The Issue The issues to be resolved in this proceeding concern whether the Petitioner, a Delaware Corporation with its principal place of business and domicile in Texas, has an obligation to collect and remit Florida sales taxes on sales it made to a Massachusetts-domiciled corporation, in view of the facts found below.
Findings Of Fact The Petitioner is a Delaware Corporation whose principal place of business is in Austin, Texas. The Petitioner designs, develops, and markets portable computer equipment, chiefly portable "tablet" personal computers with related "peripherals," which it sells and delivers in multiple states, including Florida. It sells these products to "re-sellers" and distributors, as well as to "end users." The Petitioner, by the Department's admission in Exhibit "A" (audit) does not maintain a physical presence in the State of Florida. It does employ one sales person for business in Florida, but maintains no warehouse or other facilities, vehicles nor other indicia of physical locations or operation in the state of Florida. The Petitioner is registered as a "dealer" with the State of Florida, Department of Revenue under the Florida Sales and Use Tax Law. The Petitioner does engage in some sales to Florida "end customers" or to re-sale purchasers in Florida. These transactions, however, are not at issue in this case. The dispute solely relates to transactions between the Petitioner and Advantec Computer System, Inc., of Marlboro, Massachusetts. The Respondent is an agency of the State of Florida charged with the regulation, control, administration, and enforcement of the sales and use tax laws of the State of Florida embodied in Chapter 212, Florida Statutes, and as implemented by Florida Administrative Code Chapter 12A-1. The Respondent conducted an audit of the books and records of the Petitioner, resulting in this proceeding, for the audit period April 1, 2003 to March 31, 2006. That audit was conducted by Xena Francis, and revealed, according to the Department's position, a purported sales tax payment deficiency on the part of the Petitioner in the above-referenced amounts. The Department, upon completion of the audit, issued a Notice of Intent to Make Audit Changes, thus advising the Petitioner of the amount of the tax penalty and interest it was assessing as a result of the audit. The transactions which the Department maintained were questionable, in terms of taxes not being paid with regard thereto, were those where the Petitioner sold computer products to entities who did not produce to the Petitioner a certificate of exemption from collection of sales tax by Florida on that transaction, and where the product was shipped by the Petitioner into Florida by common carrier. The Department essentially takes the position that, since the Petitioner has a state sales and use tax "dealer certificate," that it is responsible to prove any transactions as being exempt from the relevant taxing provisions of Chapter 212, Florida Statutes, and the above rule chapter. The Department apparently presumes as a part of this position that the fact that the product in question was shipped to ultimate users in Florida by common carrier from the Petitioner's place of business outside the state that such were Florida sales tax transactions. It thus contends that the burden is on the Petitioner to prove that they are exempt from such tax and collection. After it was advised of the audit findings and the basis for the assessment, the Petitioner provided to the Department certain exemption certificates for a number of the entities and transactions for which shipment had not been made into Florida. The Department accepted these and the assessment was adjusted downward to reflect the exempt status of those transactions, pursuant to the further information provided the Department by the Petitioner. The other disputed transactions for which no exemption certificate was provided by the Petitioner, were deemed by the auditor to be taxable. In essence, the auditor took the position, as does the Department, that every person making sales into the State of Florida is subject to sales and use tax unless specifically exempt and that it is incumbent upon the selling dealer (which it maintains is the Petitioner) to establish the exempt status of the transaction, at the time of sale, with a supporting re-sale certificate or some documentation to support the transactions, exempt status.1/ The sales which are the subject of this dispute are exclusively those between the Petitioner and Advantec Computer Systems, Inc. Advantec is a Massachusetts Incorporated and domiciled corporation. It apparently does not possess a Florida "re-sale certificate" or "dealer certificate." The Petitioner sold various computers and related products, as shown by the invoices in evidence, to Advantec. The invoices and the testimony adduced by the Petitioner