The Issue Whether Petitioner collected and remitted to the Florida Department of Revenue the correct amount of sales tax on Petitioner's retail sales; and Whether Petitioner remitted to the Florida Department of Revenue the proper amount of sales tax on Petitioner's general and fixed assets purchases and on its commercial lease.
Findings Of Fact Petitioning Taxpayer, Surface Preparation Group, Inc., is a "C" corporation, incorporated in the State of Texas. The Taxpayer's product or service is the sale, service, and rental of surface preparation equipment. The Taxpayer has been registered with the Department since October 7, 1999. By letter dated January 12, 2005, the Department notified the Taxpayer of its intent to audit the Taxpayer's books and records to verify the Taxpayer's compliance with Florida's sales and use tax statutes. The audit period in this case is from December 1, 2001, through November 30, 2004. When the audit started, the Taxpayer had a presence in LeGrange, Georgia. During the course of the audit and negotiations, the Taxpayer removed itself back to its Texas headquarters. Specific records were requested to be made available for the Department's auditor to review. Four subject areas were developed in the audit plan: (1) sales; (2) fixed expense; (3) general expense; and (4) commercial rent. Although the Taxpayer provided some sales data, the information contained therein did not correlate with other information the Department had concerning the Taxpayer's Florida sales. For instance, auditors had traced through general ledgers to Petitioner’s federal tax return and compared the return with the company’s Florida sales and use tax return, and the figures did not correlate. Despite repeated requests by the Department's auditor, the Taxpayer provided no information explaining the reasons for this discrepancy, nor was any information provided regarding the Taxpayer’s general purchases, fixed asset purchases, or its commercial lease expenses. Therefore, in order to complete the audit process, the Department had to use the best information available to estimate the additional tax due on fixed assets, general purchases, and commercial rent. That information in this case consisted of materials provided by the Taxpayer and industry averages and past audit assessments of businesses in similar industries. Because total sales reported by the Taxpayer on its DR-15 monthly sales returns were different than the amounts the Taxpayer reported in response to the audit request, there was no assurance that the reported taxable sales and exempt sales were correct. Accordingly, the Department's auditor disallowed all exempt sales as reported by the Taxpayer. Because the Taxpayer had a location in Polk County, Florida, during part of the audit period, it must have had fixed assets there. This meant that a use tax was due for all the Taxpayer’s purchases in Florida, without credit for sales tax paid to vendors who in many cases were located in Georgia. No information was provided by the Taxpayer for general expenses or rental expenses. Without any information from the Taxpayer for general expenses or rental location, the Department had to proceed differently than it would have normally proceeded. In anticipation of submitting more documents to be analyzed by the Department as part of the audit, Mr. Hillebrand, tax manager for Petitioner, signed, on October 24, 2005, a consent to extend the statute of limitations and time for completing the audit to July 31, 2006. (Exhibit R-2, page 000030). On March 15, 2006, Mr. Schnaible, one of the Taxpayer’s Controllers, signed a consent to extend until December 31, 2006. (Exhibit R-2, page 000029). On September 26, 2006, after analyzing all that had been received from the Taxpayer up to that date, the Department mailed a Notice of Intent to Make Audit Changes (NOI) to Petitioner, along with the work papers supporting the changes, and a letter from the auditor explaining the findings. The amount of tax assessed totaled $197,714.38, and comprised: Schedule A01: Disallowed Exempt Sales $169,994.38; Schedule B01: Estimated Fixed Asset Purchases $10,080.00; Estimated General Expenses: $5,040.00; and Estimated Commercial Rental $12,600.00. Interest accrued through September 26, 2006, totaled $57,353.50. The penalty at that date totaled $49,428.09, bringing the total assessment amount to $304,496.47. The Department’s September 26, 2006, letter offered the Taxpayer another opportunity to provide records if it disputed the auditor's findings, and another option to continue the audit process. (Exhibit R-2, pages 000044 through 000045). On October 25, 2006, Mr. Spomer, Taxpayer’s Controller who eventually signed the Petition and Amended Petition herein, wrote a letter (Exhibit R-2, page 000042) to the auditor stating that he requested to extend the audit and that he would mail back the signed, correct form. Normally, a DR-872e form to extend the statute and audit period must be signed within 30 days of the NOI. In this case, it was signed two months later. Apparently, one such form signed by Mr. Spomer was inadvertently filled-in by the Department with the extension date of "June 30, 2006," (copy attached to Amended Petition). Therefore, a second form was executed by Mr. Spomer on November 1, 2006. This form bears the correct extension date of June 30, 2007. (Exhibit R-2, page 000028). No additional information was provided by the Taxpayer which would change any of the tax amounts identified in the NOI. Therefore, on January 31, 2007, the Department issued it Notice of Proposed Assessment (NOPA). Therein, the amount of tax due remained unchanged. The amount of accrued interest through January 31, 2007, increased to $65,023.73, and the penalty was reduced to zero. The Department currently seeks $262,738.11, with interest accruing on the unpaid tax liability at the statutory rate.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order sustaining the Notice of Proposed Assessment dated January 31, 2007. DONE AND ENTERED this 6th day of December, 2007, in Tallahassee, Leon County, Florida. S ELLA JANE P. DAVIS 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, 2007. COPIES FURNISHED: Bruce Hoffmann, General Counsel Department of Revenue The Carlton Building, Room 204 501 South Calhoun Street Tallahassee, Florida 32399-0100 Lisa Echeverri, Executive Director Department of Revenue The Carlton Building, Room 104 501 South Calhoun Street Tallahassee, Florida 32399-0100 John Mika, Esquire Office of the Attorney General The Capital - Revenue Litigation Bureau Tallahassee, Florida 32399-1050 Dale Spomer International Surface Preparation Group (Texas), Inc. 6330 West Loop South, Suite 900 Houston, Texas 77401
The Issue At issue herein is whether or not the Respondent's certificate to practice as a certified public accountant in the State of Florida should be revoked based on conduct which will be set forth hereinafter in detail for alleged violations of Chapter 473, Florida Statutes, and the rules and regulations promulgated and adopted thereunder in Chapter 21A, Florida Administrative Code.
