items against that list and in that Process found a pack of Pall Mall cigarettes in the licensed premises in a location where the cigarettes were being offered for sale. Levengood noted that this particular pack did not show a Florida tax stamp and after removing this pack from its location he proceeded to remove a number of other packs, all of which were missing the necessary Florida tax stamp. All total, there were fifteen packs in this location which did not evidence the proper Florida tax stamp. Those items were removed from the licensed premises and placed in a bag and those packs and bag were admitted in the course of the hearing as Petitioner's Exhibit No. 1. Further inspection by the officer uncovered eight cartons of Pall Mall cigarettes and those cigarette containers did not carry the necessary Florida tax stamp. Those cartons were consolidated into a bag and became the Petitioner's Exhibit No. 2. Admitted into evidence in the course of the hearing. (By agreement between the parties, the items of evidence were left in the custody and control of the District Office of the Division of Alcoholic Beverages and Tobacco located in Tampa, Florida.) Columbus Lee, when questioned about the origins of those packs of cigarettes that were missing the Florida tax stamps, indicated that a couple of days before the inspection he had purchased ten cartons of Pall Mall cigarettes from persons who were vending these cigarettes from their car at a location across the street from the licensed premises. The number of total packs of cigarettes was ninety-five (95), which is less than fifty (50) cartons. The Respondent, Rose L. Lee, was not in attendance at the licensed premises on May 23, 1979, at the time that the employee of the Petitioner discovered the unstamped cigarettes.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is recommended that the Respondent, Rosie L. Lee, be fined in the amount of Two Hundred Fifty Dollars ($250.00) and in the event that the Respondent fails to pay that fine within thirty (30) days of the date of the final order, that her license to sell alcoholic beverages be suspended for a period of thirty (30) days. DONE and ENTERED this 16th day of November, 1979, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Daniel Brown, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Rose L. Lee t/a Lee's Grocery 2204 Central Avenue Tampa, Florida 33602
Findings Of Fact By check dated September 17, 1974 Willie Calhoun attempted to pay the 1974-75 beverage license fee for Blount's Place and the check was returned to the Division stamped "Closed". The witness for the Division testified that the check was returned marked "NSF". Willie Calhoun is the son of Annie Lee and with his mother, owns the "6129 Corporation" known as King the Tailor. This is their primary business and the accounts from Blount's Place are co-mingled with those funds. This business is located in a section of Miami which has been the locale of numerous racial incidents and the proprietors were unable to obtain fire insurance. A fire occurred at this store in 1973 which burned the assets and records. The IRS audited the corporation and levied against the owners. When the check for the 1974-75 beverage license was written there was sufficient funds in Willie Calhoun's account to honor the check; however, before it was presented for payment the IRS had garnished the account. During the period between 1972 and December 2, 1975 Willie Calhoun and his mother paid the IRS some $42,000 in taxes and penalties. They now have returned to a solvent status and their beverage license payments are current.
The Issue There is little controversy as to the facts in this cause. The issue is essentially a legal issue and is stated as follows: When parties act in reliance and in conformity to a prior construction by an agency of a statute or rule, should the rights gained and positions taken by said parties be impaired by a different construction of said statute by the agency? Both parties submitted post hearing proposed findings of fact in the form of proposed recommended orders filed March 17 and 18, 1983. To the extent the proposed findings of fact have not been included in the factual findings in this order, they are specifically rejected as being irrelevant, not being based on the most credible evidence, or not being a finding of fact.
Findings Of Fact The Petitioner, Vanguard Investment Company, is a Florida corporation with its principal offices at 440 Northeast 92nd Street, Miami Shores, Florida 33138. On or about March 3, 1981, Vanguard purchased an aircraft described as a Turbo Commander, serial number N9RN, from Thunderbird Aviation, Inc., for a purchase price of $120,000 plus $4,800 in sales tax. The sale price plus the sales tax was paid by Vanguard to Thunderbird, which remitted the $4,800 in sales tax to the Department of Revenue (DOR) less a three percent discount as authorized by law. On February 27, 1981, Vanguard had executed a lease of said aircraft to General Development Corporation for a term of two years commencing on March 1, 1981, contingent upon Vanguard's purchase of said aircraft from Thunderbird. Prior to March 1, 1981, General Development had leased said aircraft from Thunderbird, and the least terminated on February 28, 1981. Vanguard purchased said aircraft for the sole purpose and in anticipation of continuing its lease to General Development. Vanguard never took possession or control of said aircraft, which remained in General Development's possession at Opa-locka Airport in Dade County, Florida. No controversy exists that all sales tax payable under General Development's lease of the aircraft, both with Thunderbird and subsequently with Vanguard, had been remitted to DOR with no break in continuity of the lease as a result of the change in ownership of the aircraft on or about March 1, 1981. At the time Vanguard purchased the aircraft from Thunderbird, Vanguard had not applied for or received a sales and use tax registration number pursuant to Rule 12A-1.38, Florida Administrative Code. Vanguard applied for said sales and use tax registration number on or about April 2, 1981, approximately 30 days after the purchase of said aircraft. The sales and use tax registration number was granted by DOR on or about April 23, 1981. Shortly thereafter, Vanguard inquired of DOR concerning a refund of the $4,800 in sales tax paid on the aircraft plus the three percent discount taken by Thunderbird. In lieu of Vanguard's providing Thunderbird a resale certificate and having Thunderbird apply for the sales tax refund, it was suggested that Vanguard obtain an assignment of rights from Thunderbird and apply directly for the refund because Thunderbird had been dissolved immediately after the sale of the aircraft to Vanguard. Acquisition of the assignment of rights from Thunderbird by Vanguard was delayed by the dissolution of Thunderbird and the death of Thunderbird's principal officer. Vanguard received the assignment of rights from Thunderbird on or about July 1, 1982, and immediately applied for a refund of the sales tax. Said application for refund was well within the three years permitted by Florida law to apply for a sales tax refund. On November 22, 1982, the Office of Comptroller (OOC) notified Vanguard of its intent to deny Vanguard's application for the sales tax refund because Vanguard had failed to obtain a sales and use tax registration number prior to purchasing the aircraft from Thunderbird. At the time of the purchase, it was the policy of DOR to permit individuals to apply late for a sales and use tax registration number and not to deny refunds on the basis that the applicant did not have the sales and use tax registration number at the time of the taxable purchase. On or about July 1, 1982, this policy of DOR was altered to conform with the decision of the Florida Supreme Court in State Department of Revenue v. Robert N. Anderson, 403 So.2d 297 (Fla. 1981). Vanguard was aware of the DOR policy at the time of the sale, relied on that policy, and conformed to that policy. It was clearly stated that had Vanguard applied for its refund even a month earlier, in June of 1982, the refund would have been approved under the then-existing policy.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the application of Vanguard Investment Company for refund of sales tax be approved, and that said refund be paid by the Office of Comptroller. DONE and RECOMMENDED this 25th day of April, 1983, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of April, 1983. COPIES FURNISHED: Edward S. Kaplan, Esquire 907 DuPont Plaza Center Miami, Florida 33131 William G. Capko, Esquire Assistant Attorney General Office of Comptroller The Capitol, Suite 203 Tallahassee, Florida 32301 Thomas L. Barnhart, Esquire Assistant Attorney General Department of Legal Affairs The Capitol, LL04 Tallahassee, Florida 32301 The Honorable Gerald A. Lewis Office of Comptroller The Capitol Tallahassee, Florida 32301