established that those sales were between the Petitioner and Advantec, the Massachusetts corporation. Advantec, in turn, sold the products or some of them to Florida customers. Those customers did not pay the Petitioner for the sales, but paid Advantec. Advantec directed that delivery from the Petitioner be made not to Advantec itself, but to its Florida-end customer via common carrier from the Petitioner's out-of-state location or from its overseas supplier. In any event, delivery was made from outside Florida to the Florida Advantec customers by common carrier. The Petitioner billed no Florida customer and had no relationship with any Florida customer of Advantec. Instead it invoiced and billed Advantec for the price of the products involved on a "net 30-day" basis. Advantec would then pay the Petitioner for the amount invoiced by the Petitioner to Advantec. As to the Advantec sales at issue, there was no nexus, substantial or otherwise, between the Petitioner and Advantec's customers in Florida, except that the product was "drop shipped" from the Petitioner's relevant location out of the State of Florida to the Florida customer by common carrier, not by any vehicle owned, leased, or operated by any person or entity affiliated with the Petitioner. In fact, the deliveries in question were made by Federal Express as a drop shipment. Advantec's principal business activity is the re-sale and distribution of computers and related products. It has no presence in Florida and is not a registered dealer in Florida. When the Petitioner made the sales to Advantec Computer Systems, as shown by the invoices and testimony in evidence, it billed Advantec for the sales and did not collect sales tax. While the Petitioner has in its possession Advantec's Massachusetts-issued tax-exempt certificate, the Petitioner does not have a Florida tax-exempt certificate on-file for Advantec, because Advantec is not registered in Florida, and the sale by the Petitioner to Advantec is a Massachusetts sale with no Florida nexus. The Petitioner offered three Technical Assistance Advisements (TAA) into evidence, which it obtained from the Department in support of the fact that the transactions in question are not taxable. (See Exhibits 2, 3, 4 in evidence.) These exhibits were admitted on a limited basis over the Department's objection as being possibly material to a determination as to the weight and credibility of the Department's evidence in this case, but not as being legally binding or constituting legal precedent, which last quality is precluded by Section 213.22(1), Florida Statutes (2006). Additionally, the Petitioner offered and had admitted Petitioner's Exhibit 7, which was an e-mail received from a representative of the Department, in response to an inquiry by the Petitioner. This was admitted over hearsay objection as a party statement offered by the opposing party.2/ In that exchange between the Petitioner and the Department, the Petitioner, as shown by testimony and the exhibit, related the facts involved in the sales to Advantec. The Department's response indicated that, if indeed, the buyer and seller were both located outside the State of Florida and the goods when purchased were outside the State of Florida, then the sale is not a Florida sale, between the out-of-state buyer and the out- of-state seller (the Petitioner). If the goods were then delivered by common carrier to the out-of-state buyer's ultimate customers in Florida, from the Petitioner's out-of-state location, then the transaction between the Petitioner and the out-of-state buyer is not subject to the Florida sales tax law and, in essence, is non-jurisdictional, not as a "Florida nexus sale." In summary, the Petitioner sold the goods in question to Advantec and invoiced Advantec at its Massachusetts domicile and address on "net 30-day" term. No Florida customer, person, or entity was billed for the sales in question, nor was any payment collected from any individual or business entity located in the State of Florida. Once the sale was consummated between the Petitioner and Advantec, the Petitioner merely "dropped shipped," by common carrier, the goods purchased by Advantec to Advantec's ultimate customer located in the State of Florida.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Revenue, vacating and dismissing the assessment of the subject sales tax and interest to the Petitioner, Motion Computing, Inc. DONE AND ENTERED this 24th day of December, 2007, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF 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 Clerk of the Division of Administrative Hearings this 24th day of December, 2007.
The Issue The issues in this case are whether Petitioner is entitled to an award of attorney's fees and/or costs, pursuant to section 120.595(4); and, if so, the amounts of attorney's fees and/or costs to which he is entitled.
