The Issue Whether FMG Enterprises, Inc. must obtain and post security in the amount of $21,250 as a condition of retaining its sales and use tax dealer‘s certificate of registration as alleged in the Department‘s July 14, 2011 Notice of Intent to Revoke Registration.
Findings Of Fact Respondent 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 9726 Touchton Road, Suite 301, Jacksonville, Florida 32246. At all times material to this case, Petitioner operated a restaurant and club known as Mojitos Bar and Grill at its principal address. Petitioner is a ?dealer? as defined in section 212.06(2), Florida Statutes. Chapter 212 requires specified persons conducting business within the state to register with the Department and to obtain a certificate of registration for purposes of tax collection. Petitioner made application for and received a dealer‘s certificate of registration, No. 26-8015498892-8, for the operation of Mojitos Bar and Grill. The application indicated that the business was to open in March 2011. Mojitos Bar and Grill did not open for business until April 7, 2011. As a dealer, the Petitioner was required to collect sales and use taxes from patrons and customers of Mojitos Bar and Grill, 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 did not file a Sales and Use Tax Return for March 2011. Based on the March 2011 opening date referenced in the application, the Department issued its May 18, 2011 Notice of Intent to Revoke Registration and a Warrant demanding payment in the amount of $5,046.85, which represented the estimated tax liability for March 2011, in the amount of $5,000.00, plus interest and fees. The $5,000.00 monthly tax liability estimate was calculated using an algorithm developed by SAP, a German software company. The algorithm produced the estimate based on the location and type of the business and surrounding businesses. Based on that figure, the Department determined that it was necessary to require Petitioner to post security in the amount of $60,000.00, which represented the projected monthly tax estimate for one year. An informal hearing was held on June 21, 2011. The Department was provided with information that the business was not open in March 2011. As a result, the Department filed a satisfaction of the warrant and release of lien in the official records of Duval County. The Department was also presented with records of tax collections for April and May of 2011. Petitioner filed its Sales and Use Tax Return for April 2011, listing taxes collected for that month in the amount of $2,107.57. The check for the April 2011 taxes was returned for insufficient funds. The April 2011 tax liability has since been paid. Petitioner filed Sales and Use Tax Returns for May 2011, and paid said tax in the amount of $1,437.91. The check was dated June 20, 2011, but the return was filed late. Petitioner was assessed a late penalty of $125.38, although the record contains no evidence that Petitioner had notice of the late penalty before August 15, 2011. Petitioner has not paid the late penalty assessed against it for the May, 2011 taxes. Based on the April and May, 2011 sales and use tax collections, the Department amended the amount of security being required as a condition of Petitioner maintaining its sales and use tax dealer‘s registration certificate from $60,000.00 to $21,250.00. The amended Notice of Intent was issued on July 14, 2011. Pursuant to notice provided in the amended Notice of Intent, an informal conference was convened on August 15, 2011. No representative of Petitioner appeared at the informal conference. Although the Petitioner did not enter into a compliance agreement with the Department as a result of the August 15, 2011 informal conference, all taxes due and owing for the April 2011 and May 2011 collection periods have been paid. Thus, Petitioner has materially resolved its tax liability for those months, with the exception of non-payment of the relatively small late penalty of $125.38. Standing alone, the facts of those two monthly payments are not sufficient grounds to support a revocation of Petitioner‘s sales and use tax dealer‘s registration certificate. The Department has required security in the amount of $21,250.00. That equates to a monthly estimated sales tax collection of approximately $1,770.00. The sales tax collections in April 2011 and May 2011 were for $2,107.57 and 1,437.90, respectively. Therefore, the figure calculated by the Department is reasonable. The Department generally requires that, when security is determined to be necessary, one year of estimated tax collections be posted. That length of time can be shorter based on the circumstances. Given that the first two months of Petitioner‘s operation as a dealer resulted in returned and late payments, and since the May 2011 late penalty remains in arrears, the Department‘s decision to require one year of estimated collections as security is reasonable. The Department raised issues relating to allegations of late or returned payments for taxes collected in June, July, and August, 2011. However, since those issues do not form the basis for the July 14, 2011, amended Notice of Intent to Revoke Registration, and have not otherwise been pled, the undersigned has not made any findings, or formulated any conclusions regarding those issues. An informal drive-by inspection of Mojitos Bar and Grill conducted on September 19, 2011 by Mr. Hartland indicated that it was no longer open for business. That status was confirmed by counsel for Petitioner.
Recommendation Upon consideration of the findings of fact and conclusions of law set forth herein, it is RECOMMENDED that the Department of Revenue enter a final order requiring Petitioner to post security in the amount of $21,250.00 within 30 days of the entry of the final order. DONE AND ENTERED this 24th day of October, 2011, in Tallahassee, Leon County, Florida. S E. GARY EARLY 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 24th day of October, 2011. COPIES FURNISHED: Michael R. Yokan, Esquire Post Office Box 40755 Jacksonville, Florida 32203-0755 Timothy E. Dennis, Esquire Office of the Attorney General The Capitol, Plaza Level 01 400 South Monroe Street Tallahassee, Florida 32399-1050 Marshall Stranburg, General Counsel Department of Revenue The Carlton Building, Room 204 501 South Calhoun Street Tallahassee, Florida 32314-6668 Lisa Vickers, Executive Director The Carlton Building, Room 104 501 South Calhoun Street Tallahassee, Florida 32314-6668
Findings Of Fact Respondent is the state agency authorized to administer and enforce provisions of Chapter 520, Florida Statutes, regulating the granting or denial of applications for Home Improvement Contractor Licenses. On November 30, 1988, Petitioner submitted an application on behalf of a corporation known as "The Durocoat Company" (Durocoat) to Respondent for licensure as a home improvement contractor. On that application, Petitioner disclosed the identity of the two principals of the corporation and the position held by those two individuals. Petitioner listed himself as the president of the corporation and another individual, Russell W. Black, as the corporation's vice-president. Each principal owns 50 percent of the corporation. Following the section of the application providing for the disclosure of the identities and addresses of business principals, a number of questions are listed and the person executing the form is required to provide an "X" in a block to indicate a "yes" or "no" answer to each of those questions. Question number four reads as follows: Are there unpaid judgments against the applicant or any of the persons listed above? If "yes" attach a copy of the complaint and judgment(s). Petitioner placed an "X" in the space allotted for a "yes" answer to the inquiry regarding unpaid judgments against the persons listed as business principals, namely himself and Mr. Black. Petitioner then attached a copy of a document entitled "Notice of Levy" issued by the Internal Revenue Service (IRS) of the United States Department of the Treasury. In sum, the notice certifies the existence of a tax lien against Mr. Black, Durocoat's vice-president, in the amount of $27,546.25. It is undisputed by the parties that creditors held unpaid judgments against Petitioner at the time he submitted the application on November 30, 1988, and that he failed to attach copies of those judgments to the application. Further, Petitioner acknowledged at the final hearing that he was aware at the time of submittal of the application of the existence of one of these judgments. That judgement, entered in favor of The American Express Company (American Express) for $7,602, has existed since September of 1987. In mitigation of his failure to disclose the American Express judgement, Petitioner testified at hearing that he didn't have a copy of the judgement at the time he filed the application and was unaware of the requirement that he should attach a copy. In view of his action in attaching a copy of the existing tax lien against Mr. Black to the application, Petitioner's testimony that he was unaware that he should attach copies of unpaid judgments is not credited. A copy of Petitioner's credit report, introduced at final hearing by Petitioner, discloses that a business known as "Speeler Marine" obtained a judgement against him in the amount of $250 in March of 1986. Petitioner testified at hearing that he was unaware of the existence of this judgement. No settlement discussions have been initiated by him with the creditor. Petitioner's credit report further discloses that an outstanding loan to Petitioner in 1985 in the amount of $36,000 by a financial institution identified as "Sun Bank" is classified as a "bad debt, placed for collection." Petitioner testified that this debt represents loan funds obtained in a previous business venture and is the subject of settlement negotiations and that he has repaid $4,000 of the amount at the present time. Petitioner's testimony also establishes that the credit report's disclosure of a 1987 foreclosure certificate of title to real estate represented real property located in Gainesville, Florida, which Petitioner had taken in trade for money owed to him. In view of the distance to that city, Petitioner testified that he simply chose not to pay off the existing mortgage on the property or oppose foreclosure action by the mortgage holder. A representative of Nationwide Chemical Coating Company (Nationwide) testified at the final hearing regarding that company's business relationship with Petitioner's corporation. Since February of 1988, Nationwide has sold supplies valued at $250,000 to Durocoat. The company has always paid charges within the 30 day required time limit and is considered to be a "class A" customer. In regard to the federal tax lien which Petitioner attached to the application, Russell W. Black testified that the lien resulted from the disallowance by IRS of a tax shelter investment of $34,000 made by Black in 1977 or 1978. Black was notified by IRS in 1981 that the tax shelter was not considered to be a valid deduction for tax purposes. The amount owed by Black to IRS in 1981 was $20,630.64. The amount is now $27,546.25 and, according to Black, is still unpaid because he doesn't have the money. On advice of counsel, he has not contacted IRS to schedule payments on the debt. Respondent denied Petitioner's application by letter dated January 13, 1989, stating that Petitioner's failure to attach copies of the unpaid judgments against himself constituted a material misstatement of fact sufficient to authorize the denial. The letter further stated that the unpaid judgments, along with the federal tax lien against Mr. Black, demonstrated a lack of financial responsibility by both individuals and constituted an additional ground for denial of the application.