The Issue The issue to be resolved in this proceeding concerns whether the Petitioner is liable for sales tax, together with interest and penalties on the purported unpaid tax amount, as referenced in the assessment and the Respondent agency's notice of decision issued on October 18, 1994.
Findings Of Fact The Petitioner is the sole proprietor of a marina and restaurant business located in Pensacola Beach, Florida. The Respondent is an agency of the State of Florida charged with enforcing pertinent statutes and rules providing for the collection of sales and use taxes, as well as penalties and interest for tax amounts determined to be due and payable but not timely paid to the Department and the State of Florida. Included within the Department's regulatory authority over the assessment and collection of sales and use taxes is the authority to conduct audits of taxpayers to determine amounts of tax due and owing to the State, as well as whether such taxes have been timely and properly remitted and otherwise accounted for. The relevant audit period involved in this proceeding extended from October 1, 1987 through December 31, 1992. The Petitioner's marina and restaurant business operated during the audit period was operated on property owned by the Santa Rosa Island Authority (Authority) and the State of Florida Department of Natural Resources (now Department of Environmental Protection, DEP). The property was leased to the Petitioner for the purpose of operation of this business. The property leased by the Petitioner from the Authority consisted of certain land above the mean high water mark and five boat slips. These five boat slips will be referred to sometimes hereafter as the "Santa Rosa boat slips". During the audit period, the Petitioner operated the restaurant business on the property leased from the Authority and rented the five boat slips to various boating customers. The Petitioner also rented 70 other boat slips to customers during the audit period. These slips were built by the Petitioner in 1977 on submerged land which had been leased from the State of Florida, Department of Natural Resources, Bureau of Land Management. This property adjoined the property leased from the Authority. On November 16, 1992, the Department sent to the Petitioner a notice of intent to audit its books and records. As part of the audit, the Department requested that the Petitioner produce various records, including but not limited to, the Petitioner's federal tax returns, Florida corporation income tax returns, Florida sales and use tax returns, depreciation schedules, general ledgers, property records, cash receipts journals, cash disbursement journals, purchase journals, general journals, sales journals, sales invoices, shipping documents, purchase invoices, intangible property records, sales tax exemption certificates and lease agreements for the real or tangible property involved in the Petitioner's business. The Petitioner basically was able to provide few records to support his restaurant sales and boat slip rental receipts, except for Florida sales tax returns and federal income tax returns. There were no sales control documentation records, such as general ledgers and general journals provided to the Department's auditor for review, except for a cash register tape for the night of December 1, 1992, representing that night's restaurant gross receipts activity. The Petitioner's method of record keeping essentially consisted of his writing down the gross sales each evening from the cash register tapes, totaling those figures at the end of the month, and reporting this total on his Florida sales tax returns as the gross receipts from the restaurant business. However, the Petitioner did not keep the cash register tapes or maintain other documents to support the information reported to the Respondent on the monthly sales tax returns. The Petitioner reported as, "exempt income," the rental from the boat slips for the five Santa Rosa boat slips on the monthly sales tax returns filed with the Respondent. He did not report his monthly rental income from the remaining 70 boat slips on his sales tax returns filed with the Respondent. He did report a great deal more gross receipts on his federal income tax returns than on his Florida sales tax returns. The Department compared the Petitioner's federal income tax returns during the audit period with his Florida sales tax returns and determined that the gross receipts reported to the federal government were substantially larger than the gross receipts reported to the Department. It determined that the primary difference in the gross receipts was attributable to rental revenues from the boat slips, which were not accounted for by the Petitioner in his Florida monthly sales tax returns. The auditor determined that four percent of the recorded restaurant gross receipts were attributable to alcohol sales and 96 percent to food sales. The Department calculated the sales tax due on the undisclosed income through the audit, which represented gross receipts from the restaurant business and the boat-slip rental business, which was not reported by the Petitioner on his Florida sales tax returns. It calculated the sales tax due during the audit period on the rentals of the five boat slips, which were improperly listed as exempt sales on the Petitioner's monthly sales tax returns filed with the Respondent. It was also revealed that during the audit period, the Petitioner had sub-leased a portion of the Santa Rosa property to his