The Issue The issues are whether Respondent properly conducted a sales and use tax audit of Petitioner's books and records; and, if so, whether Petitioner is liable for tax and interest on its purchases of materials used for improvements to real property.
Findings Of Fact During the audit period, Petitioner was a Florida corporation with its principal place of business located at 7820 Professional Place, Suite 2, Tampa, Florida. Petitioner's Florida sales tax number was 39-00-154675-58, and Petitioner's federal employer identification number was 59-3089046. After the audit period, the Florida Department of State administratively dissolved Petitioner for failure to file statutorily required annual reports and filing fees. Petitioner engaged in the business of providing engineering services and fabricating control panels. Petitioner fabricated control panels in a shop Petitioner maintained on its business premises. Petitioner sold some of the control panels in over-the- counter sales. Petitioner properly collected and remitted sales tax on the control panels that Petitioner sold over-the-counter. Petitioner used other control panels in the performance of real property contracts by installing the panels as improvements to real property (contested panels). Petitioner was the ultimate consumer of the materials that Petitioner purchased and used to fabricate the contested panels. At the time that Petitioner installed the contested panels into real property, the contested panels became improvements to the real property. Petitioner failed to pay sales tax at the time Petitioner purchased materials used to fabricate the contested panels. Petitioner provided vendors with Petitioner's resale certificate, in lieu of paying sales tax, when Petitioner purchased the materials used to fabricate the contested panels. None of the purchase transactions for materials used to fabricate the contested panels were tax exempt. The audit is procedurally correct. The amount of the assessment is accurate. On October 23, 2000, Respondent issued a Notification of Intent to Audit Books and Records (form DR-840), for audit number A0027213470, for the period of October 1, 1995, through September 30, 2000. During an opening interview, the parties discussed the audit procedures and sampling method to be employed and the records to be examined. Based upon the opening interview, Respondent prepared an Audit Agreement and presented it to an officer and owner of the taxpayer. Respondent began the audit of Petitioner's books and records on January 22, 2001. On March 9, 2001, Respondent issued a Notice of Intent to Make Audit Changes (original Notice of Intent). At Petitioner's request, Respondent conducted an audit conference with Petitioner. At the audit conference, Petitioner provided documentation that the assessed transactions involved improvements to real property. At Petitioner's request, Respondent conducted a second audit conference with Petitioner's former legal counsel. Petitioner authorized its former legal counsel to act on its behalf during the audit. At the second audit conference, the parties discussed audit procedures and sampling methods, Florida use tax, fabricated items, and fabrication costs. Respondent revised the audit findings based upon additional information from Petitioner that the assessed transactions involved fabricated items of tangible personal property that became improvements to real property. Respondent assessed use tax on the materials used to fabricate control panels in those instances where Petitioner failed to document that Petitioner paid sales tax at the time of the purchase. Respondent also assessed use tax on fabrication costs including the direct labor and the overhead costs associated with the fabrication process, for the period of October 1, 1995, through June 30, 1999. Respondent eliminated use tax assessed on cleaning services in the original Notice of Intent because the amount of tax was de minimis. On August 29, 2001, Respondent issued a Revised Notice of Intent to Make Audit Changes (Revised Notice of Intent). On September 18, 2001, Petitioner executed a Consent to Extend the Time to Issue an Assessment to File a Claim for Refund until January 25, 2002. On October 18, 2001, Petitioner executed a second Consent to Extend the Time to Issue an Assessment to File a Claim for Refund until April 25, 2002. On February 6, 2002, Respondent issued a Notice of Proposed Assessment for additional sales and use tax, in the amount of $21,822.27; interest through February 6, 2002, in the amount of $10,774.64; penalty in the amount of $10,831.12; and additional interest that accrues at $6.97 per diem. Petitioner exhausted the informal remedies available from Respondent. On April 29, 2002, Petitioner filed a formal written protest that, in substantial part, objected to the audit procedures and sampling method employed in the audit. Respondent issued a Notice of Decision sustaining the assessment of tax, penalty, and interest. Respondent correctly determined that the audit procedures and sampling method employed in the audit were appropriate and consistent with Respondent's statutes and regulations. Respondent concluded that the assessment was correct based upon the best available information and that Petitioner failed to provide any documentation to refute the audit findings. Petitioner filed a Petition for Reconsideration that did not provide any additional facts, arguments, or records to support its position. On May 16, 2003, Respondent issued a Notice of Reconsideration sustaining the assessment of tax and interest in full, but compromising all penalties based upon reasonable cause.
