The Issue Whether Respondent properly assessed a tourist development tax, penalty, and interest against Petitioner.
Findings Of Fact The Tax Collector is empowered to impose a tourist development tax (“TDT”) on the privilege of renting, leasing, or letting “for consideration of any living or accommodations in any hotel, apartment hotel, motel, [or] resort motel.” § 125.0104(3)(a)1., Fla. Stat. The Tax Collector is the entity operating pursuant to Palm Beach County Ordinance, Chapter 17, Article III, Section 17-111 through 116, and is authorized to impose TDT at a six percent rate on taxpayers. See also § 125.0104(4)(a), Fla. Stat. As part of its duties, Respondent audits taxpayers and attempts to recover TDT owed. At all times material to this case, Homing Inn was a 103-room hotel located in Boynton Beach, Florida. As a taxpayer and operator of a hotel that rents rooms, Homing Inn was subject to audit of its revenues by Respondent. Respondent initiated an audit against Petitioner for the period of July 1, 2016, through June 30, 2019 (“audit period”), to determine if Petitioner had properly remitted TDT, as reflected on Petitioner’s TDT returns. In July 2019, Suzanne Englhardt (“Englhardt” or “Auditor”), revenue auditor, was assigned to conduct Homing Inn’s audit. Englhardt started the audit of Homing Inn by conducting pre-audit research, which included her looking up Petitioner on Sunbiz, the property appraisers’ website, and preparing an audit notice. On or about July 3, 2019, Englhardt sent Homing Inn a certified notice informing Petitioner that their account had been selected for a Tourist Development Audit (“audit”) of Petitioner’s books and records. In the notice, Respondent requested Homing Inn “make available all records, receipts, invoices, and related documentation” to review for the audit. Petitioner complied with Respondent’s request for records and provided bank statements for November 2017 through June 2019; federal income tax returns for years 2016, 2017, and 2018; and room revenue reports, which were typed pages of purported revenue reported by Petitioner on its TDT returns. After Homing Inn provided the records, Englhardt reviewed the submitted documentation and found that Homing Inn failed to maintain records of sales at the hotel. As a result, Englhardt used the best information supplied and available to conduct the audit, Petitioner’s federal tax returns and bank statements. She did not utilize Petitioner’s revenue reports during the audit because no source documents were provided to support or back up any of the listed numbers typed on the revenue reports. 2018 Englhardt started the audit by reviewing Petitioner’s 2018 gross income reported on its supplied federal income tax return in the amount of $1,122,076.00. Englhardt compared the supplied 2018 bank deposits on the bank statements that amounted to $1,122,048.73 to the federal income tax return. Englhardt also reviewed Petitioner’s 2018 TDT returns, which amounted to $653,202.13. Homing Inn did not provide Respondent any documentation to account for the difference in reported income. Next, Englhardt decided that since the gross revenues on the federal income tax return and the bank deposit statements balanced, she presumed TDT and sales tax were included. After she backed out the six percent TDT and seven percent sales tax, the Auditor ultimately calculated and arrived at the adjusted income of $992,963.48 that she utilized to calculate the additional TDT. Englhardt calculated the additional TDT by subtracting the income reported by Petitioner on the TDT returns, $653,202.13, from the gross adjusted amount she established, $992,963.48, and determined that the total unreported income was $339,761.85. She then charged a six percent rate of TDT, which lead to the additional TDT of $20,385.68 for 2018. Englhardt calculated the remaining years of the audit with the same methodology. 2016 When auditing 2016, Englhardt reviewed Homing Inn’s 2016 federal income tax return provided and determined that Petitioner’s gross income was $1,042,188.00. However, when the Auditor looked at the income reported on the 2016 TDT returns, the amount differed, and the reported income on the TDT returns was $724,929.42. Englhardt backed out the TDT and sales tax from the income reported on the federal tax return and ultimately calculated and arrived at the adjusted income of $922,290.27. Next, Englhardt subtracted the reported income on the TDT return from the adjusted income and determined the total 2016 unreported income was $197,360.85. To determine the additional TDT taxes Homing Inn owed, Englhardt charged the six percent rate by $197,360.85 for an additional $11,841.53 owed. 2017 Englhardt reviewed Homing Inn’s 2017 federal income tax return and determined the gross income reported was $1,032,331.00. Englhardt also reviewed Petitioner’s 2017 TDT returns, which amounted to $658,435.37. Englhardt backed out TDT and sales tax from the income reported on the federal tax return and ultimately calculated and arrived at the adjusted income of $913,567.26. Next, Englhardt subtracted the reported income on the TDT return from the adjusted income to determine the total 2017 unreported income was $255,131.89. To determine the additional TDT taxes Homing Inn owed, Englhardt charged the unreported income of $255,131.89 by the six percent rate for an additional $15,307.91 owed. 2019 Englhardt reviewed Homing Inn’s bank statements from January 2019 to June 2019 to determine the 2019 gross income. The total deposits reported were $614,992.28. Englhardt also reviewed Petitioner’s 2019 TDT returns, which amounted to $350,925.07. Englhardt backed out TDT and sales tax from the income reported from the deposits on the bank statements, and ultimately calculated and arrived at the adjusted income of $544,240.96. Next, Englhardt subtracted the reported income on the TDT return from the adjusted income and determined the total 2019 unreported income was $193,315.89. To determine the additional TDT taxes Homing Inn owed for 2019, Englhardt charged the unreported income of $193,315.89 by the six percent rate for an additional $11,598.95 owed. After completing the audit, Englhardt added the unreported income for each year and the TDT amounts owed. She found that Homing Inn had a total unreported income of $985,569.97 and owed an additional TDT of $59,134.20 from the audit period. On or about September 27, 2019, the Tax Collector issued a Notice of Intent to Make Audit Changes to Petitioner (“Notice of Intent”) and advised Petitioner of the additional TDT in the amount of $59,134.20 owed. The Notice of Intent also notified Homing Inn that Respondent also sought a penalty and interest and provided, in pertinent part: The $59,134.20 total tax due was carried over from the Summary of Tax Due scheduled to the Calculation of Tax Penalty and Interest spreadsheet. The floating rate of interest on tax due is based on the applicable rates established by the Florida Department of Revenue, which is currently an annual rate of 9%. As also prescribed by the State due to findings previously identified in a prior audit, penalty is assessed at 100% of tax due per Florida Statute 212.07(3)(b). As of 09/30/2019, Mata Chorwadi Inc., d/b/a: Homing Inn, currently owes a total of $125,460.97 in tax, penalty and interest. On or about December 16, 2019, Respondent issued a Notice of Proposed Assessment (“NOPA”). Petitioner requested and was granted an extension until April 14, 2020, to respond to the NOPA. On or about April 11, 2020, Petitioner timely protested Respondent’s audit findings. Petitioner’s protest letter claimed that the unreported revenue was made up of Homing Inn’s snack sales sold for $1.00 each; coins collected from a laundromat; proceeds from additional room cleaning services; and proceeds from charges for lost room keys. Petitioner informed Respondent in the protest letter that all the unreported revenue was deposited in the hotel’s bank account. Petitioner requested that Respondent fully abate the penalties and interest for reasonable cause and not willful neglect pursuant to section 213.21(3)(a), Florida Statutes. To support its position in the protest, Petitioner produced purchase receipts from Sam’s Club, which included purchases for snacks and cleaning supplies, and produced a laundry room collection log allegedly showing the coins collected from the laundromat at Homing Inn. Homing Inn did not produce any documents to show any revenue allegedly earned for additional cleaning services or lost room keys. On or about May 4, 2020, Respondent issued the Notice of Decision denying Homing Inn’s protest letter and sustaining the assessment. The Tax Collector considered Homing Inn’s argument and documents, but determined that Petitioner did not provide any proof that the snacks, coins listed on the collection log, or other expenses accounted for the unreported revenue since the Tax Collector was not provided any documents from Homing Inn relating to alleged revenue for additional cleaning services or lost room keys, sales receipts, or bank deposit slips that correspond to verify the amounts listed on the collection log. On June 3, 2020, Petitioner timely filed a Motion for Reconsideration (“Motion”). Homing Inn disputed the assessment and penalty and asked that it be reevaluated. Homing Inn again asserted in its Motion that the unreported revenue consisted of snack sales, revenue from the laundromat, revenue from additional cleaning services, and revenue from lost room keys. However, Petitioner did not provide any additional documents to support its position. On June 9, 2020, Respondent issued a Notice of Reconsideration-Final Assessment (“Notice of Reconsideration”) denying the Motion and sustaining the assessment since no new information was provided by Petitioner. The Tax Collector also notified Petitioner in the Notice of Reconsideration how to appeal the Tax Collector’s decision if Homing Inn was not in agreement with the tax assessment and stated, in pertinent part: If the taxpayer is not in agreement with the assessment, pursuant to Florida Statute 72.011, Mata Chorwadi Inc. may contest the assessment by “filing an action in circuit court; or, alternatively, the taxpayer may file a petition under the applicable provisions of chapter 120.” As a settlement offer, Petitioner remitted a $28,000.00 check to Respondent dated June 8, 2020, that had “paid in full” on the memo line. Respondent returned the check to Homing Inn since the amount was not for the assessment due. Afterwards, Petitioner remitted a second check in the amount of $28,000.00. Respondent applied the $28,000.00 to the total outstanding balance of Homing Inn’s tax. On July 17, 2020, Petitioner timely filed a Petition for Chapter 120 Hearing contesting tax, penalty, and interest from the Tax Collector’s assessment in the Notice of Reconsideration and requested a hearing. Audit