95-002803 Department Of Revenue vs. Stellman Enterprises, Inc., D/B/A Citgo Food Mart Status: Closed Recommended Order on Friday, October 27, 1995.

Summary: Department of Revenue entitled to revoke retail dealer's fuel license after offering note required by taxpayer's bill of rights.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF REVENUE, )

)

Petitioner, )

)

vs. ) CASE NO. 95-2803

)

STELLMAN ENTERPRISES, INC., )

d/b/a CITGO FOOD MART, )

)

Respondent. )

______________________________)

RECOMMENDED ORDER

Final hearing was held in Naples, Florida, on September 26, 1995, before

Robert E. Meale, Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

The parties were represented at the hearing as follows:

For Petitioner: Francisco Negron, Jr.

Assistant Attorney General

Office of the Attorney General

The Capitol, Tax Section

Tallahassee, Florida 32399-1050

For Respondent: Christian B. Felden

Felden and Felden

2590 Golden Gate Parkway, Suite 101

Naples, Florida 33942

STATEMENT OF THE ISSUE

The issue in this case is whether Petitioner may revoke Respondent's retail

dealer's fuel license. Subsidiary issues are whether Respondent owes Petitioner

motor fuel taxes, penalty, and interest; if so, how much; and, if so, whether

Respondent is entitled to pay the deficiencies in installments.

PRELIMINARY STATEMENT

By Administrative Complaint and Emergency Order of Suspension, both dated

May 1, 1995, Petitioner suspended Respondent's retail dealer's fuel license,

which eliminates Respondent's privilege to sell fuel at retail in Florida.

By Petition for Formal Proceedings filed May 26, 1995, Respondent demanded

a formal hearing.

At the hearing, Petitioner called three witnesses and offered into evidence

two exhibits. Respondent called one witness and offered into evidence nine

exhibits. All exhibits were admitted.

The transcript was filed October 2, 1995. Rulings on timely filed proposed

findings of fact are in the appendix.

FINDINGS OF FACT

1. Respondent owns and operates a Citgo Food Mart in Naples at which it

sells gasoline and diesel fuel at retail, provides limited motor vehicle

service, and sells food and beverage items. Petitioner issued Respondent retail

dealer's fuel license #21- 000828, which authorizes Respondent to sell motor

fuel at retail and requires Respondent to collect and remit to Petitioner motor

fuel taxes.

2. The principal of Respondent is Jack Stellman. He caused Respondent to

purchase the business in April 1993 from the fuel wholesaler, which had

purchased it from the previous retailer. The previous retailer had suffered

business and personal setbacks that necessitated the sale.

3. Mr. Stellman and his wife, Phyllis, who claims not to be an officer or

employee of Respondent despite her considerable involvement, have contributed

much personal capital and labor to the new business. Immediately after taking

over the business, Mr. and Mrs. Stellman discarded outdated inventory, fired a

number of dishonest employees, eliminated prostitution that had been taking

place on the premises, added new equipment such as a pressure fryer and hood

system, and started advertising.

4. Cash flow was a problem for Respondent from the start. The major

improvements were completed by the fall of 1994. By early 1994, however, Mr.

Stellman had quit taking a salary from Respondent. Over the 19-month period

from August 1993 through March 1995, Mr. and Mrs. Stellman borrowed $140,000

from a variety of sources, including from their retirement plan, from relatives,

and on property that they own individually.

5. Despite these infusions of cash, Respondent was unable to stay current

with certain important creditors, such as their fuel supplier, the Internal

Revenue Service, and Petitioner.

6. In August 1993, the fuel wholesaler began to demand payment on

delivery, instead of in 30 days, as it had done previously. The wholesaler

shortened the credit terms on fuel after Respondent fell behind in payments

shortly after beginning operations. In any event, the change in credit terms

involved monthly volumes of typically 40,000-50,000 gallons. The loss of use of

money corresponding to the wholesale purchase of this amount of fuel does not

begin to explain the tax deficiencies that Respondent ran up.

7. Respondent's deficiencies on its motor fuel tax also began in August

1993. Returns are filed the month following the month for which the motor fuel

tax is due.

8. For August 1993, Respondent filed a return in which it underremitted

the motor fuel tax by $62.15. The next month, Respondent filed a return in

which it remitted $2000 and left an unremitted balance of $2867.49. The next

month, Respondent filed a return, but remitted none of the $6077.28 of motor

fuel tax due. For November 1993, the next month, Respondent filed a return and

remitted $2000, leaving an unremitted balance of $3278.78.

9. For December 1993 through July 1994, Respondent filed returns but

remitted no tax. The total tax deficiency for this eight-month period was

$58,300.87, or an average of $7287.61.

10. In the 12-month period ending with the July 1994 return, Respondent

had failed to remit a total of $70,586.57.

11. For the August, September, and October 1994 returns, Respondent made

partial remittances. For August and September, Respondent left unremitted

balances of only $15.34 and $84.30, respectively, remitting a total of

$11,315.49. For October, Respondent remitted $4827.90, leaving an unremitted

balance of $2623.98. For November 1994, Respondent filed a return, but failed

to remit any of the $5983.74 due.

