The Issue The issue for determination is whether Petitioner is liable for use tax, pursuant to Chapter 212, Florida Statutes, to the Florida Department of Revenue for the use and storage of a vessel.
Findings Of Fact Camden Corporation (Petitioner) is a foreign corporation, incorporated in Delaware on August 7, 1990. Petitioner is a solely owned, closed corporation. Petitioner has two officers: a President, who is the sole owner, and a Treasurer. At all times material hereto, Petitioner's President and Treasurer were residents of Jacksonville, Florida. Petitioner's business address is in Jacksonville, Florida. Petitioner's officers handled its day-to-day activities and records from Jacksonville, Florida. Prior to the Petitioner's incorporation, its President wanted to purchase a vessel to take a world wide cruise. He obtained the services of a law firm to advise him on avoiding a state's sales and use tax on the purchase of a vessel, with Florida being one of the states. A lawyer in the firm contacted the Florida Department of Revenue (Respondent) and inquired, without relating any of Petitioner's factual circumstances, as to whether the case of Department of Revenue v. Yacht Futura, 510 So.2d 1047 (Fla. 1st DCA 1987) was still good case law in Florida. Yacht Futura was a case in which the parameters of Florida's sales and use tax were interpreted regarding repairs and personal use of vessels while in Florida waters. Respondent's representative informed the firm's lawyer that Yacht Futura was still being followed by Respondent and that no exceptions existed; but Respondent's representative further cautioned that the factual circumstances must conform to Yacht Futura. The firm's lawyer prepared a memorandum advising Petitioner's President, among other things, that no liability for Florida's sales and use tax would be incurred for repairs and personal use of a vessel in Florida's waters, so long as the circumstances complied with Yacht Futura. After having received the firm's advice and advice from tax advisors, Petitioner's President created and incorporated Petitioner. On August 14, 1990, Petitioner purchased a used motor vessel in international waters for $5,618,000. The vessel was a 131' Feadship with Coast Guard documentation number 623589. Petitioner named the vessel "CAMDEN." The CAMDEN was the only assest owned by Petitioner. Petitioner did not pay any Florida sales tax at the time of CAMDEN's purchase. From August 14, 1990 through October 15, 1990, the CAMDEN was outside the State of Florida. Petitioner's President had taken the vessel on a cruise. During the time period that the vessel was on the cruise, Petitioner did not pay any sales or use tax in any jurisdiction in the United States. Also, during the time period that the vessel was on the cruise, Petitioner did not license, title, or register the CAMDEN in any jurisdiction in the United States. On October 15, 1990, relying on the law firm's advice, Petitioner imported the CAMDEN into Florida waters for major repairs, with the intention of departing after the repairs and not returning to Florida waters. Petitioner obtained the services of Huckins Yacht Corporation, a registered repair facility, in Jacksonville to perform repairs to the CAMDEN, which had a dock in Huckins Marina. However, the dock at Huckins Marina was unable to accommodate a vessel the size of the CAMDEN. The vessel was docked at Southbank Marina which could accommodate the vessel and which was the closest marina to Huckins Marina. Petitioner's President was not in the State of Florida when the CAMDEN arrived in Florida waters. He did not return to Florida until October 24, 1990. Petitioner did not have a written contract with Huckins Yacht Corporation (Huckins) to perform any repairs on the CAMDEN. However, Huckins did perform some minor repairs to the CAMDEN. Also, Huckins arranged for a major repair to the CAMDEN. It arranged for Petitioner to purchase a global position satellite electronic system as a nonwarranty repair. The electronic system was to be installed by someone who was not an employee of Huckins and who did not have a contractual agreement with Huckins for the installation. The electronic system was installed on the CAMDEN at the Southbank Marina. During the time that repairs were being made to the CAMDEN, its crew remained on board. Petitioner never received any bill from Huckins for any repairs made to the CAMDEN, including the installation of the electronic system. While the vessel was docked for repairs at the Southbank Marina, it was used for personal entertainment. On October 25, 1990, Petitioner's President and his friends had an open house type of party on the CAMDEN. On October 26, 1990, Petitioner had a luncheon cruise on the CAMDEN. On October 27, 1990, Petitioner had a dinner cruise and a birthday party for the daughter of Petitioner's President. On October 28, 1990, Petitioner took the CAMDEN from Jacksonville to St. Augustine for a pleasure trip. Leaving St. Augustine, the CAMDEN traveled to Miami, Florida and docked there on October 30, 1990, to get the vessel prepared for world travel. In Miami, the CAMDEN was docked at the Moorings Yacht Services, Inc. (Moorings), a registered repair facility. In November 1990, the Moorings began repairs to the CAMDEN, and in December 1990, the vessel departed the Moorings. In November 1990, Petitioner hired a tax consultant, who was a former employee of Respondent, for advice regarding Petitioner's liability for sales and use tax of the CAMDEN in Florida. The tax consultant advised Petitioner to register the CAMDEN as a charter for sales and use tax. Further, he advised Petitioner to late-file with Respondent an Exemption Affidavit for Boats Placed in a Registered Repair Facility, referred to as a Safe Harbor Affidavit, pursuant to Subsection 212.08(7)(t), Florida Statutes. On December 19, 1990, a Safe Harbor Affidavit was executed by both Huckins and Petitioner's President. The Safe Harbor Affidavit indicated, among other things, that Huckins was a registered repair facility in Jacksonville, Florida and that, from October 16, 1990 through October 25, 1990, the CAMDEN was under the care, custody, and control of Huckins for the purpose of installing electronics, which was the electronic