History In 2007, Homing Inn had been audited by the Tax Collector. The first audit resulted in Petitioner owing additional TDT based on unreported revenue. The current audit is the second audit of Homing Inn for TDT. Hearing At hearing, Englhardt testified that at the beginning of the audit, Petitioner informed her that all records before November 2017 were destroyed in a flood and could not be provided. Englhardt testified that snack sales, laundry coins, key card replacement monies, and room cleaning proceeds were not revenues subject to TDT. However, she explained during the hearing, that Homing Inn failed to provide any documents to demonstrate sales or revenue for the items they were asserting, so she was not able to make any of the revenue deductions Petitioner requested. At hearing, Englhardt addressed in detail each item Petitioner was contesting and all of the documentation Homing Inn provided the Tax Collector requesting a reduction of the assessment amount determined from the audit. Englhardt started with Homing Inn’s purchase receipts for the snacks supplied. On the point of snacks, Englhardt testified that she asked Homing Inn for sales receipts during the conference they had so that she could adjust for the snacks. However, Homing Inn never provided any sales receipts. Englhardt explained that the receipts supplied by Homing Inn demonstrated expenses, not revenue, so she could not use the documents supplied for the audit. Englhardt also explained that she did not use the coin laundry log because Homing Inn did not provide any deposit slips to back up those alleged deposits. She needed additional source documentation to delineate that particular revenue stream, and Petitioner failed to provide documentation to substantiate any of the items on the log. Englhardt explained further that she was not able to use the alleged extra cleaning charge proceeds for the audit because there was nothing to quantify it. There was no audit trail, folios, sales receipts, or anything to demonstrate any such payments. Englhardt also explained that the alleged charge of $5 per lost key was considered. She testified that she saw the purchase receipt for the room keys but could not use it because nothing showed revenue for lost keys. There were no customer bills, folios, or credit card receipts. Englhardt testified she had to conduct the audit following section 212.12(5)(b), Florida Statutes, because if records were unavailable, she was to make an assessment from an estimate based on the best information available, which for Homing Inn were the federal income tax returns, TDT reports, and bank statements that she used. Englhardt also testified that she considered Homing Inn’s request to reduce the assessment amount, but denied it, because there was no documentation to make any reductions or adjustments. At hearing, Englhardt also addressed the interest and penalty the Tax Collector was imposing. She explained that the penalty is 100 percent, according to the statute, if there is a previous audit finding as there had been with Homing Inn. She also testified that interest is “never compromised.” Englhardt also testified that she applied the $28,000.00 remitted by Homing Inn to the tax, which reduced their TDT of $59,134.20 to $31,134.20, but the penalty amount was still the $59,134.20, and $7.66 per day interest. At hearing, Homing Inn produced purchase receipts for snacks and cleaning supplies, Exhibit 3; a laundromat collection log, Exhibit 4; purchase receipts for key cards, Exhibit 5; a list showing charges for room damages and a list of additional cleaning services, Exhibit 7; and a copy of a check that represented repayment for a loan, Exhibit 6. Homing Inn used its corporate representative, Dipika Shah (“Shah”), to testify at hearing. Shah explained that her husband owns Homing Inn, and she works at the desk occasionally, but mainly runs errands and purchases items needed for the hotel. Shah testified that all income collected from the snacks, key cards, and other revenues are deposited in one bank, PNC Bank. Shah explained that the computer system checks guests in and out. There are four or five people that work at the desk. She testified there are weekly customers, and the weekly rental comes with one cleaning. If a customer wants an additional cleaning, it is an additional $20.00 per room cleaning. Shah also testified that there is an additional charge for any room damage, but often times the damage amount is not paid. Shah described the Homing Inn’s coin-operated laundromat on the hotel premises contained four washers and four dryers. She explained that her husband pulls the coins out of the machines, logs the amount collected, rolls up the coins, and makes laundromat deposits in the Homing Inn general bank account. Shah admitted that she has no personal knowledge of what her husband has collected. Shah verified the purchase of 5,800 room key cards at hearing. However, she admitted there was no receipts for sales of lost keys in the amount of $5.00 each to customers. Shah also explained that Homing Inn has snacks for purchase. Shah testified that Homing Inn does not keep records of snacks sales and most of the snack purchases are cash. Shah testified that their accountant prepares the TDT returns monthly. Shah testified that she is unsure if the business maintains a general ledger and has never seen a profit and loss statement for the business. Findings of Ultimate Fact In this case, the Tax Collector established that the audit giving rise to this proceeding was properly conducted. After reviewing the records Homing Inn submitted for the audit, the Auditor determined that the amounts on the bank statements and federal tax returns matched, but the amounts listed in Homing Inn’s TDT returns were underreported. Homing Inn failed to provide the Auditor with any records to account for the difference between the federal income tax and TDT returns. The Auditor correctly performed Homing Inn’s audit using an acceptable methodology of assessing unreported revenue based on the federal income tax returns, bank statements, and income reflected in the TDT returns. During the audit, Petitioner failed to supply requested records to the Tax Collector that accurately reflected sales at the hotel or source documentation that explains any of the contested unreported revenue. Therefore, the Auditor could not use Petitioner’s supplied documentation as part of the calculations for the audit to reduce the assessment amount. Additionally, the record is void of any evidence to support reducing the assessment amount for any snack sales, laundromat revenue, cleaning revenue, key sale monies, and room damage proceeds. Shah’s limited involvement and knowledge in the daily operations of Homing Inn did not allow her to present relevant firsthand testimony or competent evidence to support Petitioner’s assertions. Therefore, the Auditor properly determined Petitioner’s TDT liability utilizing the method in section 212.12(5)(b), which allows the Auditor to rely on an estimation for the assessment when the taxpayer fails to provide records for the audit, and the Tax Collector’s assessment of $59,134.20 tax is proper.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent, Palm Beach County Tax Collector, enter a final order directing Mata Chorwadi, Inc., d/b/a Homing Inn, to pay the Tax Collector’s assessment for $31,134.20 of TDT; $59,134.20 of penalty; and $12,444.95 of interest, accruing at $7.66 per day. DONE AND ENTERED this 21st day of May, 2021, in Tallahassee, Leon County, Florida. S JUNE C. MCKINNEY Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 21st day of May, 2021. COPIES FURNISHED: Orfelia Mayor, General Counsel Palm Beach County Tax Collector 301 North Olive Avenue Post Office Box 3715 West Palm Beach, Florida 33402-3715 Rex D. Ware, Esquire Moffa, Sutton & Donnini, P.A. 3500 Financial Plaza, Suite 330 Tallahassee, Florida 32312 Joseph C. Moffa, Esquire Moffa, Sutton & Donnini, P.A. Trade Center South, Suite 930 100 West Cypress Creek Road Fort Lauderdale, Florida 33309 Manshi Shah, Esquire 6525 Jessy Court Lake Worth, Florida 33467 Jonathan W. Taylor, Esquire Moffa, Sutton & Donnini, P.A. Trade Center South, Suite 930 100 West Cypress Creek Road Fort Lauderdale, Florida 33309 Hampton C. Peterson, General Counsel Palm Beach County Tax Collector 301 North Olive Avenue Post Office Box 3715 West Palm Beach, Florida 33402-3715
Findings Of Fact Gardinier Big River is a New Jersey corporation authorized to transact business within the State of Florida. Gardinier is a Delaware corporation authorized to transact business within the State of Florida. Gardinier is a wholly owned subsidiary of Gardinier Big River. Petitioners were subject to the corporate income tax imposed by Chapter 220, Florida Statutes, for the tax years 1974 through 1981. For the tax years 1974 and 1975, Gardinier and Gardinier Big River each filed separate annual corporate income tax returns. Beginning with the tax year 1976, and continuing through the tax year 1981, Petitioners filed consolidated annual corporate income tax returns as authorized by Section 220.131, Florida Statutes. Annual corporate income tax returns were filed by Petitioners as follows: (a) Gardinier timely filed on April 1, 1975, an annual corporate income tax return for its tax year ending June 30, 1974; (b) Gardinier Big River timely filed on January 1, 1976, an annual corporate income tax return for its tax year ending March 31, 1975; (c) Gardinier timely filed on April 1, 1976, an annual corporate income tax return for its tax year ending June 30, 1975; (d) Petitioners timely filed on January 3, 1977, a consolidated annual corporate income tax return for their tax year ending March 31, 1976; (e) Petitioners timely filed on March 30, 1977, a consolidated annual corporate income tax return for their tax year ending June 30, 1976; (f) Petitioners timely filed on March 21, 1978, a consolidated annual corporate income tax return for their tax year ending June 30, 1977; (g) Petitioners timely filed on March 27, 1979, a consolidated annual corporate income tax return for their tax year ending June 30, 1978; (h) Petitioners timely filed on April 1, 1980, a consolidated annual corporate income tax return for their tax year ending June 30, 1979; (i) Petitioners timely filed on April 1, 1981, a consolidated annual corporate income tax return for their tax year ending June 30, 1980; (j) Petitioners timely filed on December 8, 1981, a consolidated annual corporate income tax return for their tax year ending June 30, 1981. For each of the years 1974 through 1981, Petitioners, either individually or jointly, timely paid the corporate income tax which Petitioners determined to be due pursuant to Chapter 220, Florida Statutes (1983), by the return date specified in Section 220.222, Florida Statutes (1983), without regard for extensions. Specifically, corporate