18-005005 Vmob, Llc vs. Department Of Revenue Status: Closed Recommended Order on Wednesday, May 22, 2019.

Summary: DOR proved jeopardy finding was appropriate and taxpayer failed to satisfy tax obligations when it failed to file electronically and checks used for tax payment were dishonored by bank.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

VMOB, LLC,

Petitioner,

vs. Case No. 18 - 5005

DEPARTMENT OF REVENUE,

Respondent.

_______________________________/

RECOMMENDED ORDER

On March 28, 2019, Hetal Desai, Administrative Law Judge of

the Division of Administrative Hearings (DOAH) , held a final

hearing in this cause by video teleconference with sites in

Tampa and Tallahassee, Florida.

APPEARANCES

For Petitioner: William B. Meacham, Esquire

308 East Plymout h Street

Tampa, Florida 33603

For Respondent: Mark S. Urban, Esquire

Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

Wheth er factual and legal grounds support the Department of

RevenueÓs jeopardy findings and assessment , dated May 26, 2017.

PRELIMINARY STATEMENT

On May 26, 2017, t he Department of Revenue (Department),

pursuant to section 213.732, Florida Statutes (2017) , is sued a

Notice of Jeopardy Finding (Jeopardy Finding) and a Notice of

Final Assessment (Assessment) to VMOB, LLC , d/b/a Cheap on

Howard (VMOB). The J eopardy F inding alleged collection of the

associated tax, penalty, fees, and interest would be jeopardized

by delay based on the dishonored checks issued for payment . 1/

The A ssessment was in the amount of $16,606.17.

On August 14, 2017 , at 9:56 p.m., VMOB faxed to the

Department a letter protesting the J eopardy F inding and

A ssessment. The letter alleged VMOB did not receive adequate

notice of the May 26, 2017 , notices. The Department eventually

allowed VMOB to pursue an administrative remedy.

On September 19, 2018, the Department transferred the

matter to DOAH, where it was assigned to an administrative la w

judge and set for hearing. After one continuance , a final

hearing was set for March 28, 2019.

An Order granting the DepartmentÓs Request to Take Judicial

Notice was entered December 10, 201 8, and the undersigned takes

official recognition of a tax war rant recorded in the official

records of Hillsborough County, Florida ; and the R ecommended

Order and F inal O rders in consolidated DOAH Case Nos. 17 - 3452

and 17 - 3630. A pre - hearing conference was held March 22, 2019,

by telephone.

At the final hearing, th e Department called one witness,

Rolinda Smoak, and offered RespondentÓs E xhibits 1 through 19 ,

which were admitted into evidence. VMOB called one witness,

Verna Bartl ett, and admitted PetitionerÓs E xhibits 1 through 5 ,

which were admitted into evidence.

At the conclusion of the hearing, the parties in dicated a

transcript would be ordered. The parties agreed to submit their

proposed recommended orders (PROs) 30 days after the filing of

the transcript.

The T ranscript was filed on April 11, 2019. Respond ent

requested an extension to file its PRO, which was granted. Both

parties timely filed PROs on May 13, 2019 , which have been

considered.

Unless otherwise indicated, all rule and statutory

references are to the 201 7 versions.

FINDING S OF FACT

Parties and People

1 . The Department is the state agency responsible for

implementing and administering the revenue laws of the State of

Florida, including the laws relating to the imposition and

collection of the stateÓs sales and use tax, pursuant to

chapter 212, Florida Statutes.

2 . VMOB is a Florida limited liability company with its

principal address at 317 South Howard Avenue, Tampa, Florida

33606; and its mailing address and tax registration address as

Post Office Box 342681, Tampa, Florida 33694 . For the p urposes

of these proceedings VMOB is the taxpayer.

3 . Verna Bartlett is, and has been since its inception,

VMOBÓs managing member responsible for collecting and remitting

VMOB's sales and use tax.

4 . Lewis Mustard became VMOBÓs Power of Attorney (POA) i n

October of 2016.

Notice to VMOB

5 . Pursuant to the DepartmentÓs ÐPower of Attorney and

Declaration of RepresentativeÑ form submitted by VMOB (POA

form), receipt of notices or other written communications Ðby

either the representative or the taxpayer wil l be considered

receipt by both.Ñ

6 . The POA form further provides that Ð[c]ertain computer -

generated notices and other written communications cannot be

issued in duplicate due to certain system constraints.

Therefore, [the Department] will send these c ommunications to

only the taxpayer at his or her tax registration address.Ñ

7 . The notices of the Jeopardy Finding and Final

Assessment in this case were mailed together to VMOBÓs mailing

address via certified mail and regular US PS mail. The certified

m ailing was re turned unclaimed; the regular USPS mailing was not

returned.

8 . Ms. Bartlett acknowledge d receiving the notices and

eventually brought this protest.

9 . The undersigned finds VMOB received notice of the

Jeopardy Finding and Assessment.

VMO BÓs Electronic Filings

10 . Beginning January 2016, VMOB was required to file and

pay its sales tax electronically , unless it received a waiver .

See § 213.755(1), Fla. Stat.; Fla. Admin. Code R. 12 - 24 . 003.

