The Issue Whether the Respondents purchased cigarettes and alcoholic beverages from other than licensed distributors contrary to statute.
Findings Of Fact On August 21, 2002, Cynthia Britt and Sabrina Maxwell, agents of the Petitioner, conducted a routine inspection of the Respondents’ convenience store. At the beginning of the inspection, Britt and Maxwell identified themselves as agents of the Petitioner and asked for access to the area behind the counter and to see Respondents' license. When Agent Britt moved behind the counter, she saw several packages of cigarettes in the overhead storage display that did not bear the State of Florida tax stamp. Agent Britt seized these packages of cigarettes. Agent Britt identified 55 packages of cigarettes she seized as Petitioner’s Composite Exhibit D. The trier of fact examined these cigarettes and returned the exhibit to the Petitioner to secure them as part of the record. Agent Britt asked Ms. Kemp for invoices for the purchase of their cigarettes. These receipts were produced and they were also seized. Agent Britt identified these receipts as Exhibit E, the receipts for purchases from unlicensed distributors, and Exhibit F, the receipts from licensed distributors.1 The receipts reflected that the Respondents had purchased cigarettes for resale from other retailers and from the Navy Exchange. The cigarettes that did not have tax stamps were purchased from the Navy Exchange. Ms. Kemp indicated to the agents that cigarettes were purchased from these retailers and the Navy Exchange because the wholesalers required that they purchase too many, or charged them so much for small quantities that they could buy them more cheaply at retail. In the process of reviewing the receipts for the purchase of the cigarettes, the Agent Maxwell discovered six receipts for the purchase of alcoholic beverages. She conducted a search of the premises and found beverages corresponding to the brands purchased on the receipts; however, there was no way to ascertain whether these beverages were the actual ones purchased.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Petitioner destroy the cigarettes seized and impose a fine of $250 on the Respondents for violation of Section 210.18(1), Florida Statutes; and impose a fine of $250 for violation of Section 210.15(1)(h), Florida Statutes. It is also recommended that the alleged violations of Section 561.14(3), Florida Statutes, be dismissed. DONE AND ENTERED this 2nd day of July, 2002, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN 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 2nd day of July, 2002.
The Issue The issue in this case is whether Petitioner should suspend or revoke Respondent's alcoholic beverage license, pursuant to Section 561.29(1), Florida Statutes (1995),1 and Florida Administrative Rule 61A-2.022,2 because Respondent operated the licensed premises in a manner that was a public nuisance and permitted others to violate state criminal laws prohibiting the possession and use of controlled substances, or both.
Findings Of Fact Petitioner is the state agency responsible for regulating alcoholic beverage licenses. Respondent holds alcoholic beverage license number 15-02695, series 2-COP for the Red Top Lounge located at 2804 Kennedy Street, Mims, Florida (the "licensed premises"). Respondent is the sole proprietor of the licensed premises. On February 13, 1997, two of Petitioner's special agents ("SAS") and other undercover law enforcement officers entered the licensed premises as part of an ongoing narcotics investigation. Several patrons of the licensed premises were consuming marijuana and rolling marijuana cigars in plain view of Respondent's employees and managers. Respondent was not present at the time. On February 28, 1997, the same SAS and law enforcement officers returned to the licensed premises incident to the same investigation. The SAS purchased a small package of marijuana for $10 from a patron who identified himself as "Black." On March 14, 1997, the same SAS and law enforcement officers returned to the licensed premises incident to the same investigation. After midnight on March 15, 1997, the SAS purchased a small package of marijuana for $10 from a patron who identified himself as "Marty." On March 15, 1997, the same SAS and law enforcement officers returned to the licensed premises, incident to the same investigation. After midnight on March 16, 1997, the SAS purchased a small package of marijuana for $10 from an unknown patron. The disc jockey routinely encouraged patrons over the public address system to smoke marijuana inside the licensed premises. On April 25, 1997, one of the same SAS, another SAS, and other law enforcement officers returned to the licensed premises incident to the same investigation. The SAS purchased a small package of marijuana for $10 from a patron who identified himself as "Kenny Harvey." On April 26, 1997, the same SAS and law enforcement officers involved in the investigation on the previous day returned to the licensed premises. After midnight on April 27, 1997, the SAS purchased a small package of cocaine for $10 from Kenny Harvey. On May 2, 1997, two SAS previously involved in the investigation and other law enforcement officers returned to the licensed premises. After midnight on May 3, 1997, the SAS purchased a small package of cocaine for $10 from Kenny Harvey. After midnight on May 3, 1997, two SAS previously involved in the investigation and other law enforcement officers returned to the licensed premises. The SAS purchased a small package of marijuana for $10 from a patron who identified himself as "Roy." After the previous transaction on May 3, 1997, the SAS purchased a small package of cocaine for $10 from Kenny Harvey. After midnight on May 4, 1997, the SAS purchased a small package of marijuana for $10 from an unknown patron. Subsequent to each purchase of marijuana by the SAS, the items purchased were chemically analyzed in a laboratory and found to be marijuana. Subsequent to each purchase of cocaine by the SAS, the items purchased were chemically analyzed in a laboratory and found to be cocaine. The SAS involved in the investigation have extensive experience and training in narcotics investigation and detection of controlled substances. They have conducted numerous undercover investigations. Each agent has personal knowledge of the appearance and smell of marijuana. The open, flagrant, and notorious drug activity on the licensed premises was the worst each agent had observed in his career. Each time the SAS entered the licensed premises, underage patrons consumed alcoholic beverages. More than half of the patrons present on each occasion consumed and rolled marijuana cigars. The second-hand marijuana smoke inside the premises was so great that the SAS were concerned for their personal health and the affect the second-hand smoke could have on each agent if subjected to a random drug test, pursuant to agency policy. The purchase, consumption, and use of marijuana occurred in plain view of Respondent's employees and managers. Respondent's managers and employees never attempted to prohibit the illegal drug activity. Respondent was never present on the licensed premises. She was caring for her daughter who died on April 2, 1997. During the time she was caring for daughter, Respondent relinquished management and control of the licensed premises to her granddaughter and her boyfriend.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order revoking Respondent's alcohol and tobacco license. DONE AND ENTERED this 7th day of August, 1997, in Tallahassee, Leon County, 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 7th day of August, 1997.