Recommendation Based upon the findings of fact and the conclusions of law, it is RECOMMENDED that Respondent enter a Final Order denying Petitioner's request for relief and sustaining Respondent's assessment of taxes and interest in full. DONE AND ENTERED this 10th day of December, 2003, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 10th day of December, 2003. COPIES FURNISHED: Carrol Y. Cherry, Esquire Office of the Attorney General Revenue Litigation Section The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 Michael E. Ferguson Control Design Engineering, Inc. 809 East Bloomingdale Avenue, PMB 433 Brandon, Florida 33511 Bruce Hoffmann, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 James Zingale, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact Petitioner corporation came into existence in April 1989. From that time until the present, Petitioner corporation has had possession or control of several beach concessionaire spots in Volusia County. Respondent Department of Revenue audited Petitioner for the five year period of November 1, 1985 through December 31, 1990. Petitioner had never obtained the certificate or receipt contemplated by Section 212.10(1) F.S., so Respondent's audit and assessment held Petitioner liable for all sales tax due from all predecessor owners. In response to the Notice of Intent to Audit, Petitioner made available for inspection all of its business records. Petitioner's records were found by the auditor to be both adequate and accurate for the period of time that Petitioner corporation had been in existence, with certain exceptions which included assigning the wrong tax rate on certain items. Respondent's auditor pointed out errors in collection and remittance of the tax by Petitioner during the period of April 1989 to the end of the audit period and Petitioner remitted the tax due with respect to each subject of the error. Respondent reviewed Petitioner's records and used such records to arrive at its estimate of Petitioner's tax liability. In assessing Petitioner's tax liability, Respondent's auditor, Albert E. Seyforth, projected backwards using all records provided by Petitioner to reach an estimate or projection of what the predecessor owners/sellers should have been paying in tax. To make this backwards projection, he worked from the Petitioner's current figures substantiated by their records which he deemed adequate and accurate for the period of April 1989 to the end of the audit period. Petitioner's records already indicated that two of the spots acquired by Petitioner were no longer actively utilized. He treated the Volusia County transfer fee and license fee as taxable rights in real estate pursuant to Rule 12A-1.070 F.A.C. He made allowance for Petitioner's misapplication of a sales tax rate. He calculated a 24-month projection rather than an 18-month projection to give Petitioner taxpayer the benefit of the doubt. He then applied an adjustment by allowing an arbitrary percentage reduction on compensable versus noncompensable units and allowing for market conditions, differences in inventory, or pricing. In applying this percentage reduction factor, he accepted Petitioner's oral unquantified anecdotal representations that (1) beach business overall had gotten progressively worse over the five- year audit period (which would lower sales figures) and (2) that Petitioner's current corporate operation which had eliminated business at certain spots and which was otherwise more efficient, was more profitable than prior businesses. (This latter assumption would raise sale figures). The percentage reduction factor the auditor devised was an arbitrary 25 percent because Petitioner did not provide any quantifiable way to measure its anecdotal oral representations on the foregoing business trends. The auditor did not accept or consider Petitioner's oral representations as to how many units Petitioner acquired from each seller because Petitioner produced no adequate "paper trail" to back up their oral representations as to what was acquired and because all concerned considered the concession business one in which physical inventory at each "spot" changed from day to day. Upon presentation of prior taxpayer identification numbers, Respondent gave Petitioner credit against the figure obtained by the foregoing methodology for prior taxes paid under those prior taxpayer identification numbers during the audit period. The foregoing assessment methodology, including credits, which was devised by Mr. Seyforth, was accepted as "reasonable" by Mr. Seyforth's superior auditor, Mr. Samuel B. Eckhardt, Jr. In approving Mr. Seyforth's methodology, Mr. Eckhardt considered two other standard methods of assessing business trends which could have been used instead of using an arbitrary 25 percent reduction factor. One alternative method would have been to assemble and apply information concerning the ramp toll census to the beach in each of the audit years. The other alternative method would have been to somehow devise a hotel/motel occupancy census and apply that information. Nonetheless, Mr. Eckhardt determined that the methodology applied by Mr. Seyforth and described in Finding of Fact 5 and the deduction of taxes actually paid as described in Finding of Fact 6 was appropriate and reasonable. At formal hearing, Petitioner did not affirmatively demonstrate how a formula for business trends on the beach could be more accurately derived from either the toll ramp census or the hotel/motel occupancy rate method. Specifically, it was not shown how the toll ramp census would relate number of cars to number of people to number of purchasers of concession products or how the hotel/motel occupancy rate would accurately reflect number of purchasers of concession products. While the 25 percent reduction figure utilized by the auditor might be "arbitrary," Petitioner did not affirmatively demonstrate how either of the alternative methods would be either more accurate or would lower the assessment figure. Petitioner presented evidence that Volusia County has always regarded the County's charge of seven percent of the purchase price on the transfer of a concession as an administrative fee. This fee was a negotiated charge agreed upon by the concessionaires, as a group. It was based on earlier such fees. However, Messrs. Seyforth and Eckhardt, on behalf of the Respondent state agency regarded this fee as a "lease or license of real property," pursuant to agency interpretation of Rule 12A-1.070 F.A.C. and treated it as such. Petitioner presented evidence that the license fee paid annually to Volusia County by each concessionaire in the amount of ten percent of gross sales or $1,000.00, whichever is greater, has always been regarded by Volusia County as a regulatory fee for use of a certain beach location and is utilized by Volusia County in lieu of occupational license fees, garbage disposal charges, and charges for other goods and services provided to the concessionaire. These services included licensed concessionaires having the right to ask Beach Rangers to move trespassing concessionaires out of the respective license-holders' assigned territories. Messrs. Seyforth and Eckhardt, on behalf of Respondent state agency regarded this fee as a "lease or license of real property" pursuant to agency interpretation of Rule 12A-1.070 F.A.C. and treated it as such. Petitioner presented evidence that it had acquired beach spots 128 and 130 and paid the Volusia County annual license fee on each but did not operate them in order to render Petitioner's entire "multi-spot operation" more efficient and profitable. Any physical business assets acquired at these locations were transferred to other spots. The license fee continued to be paid for these spots' respective locations, so as to eliminate competition. This factor was built into the agency's calculations, but Petitioner contended that the auditor's using a backward projection