Findings Of Fact On March 3, 2017, DOAH entered an Amended Final Order in Case No. 16-6127RU, determining that a portion of the Florida Department of Highway Safety and Motor Vehicles Procedure Manual TL-10, dated April 30, 2014, and Technical Advisory RS/TL 14-18, dated October 20, 2014 (hereafter, the "Unadopted Rules"), are unadopted rules that violate section 120.54(1)(a). "Stephen J. Williams, as a Trustee for the Sparkhill Trust," is Petitioner in this proceeding, and also was Petitioner in Case No. 16-6127RU. Petitioner appeared in Case No. 16-6127RU as a trustee of the Sparkhill Trust ("Trust"), which holds title to the motor vehicle for which a certificate of title was denied by Respondent and its agent, the Lee County Tax Collector, in 2014. As previously found in Case No. 16-6127RU, Petitioner also is the beneficiary of the Trust. Petitioner is not licensed to practice law in Florida, and has neither alleged nor shown that he was licensed or otherwise authorized to practice law in Florida at any point during the pendency of Case No. 16-6127RU.2/ Petitioner received a law degree from the University of Connecticut School of Law and is licensed to practice law in Connecticut, New York, and the District of Columbia; however, he currently is suspended from practicing law in those jurisdictions. Petitioner also is a lawyer on the Roll of Solicitors in England and Wales, but is not currently authorized to practice in those jurisdictions because he does not hold a practicing certificate. Petitioner asserts in the Motion that he is an attorney acting in a representative capacity as a trustee on behalf of the Trust. Petitioner filed a document titled "Declaration of Stephen J. Williams in Support of Petitioner's Motion for Attorney's Fees and Costs" ("Declaration") in support of the Motion. Although the Declaration represents that it is made "under penalty of perjury," it does not constitute a legally sufficient oath or affidavit because it does not comply with the requirements of section 92.50(1), Florida Statutes. Specifically, it does not contain a jurat or certificate of proof or acknowledgement authenticated by the signature and official seal of a judge, clerk or deputy clerk of court of record in this state, or a United States commissioner or notary public in this state, as required by the statute.3/ Petitioner attached an itemized timesheet to the Declaration. The timesheet lists, for each item for which attorney's fees are sought, the date and description of the legal services alleged to have been rendered for the particular item, and the amount of time alleged to have been spent per item. The timesheet represents that a total of 54.8 hours were spent in prosecuting Case No. 16-6127RU. Petitioner asserts that he is entitled to a $350.00 per hour attorney's fee, multiplied by a 1.5 loadstar multiplier, and a contingency multiplier of three, for a total of $86,310.00 in attorney's fees. Attached to the Declaration is email correspondence sent to Petitioner by Kiara Guzzo, Respondent's Public Records Coordinator, stating that Petitioner owed $119.73 for Respondent's response to Petitioner's public records request. In the Declaration, Petitioner states that "[t]he attached email of Guzzo email [sic] accurately indicates the out-of-pocket expenses which have been paid." Pursuant to his statement in the Declaration, Petitioner is "exclusively engaged in the practice of law." Pursuant to his statement in the Declaration, Petitioner undertook the prosecution of Case No. 16-6127RU on a contingency basis, with his attorney's fees being "limited to that approved by this tribunal."4/ Petitioner previously challenged the Unadopted Rules in two DOAH proceedings, Case Nos. 14-6005RU and 15-0484RU.5/ Thus, as far back as 2014, Respondent was on notice that its statements (i.e., the Unadopted Rules) may constitute unadopted rules.
Findings Of Fact After the motion for continuance was again denied, petitioners declined to offer any evidence and petitioners announced that they would be pursuing certain supposed federal remedies.