income taxes were paid by the Petitioners on the following dates for the following tax years: (a) tax year ending June 30, 1975--taxes paid by October 1, 1975; (b) tax year ending March 31, 1975--taxes paid by July 1, 1976; and (c) tax year ending June 30, 1980-- taxes paid by October 1, 1980. On several occasions, the latest of which was April 5, 1983, Petitioners and the Department agreed, for the tax years 1974 through 1981, to extensions of the assessment and refund limitation provisions found at Sections 214.09 and 214.16, Florida Statutes. On or about February 21, 1983, the Department commenced a corporate income tax audit of the Petitioners for the tax years 1974 through 1981. On or about April 23, 1983, as a result of the foregoing audit, the Department issued to Gardinier a Notice of Intent to Make Audit Changes indicating an overpayment of corporate income taxes for the tax year ending June 30, 1975, and an underpayment of corporate income taxes for the tax year ending June 30, 1974. On that same date, the Department issued to Petitioners jointly two separate Notices of Intent to Make Audit Changes indicating overpayments of corporate income taxes for the tax years ending March 31, 1976, and June 30, 1980, and underpayments of corporate income taxes for the tax years ending March 31, 1975, and June 30, 1979. In addition, these Notices indicated that penalty and interest assessments would be made against Gardinier for the alleged late payment of estimated taxes for the tax year ending June 30, 1975, and against Petitioners jointly for the alleged late payment of estimated taxes for the tax year ending March 31, 1976. A Notice of Intent to Make Audit Changes is a form used by the Department to advise taxpayers of overpayments or underpayments of taxes determined by the Department in an audit of the taxpayers' books and records. The notice forms are also referred to by the reference "DR 802." If the taxpayer agrees with the results set forth in the notice, it is instructed by the Department to sign the notice at the space indicated thereon and return it to the Department. By letters dated July 11, 1983, the Department advised Petitioners of its receipt of an unagreed Notice of Intent to Make Audit Changes from the Department's audit staff. The letters further stated that the audit resulted in a refund of taxes to Petitioners' account and that signed agreements to the refunds were required to be reviewed by the Department by September 12, 1983. By letter dated July 21, 1983, Petitioners notified the Department of their disagreement with certain aspects of the Notices of Intent to Make Audit Changes. Specifically, Petitioners disagreed with the assessment of penalty and interest for the alleged late payment of corporate income taxes for the tax years 1975 and 1976. In addition, Petitioners indicated their disagreement with the Department's failure to provide for the payment of interest on Petitioners' overpayments of corporate income taxes for the tax years 1975, 1976, and 1980. By letter dated August 4, 1983, the Department advised Petitioners of its agreement that penalty and interest assessments should not have been made for the tax years 1975 and 1976. In addition, the Department advised Petitioners that interest would not be paid upon the overpayments of corporate income taxes for the tax years 1975, 1976, and 1980. On August 16, 1983, Petitioners submitted to the Department signed Notices of Intent to Make Audit Changes indicating Petitioners' agreement and entitlement to a refund of the net overpayments of corporate income taxes for the tax years 1974 through 1981. By letter dated August 16, 1983, Petitioners protested the Department's failure to pay interest upon the overpayments of corporate income taxes and made a formal claim for payment pursuant to Section 214.14, Florida Statutes (1983), for said interest. On November 10, 1983, the Department issued to Petitioners a Notice of Decision denying Petitioners' claim for interest upon the overpayments of corporate income taxes. Petitioners did not request reconsideration of this Notice of Decision. The overpayment of corporate income taxes by Gardinier for the tax year ending June 30, 1975, was $204,277.61. The overpayment of corporate income taxes by Petitioners for the tax year ending March 31, 1976, was $109,658.00. The overpayment of corporate income taxes by Petitioners for the tax year ending June 30, 1980, was $222,021.00. Total overpayments of corporate income taxes by Petitioners, either individually or jointly, for the tax years 1975, 1976, and 1980 were $535,956.61. Total underpayments of corporate income taxes by Petitioners for the tax years 1974, 1975, and 1979, including penalties and interest assessed thereon, were $153,595.92. The Department refunded to Petitioners, by checks dated October 13 and November 16, 1983, $382,360.69 which amount represented the difference between total overpayments and underpayments by Petitioners of corporate income taxes for the tax years 1974 through 1981. The provisions of Chapters 214 and 220, Florida Statutes (1983), are applicable to the circumstances of this action. The parties hereby agree that the Joint Exhibits are true and accurate copies of the original documents. It is the intent of the parties hereto that this stipulation resolve all material facts necessary for a determination of the rights and liabilities of the parties in this action.
The Issue The issue in this case is whether a policy of Respondent prohibiting Respondent’s employees from engaging in preparation of federal income tax returns for profit during off-hours constitutes a rule subject to promulgation requirements of Chapter 120, Florida Statutes.
Findings Of Fact Petitioners are employees of the Department of Revenue (DOR) who wish to prepare federal income tax returns. They assert they wish to prepare the returns on a pro bono basis and for hire in their non-working time for persons who are not required to file any tax returns with the State of Florida, and who are not required to pay court-ordered payments of child support. Each of the Petitioners is employed with the Respondent as a Tax Auditor II, III, or IV, and each is a Career Service employee with permanent status. Petitioners’ primary work function for the Respondent entails auditing State tax returns filed with DOR by business entities. Victor Novoa holds a bachelors degree in finance, and has 20 years experience working in the accounting field, including nine years auditing experience with the Respondent. Ana Socarras has a bachelor’s degree in the accounting field, and has been employed with the Respondent as an auditor since 1994. She has 15 years experience working in the accounting field. Enrique Altuzarra is a licensed Certified Public Accountant. He has more than 25 years experience in the area of accounting and auditing. Lander Carn holds a master’s degree in taxation, is a licensed Certified Public Accountant, and has 15 years experience in the accounting and auditing fields. Petitioners became aware, following their employment by Respondent, of Respondent’s policy prohibiting its employees from preparation of federal income tax returns for compensation during their non-working time. Respondent’s policy has been consistently disseminated to employees through group meetings with employees and in memoranda circulated by management to employees. Pro bono preparation of federal tax returns is permitted in some situations. Respondent’s policy is expressed also in Respondent’s “Code of Conduct” which is published to all employees. The policy provides: (2) Outside Preparation of Tax Returns and Other Forms Preparation of tax returns and other forms required by the Department of Revenue or the Internal Revenue Service, whether compensated or uncompensated, for persons other than family members is not permitted. Respondent also states the policy in its auditor’s manual in the following language: The Department has a policy specifically prohibiting all employees from preparing any state or federal tax returns, reports, declarations or documents, or otherwise [sic]engage in accounting, use, analysis or preparation of any financial records for consideration, or [sic] sign such tax document for compensation, gift, or favor. Respondent’s policy has found expression in Respondent’s official writings, monthly newsletter to employees, and memoranda addressed to employees and management. Statements of the policy have been systematically communicated to agency personnel with the intent and effect of prohibiting employee preparation of federal tax returns for compensation in the course of secondary employment and implemented with the direct and consistent effect of law. Respondent’s Code of Conduct literally prohibits any exception to the policy prohibiting participation by an employee in preparation of federal tax returns for pay during off-duty hours for anyone other than family members. Respondent’s Employee Handbook also makes it clear that any employee engaging in such conduct, absent specific approval, faces disciplinary action “up to and including dismissal.” As established by testimony of Glenn Bedonie, an employee of Respondent in various, highly responsible, management positions, and William P. Fritchman, a participant in development of the policy and Respondent’s former chief of personnel for 23 years, there has been no instance in which any employee has ever been permitted to prepare federal income tax returns “for hire” during off-duty time. As stipulated by the parties, Respondent has not adopted, in compliance with Section 120.54, Florida Statutes, the policy of refusing to allow employees to prepare federal tax returns for hire in secondary employment. Petitioners do not contemplate and do not desire to prepare federal tax returns in circumstances that would present a conflict of interest with their employment with Respondent. They do not seek to prepare tax returns for individuals who own a business, who are required to file state returns, and who are subject to audit by Respondent. Confidential tax information possessed by Respondent is not available to the Petitioners or other auditors within Respondent’s employment. Such information must be requested from a Computer Audit Analyst or a Senior Tax specialist on a specific taxpayer which the particular auditor has been assigned to audit. If deemed appropriate, the information may be made available to the auditor. Similarly, confidential tax information obtained by Respondent from the Internal Revenue Service (IRS) is adequately safeguarded from ready abuse by employees by requiring an auditor to justify the need for such information to a series of supervisory personnel. Respondent presented no creditable or persuasive evidence that it would be impractical or unfeasible to enact its present policy in compliance with requirements of Chapter 120, Florida Statutes.