on these spots was unreasonable because it assigned a 75 percent profit to them which had never existed. Contrary to Petitioner's assertion, it is found that the auditor's 25 percent reduction figure lumped the unquantified increased efficiency of the whole of Petitioner's operation in with the unquantified decrease in beach traffic and thus made a reasonable adjustment for these unoperated "spots." Petitioner also contended that when it acquired beach concession spots 128 and 130 no "stock of goods" was also acquired, but Petitioner produced no "paper trail" to prove no goods were acquired. Petitioner also admitted to paying to acquire the "business" at each location and that in so doing Petitioner either directly or indirectly acquired the license to operate (or not operate) each of these spots. Section 212.10 F.S. is phrased in the disjunctive, "business or stock of goods." Petitioner produced certain books and records at deposition which were derived from the preincorporation proprietorship of Petitioner corporation's principals, and, presumably, the proprietorship/spot acquired from Mr. Harold S. Lloyd's parents, and the auditors dismissed these as inadequate. These particular records were not introduced at formal hearing. The only records of any prior owners of beach spots acquired by Petitioner which were introduced at formal hearing were certain documents from John Bowes and Richard Ruich. Mr. Bowes' records (Petitioner's Exhibit 2) are merely totals for various types of rentals and sales and are not adequate for the agency's detailed accounting procedures. They do not comply with the Unified Beach Code, and Mr. Bowes own accountant found them inadequate for federal income tax purposes. No expert witness credibly stated that they were adequate for assessment purposes. Mr. Bowes' records do not contain any prior taxpayer identification number which potentially could be linked to prior taxes paid so as to offset the assessment against Petitioner. Mr. Ruich's records (Petitioner's Exhibits 3 and 4) consisted only of monthly sales tax reports, called "DR-15's." No expert witness credibly stated that they were adequate for assessment purposes. The agency does not accept DR- 15's as proof of tax liability, but Mr. Ruich's DR-15's do contain Mr. Ruich's taxpayer identification numbers, 74-16-044761-07 and 74-16-038917-07. The record is not clear whether Petitioner was given credit for the taxes actually paid by Mr. Ruich under these taxpayer identification numbers. Since Respondent has established the precedent in this case for giving credit to Petitioner for taxes actually paid under predecessor taxpayer numbers during the audit period, Mr. Ruich's taxes actually paid during the audit period should be calculated and deducted from the assessment against Petitioner, if that has not already been done. Richard Ruich executed a sales agreement and an indemnification agreement in the sale of his business to Petitioner.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that the Department of Revenue enter a final order sustaining the subject audit and assessment against Petitioner, less credit to Petitioner for prior tax paid, if any, during the audit period by predecessor in interest Ruich, Taxpayer I.D. Nos. 74-16-044761-07 and 74-16-038917-07, if credit therefore has not previously been afforded to Petitioner. RECOMMENDED this 1st day of April, 1993, at Tallahassee, Florida. ELLA JANE P. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of April, 1993. APPENDIX TO RECOMMENDED ORDER 92-2348 The following constitute specific rulings, pursuant to S120.59 (2), F.S., upon the parties' respective proposed findings of fact (PFOF) Petitioner's PFOF: 1 Accepted so far as it goes. Covered in Findings of Facts 4, 14. 2-4 Accepted but not dispositive, ultimate, or material, Covered in Findings of Facts 4-6, 14-17. 18,25,27-28 Accepted. Covered in Findings of Facts 5-12, 14. 5 Accepted but subordinate. Covered in Findings of Fact 14-17. 6-7,11-13 Rejected as stated because as stated it does not reflect the greater weight of the credible record evidence as a whole. Covered in Findings of Facts 5-9. 8,14,21-23 Rejected as out of context and misleading. Not supported by the greater weight of the credible record evidence as a whole. 9,10,24,26 Rejected as stated because as stated it does not reflect the greater weight of the credible record evidence as a whole, and because it attempts to state a Conclusion of Law. Covered in Findings of Fact 5-11, 14-17, and Conclusions of Law. 15-17,19-20,29-30 Accepted but subordinate and unnecessary. Respondent's PFOF: 1-11 Accepted except where subordinate unnecessary, or cumulative. COPIES FURNISHED: Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Linda Lettera, Esquire General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Michael L. Brewer, Esquire 500 Canal Street New Smyrna Beach, Florida 32168 Leland L. McCharen, Esquire Assistant Attorney General Tax Section Department of Legal Affairs The Capitol Tallahassee, Florida 32399-1050
The Issue Whether Petitioner's "change of status" application should be denied for the reasons set forth in the Notice of Intent to Deny.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made: Petitioner has an undergraduate and master's degree in civil engineering from the Georgia Institute of Technology (received in 1962 and 1964, respectively) and a law degree from Emory University (received in 1980). In 1968, Petitioner went into the consulting business, and he has had his own business ever since. Since 1968, Petitioner has been licensed as a professional engineer, at one time or another, in approximately 20 different states, including Florida. He has held his Florida license since 1970. The other states in which he is currently licensed are Georgia, Alabama, New York, and Maryland. Petitioner is licensed to practice law in Georgia, but is on inactive status. Petitioner has been licensed as a real estate broker in Florida since 2001 or 2002. Petitioner has been certified as a general contractor in Florida since 1980. He was the qualifier for McKinney Drilling Company from 1980 until 1994. Since 1994, he has been the qualifier for Pressure Concrete, Inc. (Pressure), which approximately a year ago was purchased by Proshot Concrete, Inc. (Proshot). Petitioner has never received any discipline in connection with any of the professional licenses he has held over the years, including the certification allowing him to engage in general contracting in Florida; nor does he have any criminal record. Petitioner has not undertaken any construction or consulting project that has resulted in a lawsuit, judgment, or lien being filed. Petitioner has not been involved in any project where there has been a default triggering a claim against a payment or performance bond. All of the vendors and suppliers he has used on construction projects have been paid. Petitioner has never filed for bankruptcy. There are no lawsuits now pending against Petitioner. In or around September 2006, Petitioner completed and submitted an application to the Board seeking a "change of status" in his certification to enable him (as a general contractor) to qualify Proshot instead of Pressure. Petitioner used a Board-generated form, DBPR CILB 4363-Change of Status Application From One Business Entity to Another (Form), to apply for such a "change of status." The "Financial Responsibility" section of the Form contained the following questions and accompanying instructions: NOTE: If you answer "Yes" to any of the questions below, you must provide an explanation on DBPR 0060-General Explanatory Description form and attach legal documentation, i.e., satisfaction of lien, judgment, payment schedule, etc. If you have been convicted of a felony, you must submit proof of reinstatement of civil rights. The following persons must answer the financial responsibility questionnaire: Qualifying Agent All Owners/Partners Have you, or