system. Even though the Safe Harbor Affidavit does not provide that Huckins installed the electronic system on the CAMDEN, it does infer that Huckins had installed the electronic device. Respondent interprets "care, custody, and control" as the vessel being in the "physical" care, custody, and control of the registered repair facility. Clearly shown on the Safe Harbor Affidavit is that it is to be filed with the Respondent within 72 hours after the repair facility takes possession of the vessel. Additionally, clearly shown on the Safe Harbor Affidavit is that a copy of it is to be filed with Respondent within 72 hours after the work is completed and the vessel is released to the owner. On or about December 22, 1990, the CAMDEN departed Florida waters for a pleasure cruise to the Bahamas. In early January 1991, the vessel returned to Florida. The CAMDEN remained in Florida until mid-January 1991, when it traveled to the Caribbean. Around mid-May 1991, the vessel returned to Florida. In 1990, Petitioner was not issued a permit by any agency of the United States government to use the CAMDEN in Florida waters. In April 1991, one of Respondent's representatives discovered, during a routine examination of the records of the Miami Marina, that the CAMDEN was named as a boat docked in Florida with an out-of-state hailing port. On May 13, 1991, Respondent's representative sent a Declaration for Florida Sales and Use Tax (Declaration) to Petitioner for it to complete and return to Respondent. Instead of completing the Declaration, on December 10, 1991, Petitioner's tax consultant delivered the Safe Harbor Affidavit executed on December 19, 1990, to Respondent's representative. Additionally, Petitioner's tax consultant verbally supported the Safe Harbor Affidavit by stating that the CAMDEN was docked at Southbank Marina in Jacksonville while the repairs to the vessel were being completed by Huckins and the nonemployee. The Moorings filed a Safe Harbor Affidavit with Respondent, providing that the CAMDEN entered the facility in November 1990 and departed in December 1990. The Safe Harbor Affidavit was not submitted to Respondent within 72 hours of the CAMDEN either entering the facility for repairs or departing the facility after the repairs were completed. 1/ Respondent has a practice of accepting late-filed Safe Harbor Affidavits, with the condition that all documents supporting repairs are also to be submitted. A subsequent review of all the documents submitted would determine whether a person would be responsible for sales and use tax. On December 10, 1991, based on the Safe Harbor Affidavit and the representations by Petitioner's tax consultant, Respondent's representative closed her file regarding the sales and use tax, without assessing any sales or use tax against Petitioner. However, she forwarded neither a closing letter nor a closing agreement to Petitioner. Even though Petitioner had not received a closing letter or a closing agreement from Respondent, it believed that Respondent had terminated its inquiry of any assessment against it. In or around November 1991, another of Respondent's representative (Respondent's second representative) observed, while performing a routine marina check, the CAMDEN docked at the Palm Harbor Marina in West Palm Beach, Florida. Subsequently, he opened a new file on the CAMDEN. Petitioner was unaware that Respondent's second representative had opened a new file. Respondent's second representative performed an investigation of the vessel, including reviewing the Safe Harbor Affidavit submitted to the Respondent's other representative on December 10, 1991. His investigation led to the assessment at issue. The investigation by Respondent's second representative showed, and it is determined as a finding of fact here, that the CAMDEN was not in the physical care, custody, and control of Huckins during the repairs for the period October 16, 1990 through October 25, 1990. From October 15, 1990, when the CAMDEN entered in Florida waters for repairs, the vessel remained in Florida for more than a total of 10 days. Petitioner decided to sell the CAMDEN and listed it for $6.9 million. On February 14, 1992, Petitioner sold the CAMDEN for $5.3 million, which was $1.6 million less than it was originally listed. For 1991 and 1992, Petitioner's President treated the CAMDEN as his personal second home and took a home interest deduction for federal income tax purposes. On October 10, 1992, Respondent notified Petitioner that it was assessed, as of April 10, 1992, a tax of $337,080, representing: 6 percent of the CAMDEN's purchase price of $5,618,000; $84,270 in penalty; $168,540 in specific penalty; and $59,826.60 in interest. On October 26, 1992, Respondent issued a notice of final assessment to Petitioner which included the above assessment and the facts and reasons, including legal reasons, for the assessment. Petitioner contested the assessment. On January 14, 1994, Respondent issued a notice of reconsideration of the assessment and revised final assessment, withdrawing the $168,540 in specific penalty but sustaining the remaining assessment of $503,113.02, which represented: $337,080 tax; $84,270 penalty; and $81,763.02 interest. In its notice of reconsideration, Respondent determined, among other things, that Petitioner was issued an out-of-state registration, effective December 1, 1990, as a result of Petitioner submitting an application for sales and use tax registration, listing the major business activity as rental of tangible personal property. Additionally, Respondent determined, among other things, that Petitioner, as the corporation, maintained control and use of the CAMDEN during the period December 1990 through February 1992 when the CAMDEN was sold. No tax at issue was assessed for this period of time. Petitioner protested the revised assessment. Petitioner has not paid any Florida use tax.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order affirming the assessment of use tax against the Camden Corporation in the amount of $503,113.02, plus accrued interest. DONE AND ENTERED on this 30th day of September, 1996, in Tallahassee, Leon County, Florida. ERROL H. POWELL, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of September, 1996.