11 . The Department established at the hearing t hat it

repeatedly made VMOB aware of the electronic filing requirement.

For example, each tax bill sent to VMOB indicated payment was to

be made electronically; and Department staff explained the

electronic filing and payment requirements to Ms. Bartlett on

August 18, 2015 .

12 . On April 29, 2016, the Department sent a fax to

Ms. Bartlett , which included a reminder of the electronic filing

and payment requirement. In response, Ms. Bartlett stated, ÐI

will begin filing electronically with the May [2016] sales tax

return.Ñ

13 . O n December 29, 2016 , t he Department also notified

VMOBÓs POA of the electronic filing and payment requirement.

14. Ms. Bartlett b elieved that as long as she paid a

penalty , she did not have to file tax returns or tax payments

elec tronically . However, there was insufficient evidence to

support this belief.

15 . The undersigned finds VMOB has never filed or paid its

sales tax electronically.

VMOBÓs Tax Jeopardy

1 6 . VMOB issued worthless checks for sales tax due for the

periods of June 2016, July 2016, and September 2016 through

February 2017. As of May 26, 2017, the date of the Jeopardy

Finding, the dishonored checks for these time periods had not

been satisfied, and VMOB had an outstanding tax liability

totaling $104,853.60.

17 . VMOBÓs April 2017 sales tax payment was due no later

than May 20 , 2017 . See § 212.15(1), Fla. Stat. The April 2017

payment had not been received by the Department as of May 26,

2017.

18 . The competent and credible evidence establishes that

as of May 26 , 2017, payment of the March 2017 and April 2017

sales tax was jeopardized by delay. Payment of VMOBÓs sales tax

remain s in jeopardy given that VMOB has yet to submit payment

requirements through electronic filing, and as of the date of

the hearing , these liabilities were still outstanding.

19 . As a result, the undersigned finds the Department

properly issued the Jeopardy Finding.

VMOBÓs Tax Liability

20 . The sales tax rep orting periods at issue in the

J eopardy Findings and A ssessment are March 2017 and April 2017.

21 . The total tax due for the March 2017 reporting period,

as reflected on VMOBÓs sales tax return and as reflected on the

Assessment, is $6,668.73.

22 . The total tax due for the April 2017 reporting period,

as established at the hearing , is $5,651.75. 2/

23 . VMOB issued check number 40552 in the amount of

$6,668.73 from a Suntrust Bank account on April 20, 2017.

24 . VMOB issued check number 40553 in the amount of

$5,651.75 from a Suntrust Bank account on May 22, 2017.

25 . Both of t hese che cks ( for VMOBÓs March and April 2017

sales tax payments ) were dishonored by Suntrust Bank with the

notation ÐReturn Reason Î Unable to Locate Account . Ñ

2 6 . Ms. Bartlett contends she was unaware worthless checks

were being issued for the June 2016 through April 2017 periods

until late May or early June of 2017. Given the undisput ed

evidence regarding the efforts by the Department to obtain

payment , this contention is implausible. For example, for each

returned check (June 2016, July 2016, September 2016 through

February 2017, March 2017 and April 2017), the Department

automatically mailed out a bill to VMOB at its mailing address.

There was no evidence VMOB did not receive these bills.

2 7 . On November 28, 2016, the Department explained to

VMOBÓs POA tha t VMOB was writing worthless checks to the

Department. On December 28, 2016, the Department informed

VMOBÓs POA that Ms. Bartlett continued to pay with worthless

checks.

2 8 . Even if it is t rue that Ms. Bartlett was not aware of

the worthl ess checks bein g used to pay VMOBÓs taxes, any lack of

knowledge was due to her own misfeasance. Ms. Bartlett admits

that from October 2016 through April 2017 , she did not have

adequate oversight over or involvement with VMOB. She did not

monitor its checking accounts or finances; she left pre - signed

blank checks for her staff, and she did not ask staff for an

accounting.

2 9 . Ms. BartlettÓs testimony is further undermined by her

own correspondence to the Department , dated January 30 and

February 27, 2017, in which Ms. Bartlett acknowledges notices of

assessment of personal liability and personal jeopardy. She,

therefore, had to be aware at that point there was a problem

with VMOBÓs banking accounts and the methods of paying it s tax

liabilities.

30 . Even after Ms. Bart lett discovered the checks used to

make the March and April 2017 tax payments had not been honored

by the bank, VMOB made no efforts to pay the tax liability

amount.

CONCLUSIONS OF LAW

3 1 . The Division of Administrative Hearings has

jurisdiction over the subject matter and the parties pursuant to

section 120.569, Florida Statutes.

3 2 . The Department is an agency of the State of Florida

lawfully created and organized pursuant to section 20.21,

Florida Statutes, and is vested with the responsibility of

impl ementing and administering the revenue laws of the State of

Florida . This includ es the laws relating to the imposition and

collection of the stateÓs sales and use tax, pursuant to

c hapter 212 .

3 3 . The DepartmentÓs burden of proof Ð shall be limited to

a showing that an assessment has been made against the taxpayer

and the factual and legal grounds upon which the applicable

department made the assessment. Ñ § 120.80(14)(b)2 . , Fla. Stat.