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered denying Petitioner's application for licensure. DONE AND ENTERED this 24th day of August, 1989, in Tallahassee, Leon County, Florida. DON W. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of August, 1989. APPENDIX The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's Proposed Findings. Petitioner's proposed findings consisted of 10 unnumbered paragraphs which have been numbered 1-10 and are treated as follows: 1-8. Addressed in part, remainder rejected as unnecessary. Rejected, unsupported by direct admissible evidence. Rejected, unnecessary to result reached. Respondent's Proposed Findings. 1-2. Addressed. 3-4. Rejected, unnecessary. 5-11. Addressed in substance. COPIES FURNISHED: John L. Riley, Esq. 2325 Fifth Avenue North St. Petersburg, FL 33713 William W. Byrd, Esq. Assistant General Counsel Office Of The Comptroller 1313 Tampa Street, Suite 615 Tampa, FL 33602-3394 Hon. Gerald Lewis Comptroller, State of Florida Department of Banking and Finance The Capitol Tallahassee, FL 32399-0350 Charles Stutts, Esq. General Counsel Department of Banking and Finance The Capitol Plaza Level, Room 1302 Tallahassee, FL 32399-0350
The Issue This case involves the issue of whether the Petitioner, Robert P. Herring, should be required to pay documentary tax and documentary surtax on three quitclaim deeds transferring his ex-wife's interest in jointly owned property to the Petitioner. On May 3, 1982, the Department of Revenue, by letter, notified Mr. Robert P. Herring, through his counsel, Mr. Frank M. Townsend, that the Department intended to make an audit change pursuant to Chapter 201 of the Florida Statutes based upon a mortgage executed by Mr. Herring and recorded at Official Record Book 439, Page 654 of the Official Records of Osceola County. This mortgage was given by Mr. Herring in exchange for his ex-wife's transfer of her interest in the three parcels, which were the subject of the three quitclaim deeds referred to above. In response to the audit report, the Petitioner, on November 1, 1982, filed his request for a formal hearing and his written objection to the audit change. At the formal hearing in this matter, the Petitioner testified on his own behalf and called no other witnesses. The Respondent called as its only witness, Mr. John H. McCormick, a tax auditor for the Department of Revenue. The Petitioner offered and had admitted seven exhibits and the Respondent offered and had admitted nine exhibits. Counsel for the Petitioner and counsel for the Respondent submitted proposed findings of fact and conclusions of law for consideration by the undersigned Hearing Officer. To the extent that those proposed findings of fact and conclusions of law are not adopted in this order, they were considered by the Hearing Officer and determined to be irrelevant to the issues in this cause or not supported by the evidence.
Findings Of Fact Prior to June 20, 1979, the Respondent, Robert P. Herring, along with his wife, Patricia L. Herring, owned three parcels of real estate located in Kissimmee, Florida. Those three parcels were held by Mr. and Mrs. Herring as tenants in the entirety. The parcels are more fully described as: A certain lot or parcel of land known as S. Florida RR survey Block 19, beginning at the most Northerly corner of Lot 3 and running South 47 degrees East, 142 Ft. South, 43 degrees West, 25 ft. North, 47 degrees West, 142 Ft. North, 43 degrees East, 25 ft. to the point of beginning, and more particu larly described in that instrument recorded in OR Book 364, Page 340, in the Public Records of Osceola County, Florida. A certain lot or parcel of land known as St. Cloud Block 251, Lots 19 thru 22 and more particularly described in that instru ment recorded in OR Book 339, Page 155 and 158 of the Public Records of Osceola County, Florida. A certain lot or parcel of land beginning at a point 110 ft. West of the Easterly line of Gov. Lot 3, plus 15 ft. at right angle to the center line of the Old Highway South 33 degrees West, 62.3 ft. South, 53 degrees East, 60.9 ft. North, 33 degrees East, 34.3 ft. North, 42 degrees West along the highway to the point of beginning and more particularly described in that instru ment recorded in OR Book 314, Page 391 of the Public Records of Osceola County, Florida. On June 20, 1979, Patricia A. Herring executed three quitclaim deeds transferring all her right title and interest in the above three parcels to the Petitioner, Robert P. Herring. The transfer was part of a divorce settlement and the stated consideration in the three quitclaim deeds was "love and affection". (See Respondent's Exhibits 2, 3, and 4). Prior to the transfer, there was outstanding indebtedness on the three parcels and these debts were secured by mortgages. The Petitioner and his wife were both liable on these debts and mortgages. In exchange for the transfer of Patricia A. Herring's interest in the three parcels, the Petitioner executed and delivered to Patricia A. Herring a promissory note in the amount of $58,800 secured by a mortgage on the three parcels. The Petitioner, Robert Herring, also assumed full liability for the outstanding indebtednesses on the three parcels. The Petitioner is and has been since June, 1979, making monthly payments of $529.05 to Patricia A. Herring, his ex-wife, in payment on the $58,800 promissory note and mortgage. The mortgage executed by Respondent and recorded in Official Record Book 439, Pages 654-656 of the Official Records of Osceola County and the assumption of the outstanding indebtedness on the three parcels were valuable consideration paid by the Petitioner to Patricia A. Herring for her interest in the three parcels. At the time of recording the three quitclaim deeds, the Petitioner paid no documentary tax as defined in Florida Statute 201.02 (1977) and paid no documentary surtax as defined in Florida Statute 201.021 (1977) After an examination of the official records of Osceola County, the Department of Revenue determined that the Petitioner owed documentary tax on the three quitclaim deeds in the amount of $176.40. The Department determined that the Petitioner owed documentary surtax on the three parcels in the amount of $64.90. On April 13, 1982, the Department of Revenue issued its Notice of Intent to Make Documentary Stamp Tax Audit Charges to Petitioner assessing the documentary tax in the amount of $176.40 and documentary surtax in the amount of $64.90. The documentary tax and documentary surtax assessed by the Department of Revenue were based upon the $58,800 promissory note and mortgage as the sole consideration paid by the Petitioner for the transfer of the three parcels. (See Respondent's Exhibit 9). Based upon the consideration of $58,800, the Petitioner owes documentary tax of $176.40 and documentary surtax of $64.90 on the three quitclaim deeds.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Revenue enter a Final Order requiring Petitioner to pay the documentary tax in the amount of $176.40 and documentary surtax of $64.90, plus accrued penalties and interest. DONE and ENTERED this 31st day of May, 1983, in Tallahassee, Florida. MARVIN E. CHAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of May, 1983. COPIES FURNISHED: Frank M. Townsend, Esquire Post Office Box 847 Kissimmee, Florida 32741 Ms. Linda Lettera Department of Legal Affairs The Capitol, LL04 Tallahassee, Florida 32301 Mr. Randy Miller Executive Director Room 102, Carlton Building Tallahassee, Florida 32301
Findings Of Fact Petitioner, Signs of All Kinds, Inc., is a corporation duly organized and existing in the State of Florida with its principal place of business being in Miami, Florida. David G. Lennard is the president of Signs of All Kinds. (Signs of All Kinds, Inc. will be referred to herein as Petitioner. David G. Lennard will be referred to by his name.) Respondent is an agency of the State of Florida, created pursuant to Section 20.21, Florida Statutes, and is charged with the administration and enforcement of Chapter 212, Florida Statutes. Between January 1, 1988 and June 30, 1988, a taxpayer amnesty program, authorized by Section 48 of Chapter 87-6, Laws of Florida, as amended by Section 27 of Chapter 87-101, Laws of Florida, was put into effect by Respondent. Chapter 12-20, Florida Administrative Code, was adopted by Respondent to administer the amnesty program. Rule 12-20.002, Florida Administrative Code, describes the amnesty program, and provides, pertinent to these proceedings, as follows: 12-20.002. Description of the Tax Amnesty Program. the tax amnesty program is an opportunity for eligible taxpayers to satisfy their liabilities arising under included Florida revenue laws and to thereby avoid criminal prosecution and payment of penalties under such laws. The tax amnesty program is available to eligible taxpayers during the period January 1, 1988 through June 30, 1988. Eligible taxpayers have this period to resolve their liability for tax, interest, or penalties imposed under included Florida revenue laws and to file delinquent returns or reports, or to file amended returns or reports under such laws. Tax and interest owed by the eligible taxpayer must be paid in full during the amnesty period. ... * * * The term "eligible taxpayer" means any person liable for an amount of tax, interest, or penalty under an included Florida revenue law, penalty under an included revenue law, except persons under criminal investigation, indictment, information, or prosecution. Delinquent taxpayers, taxpayers under audit, and taxpayers involved in administrative or judicial proceedings contesting their liability, are eligible to participate in the tax amnesty program