Findings Of Fact Based on the testimony of witnesses and their demeanor while testifying, the documentary evidence introduced at the hearing, and the entire record compiled herein, the following relevant facts are found. Mark Finkel, Respondent, is the holder of certificate No. 2327 as a certified public accountant in the State of Florida. As such, the Respondent is subject to the provisions of Chapter 473, Florida Statutes, and the rules and regulations promulgated in Chapter 21A, Florida Administrative Code. The Respondent has been so registered as a certified public accountant since 1968. During early 1973, Respondent was engaged by David E. Wells, M.D., P.A., to prepare and file individual and corporate tax returns for the entity, David E. Wells, M.D., P.A., for the three years ending June 30, 1975. Respondent's engagement stamped from a referral of Dr. Wells' former C.P.A., Tom Williams, who relocated from Florida during late 1972. At the outset of his engagement by Dr. Wells, Respondent was briefed on the nuances of Dr. Wells' cardiology practice by Tom Williams. Respondent, according to Dr. Wells, was told that his duties would include those of filing corporate and individual tax returns and proper accounting for the administration and payment of pension plan taxes. During 1973, Respondent made quarterly visits to Dr. Wells' office to review records and billing information. The record reveals that Respondent filed quarterly payroll tax returns through September of 1976 and individual income tax returns for the years ending 1973 and 1974. Respondent failed to file individual income tax returns for the year ending December, 1975, or corporate returns for the years ending June 30, 1973, through 1976, and pension tax returns for the years ending 1973 through 1976. However, Respondent represented to Dr. Wells that all necessary returns were filed with the Internal Revenue Service and the other governmental agencies charged with the collection of taxes. For the years 1973 through 1976, Dr. Wells received inquiries from the Internal Revenue Service requesting information as to why corporate tax returns had not been filed for his corporation for the three years ending June 30, 1975. Based on the correspondence received from the Internal Revenue Service, Dr. Wells attempted to communicate with Respondent to either get the necessary forms filed or to request a return of Respondent's working papers which would assist another C.P.A. in preparing and filing the pertinent returns, to no avail. In this regard, after repeated calls, Dr. Wells obtained what records Respondent had which were of little use to his newly retained accountant, Myron Kahn, a certified public accountant who, since 1959, has been licensed in Florida and North Carolina. Messr. Kahn was retained by Dr. Wells in December of 1976 and established that the Respondent had only filed an individual income tax return for Dr. Wells for the calendar year 1973, plus quarterly payroll tax returns filed which were current. (See Petitioner's Exhibits 1 and 2.) Based on the available records, Messr. Kahn reconstructed the necessary accounting data based on cash receivables and disbursement vouchers for the prior four-year period. Messr. Kahn, after diligent search, found no control sheets, financial summaries, analyses, etc., which would have been kept if the pertinent income tax returns had been filed as required. Because Messr. Kahn had to reconstruct the necessary accounting data, he spent an inordinate amount of time compiling the returns he needed to file. Evidence reveals that due to Dr. Wells' late filing of tax returns for the fiscal year ending June 30, 1974, he incurred an additional penalty of $12,600, plus approximately $2,700 in interest and for his state corporate return, a penalty of $1,700 was assessed, plus $325 for interest. For the year ending June 30, 1975, Dr. Wells paid a Federal penalty of $5,618, plus $878 in interest, and a state penalty of $1,052, plus $132 in interest. Douglas H. Thompson, Jr., the Board's Executive Director, has been a certified public accountant since April, 1968. Director Thompson is the Board's chief administrative officer and custodian of records. On approximately December 16, 1976, Director Thompson received a complaint from David E. Wells, M.D., based on Respondent's "failure to file requested corporate returns and to return certain documents."
Recommendation Based on the foregoing findings of fact and conclusions of law, and in the absence of any effort on Respondent's part to refute or otherwise mitigate the evidence presented, it is hereby, RECOMMENDED: That the Respondent's license to practice as a certified public accountant (certificate No. 2327) be REVOKED. DONE and ENTERED this 6th day of August, 1979, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675
The Issue The issue in this case is whether the Respondent's certificates of registration should be revoked for an alleged failure to file tax returns and to remit taxes to the Petitioner.