The Issue The issue presented is whether the $5.00 per gallon tax on perchloroethylene provided for in Section 376.75, Florida Statutes, is subject to Florida sales and use tax pursuant to Chapter 212, Florida Statutes. STIPULATED FACTS Petitioner is a for-profit Florida corporation that sells perchloroethylene and other dry-cleaning supplies to the dry-cleaning industry. It is a "wholesale supply facility" as that term is defined in Section 376.301(17), Florida Statutes. Petitioner is a member of the Florida Drycleaners' Coalition, a state-wide trade association whose members consist of the owners/operators of dry-cleaning facilities and wholesale supply facilities. In 1993 and prior to and during the 1994 Florida legislative session, the Florida Drycleaners' Coalition employed lawyers-lobbyists to suggest and seek passage of amendments to Chapter 376, Florida Statutes, commonly known as the Florida Dry-Cleaning Solvents Cleanup Program. In 1994, the Florida Legislature enacted Chapter 94- 355, Laws of Florida, which amended Chapter 376, Florida Statutes. Chapter 94-355 created Section 376.3078(2)(a), Florida Statutes, which provides that: All penalties, judgments, recoveries, reimbursements, loans, and other fees and charges related to the implementation of this section and the tax revenues levied, collected, and credited pursuant to ss. 376.70 and 376.75, and registration fees collected pursuant to s. 376.303(1)(d), shall be deposited into the Water Quality Assurance Trust Fund, to be used upon appropriation as provided in this section. Charges against the funds for dry-cleaning facility or wholesale supply site rehabilitation shall be made in accordance with the provisions of this section. Chapter 94-355, Laws of Florida, also created Section 376.75, Florida Statutes, which provides, in part, as follows: Beginning October 1, 1994, a tax is levied on the privilege of producing in, importing into, or causing to be imported into the state perchloroethylene (tetrachloroethylene). A tax of $5.00 per gallon is levied on each gallon of perchloroethylene when first imported into or produced in the state. The tax is imposed when transfer of title or possession, or both, of the product occurs in this state or when the product commingles with the general mass of this state. Petitioner's corporate secretary and 50 percent shareholder is David J. Pilger. He contributed financially to the employment by the Florida Drycleaners' Coalition of lawyers- lobbyists charged with seeking passage of amendments to Chapter 376, Florida Statutes, and met several times with those lawyers- lobbyists in Tallahassee. He was assured during those meetings that it was the opinion of those lawyers-lobbyists that there was no danger of Florida sales tax being applied to the $5.00 per gallon tax on perchloroethylene. The Department conducted an audit of Petitioner for the period of January 1, 1993, through January 31, 1998. At no time prior to the Department's audit of Petitioner's financial records did Petitioner receive from the Department materials of any kind indicating that Florida sales and use tax would apply to the $5.00 per gallon tax on perchloroethylene. The Department had, however, adopted emergency Rule 12BER94-2, effective October 1, 1994, and Rule 12B-12.003(2)(b), Florida Administrative Code, effective February 19, 1995. The 1998 Florida Legislature amended Section 376.75, Florida Statutes, by enacting Chapter 98-189, Laws of Florida, effective July 1, 1998, which added a sentence regarding the $5.00 per gallon tax, as follows: "This tax is not subject to sales and use tax pursuant to ch. 212." The Department has assessed and/or collected from certain taxpayers Florida sales and use tax on the sales price of perchloroethylene and the $5.00 per gallon tax on perchloroethylene. The sales and use taxes are deposited into the general revenue fund pursuant to Section 212.20(1), Florida Statutes. The $5.00 per gallon tax on perchloroethylene is deposited into the Water Quality Assurance Trust Fund, pursuant to Section 376.3078(2)(a), Florida Statutes. The Department issued its Notice of Proposed Assessment to Petitioner on October 22, 1998, assessing sales and use tax of $39,098.66, penalties of $19,549.64, and interest of $11,184.10 through October 22, 1998, with interest of $12.85 to accrue per day. The Department issued its Notice of Proposed Assessment to Petitioner on October 22, 1998, assessing indigent care surtax of $2,128.98, penalties of $1,064.48, and interest of $611.97 through October 22, 1998, and interest of $.70 to accrue per day. Petitioner charged its customers and remitted to the Department the $5.00 per gallon tax on perchloroethylene provided for in Section 376.75, Florida Statutes, but neither collected from the customer nor remitted to the Department sales and use tax on this $5.00 per gallon tax. The $5.00 per gallon tax collected by Petitioner from its customers was reflected at the bottom of Petitioner's invoices as "the ENVRN TAX." Petitioner charged its customers and remitted to the Department the excise tax provided for in Section 206.9935(2), Florida Statutes, but neither collected from its customers nor remitted to the Department sales and use taxes or indigent care surtax on this excise tax. This tax was reflected at the bottom of Petitioner's invoices as "PERC TAX." Petitioner does not contest the Department's assessment of sales and use taxes and indigent care surtax on the water quality tax provided for in Section 206.9935(2), Florida Statutes. Petitioner does not dispute that its sales to its customers during the audit period were paid for by its customers.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered sustaining the assessment against Petitioner, together with interest, but compromising the entire penalty amount. DONE AND ENTERED this 22nd day of November, 1999, in Tallahassee, Leon County, Florida. LINDA M. RIGOT 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 22nd day of November, 1999. COPIES FURNISHED: Jarrell L. Murchison, Esquire John Mika, Esquire Department of Legal Affairs The Capitol, Tax Section Tallahassee, Florida 32399-1050 Fred McCormack, Esquire Landers & Parsons, P.A. 310 West College Avenue Tallahassee, Florida 32301 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32314-6668 Joseph C. Mellichamp, III, Esquire Office of the Attorney General Department of Legal Affairs The Capitol, Tax Section Tallahassee, Florida 32399-1050 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue Does correspondence dated August 18, 1997, from John M. Awad, Ph.D., District Administrator for District II, State of Florida, Department of Children and Family Services, directed to Theodore R. Buri, Jr., Regional Director, American Federation of State, County, and Municipal employees, AFL-CIO, identify Respondent’s agency policy? If yes, is that policy a “Rule” as defined in Section 120.52(15), Florida Statutes (Supp. 1996)? If a “Rule," has Respondent promulgated the policy in accordance with Section 120.54, Florida Statutes (Supp. 1996)? If the policy is a “Rule” that has not been promulgated, does a statutory basis exist for its promulgation?