The Issue The issue is whether the Department of Revenue (the "Department") may levy on deposits of Bell Industries, Inc. ("Bell Industries") held at Wells Fargo Bank as proposed in the Department's March 5, 2012, Notice of Intent to Levy.
Findings Of Fact The Department is the agency of the state of Florida charged with the duty to enforce the collection of taxes imposed pursuant to chapter 212, Florida Statutes, including the authority to levy against the credits or personal property of delinquent taxpayers. § 213.67, Fla. Stat. Bell Industries is a holding company for the operation of several operating entities. In early 2007, Bell Industries purchased Skytel, a telecommunications services company, from Verizon. The purchased entity was subject the communications services tax set forth in chapter 202, Florida Statutes. Mark A. Begle, an officer of Bell Industries, testified that the tax compliance issues undertaken by his company in this purchase were "quite painful and took a lot of time." Mr. Begle stated that the complexity of filings under the Florida communications services tax necessitated the hiring of Tax Partners, an outside specialty company based in Atlanta, to fulfill the Skytel tax obligations. It took Tax Partners several months to get the systems in place to properly file the Florida tax forms. Mr. Begle acknowledged that his company's initial Florida tax returns were late filed. After the Department received and processed the initial returns, it sent initial notices to Bell Industries advising the company of the late filing penalty and interest amounts due for the delinquent months. The Department sent the initial notices on August 23, 2007. Eventually, the Department sent out a Notice of Final Assessment to Bell Industries for each of the two tax periods for which the company had filed delinquent returns. The Notice of Final Assessment for the reporting periods of February 2007 through May 2007, was mailed on September 25, 2007. The Notice of Final Assessment for the reporting period of May 2008, was mailed on February 6, 2009. The Department's Notice of Final Assessment offers a taxpayer two routes for contesting an assessment. First, the taxpayer may commence an informal protest process by submitting a letter requesting review to the Department within 20 days of the date of the assessment. § 213.21, Fla. Stat. and Fla. Admin. Code R. 12-6.0033. Second, the taxpayer may choose to bypass the informal protest process and commence the formal appeals process provided by chapter 72, Florida Statutes, within 60 days of the date of the assessment. Bell Industries did not timely invoke either method of contesting the assessments. Therefore, the assessments became final. The Department filed a warrant, dated September 2, 2008, in Leon County stating that Bell Industries was indebted to the Department in the amount of $23,800.41.2/ Of this amount, $23,780.41 was listed as "penalty." The remaining $20.00 was listed as a "filing fee." Thus, for all practical purposes, the claimed amount of indebtedness is entirely a penalty. Department records indicated that the Department twice rejected Bell Industries' requests for compromise or waiver of the assessments, on September 14, 2007, and December 19, 2008. The Department issued a Notice of Freeze, dated March 5, 2012, to Wells Fargo Bank, a financial institution in Philadelphia, Pennsylvania. The Notice of Freeze instructed the bank that Bell Industries had a delinquent liability for tax, penalty and interest owed to the Department pursuant to section 213.67, and that the bank "may not transfer, dispose of, or return any credits, debts, or other personal property owned/controlled by, or owed to, this taxpayer which are in your possession or control or become under your possession or control up to the amount of $23,800.41." On March 15, 2012, Wells Fargo Bank reported to the Department that it was holding $23,800.41 in Bell Industries deposits. On March 5, 2012, the Department issued a Notice of Intent to Levy on credits or personal property belonging to Bell Industries. On March 21, 2012, the Department issued a Notice of Contested Intent to Levy, in acknowledgement that Bell Industries was contesting the Department's intended levy. At the hearing, Bell Industries essentially conceded its liability for the amount owed. Mr. Begle, Bell Industries' representative, credibly testified that the company endeavors to be timely and in full compliance as regards all of its tax obligations. Mr. Begle noted that his company sold Skytel in March 2008, which led to the termination of the relationship with Tax Partners and the dismantling of the entire management structure related to Skytel. Mr. Begle blamed these activities for Bell Industries' slow response, because correspondence from the Department regarding these tax issues was being sent to personnel no longer associated with Bell Industries. Mr. Begle requested that these unusual circumstances be taken into account and that the Department consider waiving or negotiating the penalty at issue in this proceeding. At the hearing, the Department took the position that section 213.21 allows the Department to negotiate a compromise of an assessment of tax, interest and penalty, but that once the time for filing a challenge to the assessment passes, as set forth in Florida Administrative Code Rule 12-6.0033, the Department no longer has the authority to compromise a claim. Because Bell Industries failed to file a timely challenge, the Department could not accept less than the amount claimed in the Notice of Intent to Levy.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order finding that the $23,800.41 in the Wells Fargo Bank belonging to Bell Industries is subject to the Notice of Intent to Levy that the Department of Revenue issued on March 5, 2012, in accordance with section 213.67, Florida Statutes, but that the levy should not occur until Bell Industries is provided a reasonable period of time in which to submit a request for settlement or compromise pursuant to Florida Administrative Code Rule 12-13.003. DONE AND ENTERED this 27th day of August, 2012, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of August, 2012.