former wife for $5,000.00 per year. The Department calculated that the Petitioner owed $300.00 in taxes based upon the sub-lease to his former wife. The Department additionally calculated that the Petitioner owed an additional $314.00 for use taxes, based upon non-exempt purchases of tangible personal property. The Department assessed the Petitioner's sales taxes based upon the estimated boat-slip rental receipts, although it did not assess the lease payments made by the Petitioner to the Authority or to the State of Florida, Department of Natural Resources. On February 12, 1993, the Department assessed the Petitioner a total of $71,308.30 for the audit period, representing $45,694.90 of sales tax due, $14,093.37 of interest due thereon, $11,041.36 of penalties, and $314.98 of use tax, together with $91.02 of interest due on use taxes unpaid, and $72.67 of penalties due thereon. Daily interest of $15.13 commencing on February 13, 1993 was also assessed. Additionally, on February 12, 1993, the Department assessed the Petitioner $1,060.97 for the audit period, including penalties and interest, for local government infrastructure surtax due. Daily interest of $.29, commencing on February 13, 1993, was assessed on that amount. The Petitioner, in essence, does not dispute the Department's calculation of the assessed amount. The Petitioner, rather, contends that he believes that he reported all income and paid all sales taxes which were due and that his certified public accountant failed to account properly for his gross receipts and income to the federal internal revenue service, without the Petitioner's knowledge, during the audit period. He maintains, therefore, that the method of calculation of the Department's tax assessment, based upon the difference between the gross receipts depicted on the federal income tax returns and on the sales tax returns filed with the Department, is inaccurate, apparently because of the CPA's errors. Additionally, the Petitioner maintains that he was of the belief that the boat-slip rentals were not taxable and reportable for sales tax purposes to the Department because he believes, citing Rule 12A-1.061(5)(a) and (b), Florida Administrative Code. He bases this view on his assertion that the persons residing in the boat slips were "95 percent" live-aboard-type tenants, residing on their boats and that, essentially, they treated their boats as beach homes or condominiums, etc., for purposes of that rule, by residing for longer periods than six months. He thus contends that the rental revenues from such residents were tax exempt. The Department, however, established through its auditor's testimony and the Department's Composite Exhibit 2, that the Petitioner's CPA, through information he generated, did not establish that the difference between the gross receipts reported to the internal revenue service on the federal tax returns and the gross receipts reported on the Florida sales tax returns was not taxable. The Petitioner's proof does not show the factual elements necessary to establish that the 75 boat slips meet the rule's standard for exempt revenues from non-taxable residences.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record and the candor and demeanor of the witnesses, it is, therefore RECOMMENDED that a Final Order be entered by the Respondent assessing the taxes, penalties, and accumulated interest in the above-found amounts. DONE AND ENTERED this 21st day of June, 1996, in Tallahassee, Florida. P. MICHAEL RUFF, 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 21st day of June, 1996. APPENDIX TO RECOMMENDED ORDER CASE NO. 94-7256 Petitioner's Proposed Findings of Fact Accepted. Accepted, based upon the Petitioner's testimony in this regard, but immaterial. 3-4. Rejected, as not established by preponderant evidence. The Petitioner did not show that all or even most of the tenants are on annual rentals and, moreover, if they were, the rule cited by the Petitioner himself requires that such lease agreements or contracts be written. The Petitioner has simply failed to establish that the boat-slip rental arrangements were exempt transactions. Rejected, as incorrect as a matter of law and as immaterial and irrelevant. Rejected, as immaterial and irrelevant to the issues in this proceeding. Rejected, as subordinate to the Hearing Officer's findings of fact on this subject matter and as not probative by a preponderance of evidence that the assessment is incorrect. Rejected, as immaterial to the issues in this proceeding. The Department is not seeking to establish fraudulent intent. 9-27. These constitute argument and enunciation of the Petitioner's and the Respondent's perceived legal positions, and attempted equitable arguments concerning justification for the Petitioner's lack of relevant records, including a description of his financial difficulties related to destruction of his business by fire and by two hurricanes. While this is understandable and regrettable, these arguments and positions asserted by the Petitioner are immaterial and irrelevant to the issues in this case. Respondent's Proposed Findings of Fact 1-26. Accepted. COPIES FURNISHED: Richard E. Wells 715 Pensacola Beach Boulevard Post Office Box 505 Pensacola Beach, FL 32562-0505 Jarrell L. Murchison, Esquire Office of the Attorney General The Capitol - Tax Section Tallahassee, FL 32399-1050 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100