Findings Of Fact Forrest and Charles Joseph, trading as C. Joseph Grocery, hold alcoholic beverage license No. 26-28, Series 2- APS. The licensed premises is located at 3323 Evergreen Avenue, Jacksonville, Florida. The charges herein arose from a public assistance fraud investigation conducted by the State Attorney, Fourth Judicial Circuit. "Confidential informants" were utilized on February 17 and 26, 1981, to exchange United States Department of Agriculture food stamps for cash with the owners or employees of C. Joseph Grocery. The transactions took place on the licensed premises. On February 17, 1981, a confidential informant, Dennis Rawlins, entered the licensed premises with 3265 in food stamps which he turned over to Respondents' employee, Jordan. Upon receiving the food stamps, Jordan approached Charles Joseph, Jr., who was then supervising the store. Joseph gave Jordan $150 for the stamps. Jordan kept $50 for himself and gave the remaining $100 to Rawlins in exchange for the food-stamps. On February 26, 1981, a confidential informant, Ronald Wampler, entered the licensed premises with $300 in food stamps which he traded for $100 cash. Wampler received the cash in exchange for the food stamps from a person he knew from previous visits to the store as Charles Joseph, Sr. Wampler represented the stamps as stolen property to this buyer.
Recommendation From the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondents guilty of allegations contained in Counts One and Two of the Administrative Complaint and suspend alcoholic beverage license No. 26-28, Series 2-APS, for a period of ninety (90) days. DONE AND ENTERED this 7th day of April, 1982, in Tallahassee, Florida. R. T. CARPENTER, 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 7th day of April, 1982. COPIES FURNISHED: James N. Watson, Jr., Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Lacy Mahon, Jr., Esquire 350 East Adams Street Jacksonville, Florida 32202 Gary Rutledge, Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Charles A. Nuzum, Director Division of Alcoholic Beverages and Tobacco 725 South Bronough Street Tallahassee, Florida 32301
The Issue Whether Respondent has fostered, condoned, and/or negligently overlooked trafficking in and use of illegal narcotics and controlled substances on or about the licensed premises. Whether Respondent has failed to exercise due diligence in supervising his employees and managing his licensed premises so as to prevent the illegal trafficking and use of narcotics on the licensed premises. Whether Respondent may transfer his alcoholic beverage license to a qualified licensee or if it should be permanently revoked.
Findings Of Fact Respondent is the holder of alcoholic beverage license number 69-0876, series 2-COP, for a licensed premises known as Stormy Norman's, which is located at 3006 South U.S. 17- 92, Casselberry, Seminole County, Florida. On March 13, 1990, five patrons were observed passing and smoking a marijuana cigarette, just outside the rear door on the "patio". The "patio" is a fenced-in, partially covered area, which contains picnic tables and is located immediately behind the licensed premises. The patio is primarily accessible through the rear door of the licensed premises, which is usually left open during business hours. However, access could be made to the patio through the back of the premises onto the patio without knowledge of the Respondent as to who was there or what activity was going on. On March 13, 1990, a patron known as "Billy" sold marijuana to two different patrons on the patio. Subsequently, other patrons were observed dividing up marijuana into plastic bags, rolling "joints" and smoking marijuana on the patio. During this time, the rear door of the licensed premises was open and the smoke from the marijuana cigarettes was easily detectable inside the premises. Also, inside the licenses premises, several patrons openly discussed the purchase and consumption of controlled substances in the presence of employees. On March 14, 1990, a patron known as "Kelly" sold a plastic bag containing marijuana for the sum of $35.00. The sale was discussed in the presence of the bartender known as "Gordie". After this transaction, Kelly offered to sell large quantities of cocaine to Petitioner's investigators. On March 15, 1990, while Respondent was on the premises, several patrons rolled "joints", manufactured a "pipe" and smoked marijuana on the patio. These patrons would freely enter and depart the licensed premises from the patio and did nothing to conceal their activities. Inside the licensed premises, the patrons openly discussed the use of controlled substances and extended invitations to other patrons to consume the same on the patio. In addition, Kelly openly sold a baggy of marijuana to a patron, in plain view and in the presence of several other patrons and bartender Gordie. On March 20, 1990, several patrons were rolling and smoking marijuana cigarettes on the patio. A patron known as "Rabbit" sold and delivered marijuana to another patron known as "Stan". During this time, Respondent was on the licensed premises and was in a position to detect the use of controlled substances. On March 21, 1990, a patron Billy gave Petitioner's investigator a muscle relaxant in exchange for a beer, while in the presence of bartender Gordie at the licensed premises. During this time, Respondent was playing darts near the rear door of the licensed premises and was observed looking out the rear door and watching patrons smoke