The Issue Whether the Petitioner is liable for sales tax, interest, and penalties as alleged by the Department of Revenue (Department).
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing, the following Findings of Fact are made: The Petitioner is a Florida corporation formed in October 2004. The principal office and mailing address of the Petitioner is 518 North Tampa Street, Suite 300, Tampa, Florida 33602. The directors of the corporation are Brenda Dohring and Robert Hicks (husband and wife), and Joshua Dohring (their son). Brenda Dohring and Robert Hicks are residents of Tampa, Florida, and registered voters in Hillsborough County. Brenda Dohring and Robert Hicks hold Florida driver's licenses. Joshua Dohring is a resident of the United States Virgin Islands, where he operates a charter boat business. On November 8, 2004, the Petitioner purchased, in St. Petersburg, Florida, a 36-foot catamaran sailboat (hull No. QPQ0000D089) for $113,000. On November 15, 2004, the Petitioner purchased, in St. Petersburg, Florida, an inflatable tender with outboard motor and accessories (hull No. XMO18119G405) for $4,865. The catamaran and tender were purchased for the use of Joshua Dohring in his charter boat business in the Virgin Islands. They were to replace his previous boat that was destroyed by Hurricane Ivan. Because Joshua Dohring did not have sufficient financial resources or credit, Brenda Dohring and Robert Hicks decided to make the purchases for him. They created the Petitioner corporation to purchase and own the catamaran and tender because they wanted protection from personal liability that might arise from Joshua Dohring's use of the vessels in the Virgin Islands. At the time of each purchase, Joshua Dohring was provided a Department affidavit form to be completed and filed with the Department to claim exemption from sales tax. Joshua Dohring indicated the name of the Petitioner corporation on the affidavit forms along with the names of the corporation's directors. The Department's affidavit form for sales tax exemption includes several statements that the affiant must attest to, including the following: 4. I represent a corporation which has no officer or director who is a resident of, or makes his or her permanent place of abode in Florida. David Erdman, a licensed yacht broker in Florida who assisted Joshua Dohring in the purchase of the catamaran and tender, believed that the purchases were exempt from Florida sales tax because Joshua Dohring was not a Florida resident and was going to remove the vessels from Florida. Mr. Erdman did not understand that, because the purchaser was not Joshua Dohring, but a Florida corporation, the sales tax exemption did not apply. Mr. Erdman advised Joshua Dohring that the purchases were exempt from Florida sales tax. There is no evidence in the record, and the Department did not allege, that the Petitioner intended to defraud the State. On this record, it is clear that the Petitioner's directors were simply mistaken in their belief that the purchases of the boats were exempt from Florida sales tax, based primarily on the erroneous advice of Mr. Erdman. The Department made a routine investigation after its receipt of the sales tax exemption affidavits signed by Mr. Dohring and determined that the exemption did not apply because the Petitioner is a Florida corporation with directors who are residents of Florida. In January 2005, the Department notified the Petitioner of its billing for the sales tax due on the boat purchases, plus penalty and interest, totaling $8,474.67. An informal conference regarding the billing was requested by the Petitioner, and a conference was held in an attempt to resolve the matter. Subsequently, the Department's Final Assessment was issued on January 23, 2005, indicating tax, penalty, and interest totaling $9,229.26. Because of the circumstances indicating that the Petitioner's failure to pay was due to a mistake and bad advice, the Department proposes to eliminate the penalty.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department issue an final order: finding that the Petitioner's purchases of the catamaran and inflatable tender are subject to sales tax; and assessing sales tax of six percent on the purchases; and imposing interest on the taxes until paid; and imposing no penalty. DONE AND ENTERED this 22nd day of September, 2005, in Tallahassee, Leon County, Florida. BRAM D. E. CANTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of September, 2005.