Findings Of Fact In accordance with Joint Exhibit 1, the parties have stipulated to the following facts: FLAME MEATS, INC. That Flame Meats, Inc., a corporation for profit was incorporated on February 28, 1973. That in May of 1973 the corporation applied for a certificate of registration from the State of Florida, Department of Revenue and was issued such a certificate under sales tax number 60-23-35552-02. That Flame Meats, Inc., did not hold title to the real property on which it conducted its business at 1141 U.S. Highway No. 1, North Palm Beach, Florida, during the audit period. That the corporation had exclusive occupancy of the premises described above on which it conducted its business during the audit period. That as to Flame Meats, Inc., the real property on which it conducted its business was owned by Peter G. Makris, Trustee, and encumbered by mortgages on which Peter G. Makris, Trustee, joined by Gloria Makris his wife, were mortgagors, both deed and mortgage recorded in OR Book 2137, Pages 1247 through 1251 in the records of the clerk of the circuit court, Palm Beach County, Florida. That Flame Meats, Inc., had not made itself liable for the payment of any encumbrances on said real property on which it conducted its business by either signing, co-signing, endorsement or guarantee during the audit. That Flame Meats, Inc., made payments on the mortgage set forth in (4) above, during the audit period, in monthly amounts of $2,109.19 for a total amount of $82,258.41. Flame Meats, Inc., paid the ad valorem real property tax on said real property as described in the deed in (4) above for the tax years 1973, 1974 and 1975 in the yearly amounts respectively of $42.24, $1,651.79 and $1,740.19 for a total amount during the audit period of $3,834.22. The Flame Meats, Inc., paid insurance premiums monthly to the Home Indemnity Company, P. O. Box 1856, Jacksonville, Florida 32216, Policy Number B0BB8307236, for a total amount of $5,622.63 during the audit period. That Flame Meats, Inc., received a sales tax assessment dated October 27, 1976. That Flame Meats, Inc., received the sales tax revised assessment dated January 10, 1977, after an informal conference held in the West Palm Beach Area Office on January 6, 1977. FLAME OF NORTH PALM BEACH, INC. That the Flame of North Palm Beach, inc., a corporation for profit was incorporated on November 4, 1968. That in November, 1968, the corporation applied for a certificate of registration from the State of Florida, Department of Revenue and was issued such a certificate under sales tax number 60-23-26281-08. That the Flame of North Palm Beach, Inc. as a corporation did not hold title to the real property on which it conducted its business at 200 Yacht Club Drive, North Palm Beach, Florida, during the audit period. The corporation had exclusive occupancy of the premises on which it conducted its business during the audit period. That as to the Flame of North Palm Beach, Inc., the real property on which it conducted its business was owned by Peter G. Makris and Gloria Makris as husband and wife recorded in OR Book 1666, Page 1520 and 1521, in the records of the clerk of the circuit court of Palm Beach County. That the Flame of North Palm Beach, Inc., as a corporation had not made itself liable for the payments of any encumbrances on said real property on which it conducted its business by either signing, co-signing or endorsement or guarantee during the audit period. That the Flame of North Palm Beach, Inc., made payments on the mortgage which encumbered the real property set forth in (14) above, during the audit period, in monthly amounts of $2,920.21 until September, 1974, then in the amount of $3,300.00 for a total of $123,382.94. That the Flame of North Palm Beach, Inc., paid the ad valorem real property tax on said real property as described in the deed in (14) above for the tax years 1973, 1974 and 1975, in the yearly amounts respectively of $6,936.80, $6,342.46, and $6,101.95 for a total amount during the audit period of $19,381.21. That the Flame of North Palm Beach, Inc. paid insurance premiums monthly to the Home Indemnity Company, P. O. Box 1685, Jacksonville, Florida 32216, Policy Number BOP8307327, for a total amount of $4,419.87 during the audit period. That the Flame of North Palm Beach, Inc., received the sales tax assessment dated October 27, 1976, represented in Composite Exhibit 6. That the Flame of North Palm Beach, inc., received the sales tax revised assessment, dated January 10, 1977, after an informal conference held in the West Palm Beach Area Office on January 6, 1977. LORD CHUMLEY'S OF JUPITER, INC. That Lord Chumley's of Jupiter, Inc. a corporation for profit was incorporated on December 12, 1972. That in March of 1973 the corporation applied for a certificate of registration from the State of Florida, Department of Revenue and was issued such a certificate under sales tax number 60-11-17282-09. That Lord Chumley's of Jupiter, Inc. did not hold title to the real property on which it conducted its business at Highway A-1-A, Ocean Drive, Jupiter, Florida, during the audit period. The corporation has exclusive occupancy of the premises described above on which it conducted its business during the audit period. That as to Lord Chumley's of Jupiter, Inc., the real property on which it conducted its business was owned by Peter G. Makris, Trustee, as recorded in OR Book 2099, Page 735 in the records of the clerk of the circuit court of Palm Beach, County, Florida. That Lord Chumley's of Jupiter, Inc., had not made itself liable for the payment of any encumbrances on said real property