Findings Of Fact The Petitioner is the state agency responsible for collection of sales and use taxes in Florida, pursuant to chapter 212, Florida Statutes (2011).1/ The Respondent is a Florida company doing business at 7810 U.S. Highway 19, Port Richey, Florida, and is a "dealer" as defined at section 212.06(2). The Respondent holds two certificates of registration issued by the Petitioner (Certificate No. 61-8012297146-3 and Certificate No. 61-8012297147-0) and is statutorily required to file tax returns and remit taxes to the Petitioner. As set forth herein, the Respondent has failed to file tax returns or has filed returns that were not accompanied by the appropriate tax payments. During the time the Respondent has held the certificates, the Petitioner has filed 15 separate warrants against the Respondent related to unpaid taxes, fees, penalties, and interest. The Petitioner is authorized to cancel a dealer's certificate of registration for failure of a dealer to comply with state tax laws. Prior to such cancellation, the Petitioner is required by statute to convene a conference with a dealer. On June 24, 2011, the Petitioner issued a Notice of Conference on Revocation of Certificate of Registration (Notice). The conference was scheduled for July 27, 2011. The Respondent received the Notice and attended the conference. Certificate of Registration No. 61-8012297146-3 The Respondent failed to file tax returns related to Certificate No. 61-8012297146-3 for the period of August through December 2001. The Petitioner assessed estimated taxes of $587.50, fees of $110.95, and a penalty of $285.00. As of the date of the Notice, the accrued interest due was $633.79. Additionally, the Respondent failed to remit taxes of $5,623.63 related to Certificate No. 61-8012297146-3 that were due according to his filed tax returns. Based thereon, the Respondent assessed fees of $994.58 and a penalty of $2,478.26. As of the date of the Notice, the accrued interest due was $4,702.27. As of the date of the Notice, the Respondent's total unpaid obligation on Certificate No. 61-8012297146-3 was $15,415.98, including taxes of $6,211.13, fees of $1,105.53, penalties of $2,763.26, and accrued interest of $5,336.06. Certificate of Registration No. 61-8012297147-0 The Respondent failed to file tax returns related to Certificate No. 61-8012297147-0 for the months of June 2000, September 2000, May 2001, and August 2001. The Petitioner assessed estimated taxes of $619.00 and fees of $202.00. As of the date of the Notice, the accrued interest due was $782.56. Additionally, the Respondent failed to remit taxes related to Certificate No. 61-8012297147-0 of $4,332.48 that were due according to his filed tax returns. Based thereon, the Respondent assessed fees of $771.71 and a penalty of $1,576.87. As of the date of the Notice, the accrued interest due was $4,725.27. As of the date of the Notice, the Respondent's total unpaid obligation related to Certificate No. 61-8012297147-0 was $13,009.89, including taxes of $4,951.48, fees of $973.71, penalties of $1,576.87, and accrued interest of $5,507.83. The Audit A separate audit of the Respondent's business records for the period of February 2004 through January 2007 resulted in an additional assessment totaling $9,314.07, including taxes of $5,048.23, fees of $661.76, and a penalty of $252.42. As of the date of the Notice, the accrued interest due was $3,351.66. At the July 27, 2011, conference, the parties negotiated a compliance agreement under which the Respondent would have retained the certificates of registration. The agreement required the Respondent to make an initial deposit of $2,000.00 by August 15, 2011, and then to make periodic payments towards satisfying the unpaid obligation. The Respondent failed to pay the $2,000.00 deposit, and the Petitioner subsequently filed the Complaint at issue in this proceeding. As of the date that the Complaint was filed, the Respondent owed a total of $37,797.66 to the State of Florida, including taxes of $15,004.34, estimated taxes of $1,206.50, fees of $2,741.00, penalties of $4,592.55, and accrued interest of $14,253.27.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue issue a final order revoking the certificates of registration held by the Respondent. DONE AND ENTERED this 1st day of May, 2012, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 1st day of May, 2012.