a partnership in which you were a partner, or an authorized representative, or a corporation in which you were an officer or an authorized representative ever: Undertaken construction contracts or work that a third party, such as a bonding or surety company, completed or made financial settlements? Had claims or lawsuits filed for unpaid past-due bills by your creditors as a result of construction operations? Undertaken construction contracts or work which resulted in liens, suits, or judgments being filed? (If yes, you must attach a copy of Notice of Lien and any payment agreement, satisfaction, Release of Lien or other proof of payment.) Had a lien filed against you by the U.S. Internal Revenue Service or Florida Corporate Tax Division? Made an assignment of assets in settlement of construction obligations for less than the debts outstanding? Been charged with or convicted of acting as a contractor without a license, or, if licensed as a contractor in this or any other state, been subject to any disciplinary action by a state, county, or municipality? (If yes, you must attach a copy of any state, county, municipal or out- of-state disciplinary order or judgment.) Filed for or been discharged in bankruptcy within the past five years? (If "yes," you must attach a copy of the Discharge Order, Order Confirming Plan, or if a Corporate Chapter 7 case, a copy of the Notice of Commencement.) Been convicted or found guilty of or entered a plea of nolo contendere to, regardless of adjudication, a crime in any jurisdiction? Note: If you, the applicant/licensee, have had a felony conviction, proof that your civil rights have been restored will be required prior to Licensure. Petitioner answered "No" to all of these questions, believing, in good faith, that such information was accurate. The final page of the Form contained the following "Attest Statement," which Respondent signed: I have read the questions in this application and have answered them completely and truthfully to the best of my knowledge. I have successfully completed the education, if any, required for the level of licensure, registration, or certification sought. I have the amount of experience required, if any, for the level of licensure, registration, or certification sought. I pledge to comply with the applicable standards of practice upon licensure, registration, or certification. I understand the types of misconduct for which disciplinary proceedings may be initiated. As part of the application process, Petitioner made the necessary arrangements with Advantage Information Services, LLC (Advantage) to directly provide the Board with a credit report. On or about October 26, 2006, Advantage sent the Board a two-page Transunion credit report (Transunion Report) containing Petitioner's "credit profile," along with a one-page report of the results of a "check[]" of public records at the "local, statewide, and national level" (Records Check Report). The Transunion Report revealed a federal tax lien in the amount of $35,100.00 that had been filed against Petitioner in 1997 for unpaid personal income taxes. Petitioner was aware of this lien at the time he filled out the Form, but did not report it in response to Question 4 of the "Financial Responsibility" section because he did not understand the question to ask about liens such as this one which were unrelated to his business activities. The Internal Revenue Service is withholding 15% of Petitioner's monthly Social Security benefit and applying it to reduce the amount Petitioner owes for his unpaid personal federal income taxes. The Records Check Report read as follows: Public records have been checked on a local, statewide, and national level and are incorporated within the report. Additional records are as follows: Cheatham Register of Deeds, TN - Federal Tax Lien Release, 01/11/2005, Case #74147 - Book/Page 131/552 - $30,908.00 - Not Paid. Plaintiff: IRS Walton County Superior Court GA - County Tax Lien, 03/12/1998, $387.00 - Not Paid. Case Number - B3P253C, Book/Page - 3/253 Plaintiff: County Tax Assessor Dekalb County State Court, GA - Civil Judgment, 05/01/1991, $49,283.00 - Not Paid. Case Number - 814497 Plaintiff: Bank South The 1998 Walton County Tax lien noted in the Records Check Report concerned an assessment made on tangible personal property in the form of an airplane owned, not by Petitioner, but by a corporation of which he was the president. The lien did not arise out of any activities in which Petitioner was engaged as a general contractor. The 1991 Dekalb County civil judgment noted in the Records Check Report required Petitioner to repay a bank loan Petitioner had co-signed for a friend. It too had nothing to do with his activities as a general contractor. It was only after the Board had provided Petitioner with a copy of the Records Check Report that Petitioner first became aware of the existence of the 1998 Walton County Tax lien and the 1991 Dekalb County civil judgment.2 As noted above, on April 18, 2007, the Board issued its Notice of Intent to Deny Petitioner's "change of status" application.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Board find Petitioner qualified for the "change of status" for which he has applied. DONE AND ENTERED this 1st day of November, 2007, in Tallahassee, Leon County, Florida. S STUART M. LERNER 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 1st day of November, 2007.
Findings Of Fact Frank O. Sherrill is the sole stockholder of Oceania Charters, Inc. and is a resident of North Carolina from where he directs the operations of Oceania Charters, Inc. The principal, if not sole, asset of Oceania Charters, Inc. is the 101 foot motor yacht Captiva II. The Captiva II was built in Amsterdam, the Netherlands, pursuant to contract between the shipbuilder and Oceania Charters, Inc. and/or Frank Sherrill entered into in 1972. Sherrill purchased the vessel for the intended purpose that it be used as a charter vessel hired to various charterers for short or longer-term cruises. This is the fourth or fifth vessel that Respondent has owned and used in the charter business. The evidence was uncontradicted that the purpose of acquiring the Captiva II was to place it in charter service. The vessel was originally scheduled for completion in the summer of 1973 and it was intended to have the Captiva II proceed from Amsterdam to North Carolina under her own power. The vessel was not completed until late fall or early winter and the insurers would not insure the Captiva II if it proceeded across the North Atlantic under her own power at that time of year. Arrangements were made to ship the Captiva II from Amsterdam to Bermuda via freighter to off-load the Captiva II there and proceed under her own power to Wilmington, North Carolina for custom clearance and documentation. While loading the Captiva II damage was done to one stabilizer and to the hull. Upon arrival of the ship carrying the Captiva II at Bermuda, excess costs involved in off-loading and repairing there were weighed against the carrier's offer to off- load the Captiva II at the next port of call, Miami, and facilities at the latter port. It was then decided that the Captiva II should stay aboard for the voyage from Bermuda to Miami and there be off-loaded and repaired. This was done and upon arrival in Miami the Captiva II was off-loaded, repaired and fitted out for charter operations. Berthing arrangements were made and, except for charter trips, trips to Palm Beach soliciting charters, and sea trials the Captiva II has been moored at Miami. Mr. and Mrs. Sherrill stayed on board the Captiva II during the period she was being outfitted for charter operations and on several of the sea trials the vessel underwent. They were not on board during any of the charter trips and did not use the Captiva II for cruises themselves or make her available for use by their friends unless pursuant to a charter party. These facts were undisputed.