on which it conducted its business by either signing, co-signing, endorsement or guarantee during the audit period. That Lord Chumley's of Jupiter, Inc. made payments on the mortgage which encumbered the real property set forth in (24) above, during the audit period in monthly amounts of $3,247.24 for a total amount of $126,642.36 during the audit period. That Lord Chumley's of Jupiter, Inc. paid the ad valorem real property tax on said real property as described in the deed in (24) above for the tax years 1973, 1974 and 1975 in the yearly amounts respectively of $1,862.35, $1,756.01 and $1,731.46, for the total amount during the audit period of $5,349.82. That Lord Chumley's of Jupiter, Inc., paid insurance premiums monthly to the Home Indemnity Company, P. O. Box 1685, Jacksonville, Florida 32216, Policy Number BOP8307329, for a total amount of $17,169.75 during the audit period. That Lord Chumley's of Jupiter, Inc., received the sales tax assessment dated October 27, 1976. That Lord Chumley's of Jupiter, Inc., received the sales tax revised assessment dated January 10, 1977, after an informal conference held in the West Palm Beach Area Office on January 6, 1977. LORD CHUMLEY'S OF STUART, INC. That Lord Chumley's of Stuart, Inc., a corporation for profit, was incorporated on November 14, 1973. That in December, 1973, the corporation applied for a certificate of registration from the State of Florida, Department of Revenue and was issued such a certificate under sales tax number 53-07-034130-08. That Lord Chumley's of Stuart, Inc., did not hold title to the real property on which it conducted its business at 52 U.S. No. 1, Stuart, Florida, during the audit period. The corporation had exclusive occupancy of the premises described above on which it conducted its business during the audit period. That as to Lord Chumley's of Stuart, Inc., the real property on which it conducted its business was owned by Peter G. Makris, Trustee, recorded in OR Book 358, Pages 1283 and 1284, the records of the clerk of the circuit court of Palm Beach County, Florida. That Lord Chumley's of Stuart, Inc., had not made itself liable for the payment of any encumbrances on said real property on which it conducted its business by either signing, co-signing, endorsement or guarantee during the audit period. That Lord Chumley's of Stuart, Inc., made payments on the mortgage which encumbered the real property as set forth in (34) above during the audit period in the monthly amounts of $4,923.70 for a total amount of $132,939.90. That Lord Chumley's of Stuart, Inc., paid the ad valorem real property tax on said property as described in the deed in (34) above for the tax years 1974 and 1975 in the yearly amounts respectively of $9,680.49 and $10,519.85 for a total amount during the audit period of $20,200.34. That Lord Chumley's of Stuart, Inc., paid insurance premiums monthly to Home Indemnity Company, P. O. Box 1685, Jacksonville, Florida 32216, Policy Number BOP8307328, for a total amount of $4,274.91 during the audit period. That Lord Chumley's of Stuart, Inc. received the sales tax assessment dated October 27, 1976. That Lord Chumley's of Stuart, Inc., received the sales tax revised assessment dated January 10, 1977, after an informal conference held in the West Palm Beach Area Office on January 6, 1977. The parties have further stipulated that there were no formal trust agreements between the Makrises and any of the four corporations respecting these transactions. Flame Meats, Inc. operates a retail meat market, a butcher shop, and a liquor store. The other three corporations operate restaurants. There are no formal rental or lease agreements between the Makrises and any of the corporations. Peter G. Makris purchased the properties upon which each of the corporations do business. He purchased the properties for the sole purpose of establishing the businesses. It was never his intention to undertake the business of renting or leasing the property to the corporations. Although he took legal title to the properties, and held legal title during the entire period that is the subject of the instant audits, he did not personally enjoy any of the benefits of ownership. The corporations occupied and controlled the properties. They paid no rent to Makris. They did make payments on outstanding mortgages, which were the obligation of Peter G. Makris, and they paid real property taxes and insurance premiums. These payments did not amount to rental payments, but rather reflected the fact that Makris purchased the properties for the corporations. A further reflection of this relationship is the fact that subsequent to the instant audits, Makris conveyed each of the properties to the respective corporations through quitclaim deeds. He received no consideration for the quitclaim deeds, as he had received no consideration for permitting the corporations to do business on the properties while he held legal title. Makris, either in his personal or trustee capacity, never received any compensation or consideration of any kind for owning the properties.
The Issue The issue in this case concerns whether the Petitioner should issue a cease and desist order and/or impose sanctions against the Respondent on the basis of allegations that the Respondent, by failing to have its books, accounts, and documents available for examination and by refusing to permit an inspection of its books and records in an investigation and examination, has violated Sections 520.995(1)(a), (f), and (g), Florida Statutes.