marijuana. While doing so, several patrons were heard to yell "He's out back doing drugs," in response to bartender Gordie's inquiry about another patron. On March 22, 1990, Petitioner's investigators made two controlled buys of marijuana while on the patio. One of the sellers was Respondent's day manager, known as "Little Dave". On the same date, while Respondent was on the licensed premises, several patrons were observed smoking marijuana on the patio, and other patrons were observed in possession of plastic bags containing marijuana inside the licensed premises. On March 28, 1990, Petitioner's investigator made a controlled buy of marijuana from Respondent's day manager, Little Dave. Just prior to this sale, the bartender known as "Cookie" was asked to make change for a marijuana purchase. In response thereto, Cookie smiled and freely made change for a twenty dollar bill. On this occasion, patrons openly smoked marijuana on the patio, the odor of which was easily detectable inside the licensed premises. On April 4, 1990, patrons were smoking marijuana on the patio, and the bartender Cookie had open conversations regarding the use of cocaine. On April 10, 1990, patron Stan sold marijuana on the patio to two patrons. On April 12, 1990, a patron known as "Fred" approached the bar to purchase a beer. While at the bar, Fred openly displayed two small white pills and a small quantity of marijuana on the bar counter in the presence of bartender Gordie. Subsequently, Fred went to the patio, where he was observed selling white pills to patrons, which were later determined to be "white- crosses". On April 18, 1990, several patrons were observed rolling and smoking marijuana cigarettes. On April 19, 1990, Respondent's day manager, Little Dave, sold a small plastic bag containing marijuana to Petitioner's investigator for $35 while on the patio. Throughout this transaction, there was a young boy, approximately 8 years of age, playing on the patio. Also, bartender Cookie went to the patio on three occasions while on duty to smoke a marijuana cigarette. On one occasion she was observed blowing marijuana smoke at bartender Gordie's face. During this general time period, Respondent was on the patio while several patrons were smoking marijuana. On April 24, 1990, Petitioner's investigator made a purchase of a small bag of marijuana in plain view of the bar while on the licensed premises. On April 25, 1990, several patrons were observed smoking marijuana on the patio of the licensed premises. At no time throughout the entire investigation did the licensee or any of his employees do or say anything to prevent employees from using or selling controlled substances on the licensed premises. The Respondent did not participate in the sale of any controlled substances or drugs, nor did he witness the sale of drugs at any time during the course of the investigation. Respondent was aware of customers smoking marijuana on the patio on several occasions and did not evict them from the premises. Respondent did ask Little Dave to leave the property on divers occasions when it was discovered that he was selling marijuana, but he was allowed to return to the premises. Respondent was taken advantage of by his friends and customers and was not aware that drug use was so prevalent, although he did know that at times some marijuana smoking was going on. Respondent seeks to transfer his beverage license, as provided by Section 561.3 2, Florida Statutes, to Elizabeth Ann Allen of Casselberry, Florida, who would qualify for a temporary license upon application for transfer as provided in Section 561.331, Florida Statutes.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent's Alcoholic Beverage License Number 69- 0876, Series 2-COP be REVOKED. DONE AND ENTERED this 4th day of September, 1990, in Tallahassee, Leon County, Florida. DANIEL N. KILBRIDE 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 4 day of September, 1990. COPIES FURNISHED: Thomas A. Klein Assistant General Counsel Department of Business Regulation The Johns Building 725 S. Bronough Street Tallahassee, FL 32399-1000 Mark E. NeJame, Esquire 1520 E. Amelia Street Orlando, FL 32803 Leonard Ivey Director, DABT Department of Business Regulation The Johns Building 725 S. Bronough Street Tallahassee, FL 32399-1000 Joseph A. Sole Secretary Department of Business Regulation The Johns Building 725 S. Bronough Street Tallahassee, FL 32399-1000
The Issue Whether or not on or about August 10, 1978, the Respondent, Brian H. Strickland, a wholesale dealer, handling, transporting or possessing cigarettes for sale or distribution within the State, failed to file with the Division of Alcoholic Beverages and Tobacco all reports on or before the tenth day of the month, contrary to Subsection 210.09(2), Florida Statutes. Whether or not on or about September 10, 1978, the Respondent, Brian H. Strickland, a wholesale dealer, handling, transporting or possessing cigarettes for sale or distribution within the State, failed to file with the Division of Alcoholic Beverages and Tobacco all reports on or before the tenth day of the month, contrary to Subsection 210.09(2), Florida Statutes. Whether or not on or about October 10, 1978, the Respondent, Brian H. Strickland, a wholesale dealer, handling, transporting or possessing cigarettes for sale or distribution within the State, failed to file with the Division of Alcoholic Beverages and Tobacco all reports on or before the tenth day of the month, contrary to Subsection 210.09(2), Florida Statutes.
