The Issue Whether Respondent, Neighborhood Grill, Inc., d/b/a Neighborhood Sports Grill (Respondent), failed to remit monies owed to Petitioner, Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (the Department) pursuant to the surcharge provisions found in Section 561.501, Florida Statutes (2006). If so, whether the Department should impose discipline against Respondent for that failure.
Findings Of Fact At all times material to the allegations of this case, the Department has been the state agency charged with the responsibility of regulating persons holding alcoholic beverage licenses. At all times material to the allegations of this matter Respondent has held license number 60-13254, series 4-COP., which was duly issued Respondent by the Department. At all times material to the allegations of this matter, Respondent was obligated to pay monthly surcharge taxes to the Department pursuant to the provisions of Section 561.501, Florida Statutes (2006). Respondent elected to have these surcharge taxes based on the "purchase method," i.e., based on the volume of alcohol Respondent purchased from its suppliers during the month.2 The Department routinely audits licensees to compare the surcharge taxes remitted by the licensee with the records maintained by the licensee’s suppliers and/or by the licensee. The purpose of the audit is to verify that surcharge tax paid by a licensee was based on a correct calculation of its surcharge tax obligation. In this case, the Department audited Respondent for the subject audit period of October 1, 2006, through June 30, 2007. Mr. Marrero began the subject audit by issuing an engagement letter to Respondent that included a questionnaire. In addition to other information, the questionnaire requested Respondent to identify its beverage suppliers. Respondent did not respond to the engagement letter or to the questionnaire. Based on records available to him, including information as to Respondent’s beverage suppliers gathered during prior audits, Mr. Marrero was able to identify Respondent’s major beverage suppliers. Consistent with the Department’s policies, Mr. Marrero contacted Respondent’s beverage suppliers to obtain records of all sales of alcoholic beverages those suppliers had made to Respondent during the subject audit period. Those beverage suppliers then provided their records to establish the beverages sold to Respondent during the subject audit period. Based upon those records Mr. Marrero determined the volume of alcoholic beverages purchased by Respondent during the subject audit period and calculated the surcharge tax due and owing to the Department for the subject audit period. Mr. Marrero compared the amount of the surcharge tax he calculated with the surcharge tax paid by Respondent to the Department for the subject audit period. Based upon that comparison, Mr. Marrero determined that Respondent had failed to remit the correct surcharge taxes payment based on underpayment, non-payment, and late payment. More specifically, Mr. Marrero calculated that the Respondent owed the Department additional surcharge tax in the principal amount of $6,265.06; surcharge interest in the amount of $589.93; and surcharge penalties in the amount of $3,467.05. Mr. Marrero determined that Respondent owed the Department the total amount of $10,322.04. Mr. Torres reviewed the audit prepared by Mr. Marrero and verified its accuracy. Mr. Marrero and Mr. Torres have the requisite education, training, and experience to conduct the subject audit (in the case of Mr. Marrero) and to review the subject audit to verify its accuracy (in the case of Mr. Torres). The subject audit accurately reflects the amounts Respondent owes the Department. On May 5, 2008, the Department provided Respondent a copy of its audit summary and demanded payment of the amounts due. Respondent has not paid any portion of the total sum ($10,322.04) identified as being due by the audit summary.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, enter a Final Order providing that the Respondent owes it surcharge taxes in the principal amount of $6,265.06, surcharge interest in the amount of $589.93, and surcharge penalties in the amount of $3,467.05, for a total amount of $10,322.04. The Final Order should give the Respondent a period of 30 days to remit the full amount $10,322.04 or make acceptable arrangements for the payment. The Final Order should revoke Respondent’s license if Respondent fails to timely remit the full amount due or make acceptable arrangements for such payment. DONE AND ENTERED this 5th day of June, 2009, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 5th day of June, 2009.
The Issue The issues are whether Respondent has incurred and failed to pay Petitioner a surcharge of $12,380.59 plus a penalty of $7553.07, in violation of Section 561.501, Florida Statutes, and whether Respondent has failed to maintain the records required by Section 561.501(2), Florida Statutes, and Rule 61A-4.063(8), Florida Administrative Code.
Findings Of Fact Respondent holds license number 39-00410 4COP. Respondent owns and operates the Station Bar located at 1947 Main Street in Tampa. Respondent sells alcoholic beverages, but is not a “pouring bar.” In other words, Respondent’s employees sell the alcoholic beverages, but never open and pour the alcoholic beverage into a glass. In the typical transaction, Respondent sells a bottle or six-pack of alcoholic beverages to a patron, who may also purchase from Respondent a nonalcoholic beverage to mix with his alcoholic beverage, as well as cups and stirrers. Sometimes, the patrons remain in the bar after the purchase. Respondent’s bar contains a dance floor, pool tables, video games, and a juke box for the entertainment of patrons choosing to remain and consume their alcoholic beverages in the bar. Respondent’s accounting system is fairly simple. Placing labels on each bottle, Respondent’s employees remove the label each time that a bottle is sold. If a patron chooses to consume his drink on the premises, the bartender is supposed to record this fact on a piece of paper. Either the bartender or Respondent’s manager records sales information on a daily sheet; Respondent’s manager transfers the information to weekly and monthly sheets. Respondent eventually produced for Petitioner's auditor some daily sheets, but they were not sufficiently detailed to document Respondent’s position concerning the sales of alcoholic beverages for off-premises consumption. Respondent also uses a two-tape cash register, but it shows only the sale amount and is not computerized. Neither tape reveals individual sales or whether the patron purchased his alcoholic beverage for consumption on premises. During the audit, Respondent took the position that about 60 percent of its sales of all alcoholic beverages were for off-premises consumption. However, despite repeated requests from Petitioner’s auditor, Respondent never produced a any detailed documentation of individual transactions. Instead, Respondent produced only highly summarized information supporting its position that few, if any, sales were for on- premises consumption. Petitioner’s auditor agreed to allow Respondent to keep detailed records of sales for on- and off-premises consumption for a period of time and then extrapolate the information back to the audit period. However, Respondent did not undertake such a process. Knowing that Respondent made some sales for consumption off premises, Petitioner’s auditor allocated 10 percent of all sales of beer and liquor for consumption off premises. Applying this 10 percent factor, Petitioner’s audit correctly determined that, from September 30, 1996, through December 31, 1998, Respondent incurred a surcharge liability of $14,114.90, as well as a penalty of $5,818.76, for a total liability of $19,933.66, taxes and penalty.