Findings Of Fact Sometime during the month of February of 1991, Ms. Jennifer Chirolis, a Financial Investigator from the Department of Banking and Finance, visited the offices of the Barat Company. She spoke with Mr. Roque Barat and determined that the Barat Company was conducting retail installment sales without being licensed to do so under Chapter 520, Florida Statutes. Mr. Chirolis advised Mr. Roque Barat that he needed a license and asked him to cease operations until he obtained the necessary license. The Barat Company thereafter obtained the necessary license and was still licensed as of the time of the formal hearing. Thereafter, the Department received a complaint about the Barat Company from a customer. The customer's complaint was to the effect that the Barat Company had made misrepresentations concerning the fee paid by the customer. The Department initiated an "investigation" of the customer's complaint and also decided to conduct an "examination" of the Barat Company. On April 22, 1992, a Department Examiner, Mr. Lee Winters, went to the office of the Barat Company to conduct the "examination" and "investigation". The Barat Company is operated out of a small office with two employees and a few filing cabinets. When Mr. Winters arrived, employees of the Barat Company were conducting business with two customers. Mr. Winters identified himself to the employees and informed them that he had been assigned to conduct an "examination" and "investigation" of the Barat Company. A Barat Company employee, Mr. Fred Vivar, said that he could not produce the company's records without express authorization from Mr. Roque Barat, that Mr. Roque Barat was out of the country, that he could not get in touch with Mr. Roque Barat at that moment, but that when he did get in touch with him, he would advise Mr. Roque Barat of Mr. Winter's desire to examine the company's books and records. Following a number of telephone calls over a period of several days, on May 1, 1992, Mr. Vivar advised Mr. Winters that he had received authorization from Mr. Roque Barat for the Department to inspect the books and records of the Barat Company. An appointment was made for the Department to inspect the books and records on May 6, 1992, beginning at 10:00 a.m. On May 5, 1992, a letter from an attorney representing the Barat Company was hand delivered to Mr. Winters. The letter included the following paragraph: It is my understanding that you have requested the opportunity to view the records of the above-referenced company, said inspection to take place on May 6, 1992. Please be advised that if this "inspection" is purportedly being done by your agency's authority, pursuant to F.S. 520.996, that no records will be produced absent compliance by your department with F.S. 520.994 including, but not limited to, the Barat Company exercising its right to challenge said subpoena. The Department concluded from the letter of May 5, 1992, that the Barat Company not only refused to produce records without a subpoena, but that, even if served with a subpoena, the Barat Company would resist compliance with the subpoena unless and until ordered to comply by a court. For that reason the Department did not pursue the issuance of a subpoena. Mr. Winters has been involved in over one hundred "examinations" under Chapter 520, Florida Statutes. In the course of those "examinations" there have been only two licensees that did not produce their records. Those two licensees were the Barat Company and another company known as Phase One Credit. Mr. Roque Barat is an officer and director of both Phase One Credit and the Barat Company. The license of Phase One Credit was revoked for its failure to produce its books and records. The refusal to produce the books and records of the Barat Company was occasioned by an effort on the part of Mr. Roque Barat to avoid payment of "examination" fees authorized by Section 520.996, Florida Statutes. In the summer of 1992, the Barat Company filed for bankruptcy, closed down its business operations, and is currently winding up the business.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Banking and Finance issue a Final Order in this case to the following effect: Dismissing the charge that the Barat Company has violated Section 520.995(1)(a), Florida Statutes; Concluding that the Barat Company has violated Sections 520.995(1)(f) and (g), Florida Statutes, as charged in the Administrative Complaint; Imposing a penalty consisting of: (a) an administra-tive fine in the amount of one thousand dollars, and (b) revocation of the Barat Company's license; and Ordering the Barat Company to cease and desist from any further violations of Chapter 520, Florida Statutes. DONE AND ENTERED this 23rd day of February, 1993, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of February, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-5620 The following are my specific rulings on the proposed findings of fact submitted by the parties. Proposed findings submitted by Petitioner: Paragraph 1: Rejected as constituting a conclusion of law, rather than a proposed finding of fact. Paragraphs 2, 3 and 4: Accepted in substance. Paragraph 5: Accepted in substance, with the exception of the last five words. The last five words are rejected as irrelevant to the issues in this case and as, in any event, not supported by clear and convincing evidence. Paragraph 6: Accepted in substance. Paragraph 7: First sentence accepted in substance. Second sentence rejected as irrelevant to the issues in this case. Paragraph 8: First sentence accepted. Second sentence rejected as inaccurate description of letter. (The relevant text of the letter is included in the findings of fact.) Last sentence rejected as subordinate and unnecessary evidentiary details. Paragraph 9: Rejected as irrelevant to the issues in this case. Paragraph 10: First two sentences rejected as irrelevant to the issues in this case. Last two sentences accepted in substance. Paragraph 11: Accepted in substance. Paragraph 12: First sentence