for amounts for which amnesty is available. ... Eligible taxpayers who comply with the terms and conditions of the tax amnesty program will be granted amnesty from criminal prosecution for violation of included Florida revenue laws and will not be required to pay any penalty imposed under an included Florida Revenue law. Eligible taxpayers are required to pay any tax or interest due under an included Florida revenue law for which amnesty is granted. Brian Matlin is an accountant who performed accounting services for Petitioner between January 1986 and May 1987. These services did not include the preparation or the filing of sales tax returns. In May 1987, Mr. Matlin and Mr. Lennard had a disagreement which resulted in Mr. Matlin becoming disgruntled and in his services to Petitioner being terminated. In June of 1987 Mr. Matlin provided Respondent's investigators, Karen F. Johnson and Paul DeLesdernier, a sworn statement in which he alleged that Petitioner had underpaid its sales taxes. Mr. Matlin produced certain financial records of Petitioner that had come into his possession during the time he performed services for Petitioner which supported his contention that Petitioner was underpaying its sales taxes. As a result of the information that had been supplied to it by Mr. Matlin, Respondent began an investigation of Petitioner that was initially classified by Investigator Johnson as being both civil and criminal. Prior to the institution of the amnesty program, Respondent developed a procedure to designate and to handle those cases that were to be considered to be under criminal investigation, and therefore ineligible to participate in the amnesty program. On December 28, 1987, Investigator Johnson filled out a request that the investigation into Petitioner's underpayment be formally classified as a criminal investigation. This request was approved by Mr. David Skinner, Respondent's Chief of Enforcement, on December 29, 1987. The procedure followed by both Ms. Johnson and Mr. Skinner was consistent with the procedure Respondent had adopted. As of December 29, 1987, Petitioner was under a criminal investigation by Respondent for a possible violation of Section 212.12(2), Florida Statutes, for making a false or fraudulent return or willfully attempting to evade payment of tax. As of December 29, 1987, Respondent's records formally reflected that the investigation of Petitioner was classified as a criminal investigation. Respondent's first contact with Mr. Lennard occurred on February 9, 1988, at which time he was interviewed by Investigators Johnson and DeLesdernier at the Petitioner's offices. At this first meeting, Ms. Johnson gave to Mr. Lennard a statement of rights form that contained, in pertinent part, the following warning: As a Revenue Investigator for the Florida Department of Revenue, one of my functions is to investigate the possibility of criminal violations of Florida Tax Laws, and other related offenses. I am investigating tax matters which involve you or your business and would like to ask you some questions. I must advise you, however, that under the Fifth Amendment to the Constitution, you cannot be compelled to answer any of my question or submit any information which you feel might tend to incriminate you in any way. You are further advised that anything that you say and any documents that you may submit may be used against you in a criminal proceeding. ... Mr. Lennard denies that such a form was given to him at this meeting and that he was not advised that his company was under criminal investigation. Investigator Johnson's testimony is in conflict with Mr. Lennard's testimony in this regard. She contends that the form was given to Mr. Lennard, but that he refused to sign the form. She contends that Mr. Lennard took the form so that his attorney could review it. This dispute in the testimony is resolved by rejecting the testimony of Mr. Lennard and by accepting the testimony of Ms. Johnson because her testimony is found to be more credible. Subsequent to the February 9, 1988, meeting, Mr. Lennard was contacted on several occasions by Investigator Johnson to produce various records of the Petitioner. On each occasion, Mr. Lennard complied with the request and was asked to sign an Investigation Unit Property Receipt. Such receipts were signed on the following dates in 1988: February 16, March 2, March 16, March 23, April 8, May 9, and May 20. As of the formal hearing, Respondent had not referred this case to the office of the State Attorney for prosecution, and the State of Florida had not commenced any criminal proceedings against Petitioner. From May 1985 through December 1987, Petitioner underpaid the sales taxes it owed the State of Florida under the provisions of Part I of Chapter 212, Florida Statutes, by the total amount of $58,584.00. On March 2, 1988, Petitioner and Mr. Lennard made a request for amnesty under the Florida Tax Amnesty Program for all Florida sales tax liabilities owed by them for the period May 1985 through December 1987. Petitioner paid the full amount of tax and interest assessed by Respondent for the period May 1985 through December 1987 prior to July 1, 1988. These payments were made as follows: Date Amount March 4, 1988 $10,000.00 May 16, 1988 $10,000.00 June 30, 1988 $50,680.01 On June 20, 1988, Respondent filed a "Notice of Assessment for Tax, Penalty and Interest Due" against Petitioner based on the alleged underpayment of sales taxes by Petitioner between May 1985 and December 1987. The total amount of taxes due was assessed as being $58,584.00. In addition to interest assessed pursuant to the provisions of Section 212.12(3), Florida Statutes, Respondent assessed penalties under the provisions of Section 212.12(2)(a), Florida Statutes, that are the subject of this proceeding. First, a late penalty was assessed in the amount of $4,634.01. Second, a specific penalty in the amount of $29,292.00 (50% of the assessed taxes) was assessed. This specific penalty was assessed on the premise that Petitioner had submitted a false or fraudulent return. Petitioner's application to participate in the amnesty program was denied by Respondent on the grounds that Petitioner was under a criminal investigation prior to the request being made and was, consequently, not eligible to participate in the amnesty program. At Petitioner's request, the initial determination was reconsidered by Respondent. Following the reconsideration, the initial determination that Petitioner was not eligible to participate in the amnesty program was confirmed. This proceeding followed Petitioner's request for a formal administrative hearing. The parties stipulated that the penalties that were assessed against Petitioner were properly assessed unless Petitioner is eligible to participate in the amnesty program. On June 20, 1988, Respondent filed a separate "Notice of Assessment for Tax, Penalty and Interest Due" in the amount of $58,584.00 against Mr. Lennard, in his individual capacity. This assessment, pursuant to Section 213.29, Florida Statutes, was premised on Mr. Lennard's status as president of Signs of All Kinds, Inc. The principal amount of the tax and the interest thereon were paid by Petitioners in 1988. As a consequence, the lien that had been filed by Respondent against Mr. Lennard was discharged and the separate assessment has been rendered moot.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent enter a final order which determines that Petitioner, Signs of All Kinds, Inc., is not eligible to participate in the tax amnesty program because it was under criminal investigation and which upholds the assessment of the subject penalties against Petitioner, Signs of All Kinds, Inc. It is further RECOMMENDED that the assessment that was separately made against Petitioner, David G. Lennard, be dismissed. DONE AND ENTERED this 13th day of September, 1990, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Hearing Officer The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 904/488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of September, 1990. APPENDIX TO THE RECOMMENDED ORDER IN CASE 89-5974 The following rulings are made on the proposed findings of fact submitted by Petitioners: The proposed findings of fact in paragraphs 1-3, 5-7, 9, 12, 15, 18, and 19 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraphs 4 and 8 are rejected as being subordinate to the findings made. The proposed findings of fact in paragraph 10 are rejected because the proposed finding implies that the decision to classify the case as a criminal investigation was based solely on the contact with Mr. Matlin. Consequently, the proposed finding is contrary to the findings made. The proposed findings of fact in paragraphs 11 and 14 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraphs 13 and 17 are rejected as being contrary to the greater weight of the evidence or to the findings made. The proposed findings of fact in paragraphs 20-22 are rejected as being conclusions of law. The following rulings are made on the proposed findings of fact submitted by Respondent. The proposed findings of fact in paragraphs 1, 3, 4, 6, 9, 10, 20, 21, 23, and 29 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraphs 2, 8, 12, 16, 13 (this is the second of two paragraphs numbered 13 and is found on page 6 of the proposed recommended order), 18, and 19 are rejected as being subordinate to the findings made. The proposed findings of fact contained in the first two sentences and in the last sentence of paragraph 5 are adopted in material part by the Recommended Order. The proposed findings of fact in the remainder of paragraph 5 are rejected in part as being unnecessary to the conclusions reached. The proposed findings of fact in paragraphs 7 and 11 are adopted in part by the Recommended Order, and are rejected in part as being the recitation of testimony. The proposed findings of fact in paragraphs 13-15, 17, 22, and 24-28 are rejected as being unnecessary to the conclusions reached or as being subordinate to the findings made. Copies furnished: Lynn C. Washington One CenTrust Financial Center 100 Southeast 2nd Street Miami, Florida 33131 Kevin J. O'Donnell, Esquire Joseph C. Mellichamp, Esquire Department of Legal Affairs The Capitol - Tax Section Tallahassee, Florida 32399-1050 William D. Moore, Esquire Department of Revenue 203 Carlton Building Tallahassee, Florida 32399-0100 J. Thomas Herndon Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue The issue is whether Respondent's Certificate of Registration 39-8011930243-9 should be revoked for the reasons stated in an Administrative Complaint for Revocation of Certificate of Registration (Administrative Complaint) issued by the Department of Revenue (Department) on June 5, 2014.