Recommendation It is RECOMMENDED that the Division of Alcoholic Beverages and Tobacco enter a final order finding Respondent liable for $12,380.59 in surcharge and $6190.29 in penalty, for a total liability of $18,570.88. DONE AND ENTERED this 13th day of June, 2001, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 13th day of June, 2001. COPIES FURNISHED: Richard Turner, Director Division of Alcoholic Beverages and Tobacco Department of Business and Professional Regulation 1940 North Monroe Street, Northwood Centre Tallahassee, Florida 32399-2202 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street, Northwood Centre Tallahassee, Florida 32399-2202 Michael Martinez Assistant General Counsel Department of Business and Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-2202 Thomas A. Smith 800 West Platt, Suite 3 Tampa, Florida 33606 Captain John L. Blair 1313 Tampa Street Park Trammel Building, Suite 702 Tampa, Florida 33602
The Issue The issue in this case is whether Petitioner should revoke Respondent's alcohol beverage license, pursuant to Section 561.501, Florida Statutes (1995), 1/ and Florida Administrative Rule 61A-2.02 2/ because Respondent failed to pay tax, interest, and penalties of $179,146.56.
Findings Of Fact Petitioner is the state agency responsible for regulating alcohol beverage licenses. Respondent holds alcoholic beverage license number 69-00735, series 4-COP, for Lake Monroe Inn, 2485 North Highway 17-92, Sanford, Florida. Until sometime after December 1996, Respondent sold alcoholic beverages for consumption on the licensed premises. Respondent was required by Section 561.501 to pay a surcharge tax on such alcoholic beverages. In October, 1996, Petitioner audited Respondent's books and records to determine Respondent's compliance with the surcharge tax. The audit period was January 1, 1996, through August 31, 1996. Petitioner's auditors conducted the audit in accordance with generally accepted audit procedures. Petitioner determined the following surcharge tax liability: Surcharge Tax $ 47,472.98 Interest $ 7,961.66 Penalty $123,711.92 Total Liability $179,146.56 On October 10, 1996, Petitioner presented an audit report to Respondent, and the auditors discussed the audit findings with Respondent. Respondent does not contest the audit report and concedes the total liability. Respondent admits that the failure to collect and remit the tax was willful. Subsequent to the filing of the Administrative Action, Respondent went out of business. A lienholder foreclosed on Respondent's license. Another business now operates at Respondent's location.
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 21st 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 21st day of August, 1997.
Findings Of Fact Petitioner owns the Palm Beach El Cid Bar and the Fifty-One-O-One Bar in West Palm Beach. Mixed drinks are sold at these establishments. In both bars, the cash registers record each item rung up but do not state the prices of the drinks separately from the sales taxes incurred on account of their sale. When James A. Blalock acquired petitioner approximately five years ago, he computed the sales tax owing on a day's sales at the Palm Beach El Cid Bar by examining a cash register tape which reflected the sales. For the day Mr. Blalock made his item by item calculations, he computed sales tax at 4 percent on each item, which yielded a figure slightly in excess of 4.2 percent on aggregate sales. Mr. Blalock then "made a supposition" that multiplying gross receipts (the sum of aggregate sales and aggregate sales taxes) by one twenty- fifth (4 percent) would yield a figure which would approximate 4.2 percent of aggregate sales. This supposition is well founded, as reflected by the equation .042 = X(1 + .042), where X equals the number by which gross receipts are to be multiplied. After Mr. Blalock had done his calculations, he made the assumption that the results for that day would hold true generally for both bars, and instructed petitioner's employees to multiply gross receipts by one twenty-fifth (4 percent) in order to compute petitioner's sales taxes. Petitioner's employees did in fact calculate and pay sales taxes monthly on this basis from August 1, 1974, through September 30, 1976, on sales at the Fifty-One-O-One Bar, and from October 1, 1979, through September 30, 1976, on sales at the Palm Beach El Cid Bar. Since Mr. Blalock's calculations, however, the "price structure" at the bars has changed three times. Nobody now remembers what day of the week was chosen as the basis for the original calculations. Gross sales at the Fifty-One-O-One Bar from August 1, 1974, through September 30, 1976, amounted to two hundred twenty thousand four hundred ninety- one dollars and thirty cents ($220,491.30). On these sales, petitioner paid sales taxes of eight thousand seven hundred forty-three dollars and twenty-eight cents ($8,743.28). Gross sales at the Palm Beach El Cid Bar from October 1, 1973, through September 30, 1976, amounted to four hundred ninety-two thousand six hundred forty-one dollars. and sixty-four cents ($492,641.64). On these sales, petitioner paid sales taxes of nineteen thousand six hundred sixty-five dollars and ninety-one cents ($19,665.91). At both of petitioner's bars, a price list which sated, for each item, its cost without tax, the amount of sales tax, and its cost with sales tax, was kept next to the cash register, for employees' use. Ordinarily, these price lists were not visible patrons. At least since the fall of 1971, respondent has permitted dealers in mixed alcoholic beverages to pay a sales tax equal to their gross sales less the quotient. of gross sales divided by 1.045, whenever it is impractical to record the sales price of each drink separately from the tax collected on account of the sale of the drink, but only if the dealer displays a price list on which the dealer "indicate[s]. . . the cost of each item, the applicable amount of sales tax to each and the total price of the item." Petitioner's exhibit No. 2.