accepted in substance. Second sentence rejected as irrelevant to the issues in this case. Paragraph 13: Accepted. Proposed findings submitted by Respondent: As noted in the Preliminary Statement portion of this Recommended Order, the Respondent's proposed recommended order was filed late. The Respondent's proposed recommended order also fails to comply with the requirements of Rule 60Q-2.031, Florida Administrative Code, in that it fails to contain citations to the portions of the record that support its proposed findings of fact. A party's statutory right to a specific ruling on each proposed finding submitted by the party is limited to those circumstances when the proposed findings are submitted within the established deadlines and in conformity with applicable rules. See Section 120.59(2), Florida Statutes, and Forrester v. Career Service Commission, 361 So.2d 220 (Fla. 1st DCA 1978), in which the court held, inter alia, that a party is not entitled to more than a reasonable period of time within which to submit its proposals. Because the Respondent submitted its proposals late and because those proposals fail to comply with the requirements of Rule 60Q-2.031, Florida Administrative Code, the Respondent is not statutorily entitled to a specific ruling on each of its proposed findings and no such specific findings have been made. (As noted in the Preliminary Statement, the Respondent's proposed recommended order has been read and considered.) COPIES FURNISHED: Ron Brenner, Esquire Office of the Comptroller 401 Northwest 2nd Avenue Suite 708-N Miami, Florida 33128 Louis J. Terminello, Esquire 950 South Miami Avenue Miami, Florida 33130 Michael H. Tarkoff, Esquire 2601 South Bayshore Drive Suite 1400 Coconut Grove, Florida 33133 Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 Copies furnished continued: William G. Reeves, General Counsel Office of the Comptroller The Capitol, Room 1302 Tallahassee, Florida 32399-0350
Findings Of Fact On 22 July 1977 James R. Rivers contracted to sell to John R. Hutchinson, Joan Hutchinson, Adrian Maxwell and Bugs Bunny Marina, Inc., the 65 foot F/V Bugs Bunny II for $113,323.29. (Exhibit 1). The price was comprised of a deposit of $1,500 upon acceptance of the contract, $13,500 at closing and purchasers to assume existing mortgage on the boat of approximately $98,323.29 held by Sun Bank of Volusia County. In addition to the $1,500 down payment, two additional payments were made to Rivers in the amounts of $500 and $14,276.75. No evidence was presented that these payments included, or did not include, payments other than were due pursuant to the contract. (Exhibit 1). This agreement to purchase was executed by the buyers in New York while the Bugs Bunny II was in Florida at the time the contract was executed, and it has remailed in Florida since that time. The Bugs Bunny II has been used as a charter fishing boat and for commercial fishing both before and after its acquisition by Petitioner. It is registered by the U.S. Government and has been issued U.S. Coast Guard official No. 549866. The parties stipulated that at closing, Rivers was not a registered dealer in Florida. At closing, title to the Bugs Bunny II was taken in the name of Bugs Bunny Marina, Inc. a New York Corporation, registered to do business in New York. By Assumption Agreement and Release the purchasers, jointly and severally, assumed and agreed to pay the mortgage indebtedness which as of June 23, 1977, was $98,323.29 and Rivers was released from further liability. No sale or use tax was collected by seller or paid by the buyers for this transaction.
The Issue The issue presented is whether Petitioner is liable for payment of sales and use taxes.
Findings Of Fact The Department conducted an audit of the business records of Petitioner, a Florida corporation operating a food catering business, covering the audit period of June 1, 1985 through May 31, 1990. As a result of that audit, the Department determined that Petitioner had failed to collect and remit sales taxes due to the Department and was liable for the payment of those unpaid sales taxes. The Department issued an assessment determining that Petitioner owed the amount of $213,683.87 in unpaid taxes, interest, and penalty for the audit period. On October 9, 1992, the Department issued its second revised audit assessment based upon its redetermination of Petitioner's tax liability. On that date, the Department reduced Petitioner's liability to the amount of $147,924.45, which sum includes the unpaid tax, the penalty therefor, and interest through that date. Based on its revised calculations, the Department also determined that interest would accrue at the rate of $27.06 per day until the date of payment. Through the date of the final hearing in this cause, Petitioner has made no payments to satisfy or reduce the amount of assessment.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Petitioner liable for the payment of sales tax, penalty, and interest through October 9, 1992, in the amount of $147,924.45 together with the amount of $27.06 interest per day until the date of payment. DONE and ENTERED this 18th day of August, 1994, at Tallahassee, Florida. LINDA M. RIGOT 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 18th day of August, 1994. APPENDIX TO RECOMMENDED ORDER The Department's proposed findings of fact numbered 1 and 6-8 have been adopted in substance in this Recommended Order. The Department's proposed findings of fact numbered 2-5 and 9-16 have been rejected as not constituting findings of fact but rather as constituting conclusions of law or recitation of the procedural context of this case. COPIES FURNISHED: Eric J. Taylor, Esquire Assistant Attorney General Office of the Attorney General The Capitol, Tax Section Tallahassee, Florida 32399-1050 Richard J. Hays, Esquire 7100 West Commercial Boulevard Suite 109 Lauderhill, Florida 33319 Mark D. Cohen, Esquire 121 Southeast First Street Suite 600 Miami, Florida 33131 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact High-Tech Yacht & Ship, Inc. (Petitioner) is a Florida corporation engaged in the business of retail sales of marine vessels. Also, Petitioner is a registered retail dealer in the State of Florida. The President of Petitioner is its only corporate officer. On or about September 2, 1993, Petitioner, in the capacity of a broker, sold a motor yacht at retail to Regency Group, Inc. (purchaser), through its representative, for $78,000. The motor yacht is described as a 1988, 41' Amerosport Chris Craft, hull Number CCHEU075E788, and called the "Motivator". At the closing of the sale, on or about September 2, 1993, the purchaser refused to pay the sales tax on the purchase, which was $4,680. However, the purchaser agreed to pay the sales tax after being informed by Petitioner that, without the payment of the sales tax, there could be no closing. The purchaser's representative submitted, at closing, a personal check in the amount of $4,680 for the sales tax. All of the necessary documents were completed for ownership and registration to be transferred to the purchaser. Subsequently, Petitioner received notice from its bank that the check for the sales tax had been dishonored by the purchaser's bank. The purchaser's representative had stopped payment on the check. In October 1993, Petitioner submitted its sales and use tax return for the month of September 1993 to Respondent in which the sale of the yacht was reported. Respondent automatically reviews sales and use tax returns. Respondent's review of Petitioner's return revealed a shortage of sales tax collected in the amount of $4,680.. In January 1994, Respondent issued a notice of tax action for assessment of additional tax in the amount of $4,710, plus interest and penalty, to Petitioner. The $4,710 included the loss of Petitioner's collection allowance of $30, which loss resulted from Petitioner's failure to timely remit all taxes due. Having received the notice of tax action, by letter dated January 20, 1994, Petitioner generally informed Respondent of the circumstances regarding the sales tax shortage, including the dishonored check. Petitioner pointed out, among other things, that Respondent had the authority and the means to collect the tax, while it (Petitioner) had limited means, and suggested, among other things, that Respondent cancel the purchaser's Florida registration of the yacht. On or about January 31, 1994, approximately three months after the check for sales tax was dishonored, Petitioner issued a notice of dishonored check to the purchaser, in which Petitioner requested payment of the sales tax. The notice provided, among other things, that Petitioner could seek criminal prosecution and civil action if the monies were not paid to Petitioner. Having not received the $4,680, Petitioner contacted the local law enforcement agency. After investigation, the law enforcement agency informed Petitioner that a civil action would have to be instituted because the purchaser, through its representative, had indicated that it was not satisfied with the yacht. Although Petitioner engaged the services of an attorney for civil action, no civil action was commenced. Additionally, Petitioner did not engage the services of a collection agency for assistance in collecting the sales tax. Subsequent to its notice of tax action, on or about March 12, 1994, Respondent issued a notice of assessment to Petitioner. The notice of assessment provided, among other things, that Petitioner was being assessed taxes in the amount of $4,710, plus penalty and interest in the amount of $2,342.61, totalling $7,052.61. Petitioner protested the assessment. On February 8, 1995, Respondent issued its notice of reconsideration in which Respondent determined, among other things, that the assessment was appropriate and affirmed the assessment of $7,052.61, plus interest and penalty. The interest accrues at the rate of $1.55 per day. Petitioner has not remitted any of the assessed tax, including interest and penalty, to Respondent. Petitioner has not identified on its federal tax return the noncollection of the sales tax from the purchaser as a bad debt. Sales tax is part of the total sale price for an item. Respondent considers the sales tax as collectable by a seller in the same manner as any other debt owed by a purchaser to a seller. A retail dealer, who is also a seller, is considered to be an agent for the State in the collection of sales tax. The burden of collecting the sales tax is placed upon the retail dealer by Respondent. Some of Respondent's employees have been sympathetic to Petitioner's tax assessment matter. However, none of the employees indicated to or advised Petitioner that Respondent was or is in error.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order affirming the assessment of sales tax against High-Tech Yacht & Ship, Inc. in the amount of $7,052.61, plus interest and penalty. DONE AND ENTERED this 7th day of August 1996, in Tallahassee, Leon County, Florida. ERROL H. POWELL, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of August 1996.
Findings Of Fact In June 1986, Petitioner purchased a 55 Ft. Ocean Yacht Super Sport from South Jersey Yacht Sales for $577,055 and took delivery in New Jersey. Although Petitioner is not a dealer, a dealer's license was used to purchase this vessel and Petitioner paid no sales tax to New Jersey on this sale. The boat was named "SEABURY", entered Florida waters in November 1986 and remained for 105 days, proceeded to Bahama Islands February 22, 1987 and returned to Florida April 7, 1987, and remained in Florida for 31 additional days before returning north. From bridge logs maintained by bridge tenders over the Intracoastal Waterway and docking receipts at Bahia Mar and other berthing spaces it was concluded the vessel was used in Florida. Respondent established a prima facie case that the M/V SEABURY entered Florida waters within 6 months of its purchase in New Jersey and was used in this state. No evidence to rebut this prima facie case was presented by Petitioner.