The Issue Whether or not the Petitioner is required to pay taxes under the authority of Chapter 212, Florida Statutes, which are set forth in the assessment by the Respondent, State of Florida, Department of Revenue, dated May 18, 1977.
Findings Of Fact The Respondent, State of Florida, Department of Revenue, performed an audit of the business which is the Taj Apartments, for purposes of determining if sales and use taxes were owed by that operation. At the time of the initial contact by the Respondent, the Taj Apartments were owned by individuals other than the Petitioner, Robert Hartley. However, in the process of the audit, it was determined that Hartley would be responsible for paying some of the assessments which were being alleged against the operation located on the premises which constitutes the Taj Apartments. Further liability for the audit period was established when Robert Hartley foreclosed a mortgage which he held from the owners of record who were the owners when the tax audit was first commenced. By his action of foreclosure, he became responsible for any tax assessments under Chapter 212, Florida Statutes, which were mete and proper during the audit period, which dated from September 1, 1973, through May 31, 1975. Those dates include the time that Robert Hartley d/b/a Taj Apartments was still in control of the premises. The assessment of the property from September 1, 1973, through May 31, 1975, was made upon the basis of a consideration of the rents collected as reflected in Hartley's ledger cards and receipts. The taxation was based upon a consideration of the number of units, in contrast to a consideration of the number of tenants found in the apartment building. The distinction of taxation on units and not tenants is significant because Hartley, in his petition, challenges the right of the Respondent to tax on a formula which pertains to units and not tenants. The language of the applicable section of Chapter 212, Florida Statutes, specifically, Section (7)(c), Florida Statutes, states the following: The rental of facilities, including trailer lots, which are intended primarily for rental as a principal or permanent place of residence is exempt from the tax imposed by this chapter. The rental of facilities that primarily serve transient guests is not exempt by this subsection. In the application of this law, or in making any determination against the exemption, the department shall consider and be guided by, among other things: Whether or not a facility caters primarily to the traveling public; Whether less than half of its tenants have a continuous residence in excess of 3 months; and The nature of the advertising of the facility involved. It can be seen that the language of that provision clearly invisions that permanent residents are exempt from consideration of the tax, and transient guests are not exempt. Discussion of tenants is used only in describing some of the matters that the Respondent shall consider and be guided by, and is not the only determination which the Respondent must look to in determining whether an exemption from the provisions of this subsection has been established. Furthermore, the fact that Rule 12A-1.61, Florida Administrative Code, which implements Chapter 212, Florida Statutes, in this particular taxing theory speaks in terms of units and not tenants is not inconsistent or in violation of the above quoted statutory provision, because that statutory provision allows the Respondent to look at other things in making its determination of an exemption. The language of Rule 12A-1.61, Florida Administrative Code, spoken of, states the following: Rental of living quarters, sleeping or housekeeping accommodations. (1) Every person, except housing authorities which are specifically exempt from provisions hereof by Section 212.08(10), F.S., is exercising a taxable privilege when he engages in the business of renting, leasing or letting any living quarters, sleeping or housekeeping accommodations in connection with any hotel, motel, apartment house, duplex, rooming house, tourist or mobile home court subject to the provisions of Chapter 212, F.S. Notwithstanding the aforesaid provisions of this paragraph, effective March 1, 1972, the tax shall not apply to the rental of living accommodations which are rented primarily to persons as their principal or permanent place of residence but the tax shall apply to the rental of such facilities at hotels, motels, and seasonal lodging facilities that primarily serve transient guests. (See paragraph 9 of this rule.) When a lodging facility does not primarily cater or advertise that it primarily caters to seasonal or transient guests, or to the traveling public, and when fifty percent or more of its total units are rented to persons who have resided thereat continuously for the three months immediately preceding March 1, 1972, the facility shall have an exempt status until a redetermination has been made. Landlords beginning business after March 1, 1972 shall determine the taxable status of their lodging facility as of the commencing of business. In making their determination, the above guidelines will be applied except that the three months prior residence requirement will be waived in those instances where leases or other records of the facility clearly reflect that the facility does not primarily cater to or advertise that it caters to seasonal or transient guests or the traveling public. All landlords are required to make a redetermination of the taxable status of their businesses on July 1 of each year and in the event that his taxable status has changed, he shall notify the Department of such change. Therefore, the Petitioner's challenge to the Respondent's utilization of rental units, as opposed to tenants residing in the apartment building of the Petitioner during the pendancy of the audit period, to decide the issue whether less than half of the tenants (units) have a continuous residence in excess of three months must fail. Moreover, when an assessment is made under the theory of Section 212.03, Florida Statutes, it is incumbent on the taxpayer to establish an exemption and the petitioner offered no evidence to establish an exemption. In view of the fact that the information for the assessment was taken from the books and records of the Petitioner, and their being no testimony to establish an exemption from the tax imposed on the rentals of the Taj Apartments which was serving transient guests in the time period at issue; the tax together with penalties and interest as set forth in the assessment document (Respondent's Exhibit No. 1, admitted into evidence) should stand. The audit brought about a further assessment for use tax due and owing during the period of the audit. The use tax pertains to Robert Hartley's rental of television sets to the guests in his rental facility and the rental of parking spaces to the guests in the rental facility. The determination of taxes owed for those rentals was also premised upon an examination of Mr. Hartley's books and records. No reason was established for not using the figures found in the hooks and records, in assessing any tax that might be owed for the rental of television sets and parking spaces. Consequently, the portion of the assessment of May 18, 1977, pertaining to a use tax on the rentals of the television sets and parking spaces should be upheld. The imposition of the assessment of May 18, 1977, is a revision of a prior assessment which was rendered before Mr. Hartley provided his books and records. This revised assessment reduced the initial assessment, premised upon an examination of Mr. Hartley's books and records and certain credits for exemptions in the year 1974. The revised assessment reflects this in its provision entitled "Abatements:" The revised assessment then becomes an assessment of $15,960.92. This assessment is constituted of a tax on the transient rentals, parking spaces and television sets; together with penalties on that tax amount and interest through May 8, 1977. The facts show that the revised assessment of May 18, 1977, is correct.
Recommendation It is recommended that the assessment of May 18, 1977, which has been placed against the Petitioner, Robert F. Hartley, d/b/a Taj Apartments, be upheld. DONE AND ENTERED this 17th day of February, 1978, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Mr. Robert F. Hartley Post Office Box 82 Middletown, California 95461 and Mr. Robert F. Hartley 33 Southwest 2nd Avenue Miami, Florida 33130 Edwin Stacker, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 John D. Moriarty, Esquire Department of Revenue Room 104 Carlton Building Tallahassee, Florida 32304
The Issue The issue in the case is whether the allegations of the Administrative Complaint for Revocation of Certification of Registration are correct.
Findings Of Fact At all times material to this case, the Respondent operated a used car dealership at 1014 West Central Boulevard, Orlando, Florida, 32805. At all times material to this case, the Respondent's registered corporate agent was identified as Jennifer Hamilton, 3517 Domino Drive, Orlando, Florida, 32805. Florida law requires specified persons conducting business within the state to register with the Petitioner and to obtain a certificate of registration essentially for purposes of tax collection. As a dealer, the Respondent was required to register with the Petitioner and received Certificate of Registration No. 58-8011915294-5 from the Petitioner. As a dealer, the Respondent was required to collect sales and use taxes from purchasers and to submit monthly tax returns and collected taxes to the Petitioner. The Respondent filed proper tax returns, but failed to remit taxes received for the following months: September 2004, October 2004, December 2004, January 2005 through October 2005, December 2005, March 2007 through July 2007, and September 2007 through December 2007. The unremitted taxes totaled $21,194.32. Based on the Respondent's failure to remit the taxes, on July 22, 2008, the Petitioner assessed a penalty of $3,271.64 pursuant to Subsection 212.12(2), Florida Statutes. Based on the Respondent's failure to remit the taxes, the Petitioner assessed interest charges of $4,304.62 (as of July 22, 2008) pursuant to Subsection 212.12(3), Florida Statutes. The interest charges continue to accrue until they are paid. The Respondent failed to file tax returns for the months of January 2008 through July 2008. Pursuant to Subsection 212.12(5), Florida Statutes, the Petitioner assessed an estimated tax liability of $3,500.00 against the Respondent. Pursuant to Subsection 212.15(4), Florida Statutes, the Petitioner has recorded warrants in the public records of Orange County, Florida, for the unpaid taxes. Pursuant to Subsection 212.18(3)(d), Florida Statutes, the Petitioner issued a Notice of Conference of Revocation of Certificate of Registration dated July 30, 2008, and an informal conference was conducted on September 4, 2008. No one appeared at the conference on behalf of the Respondent. The Petitioner thereafter filed the Administrative Complaint underlying this proceeding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner enter a final order revoking the certificate of registration held by the Respondent. DONE AND ENTERED this 3rd day of March, 2009, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 3rd day of March, 2009.