Recommendation Upon consideration of the foregoing, and in keeping with the teachings of McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st D.C.A. 1977), it is RECOMMENDED: That respondent cease and desist from applying the policy set forth in petitioner's exhibit No. 2 until and unless the same shall be duly adopted as a rule, in the manner provided by law. That petitioner pay respondent twenty-two thousand one hundred sixty- eight dollars and eighty-seven cents ($22,168.87) on account of sales at the Palm Beach El Cid Bar and nine thousand nine hundred twenty-two dollars and eleven cents ($9,922.11) on account of sales at the Fifty-One-O-One Bar, together with applicable penalties and interest, less sales taxes petitioner has already paid on account of the Palm Beach El Cid Bar for the period October 1, 1973, to September 30, 1976, and on account of the Fifty-One-O-One Bar for the period August 1, 1974, to September 30, 1976. DONE and ENTERED this 19th day of August, 1977, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Mr. John E. Woodbery, Esquire Woodbery and Sapp 217 John Knox Road Tallahassee, Florida 32303 E. Wilson Crump, II, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304
Findings Of Fact This cause comes on for consideration based upon a Notice to Show Cause filed by the Petitioner, State of Florida, Department of Business Regulation, Division of Alcoholic Beverages and Tobacco, against Henry Rodriguez, trading as Hickory House, 38 Sunshine Mall, Clearwater, Florida. This Notice to Show Cause was filed against the license, No. 62-1602, Series 2-COP, which the Respondent had been granted by the Petitioner. This license was in effect on or about April 10, 1978, at a time the Respondent was accused of failing to disclose the name and address of a person connected directly or indirectly with the business, namely, William Vasios, and this failure to disclose was allegedly contrary to Section 561.17, Florida Statutes. That provision reads: "561.17 License application; approved person.-- Any person, before engaging in the business of manufacturing, bottling, distributing, selling, or in any way dealing in alcoholic beverages, shall file, with the district supervisor of the district of the division in which the place of business for which a license, is sought is located, a sworn application in duplicate on forms provided to the district supervisor by the division. Prior to any application being approved, the division may require the applicant to file a set of fingerprints on regular United States Department of Justice forms for himself and for any person or persons interested directly or indirectly with the applicant in the business for which the license is being sought, when so required by the division. If the applicant or any person interested with the applicant either directly or indirectly in the business is not qualified, the application shall be denied by the division. All applications for alcoholic beverage licenses for consumption on the premises shall be accompanied by a certificate of the Department of Health and Rehabilitative Services or the county health department that the place of business where in the business is to be conducted meets all of the sanitary requirements of the state." The facts in this case reveal that on April 10, 1978, when a routine inspection was made of the licensed premises by an employee of the Petitioner, one William Vasios was found to be in charge of the premises. Vasios reported that in July, 1977, he had loaned the Respondent, Henry Rodriguez, an amount of $14,000.00 to keep the Hickory House business open and Vasios had taken over the operation of the business to protect his interest in the loan. Some of the indicia of Vasios' interest in the business are shown by the fact that the sales tax permit for operating the business was issued in both Rodriguez' and Vasios' names, as demenstrated through the Petitioner's opposite Exhibit No. 2 admitted into evidence. Certain cancelled checks drawn on the business, as shown by Petitioner's Exhibits 3 through 5 admitted into evidence, were written by William Vasios and not the Respondent. These checks pertained to the operation of the business. Certain recap slips and ledger entries indicated that Vasios was controlling the business. The only indication that Rodriguez is still involved in the operation of the licensed premises is shown by his comments to the effect that he makes periodic checks of the business a couple of times a week. Henry Rodriguez had not disclosed the interest which William Vasios had in the license even though this requirement was stated in law through Section 561.17, Florida Statutes, and in our system of jurisprudence the Respondent is presumed to know the requirements of law. Additionally, when the Respondent applied for the license, he completed a form which indicated that he was disclosing any interest which other persons would have in the licensed premises; and even though this form was filled out at a time prior to Vasios' involvement with the business, common sense would have dictated that the Respondent apprise the Petitioner of any future interest which a third party might have in the licensed premises. The license was last renewed for the period October 1, 1977, through September 30, 1978. There has been no further effort on the part of the Respondent, Henry Rodriguez, to renew the license and, by his remarks in the course of the hearing, he has indicated that he has no future desire to renew the license. The license is nonetheless still in effect and subject to the penalties provided for through the Section 561.29, Florida Statutes. The license is deemed to be a viable license, based upon an examination of the provisions of Section 561.27, Florida Statutes, which states: "561.27 Renewing license.- A licensee under the Beverage Law shall be entitled to a renewal of his annual license from year to year, as a matter of course, on or before September 30 by presenting the license for the previous year or satisfactory evidence of its loss or destruction to the division and by paying the annual license tax and giving any bond required of such licensee under the Beverage Law. A license may be renewed subsequent to September 30 of each year only upon making to the division a delinquent application for approval, accompanied by an affidavit stating that no sales of alcoholic beverages have been made subsequent to September 30, and upon payment of a penalty of $5 for each month or fraction of a month of delinquency, or upon payment of a penalty of 5 percent of the license fee, whichever amount is the greater. All licenses not renewed within 60 days of September 30 will be canceled by the division unless such license is involved in litigation; however, the division may allow a licensee to renew the license subsequent to the 60day period after good and sufficient cause for the delinquency has been shown to the division by the licensee." It was not revealed in the course of the hearing whether the Notice to Show Cause (Administrative Complaint) was filed later than sixty days beyond September 30, 1978, and under the language of Section 561.27, Florida Statutes, the automatic cancellation set out in that provision only applies to licenses which were not renewed sixty days beyond September 30, 1978, and it excepts those licenses which were the subject of litigation or those licenses where the licensee was able to show good and sufficient cause for his delinquency in the payment of the renewal fee. Since the proof failed to demonstrate the effective date of the filing of the Notice of Show Cause, it is presumed for the purposes of this hearing that the Notice to Show Cause was filed prior to the expiration of the sixty-day grace period which follows the September 30, 1978, date. Therefore, the license would have been in litigation and not subject to cancellation by the provisions of Section 561.27, Florida Statutes. This analysis can be supported by the fact that the Respondent was apprised of the Petitioner's concern on the question of the non-disclosure of the name of William Vasios and this knowledge was imparted to the Respondent on April 11, 1978, at a time when the license was still in operation under the payment of fees for the period October 1, 1977, through September 30, 1978. In summary, the Respondent is the holder of a license within the meaning of the law and has violated the provisions of Section 561.17, Florida Statutes, thereby subjecting the Respondent to the penalties found Section 561.29, Florida Statutes.