Findings Of Fact This cause comes on for consideration based upon a Notice to Show Cause filed by the Petitioner, State of Florida, Division of Alcoholic Beverages and Tobacco, against Brian H. Strickland, who trades as Smoke Rise Vending Service, located at 8454 Royalwood Drive, Jacksonville, Florida. The purpose of the Notice to Show Cause was for taking action against the permit No. 26-128 CWD, issued to the Respondent, Brian H. Strickland, as permittee, by the State of Florida, Division of Alcoholic Beverages and Tobacco. The allegations contained in the Notice to Show Cause are these allegations as set forth in the issue statement of this Recommended Order. At the beginning of the hearing, the parties, by an oral stipulation, agreed that the Respondent, Brian H. Strickland, no longer held the permit No. 26-128 CWD after October 31, 1978. In view of this fact, the threshold question arises concerning the jurisdiction of the Petitioner to take further action against the Respondent, Brian H. Strickland, when in fact this Respondent no longer holds a permit issued by the Petitioner. Section 210.16, Florida Statutes, establishes the right of the Petitioner to take disciplinary action against permitees. The language of that provision states: "210.16 Revocation or suspension of permit.-- The Division of Alcoholic Beverages and Tobacco is given full power and authority upon sufficient cause appearing of the violation of any of the provisions of this chapter by any wholesale dealer receiving a permit to engage in business under this chapter to revoke the permit of such wholesale dealer. The division may suspend for a reasonable period of time, in its discretion, the permits of wholesale dealers issued under the provisions of this chapter for the same causes and under the same limitations as is authorized hereunder to revoke the permits of such wholesale dealers. No wholesale dealer whose permit for any place of business has been revoked shall engage in business under this chapter at such place of business after such revocation until a new permit is issued to him. No wholesale dealer whose permit for any place of business has been revoked shall be permitted to have said permit renewed, or to obtain an additional cigarette permit for any other place of busi- ness, for a period of 6 months after the date such revocation becomes final. In lieu of the suspension or revocation of permits, the Division of Alcoholic Beverages and Tobacco may impose civil penalties against holders of permits for violations of this chap- ter or rules or regulations relating thereto. No civil penalty so imposed shall exceed $1,000 for each offense, and all amounts collected shall be deposited with the State Treasurer to the credit of the General Revenue Fund. If the holder of the permit fails to pay the civil penalty, his permit shall be suspended for such period of tins as the division may specify. An analysis of these provisions leads to the conclusion that the Petitioner may not take action against a Respondent, unless that Respondent is currently the "holder" of a permit. Therefore, in view of the fact that Strickland's permit has not been effective since October 31, 1978, the Petitioner has no right to seek further action against the permit either in the form of revocation, suspension or fine.
Recommendation It is recommended that the case reported as Division of Alcoholic Beverages and Tobacco, No. 27011-A, which has been filed against the Respondent, Brian H. Strickland, t/a Smoke Rise Vending Service, be DISMISSED. DONE AND ENTERED this 13th day of April, 1979, in Tallahassee, Florida. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings Room 101, Collins Building 530 Carlton Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Francis Bayley, Esquire Staff Attorney Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Brian H. Strickland t/a Smoke Rise Vending Service 8454 Royalwood Drive Jacksonville, Florida J. M. Ogonowski Richard P. Daniel State Building, Suite 514 111 East Coast Line Drive Jacksonville, Florida
The Issue Whether or not on or about the 17th day of December, 1975, on the licensed premises of the Respondent; its agent, servant or employee, one Fonda Joyce Ward, did unlawfully have in her actual or constructive possession a controlled substance (marijuana), in violation of Section 893.13(1)(e), Florida Statutes, thereby causing the Respondent to violate Section 561.29(1)(a), Florida Statutes.
Findings Of Fact It was stipulated and agreed that the Respondent, Riviera Lounge, Inc., trading as Riviera Lounge, 10 Julia Street, Jacksonville, Florida, is the holder of a beverage license #26-233, Class 4-COP, and held such license on December 17, 1975. On December 17, 1975, Fonda Joyce Ward was employed at the licensed premises and came to work on that date. When she arrived at work she had with her a brown paper bag which contained approximately one ounce of a controlled substance known as marijuana, a toothbrush, a bar of soap, and cigarette rolling papers. This large bag and contents was placed behind the bar and the witness commenced her employment, without further attention to the large paper bag and contents. Subsequent to the time that Fonda Joyce Ward came on her shift, agents of the State of Florida, Division of Beverage, came to the licensed premises to make a routine inspection of the licensed premises, to include the check of inventory and records. Agent K. A. Boyd discovered the paper bag and contents behind the bar. The bag was partially open and Agent Boyd looked into the bag, not for purposes of discovering the contraband but with the expectation of finding invoices or receipts. He discovered the marijuana and that substance was subsequently turned over to a chemist who analysed it and concluded that it was marijuana. Ms. Ward explained that she had been in a hurry and quickly taken the paper bag containing the marijuana out of her car. (The paper bag and contents are Petitioner's Exhibit #1 admitted into evidence and are left in the control and custody of the Division of Beverage in their Jacksonville office located at 1934 Beachway Road, Jacksonville, Florida, with the consent of the Respondent.) At the time of Agent Boyd's discovery, Fonda Joyce Ward was not in the immediate vicinity of the marijuana and the other employee in the bar, identified as Mr. Davis, was not in close proximity of the marijuana. There is no evidence to indicate that Fonda Joyce Ward or Davis were smoking the marijuana. The president of the corporation, Mr. Jeffrey Cohen, was not on the licensed premises on the night of the occurrence, but subsequently told the beverage officers that he knew that Fonda Joyce Ward smoked marijuana but didn't know that she brought it on the premises. In his testimony at the hearing, Mr. Cohen indicated that he knew she had used marijuana but that he doesn't allow marijuana on his premises and that there had not been any prior problem of this sort with the employee Ms. Ward. Furthermore, he said he had no reason to believe that she would use the marijuana on the premises. Fonda Joyce Ward in her testimony indicated that she had discussed the use of marijuana with Cohen before and he had told her not to bring it into the bar. There was additional testimony that the use of the controlled substance, marijuana, is not allowed in the bar and thence persons who try to use it are removed. Fonda Joyce Ward is still employed at the licensed premises.