The Issue The issue is whether the Department of Revenue (the "Department") may revoke the Certificate of Registration issued to Petitioner for failure to post a $10,000 cash deposit, surety bond, or irrevocable letter of credit.
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, to issue warrants for the collection of taxes, interest, and penalties and, where necessary, to require a cash deposit, bond, or other security, as a condition to a person obtaining or retaining a dealer‘s certificate of registration under chapter 212. Petitioner is a Florida corporation with its principal and mailing address at 5800 Phillips Highway, Jacksonville, Florida 32216. Petitioner is a "dealer" as defined in section 212.06(2), Florida Statutes. Petitioner holds Dealer's Certificate of Registration No. 26-8015523525-2. As a dealer, Petitioner was required to collect sales and use taxes from customers and to submit monthly tax returns and collected taxes to the Department. Sales and use taxes for any given month are due on the first day of the succeeding month, and must be paid to the Department on or before the 20th day of that succeeding month. Petitioner failed to file the required sales and use tax returns for January through March 2011. In a delinquent tax warrant dated May 18, 2011, the Department assessed Petitioner estimated tax of $3,000 for the three months in question, along with $32.79 in interest, $300.00 in penalties, and fees in the amount of $20.00, for a total of $3,352.79. The Department estimated the tax due for the months of January through March 2011 based on historical data, i.e., Petitioner's previous sales and use tax returns. The Department issued the Notice on May 18, 2011. The Notice was served on Petitioner on May 20, 2011. The Notice required Petitioner to post a $10,000 cash deposit, surety bond, or irrevocable letter of credit as a condition to retaining its Certificate of Registration. The Notice further advised Petitioner of an informal conference, commonly referenced as a "bond hearing," to be conducted on June 21, 2011, for the purpose of affording the Petitioner an opportunity to resolve the delinquent tax issue. The Notice also stated as follows, in relevant part: This Notice of Intent to Revoke Registration will become final on the date of the informal conference if the required security has not been posted, or an agreement is not reached at the informal conference, or you fail to attend the informal conference.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order that declines to revoke Dealer's Certificate of Registration No. 26-8015523525-2 held by Jacksonville Entertainment Company, LLC, until such time as the Department fully complies with the requirements of subsection 212.18(3)(d), Florida Statutes by issuing an Administrative Complaint. DONE AND ENTERED this 19th day of March, 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 19th day of March, 2012. COPIES FURNISHED: Marshall Stranburg, Esquire Department of Revenue The Carlton Building, Room 204 501 South Calhoun Street Tallahassee, Florida 32314-6668 Carrol Y. Cherry, Esquire Office of the Attorney General The Capitol, PL-01 Revenue Litigation Bureau Tallahassee, Florida 32399 carrol.cherry@myfloridalegal.com Bechara Richa Jacksonville Entertainment Company, LLC 8474 Papelon Way Jacksonville, Florida 32217 Nancy Terrel, Acting General Counsel Department of Revenue The Carlton Building, Room 204 501 South Calhoun Street Post Office Box 6668 Tallahassee, Florida 32314-6668 Lisa Vickers, Executive Director Department of Revenue The Carlton Building, Room 104 501 South Calhoun Street Tallahassee, Florida 32314-6668
The Issue The issue is whether Petitioner is qualified to be licensed as a Florida real estate sales associate.
Findings Of Fact Petitioner has a Bachelor of Science degree in accounting from Florida State University. After receiving a Florida license as a Certified Public Accountant (CPA) in 1974, Petitioner worked as a CPA in private practice until 1978. He then returned to school at Trinity University, where he earned a Master of Science degree in Health Care Administration. Petitioner worked for the Hospital Corporation of America (HCA) for approximately 20 years. In the early 1980's, Petitioner's job with HCA involved the management of physician clinics. One of the physicians requested Petitioner to prepare some financial statements and to assist with the preparations of some federal income tax returns for a private client. At that time, Petitioner was living and working in two locations: Atlanta, Georgia, and Dothan, Alabama. Petitioner was not licensed to practice as a CPA in any state except Florida. For approximately two and one-half years, Petitioner helped the private client maintain her books. During this time, Petitioner corresponded with the client, sending her letters with CPA after his name. In 1986, Petitioner decided to discontinue his business relationship with the private client. The private client, who was upset, filed a complaint against Petitioner. In 1987, the private client's complaint resulted in Petitioner’s pleading no contest to the offense of identifying himself as a CPA when he was not a licensed CPA in Georgia. Petitioner subsequently satisfied all sanctions related to the Georgia offense. The Florida Board of Accountancy has not disciplined Petitioner's CPA license. At the time of the hearing, Petitioner's Florida CAP license was inactive. In 1991, Petitioner received a stock bonus from his employer, HCA, when it purchased a private hospital. The bonus consisted of stock certificates in a spin-off company known as Quorum Health Care. The stock was restricted and could not be sold for five years. Petitioner never received a Federal Income Tax Form 1099 related to the stock bonus. Petitioner placed the stock certificates in his safe. He did not include the stock bonus on his personal federal income tax return. In 1994, the Internal Revenue Service audited Petitioner's personal tax returns. During the audit, Petitioner disclosed the stock bonus and immediately filed an amended income tax return, paying all tax and interest due and all penalties. In 1996, Petitioner filed a whistleblower lawsuit against his employer for Medicare fraud. Because the lawsuit was filed in Alabama, the United States Attorney in Birmingham, Alabama, intervened in the case. The lawsuit resulted in the recovery of $180,000,000 from Quorum Health Care. Petitioner was entitled to a whistleblower award in the amount of $5,000,000. In 1999, before Petitioner received his financial reward from the lawsuit, the United States Attorney in Birmingham, Alabama, advised Petitioner that he would be charged with failure to file a correct federal income tax return for the years 1991 and 1992. Petitioner granted the government's request to extend the statute of limitations while the government investigated the tax fraud allegations against him. In 2000, Petitioner pled guilty to income tax fraud and agreed to forego any reward for his participation in the whistleblower lawsuit. Petitioner was sentenced to serve two years in a federal prison, followed by one year of supervised probation. Petitioner also paid a $50,000 fine. Petitioner was incarcerated for 367 days. He was released from federal prison in August 2002. His supervised probation terminated February 2004. In January 2006, Petitioner's civil rights were restored. In an effort to prove rehabilitation, Petitioner presented evidence to show his involvement and/or active participation with the following: (a) his church; (b) children's sports programs; (c) Habitat for Humanity; (d) neighborhood hurricane recovery; (e) and other activities beneficial to his friends and family. The following three witnesses testified on Petitioner's behalf at the hearing: (a) Mike Papantonio, an attorney and Petitioner's brother-in-law; (b) Randal Spencer, a Florida licensed real estate broker who, along with his partners, sold a commercial building to Petitioner's wife; and (c) Carl Collins, Petitioner's neighbor since 2000. Each witness testified that Petitioner is honest, trustworthy, and of good character. At the time of the hearing, Petitioner was owner/manager of CommStructure, a company that manufactures and installs cellular towers. Petitioner oversees all financial aspects of the company. Petitioner's wife owns a real estate brokerage company, Spencer Realty. If Petitioner becomes licensed as a real estate sales associate, he would assist his wife in her business. A real estate sales associate, like a CPA, is responsible for important financial transactions where accuracy is important. Therefore, a real estate sales associate must be trustworthy regarding financial matters.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Respondent enter a final order denying Petitioner a license as a real estate sales associate. DONE AND ENTERED this 20th day of April, 2006, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD 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 20th day of April, 2006. COPIES FURNISHED: Daniel R. Biggins, Esquire Department of Legal Affairs The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 Daniel Villazon, Esquire Daniel Villazon, P.A. 1020 Verona Street Kissimmee, Florida 34741 Nancy B. Hogan, Chairman Real Estate Commission Department of Business and Professional Regulation 400 West Robinson Street, Suite 801N Orlando, Florida 32801 Josefina Tamayo, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue The issues in this case are: (1) whether portions of Florida Administrative Code Rules 12D-9.020 and 12D-9.025 constitute invalid exercises of delegated legislative authority; (2) whether sections of Modules Four and Six of the 2010 Value Adjustment Board Training are unpromulgated rules; and (3) whether Property Tax Oversight Bulletin 11-01 is an unpromulgated rule.