Recommendation In consideration of the facts herein, it is recommended that the license, No. 62-1602, Series 2-COP, held by the Respondent, Henry Rodriguez to trade as Hickory House, at the location 38 Sunshine Mall, Clearwater, Florida, be revoked. DONE AND ENTERED this 20th day of April, 1979, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Mary Jo M. Gallay, Esquire Staff Attorney Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Henry Rodriguez t/a Hickory House 38 Sunshine Mall Clearwater, Florida 33516 Captain R. Caplano Park Trammell Building, Room 705 1313 Tampa Street Tampa, Florida 33623
The Issue Whether the Application for Alcoholic Beverage License dated March 9, 1988, filed by Ocie C. Allen, Jr., should be approved by the Respondent?
Findings Of Fact Ocie C. Allen, Jr., d/b/a OCA, filed an Application for Alcoholic Beverage License dated March 9, 1988 (hereinafter referred to as the "Application"), with the Division. In the Application, Mr. Allen indicated under "Type of Application" that the Application type was "Other - ownership change because of contract and change of location." Mr. Allen listed himself as the "Applicant" and signed the Application as the "Applicant." The "Current License Number" listed in the Application to be transferred to Mr. Allen is 62-03498, current series 4 COP. The holder of this license was Terri Howell. At the end of the Application there is an "Affidavit of Seller(s)" to be executed by the licensee from whom the license is to be transferred. This affidavit has not been completed in the Application. The purchase price for the business was listed as $86,250.00. By letter dated March 16, 1988, the Division returned the Application to Mr. Allen and informed him that it was being returned for the following reasons: (1.) Need copy of loan in the amount of $86,250.00. (2.) If there are other agreements concerning this change, we will need copies. (Closing Statements) (3.) Need Affidavit of Seller signed by Ms. Howell making sure signature has been notarized on both applications. (4.) If no business name, please use applicants [sic] name also in that blank. Mr. Allen returned the Application to the Division with a letter dated March 21, 1988, and indicated, in part, the following: The Loan of $86,250.00 is 75% of the appraised value for which a 4 COP license was sold in Pinellas County prior to Ms. Howell winning the drawing. This amount is reduced by the amounts she has received from the operation of Spanky's. Thereby the actual amount owed by me to Ms. Howell is $86,250.00 LESS the amount she has received during the operation of Spanky's, approximately, $60,000.00. The Application was not modified by Mr. Allen. In a letter dated March 24, 1988, the Director of the Division requested the following additional information from Mr. Allen: (1.) Need Affidavit of Seller signed by Ms. Howell making sure signature has been notarized on both applications. (2.) Complete (No.5) Type of License Desired: (Series ). By letter dated March 28, 1988, Mr. Allen responded as follows to the Division's request for information: Enclosed is the application for transfer. Ms. Howell signature [sic] on the Independent [sic] Contractor Agreement is the only signature of hers that will be furnished to you. By letter dated April 4, 1988, the Division informed Mr. Allen that Terri Howell, the licensee, needed to sign the Affidavit of Seller. The Division notified Mr. Allen that it intended to deny the Application in a letter dated May 31, 1988. Mr. Allen was provided a Notice of Disapproval of the Application in a letter dated June 29, 1988. The following reasons were given for denial of the Application: Application to transfer the license does not bear the signature of the current licensee and, therefore does not evidence a bonafide [sic] sale of the business pursuant to [Section] 561.32, Florida Statutes. Application incomplete as applicant has failed to provide complete verification of his financial investment. Also, applicant has failed to provide records establishing the annual value of gross sales of alcoholic beverages for the three years immediately preceding the date of the request for transfer. The Division is, therefore, unable to fully investigate the application pursuant to Florida law. By letter dated July 19, 1988, Mr. Allen requested a formal administrative hearing to contest the Division's denial of the Application. Mr. Allen sent a letter to the Division dated October 27, 1988, with an Affidavit requesting permission to pay a transfer fee of $5,000.00 "in lieu of the 4-mill assessment."