Findings Of Fact Until December of 1974, respondent William W. Lambert did business as a general contractor under the corporate name of Lambert Enterprises, Inc. As qualifying agent for the corporation, he built homes, poured concrete, laid sod, and did other general contracting. During 1974, respondent was in the process of acquiring a sod farm, as well as being engaged in the general contracting business. Lambert Enterprises, Inc. dealt largely with other contractors. When The Commonwealth Corporation went bankrupt, other contractors, notably the Collins brothers, also ended up in bankruptcy, and unable to make good on outstanding obligations to Lambert Enterprises, Inc. Respondent caused a voluntary petition in bankruptcy to be filed on behalf of Lambert Enterprises, Inc., on November 22, 1974. At that time he held all the stock in Lambert Enterprises, Inc., and served both as president and as a member of the board of directors of the corporation. Respondent Lambert has never been interested in any other corporation that has been declared bankrupt, and has never gone into bankruptcy personally. Mr. William E. Wingate, an investigator for the Florida Construction Industry Licensing Board, checks bankruptcy records twice monthly. By looking through bankruptcy records, he has learned of ten to twelve bankruptcies, in the Northern District of Florida, involving contractors in the last two years. He may have missed some, but every time he finds out about a contractor's bankruptcy, he reports it to the Board's Jacksonville office. On July 31, 1975, he first learned of respondent's corporation's bankruptcy. He obtained certified copies of pertinent papers which he then forwarded to other Board staff in Jacksonville. After Lambert Enterprises, Inc. failed, respondent obtained a general contractor's license as an individual, which is currently in force. Since December of 1975, respondent has been employed by Century Construction, first in Tallahassee, then in Jacksonville, where he is now a project manager for the company. Permits for work performed by Century Corporation are not pulled on respondent's license. Respondent's financial condition is now stable, and he is financially sound.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent be reprimanded. DONE and ENTERED this 25th day of April, 1977, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida COPIES FURNISHED: Barry S. Sinoff, Esquire Blackstone Building, Suite 1010 Jacksonville, Florida 32202 Daniel J. Wiser, Esquire Post Office Box 10137 Tallahassee, Florida 32302 Mr. J. K. Linnan Executive Director Florida Construction Industry Licensing Board 1010 Blackstone Building Jacksonville, Florida 32202
The Issue The issue presented is whether HMY New Yacht Sales, Inc., is liable for the payment of use tax, together with penalty and interest, on a yacht which it purchased for resale and for use as a demonstrator.
Findings Of Fact Petitioner HMY New Yacht Sales, Inc., is a Florida cor-poration located in Dania, Florida. It is a franchise and an authorized dealer for several lines of new boats. Petitioner is registered as a dealer for Florida sales tax purposes and has a dealer decal. Petitioner became an authorized dealer for Davis Yachts, a manufacturer located in North Carolina, in 1985. In January 1990 Petitioner purchased a boat from Davis Yachts to be used for demonstration and promotional activities and for resale. The boat was a 47-foot fiberglass sports fisherman named "The Bandit." When the boat was delivered, Petitioner outfitted The Bandit with extensive electronics and fishing equipment, including a tuna tower, outriggers, a fighting chair, rocket launchers, and live wells. It took approximately two months (until the second week in March 1990) to outfit the boat to have it ready for its intended sports fishing purpose. The type of equipping done by Petitioner is typical of that done on every such boat when it is sold since such a boat cannot be used for its intended purpose without the electronics and other equipment. Petitioner, however, wanted the boat to be "ready to go," when Petitioner sold it rather than having the purchaser wait for the outfitting to be done before the purchaser could use the boat. Petitioner paid the factory approximately $520,000 for the boat. Petitioner's payments to local vendors for services and materials used in outfitting the boat brought Petitioner's cost to approximately $590,000. The Bandit was never documented or registered in the state of Florida. It was only operated under Petitioner's dealer registration and decal, as provided in Section 327.13, Florida Statutes. The boat was purchased with the intent to sell it, and it was always for sale from the first moment it was outfitted and ready to be shown. It was never Petitioner's intent to keep the boat. As soon as it was outfitted, the boat had on board, at all times, a file containing a complete inventory of the boat's equipment, including custom and standard options, and a color brochure with pictures of the boat to be given to potential customers. While Petitioner was attempting to sell the boat, it was also used by Petitioner as a sales promotional tool. Petitioner took the boat to various fishing tournaments and exhibited it at boat shows and open houses. Davis Yachts bore some of the expense of those activities since promoting the boat inured to the benefit of Davis as well as of Petitioner. When the boat was being used for promotional or sales activities, it would always have on board employees or salespersons of Petitioner or of Davis Yachts and customers. On occasion, family members accompanied Petitioner's salespersons on board the boat. The manner in which The Bandit was marketed--taking it to fishing tournaments and boat shows and having open house at various events--is typically the way new sport fisherman yachts are sold throughout the industry. The boat was shown to prospective customers at least once a month. Approximately 50 customers were taken on sea trials. The boat was never loaned or rented to anyone. It was used only under the direction of Petitioner or Davis Yachts. The only compensation received by Petitioner relating to the boat resulted from the occasions when Davis Yachts split some of the expenses for the promotional or sales activities. The boat did not sell as quickly as