Findings Of Fact The Parties Petitioner Turner is the Property Appraiser for Hillsborough County, Florida. Petitioners Crapo, Higgs, and Smith are the Property Appraisers for Alachua, Monroe, and Okaloosa Counties, respectively. Respondent, the Department of Revenue ("DOR"), is an agency of the State of Florida that has general supervision over the property tax process, which consists primarily of "aiding and assisting county officers in the assessing and collection functions." § 195.002(1), Fla. Stat. DOR is also required to prescribe "reasonable rules and regulations for the assessing and collecting of taxes . . . [to] be followed by the property appraisers, tax collectors . . . and value adjustment boards." § 195.027(1). Petitioner-Intervenor Roger A. Suggs is the Clay County Property Appraiser. Petitioner-Intervenor Gary R. Nikolitis is the Palm Beach County Property Appraiser. Petitioner-Intervenor PAAF is a statewide nonprofit professional association consisting of 35 property appraisers in various counties throughout Florida. Petitioner-Intervenor FAPA is a statewide nonprofit professional organization of Florida property appraisers. Respondent-Intervenor FUTMA is a statewide nonprofit association consisting of 46 of the largest property taxpayers in Florida. Ms. Cucchi, the second Respondent-Intervenor, is a property owner and taxpayer in Hillsborough County. Background of Florida's Property Tax System Article VII, Section Four of the Florida Constitution mandates that all property be assessed at "just value," and further requires that the Legislature prescribe, by general law, regulations that "shall secure a just valuation of all property for ad valorem taxation." Pursuant to chapters 192 through 196 of the Florida Statutes, locally elected property appraisers in each of Florida's 67 counties develop and report property assessment rolls. The assessment rolls——which property appraisers prepare each year and submit to DOR by July 1——contain information such as the names and addresses of the property owners, as well as the just, assessed, and taxable values of the properties within each appraiser's respective county. DOR is responsible for reviewing and ultimately approving or disapproving the assessment rolls. § 193.1142, Fla. Stat. Once DOR approves the assessment rolls, the property appraiser mails a "Notice of Proposed Property Taxes and Non-ad Valorem Assessments" (known as a "TRIM" notice) to each property owner. § 200.069, Fla. Stat. The notices advise each owner of his property's assessment for that year, the millage (tax) rate set by the taxing authorities, and the dates of the budget hearing for those authorities. After receiving a TRIM notice, a property owner may request an informal conference with the property appraiser's office to discuss the assessment of his or her property. Alternatively, or in addition to the informal conference, a property owner may challenge the assessment by filing a petition with the county value adjustment board or by brining a legal action in circuit court. § 194.011(3), Fla. Stat.; § 194.171, Fla. Stat. Value Adjustment Boards Pursuant to section 194.015(1), Florida Statutes, each of Florida's 67 value adjustment boards is composed of two members of the county commission, one member of the school board, and two citizen members.1 Of particular import to the instant case, section 194.015(1) requires value adjustment boards to retain private counsel to provide advice regarding legal issues that may arise during value adjustment hearings.2 In counties with populations greater than 75,000, the value adjustment board must appoint special magistrates3 to conduct hearings and issue recommended decisions. § 194.035(1), Fla. Stat. Hearings in counties with 75,000 citizens or fewer may be conducted by either magistrates or the value adjustment board itself. Id. DOR has no involvement in the appointment or removal of board attorneys, magistrates, or the members of value adjustment boards. Should a property owner choose to contest an assessment through the value adjustment board process, the board's clerk schedules an administrative hearing and sends a notice of hearing to the property owner and the property appraiser. § 194.032(2), Fla. Stat. At the hearing, the determinative issue is whether the assessment of the particular property at issue exceeds just value. In the event that a property owner is dissatisfied with the outcome of a value adjustment hearing, an appeal may be taken to the circuit court, where a de novo hearing will be conducted. § 194.036(2) & (3), Fla. Stat. Under certain conditions, the property appraiser may likewise appeal an adverse value adjustment board decision to the circuit court. § 194.036(1).4 2008 Legislative Reforms Prior to 2008, DOR was not charged with the responsibility of training value adjustment boards or their magistrates. However, pursuant to chapter 2008-197, Laws of Florida, the Legislature enacted a series of changes to the VAB process, including a new requirement that DOR "provide and conduct training for special magistrates at least once each state fiscal year." See § 194.035(3), Fla. Stat. Immediately after enactment of the law, DOR initiated rulemaking and developed 2008 interim training for value adjustment boards and special magistrates. Persons required to take the training include all special magistrates, as well as value adjustment board members or value adjustment board attorneys in counties that do not use special magistrates. § 194.035(1) & (3), Fla. Stat. In addition to the new training requirement, chapter 2008-197 mandated that DOR develop a Uniform Policies and Procedures Manual for use by value adjustment boards and magistrates. The Uniform Policies and Procedures Manual ("The Manual"), which is posted on DOR's website and is separate and distinct from DOR's training materials for value adjustment boards, consists of relevant statutes, administrative rules, provisions of the Florida Constitution, as well as forms. The Manual is also accompanied by two sets of separate documents, which are likewise available on DOR's web page: (1) "Other Legal Resources Including Statutory Criteria; and (2) "Reference Materials Including Guidelines," consisting of guidelines and links to other reference materials, including DOR's value adjustment board training materials, bulletins, and advisements. The introduction to the "Reference Materials Including Guidelines" reads in relevant part as follows: The set of documents titled "Reference Materials Including Guidelines," contains the following items: Taxpayer brochure General description and internet links to the Department's training for value adjustment boards and special magistrates; Recommended worksheets for lawful decisions; The Florida Real Property Appraisal Guidelines; * * * 7. Internet links to Florida Attorney General Opinions, Government in the Sunshine Manual, PTO Bulletins and Advertisements, and other reference materials. These reference materials are for consideration, where appropriate, by value adjustment boards and special magistrates in conjunction with the Uniform Policies and Procedures Manual and with the Other Legal Resources Including Statutory Criteria. The items listed above do not have the force or effect of law as do provisions of the constitution, statutes, and duly adopted administrative rules. Revisions to Value Adjustment Board Procedural Rules Pursuant to section 194.011, Florida Statutes, the Legislature charged DOR with the responsibility to prescribe, by rule, uniform procedures——consistent with the procedures enumerated in section 194.034, Florida Statutes——for hearings before value adjustment boards, as well as procedures for the exchange of evidence between taxpayers and property appraisers prior to value adjustment hearings. On February 24, 2010, following a 12-month period of public meetings, workshops, and hearings, the Governor and Cabinet approved the adoption of chapter 12D-9, Florida Administrative Code, which is titled, "Requirements for Value Adjustment Board in Administrative Reviews; Uniform Rules of Procedure for Hearings Before Value Adjustment Boards." As discussed in greater detail in the Conclusions of Law of this Order, Petitioner Turner contends that portions of Florida Administrative Code Rule 12D-9.020, which delineate the procedures for the exchange of evidence between property appraisers and taxpayers, contravene section 194.011. Petitioner Turner further alleges that section 194.011 is contravened by parts of Florida Administrative Code Rule 12D- 9.025, which governs the procedures for conducting a value adjustment hearing and the presentation of evidence. 2010 Value Adjustment Training Materials In 2010, following the adoption of Rule Chapter 12D-9, DOR substantially revised the value adjustment board training materials. After the solicitation and receipt of public comments, the 2010 VAB Training was made available in late June 2010 on DOR's website. The 2010 VAB Training is posted on DOR's website in such a manner that an interested person must first navigate past a bold-font description which explains that the training is not a rule: This training is provided to comply with section 194.035, Florida Statutes. It is intended to highlight areas of procedure for hearings, consideration of evidence, development of conclusions and production of written decisions. This training is not a rule. It sets forth general information of which boards, board attorneys, special magistrates and petitioners / taxpayers should be aware in order to comply with Florida law. (Emphasis in original). The 2010 VAB Training consists of eleven sections, or "modules," portions of two of which Petitioners allege constitute unadopted rules: Module 4, titled "Procedures During the Hearing"; and Module 6, titled "Administrative Reviews of Real Property Just Valuations." While words and phrases such as "must," "should," and "should not" appear occasionally within the materials, such verbiage is unavoidable——and indeed necessary——in carrying out DOR's statutory charge of disseminating its understanding of the law to magistrates and value adjustment board members. Although DOR is required to create and disseminate training materials pursuant to section 194.035, the evidence demonstrates that the legal concepts contained within the 2010 VAB Training are not binding. Specifically, there is no provision of law that authorizes DOR to base enforcement or other action on the 2010 VAB Training, nor is there a statutory provision that provides a penalty in situations where a value adjustment board or special magistrate deviates from a legal principle enumerated in the materials. Further, the evidence demonstrates DOR has no authority to pursue any action against a value adjustment board or magistrate that chooses not to adhere to the legal concepts contained within the training. PTO Bulletin 11-01 On January 21, 2011, DOR issued Property Tax Oversight Bulletin 11-01, titled "Value Adjustment Board Petitions and the Eighth Criterion," to the value adjustment board attorneys for all 67 counties. DOR also disseminated courtesy copies of the bulletin by e-mail to over 800 interested parties. The bulletin, the full text of which is reproduced in the Conclusions of Law section of this Summary Final Order, consisted of a non-binding advisement regarding the use of the eighth just valuation criterion (codified in section 193.011(8), Florida Statutes5) in administrative reviews. The bulletin advised, in relevant part, that the eighth just value criterion: "must be properly considered in administrative reviews"; "is not limited to a sales comparison valuation approach"; and "must be properly considered in the income capitalization and cost less depreciation approaches" to valuation. The bulletin further advised that when "justified by sufficiently relevant and credible evidence, the Board or special magistrate should make an eighth criterion adjustment in any of the three valuation approaches." Although certain interested parties (i.e., a special magistrate in Nassau County, the director of valuation for the Hillsborough County Property Appraiser's Office, and legal counsel for the Broward County value adjustment board) perceived the bulletin to be mandatory, the evidence demonstrates that value adjustment boards and magistrates were not required to abide by the bulletin's contents. As with the training materials, DOR possesses no statutory authority to base enforcement action on the bulletin, nor could any form of penalty be lawfully imposed against a magistrate or value adjustment board that deviates from the legal advice contained within the document. Further, there is no evidence that DOR has taken (or intends to take) any agency action in an attempt to mandate compliance with the bulletin.