Findings Of Fact Stipulated Facts Respondent conducted an audit of Petitioner's business records for the period July 1, 1985, through June 30, 1990. Respondent determined a deficiency in sales tax of $174,823.96, including penalty and interest through August 22, 1990. Petitioner objected to the deficiency. Respondent reviewed the audit, and made audit changes that are the subject of this proceeding. The audit changes determined a deficiency in use tax of $76,035.60, including tax ($47,910.10), penalty ($11,977.68), and interest through March 12, 1991 ($16,147.60). Interest accrues daily in the amount of $15.75. A First Revised Notice Of Intent To Make Sales Tax Changes, for the reduced assessment of $76,035.60, was issued on March 21, 1991. A Notice Of Proposed Assessment was issued on July 2, 1991. The Notice Of Proposed Assessment became a Final Assessment on August 31, 1991. Respondent made a prima facie showing of the factual and legal basis for the use tax assessment. Section 120.575(2), Florida Statutes. 1/ The audit and assessment are procedurally correct. Tax, interest, and penalty are correctly computed. Formation Petitioner was incorporated in Florida, in January, 1983, by Mr. B. Theodore Troy, president and sole shareholder. Petitioner's principal place of business is 101 Wymore Road, Suite 224, Altamonte Springs, Florida. Petitioner conducted business as American Advertising Distributors of Central Florida. Mr. Troy and his wife operated the business until liquidating Petitioner's assets in 1992. Operation Petitioner sold direct mail advertising to Florida businesses. Petitioner operated pursuant to a franchise agreement with American Advertising Distributors, Inc., of Mesa, Arizona ("AAD"). AAD was Petitioner's franchisor until AAD filed for bankruptcy in 1990. Petitioner solicited orders from Florida businesses 2/ for advertising coupons designed and printed by AAD in Arizona. AAD mailed the advertising coupons to addressees in Florida who were potential customers for Florida businesses. Florida businesses placed orders with Petitioner on written contracts, or sales agreements, labeled "advertising orders." AAD was not a party to advertising orders. Advertising orders identified "AAD" as American Advertising Distributors of Central Florida, and were imprinted with the name and address of "AAD" in Central Florida. Advertising orders specified the total charges, color and stock of paper, number of addressees, and areas of distribution. Petitioner assisted businesses with rough layout for art work. The rough layout was forwarded to AAD. AAD prepared finished art work and sent copies back to Petitioner for approval by Florida businesses. AAD then printed, collated, and mailed advertising coupons to addressees in Florida, without charge to addressees. Florida businesses paid non-refundable deposits when placing advertising orders. The remaining balance was paid upon approval of final art work. AAD did not submit invoices to Florida businesses. AAD submitted invoices to Petitioner for the amount due from Petitioner. 3/ Petitioner paid AAD 10 days before advertising coupons were mailed. Some advertising coupons were produced by Laberge Printers, Inc., in Orlando, Florida ("Laberge"). Coupons from Laberge were designed, printed, and distributed in the same manner as coupons from AAD. Two types of advertising coupons were provided by AAD and Laberge. The majority of coupons were distributed in coop mailings, or "bonus express" envelopes, containing coupons for up to 20 businesses. Bonus express envelopes were mailed approximately eight times a year. Advertising coupons were also distributed in "solo" mailings. A solo mailing was an individualized, custom printed coupon, or flyer, mailed to individual addressees. The total charges stated in advertising orders included the cost of services provided by Petitioner, AAD, and Laberge. Services included typesetting, art work, printing, inserting envelopes, and mailing. Florida imposed a tax on services, from July 1, 1987, through December 31, 1987. Petitioner collected and remitted tax imposed on the cost of services included in the total charges stated on advertising orders. Except for the services tax, neither Petitioner, AAD, nor Laberge collected and remitted sales or use tax to Florida or to Arizona. Petitioner never utilized resale certificates for any tax other than the tax on services. Collectibility Petitioner was financially able to pay the use tax assessment during 1990 and 1991. No later than August 22, 1990, Mr. Troy knew of the sales tax deficiency of $174,823.96. By March 21, 1991, Mr. Troy knew of the reduced use tax assessment of $76,035.60. During 1990 and 1991, Petitioner made discretionary payments to Mr. Troy of $110,389. Petitioner reported federal taxable income of $58,279 in 1990 and 1991. 4/ In arriving at taxable income, Petitioner deducted payments to Mr. Troy of $59,430 for compensation to officers, management fees, and salary. 5/ From taxable income of $58,279, Petitioner paid approximately $50,959 to Mr. Troy in nondeductible shareholder loans. 6/ Discretionary payments of $110,389, 7/ made to Mr. Troy in 1990 and 1991, were more than adequate to pay the use tax assessment of $76,036.60. At the end of 1991, Petitioner reported fixed assets with a book value of $14,933, a customer list valued at $104,447.72, and retained earnings of $102,605. The book value of intangible assets was $82,943, comprised primarily of the franchise, valued at $35,000, and goodwill of $45,000. Termination Of Operations But Continued Existence AAD petitioned for bankruptcy in 1990. Petitioner subsequently determined that its franchise and goodwill were worthless. In 1992, Petitioner reported a loss of $99,726 for federal tax purposes. All of Petitioner's assets, including its customer lists, were sold or transferred for $1,330 to Florida Mail, Inc. ("Florida Mail"). Florida Mail is a Florida corporation wholly owned by Mr. Troy. Florida Mail sells direct mail advertising; and shares Petitioner's principal place of business. Since 1992, Petitioner has been a shell corporation with $579 in assets.