Recommendation It is recommended that the Director of the Division of Beverage allow the Respondent, Riviera Lounge, Inc. to go without further answer to this charge. DONE and ENTERED this 23rd day of August, 1976, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Charles F. Tunnicliff, Esquire Department of Business Regulation The Johns Building Tallahassee, Florida 32304 Robert M. Smith, Jr., Esquire 1904 Gulf Life Tower Jacksonville, Florida 32207
The Issue The issue in this case is whether Respondent, Department of Business and Professional Regulation, Division of Alcoholic Beverages & Tobacco (the “Department”), is operating under an unadopted rule in its application of sections 210.276 and 210.30, Florida Statutes, which impose a surcharge and an excise tax, respectively, on tobacco products other than cigarettes or cigars, commonly known as other tobacco products (“OTP”), by calculating “wholesale sales price” as the full invoice price charged by OTP manufacturers to distributors, including any federal excise taxes (“FET”) and shipping charges reflected in the invoice price.
Findings Of Fact Each of the Petitioners is a licensed business in the State of Florida engaged in the business of distributing tobacco products. The Department is the government agency responsible for, inter alia, administering and enforcing chapter 210, Florida Statutes, related to the taxation of tobacco products other than cigarettes and cigars. By way of general background, tobacco products are taxed at both the federal and state levels. The first company to produce or import the tobacco products into the United States must pay the federal government a federal excise tax which is based on weight. 26 U.S.C. § 5702. Similarly, when the tobacco is produced or brought into Florida, Florida OTP tax applies at the rate of 85 percent of the “wholesale sales price.” Technically, Florida OTP tax has two components: an excise tax and surcharge as defined by sections 210.30 and 210.276. Section 210.30 was first enacted in 1985; it imposes a 25-percent tax on OTP. Section 210.276 was enacted in 2009; it levies a 60-percent surcharge on OTP. For convenience, the excise tax and surcharge will be referred to collectively as the OTP tax. The phrase “wholesale sales price” is defined as “the established price for which a manufacturer sells a tobacco product to a distributor, exclusive of any diminution by volume or other discounts.” § 210.25, Fla. Stat. Section 210.25(11) defines "tobacco products" as follows: [L]oose tobacco suitable for smoking; snuff; snuff flour; cavendish; plug and twist tobacco; fine cuts and other chewing tobaccos; shorts; refuse scraps; clippings, cuttings, and sweepings of tobacco, and other kinds and forms of tobacco prepared in such manner as to be suitable for chewing, but ‘tobacco products’ does not include cigarettes . . . or cigars. In 2012, the Second DCA interpreted “wholesale sales price” to apply to the price at which the manufacturer sells tobacco products to the distributor. Micjo, 78 So. 3d at 127. In that case, in which the Second DCA described the dispute as “not complicated,” the Court determined that OTP tax applies only to the charge for tobacco and not to other charges to bring the tobacco to market, such as FET and shipping charges. Id. at 126-127. There are no relevant adopted rules in which the Department has interpreted “wholesale sales price.” State agencies are required to follow the Courts’ interpretations of statutes. See Costarell v. Fla. Unemplmt. App. Comm’n, 916 So. 2d 778, 782 (Fla. 2005). Subsequent to the ruling in Micjo, the Department followed the ruling set forth by the Second DCA and stopped imposing a tax on distributors based upon on FET or shipping charges. Beginning in 2013, the Department commenced enforcing a new “policy” interpreting Micjo to exclude FET and shipping charges only when such charges were separately stated. As a result of this policy, the Department paid some refunds and did not assess OTP tax if the FET and shipping charges were separately stated. The Department began relying upon a new policy in mid- 2013 to the effect that if the domestic manufacturer of the tobacco paid FET when it produced the product, Micjo did not apply and the phrase “wholesale sales price” included non- tobacco charges, such as FET and shipping charges. This was due to the fact that the manufacturer would pass down the cost of the FET and shipping charges to the distributor as part of the “wholesale sales price.” As for foreign manufacturers who did not pay FET, Micjo operated to exclude FET and shipping charges from the taxable base. That is because the distributor who purchased the tobacco products would be responsible for paying the FET separately; it would not be part of the “wholesale sales price.” In other words, the Department’s policy was that “wholesale sales price,” as interpreted by Micjo, applies differently depending on whether the tobacco is manufactured foreign or domestically. The Petitioners seek to invalidate this non-rule policy. The Department confuses wholesale sales price (i.e., “the established price for which a manufacturer sells a tobacco product to a distributor”) with the invoice amount, which may or may not include something other than the price for the tobacco product. The Micjo decision clearly delineates the cost of the tobacco from “the various other distributor invoice costs for reimbursement of FET, shipping costs, and other charges [which are] not part of tobacco.” Micjo, 78 So. 3d at 127. After the Micjo ruling, the Department determined that it would not include FET and shipping charges in its determination of “wholesale sales price” for purposes of calculating OTP taxes. It did not promulgate a rule to that effect, but began nonetheless using the policy uniformly. In early October 2013, when the Department decided to rescind its policy in favor of a new statement of general applicability, it again failed to promulgate the policy as a rule. Instead, it unilaterally began to impose the new policy on all distributors of OTP in the state. It is clear from the record that the current policy is applicable to all distributors and that the policy delineates which distributors must pay taxes based on total invoice amounts, including FET and shipping charges, and which distributors do not have to pay taxes based on those items. It is not clear from the record how the domestic versus foreign manufacturer dynamic was argued to the Micjo Court or in the case from which the appeal arose. Micjo specifically addressed the domestic distributors, but did not make a distinction between domestic and foreign manufacturers. To the extent the Department’s position in the instant case seeks to revise the facts of Micjo, that argument is rejected.