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 Whether the Petitioners are liable for sales tax, penalties and interest as assessed by the Department of Revenue (the Department) and if so, in what amount?
Findings Of Fact The parties have stipulated to the facts stated in paragraphs 2-59.1/ The Department of Revenue is an agency of the State of Florida, pursuant to Section 20.21, Florida Statutes, and is authorized to administer the tax laws of the state, pursuant to Section 213.05, Florida Statutes. The Department was authorized to conduct an audit of each of the Petitioners and to request information to determine their liability for taxes pursuant to Chapter 212, Florida Statutes. Legendary Holding, Inc. (Holding) is a corporation organized under the laws of Florida effective October 23, 1996, and was so organized from 1999-2003. Holding's corporate address is 4100 Legendary Drive, Suite 200, Destin, Florida 32541. Holding was subject to the Internal Revenue Code of 1986 as amended and in effect (IRC) during 1999-2003 and for federal income tax purposes, Holding was a subchapter "s" corporation during this time. Holding was also subject to Chapter 212, Florida Statutes, during 1999-2003. Petitioner Harry T's, Inc. (Harry T's), is a corporation organized under the laws of Florida effective November 9, 1998, and was so organized during Harry T's Audit Period, defined as December 1, 1999 through March 31, 2003. Harry T's was a wholly-owned subsidiary of Holding. During its Audit Period, Harry T's corporate address was 4460 Legendary Drive, Suite 400, Destin, Florida. Harry T's was subject to the IRC and for federal income tax purposes was a qualified subchapter S subsidiary of the s-corporation parent, Holding. Petitioner Beachside Inn Destin, Inc. (Beachside) was a corporation organized under the laws of Florida effective March 6, 2000, and was so organized during the Beachside Audit Period, defined as May 1, 2000, through May 31, 2003. Beachside, a wholly-owned subsidiary of Holding, was administratively dissolved on October 14, 2004, for failure to file an annual report. During the Audit Period, Beachside's principle place of business was 2931 Scenic Highway 98, Destin, Florida, 32541. Its corporate address was 4460 Legendary Drive, Suite 400, Destin Florida. Beachside was subject to the IRC and for federal income tax purposes was a qualified subchapter S subsidiary of the s-corporation parent, Holding, during the Beachside Audit Period. Petitioner Legendary Restaurant Associates, Inc. (Restaurant) is a corporation organized under the laws of Florida effective October 7, 1999, and was so organized during Restaurant's Audit Period, defined as December 1, 1999, through March 31, 2003. During this time Restaurant was a wholly owned subsidiary of Holding and Restaurant's corporate address was 4460 Legendary Drive Suite 400, Destin, Florida. Restaurant was subject to the IRC and for federal income tax purposes was a wholly-owned, qualified subchapter S subsidiary of the s-corporation parent, Holding, during the Restaurant Audit Period. Legendary, Inc. (Legendary) is a corporation organized under the laws of Florida during 1999-2003, and its corporate address was also 4460 Legendary Drive, Suite 400, Destin, Florida, during this time. Legendary was also a wholly-owned subsidiary of Holding. Legendary was subject to the IRC and for federal income tax purposes, was a qualified subchapter S subsidiary of the s-corporation parent, Holding. Legendary Resorts, LLC (Resorts), is a limited liability company organized under the laws of Florida and was so organized during 2000-2003. Resorts, whose corporate address was also 4460 Legendary Drive, Suite 400, Destin, Florida, was administratively dissolved on September 16, 2005, for failure to file an annual report. Legendary entered into a cooperative business agreement (CBA) with certain subsidiaries of Holding prior to or during 1999-2003. The terms of the CBA between Legendary and these subsidiaries were identical other than the name of the "manager" subsidiary and the percentage of compensation paid to Legendary and the formula for sharing profits varied from time to time. Legendary also entered into a management agreement with certain other of Holding's subsidiaries, and the terms of these agreements were identical. FACTS RELATED TO PETITIONER HARRY T'S AUDIT Harry T's was a registered dealer who filed form DR- 15 (Sales Tax Return) with the Department for each month of Harry T's Audit Period. Harry T's used the cash basis of accounting during its Audit Period. The Department sent Harry T's a Notification of Intent to Audit Books and Records (Form DR-840) to conduct an audit of Harry T's books and records for this purpose. The Department and Harry T's entered into an Audit Agreement agreeing that a sampling method is the most effective, expedient, and adequate method in which to conduct an audit of Harry T's books and records. Gina Imm, a Department tax auditor, examined and sampled the available books and records of Harry T's to determine whether it properly collected and remitted sales and use tax in compliance with Chapter 212, Florida Statutes. Harry T's was the tenant party in a lease with Legendary for the property upon which Harry T's operated its business prior to January 1, 2000. Under the terms of the lease agreement between Harry T's and Legendary, Harry T's paid rent equal to eight percent of the gross sales to Legendary. On January 1, 2000, the lease was terminated. On January 1, 2000, Harry T's entered into a CBA with Legendary, which was effective throughout Harry T's Audit Period. Harry T's operated a business on property owned by Holdings during Harry T's Audit Period. Accounting entries were made each month during the Audit Period to record the amount of CBA compensation that was accrued by Harry T's to Legendary under the CBA. However, no rent was recorded on the income tax or accounting books of either Harry T's or Legendary during the Audit Period. Further, no amount of money labeled as CBA compensation was transferred from Harry T's to Legendary during Harry T's Audit Period and no payments labeled as "rent" were transferred from Harry T's to Legendary. Based upon the business decisions of the Chief Financial Officer of Legendary, cash was transferred periodically from Harry T's to Legendary during the Audit Period. Based upon the business decisions of the Chief Financial Officer of Legendary, cash was also transferred from Legendary to Harry T's. During Harry T's Audit Period cash was also transferred from Legendary to Holdings. These