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order upholding the assessment of tax and interest and waive all of the penalty included in the assessment. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 2nd day of June, 1994. DANIEL MANRY 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 2nd day of June, 1994.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Petitioner, Gainesville Amateur Radio Society, Inc. (GARS or petitioner), a Florida non-profit corporation, was incorporated on December 31, 1975. Its stated purpose is to promote an interest in amateur radio operation. Among other things, GARS provides preparation for Federal Communication Commission licensing examinations, supports community activities with free communication services, and encourages public awareness of ham radio activities through the publication of a monthly newsletter called the GARS-MOUTH. Respondent, Department of Revenue (DOR), is charged with the responsibility of administering and implementing the Florida Revenue Act of 1949, as amended. It has the specific task of collecting sales taxes and enforcing the state tax code and rules. By law, certain transactions are exempt from the state sales and use tax. Among these are sales or lease transactions involving "scientific organizations." In order for an organization to be entitled to an exemption, it must make application with DOR for a consumer's certificate of exemption and demonstrate that it is a qualified scientific organization within the meaning of the law. Once the application is approved, the certificate entitles the holder to make tax exempt purchases that are otherwise taxable under Chapter 212, Florida Statutes. In the case of petitioner, a certificate would enable it to save a hundred or so dollars per year. Claiming that it was entitled to a certificate of exemption as a charitable organization, GARS filed an application with DOR on December 21, 1993. After having the application preliminarily disapproved by DOR on the ground it did not expend "in excess of 50.0 percent of the . . . organization's expenditures toward referenced charitable concerns, within (its) most recent fiscal year," a requirement imposed by DOR rule, GARS then amended its application to claim entitlement on the theory that it was a scientific organization. Although DOR never formally reviewed the amended application, it takes the position that GARS still does not qualify for a certificate under this new theory. Is GARS a Scientific Organization? Under Section 212.08(7)(o)2.c., Florida Statutes, a scientific organization is defined in relevant part as an organization which holds a current exemption from the federal income tax under section 501(c)(3) of the Internal Revenue Code. A DOR rule tracks this statute almost verbatim. Accordingly, as a matter of practice, in interpreting this statutory exemption, DOR simply defers to the final determination of the Internal Revenue Service (IRS). If the IRS grants an organization a 501(c)(3) status based on the determination that it is a scientific organization, then DOR accepts this determination at face value. DOR does not make an independent determination whether the organization is "scientific" or question the decision of the IRS. This statutory interpretation is a reasonable one and was not shown to be erroneous or impermissible. GARS received a federal income tax exemption from the IRS regional office in Atlanta, Georgia by letter dated August 12, 1993. The record shows that GARS was granted an "exempt organization" status as a "charitable organization" and as an "educational organization" under Treasury Regulation Section 1.501(c)(3). However, GARS did not receive an exempt status as a "scientific organization" nor did the IRS make that determination. Therefore, GARS does not qualify as a scientific organization within the meaning of the law. While petitioner submitted evidence to show that it engages in what it considers to be a number of scientific endeavors, these activities, while laudable, are irrelevant under Florida law in making a determination as to whether GARS qualifies for a sales tax exemption as a scientific organization. Therefore, the application must be denied.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent enter a final order denying petitioner's application for a consumer certificate of exemption. DONE AND ENTERED this 23rd day of June, 1995, in Tallahassee, Florida. DONALD R. ALEXANDER 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 23rd day of June, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-1200 Petitioner: 1-2. Partially accepted in finding of fact 4. 3. Partially accepted in finding of fact 6. 4. Partially accepted in finding of fact 1. 5. Rejected as being irrelevant. 6. Rejected as being unnecessary. 7. Partially accepted in finding of fact 5. 8-9. Partially accepted in finding of fact 7. 10. Partially accepted in finding of fact 5. 11. Partially accepted in finding of fact 7. 12. Partially accepted in finding of fact 6. 13. Rejected as being unnecessary. 14. Partially accepted in finding of fact 6. Respondent: 1. Partially accepted in finding of fact 1. 2. Partially accepted in finding of fact 2. 3. Rejected as being unnecessary. 4. Rejected as being cumulative. 5-12. Partially accepted in finding of fact 7. 13-14. Partially accepted in finding of fact 4. 15. Partially accepted in finding of fact 3. 16. Covered in preliminary statement. 17. Partially accepted in finding of fact 4. 18-19. Partially accepted in finding of fact 6. 20-21. Rejected as being unnecessary. 22. Partially accepted in finding of fact 5. 23-24. Partially accepted in finding of fact 6. Note - Where a proposed finding has been partially accepted, the remainder has been rejected as being irrelevant, unnecessary for a resolution of the issues, not supported by the evidence, cumulative, subordinate, or a conclusion of law. COPIES FURNISHED: Mr. Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100 Linda Lettera, Esquire General Counsel Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Sidney Schmukler, Esquire 3922 N. W. 20th Lane Gainesville, Florida 32605-3565 Olivia P. Klein, Esquire Department of Legal Affairs The Capitol-Tax Section Tallahassee, Florida 32399-1050