Petitioner hoped. In October 1990 Petitioner placed the boat on the Buck System, a multiple listing service which distributes information to other yacht brokers concerning boats which are for sale. Generally, boat dealers would not put new inventory in the multiple listing system. Petitioner did so in this instance, however, in order to quickly sell the boat because the government had announced a luxury tax proposal which Petitioner feared would result in a downturn in the boat market. Even with all the effort put into attempting to sell the boat, it did not sell until November 1991. In July 1992 the Department began a routine sales tax audit of Petitioner. The audit was completed in September 1992 and covered the period of time from March 1987 through February 1992. The Department auditor determined that Petitioner owed use tax on The Bandit because in November 1990, on the advice of its accountant, Petitioner took the boat out of its inventory account and placed it in its fixed assets account in order to take depreciation for federal income tax purposes. Based solely on Petitioner's treatment of the vessel on its corporate books, the auditor determined that Petitioner converted The Bandit to its own use and was, therefore, responsible for payment of the statutory use tax rate of 6 percent of the value of the boat as reflected on Petitioner's records. Based upon the audit, the Department issued its Notice of Proposed Assessment, assessing Petitioner $33,921.94 in tax, $8,480.50 in penalty, and $7,085.52 in interest through September 16, 1992. Interest continues to accrue at $11.15 per day.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered determining that Petitioner is not liable for payment of use tax, penalty, or interest on The Bandit, and withdrawing the assessment which is the subject of this proceeding. DONE and ENTERED this 2nd day of August, 1995, at Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of August, 1995. APPENDIX TO RECOMMENDED ORDER Petitioner's proposed findings of fact numbered 1-12, 15, and 19 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed findings of fact numbered 13, 14, and 18 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Petitioner's proposed findings of fact numbered 16, 17, and 20 have been rejected as being unnecessary to the issues involved herein. Respondent's proposed findings of fact numbered 1-3, 6, 8, and 9 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 4, 5, and 10 have been rejected as not being supported by the weight of the competent evidence in this cause. Respondent's proposed finding of fact numbered 7 has been rejected as being unnecessary to the issues involved herein. COPIES FURNISHED: Cynthia S. Tunnicliff, Esquire Pennington & Haben, P.A. Post Office Box 10095 Tallahassee, Florida 32302-2095 Mark T. Aliff, Esquire Office of the Attorney General Tax Section, The Capitol Tallahassee, Florida 32399-1050 Linda Lettera General Counsel Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact On January 31, 1984, the subject vessel, a 1969 sixty-five foot Hargrave Halmatic motor yacht, was purchased by Nelson Gross as President and principal of the corporation, Binghamton Too, Inc., for $457,500 in Houston Texas. It was financed through a Connecticut bank. The closing was held in Mr. Gross' New Jersey office. No sales or use tax has been paid on the yacht in Florida or in any other state. Mr. Gross' initial intent was to operate his new purchase as a commercial charter boat in conjunction with the "Binghamton," a ferryboat permanently moored and operating in Edgewater, New Jersey, as a floating restaurant. To get the new motor yacht there, Mr. Gross directed that it be brought to New Jersey around the Florida coast under its own power. The motor yacht reached Florida on February 17, 1984, but en route from Texas an unexpected vibration had arisen which required emergency repairs. These repairs were commissioned at Bradford Marine, Ft. Lauderdale, Florida, where the motor yacht remained, except for sea trials in connection with the vibration problem, until the first week in April, 1984. A cracked strut was diagnosed as the cause of the vibration problem. Repair costs of this emergency problem totalled $5,975. The balance of charges incurred at Bradford Marine, Ft. Lauderdale, was $21,729, including dockage. Many more of the repairs catalogued by Respondent's Exhibit 5, the Bradford Marine records for this period, were clearly voluntary, discretionary, and cosmetic in nature. The majority were of a non-emergency nature. The vessel, by then relettered "Binghamton Too," left Florida waters approximately April 20, 1984. "Binghamton Too" next spent approximately three weeks at Thunderbolt Marine Industries in Georgia at an approximate cost of $12,000. There, a strap was fabricated to hold the strut and the yacht proceeded on to New Jersey. The "Binghamton Too" began its charter business as part of the "Binghamton" operation in Edgewater, New Jersey on May 5, 1984. Seventy-five to eighty charters were accomplished between May, 1984 and October, 1984 under New Jersey state and local chartering, transit liquor, and environmental licenses and under U.S. Corps of Engineers permits. "Binghamton Too" returned to Florida waters sometime on or before October 25, 1984, when it was sighted at the Indian River Causeway Bridge. On October 26, 1984, it was sighted at Flagler Bridge in West Palm Beach. Thereafter, it went on to the Lantana Boat Works Marina, Lantana, Florida, for repairs. Lantana is the location of the yacht's original builder, whose equipment and expertise were preferable to that of other boatyards for certain strut repairs due to the peculiar nature of this type of yacht. After those repairs, the yacht was anchored in Palm Beach from January 1985 to April 1985. Although Mr. Gross testified that the strut repairs of necessity had to be done in the Lantana boatyard, his view is not necessarily conclusive of this issue because he admitted "Binghamton Too" was the first yacht he had ever purchased, because he was vague about equating desirability and necessity without any supporting direct expert testimony, and because of the facts found infra. The Lantana repair records from October 29 to December 31, 1984 show $42,521.82 in repairs, of which only $2,500 pertain to fabrication of a strut. Again, the