The Issue The issue in this case is whether Respondent failed to pay tax surcharges, penalties, and interest owed on the sale of cigarettes, and, if so, the amount that is currently due and owing.
Findings Of Fact The Department is the state agency responsible for monitoring the sale of tobacco products and for assuring that all businesses selling such products pay the requisite surcharges on each pack of cigarettes sold. Respondent is a convenience store which is licensed to sell tobacco products. The store also sells alcoholic beverages, food items, and miscellaneous other products. The sales tax associated with the sale of tobacco products (only) is at issue in this proceeding. The 2009 Florida Legislature enacted legislation imposing a $1.00 per pack surcharge on each pack of cigarettes sold in this state beginning July 1, 2009. Retailers having a cigarette inventory and, as of that date, would be required to pay a "floor tax" of $1.00 per pack in their inventory. In February 2010, the Department received a letter from an anonymous source (who identified himself as "A Good Civilian (Business Owner) (Who always pays tax)[sic]." The letter had a flyer attached to it which had been distributed by Respondent. The flyer identified a number of products for which buyers could realize "[t]he lowest prices in Polk County." Included in the list of products were various tobacco items, including cigarettes. The anonymous source's letter suggested that anyone who could sell the tobacco products at those prices must be doing something illegal. Based on the allegations in the anonymous letter, the Department decided to investigate. A team was sent to one of Respondent's stores (hereinafter referred to as "Store 1") on February 18, 2010. The team did an inventory of tobacco products at Store 1. There were 2,855 packs of cigarettes at Store 1. Some of the cigarettes were in individual packs; some were still in cartons (which contain ten packs each). The cigarette packs had the requisite state stamp on them. However, most of the packs had a stamp which had been in existence prior to the change in law on July 1, 2009. The fact that most of Store 1's cigarette packs had the old stamp meant that the cigarettes had been around for a while. The inventory eventually formed the basis for an audit performed on Respondent's other store ("Store 2"). Store 2 had just recently opened and was stocked with cigarettes brought over from Store 1. There were, therefore, no invoices available at Store 2 as to the purchase of the cigarettes it had on hand. The audit process involved a determination of distributors from which Respondent purchased its cigarettes. The two primary distributors were Sam's Club and Dosal. The Department ascertained from those distributors how many packs of cigarettes Respondent had purchased over a given span of time. Sam's Club provided records seeming to indicate the purchase of 37,770 packs between February 1 and June 29, 2009; another 9,090 packs were purchased between July 4, 2009, and January 29, 2010. Dosal said 65,490 packs had been purchased between March 3 and June 23, 2009; another 17,800 were purchased between July and December 2009. An audit investigation was commenced at Store 2 on March 17, 2010. The auditors did not ascertain the actual number of packs of cigarettes on hand at the store on that date. The auditors talked with the owners of the stores (Salah Rabi and his brother, Mohammed Rabi) about their sales history. Pursuant to requests of the auditors, the owners also sent in some additional records reflecting their sale of cigarettes. In order to calculate the number of cigarette packs sold by Store 2 during a four-month period, the auditors determined how much business the store had done in all products (including non-tobacco products) for that period. Respondent gave the Department a list of daily sales on all products sold and the taxes paid on those products for the period February 2009 through January 2010. The average monthly sales amount for the store during the audit period was $25,000. However, the Department found the information provided by Respondent to be incomplete and, thus, unreliable. The auditors then assumed that 80 percent of the store's sales were for cigarettes1/ and that the average price per pack was $4.50. Using this formula, the auditors found that approximately 4,444 packs of cigarettes were sold each month, which the auditors rounded up to 4,500. Thus, for the audit period, the auditors estimated that 18,000 packs of cigarettes were sold. Neither of the auditors testified at final hearing as to the reasonableness of the formula or as to their alleged conversations with the owners. Based on their findings, the auditors concluded that Respondents owe a balance of $77,798.23. That figure was derived as follows: Total packs purchased 3/09 - 6/09 from Dosal 65,490 from Sam's 37,770 Total purchases prior to 7/1/09 103,260 Estimated monthly sales at 4,500 packs per month for four months 18,000 Total estimated inventory on 7/1/09 85,260 Floor tax due on estimated inventory $85,260 Floor tax paid $ 4,963,09 Unpaid floor tax $80,296.91 Overpayment on other tobacco product $(2,498.54) Total cigarette floor tax due $77,798.37 Missing from the evidence presented was any statement by the Department as to whether, on March 17, 2010, or any other date, there were 80,000-plus packs of cigarettes visible at the store. It seems plausible that so many packs, even if in cartons of 10 packs apiece, would be easy to identify. Respondent refutes the basic premise of the auditor's findings. Using cash register receipts (called Z Tapes) from March and May 2009 (two of the four months at issue), Respondent was able to establish a more accurate percentage of cigarette sales versus all products sold. The Z Tapes are printed out each day by way of turning a key on the cash register. The tapes print out a receipt showing the date, the number of packs of cigarettes sold, the number of food items sold, and the number of taxable items sold. According to the Z Tapes, close to 90 percent2/ of Store 2's total sales for those months were