Findings Of Fact The Department is the state agency charged with administering and enforcing the state revenue laws, including the laws related to the imposition and collection of sales and use taxes pursuant to chapter 212. Respondent is a Florida limited liability corporation doing business as The Hyde Park Cafe at 1806 West Platt Street, Tampa, Florida. For purposes of collecting and remitting sales and use taxes, it is a dealer as defined in section 212.06(2) and is required to comply with chapter 212. Respondent holds Certificate of Registration number 39- 8011930243-9, which became effective on July 27, 2000. A certificate of registration is required in order to do business in the state and requires its holder to collect and remit sales tax pursuant to chapter 212. See § 212.05(1), Fla. Stat. Respondent is also an employing unit as defined in section 443.036(20) and is subject to the unemployment compensation tax (UCT) provisions of chapter 443, as provided in section 443.1215. Through an interagency agreement with the Department of Economic Opportunity, the Department provides collection services for UCTs. See § 443.1316(1), Fla. Stat. In doing so, the Department is considered to be administering a revenue law of the state. See § 443.1316(2), Fla. Stat. A dealer must file with the Department sales tax returns and remit the tax collected on a monthly basis. See § 212.15(1), Fla. Stat. Also, an employment unit must remit payment to the Department for UCTs due and owing on a quarterly basis. The Department is authorized to revoke a dealer's certificate of registration for failure to comply with state tax laws. See § 212.18(3)(e), Fla. Stat. If the Department files a warrant, notice of lien, or judgment lien certificate against the property of a dealer, it may also revoke a certificate of registration. See § 213.692(1), Fla. Stat. Before revoking a certificate of registration, the Department must convene an informal conference that the dealer is required to attend. See § 213.692(1)(a), Fla. Stat. At the conference, the dealer may either present evidence to refute the Department's allegations of noncompliance or enter into a compliance agreement with the Department to resolve the dealer's failure to comply with chapter 212. Id. After a compliance agreement is executed by the dealer, the Department may revoke the certificate of registration if the dealer fails to comply with its terms and conditions. See Pet'r Ex. 6, p. 2, ¶ E. If a breach occurs, the entire amount is due and payable immediately. Id. at ¶ G. An informal conference can be characterized as the Department's last administrative remedy to collect delinquent taxes before beginning revocation proceedings. A dealer can also enter into a diversion program with the State Attorney's Office to resolve liabilities, but the record shows that Respondent defaulted on that arrangement. According to the Department, collection problems with this dealer first began in 2003. Department records show that Respondent failed to remit required sales taxes for the months of January 2012, August through December 2012, January through December 2013, and January and February 2014. In addition, Respondent failed to remit UCTs for the calendar quarters ending September 2010, December 2010, March 2011, June 2011, September 2011, December 2011, March 2012, June 2012, September 2012, December 2012, and March 2013. Respondent does not dispute that it failed to timely remit and pay the foregoing taxes for the time periods listed above. For the purpose of collecting the delinquent taxes, the Department issued and filed against Respondent delinquent tax warrants, notices of lien, or judgment lien certificates in the Hillsborough County public records. See Pet'r Ex. 3. Before seeking revocation of Respondent's certificate of registration, on February 5, 2014, the Department's Tampa Service Center served on Respondent a Notice of Conference on Revocation of Certificate of Registration (Notice). See Pet'r Ex. 4. The Notice scheduled an informal conference on March 21, 2014. It listed 16 periods of sales and use tax noncompliance and 11 periods of re-employment tax noncompliance and provided the total tax liability as of that date. This number was necessarily fluid, as the taxes owed were accruing interest, penalties, and/or fees on a daily basis. The purpose of the informal conference was to give Respondent a final opportunity to make full payment of all delinquent taxes, or to demonstrate why the Department should not revoke its Certificate of Registration. As pointed out by the Department, an informal conference allows a dealer to bring up "any concerns" that it has regarding its obligations. Respondent's manager and registered agent, Christopher Scott, appeared at the conference on behalf of Respondent.1/ At the meeting, he acknowledged that the dealer had not timely paid the taxes listed in the Notice and that the money was used instead to keep the business afloat. However, Mr. Scott presented paperwork representing that sales and use tax returns and payments for the months of November 2013 through February 2014 had just been filed online, and checks in the amount of $8,101.41 and $9,493.99 were recently sent to Tallahassee. It takes 24 hours for online payments to show up in the system, and even more time for checks to be processed in Tallahassee. Accordingly, the Department agreed that Mr. Scott could have a few more days before signing a compliance agreement. This would allow the Department to verify that the payments were posted and recalculate the amount of taxes still owed. Also, before entering a compliance agreement, Respondent was required to make a down payment of around $20,000.00. Mr. Scott had insufficient cash, and a delay of a few days would hopefully allow him to secure the necessary money for a down payment. When none of the payments had posted by March 25, 2014, the Department calculated a total liability of $113,448.13, consisting of sales and use taxes and UCTs, penalties, interest, and fees. As of that date, none of the taxes listed in Finding of Fact 9 had been paid. On March 25, 2014, Respondent's controller, who did not attend the informal conference, sent an email to the Department requesting a breakdown on the new tax liability. In response to her request, the Department faxed a copy of the requested information. See Resp. Ex. 4. After getting this information, the controller continued to take the position that the Department's calculations overstate Respondent's tax liability. On March 31, 2014, Mr. Scott signed the compliance agreement. See Pet'r Ex. 6. Despite the controller testifying that she did not agree with the numbers, no question was raised by Mr. Scott when he signed the agreement. By then, the check in the amount of $8,101.41 had cleared and been credited to Respondent's account. Along with other funds, it was used towards the down payment of $20,000.00. The record does not show the status of the other payments that Mr. Scott claimed were mailed or filed online prior to the informal conference; however, on March 31, 2014, except for the one check, none had yet posted. The compliance agreement required scheduled payments for 12 months, with the final payment, a balloon payment in an undisclosed amount, being subject to renegotiation in the last month. Payments one and two were $1,500.00, while payments three through 11 were $2,900.00. The compliance agreement reflected a balance owed of $95,887.36, consisting of $60,504.34 in sales taxes and $35,347.02 in UCTs.2/ In return for the Department refraining from pursuing revocation proceedings, the compliance agreement required Respondent to "remit all past due amounts to the Department as stated in the attached payment agreement," "accurately complete and timely file all required tax returns and reports for the next 12 months," and "timely remit all taxes due for the next 12 months." Pet'r Ex. 1, p. 1. In other words, the compliance agreement addressed both delinquent taxes and current taxes that would be due during the following 12-month period, and it required that both categories of taxes be timely paid in the manner prescribed by the agreement. To summarize the salient points of the agreement, all taxes were to be timely paid; delinquent taxes were to be paid by certified check, money order, or cash and were to be mailed or hand delivered to the Tampa Service Center and not Tallahassee; and while not specifically addressed in the agreement, the dealer was instructed to pay all current obligations electronically, as required by law. Otherwise, Respondent was in violation of the compliance agreement. A Payment Agreement