12. In the summer of 1994, the Stellmans finally sold their house in New

York, but realized less cash than they had expected. In October 1994, the

Stellmans applied for a loan on their Florida residence. During the same month,

they began negotiations with Texaco to convert their Citgo convenience store

into a Texaco outlet. The Stellmans believed that they would receive $225,000

from Texaco, which would be sufficient to pay their fuel wholesaler and

Petitioner, convert their service operation into more store space, and acquire

additional inventory and working capital. The record does not permit a finding

whether $225,000 would cover all of these items.

13. In any event, the Texaco negotiations did not proceed quickly. The

fuel wholesaler threatened litigation over the prospective cancellation of its

contract to supply Respondent with fuel and oil. And Petitioner's

representatives were increasingly unsatisfied with Respondent's lack of progress

in paying back taxes. Repeatedly, the Stellmans promised payments that did not

materialize. At the same time, Respondent was not remitting motor fuel taxes

currently.

14. For December 1994 through March 1995, Respondent did not even file

returns. During this four-month period, motor fuel taxes due and unremitted

totalled $32,106.59. The total of unremitted motor fuel taxes for August 1993

through March 1995 was now $111,400.52, exclusive of penalties and interest.

15. Penalties for the underremittances for the period August 1993 through

March 1995 totalled $60,284.67. Interest for the same period totalled

$14,042.88. The total of tax, penalties, and interest was thus $185,728.07.

16. Respondent later reduced this deficiency by paying a total of $323.48

of penalties and $4154.52 of interest, so the current totals are tax of

$111,400.52, penalties of $59,961.19, and interest of $9888.36, for a total of

$181,250.07. The interest is current through August 1, 1995, and the daily

interest thereafter is calculated by multiplying the tax deficiency by

0.000328767.

17. Mr. and Mrs. Stellman claim that the $185,728.07 deficiency arose due

to business setbacks, but the business setbacks that they have shown do not

account adequately for the deficiency. The Stellmans clearly began the business

badly undercapitalized.

18. Mr. and Mrs. Stellman attribute part of the financial problems to bad

debts suffered by Respondent. From August 1993 through the end of 1993, the

Stellmans pursued seasonal business by offering liberal credit terms, which

eventually resulted in worthless accounts receivable. However, the total bad

debt was only $15,000.

19. Although hardly meriting mention, except perhaps to reveal their lack

of insight, the Stellmans also complain that they lost cash flow due to ill-

advised advertising deals into which they entered where they traded fuel for

advertising. Even ignoring the benefits derived from such agreements,

Respondent traded only about $4000 worth of fuel under these arrangements.

20. Together, these claimed business setbacks of no more than $20,000

constitute less than 18 percent of the taxes, penalties, and interest owed

Petitioner. The amount of motor fuel tax that Respondent would have collected

on $20,000 worth of fuel would be around $1500.

21. With more zeal than business acumen, the Stellmans attacked the

challenge of a new business. Their lack of business sophistication, not fraud,

led the Stellmans to convert the motor fuel taxes from current payables to long-

term debt, to underreport the amount of fuel pumped on 12 of 19 returns filed

with Petitioner during the period in question, and repeatedly to file returns

late, so as to lose the collection allowance normally given retail dealers.

22. The unwillingness of Petitioner to become a long term creditor was

manifested dramatically when, on May 4, 1995, Petitioner issued an emergency

order suspending Respondent's retail dealer's fuel license.

23. The emergency suspension took place after a meeting of Petitioner's

Emergency Response Group, which, after reviewing the facts, determined that this

was the best course of action to prevent the loss of motor fuel tax.

24. The Stellmans complain that Petitioner did not give them enough time

to try to pay the tax deficiencies. However, the record does not justify the

Stellmans' demand that Petitioner share their confidence in their ability to

take care of this substantial debt. As late as mid-February 1995, the Stellmans

were still making unfulfilled promises to pay, as when they assured a Naples

employee of Petitioner that Respondent would pay $10,000 by mid-April. This sum

was not paid, nor were the motor fuel taxes that Respondent collected at the

time even paid currently. In other words, Respondent was still taking the motor

fuel tax that it was collecting from customers and applying it to other debts.

25. The Stellmans never told Petitioner what they expected to net from the

Texaco agreement. They never explained why the negotiations took so long to

conclude. In early 1995, Petitioner's representatives justifiably saw: 1) new

financing never resulted in any reduction of the outstanding deficiencies and 2)

the outstanding deficiencies continued to grow as Respondent continued to

collect motor fuel tax and apply it to other purposes.