majority of repairs was to refurbish and paint the vessel. Mr. Gross spent approximately October 1984 to April 1985, October 1985 to April 1986, and October 1986 to April 1987 in his father's home in West Palm Beach, Florida. By his own testimony, he confirmed that he established the "technical" office for his "Binghamton Too" business there. He applied, in early December 1984, for a Florida sales tax registration to operate a charter business, representing Palm Beach as his place of business. The account was established January 1, 1985 with the account number of 60-22-080051-61. The captain and mate of the "Binghamton Too" also wintered in Florida each of these years. On December 6, 1984, Mr. Gross wrote the State of New Jersey's Division of Taxation that the yacht's "principal location and headquarters are in West Palm Beach, Florida where it maintains an office and full-time employees," thus successfully arguing that the "Binghamton Too" should be exempt from New Jersey's registration requirements for any vessel residing in that state in excess of 180 days. This correspondence was in connection with a tax problem of the mother ship "Binghamton," still moored in New Jersey. Mr. Gross further represented that Florida was "Binghamton Too's" primary location with trips to the Bahamas." For most of the period from late December, 1984 to early April, 1985, the yacht was in Palm Harbor Marina, West Palm Beach, Florida, the first time not in repairs, and clearly could have returned to New Jersey under its own power had Mr. Gross chosen to do so. From January 24 to March 26, 1985, the boat was in operation, as sighted at the Pompano Beach and Fort Lauderdale bridges. From April 1985 until October of 1985, the yacht was operated as part of Petitioner's commercial charter operation in New Jersey, which included over 100 charters during this time period. Nonetheless, on June 10, 1985, Mr. Gross purchased a boat slip at Ocean Reef Club in Key Largo, Florida. This slip was later sold. Upon the foregoing Findings of Fact 6-12, which clearly establish a pattern of wintering the yacht in Florida waters, it is inferred that, despite Mr. Gross' testimony that it was "necessary" to have "Binghamton Too's" strut repaired in late 1984 by the original Florida manufacturer of the yacht, its presence in Florida from October 1984 until April, 1985 was primarily and substantially due to the preference of Mr. Gross, Petitioner's President, and not due to necessity or emergency. In October of 1985, the yacht returned to Florida where it remained until April of 1986. During this time, the boat underwent further repairs, including the complete repainting of the hull, the need for which Mr. Gross attributed to the old paint being cracked and shaken off by the vibration of the yacht. From April 1986 until October of 1986, the yacht was operated as part of Petitioner's commercial charter operation in New Jersey, which included over 100 charters during this time period. The yacht returned to Florida in October, 1986, and again remained in Florida until early April, 1987, when it left for New Jersey. In late October 1987, the yacht returned to Florida where it was traded in as part of the consideration for a larger yacht in November of 1987. The closing date was December 30, 1987. The cash equivalent received by Petitioner as credit on the trade-in was $100,000. In all, Petitioner asserts that over $200,000 was spent by the corporation on the "Binghamton Too" before it was traded. Shortly after buying the "Binghamton Too", Petitioner had begun trying to sell it for the highest price obtainable. These sales efforts included large ads in national yachting publications and listings with active yacht brokers. The highest outright offer received by Petitioner was $75,000. However, this was Mr. Gross' first sales effort of this kind, and his opinion testimony that the "Binghamton Too" was not bought from the Petitioner outright and at a good price because of latent defects and cost of repair is neither credible nor persuasive since his opinion does not possess the reliability of an expert in assessing whether it was the condition of the yacht, its unusual "Halmatic" type, or some other factor which made the "Binghamton Too" undesirable to potential purchasers. The Florida Department of Revenue issued a Notice of Delinquent Tax January 30, 1987, of five-percent use tax upon the purchase price plus 25 percent penalty. Interest was figured at 12 percent per annum. Petitioner timely protested. The agency conceded that the purchase price on the original notice was mistakenly listed at $475,000, that the assessment appropriately should have been on $457,500 (see Finding of Fact No. 1) and that the State presently claims only the tax amount of 5% of Petitioner's initial $457,500 purchase price at $22,875, the 25 percent penalty at $5,719, and interest on the tax from February 18, 1984, to June 18, 1989 at $14,650. (Interest accrues at $7.52 daily.) The total assessment through June 18, 1989 is $43,234.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that the Department of Revenue enter a Final Order affirming the assessment of $22,875, with 25% penalty and interest at $7.52 per day from February 18, 1984 until paid. DONE and RECOMMENDED this 11th day of August, 1989, in Tallahassee, Leon County, Florida. ELLA JANE P. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of August, 1989. APPENDIX TO RECOMMENDED ORDER Upon consideration of Section 120.59(2) Florida Statutes the following rulings are made upon the parties' respective proposed findings of fact (PFOF). Petitioner's PFOF: 1, 2,3, 5, 10, 11, 13, 14, 15, 17, 18, 19, 21, 22: Accepted except to the degree not proven. 4: Rejected as stated because not supported by the greater weight of the evidence as a whole. 6, 12: Rejected in part as not proven, in part as subordinate and unnecessary, and in part as to the conclusion-if law as "latent." 7, 8, 9: Accepted except as subordinate and unnecessary to the facts as found. 16: Accepted that Mr. Gross testified to this amount, however, the evidence does not support the amount precisely nor that it all went to "repairs." 20: Accepted as modified to better express the record as a whole. Respondent's PFOF: 1: Accepted, but as a Conclusion of Law. 2, 3, 4, 9, 10, 12, 13, 14, 15, 16, 17, 19, 20, 21, 22, 23: Accepted. 