cigarette sales, i.e., a much higher percentage than used by the auditors. The evidence presented by the owners is credible and persuasive. Respondent also provided a calculation of its price per pack of cigarettes. The price depends, in part, on how much they pay the distributors for each pack or carton of cigarettes. Of its four best selling cigarettes, the following costs were determined for the period March through June 2009: Brand Cost Markup Markup% Price 305's 2.93 .06 2 2.99 Marlboro 4.66 .08 1.7 4.74 Romy 2.75 .21 7.0 2.96 Newport 4.45 .34 7.6 4.79 Then, using the inventory of products on hand, a weighted average markup percentage was calculated as follows: Brand Weighted Number Weighted Cost Weighted Price Markup 305's 5,900 17,287 $17,641 Marlboro 1,957 9,394 9,276 Romy 1,611 4,430 4,769 Newport 108 454 517 TOTAL 31,565 $32,203 2.02% Based on the foregoing calculation, the owners estimated an average price per pack of $3.00, i.e., much less than the $4.50 per pack figure utilized by the auditors. The unrefuted testimony of the owners is credible and seems reasonable based upon the facts. Inasmuch as neither of the auditors was available to provide further justification for their price-per-pack estimation, the owners' calculation is accepted for use in this proceeding. Respondent purchased 91,520 packs of cigarettes during the period of March 2009 through June 2009. Respondent sold 55,634 packs of cigarettes during that same period. The average price per pack sold was $3.00 (three dollars). Based on the foregoing, Respondent had a floor inventory of 35,886 packs of cigarettes on July 1, 2009. Respondent paid a cigarette surcharge floor tax of $4,963.09 on July 15, 2009. Respondent also overpaid its floor tax for other tobacco products by $2,948.54 for a total of $7,815.83 in payments to the Department. That amount should be credited against any tax liability determined in this proceeding. The Department provided bank statements for Store 1 and Store 2 showing much larger monthly transactions than evidenced by the stores' sale of products. That fact raised a red flag justifying further investigation into Respondent's business. However, the discrepancy was explained by the fact that Respondent does a large amount of check-cashing business at its stores. The large bank transactions are not relevant to the issue in this proceeding.
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, imposing a cigarette surcharge in the amount of $35,886 (thirty-five thousand, eight hundred and eighty-six dollars) against Respondent, Discount Zone, Inc., d/b/a Lakeland Discount Beverage, Inc., minus $7,815.83 already paid. DONE AND ENTERED this 12th day of May, 2011, 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 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of May, 2011.
The Issue Whether, pursuant to section 210.30, Florida Statutes (2016),2/ Petitioner, Jemco Enterprises, Inc., d/b/a Payless Tobacco Source (“Jemco”), owes a tax deficiency in the amount of $5,582.73 for the audit period from July 1, 2016, to October 31, 2016, plus $558.27 in penalties and $144.43 in interest, for a total amount due of $6,285.43.
Findings Of Fact Jemco is a Florida corporation that is a distributor of tobacco products in Florida, pursuant to Wholesale License No. WDE1614464. The Division is the state agency charged with administering and enforcing chapter 210, related to the taxation of tobacco products. It is undisputed that Jemco is a distributor of tobacco products in Florida, and that it engaged in the distribution of tobacco products during the period of July 1, 2016, through October 31, 2016. It also is undisputed that Jemco was engaged in the distribution of tobacco products, on which it paid an applicable excise tax and surcharge, before July 1, 2016. As discussed in greater detail below, pursuant to section 210.30, an excise tax is imposed on all tobacco products and on any person engaged in business as a distributor in Florida at the rate of 25 percent of the wholesale sales price of such tobacco products. This excise tax is due to be paid during the month in which the licensed distributor purchases the tobacco products and brings them in state for sale in Florida. Additionally, pursuant to section 210.276, a surcharge is imposed on all tobacco products and on any person engaged in business as a distributor in Florida at the rate of 60 percent of the wholesale sales price of such tobacco products. This surcharge is due to be paid during the month in which the licensed distributor purchases the tobacco products and brings them in state for sale in Florida. In 2016, the Florida Legislature amended the definition of “wholesale sales price” in chapter 210. This amendment, which went into effect on July 1, 2016, changed the assessment of the excise tax and surcharge on the distribution of tobacco products. At some point——and the evidence does not establish when——the Division posted notice of this statutory amendment to the definition of “wholesale sales price” on its website. However, it did not notify distributors, including Jemco, by regular or electronic mail. Consequently, Jemco was unaware of this change in the law. On or about February 16, 2017, Alicia Cortez, an auditor employed by the Division, conducted a tax audit on Jemco for the audit period between July 1, 2016, and October 31, 2016. In conducting the audit, Cortez reviewed copies of out-of-state supplier invoices for tobacco products sold by the out-of-state suppliers to Jemco. These documents showed the total amount of the sales of tobacco products by out-of-state suppliers to Jemco. She verified these purchases by reviewing Jemco's bank statements. Cortez also reviewed the In-State Tobacco Products Wholesale Dealer's Reports (“Monthly Report”) submitted by Jemco to the Division on a monthly basis. These Monthly Reports, which are submitted in electronic format, show the net taxable purchases, excise tax amount, surcharge amount, and total amount——which consists of the excise tax and surcharge——due for that particular month, as calculated by Jemco. The Monthly Reports also show the amount