Findings Of Fact The individual Petitioners are employed at the Florida State Hospital. This is a mental health facility operated by the Respondent. The individual Petitioners have contact with the clients who reside in the hospital. Because those individual Petitioners have client contact in performing their employment at the hospital, Respondent, as their employer, is responsible for screening the employees to ascertain whether those individual Petitioners have been convicted of or pled guilty or nolo contendere to certain offenses set forth in Sections 435.03 and 435.04, Florida Statutes (1995). Such a finding would disqualify the employees from working directly with the clients. The requirement for screening is in accordance with Section 110.1127(3), and Section 394.4572, Florida Statutes (Supp. 1996). Florida Public Employees Council 79, American Federation of State, County, and Municipal employees, AFL-CIO (AFSCME), represents the individual Petitioners in collective bargaining between those Petitioners and the State of Florida. Each of the individual Petitioners received notification from Robert B. Williams, Hospital Administrator, Florida State Hospital, that each person had been declared ineligible to hold a position of “special trust” based upon certain offenses attributable to the Petitioners. The basis for the disqualifications was Chapter 435, Florida Statutes (1995). This meant that the individuals could not have client contact. As a consequence, Petitioners were told, through the correspondence notifying them of their disqualifications, that they could seek exemption from disqualification and/or contest the accuracy of the records declaring their disqualifications. All Petitioners sought relief from Respondent in accordance with Section 435.07(3), Florida Statutes (1995), by requesting exemption from disqualification before the Respondent. Bobby Jones, Clarence Cornell Simmons, Freddie Lee, and Frank Lawrence Dickens were denied exemption. Whether those Petitioners have contested the preliminary decision by Respondent denying their exemption through hearing procedures set forth in Chapter 120, Florida Statutes is not known. The other Petitioners were granted exemption from disqualification by action of the Respondent. Before Respondent made its preliminary determination on eligibility, on August 13, 1997, Theodore R. Buri, Jr., Regional Director of AFSCME Florida Council 79, wrote to Dr. John Awad, District Administrator, District II, Department of Children and Family Services. The purpose of the letter concerned the disqualification of the individual Petitioners to continue work in positions of “special trust” by having contact with clients at Florida State Hospital. That correspondence stated: The above referenced employees have been previously notified of disqualification, allegedly under the provisions of Chapter 435, Florida Statutes. These employees have notified Council 79, through their local union, that they are scheduled for a hearing on a possible exemption from the provisions of Chapter 435 on August 27, 1997. I have reviewed the documents of these individuals and I have found, without exception, that the charges which served as the basis of potential disqualification all occurred prior to October 1, 1995. As I am sure you are aware the provisions of Chapter 435, Florida Statutes, did not become effective until October 1, 1995. Further, the notations are consistent throughout Chapter 435, indicating that the provisions of Chapter 435 shall apply only to offenses committed subsequent to October 1, 1995. It appears that these, and other, employees are being improperly required by the Department to defend themselves against provisions of Florida Statutes which do not apply to them. I wish you would immediately review this concern with your legal department and direct Florida State Hospital to immediately make the affected employees whole and to terminate the pending actions against these employees. Your prompt attention in this matter is very much appreciated. On August 18, 1997, Dr. Awad responded to Mr. Buri’s inquiry through correspondence, in which Dr. Awad stated: The concerns expressed in your letter dated August 13, 1997, concerning background screenings were reviewed approximately a year