amounts were reflected as dividend distributions and varied in amount and time from (a) Holdings insurance and mortgage indebtedness obligations associated with the property used by Harry Ts and owned by Holding, and (b) the amounts accrued under the CBA's. Any amounts collected by Harry T's and not paid directly to third parties were distributed periodically to Holdings as corporate dividends. The Department determined that the transfers of cash from Harry T's to Legendary reflected rental consideration paid as CBA compensation, and directed the Department's auditor to assess sales tax against the amounts recorded as CBA compensation accounting entries. Harry T's paid ad valorem taxes due on the property on which Harry T's operated during each year of Harry T's Audit Period. The Department auditor assessed sales tax on the amounts of ad valorem taxes paid by Harry T's on behalf of Holding. The Department determined that Harry T's owed $58,844.02 in additional sales tax for the CBA compensation and ad valorem taxes paid, plus statutory interest and penalties. On September 5, 2003, the Department issued to Harry T's a Notice of Intent to Make Audit Changes (form DR- 1215) for Audit No. A0233016246, stating that Harry T's owed $69,249.79 in taxes, $29,422.03 in penalties, and $6,612.44 in interest for a total of $94,330.64, and that interest continued to accrue on the unpaid assessment. By letter dated October 9, 2003, Harry T's agreed to the portions of the assessment related to food and beverage, but objected to the assessment for all other amounts including the CBA fees. Harry T's paid $10,953.62 for the uncontested assessment amounts. The Department issued its Notice of Proposed Assessment (NOPA) for audit number A0233016246 on January 27, 2004. The NOPA stated that the total owed by Harry T's was $69,249.79 in taxes, $29,422.03 in penalties, and $11,831.88 for a total of $110,501.72. The NOPA reflected a payment of $10,953.62 paid for the uncontested amounts of the audit assessment, and showed a balance due of $99,548.10 as of the date of the NOPA. The Department received Harry T's formal written protest on April 23, 2004. FACTS RELATED TO RESTAURANT'S AUDIT Petitioner Restaurant was a registered dealer who filed form DR-15 (Sales and Use Tax Return) with the Department for each month of the Restaurant Audit Period. Restaurant used the cash basis of accounting. The Department sent Restaurant a Notification of Intent to Audit Books and Records (Form DR-840) to conduct an audit of Restaurant's books and records for the purposes of Chapter 212, Florida Statutes. The Department and Restaurant entered into an Audit Agreement stipulating that a sampling method is the most effective, expedient, and adequate method by which to conduct an audit of Restaurant's books and records. Gina Imm examined and sampled the available books and records of Restaurant to determine whether Restaurant properly collected and remitted sales and use tax in compliance with Chapter 212, Florida Statutes. Restaurant was the tenant party in leases for the property upon which Restaurant operated its business prior to January 1, 2000. On January 1, 2000, Restaurant terminated its leases for these properties. Restaurant entered a CBA with Legendary prior to the beginning of Restaurant's Audit Period, December 1, 1999 through March 31, 2003. The CBA between Restaurant and Legendary was effective throughout the Restaurant Audit Period. Restaurant operated the "Crystal Beach Coffee Company" and "Tony's By the Sea" on property owned by Floridian Homes of Crystal Beach, Inc. (FHCB), an unrelated third party, during the Restaurant Audit Period. Restaurant operated "Blues" on property owned by an individual, Mr. Peter H. Bos, during the Restaurant Audit Period. 37. Restaurant operated "Rutherford's 465" on property owned by Regatta Bay Investor, Ltd., a Florida limited partnership, during the Restaurant Audit Period. Accounting entries were made each month during the Restaurant Audit Period to record the amount of CBA compensation that was accrued by Restaurant to Legendary under the CBA; however, no rent was recorded on the income tax or accounting books of either Restaurant or Legendary during the Restaurant Audit Period. No amount of money labeled as CBA compensation was transferred from Restaurant to Legendary and no payments labeled as "rent" were transferred from Restaurant to Legendary. Based upon the business decisions of the Chief Financial Officer of Legendary, cash was transferred periodically from Restaurant to Legendary, and cash was also transferred from Legendary to Restaurant during the Restaurant Audit Period. Any amounts collected by Restaurant during the Restaurant Audit Period and not paid directly to third parties were distributed periodically to Holdings as corporate dividends. The Department determined that the transfers of cash from Restaurant to Legendary reflected rental consideration paid as CBA compensation, and directed the Department's auditor to assess sales tax against the amounts recorded as CBA compensation accounting entries. Restaurant paid ad valorem taxes due on the property on which Restaurant operated during each year of the Restaurant Audit period. The Department assessed sales tax on the amounts of ad valorem taxes paid by Restaurant on behalf of Holding. The Department determined that Restaurant owed $17,880.71 in additional sales tax for the CBA compensation and ad valorem taxes paid, plus statutory interest and penalties. On September 5, 2003, the Department issued the Restaurant a Notice of Intent to Make Audit Changes (Form DR- 1215) for audit number A0231102584, stating that Restaurant owed $26,092.10 in taxes, $8,940.31 in penalties, and $1.808.87 in interest for a total of $36,841.28. The Department noted Restaurant's payment of $8,745.53 for the portions of the assessment related to food and beverage sales, leaving a balance due as of that date of $28,095.75. The Department informed Petitioner Restaurant that interest continued to accrue on the unpaid assessment. The Department issued its NOPA for audit number A0231102584 on March 17, 2004, to Restaurant. The total owed by Restaurant as stated in the NOPA was $26,092.10 in taxes, $8,940.34 in penalties, and $3,378.99 in interest for a total of $38,411.43, less the $8,745.53 already paid, for a total balance due on that date of $29,665.90. Restaurant protested the NOPA, and the Department referred the matter to the Department's Technical Assistance and Dispute Resolution Section. On March 28, 2005, the Department issued its Notice of Decision