ÐOnce the Respondent has met this initial burden of proof, the

burden shifts to the taxpayer to demonstrate by a preponderance

of the evidence that the assessment is incorrect.Ñ IPC Sports ,

Inc. v. State, Dep Ó t of Rev . , 829 So. 2d 330, 332 (Fla. 3d DCA

2002).

3 4 . In accordance with sections 212.15(1) and (2), the

tax es i mposed pursuant to c hapter 212 become state funds at the

moment of collection, and the intentional failure to remit these

taxes constitutes theft of state funds.

3 5 . Section 212.15(1) also requires that dealers collect

and remit to the Department the tax imposed by chapter 212 on a

monthly basis. The collected taxes are due on the first day of

the succeeding calendar month and are considered late if not

paid to the Department by the 20th day of the month when due.

36 . Pursuant to section 213.755(1), and the DepartmentÓs

rules, VMOB was required to file returns and remit payments by

electronic means, unless first obtaining a waiver. Because VMOB

failed to do so and , thus , violated this requirement, the

Department was justified in issuing the Jeopardy Findi ng.

3 7 . The Department proved by clear and convincing evidence

that the sa les and use taxes owed by VMOB were in jeopardy at

the time of issuance of the notice and, accordingly, the

DepartmentÓs J eopardy F inding and A ssessment for this period are

sustaine d . See § 213.732(2), Fla. Stat.; Fla. Admin. Code R.

12.21.005(1).

38 . The total tax due for the March 2017 reporting period,

as reflected on VMOBÓs sales tax return and as reflected on the

Assessment, is $6,668.73.

39 . The total tax due for the April 2017 reporting period,

as reflected on the Assessment, is $8,258.92. Because the April

2017 sales tax return and payment were late, the Department,

pursuant to section 212.14, estimated the total tax due at

$8,258.92. However, the actual amount of tax du e, as reflected

on VMOBÓs late - filed sales tax return, is $5,651.75.

40. The total tax amount VMOB owe s , without penalties or

interest, for March and April 2017 is $12,320.48.

4 1 . The Department is entitled to impose an additional

amount for the penalti es and interest that have accrued on the

outstanding March and April 2017 tax amount. § § 213.235 and

213.24, Fla. Stat.; DepÓt of Revenue Tax Infor mation Publication

N o. 17ADM - 02 (November 15, 2017) .

Due Process

4 2 . VMOB alleges a due process violation b ecause the

J eopardy F inding and the A ssessment were contained within the

same mailing. More specifically, VMOB contends that because the

time to review the J eopardy F inding and the time to challenge

the A ssessment started running at the same time, VMOB wo uld

conceivably not have the results of the jeopardy review before

the time to challenge the A ssessment had lapsed. Regardless,

Petitioner has not been prejudiced because nothing prohibits

VMOB from informally or formally challenging the A ssessment

prior to receiving the results of a jeopardy review. Finally,

the issue is moot because VMOB has had the opportunity to

challenge the A ssessment , and a formal administrative hearing

has been conducted. Thus, it was not a violation of VMOBÓs due

process rights for the Department to send the n otice s for the

Jeopardy Finding and the Assessment in the same mailing.

See generally , Gosciminski v. State , 262 So. 3d 47, 59 (Fla.

2018) (finding no procedural due process violation where

defendant was given notice and ha d an opportunity to be heard).

RECOMMENDATION

Based on the foregoing Findings of Facts and Conclusions of

Law, it is RECOMMENDED that the Department of Revenue enter a

final order: (1) S ustaining the May 26, 2017 , Notice of

Jeopardy Finding ; and (2) I ssu ing an Assessment for March and

April 2017 in the amount of $12,320.48 with penalties and

interest .

DONE AND ENTERED this 2 2 nd day of May , 2019 , in

Tallahassee, Leon County, Florida.

S

HETAL DESAI

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 22 nd day of May , 2019 .

ENDNOTE S

1/ T he Notice of Jeopardy Finding alleged the following facts :

¤ The collection of the amount the

Department has determined to be due w ill be

jeopardized by delay.

¤ The taxpayer has failed to satisfy a

dishonored check and/or failed electronic

payment transaction.

2/ The April 2017 tax figure is different than what is reflected

on VMOBÓs April 2017 sales tax return , because the return was

filed late by VMOB. The Department is authorized to estimate

any unpaid deficiencies in tax to be assessed against the sales

tax dealer upon such information as may be available to it, and

to issue a delinquent tax warrant for the collection of such

tax, interest, or penalties estimated to be due and payable, and

such assessment is deemed prima facie correct , but the testimony

at the hearing established the actual amount . § 212.14, Fla.

Stat.

COPIES FURNISHED:

Mark S. Hamilton, General Counsel

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314 - 6668

Verna Bartlett

V MOB, LLC

Post Office Box 342681

Tampa, Florida 33694

Mark S. Urban, Esquire

Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399

(eServed)

William B. Meacham, Esquire

308 East Plymouth Street

Tampa, Florida 33603

(eSer ved)

James a Zingale, Executive Director

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314 - 6668

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.