Findings Of Fact High-Tech Yacht & Ship, Inc. (Petitioner) is a Florida corporation engaged in the business of retail sales of marine vessels. Also, Petitioner is a registered retail dealer in the State of Florida. The President of Petitioner is its only corporate officer. On or about September 2, 1993, Petitioner, in the capacity of a broker, sold a motor yacht at retail to Regency Group, Inc. (purchaser), through its representative, for $78,000. The motor yacht is described as a 1988, 41' Amerosport Chris Craft, hull Number CCHEU075E788, and called the "Motivator". At the closing of the sale, on or about September 2, 1993, the purchaser refused to pay the sales tax on the purchase, which was $4,680. However, the purchaser agreed to pay the sales tax after being informed by Petitioner that, without the payment of the sales tax, there could be no closing. The purchaser's representative submitted, at closing, a personal check in the amount of $4,680 for the sales tax. All of the necessary documents were completed for ownership and registration to be transferred to the purchaser. Subsequently, Petitioner received notice from its bank that the check for the sales tax had been dishonored by the purchaser's bank. The purchaser's representative had stopped payment on the check. In October 1993, Petitioner submitted its sales and use tax return for the month of September 1993 to Respondent in which the sale of the yacht was reported. Respondent automatically reviews sales and use tax returns. Respondent's review of Petitioner's return revealed a shortage of sales tax collected in the amount of $4,680.. In January 1994, Respondent issued a notice of tax action for assessment of additional tax in the amount of $4,710, plus interest and penalty, to Petitioner. The $4,710 included the loss of Petitioner's collection allowance of $30, which loss resulted from Petitioner's failure to timely remit all taxes due. Having received the notice of tax action, by letter dated January 20, 1994, Petitioner generally informed Respondent of the circumstances regarding the sales tax shortage, including the dishonored check. Petitioner pointed out, among other things, that Respondent had the authority and the means to collect the tax, while it (Petitioner) had limited means, and suggested, among other things, that Respondent cancel the purchaser's Florida registration of the yacht. On or about January 31, 1994, approximately three months after the check for sales tax was dishonored, Petitioner issued a notice of dishonored check to the purchaser, in which Petitioner requested payment of the sales tax. The notice provided, among other things, that Petitioner could seek criminal prosecution and civil action if the monies were not paid to Petitioner. Having not received the $4,680, Petitioner contacted the local law enforcement agency. After investigation, the law enforcement agency informed Petitioner that a civil action would have to be instituted because the purchaser, through its representative, had indicated that it was not satisfied with the yacht. Although Petitioner engaged the services of an attorney for civil action, no civil action was commenced. Additionally, Petitioner did not engage the services of a collection agency for assistance in collecting the sales tax. Subsequent to its notice of tax action, on or about March 12, 1994, Respondent issued a notice of assessment to Petitioner. The notice of assessment provided, among other things, that Petitioner was being assessed taxes in the amount of $4,710, plus penalty and interest in the amount of $2,342.61, totalling $7,052.61. Petitioner protested the assessment. On February 8, 1995, Respondent issued its notice of reconsideration in which Respondent determined, among other things, that the assessment was appropriate and affirmed the assessment of $7,052.61, plus interest and penalty. The interest accrues at the rate of $1.55 per day. Petitioner has not remitted any of the assessed tax, including interest and penalty, to Respondent. Petitioner has not identified on its federal tax return the noncollection of the sales tax from the purchaser as a bad debt. Sales tax is part of the total sale price for an item. Respondent considers the sales tax as collectable by a seller in the same manner as any other debt owed by a purchaser to a seller. A retail dealer, who is also a seller, is considered to be an agent for the State in the collection of sales tax. The burden of collecting the sales tax is placed upon the retail dealer by Respondent. Some of Respondent's employees have been sympathetic to Petitioner's tax assessment matter. However, none of the employees indicated to or advised Petitioner that Respondent was or is in error.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order affirming the assessment of sales tax against High-Tech Yacht & Ship, Inc. in the amount of $7,052.61, plus interest and penalty. DONE AND ENTERED this 7th day of August 1996, in Tallahassee, Leon County, Florida. ERROL H. POWELL, 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 7th day of August 1996.