Schedule for past due taxes was incorporated into the compliance agreement and provided that the first payment was due April 30, 2014, payable to: Florida Department of Revenue, Tampa Service Center, 6302 East Dr. Martin Luther King, Jr. Boulevard, Suite 100, Tampa, Florida 33619. Payments 2 through 12 were to be mailed or hand delivered to the same address. This meant, with no ambiguity, that money should not be sent to Tallahassee. There is no credible evidence that these instructions were misunderstood. Unless a waiver is granted, Respondent is required by statute and rule to electronically file sales and use tax returns and UCT reports. See § 213.755, Fla. Stat.; Fla. Admin. Code R. 12-24.009 (where a taxpayer has paid its taxes in the prior state fiscal year in an amount of $20,000.00 or more, subsequent payments shall be made electronically). No waivers have been approved. In 2003, the Department notified Respondent of these requirements and Respondent complied with this directive until 2009. For reasons not disclosed, in 2009 Respondent voluntarily quit filing electronically. The record is silent on why this was allowed.3/ In any event, at the informal conference, Mr. Scott was specifically told that all current returns, reports, and taxes must be filed electronically, and not by mail, and that no money should be sent to Tallahassee. There is no credible evidence that he misunderstood these instructions. In its PRO, Respondent correctly points out that the requirement to file current returns electronically was not specifically addressed in the compliance agreement. This is because the compliance agreement does not set forth every statutory and rule requirement that applies to a dealer. If this amount of detail were required, a dealer could ignore any otherwise applicable rule or statute not found in the compliance agreement. This contention has no merit. Respondent failed to electronically file the current sales and use tax return and payment for the month of March 2014, due no later than April 21, 2014. Instead, it sent a paper check, which was returned by the bank for insufficient funds. This constituted a breach of the compliance agreement. Despite repeated instructions on how and where to pay the delinquent taxes, payment 1, due on April 30, 2014, was paid by regular check and sent to Tallahassee, rather than the Tampa office. This contravened the compliance agreement. When payment was not timely received by the Tampa Service Center, Respondent was told that a check must be delivered to the Tampa office by May 9. Respondent hand delivered a second check, this one certified, to the Tampa Service Center on May 9, 2014, or after the April 30 due date. The second check was treated as payment 1. Respondent points out that on May 7 the Tampa Service Center granted its request for an extension of time until May 9 in which to deliver the certified check. While this is true, the extension was allowed in an effort to "work with" the Respondent on the condition that the account would be brought current by that date; otherwise, revocation proceedings would begin. Even if the extra ten days is construed as a grace period for payment 1, there were other violations of the compliance agreement set forth below. Payment 2 for delinquent taxes, due on May 30, 2014, was paid by regular check and sent by mail to Tallahassee rather than the Tampa Service Center.4/ This contravened the compliance agreement. After the May 30, 2014 payment, Respondent made no further payments pursuant to the Payment Agreement Schedule. This constituted a violation of the compliance agreement. Respondent did not remit payment with its current sales and use return for the month of August 2014. This contravened the compliance agreement. Respondent did not file any current sales and use tax returns or remit payment for the months of July 2014 or September through January 2015. This contravened the compliance agreement. Beginning in March 2014, Respondent filed current reemployment tax returns and payments using the incorrect tax rate on every return. This delayed their processing and resulted in penalties being imposed. In addition, even though Respondent was repeatedly told that such returns must be filed electronically, none were filed in that manner, as required by statute and rule. This contravened the compliance agreement. In its PRO, Respondent contends the compliance agreement cannot be enforced because there was no "meeting of the minds" by the parties on all essential terms of the agreement. Specifically, it argues that the total amount of taxes owed was still in dispute -- the dealer contended that it owed $23,000.00 less than was shown in the agreement; the Payment Schedule Agreement did not specify the amount of the final balloon payment; the compliance agreement failed to state when payments are due if the due date falls on a weekend or holiday; the compliance agreement did not specify how the dealer's payments would be allocated between UCTs and sales and use taxes; and the compliance agreement failed to address the issue of filing electronically. Although some of these issues were not raised in the parties' Joint Pre-hearing Stipulation, or even addressed by testimony at hearing, they are all found to be without merit for the reasons expressed below. First, Mr. Scott did not dispute the amount of taxes owed when he signed the agreement, and he brought no evidence to the conference to support a different amount. Second, as explained to Mr. Scott at the informal conference, the precise amount of the balloon payment can only be established in the 12th month. This is because the exact amount depends on the dealer's compliance with the agreement over the preceding 11 months, and the amount of interest, penalties, and/or other fees that may have accrued during the preceding year. Third, there is no evidence that the dealer was confused when a due date for a payment fell on a weekend or holiday. Even if it was confused, reference to section 212.11(1)(e) and (f) would answer this question. Fourth, there is no statute or rule that requires the Department to specify how the delinquent payments are allocated. Moreover, neither Mr. Scott nor the controller requested that such an allocation be incorporated into the agreement before it was signed. Finally, the issue of filing electronically already has been addressed in Finding of Fact 22 and Endnote 3. At hearing, Respondent's controller testified that she was out of town when the conference was held, suggesting that Mr. Scott, who is not an accountant, was at a disadvantage when he attended the informal conference. However, Respondent had six weeks' notice before the conference, and there is no evidence that Respondent requested that the meeting be rescheduled to a more convenient day. Also, Respondent does not dispute that Mr. Scott was authorized to represent its interests at the conference, or that he could have been briefed by the controller before attending the informal conference or signing the compliance agreement. See also Endnote 1. Notably, at hearing, the controller testified that she "was involved in actually negotiating the agreement both before and after it was actually signed" even though she did not attend the conference. Tr. at 89. Respondent also contends that after the Department considered the compliance agreement to be breached, the dealer had no further obligation to make payments pursuant to the agreement or state law until the parties negotiated a new agreement. Aside from Respondent's failure to cite any authority to support this proposition, nothing in the compliance agreement comports with this assertion. To the contrary, the compliance agreement specifically provides that if a breach occurs, the entire tax liability becomes due immediately. See Pet'r Ex. 6, p. 2, ¶ G. Thus, Respondent is obligated to pay the entire tax liability, which now exceeds $200,000.00. All other arguments raised by Respondent have been carefully considered and are rejected as being without merit.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order revoking Respondent's Certificate of Registration 39- 8011930243-9. DONE AND ENTERED this 11th day of June, 2015, in Tallahassee, Leon County, Florida. S D. R. ALEXANDER 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 11th day of June, 2015.
The Issue Whether Respondent's sales and use Certificate of Registration should be revoked for failure to abide by the repayment terms agreed to in a Compliance Agreement entered into with Petitioner on August 29, 2013, as alleged in the Amended Administrative Complaint for Revocation of Certificate of Registration.