upholding the assessment of tax for the CBA fees and ad valorem taxes paid by Restaurant, and on April 6, 2005, the Department received the Restaurant's formal written protest. FACTS RELATED TO BEACHSIDE'S AUDIT Petitioner Beachside Inn Destin, Inc. (Beachside) was a registered dealer who filed form DR-15 (Sales and Use Tax Return) with the Department for each month during the Beachside Audit period, May 1, 2000, through May 31, 2003. Beachside used the cash basis of accounting during the Beachside Audit Period. Beachside and the Department entered into an Audit Agreement stipulating that a sampling method is the most effective, expedient, and adequate method by which to conduct an audit of Beachside's books and records. Gina Imm, a Tax Auditor for the Department, examined and sampled the available books and records of Beachside to determine whether Beachside properly collected and remitted sales and use tax during the Audit Period in compliance with the requirements of Chapter 212, Florida Statutes. Legendary Resorts, LLC (Resorts) entered into an Asset Purchase Agreement with FHCB and Lester J. Butler, Timothy Fulmer and Mitt Fulmer, three of Resorts' shareholders (the Shareholders), in April 2000, for the acquisition of the Beachside Inn assets by Resorts. Subsequent to the execution of the Asset Purchase Agreement, the parties discovered that a condition precedent to the agreement, i.e., the assumption by Resorts of the major indebtedness of FHCB could not be accomplished as contemplated because it would cause the existing lender to violate its loan consideration limits with respect to the Legendary Group. After discovering this problem, Resorts entered into a Triple-net Lease dated March 1, 2000, with the Shareholders for a beachfront lot and entered into a Triple-net Lease dated March 1, 2000, with FHCB for the Beachside Inn assets that were originally the subject of the Asset Purchase Agreement. These Triple-net Leases were designed to transfer control, and the benefits and burdens of ownership, of the Beachside Inn assets to Resorts pending resolution of the financing contingency and the closing under the Asset Purchase Agreement. Beachside entered into a CBA with Legendary prior to the beginning of the Beachside Audit Period, which was effective throughout the Beachside Audit Period. Although Resorts was the party entitled to all rights, and subject to all obligations, under the Triple-net Leases and Asset Purchase Agreement, the financial accounting and cash management functions and activities during the terms of the Leases were handled by and recorded in Beachside because these leases were designed to permit the Legendary Group to take over the operations of the Beachside Inn assets pending closing and because the Legendary Group intended to place the assets in Beachside under the Asset Purchase Agreement upon the closing of the asset purchase. Resorts and Beachside operated the Beachside Inn assets on property owned by FHCB and the Shareholders during the Beachside Audit Period. Accounting entries were made each month to record the amount of CBA compensation that was accrued by Beachside to Legendary under the CBA but no rent was recorded on the income tax or accounting books of either Beachside or Legendary during the Beachside Audit Period. No money labeled as CBA compensation was transferred from Beachside or Resorts to Legendary and no payments labeled as "rent" were transferred from Beachside or Resorts to Legendary. Based on the business decisions of the Chief Financial Officer of Legendary, cash was transferred periodically from Resorts and/or Beachside to Legendary and from Legendary to Resorts and/or Beachside during the Beachside Audit Period. After Resorts and Beachside operated the Beachside Inn assets for a period of time at a material loss, Resorts was not able to arrange for suitable substitute financing to close on the purchase of the Beachside Inn assets under the Asset Purchase Agreement. Resorts, FHCB and the Shareholders reached an agreement on or about August 15, 2003 (the Termination Date), whereby Resorts terminated its rights under the Asset Purchase Agreement and the two leases. In exchange, the Shareholders transferred ownership of the beachfront lot to Resorts. Federal income tax returns for calendar years 2000, 2001, and 2002 were filed by Resorts which reflected the results of operating the Beachside Inn assets. Following the Termination Date, all of the historic accounting entries made by Beachside reflecting the operation of the Beachside Inn assets were moved from its books and records to the books and records of Resorts for administrative reasons and consistency with the legal documents. Beachside and Resorts made insurance payments on behalf of the owners of the property upon which Resorts operated its business for each year of the Beachside Audit Period. They also made payments for loans on behalf of the owners of the property and paid ad valorem taxes due on the property upon which Resorts operated for each year of the Beachside Audit Period. The Department assessed Beachside sales tax on the amounts of ad valorem taxes, insurance payments and loan payments paid by Beachside on behalf of FHCB and the Shareholders. On October 27, 2003, the Department issued Beachside a Notice of Intent to Make Audit Changes (form DR- 1215) for audit number A030582778, stating that Beachside owed $69,436.01 in taxes, $30,606.77, and $7,635.33 for a total of $107,678.11. The Department noted Beachside's payment of $8,936.01 for the portions of the assessment related to sales of good and beverage, and reflected a balance due after payment of $98,742.10, with interest continuing to accrue.2/ Beachside made an additional payment of $8,936.01 toward the balance due on the uncontested amount of the assessment. On February 19, 2004, the Department issued its Notice of Proposed Assessment for audit number A030582778, stating that the total amount owed by Beachside was $69,436.01 in taxes, $30,606.77 in penalties and $8,917.55 in interest for a total of $108,960.33, less $17,872.02 previously paid by Beachside, for a balance as of that date of $91,088.31. On April 16, 2004, Beachside protested the NOPA, and the Department referred the matter to the Department's Technical Assistance and Dispute Resolution Section. On March 28, 2005, the Department issued its Notice of Decision upholding the assessment of tax for the payment of ad valorem taxes, insurance and loans by Beachside on behalf of Holding. On April 6, 2005, the Department received the Beachside's formal written protest of audit