of excise tax and surcharge paid by Jemco for purchases of tobacco products from out-of-state suppliers for that month. Cortez compared the total amount of taxable purchases of tobacco products, as determined by a review of the out-of- state supplier invoices, with the taxable purchases and excise tax and surcharge paid by Jemco for the particular month, as reported in its Monthly Reports. Here, the audit showed that Jemco did pay some excise tax and surcharge for the period between July 1, 2016, and October 31, 2016, but that it also had a tax deficiency of $5,583.73 for failure to pay the full amount of the excise tax and surcharge due during the audit period. With the imposition of $144.43 in interest and a penalty of $558.27, Jemco was determined to owe a total of $6,285.43. At Jemco's request, an audit conference between the Division and Jemco was conducted on June 19, 2017. The conference did not result in any change to the total amount of excise tax, surcharge, penalty, and interest that Jemco was determined to owe. As more fully discussed below, pursuant to section 120.80(14), which governs taxpayer contest proceedings under chapter 210, the Division has the initial burden in this proceeding to demonstrate the factual and legal grounds for the tax assessment. Once the Division makes that showing, the entity contesting the assessment——here, Jemco——has the burden to show the assessment was incorrect. Jemco contends that it did not intentionally try to evade paying its taxes due for the audit period, and asserts two grounds for disputing the assessed amount of $6,285.43. First, Jemco contends that, in addition to the period between July 1, 2016, and October 31, 2016, the audit also covered the months of May and June 2016. However, all of the documentary evidence admitted into the record of this proceeding, including the supplier invoices, Monthly Records, audit report, and auditor's summary sheet clearly shows that the Division audited only the period consisting of July 1, 2016, through October 31, 2016. The evidence shows that the Division purposely chose to audit only this four-month period, rather than a typical six-month audit period, specifically because the amended definition of “wholesale sales price” went into effect on July 1, 2016, and the Division decided to “have a clean cut off” in conducting audits. The evidence clearly and uniformly refutes Jemco's argument that the audit actually covered a six-month period, from May 1, 2016, to October 31, 2016.3/ Jemco also asserts that it should not be held liable for the tax deficiency for the audit period because it was unaware of the amended definition of “wholesale sales price” that went into effect on July 1, 2016. It characterizes the Division's assessment of tax deficiency, penalties, and interest based on the 2016 amendment to that definition as a “got-you attack.” The undersigned finds the testimony of Solis and Hershewsky credible and sympathetic that Jemco never intended to avoid paying the excise taxes and surcharges that it owed under the law, and that Jemco only found out that it was not paying the correct amount of taxes and surcharge for the audit period when the audit commenced in early 2017. It is understandable that a small business like Jemco could be caught unaware of a change in the law——particularly when it was not directly notified by regular or electronic mail of the changed law. However, as a wholesale distributor licensee subject to chapter 210, Jemco is nonetheless presumed to be aware of, and required to follow, this statute in accurately paying its excise taxes and surcharges. To that point, Florida case law states that “[a]s to notice, publication in the Laws of Florida or the Florida Statutes gives all citizens constructive notice of the consequences of their actions.” L & L Docs, LLC v. Div. of Alcoholic Bevs. & Tobacco, 882 So. 2d 512, 515 (Fla. 4th DCA 2004)(quoting State v. Beasley, 580 So. 2d 139, 142 (Fla. 1991)). Thus, “ignorance of the law is no excuse.” Davis v. Strople, 158 Fla. 614, 29 So. 2d 364 (Fla. 1947). Here, after the Legislature amended the definition of “wholesale sales price” in 2016, this amended definition was published as part of chapter 2016-220, Laws of Florida, and also as subsection 210.25(14), in the 2016 version of Florida Statutes, which remains in effect to date.4/ Under Florida law, Jemco, as a regulated licensed wholesale distributor of tobacco products, is responsible for being aware of, and complying with, the applicable law——here, the amended definition of “wholesale sales price” that went into effect on July 1, 2016. Nevertheless, it is noted that had the Division directly——by electronic mail or regular mail——informed wholesale distributors of tobacco products of the changed definition of “wholesale sales price” after it was enacted by the Legislature during the 2016 Legislative Session and before it went into effect on July 1, 2016, Jemco——and, presumably other distributors of wholesale tobacco products, some of which are small businesses——would have been informed of the change, so may not have incurred a tax deficiency, with accompanying penalty and interest. This is mentioned for the Division's consideration in informing licensees of significant future changes in the law that could affect their liability for tax deficiencies, penalties, and interest. Based on the foregoing findings, it is determined that the Division met its burden, pursuant to section 120.80(14)(b), to establish the factual and legal grounds on which the assessment of $6,285.43 was made. It is further determined that Jemco did not meet its burden under section 120.80(14)(b) to show that the assessment was incorrect. The clear and convincing evidence supports the Division's imposition of the proposed penalty and interest.
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, issue a final order imposing an excise tax and surcharge assessment of $6,285.43 on Jemco. DONE AND ENTERED this 14th day of February, 2019, in Tallahassee, Leon County, Florida. S CATHY M. SELLERS 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 14th day of February, 2019.