Findings Of Fact The Department is the state agency charged with administering and enforcing Florida's revenue laws, including the laws related to the imposition and collection of sales and use tax pursuant to chapter 212, Florida Statutes (2014). Respondent is a Florida Profit Corporation doing business at 90791 Old Highway, Unit 1, Tavernier, Florida 33037. Respondent is a "dealer" as defined in section 212.06(2) and is required to comply with chapter 212. Respondent holds Certificate of Registration number 54- 8013269710-0 issued by the Department. A certificate of registration is required in order to do business in the state of Florida and authorizes its holder to collect and remit sales tax pursuant to chapter 212. The Department is authorized to revoke a dealer's certificate of registration for failure to comply with state tax laws. Prior to such revocation, the Department is required by statute to schedule a conference with the dealer. The dealer is required to attend the informal conference and may either present evidence to refute the Department's allegations of noncompliance or to enter into a compliance agreement with the Department to resolve the dealer's failure to comply with chapter 212. The Department issued and recorded warrants in the public records of Monroe County to secure collection of delinquent sales and use tax, plus penalties, filing fees, and interest from Respondent.1/ The Department initiated the process of revoking Respondent's Certificate of Registration by sending Respondent a Notice of Conference on Revocation of Certificate of Registration (Notice of Conference). The Notice of Conference advised that the informal conference would be held on August 29, 2013, and that the Department had initiated the process to revoke Respondent's Certificate of Registration for failure to remit sales and use tax and pay the reemployment tax that was determined to be due. The notice also informed Respondent that it would have the opportunity to make payment or present evidence to demonstrate why the Department should not revoke Respondent's Certificate of Registration. Respondent's President and Registered Agent, Spencer Slate, attended the informal conference on behalf of Respondent and entered into a Compliance Agreement with the Department. During the informal conference, Mr. Slate admitted to using the collected tax to pay for Respondent's payroll, fuel, and other business expenses instead of remitting the tax to the State. The Compliance Agreement states that due to Respondent's failure to timely file returns and pay all taxes due, Respondent admits to a past due sales and use tax liability of $51,506.55, consisting of tax, penalty, interest, and fees. The Compliance Agreement requires Respondent to make a down payment of $16,349.14 by August 29, 2013, and to make 12 monthly payments. The Compliance Agreement also provides that: IN CONSIDERATION for the Department refraining from pursuing revocation proceedings at this time, the taxpayer agrees: * * * To accurately complete and timely file all required returns and reports for the next 12 months, beginning with the first return/report due for 08/31/2013, payable on or before 09/20/2013. To timely remit all taxes due for the next 12 months, following the date of this agreement. Respondent made the down payment of $16,349.14, as required by the Compliance Agreement, and the first four scheduled payments, but defaulted on the terms of the Compliance Agreement as follows: Failed to make the monthly payments due, beginning with the fifth payment. Failed to timely remit taxes due for September 2013, October 2013, and November 2013. In addition, the payment for sales tax due September 2013 was returned due to insufficient funds. Failed to timely file sales and use tax returns and remit the taxes due for the tax periods May 2014, June 2014, and July 2014. The Compliance Agreement provides that "[i]f the taxpayer fails to comply with any obligation under this agreement, the Department has the right to pursue revocation of the taxpayer's certificate of registration." As provided by the Department's revocation worksheet dated December 5, 2014, Respondent currently has an outstanding sales and use tax liability in the amount of $67,501.98 and reemployment tax liability of $667.08, including tax, penalty, interest, and fees.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Revenue revoking the Certificate of Registration issued to and held by Respondent. DONE AND ENTERED this 30th day of January, 2015, in Tallahassee, Leon County, Florida. S MARY LI CREASY 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 30th day of January, 2015.
The Issue The issue to be determined is whether Respondent, Ronald M. Shultz, violated section 473.323(1)(g) and (h), Florida Statutes (2014), and Florida Administrative Code Rule 61H1-23.002(1)(a) and (b), as alleged in the Administrative Complaint, and if so, what penalty should be imposed.
Findings Of Fact Based upon the documentary evidence and the witness testimony presented, and the entire record of this proceeding, the following findings of fact are found: The Florida Board of Accountancy is the state agency charged with the licensing and regulation of the practice of certified public accounting pursuant to section 20.165 and chapters 455 and 473, Florida Statutes. Respondent, Ronald M. Shultz, is a certified public accountant (CPA) licensed in the state of Florida. Respondent has been licensed since 1997 and holds license number AC 003065. His license is currently active, and he has no history of discipline by the Board. Respondent’s address of record is 1031 Northwest 6th Street, Suite F-2, Gainesville, Florida 32601. At all times material to the allegations in the Administrative Complaint, Respondent was the owner of a CPA firm in the state of Florida, i.e., Ronald M. Shultz, CPA, PA. The firm’s license was first issued in May of 2006, and is also in active status. Respondent is the president and sole shareholder for his firm. While he employed others who worked in the firm, Respondent is ultimately responsible for all aspects of business conducted by the firm. Ronald M. Shultz, CPA, PA, is in the business of providing tax services to clients, including the preparation of federal income tax returns. The normal procedure employed in Respondent’s office required that, once a client’s tax return had been prepared, the client was called to come in and receive a copy of the return for review. The client also was given a copy of an IRS E-File signature authorization form (Form 8879), although the evidence was unclear as to when the form was given to the client. In any event, the client was usually told to review the return, and then a meeting would be scheduled to go over the return, especially in those cases where the return was complex or had a lot of “moving parts.” Once the client had an opportunity to review the return and discuss it with Respondent, the client would provide a signed copy of Form 8879 and Respondent’s firm’s personnel would electronically file the return. No return is supposed to be filed without a signed Form 8879. During the period giving rise to these proceedings, Respondent had a part-time employee named Jeff Gruver, and a former IRS-enrolled agent named Jeff Conklin. Mr. Gruver usually answered the phones, took messages, provided copies of returns to clients, and, once things were finalized with a return, electronically filed returns as directed. Mr. Gruver could answer simple tax-related questions such as, “the return indicates you are getting a refund of this amount,” or the return shows that you need to pay this much in taxes.” Any more complicated questions were fielded by Mr. Conklin, or if necessary, Mr. Shultz. Mr. Conklin is someone with whom Mr. Shultz had worked previously, and actually prepared tax returns for the firm. Mr. Shultz would generally review his work, and would go over the return with the client. During this time period, Respondent relied on Mr. Conklin to a greater extent than was his normal practice. Mr. Shultz was in the midst of a protracted divorce, and helping with the care of his father, who was in declining health. William and Jo Lee Beaty were clients of Respondent, and had been clients for several years. Respondent’s office prepared their federal income taxes since at least 2009. The Beatys’ tax return generally has a lot of “moving parts.” They typically request an extension of time for filing, and bring their paperwork to Respondent’s office early in October, in order to have the return prepared by the October 15 deadline. Normally, the Beatys will owe additional taxes. They generally reviewed the return with Mr. Shultz, signed the Form 8879, and provided a check to send to the IRS when the return was filed. In 2014, Mr. Beaty took the documents necessary for the preparation of the Beatys’ 2013 tax return to Respondent’s office. Mr. Beaty acknowledged that he often delivered the documentation very late in the process–-often just days before the October 15 deadline--but thought that this year, he had delivered it as much as six weeks before. The complaint the Beatys filed with the Department indicates that the documents were delivered on or about October 1. While Respondent had no direct knowledge of when the documents were delivered to the office, he testified that his office records indicated that it was no earlier than October 1.1/ After consideration of all of the evidence, the documents were delivered most likely sometime in very late September or on October 1, 2014. Respondent directed Jeff Conklin to prepare the Beatys’ tax return. Mr. Conklin had prepared their tax return the year before. In the days immediately preceding the October deadline, Jo Lee Beaty started calling Respondent’s office to see when she and her husband would be able to review the return and determine how much money they owed in taxes. She could not reach anyone from the firm, despite repeated phone calls. Someone from Respondent’s office (presumably either Mr. Conklin or Mr. Gruver) electronically submitted the Beatys’ 2013 federal income tax return to the IRS on October 15, 2014. However, Respondent did not review the return before it was filed and the Beatys did not see it, and were not informed as to its contents. On or about November 6, 2014, Mr. Conklin notified Mr. Shultz that he was quitting his job, effective immediately. He did not notify Respondent that there were any problems with the Beatys’ tax return. Respondent was knowledgeable about the Beatys’ prior returns, and knew that the 2013 return would include a significant amount of information, including multiple Schedule Cs, Schedule K-1s, significant information regarding businesses owned by the Beatys, and property rentals. Respondent was also aware that the Beatys typically wanted to review their tax return with him prior to its filing. Not only were the Beatys unable to contact Respondent in order to schedule a meeting prior to the tax-filing deadline, but they were unable to contact him to determine whether the return was actually filed or to determine how much money was owed. Mrs. Beaty