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by Cathy M. Sellers, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Petitioner’s Notice of Voluntary Dismissal with Prejudice, a copy of which is attached, and incorporated by reference, in this Order. The Department hereby adopts the Order Closing File as its Final Order in this matter. Accordingly, it is hereby ORDERED and ADJUDGED that Respondent, Coconut Creek Automotive, LLC d/b/a Coconut Creek Subaru, be granted a license to sell motor vehicles manufactured by Subaru of America, Inc. (SUBA) at 4980 North State Road 7, Coconut Creek, (Broward County), Florida 33073, upon compliance with all applicable requirements of Section 320.27, Florida Statutes, and all applicable Department rules. Filed April 30, 2012 9:03 AM Division of Administrative Hearings DONE AND ORDERED this 30 thday of April, 2012, in Tallahassee, Leon County, Florida. Julie/Baker, Chief Bureau of Issuance Oversight Division of Motorist Services Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A338 Tallahassee, Florida 32399 Filed with the Clerk of the Division of Motorist Services this 30¥h day of April, 2012. alini Vinayak, Dealer Wcense Administrator N NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. JB/jc Copies furnished: J. Gregory Humphries, Esquire Shutts and Bowen, LLP 300 South Orange Avenue, Suite 1000 Orlando, Florida 32801 Ed Appleby Coconut Creek Automotive, LLC 4980 North State Road 7 Coconut Creek, Florida 33073 J. Andrew Bertron, Esquire Nelson, Mullins, Riley, And Scarborough, LLP Suite 202 3600 Maclay Boulevard South Tallahassee, Florida 32312 Eric Scott Adams, Esquire Shutts and Bowen, LLP Suite 300 4301 West Boy Scout Boulevard Tampa, Florida 33607 Cathy M. Sellers Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399 Nalini Vinayak Dealer License Administrator
Findings Of Fact Petitioner is incorporated under the laws of the State of Virginia and is registered to conduct business in the State of Florida. Robinson's of Florida is a Division of Petitioner, and is currently engaged in the sale of merchandise and retail through four Robinson's of Florida department stores situated in the Florida counties of Pinellas, Orange, Hillsborough and Seminole. Respondent is an agency of the State of Florida whose duties include the assessment of taxes and penalties imposed under Chapter 201, F.S. An unspecified portion of Robinson's retail sales in Florida is made pursuant to revolving charge agreements between Robinson's and its customers. These sales are made under retail charge agreements (Petitioner's Exhibit 1) which provide that in consideration of credit to be extended by Robinson's of Florida, the customer agrees to pay the full amount owing on the account within 25 days from the billing date of each monthly statement or monthly payments of not less than the payment required by a table included in the agreement which lists minimum monthly payments based upon the unpaid balance of the account. The agreement further provides that in case of a failure to pay the minimum payment due on the monthly statement, that the amount shown as the new balance on the monthly statement shall at the option of Robinson's become due and payable immediately. It provides that the charge card issued to the customer may be terminated or revoked at any time and must be surrendered to Robinson's upon demand. It states that the agreement constitutes a "revolving account" within the meaning of Section 2 subsection 8 of the Florida Retail Installment Sales Act, Chapter 59-414, Laws of Florida, 1959. Each time a customer purchases merchandise pursuant to a Robinson's revolving charge account, he executes a sales ticket (petitioner's Exhibit No. 2 and Exhibit B to Petition) which includes the following printed statement on the face of the ticket. "I agree to pay the total amount of this sales check in accordance with my credit arrangements with you." During March, 1975, Respondent conducted an audit of all of Robinson's revolving charge account sales records in its Florida stores. As a result of the audit, Respondent issued to Petitioner a proposed notice of assessment of tax and penalty under Chapter 201, F.S., dated March 20, 1975, (Exhibit C to Petition). The proposed notice of assessment requested payment of documentary stamp taxes in the amount of $17,925.00, pursuant to Section 201.08(2), F.S., and a penalty in -- the same amount pursuant to Section 201.17(2), F.S., (Exhibit's C & E to Petition). Petitioner requested and was afforded an opportunity to meet with a representative of Respondent for the purpose of objecting to the aforementioned assessment of taxes and penalty on May 6, 1975, in St. Petersburg, Florida. Subsequent to this conference, Petitioner received a letter dated May 9, 1975, from Respondent reaffirming the proposed total assessment and penalty in the total amount of $35,850.00 (Exhibit E to Petition). No evidence has been presented that documentary tax stamps for the sales in question were purchased, affixed to, or placed on the instruments in question.
Recommendation It is recommended: That the proposed assessment of documentary stamp taxes against the Petitioner in the amount of $17,925.00 under Section 201.08(2), Florida Statutes, be determined valid, and that collection thereof be made in accordance with appropriate law and regulations. That the proposed assessment of a penalty against thee Petitioner in the amount of $17,925.00 under Section 201.17(2), Florida Statutes, be determined invalid and set aside. DONE and ORDERED this 30th day of September, 1975, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Larry Levy, Esquire James D. Beasley, Esquire Assistant Attorney General P.O. Box 391 Department of Legal Affairs Tallahassee, Florida The Capitol For the Petitioner Tallahassee, Florida 32304 For the Respondent ================================================================= AGENCY FINAL ORDER =================================================================