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be issued in this case dismissing the case with prejudice. DONE and ENTERED this 17th day of January, 1989, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of January, 1989. COPIES FURNISHED: Ocie C. Allen, Jr. Post Office Box 10616 Tallahassee, Florida 32302 Lt. B. A. Watts, Supervisor Division of Alcoholic Beverages and Tobacco Department of Business Regulation 345 S. Magnolia Drive, Suite C-12 Tallahassee, Florida 32301 Harry Hooper Deputy General Counsel Department of Business Regulation The Johns Building 725 South Bronough Street Tallahassee, Florida 32399-1007 Leonard Ivey, Director Department of Business Regulation The Johns Building 725 South Bronough Street Tallahassee, Florida 32301-1927 Joseph A. Sole General Counsel Department of Business Regulation The Johns Building 725 South Bronough Street Tallahassee, Florida 32301-1927
The Issue Whether surcharge taxes and excise taxes, plus penalties and interest, attributable to the sale of alcoholic beverages should be assessed against the Respondent, Trans World Airlines, Inc., d/b/a Trans World Airlines? Whether the Respondent's Division of Alcoholic Beverages and Tobacco license/permit number 78-14 should be subjected to a civil penalty or should be suspended or revoked for failure to timely file surcharge and excise tax reports and surcharge and excise taxes to the Petitioner?
Findings Of Fact The Petitioner is the State of Florida, Department of Business Regulation, Division of Alcoholic Beverages and Tobacco. The Respondent is Trans World Airlines, Inc., d/b/a Trans World Airlines. The Respondent has be granted an alcoholic beverage license by the Petitioner. That license is identified as license number 78-14, series X (hereinafter referred to as the "License"). At all times relevant to this proceeding the Respondent held the License. From January 1, 1988, through January 15, 1991 (hereinafter referred to as the "Tax Period"), the Respondent operated as an air carrier in the State of Florida. During the Tax Period the Respondent sold alcoholic beverages to passengers on aircraft flights over the State of Florida. As a result of the sales of alcoholic beverages over Florida airspace, the Respondent has incurred surcharge and excise tax liability to the Petitioner for the Tax Period. The Respondent has not remitted any amount of its surcharge or excise tax liability to the Petitioner for the Tax Period. The Respondent has failed to file monthly surcharge or excise tax reports during the Tax Period. In February, 1991, the Petitioner performed an audit of the Respondent for the Tax Period. During the Petitioner's audit of the Respondent, the employee of the Respondent responsible for remitting alcoholic beverage reports and taxes to various states, including Florida, admitted to the Petitioner that the Respondent remitted its alcoholic beverage taxes to other states and did not understand why the Respondent did not remit its alcoholic beverage surcharge and excise taxes to Florida. The Petitioner, as a result of its audit of the Respondent, computed the Respondent's liability for surcharge and excise taxes for the Tax Period. The Petitioner used a standard airline industry apportionment formula to compute the Respondent's tax liability. The apportionment formula utilized by the Petitioner to compute the Respondent's tax liability to Florida for the Tax Period consisted of the following computation (hereinafter referred to as the "Apportionment Formula"): (a) a ratio is computed by dividing total revenue air miles (based upon revenue plane miles) flown by the Respondent by the total revenue miles flown by the Respondent in Florida; (b) the ratio is multiplied by the total gallons of alcohol sold by the Respondent to determine the estimated amount of alcohol sold in Florida; and (c) the estimated amount of alcohol sold in Florida is multiplied by the Florida tax rate(s) to determine the total alcohol tax payable. In applying the Apportionment Formula, the Petitioner used revenue plane miles in calculating the first ratio of the Apportionment Formula. Line 22, page 18, line 9, page 28, lines 13-20, page 37, Transcript of August 21, 1991. The Petitioner did not use revenue passenger miles as argued by the Respondent. Revenue plane miles looks at the total miles flown by an aircraft without regard to the number of passengers on a flight. Revenue passenger miles takes into account the number of passengers on each flight by including the number of miles a plane flies times the number of passengers on board that flight. Revenue passenger miles takes into account the difference in the size of each plane involved in a flight. Revenue passenger miles more accurately reflects the amount of alcohol which may be consumed. The information utilized by the Petitioner in applying the Apportionment Formula to the Respondent for the Tax Period was information provided by the Respondent. The Respondent provided the Petitioner with revenue plane miles and not revenue passenger miles. Therefore, the Petitioner reasonably relied upon and used the best information available to it to compute the Respondent's liability for surcharge and excise taxes. It is reasonable for the Petitioner to use revenue plane miles to compute surcharge and excise taxes attributable to the sale of alcohol in Florida absent a taxpayer providing revenue passenger miles. The Apportionment Formula utilized by the Petitioner is a fair method of computing the tax liability of the Respondent to the State of Florida for the Tax Period. Using the data provided by the Respondent was reasonable. If the Respondent had provided revenue passenger miles, the Petitioner should have used that information in applying the Apportionment Formula. Based upon an application of the Apportionment Formula and using the data provided by the Respondent to the Petitioner, the Respondent owes the following amounts for the Tax Period: Surcharge: Surcharge $ 9,580.38 Penalty 1,699.87 Interest 356.01 Total $11,636.26 Excise: Excise $40,285.49 Interest 7,279.60 Total $47,565.09 The total liability of the Respondent for the Tax Period is $59,201.34. After the Petitioner's audit of the Respondent, the Respondent provided the Petitioner with revenue passenger miles and revenue ton miles. Revenue ton miles have no substantive affect on the taxable event at issue in this proceeding; the sale of alcohol in Florida. It is not clear whether the revenue passenger miles provided by the Respondent can be used by the Petitioner in applying the Apportionment Formula. If so, that information should be used to calculate the Respondent's liability for taxes, penalties and interest in this case. If the information is not sufficient, the parties agreed that the record would remain open to give the Respondent an opportunity to provide any information needed to calculate the Respondent's liability. The Respondent presented evidence concerning the percentage of flights by the Respondent during which alcoholic beverages were served over Florida and the percentage of flights by the Respondent during which alcoholic beverages were not served over Florida. This evidence is rejected because it did not specifically apply to the Tax Period and is not otherwise credible to prove the facts the Respondent was attempting to prove. So called "complimentary" alcoholic beverages are provided by the Respondent to some passengers. These beverages, however, are received as part of the consideration a passenger receives for purchasing a ticket from the Respondent. Such beverages are, therefore, sold by the Respondent.