called the office the day after the deadline and no one answered. The office was actually closed that day. Mrs. Beaty made other calls to the office, although she was unable to say specifically how many times. However, when she was still unable to speak to anyone on November 13, 2014, nearly a month after the filing deadline, she made a request to the IRS to get a copy of the couple’s tax return. The IRS sent the Beatys a transcript of their filed return that same day, although it is unclear when they received it. Mrs. Beaty continued to attempt to reach Respondent, with no success. She even spoke to Respondent’s wife on the phone, and requested that she have Respondent return Mrs. Beaty’s phone calls. Respondent first learned that the Beatys were trying to reach him when his wife called him with the message from Mrs. Beaty. Respondent finally spoke to Mrs. Beaty on November 18, 2014. During this phone call, Respondent advised Mrs. Beaty that he would have their materials ready the following week. The Beatys did not receive the return or their documents as promised. On or about December 9, 2014, Mrs. Beaty sent Respondent an email requesting their return and backup materials. The email states: Ron, We were not given an opportunity to review the return with you prior to you submitting it to the IRS electronically. I called for several days prior to the final October 15th deadline to file trying to talk with you an/or [sic] Jeff. No one was available. My calls were not returned. October 14th and 15th I called more than once trying to find out what we were going to owe so that we could be prepared to include a check with the return we would need to sign and send to the IRS. Still no return phone call. Late in the day on October 15, I was assured by Jeff Gruver that the return would be filed and we would be able to take care of everything October 16th. It is nearly two months now, we have not reviewed our return with you, for accuracy, as has been the procedure in years past. We have not received the return for our signatures and instructions for submission. It is not for a lack of trying. After the filing deadline, on October 16th we began calling the office on numerous occasions to talk with you or Jeff and get our return. We left messages both with Jeff Gruver and on the various voice mailboxes to no avail. I have driven to the office only to find the man who was renting space from you there. He knew nothing of your schedule or when I might find you. He did indicate that Jeff C. now [sic] longer worked there. After calling Debra at the numbers on your sign twice you finally called. That was on or about November 18th or 19th. You told me you needed to review the return and would get it to us that week. I told you it needed to be before Friday November 21, 2014 as I was having surgery that day. You told me it would be before my surgery. We didn’t hear from you as promised. I called again the beginning of the next week (Thanksgiving week) and left a message which you returned early Tuesday afternoon I believe. You said you would get it to me later probably that day (this was a day that you had an afternoon doctor appointment). To date I have not heard from you again and had it not been for my call to the IRS I would have no proof that the return was filed nor any idea of what we owe. We are sorry to have to terminate our relationship under these circumstances. We had previously been very satisfied with your service and as you know we had referred people to you. Ron, your negligence and non-feasance comes as a great surprise. It is nonetheless inexcusable. We are contemplating reporting your inaction to the Florida DBPR. Please respond to this email and tell me what time before 5:00 p.m. Tuesday, December 9, 2014, so I can pick up all of the documents we gave you to prepare our 2013 tax return, and copies of all of our records. With disappointment, Jo Beaty Respondent did not respond to this email in a timely fashion and states that he did not do so because he was not checking his email regularly due to the issues with his father’s health. As a consequence, his first response to the email was dated December 22, 2014, in which he stated in part: First speaking about your federal tax return. Jeff Conklin told me your return was complete. He then told me basically he had to quit his current position with me for personal reason [sic] and simply walked out. When I went to find your file, none of your paperwork had been copied for what we call work papers . . . . Since Jeff left your file is [sic] disarray, I had to organize your paper work so that I could do an accurate review of your return. Yesterday I completed putting all of your paper work together and is now ready for my review. My plan is to complete the review tonight. And then, we can arrange a time to meet to go over your return. Despite this communication over two months after the filing of the Beatys’ tax return, they still did not receive their tax return or supporting documentation. The Beatys hand-delivered a complaint to the Department on December 22, 2014. Respondent was sent a notification letter regarding the complaint on December 29, 2014. He placed the documentation in the Beatys’ mailbox that same day. With the tax return and supporting documentation was an invoice for his services at a 50-percent discounted rate of $350. The Beatys were going to owe money, including some interest and penalties for being late, even had they paid their taxes on October 15, because payment was actually due on April 15. The IRS charges a failure to pay proper estimate penalty of $200. When taxes are paid after the due date, the IRS also charges a penalty of .5 percent of the unpaid amount due per month, up to 25 percent of the amount due. Any portion of a month is treated as a full month. On November 24, 2014, the IRS sent the Beatys a letter notifying them that they owed their taxes, including the $200 failure to pay proper estimated tax penalty; $879.08 in penalties, and $406 in interest. Some, but not all, of the penalties and interest are due to Respondent’s failure to timely provide a copy of their tax return. The Department expended $260 in costs, not including time by the legal section, in the investigation of this case.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Board of Accountancy enter a final order finding that Respondent, Ronald M. Shultz, violated section 473.323(1)(g) and (h), and rule 61H1-23.002(1)(a) and (b). It is further recommended that Respondent’s license be reprimanded; that he be placed on probation for a period of one year, subject to conditions determined by the Board; and that he pay an administrative fine of $500 and investigative costs of $260.00 DONE AND ENTERED this 8th day of April, 2016, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of April, 2016.
The Issue Whether the Department of Revenue properly denied Petitioner's March 10, 2000, Application For Refund of Sales and Use Tax, Petitioner having asserted that the Department of Revenue obtained the Closing Agreement through misrepresentation and intimidation.
Findings Of Fact Petitioner, Tuskawilla Learning Center, is a Florida corporation which operates a private Montessori School in Oviedo, Seminole County, Florida. Petitioner has elected to be an "S" corporation for federal income tax reporting purposes. Tuskawilla Learning Center is owned by its shareholders, Thomas E. Phillips; his wife, Lois; his daughter, Terry Lynn DeLong; and his son-in-law, Daniel F. DeLong. At all times material to this matter, a partnership comprised of the above-named owners of the Tuskawilla Learning Center also owned the real property upon which the Tuskawilla Learning Center operated. In early July 1997, Respondent audited Petitioner's corporate transactions for the period from July 1, 1992, through June 30, 1997, for compliance with sales and use tax and the local government infrastructure surtax. During the audit Petitioner was requested to provide all information and documents which Petitioner felt supported its business activities. Respondent issued a Notice Of Intent To Make Audit Changes on September 25, 1997, which advised Petitioner that the audit revealed that Petitioner had failed to pay use tax on purchases Petitioner made from out-of-state vendors, which Petitioner acknowledged and paid. The audit also revealed that Petitioner failed to pay sales tax on the monthly rental charges that Petitioner paid to the property owner on which the Tuskawilla Learning Center operated. Petitioner did not agree with Respondent's position on the sales tax on monthly rental charges. On October 28, 1997, an audit conference was held in Orlando, Florida, where the tax assessment on the monthly rental charges was discussed. The parties were unable to resolve the issue, and Petitioner requested that the issue be referred to Tallahassee for further review. The review in Tallahassee essentially confirmed the original audit findings, and a Notice of Proposed Assessment was issued on January 26, 1998. Petitioner filed a protest and requested a further review of the Notice of Proposed Assessment. As a result, the entire audit was reviewed, and Petitioner was allowed to provide additional documentation to support its position. On August 4, 1998, Respondent issued a Notice of Decision which essentially confirmed the findings of the original audit. At this point, Petitioner had certain rights of appeal which had to be exercised within specific time limits, or Petitioner could elect to pay the taxes and interest as set forth in a Closing Agreement in which Respondent waived the penalties which had accrued for failure to pay the tax. The various time deadlines passed without Petitioner electing one of the avenues of appeal nor did Petitioner execute the Closing Agreement. After all deadlines for appeal had passed, Petitioner contacted Respondent through an attorney seeking relief. Respondent found no basis for relief but renewed the opportunity for Petitioner to sign the Closing Agreement. On February 5, 1999, Petitioner executed the Closing Agreement and paid $71,693.87 (a $285.31 overpayment). The Closing Agreement clearly states: The taxpayer waives any and all rights to institute any judicial or administrative proceedings, including the remedies provided by ss. 213.21(2)(a) and 72.011(1), F.S., to recover, compromise, or avoid any tax, penalty or interest paid or payable pursuant to this agreement. This agreement is for the sole purpose of compromising and settling taxpayer's liability to the State of Florida . . . This agreement is final and conclusive with respect to the audit assessment or specific transaction/assessment and period described . . . and no additional assessment may be made by the Department against the taxpayer for the specific liability referenced above, except upon showing of fraud or misrepresentation of material fact . . . . On March 10, 2001, Petitioner filed an Application for Refund of the taxes and interest paid with the Closing Agreement. Attached to the Application for Refund was Petitioner's four-page "position paper," which outlined facts and arguments