The Issue The issues in this bid protest are, first, whether, as Petitioner alleges, Intervenor's failure to attach copies of "occupational licenses" to its proposal was a deviation from the requirements of the Request for Proposal; second, whether any such deviation was material; and third, whether Respondent's preliminary decision to award Intervenor the contract at issue was clearly erroneous, arbitrary or capricious, or contrary to competition.
Findings Of Fact On September 18, 2009, Respondent Department of Transportation ("Department") issued Request for Proposal No. RFP-DOT-09/10-4007FS (the "RFP"). Through the RFP, which is entitled, "Treasure Coast Road Ranger Service Patrol," the Department solicited written proposals from qualified providers who would be willing and able to perform towing and emergency roadside services on Interstate 95 in Martin County, St. Lucie County, and Indian River County. The Department intended to award a three-year contract to the "responsive and responsible Proposer whose proposal is determined to be the most advantageous to the Department." The Department anticipated that the contract would have a term beginning on December 1, 2009, and ending on November 31, 2012. The annual contract price was not to exceed $1.59 million. Proposals were due on October 13, 2009. Four firms timely submitted proposals in response to the RFP, including Petitioner Sunshine Towing @ Broward, Inc. ("Sunshine") and Intervenor Anchor Towing and Marine of Broward, Inc. ("Anchor"). An evaluation ensued, pursuant to a process described in the RFP, during which the Department rejected two of the four proposals for failing to meet minimum requirements relating to technical aspects of the project. As a result, Sunshine and Anchor emerged as the only competitors eligible for the award. Sunshine offered to perform the contractual services for an annual price of $1,531,548. This sum was less than the price that Anchor proposed by $46,980 per year. Despite Sunshine's lower cost, Anchor nevertheless edged Sunshine in the final score, receiving 92.86 points (out of 100) from the Department's evaluators, to Sunshine's 87.75. On November 30, 2009, the Department duly notified the public of its intent to award the contract to Anchor. Sunshine promptly initiated the instant protest, whereby Sunshine seeks to have Anchor's proposal disqualified as nonresponsive, in hopes that the Department will then award the contract to Sunshine as the highest-ranked (indeed the sole) responsive proposer. Sunshine alleges that Anchor's proposal failed to conform strictly to the specifications of the RFP, principally because Anchor did not attach copies of its "occupational licenses" to the proposal. Anchor insists that its proposal was responsive but argues, alternatively, that if its proposal deviated from the specifications, the deviation was merely a minor irregularity which the Department could waive. Anchor further contends that Sunshine's proposal contains material deviations for which it should be deemed nonresponsive. The Department takes the position that Anchor's failure to attach "occupational licenses" was a minor irregularity that could be (and was) waived.1 The RFP includes a "Special Conditions" section wherein the specifications at the heart of this dispute are located. Of particular interest is Special Condition No. 8, which specifies the qualifications a provider must have to be considered qualified to perform the services called for under the contract to be awarded. Special Condition No. 8 provides as follows: QUALIFICATIONS General The Department will determine whether the Proposer is qualified to perform the services being contracted based upon their proposal demonstrating satisfactory experience and capability in the work area. The Proposer shall identify necessary experienced personnel and facilities to support the activities associated with this proposal. Qualifications of Key Personnel Those individuals who will be directly involved in the project should have demonstrated experience in the areas delineated in the scope of work. Individuals whose qualifications are presented will be committed to the project for its duration unless otherwise excepted by the Department's Project Manager. Where State of Florida registration or certification is deemed appropriate, a copy of the registration or certificate should be included in the proposal package. Authorized To Do Business in the State of Florida In accordance with sections 607.1501, 608.501, and 620.169, Florida Statutes, foreign corporations, foreign limited liability companies, and foreign limited partnerships must be authorized to do business in the State of Florida. Such authorization should be obtained by the proposal due date and time, but in any case, must be obtained prior to the posting of the intended award of the contact. For authorization, [contact the Florida Department of State].[2] Licensed to Conduct Business in the State of Florida If the business being provided requires that individuals be licensed by the Department of Business and Professional Regulation, such licenses should be obtained by the proposal due date and time, but in any case, must be obtained prior to the posting of the intended award of the contract. For licensing, [contact the Florida Department of Business and Professional Regulation]. References and experience must entail a minimum of three (3) years of experience in the towing industry in Florida. NOTE: Copies of occupational licenses must also be attached to the back of Form 'F'. (Boldface in original.) Special Condition No. 19, which defines the term "responsive proposal," provides as follows: RESPONSIVENESS OF PROPOSALS Responsiveness of Proposals Proposals will not be considered if not received by the Department on or before the date and time specified as the due date for submission. All proposals must be typed or printed in ink. A responsive proposal is an offer to perform the scope of services called for in this Request for Proposal in accordance with all the requirements of this Request for Proposal and receiving fifty (50) points or more on the Technical Proposal.[3] Proposals found to be non-responsive shall not be considered. Proposals may be rejected if found to be irregular or not in conformance with the requirements and instructions herein contained. A proposal may be found to be irregular or non-responsive by reasons that include, but are not limited to, failure to utilize or complete prescribed forms, conditional proposals, incomplete proposals, indefinite or ambiguous proposals, and improper and/or undated signatures. (Emphasis and boldface in original.) In the "General Instructions to Respondents" section of the RFP there appears the following reservation of rights: 16. Minor Irregularities/Right to Reject. The Buyer reserves the right to accept or reject any and all bids, or separable portions thereof, and to waive any minor irregularity, technicality, or omission if the Buyer determines that doing so will serve the State's best interests. The Buyer may reject any response not submitted in the manner specified by the solicitation documents. Anchor did not attach copies of any "occupational licenses" to the back of Form 'F' in its proposal. Anchor contends that it did not need to attach such licenses because none exists. This position is based on two undisputed facts: (1) The Florida Department of Business and Professional Regulation ("DBPR") does not regulate the business of providing towing and emergency roadside assistance; therefore, neither Anchor nor Sunshine held (or could hold) a state-issued license to operate, and neither company fell under DBPR's regulatory jurisdiction. (2) The instrument formerly known as an "occupational license," which local governments had issued for decades, not for regulatory purposes but as a means of raising revenue, is presently called (at least formally) a "business tax receipt," after the Florida Legislature, in 2006, amended Chapter 205 of the Florida Statutes, changing the name of that law from the "Local Occupational License Tax Act" to the "Local Business Tax Act." See 2006 Fla. Laws ch. 152. Sunshine asserts that the terms "occupational license" and "business tax receipt" are synonymous and interchangeable, and that the RFP required each offeror to attach copies of its occupational licenses/business tax receipts to the proposal. Sunshine insists that Anchor's failure to do so constituted a material deviation from the specifications because, without such documentation, the Department could not be sure whether an offeror was authorized to do business in any given locality. Sunshine presses this argument a step further based on some additional undisputed facts. As it happened, at the time the proposals were opened, Anchor held a local business tax receipt from the City of Pembroke Pines, which is the municipality in which Anchor maintains its principal place of business. Anchor had not, however, paid local business taxes to Broward County when they became due, respectively, on July 1, 2008, and July 1, 2009. Anchor corrected this problem on December 14, 2009, which was about two weeks after the Department had posted notice of its intent to award Anchor the contract, paying Broward County a grand total of $248.45 in back taxes, collection costs, and late penalties. As of this writing, all of Anchor's local business tax obligations are paid in full. Sunshine contends, however, that during the period of time that Anchor's Broward County business taxes were delinquent, Anchor was not authorized to do business in Broward County and hence was not a "responsible" proposer eligible for award of the contract. In support of this proposition, Sunshine relies upon Section 20-15 of the Broward County, Florida, Code of Ordinances ("Broward Code"), which states: Pursuant to the authority granted by Chapter 205, Florida Statutes, no person shall engage in or manage any business, profession or occupation, as the same are contemplated by Chapter 205, Florida Statutes, unless such person first obtains a business tax receipt as required by this article, unless other exempt from this requirement . . . . On this latter point regarding Anchor's authority to operate in Broward County, Sunshine appears to be correct, at least in a narrow legal sense. It is abundantly clear, however, and the undersigned finds, that, as a matter of fact, Anchor was never in any danger of being shut down by the county. Indeed, even under the strict letter of the local law, Anchor was entitled to continue operating in Broward County