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a final order be issued requiring the Respondent, Trans World Airlines, Inc., d/b/a Trans World Airlines, to pay surcharge and excise taxes, plus penalties and interest thereon, based upon application of the Apportionment Formula in the amounts set out in finding of fact 19. The amount of surcharge and excise taxes, plus penalties and interest thereon, may be recalculated by the Petitioner based upon an application of the Apportionment Formula utilizing revenue passenger miles for the Tax Period if revenue passenger miles have been, or are subsequently, provided to the Petitioner by the Respondent. It is further recommended that the Respondent be assessed a civil penalty of $1,000.00 for its failure to remit surcharge taxes and a civil penalty of $1,000.00 for its failure to remit excise taxes. RECOMMENDED this 13th day of November, 1991, in Tallahassee, Florida. LARRY J. SARTIN 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 13th day of November, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-2441 The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 2. 2 3. 3 5. 4 6. 5-6 Hereby accepted. 7 10/ 8 7. 9-11 11. 12 12. 13 13. 14 16. 15 18. But see 15-17. 16 17. See 12 and 18. Conclusion of law. Not relevant. See 12. 21-22 Although true, the burden of proof in this case was on the Petitioner. 23 8-9. 24 Not relevant. 25-26 19. 27 20. The Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1. 2 2-3. 3 5. 4 6. 5 12-13. 6 See 14-15. 7 See 21. 8-10 Not supported by the weight of the evidence. COPIES FURNISHED: Robin L. Suarez Assistant General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007 Thomas P. Lombardi Director - Tax Administration 100 S. Bedford Road Mt. Kisco, New York 10549 Donald D. Conn, Esquire General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1000 Richard W. Scully, Director Division of Alcoholic Beverages and Tobacco Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1000
The Issue The issue in this case is whether Respondent failed to pay tax surcharges, penalties and interest owed on the sale of alcoholic beverages, and, if so, the amount that is currently due and owing.
Findings Of Fact The Department is the state agency responsible for, inter alia, the licensing of establishments that sell alcoholic beverages. During the years 2000 to 2006, a statutory tax surcharge existed on the sale of alcohol consumed on the premises of licensed establishments. The Department was responsible for ensuring that all such surcharges were paid by licensed establishments. Respondent is a licensed purveyor of alcoholic beverages. Respondent's business, known as The Hub, has an area for consumption of alcoholic beverages and a separate, but attached, area for selling alcohol in sealed containers (i.e., in "package"). Alcohol served in package is not subject to the surcharge mentioned above. Alcoholic beverages are stored in five different areas of the establishment: in the bar, in the package store area, in a large storeroom, in a wine room, and in a walk-in cooler. In September 2006, the Department conducted a tax surcharge audit of Respondent's business for the period July 1, 2003 through June 30, 2006 (the "Audit Period"). A surcharge audit is performed to ensure that an establishment has paid the entire tax surcharge owed for the sale of alcohol consumed on the premises. By letter dated September 25, 2006, the Department advised Respondent that it had been selected for the aforementioned audit. The letter included a questionnaire to be filled out by Respondent to provide the Department information to make the audit more accurate. Respondent was asked to complete and mail the questionnaire on or before October 9, 2006. Respondent did not respond to the September 25, 2006, letter as requested. Therefore, an initial desk audit was performed by the Department. A desk audit utilizes information from the department's database in lieu of records and information received directly from a licensee. The Department's database included reports from major alcohol distributors concerning deliveries made to Respondent during the Audit Period. The sale and delivery of alcoholic beverages is reported by distributors to the Department in the form of gallons of alcohol delivered. The report does not list sizes of bottles, numbers of bottles, or brand names. The tax surcharge is based solely on gallons sold. The initial desk audit was completed on or about November 16, 2006. The audit found an unpaid surcharge amount of $33,817.34, plus reporting penalties and interest of $183.02; and underpayment penalties and interest of $23,755.98, for a total liability of $57,810.34. Pursuant to its normal operating procedures, the Department sent a letter by certified mail advising Respondent of the audit findings. The letter also gave Respondent the right to waive the underpayment penalties and interest by paying the remaining balance within 30 days. The letter further provided Respondent the right to make any corrections to errors which it believed to exist within the audit. The letter then asked Respondent to produce certain records so that the audit findings could be confirmed. The desk audit performed by the Department established the number of gallons of beer, wine and liquor delivered to Respondent by major distributors during the audit period. The primary beer distributors were Pep Distributing and JJ Taylor; the primary liquor distributors were Southern, National, and Premiere. Adjustments to the gallonage (as it is referred to by the Department) were made for spillage, alcohol used for cooking, and other reasons. The desk audit revealed that 2.25 gallons of draft beer, 38,340.90 gallons of other beer, 721.19 gallons of wine, and 10,498.34 gallons of liquor had been delivered to The Hub during the Audit Period. Meanwhile, Respondent had been making some tax surcharge payments on a regular basis during the Audit Period. The surcharge payment was mailed in using a printed form supplied by the Department. On the form, a business could elect to pay the surcharge based on its sales or based on its purchases of alcohol. Respondent chose to pay using the sales method, i.e., payments were made on the amount of alcohol sold for consumption on its premises. The Department determined that despite the surcharge payments made by Respondent during the Audit Period, Respondent had underpaid by the sum of $33,871.34. The basis for this finding was that of the 10,000 (plus or minus) gallons of alcohol purchased