related to the sales tax issue. Petitioner's Application for Refund states that "the State has misled us." The Application for Refund went through the review process. On May 5, 2000, Respondent issued a Notice of Proposed Denial for the refund claim. Petitioner sought an informal review of the proposed refund denial. After an informal review of the proposed refund denial, on June 16, 2000, Respondent issued a Notice of Decision denying Petitioner's Application for Refund. On August 12, 2000, Petitioner forwarded a letter to Respondent, which was interpreted as a request for an administrative hearing to review the decision to deny the Application for Refund which resulted in the instant administrative hearing. Thomas E. Phillips has a Ph.D. in accounting from the University of Nebraska, is a Certified Public Accountant, and had taught accounting at the University of Central Florida for 23 years prior to his retirement. He and his family founded the Tuskawilla Learning Center. On behalf of Petitioner, Dr. Phillips maintains that the tax audit and subsequent review process were "intimidating" and that Respondent "misled" Petitioner. Notwithstanding Dr. Phillips' assertion that the audit and review process were "intimidating," he testified that he found the auditor and her supervisor "not intimidating, but were very pleasant." Dr. Phillips testified about several aspects of the audit and review process and activities that occurred during the audit and review process that he found objectionable. For example, Dr. Phillips testified that Respondent failed to respond to his inquiries in an appropriate way and that Respondent had misinterpreted certain case law that he felt applicable. Nothing offered by Dr. Phillips suggests any impropriety or misrepresentation by Respondent.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that Respondent enter a final order denying Petitioner's Application for Refund. DONE AND ENTERED this 26th day of April, 2001, in Tallahassee, Leon County, Florida. JEFF B. CLARK 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 26th day of April, 2001. COPIES FURNISHED: Joseph C. Mellichamp, III, Esquire Office of the Attorney General Department of Legal Affairs The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 John Mika, Esquire Office of the Attorney General Department of Legal Affairs The Capitol, Tax Section Tallahassee, Florida 32399-1050 Thomas E. Phillips 1625 Montessori Point Oviedo, Florida 36527 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 James Zingale, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact Petitioner is employed as a Tax Auditor IV in Respondent's Property Tax Administration Program. He is assigned to work in Respondent's Regional Office in Jacksonville, Florida. The counties within the Jacksonville Region for Property Tax Administration are: Duval, Clay, Nassau, Putnam, St. John and Flagler. In January of 1996, Petitioner wrote to John Everton, Director of Respondent's Property Tax Administration Program requesting permission to run for Tax Collector of Clay County. In February of 1996, Petitioner talked to Mr. Everton's secretary. After making this call, Petitioner understood that Respondent's attorneys had his application to run for elective office and that he would soon receive an answer. Petitioner sent Mr. Everton an E Mail message on or about March 6, 1996. In this message, Petitioner asked Mr. Everton to check on his request to run for office and to expedite it immediately because time was of the essence. That same day, Mr. Everton responded to Petitioner's request with an E mail message. Expressing his apologies, Mr. Everton advised Petitioner that Respondent's attorneys had Petitioner's initial request. Mr. Everton stated that he would request that the attorneys respond immediately to Petitioner's inquiry. On or about March 13, 1996 Mr. Everton advised Petitioner that he would have to send his request for approval to run for local office directly to the agency head pursuant to the directive contained in Rule 60K-13.0031(1), Florida Administrative Code. By letter dated March 18, 1996 Petitioner requested that Larry Fuchs, Respondent's Executive Director, grant him permission to run for Tax Collector of Clay County. Mr. Fuchs received this letter on March 29, 1996. Mr. Fuchs responded to Petitioner's request by letter dated April 5, 1996. He reminded Petitioner that Rule 60K-13.0031(1), Florida Administrative Code, requires employees to apply directly to the agency head when requesting approval to become a candidate for local office. Mr. Fuchs then gave several reasons why he could not certify to the Department of Management Services that Petitioner's candidacy would involve no interest which conflicts or activity which interferes with his state employment. More specifically, Mr. Fuchs' April 5, 1996 letter stated in relevant part that: Under section 195.002, Florida Statutes, the Department of Revenue has supervision of the tax collection and all other aspects of the administration of such taxes. Your position with the Department may require you to review or audit the activities of the office you propose to seek. Also some of your duties in supervising other officials in the administration of property taxes may be affected by your proposed candidacy. Your job requires you to review appropriate tax returns, and other records to resolve complex issues related to taxing statutes administered by the Department of Revenue. It also requires you to identify and scrutinize transactions to ascertain whether taxpayers have escaped paying property taxes. In addition, it also requires you to review and audit procedures used by counties to identify and value tangible personal property and accomplish statutory compliance, to investigate taxpayer complaints, to conduct field review with county staff as appropriate, and to provide education an assistance to county taxing officials. Because of the Department's statutory super- vision of the office of tax collector, there cannot be a certification that your candidacy would involve "no interest which conflicts or activity which interferes " with your state employment within the definitions of section 110.233(4), Florida Statutes. The letter went on to say that: This letter is a specific instruction to you that you should not qualify or become a candidate for office while employed in your current position. If you wish to commence your campaign by performing the pre-filing requirements, the law requires that you first resign from the Department. Failure to do so shall result in disciplinary action to dismiss you from your position in accordance with the Department's disciplinary standards and procedures, and Rule 60K-4.010, F.A.C., the Department's Code of Conduct, Section 110.233, Florida Statutes, and Rule 60K-13.002(3), F.A.C. After receiving the above decision, Petitioner requested a formal hearing to challenge the denial of his request to run for Tax Collector of Clay County by letter dated April 10, 1996. Respondent received this letter on April 16, 1996. Respondent referred Petitioner's request for a formal hearing to the Division of Administrative Hearings on April 26, 1996. Petitioner responded to the Division of Administrative Hearings' Initial Order on May 7, 1996 advising the undersigned that he was unavailable for hearing May 28, 1996 through June 10, 1996 and July 5, 1996. He also included an initial pleading requesting, among other things, that Respondent immediately allow him to run for office and pay his filing fee because, in his opinion, it was too late for him to qualify using the alternative method of submitting petitions. On May 21, 1996 this matter was scheduled for hearing on July 9, 1996. Respondent filed a Unilateral Response to the Initial Order and a Prehearing Statement on May 30, 1996. On June 14, 1996 Petitioner filed a letter stating that it was impossible for him to be prepared for the hearing scheduled for July 9, 1996 for two reasons: (a) he had just returned to work after two weeks of vacation; and (b) he was overwhelmed by discovery associated with his upcoming hearing. Petitioner requested that this matter be continued until sometime after August 15, 1996. He represented that Respondent had no objection to his request. An order dated June 20, 1996 rescheduled the case for hearing on August 19, 1996. On July 18, 1996, Respondent sent Petitioner a letter granting him permission to qualify and file the necessary paperwork to become a candidate for Clay County Tax Collector. The letter also advised Petitioner of the conditions under which he could begin campaign activities while on Respondent's payroll. Respondent's change in position was due in part to the pending Final Order in Hendrick v. Department of Revenue, DOAH Case No. 96-2054. Respondent faxed its July 18, 1996 letter to Petitioner's office at 2:38 p.m. Petitioner's immediate supervisor contacted Petitioner at his home later that day at approximately 3:45 p.m. Petitioner did not request annual leave for the following day so that he could take whatever steps were necessary in order to qualify as a candidate for the office of Tax Collector. Instead, he opted to follow through with his previously arranged appointments for July 19, 1996. On July 22, 1996 Petitioner faxed a letter to Respondent indicating that Respondent had not given him sufficient time in which to meet all requirements to qualify as a candidate for elective office by noon on July 19, 1996. In order to qualify as a candidate for elective office in Clay County, Petitioner had to declare a bank depository for campaign purposes and designate a campaign treasurer. If Petitioner intended to use the alternative method of qualifying by filing petitions, he had to file an alternative affidavit and obtain petition forms from the Clay County Supervisor of Elections between January 3, 1996 and June 21, 1996. He had to submit the signed petitions (Democrats-688; Republicans-990, Independent-1,873) to the Supervisor of Elections on or before June 24, 1996. Regardless of whether Petitioner intended to qualify by paying a fee (Major Party-$5,876.40; Independent-$4,309.36) or by using the alternative petition method, he had to complete all paperwork on or before noon of July 19, 1996. Petitioner did not qualify by either method.
Recommendation Based on the Findings of Fact and Conclusions of Law set forth above, it is recommended that Respondent enter a Final Order dismissing Petitioner's request for certification to the Department of Management Services that his candidacy for the office of Clay County Tax Collector would involve no interest which conflicts, or activity which interferes, with his state employment. DONE AND ENTERED this 15th day of October, 1996 in Tallahassee, Leon County, Florida. SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 15th day of October, 1996. COPIES FURNISHED: Patrick A. Loebig, Esquire Peter S. Fleitman, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Floyd L. Hylton 103 Century 21 Drive, Suite 213 Jacksonville, Florida 32216 Linda Lettera, Esquire Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