The Issue The issue is whether Petitioners are liable for the sales and use tax audit assessment and charter transit system surtax audit assessment, as reflected in Respondent's Notices of Reconsideration dated March 17, 1998.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: From 1988 through 1993, Petitioner, Dane W. Lucas (Lucas), operated the Annabelle Lee, a cruise boat, under the name of River Entertainment. On January 1, 1994, Lucas incorporated his business under the name of River Cruises, Inc. (the corporation), which is also a Petitioner in this cause. In 1996, Respondent, Department of Revenue (DOR), conducted an audit of the records of both Petitioners to determine whether all sales and use taxes and charter transit system surtaxes had been properly reported and paid. As a result of the audit, DOR issued two proposed assessments dated January 28, 1997, against Lucas individually and two assessments dated July 22, 1997, against the corporation. However, the latter two assessments reflect the combined liability of both Lucas individually as well as the corporation and cover the five-year audit period from March 1, 1990, through February 28, 1995. After a protest letter was filed by Petitioners, DOR issued two Notices of Reconsideration on March 17, 1998. As to Lucas individually, the Notice of Reconsideration reflects that as of March 11, 1998, he owed $44,083.56 for sales and use taxes, with interest to accrue from that date at the rate of $7.26 per day. It further asserted that he owed $3,290.35 in charter transit system surtaxes as of the same date, with interest to accrue at the rate of $.058 per day. As to the corporation, the Notice of Reconsideration reflects that as of March 11, 1998, it was liable for $17,906.53, with interest to accrue as of March 11, 1998, at the rate of $2.97 per day. Also, it asserts that as of March 11, 1998, the corporation was liable for $5,839.94 for charter transit system surtaxes, with interest to accrue at the rate of $0.25 per day. On April 24, 1998, Petitioners remitted a check in the amount of $9,626.92, which represented what they believed was the proper tax assessment. As to the remaining portion, they deny that any moneys are owed; alternatively, they have requested that the amounts be compromised on the basis that they have no ability to pay the amount claimed by DOR.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Revenue enter a final order sustaining its original assessment against Petitioner. DONE AND ENTERED this 12th day of July, 1999, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 12th day of July, 1999. COPIES FURNISHED: Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Eric J. Taylor, Esquire Department of Legal Affairs 28 West Central Boulevard, Suite 310 Orlando, Florida 32801 Dane W. Lucas 1511 Montana Avenue Jacksonville, Florida 32207-8642 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue The issue in this case is whether a policy of Respondent prohibiting Respondent’s employees from engaging in preparation of federal income tax returns for profit during off-hours constitutes a rule subject to promulgation requirements of Chapter 120, Florida Statutes.
Findings Of Fact Petitioners are employees of the Department of Revenue (DOR) who wish to prepare federal income tax returns. They assert they wish to prepare the returns on a pro bono basis and for hire in their non-working time for persons who are not required to file any tax returns with the State of Florida, and who are not required to pay court-ordered payments of child support. Each of the Petitioners is employed with the Respondent as a Tax Auditor II, III, or IV, and each is a Career Service employee with permanent status. Petitioners’ primary work function for the Respondent entails auditing State tax returns filed with DOR by business entities. Victor Novoa holds a bachelors degree in finance, and has 20 years experience working in the accounting field, including nine years auditing experience with the Respondent. Ana Socarras has a bachelor’s degree in the accounting field, and has been employed with the Respondent as an auditor since 1994. She has 15 years experience working in the accounting field. Enrique Altuzarra is a licensed Certified Public Accountant. He has more than 25 years experience in the area of accounting and auditing. Lander Carn holds a master’s degree in taxation, is a licensed Certified Public Accountant, and has 15 years experience in the accounting and auditing fields. Petitioners became aware, following their employment by Respondent, of Respondent’s policy prohibiting its employees from preparation of federal income tax returns for compensation during their non-working time. Respondent’s policy has been consistently disseminated to employees through group meetings with employees and in memoranda circulated by management to employees. Pro bono preparation of federal tax returns is permitted in some situations. Respondent’s policy is expressed also in Respondent’s “Code of Conduct” which is published to all employees. The policy provides: (2) Outside Preparation of Tax Returns and Other Forms Preparation of tax returns and other forms required by the Department of Revenue or the Internal Revenue Service, whether compensated or uncompensated, for persons other than family members is not permitted. Respondent also states the policy in its auditor’s manual in the following language: The Department has a policy specifically prohibiting all employees from preparing any state or federal tax returns, reports, declarations or documents, or otherwise [sic]engage in accounting, use, analysis or preparation of any financial records for consideration, or [sic] sign such tax document for compensation, gift, or favor. Respondent’s policy has found expression in Respondent’s official writings, monthly newsletter to employees, and memoranda addressed to employees and management. Statements of the policy have been systematically communicated to agency personnel with the intent and effect of prohibiting employee preparation of federal tax returns for compensation in the course of secondary employment and implemented with the direct and consistent effect of law. Respondent’s Code of Conduct literally prohibits any exception to the policy prohibiting participation by an employee in preparation of federal tax returns for pay during off-duty hours for anyone other than family members. Respondent’s Employee Handbook also makes it clear that any employee engaging in such conduct, absent specific approval, faces disciplinary action “up to and including dismissal.” As established by testimony of Glenn Bedonie, an employee of Respondent in various, highly responsible, management positions, and William P. Fritchman, a participant in development of the policy and Respondent’s former chief of personnel for 23 years, there has been no instance in which any employee has ever been permitted to prepare federal income tax returns “for hire” during off-duty time. As stipulated by the parties, Respondent has not adopted, in compliance with Section 120.54, Florida Statutes, the policy of refusing to allow employees to prepare federal tax returns for hire in secondary employment. Petitioners do not contemplate and do not desire to prepare federal tax returns in circumstances that would present a conflict of interest with their employment with Respondent. They do not seek to prepare tax returns for individuals who own a business, who are required to file state returns, and who are subject to audit by Respondent. Confidential tax information possessed by Respondent is not available to the Petitioners or other auditors within Respondent’s employment. Such information must be requested from a Computer Audit Analyst or a Senior Tax specialist on a specific taxpayer which the particular auditor has been assigned to audit. If deemed appropriate, the information may be made available to the auditor. Similarly, confidential tax information obtained by Respondent from the Internal Revenue Service (IRS) is adequately safeguarded from ready abuse by employees by requiring an auditor to justify the need for such information to a series of supervisory personnel. Respondent presented no creditable or persuasive evidence that it would be impractical or unfeasible to enact its present policy in compliance with requirements of Chapter 120, Florida Statutes.