and a half ago by an agency statewide workgroup, which included several background screening coordinators, District Legal Counsels, and attorneys from the General Counsel’s office. The legal research from that group resulted in the issuance of Agency policy addressing this and other statewide issues. In response to a question similar to that raised in your letter, Agency policy is that although Section 64 of Chapter 95-228, Laws of Florida, states that “this act shall take effect October 1, 1995, and shall apply to offenses committed on or after that date,” it applies only to the new criminal offense of “Luring or enticing a child” created by Section 1 of the law and does not apply to screening provisions. Therefore, in accordance with established principals [sic] of statutory construction, a person being rescreened after 10-1-95, must meet the requirements of the law in effect as of the date of the rescreening, which includes the broadened offenses, just as a new job applicant must meet such requirements. If you have any further questions concerning this matter, you may wish to have your attorney discuss this with the Agency’s General Counsel. The exemption hearings before Respondent were held on August 27, 1997, leading to the grant of exemptions for some Petitioners, and denial for others. Through their Petition to determine the invalidity of a “Rule," Petitioners allege and request the following relief: Although Chapter 435 of the Laws of Florida concerning employment screening specifically states that it applies to offenses committed on or after October 1, 1995, the Respondent applies employment screening to all employees and to all offenses regardless of the date of the offense. The Respondent articulated this policy of application in correspondence addressed to Theodore R. Buri from John Awad dated August 18, 1997,. . . The Respondent’s policy, as more fully described above, is a 'Rule' within the meaning of Section 120.52(16), Florida Statutes, because it is an 'agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the organization, procedure, or practice requirements of the agency.' Id. This rule should be declared an invalid exercise of delegated legislative authority for the following reasons: The above described rule has not been adopted in substantial compliance with Section 120.54, Florida Statutes; The Respondent has no statutory or rule authority to adopt the above described rule as applied to offenses predating October 1, 1995, thus the rule violates Section 120.56, Florida Statutes. The rule imposes a civil penalty against the individually named Petitioners for which there is no specific statutory authority. The rule is arbitrary and capricious as applied to offenses predating October 1, 1995, and thus violates Section 120.56, Florida Statutes. The rule adversely affects the Petitioners' substantial interest in continued employment in a position of 'special trust.' The rule is an unconstitutional impairment of the contract of employment. It unfairly burdens the Petitioners and others similarly situated with the duty to timely request and prove by clear and convincing evidence that [sic] either an entitlement to an exemption from disqualification or that the records are inaccurate. It is an oppressive and unreasonable condition of employment. As a penalty attached to an offense committed prior to October 1, 1995, the Rule is unlawful as an ex post facto law. The immediate removal from a position of trust before an employee may be heard denies the employee due process. The rule attacks a protected property and liberty interest of the individually named Petitioners and those similarly situated. The Agency’s actions against the Petitioners based on the Rule stigmatizes the employee. Petitioners also request that they be granted costs and attorneys fees pursuant to Section 120.595(3) and (4), Florida Statutes (Supp. 1996). Chapter 95-228, Laws of Florida, referred to by Dr. Awad in his August 18, 1997, correspondence to Mr. Buri, created Chapter 435, Florida Statutes.
The Issue The issue is whether the Department of Revenue (the "Department") may levy on deposits of Bell Industries, Inc. ("Bell Industries") held at Wells Fargo Bank as proposed in the Department's March 5, 2012, Notice of Intent to Levy.