number A030582778. ADDITIONAL FACTS In addition to the Stipulated Facts submitted by the parties, the undersigned makes the following findings based upon the stipulated exhibits submitted. With respect to the CBAs, the documents provided "the Co-Operator and Manager have agreed to enter into this Agreement for each to provide certain assets to the Business and for Manager to provide, on a cost effective basis, Management Services as required from time to time by the Business." The Agreements state that "each have various assets including fixtures, employees, contractual relationships, knowhow and real estate which they wish to combine to operate a restaurant and bar (the Business)." The CBAs do not name a physical location and do not have provisions for care and repair of the premises; for rights of access and inspection; for eminent domain or condemnation; for default; for provision of utilities or for subletting, all provisions typically seen in a commercial lease. By contrast, the Triple-Net Lease for the Beachside Inn Assets (Stipulated Exhibit 10) contains all of these provisions. The CBAs provide for payment of management services, expenses of the business, and all services and assets necessary for the operations of the business. They are clearly not limited to provision of a location. With respect to the Beachside Assets, the Triple-Net Lease (the Beachside lease) was entered after the Asset Purchase Agreement and expressly acknowledges the existence of that document. However, the Beachside lease by its terms does not provide a right of purchase at a nominal sum at the end of the lease. It provides options to extend the term of the three-year lease for five additional terms of three years each, governed by the same terms and provisions. It also provides a right to purchase the premises at any time during the term of the lease and up to six months after any extensions of the lease which shall be exercised by affecting a closing under the Asset Purchase Agreement. The Beachside Lease for the Beachside Inn assets has other provisions that are relevant to these proceedings. For example, the Beachside Inn lease defines the term "rent" as including the base rent ($100 per month) plus any state sales tax imposed "upon any and all rents or other payments provided in this lease." It provides for surrender of the premises at the expiration of the lease, including terms for removal of any trade fixtures, personal property and signs. Most importantly, the Beachside Inn lease expressly states the following: 26. a. The Lease does not create the relationship of principal and agent or of partnership or of joint venture or of any association between Landlord and Tenant, the sole relationship between the parties hereto being that of Landlord and Tenant. * * * c. This Lease and the Exhibits, if any, attached hereto and forming a part hereof, constitute the entire agreement between Landlord and Tenant affecting the Premises and there are no other agreements, either oral or written, between them other than are herein set forth. . . .
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED: That the Department of Revenue enter a final order finding that: The Department's assessment for additional sales tax, penalties and interest against Petitioner Harry T's is sustained for the portion attributable to payment of ad valorem taxes only; The Department's assessment for additional sales tax, penalties and interest against Petitioner Legendary Restaurant Associates, Inc., is sustained for the portion attributable to payment of ad valorem taxes only; and The Department's assessment for additional sales tax penalties and interest against Petitioner Beachside Inn, Inc., be sustained in its entirety. DONE AND ENTERED this 27th day of July, 2006, in Tallahassee, Leon County, Florida. S ___________________________________ LISA SHEARER NELSON 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 27th day of July, 2006.
Findings Of Fact Each of the above-named Petitioners have previously filed with the Office of the Comptroller requests for refund of monies paid to the State for cab card fees, identification stamps and road taxes pursuant to the provisions of Chapter 32, Florida Statutes. Thereafter, this Office issued to each Petitioner its Notice of Intention to Deny the Request ford Refund and each Petitioner filed its Petition; requesting a formal hearing pursuant to the provisions of Chapter 120, Florida Statutes, concerning such proposed denial. This Office granted such Petitions and same were forwarded to the Division of Administrative Hearings for formal proceedings. Charles C. Adams was appointed as the Hearing Officer and by stipulation of the parties all of the Requests for Refund were consolidated in one proceeding. On May 10, 1982, Mr. Adams issued his Recommended Order which included Findings of Fact by Stipulation of the Parties, Conclusions of Law and a Recommended Order. Copies of such Recommended Order were furnished to all of the Petitioners. Thereafter, this Office represented by John Browdy, Esquire, Assistant Attorney General, filed a Motion for Clarification which was denied by the Hearing Officer by Order dated June 7, 1982. Mr. Browdy then filed Exceptions to the Recommended Order. Both the Motion for Clarification and the Exceptions are based upon an alleged failure of the Hearing Officer to set forth in his Recommended Order any instruction's as to the fund or appropriation to which refunds, if granted, should be charged. In paragraph five of the Conclusions of Law in the Recommended Order, Hearing Officer Adams entered a conclusion to the effect that the annual assessment of cab card fees and identification stamps collected pursuant to Rule 25-5.14, Florida Administrative Code, was improper as that Rule had been held invalid by Order of the Division of Administrative Hearings in DOAH Case No. 82- 131R captioned Aero Mayflower Transit Co., Inc., et al. v. State of Florida, Public Service Commission and the Comptroller of Florida. Hearing Officer Adams notes that this Order of the DOAH has been appealed to the First District Court of Appeal of Florida. That Court is now considering, in Case No. AL-341, the accuracy of the DOAH Order and may either affirm, reverse; or remand such Order. With the addition of the Findings of Fact set forth above, the Findings of Fact set forth in the Recommended Order of Hearing Officer Adams issued under date of May 10, 1982, are adopted as the Findings of Fact determined by this Office and the same are incorporated and made a part hereof as though fully set forth at length.