5: Accepted in substance; what is not adopted is either mere recitation/characterization of testimony, is cumulative, or is subordinate to the facts as found. 6: Accepted but subordinate and unnecessary to the facts as found. 7: Sentence 1 is accepted. The remainder is rejected as mere legal argument or subordinate to the facts as found. 8, 11: Accepted as modified to conform to the record as a whole. Mr. Gross testified to a May 5, 1984 date for No. 8. 18: Except for mere legal argument, accepted. 24: Accepted upon the terms set forth in the Recommended Order. 25: Except as subordinate and unnecessary, accepted. COPIES FURNISHED: Gene D. Brown, Esquire 3836 Killearn Court Tallahassee, Florida 32308 Linda G. Miklowitz, Esquire Department of Legal Affairs Tax Section, The Capitol Tallahassee, Florida 32399-1050 William D. Moore, General Counsel Department of Revenue 203 Carlton Building Tallahassee, Florida 32399-0100 Katie D. Tucker Executive Director Department of Revenue 102 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact Based upon the foregoing and in consideration of Pitts' failure to timely respond to Requests for Admissions, the following Findings of Fact are made in this matter: On or about December 12, 2007, J2J filed a form entitled, "Appointment of Campaign Treasurer and Designation of Campaign Depository for Political Committees and Electioneering Communication Organizations" with the Florida Division of Elections (the "Division"). The form designated Pitts as the chairman and treasurer of J2J. The Division then sent Pitts a letter dated December 14, 2007, providing directions concerning the filing of a Committee Campaign Treasurer's Report ("Report") by J2J in accordance with the campaign financing requirements set forth in chapter 106, Florida Statutes (2007). Pitts received the letter from the Division. By letter dated April 13, 2009, the Division notified Pitts that J2J had failed to file the Report which had been due on April 10, 2009. Pitts received the letter from the Division concerning the overdue Report. The Division sent a follow-up letter to Pitts dated April 27, 2009, concerning the delinquent Report. Pitts received the letter from the Division. As of the date of its Motion for Summary Final Order, the Division had not received the Report from Pitts. J2J is in violation of the campaign financing requirements for political committees in Florida. The Division deems Pitts' failure to file the Report for J2J to be a willful violation of the Florida campaign financing laws.
Findings Of Fact Based on the testimony of the witnesses and the exhibits received in evidence at the hearing, I make the following findings of fact: On January 9, 1980, Richard Morgentaler, Trustee, obtained title to 574 lots in Pinecrest Estates, a subdivision located in St. Johns County, Florida. Pinecrest Estates is registered with the Division. (Pet. Ex. 1) Richard Morgentaler paid 22,960.00 for the 574 lots, or approximately $40 per lot. (Pet. Ex. 23) On July 21, 1980, Richard Morgentaler conveyed 44 lots to Florida Crown Corporation. (Pet. Ex. 15) The deed reflects a documentary stamp tax of 8.80. Murray Fields was the president and sole stockholder of Florida Crown Corporation. (Pet. Ex. 20) The Corporation was formed on July 17, 1980, only 4 days before the corporation obtained title to the 44 lots from Richard Morgentaler. On August 29, 1980, Richard Morgentaler also conveyed 10 lots in Pinecrest Estates to Murray Fields. (Pet. Ex. 18) Neither Florida Crown Corporation nor Murray Fields has ever been registered with the Division to offer or sell subdivided lands. (Pet. Ex. 2) On August 29, 1980, Shirley Arthur purchased 9 lots in Pinecrest Estates from Richard Morgentaler, Trustee, for $21,860.00. (Pet. Ex. 16 & 22) Present at the closing in Morgentaler's office were Shirley Arthur, Murray Fields, Barry Shelomith and Richard Morgentaler. Shirley Arthur had previously met Murray Fields when Murray Fields became her driving instructor. As a friendship developed between Shirley Arthur and Murray Fields, Shirley Arthur placed a great deal of trust and confidence in Murray Fields. Murray Fields told Shirley Arthur about some allegedly great investments in land through Barry Shelomith, who was described by Fields as "liquidator of estates." Fields and Shelomith presented brochures about Pinecrest Estates and the surrounding area and made many representations to Shirley Arthur about the value of the land as well as potential development in the area. (Pet. Ex. 21) Murray Fields also told Shirley Arthur that he was buying 10 lots in Pinecrest Estates at the same time. Shirley Arthur's belief that Murray Fields was buying lots at the same time was a major factor in her decision to purchase, because of the trust she placed in Murray Fields. Shirley Arthur was not given a public offering statement prior to or at the closing. At no time did Murray Fields disclose to Shirley Arthur the adverse features of the land, the absence of roads to the subdivision, the absence of roads in the subdivision, or the amount of water continually covering the subdivided land. (Testimony of Shirley Arthur; Pet. Ex 4) As president of Florida Crown Corporation, Murray Fields sold subdivision lots to many individuals from July 1980 to July 1981. (Pet. Ex. 5 through 14) Most of these deeds reflect documentary stamp taxes in the amount of $5.20 to $13.60). 1/
Recommendation On the basis of all of the foregoing it is recommended that the Department of Business Regulation, Division of Florida Land Sales and Condominiums, issue a Final Order as follows: Ordering Murray Fields to cease and desist from offering or disposing and from partici pating in the offer or disposition of interests in Pinecrest Estates or any other subdivided lands until he has a valid order or registration, delivers a current public offering statement, and otherwise complies with Chapter 498, Florida Statutes: and Ordering Murray Fields to pay to the Division, within 30 days from the entry of the Final Order, a civil penalty in the amount of $5,000 for violation of Section 498.023(1) and Section 498.023(2), Florida Statutes. DONE and ORDERED this 28th day of September, 1984, at Tallahassee, Florida. MICHAEL M. PARRISH 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 28th day of September, 1984.