Findings Of Fact The Department is the agency of the state of Florida charged with the duty to enforce the collection of taxes imposed pursuant to chapter 212, Florida Statutes, including the authority to levy against the credits or personal property of delinquent taxpayers. § 213.67, Fla. Stat. Bell Industries is a holding company for the operation of several operating entities. In early 2007, Bell Industries purchased Skytel, a telecommunications services company, from Verizon. The purchased entity was subject the communications services tax set forth in chapter 202, Florida Statutes. Mark A. Begle, an officer of Bell Industries, testified that the tax compliance issues undertaken by his company in this purchase were "quite painful and took a lot of time." Mr. Begle stated that the complexity of filings under the Florida communications services tax necessitated the hiring of Tax Partners, an outside specialty company based in Atlanta, to fulfill the Skytel tax obligations. It took Tax Partners several months to get the systems in place to properly file the Florida tax forms. Mr. Begle acknowledged that his company's initial Florida tax returns were late filed. After the Department received and processed the initial returns, it sent initial notices to Bell Industries advising the company of the late filing penalty and interest amounts due for the delinquent months. The Department sent the initial notices on August 23, 2007. Eventually, the Department sent out a Notice of Final Assessment to Bell Industries for each of the two tax periods for which the company had filed delinquent returns. The Notice of Final Assessment for the reporting periods of February 2007 through May 2007, was mailed on September 25, 2007. The Notice of Final Assessment for the reporting period of May 2008, was mailed on February 6, 2009. The Department's Notice of Final Assessment offers a taxpayer two routes for contesting an assessment. First, the taxpayer may commence an informal protest process by submitting a letter requesting review to the Department within 20 days of the date of the assessment. § 213.21, Fla. Stat. and Fla. Admin. Code R. 12-6.0033. Second, the taxpayer may choose to bypass the informal protest process and commence the formal appeals process provided by chapter 72, Florida Statutes, within 60 days of the date of the assessment. Bell Industries did not timely invoke either method of contesting the assessments. Therefore, the assessments became final. The Department filed a warrant, dated September 2, 2008, in Leon County stating that Bell Industries was indebted to the Department in the amount of $23,800.41.2/ Of this amount, $23,780.41 was listed as "penalty." The remaining $20.00 was listed as a "filing fee." Thus, for all practical purposes, the claimed amount of indebtedness is entirely a penalty. Department records indicated that the Department twice rejected Bell Industries' requests for compromise or waiver of the assessments, on September 14, 2007, and December 19, 2008. The Department issued a Notice of Freeze, dated March 5, 2012, to Wells Fargo Bank, a financial institution in Philadelphia, Pennsylvania. The Notice of Freeze instructed the bank that Bell Industries had a delinquent liability for tax, penalty and interest owed to the Department pursuant to section 213.67, and that the bank "may not transfer, dispose of, or return any credits, debts, or other personal property owned/controlled by, or owed to, this taxpayer which are in your possession or control or become under your possession or control up to the amount of $23,800.41." On March 15, 2012, Wells Fargo Bank reported to the Department that it was holding $23,800.41 in Bell Industries deposits. On March 5, 2012, the Department issued a Notice of Intent to Levy on credits or personal property belonging to Bell Industries. On March 21, 2012, the Department issued a Notice of Contested Intent to Levy, in acknowledgement that Bell Industries was contesting the Department's intended levy. At the hearing, Bell Industries essentially conceded its liability for the amount owed. Mr. Begle, Bell Industries' representative, credibly testified that the company endeavors to be timely and in full compliance as regards all of its tax obligations. Mr. Begle noted that his company sold Skytel in March 2008, which led to the termination of the relationship with Tax Partners and the dismantling of the entire management structure related to Skytel. Mr. Begle blamed these activities for Bell Industries' slow response, because correspondence from the Department regarding these tax issues was being sent to personnel no longer associated with Bell Industries. Mr. Begle requested that these unusual circumstances be taken into account and that the Department consider waiving or negotiating the penalty at issue in this proceeding. At the hearing, the Department took the position that section 213.21 allows the Department to negotiate a compromise of an assessment of tax, interest and penalty, but that once the time for filing a challenge to the assessment passes, as set forth in Florida Administrative Code Rule 12-6.0033, the Department no longer has the authority to compromise a claim. Because Bell Industries failed to file a timely challenge, the Department could not accept less than the amount claimed in the Notice of Intent to Levy.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order finding that the $23,800.41 in the Wells Fargo Bank belonging to Bell Industries is subject to the Notice of Intent to Levy that the Department of Revenue issued on March 5, 2012, in accordance with section 213.67, Florida Statutes, but that the levy should not occur until Bell Industries is provided a reasonable period of time in which to submit a request for settlement or compromise pursuant to Florida Administrative Code Rule 12-13.003. DONE AND ENTERED this 27th day of August, 2012, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of August, 2012.