during the Audit Period, there was proof of consumption on the premises for only about 2,075 gallons. Because The Hub had a 4-COP license (meaning it is allowed to sell alcohol for consumption on the premises), the remainder of the alcohol was presumed to have been consumed without a surcharge being paid. Interest in the amount of $183.02 was assessed, along with underpayment penalties and interest of $23,755.98, for a total statutory liability of $57,810.34, pursuant to the desk audit. By letter dated November 16, 2006, the Department notified Respondent of its findings and conclusions from the desk audit. The letter was sent to The Hub via certified mail and signed for on November 17, 2006, by Jeannie Robinson, an employee (bartender) of Respondent. On or about December 6, 2006, Respondent (through the person of Scott Imrich, a manager of the establishment) contacted the Department and provided answers to the questionnaire that had been sent out with the November 16, 2006, letter to Respondent. The questionnaire contained two pertinent pieces of information: 1) The Hub did not have any draft beer; the draft beer indicated in the distributors' reports was actually a certain kind and size of canned beer that Respondent did not know how to classify, so they placed it in the draft beer column; and 2) The Hub also had a package store and 24-to-25 percent of The Hub's "total sales" were made in the package store. That is, Respondent was saying that the package sales were not subject to the surcharge. Imrich did not specify whether his comments about percentage of sales in the package store were meant to reflect total dollar amounts or total gallons sold. His letter simply stated: "We are currently looking at a 24-25% rate (over the three year audited period) in total beer (container), liquor, and wine sales from our package store, from our total sales." The Department interpreted that statement to mean 25 percent of total gallons sold. Respondent's witnesses at final hearing said that Imrich meant 25 percent of the total dollar amounts of sales. Imrich did not appear at final hearing to clarify what he actually meant. The current owner of The Hub, who was a bartender during the Audit Period, estimated that approximately 30 percent of revenues were generated in the package store at that time, but could not provide any estimation as to percentage of gallons sold. After receipt of Imrich's letter, the Department revised its audit findings. A credit was given to Respondent for package sales. (Respondent was also given credit for spillage amounting to five percent of beer and wine.) Beer gallonage was reduced from 36,423 gallons to 27,319.91 gallons. Wine gallonage actually increased, but that was due to Respondent's identifying one distributor (Johnson Brothers) that the Department had not previously considered. Respondent's wine inventory went from 721 gallons to 997 gallons, minus the 25 percent allowance, for a total of 816.7 gallons.1 Liquor gallonage was also affected by Johnson Brothers deliveries, but liquor went from 9,448.55 gallons to 7,163.77 gallons. The adjustments referred to above reduced the amount of the surcharge to $22,915.48 and reduced the reporting penalties to $121.68. The underpayment penalties and interest calculation was reduced to $16,036.81 for a total statutory liability of $39,073.97. A letter advising Respondent of the revised audit was mailed on December 20, 2006, and again advised that prompt payment could reduce the total amount owed. James Smith, who was a primary owner of The Hub at that time, was notified about the audits, but Smith told his manager, Imrich, to handle the situation. Imrich apparently failed to do so. When no response to the revised audit findings was received by the auditors for the Department, the matter was referred to the Department's Enforcement Division for further action. The Enforcement Division then conducted a visit to The Hub to advise Respondent as to the existing determination of money owed. That visit was made on March 6, 2007. A form memorializing the visit was filled out and signed by Kelly Primo, a bartender at The Hub. Respondent was given 14 days to respond to the Department or else an administrative action would be filed to collect the outstanding tax surcharge charges. Imrich thereafter provided cash register tapes (called Z Tapes) to the Department. The Z Tapes were purported, by Imrich, to establish the amount of alcohol actually sold for consumption on the premises. There were thousands of Z Tapes (two tapes per day from the bar during the Audit Period) provided to the Department. Imrich also provided cash register receipts from the package store portion of the establishment. The Z Tapes distinguished purchases for beer versus wine versus liquor. The package store receipts did not identify what kind of alcohol was purchased, only the dollar amount of the purchase. It is, therefore, impossible to ascertain from the cash register receipts how many gallons of alcoholic beverage were sold in the package store. If the Z Tapes are correct and if they reflect all sales during the audit period, then one might extrapolate--using a one ounce per drink assumption--the total gallonage sold at the bar. However, the Z Tapes were not introduced into evidence and cannot be relied upon to make a finding herein. Respondent did prepare some general summaries of the Z Tapes, but no competent evidence was presented to give those summaries any credibility. Thus, they also cannot be relied upon to make a finding herein. The Z Tapes purportedly indicate that 2,075 gallons of alcoholic beverages were sold in the bar portion of the establishment during the Audit Period. There is no disagreement by the Department that at least 2,075 gallons were sold at the bar. Ferrell Melton, who was a bartender during the Audit Period but has since become an owner of The Hub, estimated that approximately 70 percent of the Respondent's revenues generated during the Audit Period were from the bar sales. There was no documentary evidence to support his estimation. Based upon the Z Tapes and further conversations with Respondent, the Department agreed to give Respondent the benefit of the doubt. An allowance for sales in the package store was then increased to 40 percent (from 25 percent) of total sales for purposes of calculating the surcharge.2 The 40-percent revision reduced the surcharge to $16,646.78; the reporting penalties and interest were reduced to $88.02; the underpayment penalties and interest were reduced to $11,630.98, for a total statutory liability of $28,365.78 (as compared to $57,810.34 in the original audit, a 50-percent reduction). A letter dated June 13, 2007, was sent to Respondent setting forth the revised amounts. Converting Dollar Sales to Gallons The package store area constituted a small portion of the entire establishment. There was a door connecting the package store to the bar area, but it was kept locked at all times relevant to this dispute. A sign on the door advised potential customers to ask the bartender for assistance