Findings Of Fact At the time and place scheduled for final hearing, nobody appeared on behalf of petitioner and no evidence was adduced.
Recommendation It is, accordingly recommended that respondent dismiss petitioner's request for a formal administrative proceeding. RECOMMENDED this 19th day of November, 1991, in Tallahassee, Florida. ROBERT T. BENTON, II 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 19th day of November, 1991. COPIES FURNISHED: J. Thomas Herndon, Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100 Vicki Weber, General Counsel Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Kevin J. O'Donnell, Esquire Department of Legal Affairs Tax Section, The Capitol Tallahassee, FL 32399-1050 Louise J. Allen, Esquire Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A. 150 W. Flagler Street, Suite 2200 Miami, FL 33130
The Issue Whether Respondent Office of the Comptroller should refund to Petitioner taxes paid pursuant to Chapter 199 and 201, Florida Statutes.
Findings Of Fact The parties stipulated to the facts set forth in paragraphs 1 through 9 of the Petition herein, as follows: The agencies affected in this action are the Department of Revenue, Tallahassee, Florida, and the Office of the Comptroller, Tallahassee, Florida. The Petitioner is Zimmer Homes Corporation, 777 Southwest 12th Avenue, Pompano Beach, Florida. Zimmer Homes Corporation, on or about December 12, 1974, conveyed a piece of property described as follows: All of that part of the Southeast quarter of Section 10, Township 44 South, Range 42 East, of Palm Beach County, Florida, lying North of the North right-of-way (r/w) line of Forest Hill Boulevard, less the West 40 feet thereof for road right-of-way and less the East 40 feet thereof. The sellers paid the necessary excise tax on documents and intangible tax as follows: a. $11,250.00 total consideration $3,750,000.00 of Section Florida 201.02(1) Statutes b. 3,900.00 based upon note of $2,600,000.00 Section Florida 201.07 Statutes c. 1,542.00 based upon note of $1,027,906.00 Section Florida 201.07 Statutes d. 4,125.00 based upon total consider- ation of $3,750,000.00 Section Florida 201.021(1) Statutes e. 5,200.00 based upon mortgage secur- ing note of $2,600,000.00 Section Florida 199.032(2) Statutes f. 2,055.81 based upon mortgage secur- ing note of $1,027,906.00 Section Florida 199.032(2) Statutes A lawsuit was commenced for reasons not relevant to this Petition and the Circuit Court of the Fifteenth Judicial Circuit of Florida entered a Final Judgment on July 12, 1978, a copy of which is attached hereto as Exhibit "A". In the Final Judgment the Court determined that the Purchasers had a right to rescind the transaction. The Court ordered that all obligations of the parties arising out of the Purchase and Sale Agreement were cancelled and that the Purchasers were entitled to a sum of money in order to restore the parties to their original positions. (Petitioner's Exhibit 1). On March 22, 1979, pursuant to Section 215.26, Florida Statutes, Zimmer Homes Corporation applied for a refund of the excise tax on the documents in an amount as specified in Paragraphs 4(a), 4(b), 4(c) and 4(d), above. (Petitioner's Exhibit 4). On April 3, 1979, pursuant to Section 199.252, Florida Statutes, and Section 215.26, Florida Statutes, Zimmer Homes Corporation applied for a refund of the intangible tax paid in an amount as specified in Paragraphs 4(e) and 4(f) above. (Petitioner's Exhibit 4). According to a letter from the Office of the Comptroller dated April 23, 1979, a copy of which is attached hereto as Exhibit "B", the Office of the Comptroller indicated that they concurred with the findings and conclusions of the Department of Revenue in denying the refund request on the excise tax on documents as specified in paragraph 6 above. As grounds therefore, it was indicated that the refund requests were denied because the statute of limitations under Section 215.26, Florida Statutes, barred the request for refund. (Petitioner's Exhibit 3). By letter dated April 26, 1979, a copy of which is attached hereto as Exhibit "C", the Office of the Comptroller indicated that they concurred with the findings of the Department of Revenue on denying the refund for intangible taxes which had been paid as specified above. As grounds therefore it was indicated that the request was denied because the applicable statute of limitations had run. (Petitioner's Exhibit 2).
Recommendation That Petitioner's application for refund of tax paid under Chapters 199 and 201, Florida Statutes, be approved. DONE AND ENTERED this 6th day of September 1979 in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of September 1979. COPIES FURNISHED: Richard B. Burk, Esquire Scott, Burk, Royce and Harris 450 Royal Palm Way Palm Beach, Florida 33480 Barbara Harmon, Esquire Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32301 John D. Moriarty, Esquire Department of Revenue Room 104, Carlton Building Tallahassee, Florida 32301 Honorable Gerald A. Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32301