unless and until the county took steps to compel the payment of the delinquent taxes. Broward Code Section 20-22, which deals with the enforcement of the business tax provisions, provides: Whenever any person who is subject to the payment of a business tax or privilege tax provided by this article shall fail to pay the same when due, the tax collector, within three (3) years from the due date of the tax, may issue a warrant directed to the Broward County Sheriff, commanding him/her to levy upon and sell any real or personal property of such person liable for said tax for the amount thereof and the cost of executing the warrant and to return such warrant to the tax collector and to pay him/her the money collected by virtue thereof within sixty (60) days from the date of the warrant. . . . The tax collector may file a copy of the warrant with the Clerk of the Circuit Court of Broward County[, which shall be recorded in the public records and thereby] become a lien for seven (7) years from the due date of the tax. . . . Any person subject to, and who fails to pay, a business tax or privilege tax required by this article, shall, on petition of the tax collector, be enjoined by the Circuit Court from engaging in the business for which he/she has failed to pay said business tax, until such time as he/she shall pay the same with costs of such action. There is no evidence suggesting that the county ever sought to enjoin, or that a court ever issued an injunction prohibiting, Anchor from engaging in business, nor does it appear, based on the evidence, that a tax warrant ever was issued, filed, or executed to force Anchor to pay its back taxes. Given the relatively small amount of tax due, the likelihood of such enforcement actions being taken must reasonably be reckoned as slim to none. While paying taxes when due is certainly the obligation of a good corporate citizen, it would not be reasonable, based on the facts established in this case, to infer that Anchor is a scofflaw for failing to timely pay a local tax amounting to about $80 per year. Anchor, in short, was a responsible proposer. Sunshine's other argument has more going for it. The RFP clearly and unambiguously mandated that "occupational licenses" be attached to a proposal. If, as Sunshine maintains, the terms "occupational license" and "business tax receipt" are clearly synonymous, then Anchor's proposal was noncompliant. For reasons that will be explained below, however, the undersigned has concluded, as a matter of law, that the term "occupational license" does not unambiguously denote a "business tax receipt"——at least not in the context of Special Condition No. 8. The specification, in other words, is ambiguous. No one protested the specification or otherwise sought clarification of the Department's intent. The evidence shows, and the undersigned finds, that the Department understood and intended the term "occupational license" to mean the instrument now known as a "business tax receipt." The Department simply used the outdated name, as many others probably still do, owing to that facet of human nature captured by the expression, "old habits die hard." The Department's interpretation of the ambiguous specification is not clearly erroneous and therefore should not be disturbed in this proceeding. Based on the Department's interpretation of Special Condition No. 8, the undersigned finds that Anchor's failure to attach copies of its occupational licenses was a deviation from the requirements of the RFP. That is not the end of the matter, however, for a deviation is not necessarily disqualifying unless it is found to be material. The letting authority may, in the exercise of discretion, choose to waive a minor irregularity if doing so will not compromise the integrity and fairness of the competition. There is no persuasive direct evidence in the record that the Department made a conscious decision to waive the irregularity in Anchor's proposal. Documents in the Department's procurement file show, however, that the Department knew that Anchor's proposal lacked copies of occupational licenses, and in any event this was a patent defect, inasmuch as nothing was attached to the back of Anchor's Form 'F'. It is therefore reasonable to infer that the Department elected to waive the irregularity, and the undersigned so finds. Necessarily implicit in the Department's action (waiving the deficiency) is an agency determination that that the irregularity was a minor one. The question of whether or not Anchor's noncompliance with Special Condition No. 8 was material is fairly debatable. Ultimately, however, the undersigned is unable to find, for reasons more fully developed below, that the Department's determination in this regard was clearly erroneous. Because the Department's determination was not clearly erroneous, the undersigned accepts that Anchor's failure to submit occupational licenses was a minor irregularity, which the Department could waive. The Department's decision to waive the minor irregularity is entitled to great deference and should be upheld unless it was arbitrary or capricious. The undersigned cannot say that waiving the deficiency in question was illogical, despotic, thoughtless, or otherwise an abuse of discretion; to the contrary, once it has been concluded that the irregularity is minor and immaterial, as the Department not incorrectly did here, waiver seems the reasonable and logical course of action. The upshot is that the proposed award to Anchor should be allowed to stand. The foregoing determination renders moot the disputed issues of fact arising from Anchor's allegation that Sunshine's proposal was nonresponsive. It is unnecessary, therefore, for the undersigned to make additional findings on that subject.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order consistent with its preliminary decision to award Anchor the contract at issue. DONE AND ENTERED this 6th day of April, 2010, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings 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 6th day of April, 2010.
The Issue The issues for determination are whether Petitioner paid sales and use tax on rental income from transient housing in Osceola and Polk counties, and whether Petitioner paid sales and use tax on the purchase of fixed assets in accordance with the requirements of Sections 212.03 and 212.06, Florida Statutes (1995). (Statutory references are to Florida Statutes (1995) unless otherwise stated.)
Findings Of Fact Petitioner is a Florida corporation with its principal place of business located at 3501 West Vine Street, Suite 387, Kissimmee, Florida. Petitioner primarily engages in the business of renting and managing transient property in the Orlando-Disney World area for absentee owners. Respondent is the state agency responsible for the administration of the Florida sales and use tax pursuant to Section 213.05. Respondent selected Petitioner for audit because Petitioner filed several sales and use tax returns reporting no taxable income (zero returns). Zero returns are unusual for a tourist-based business in the Orlando-Disney area. Osceola County, Florida (Osceola), also audited Petitioner for the period December 1994 through December 1999. Osceola is a political subdivision of the state and is responsible for administering and assessing the Tourist Development Tax authorized in Section 212.03 and Section 13-16, Osceola County Code of Ordinances (Code). Osceola audited Petitioner because Petitioner failed to file any tax returns with Osceola. Osceola correctly assessed Petitioner $394,378.39 for tax, penalty, and interest. The mathematical computations in the Osceola audit are correct. Osceola conducted its audit in accordance with generally accepted auditing principals. The Osceola audit revealed that Petitioner began doing business on January 1, 1995, but reported that it began doing business on both November 16, 1999, and March 12, 1998. The Osceola audit revealed that Petitioner failed to maintain required tax records, including guest registration forms; cash receipts; a general ledger; and documents necessary to verify amounts reported in tax returns. Petitioner did not reconcile its bank statements and did not maintain records necessary to verify that all receipts from guest registrations were properly entered into Petitioner's computer system of record keeping. Respondent began its audit on January 8, 2001. However, Respondent was unable to examine most of Petitioner's books and records due to a lack of cooperation from Petitioner. Respondent made several attempts to obtain Petitioner's books and records, but Petitioner provided Respondent with only consumable purchase invoices. Respondent and Osceola have an agreement to share information. Respondent relied on information obtained by Osceola in the course of the Osceola audit. Osceola provided Respondent with copies of Osceola's work papers including a spreadsheet of undeclared revenue compiled from Petitioner's books and records. Osceola also provided Respondent with a list of 102 properties managed by Petitioner during the audit period. Approximately 61 properties are located in Osceola County and 41 are located in Polk County. Respondent bases its assessment on an estimate derived from the Osceola assessment, records, and work papers. Respondent conducted its audit in accordance with applicable law. The mathematical computations in Respondent's audit are correct. Petitioner owes sales and use tax in the respective amounts of $218,152.88 and $125,680.72, due on rentals derived from transient housing in Osceola and Polk counties. Petitioner also owes sales and use tax in the amount of $2,100 from the sale of fixed assets. Interest accrues at the daily rate of $98.13.
Recommendation Based upon the findings of fact and the conclusions of law, it is RECOMMENDED that Respondent enter a Final Order assessing Petitioner for tax, penalty, and accrued interest. DONE AND ENTERED this 11th day of July, 2003, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of July, 2003. COPIES FURNISHED: Carrol Y. Cherry, Esquire Office of the Attorney General, Tax Section The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 Martha F. Barrera, Esquire Office of the Attorney General, Tax Section The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 A.C.E. Property Management of Orlando, Inc. 3501 West Vine Street, Suite 387 Kissimmee, Florida 34741 Bruce Hoffmann, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 James Zingale, Executive Director Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100