when items needed to be purchased from the package store. When asked, the bartender would leave the bar area, unlock the package store, and ring up the purchase on the cash register located in the package store. The door would then be re-locked until another customer asked for assistance. The package store sold beer, wine and liquor. The liquor in the package store was sold in several bottle sizes: 50 ml, 100 ml, 200 ml, 375 ml, and 1.75 liters. By way of example, Respondent provided an inventory for the week ending May 6, 2007, which showed the following numbers of bottles of liquor in each size: 50 ml--1844 bottles (24.3566 gallons) 100 ml--48 bottles (1.26802 gallons) 200 ml--1766 bottles (93.3055 gallons) 375 ml--925 bottles (91.6346 gallons) 1.75 liters--150 bottles (69.3750 gallons) Total for these bottles: 433.09 gallons 750 ml--773 bottles (153.153 gallons) Liters--743 bottles (196.279 gallons) Total for these bottles: 349.432 gallons The beer inventory was 773 12-ounce bottles (522 gallons) and 743 16-ounce bottles (196.279 gallons). The wine inventory was 666 bottles (131.953 gallons). Gallonage Theory: The larger size bottles were used in the bar area. Thus, a considerably larger number of bottles would have to be sold in the package area to generate 8,000 gallons of liquor. It is difficult to imagine how the small package store, using a bartender as its cashier on an intermittent basis, could generate enough sales of smaller bottles to sell four times as much alcohol as the bar area. Presumably some wine and beer was also sold in the package store. Revenue Theory: A 33-ounce (one liter) bottle of liquor would sell in the package store for a set price. The price of $10.00, although not realistic, was used at final hearing by way of example. That same 33-ounce bottle would generate far more if sold by the drink in the bar area. For example, at $3.00 per drink containing one ounce of alcohol, the bottle would provide $99.00 in revenue at the bar versus $10.00 if sold in the package area. Thus, alcohol sold in the bar area would definitely generate more revenue than package alcohol. Respondent did not have any record as to how many gallons were sold in the package store, but maintains that all liquor, except for what was sold in the bar area, would have been package store sales. For the Audit Period (per findings in the second revised audit), 10,584.32 gallons were purchased, and Respondent paid tax on 2,075.55 gallons. Thus 8,508.77 gallons were presumed to have been sold as package. If, as Respondent asserts, liquor sold in the bar generates ten times as much per ounce more than liquor sold in package, than at a theoretical $1.00 per gallon, the package store would generate $8,508.77 and the bar would generate $20,755.50 (2,075.55 gallons times $10.00). Respondent's primary representative, who had been a bartender at The Hub for 20 years before recently purchasing it, estimates that 60 percent of The Hub's revenue currently comes from sales at the bar area. During the Audit Period, he believes approximately 70 percent of the revenue was generated in the bar area. There is no documentary support for the witness's estimation, and the witness's confusion concerning the facts does not make the testimony very credible. Using the theoretical amounts set forth in paragraph 23 above, $8,508.77 (package) plus $20,755.50 (bar), equates to $29,264.27. Seventy percent of that figure equals $20,484.98, i.e., very close to the amount that the 2,075 gallons of liquor might generate in the bar on a per-drink basis. Using the prior manager's figure of 75 percent of sales (if revenues is what he meant) being from the bar, that would equate to $21,948 of sales from the bar. Thus, theoretically, Respondent's position could be feasible. However, Respondent simply failed to provide competent, substantial evidence to support its theory. The unsubstantiated hearsay as to what Imrich meant or how much alcohol Imrich sold through the package store is insufficient to make a conclusive finding. So, too, is the general assertion by Respondent as to demographics in the area, type of clientele, etc. None of the evidence at final hearing could establish a definitive relationship between the gallonage sold and the revenue received. None of the Z Tapes or cash register receipts were offered into evidence to establish such a relationship. There were apparently no records as to the number of bottles sold in the package store. Rather, the tapes from the package store show only a dollar amount; the gallonage per dollar cannot be ascertained from the tapes. (Mr. Smith did take an inventory each day when he was working at The Hub, but he would throw away his inventory sheet each day. Besides, Mr. Smith was not working full-time at the establishment during the Audit Period.) Respondent's record-keeping for its alcohol sales is inconsistent. For the bar area of its establishment, Respondent's cash register tapes identify whether each purchase is beer, wine or liquor. In the package store, the cash register receipts show only a dollar amount, without identifying what was sold.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco: Upholding the Department's assessment of a surcharge in the amount of $16,646.78; surcharge interest in the amount of $88.02; and surcharge penalties in the amount of $11,3630.98, for a total liability of $28,365.78; and Assessing a penalty in the amount of $4,161.69. DONE AND ENTERED this 15th day of April, 2010, in Tallahassee, Leon County, Florida. R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of April, 2010.
The Issue Whether Respondents' alcoholic beverage license should be disciplined for the reasons stated in Petitioner's Notice to Show Cause dated September 14, 1982.
Findings Of Fact Based on the evidence presented, the following facts are determined: The Long Branch was operating under DABT License No. 74-878 in License Series 4-COP-SRX. This type of license requires food and nonalcoholic beverage sales to constitute at least 51 percent of all sales. Audit of the Long Branch's records, which were examined on a month-by- month breakdown of the sales for the period July 1 1981, to July 1, 1982, showed food and non- alcoholic beverage sales at 7.7 percent and alcoholic beverage sales at 92.3 percent of total sales. For the period July 1 through July 27, 1982, the ratio was 4.3 percent to 95.7 percent. At no time during the more than one year period audited did the food sales reach the required 51 percent.
Recommendation Based on the foregoing, it is RECOMMENDED: That Respondents' License No. 74-878 be revoked. RECOMMENDED this 31st day of March, 1983, in Tallahassee, Florida. ARNOLD H. POLLOCK, 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 31st day of March, 1983. COPIES FURNISHED: Thomas M. and Sandra J. Spera Long Branch 600 South Yonge Street Ormond Beach, Florida Mr, Howard M. Rasmussen Director, Division of Alcoholic Beverages and Tobacco Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Mr Gary R. Rutledge Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