26. The record is not entirely clear as to the status of Respondent with

respect to unremitted or unpaid taxes in April 1995 and following. Respondent

owed $34,861.20 in unremitted sales tax, as of May 1, 1995. However, it appears

more likely than not that, during at least part of the period subsequent to May

1, 1995, Respondent remitted and paid to Petitioner its currently accruing tax

obligations. With the cessation of fueling operations, these obligations arose

from sales of convenience store items, as these sales were unaffected by

Petitioner's action against Respondent's retail dealer's fuel license.

27. Since the suspension of the license, the Stellmans have supplied

Petitioner with accurate, current information concerning Respondent's tax

liabilities, at least to the extent that they possess such information.

28. Respondent's financial condition is precarious, at best. Even

assuming that the Stellmans were willing to continue to contribute more money to

Respondent, there is nothing in the record to suggest that they have the

financial resources to contribute substantial sums beyond a large fraction of

the total currently due Petitioner in this case. Such a payment would probably

come from a combination of the Stellmans' assets and the assets of friends and

family. Their obvious failure to prepare and follow a feasible business plan

does not bode well for Respondent's future ability to operate and, at the same

time, retire what has become a substantial financial liability owed to

Petitioner.

CONCLUSIONS OF LAW

29. The Division of Administrative Hearings has jurisdiction over the

subject matter. Section 120.57(1), Florida Statutes. (All references to

Sections are to Florida Statutes.)

30. Petitioner is seeking to revoke Respondent's retail dealer's fuel

license. Petitioner thus must prove the material allegations against Respondent

by clear and convincing evidence. Ferris v. Turlington, 510 So. 2d 292 (Fla.

1987).

31. Sections 206.055(1), 336.025, and 336.026 authorize Petitioner to

cancel a retail dealer's fuel license if the dealer fails to file required

monthly returns, fails to remit the motor fuel tax, or knowingly files false

returns.

32. Petitioner has not proved by the requisite standard that Respondent

knowingly filed false returns. However, Petitioner has proved by clear and

convincing evidence that Respondent failed to file required returns and failed

to pay motor fuel tax in the amount of $111,400.52, plus penalties and interest,

for a total deficiency of $181,250.07.

33. Section 213.015(10) gives the taxpayer:

The right to procedures for retirement of

tax obligations by installment payment agree-

ments which recognize both the taxpayer's

financial condition and the best interests of

the state, provided that the taxpayer gives

accurate, current information and meets all

other tax obligations on schedule (see s.

213.21(4)).

34. As stated at the hearing, the right to procedures for retiring tax

obligations by installment payments does not mean merely that the Legislature

directed Petitioner to adopt rules covering such important issues as the

conditions under which installment payments would be permitted, the term of such

an installment agreement or note, and whether and under what conditions

installment obligations would have to be secured and, if so, by what. Although

rules covering such issues would be helpful, Section 213.015(10) does not await

such rules, but instead is self-activating. The "procedures" mentioned in the

statute may be informal nonrule policies or even the installment agreements

themselves, but in no event does Section 213.015(10) remain ineffective until

Petitioner adopts rules.

35. Section 213.015(10) authorizes Respondent to require Petitioner to

enter into installment obligations for the retirement of tax obligations if

certain conditions are met. Nothing in the statute suggests that tax obligations

should exclude remittances that a dealer collects and remits to the state. So

the remaining threshold issue in this case is whether the conditions have been

satisfied.

36. Respondent provided Petitioner accurate, current information, at least

after the fueling operation was closed. Although the issue is far from clear, it

appears more likely than not that Respondent is currently meeting its tax

obligations to Petitioner.

37. Even after the conditions are satisfied, however, the structuring of

the installment obligation requires consideration of the financial condition of

Respondent and the best interests of the state. The financial condition of

Respondent is poor, even after giving due consideration to the financial

condition of its principal and his wife. The best interests of the state demand

timely remittance of this tax. There is little justification in allowing any

dealer to ignore its obligation to remit motor fuel tax that it has collected

from its customers, who, if the nonremitting dealer were closed, would have

bought that gasoline and diesel fuel from a dealer that would have remitted the

tax. The best interests of the state, in structuring the installment payments,

require consideration of Respondent's poor record in the past, not only in not

remitting motor fuel taxes as they were collected but in failing to live up to

promises to pay deficiencies.

38. Under the circumstances, Section 213.015(10) requires Petitioner to

accept a promissory note, bearing interest at the legal rate, for the retirement

of the $181,250.07, plus interest from August 1, 1995, through the date of the

note. However, Petitioner is obligated to accept a note only if it contains the

terms and conditions set forth in this and the following paragraphs. First,

Respondent shall pay in a single payment one- half of the total deficiency,

including interest accruing since August 1, 1995. Upon receipt of this payment,

Petitioner shall reinstate Respondent's license. Second, Respondent shall pay

the remaining balance in 60 equal monthly payments. If Respondent fails to pay

any installment payment when it first falls due under the note, the entire

balance shall become due and owing immediately, without notice or demand, and

Petitioner may, in its sole discretion, revoke the license at that time.

Additional conditions shall provide that the entire balance shall become due and

owning without notice or demand if Respondent fails to pay or remit timely to

Petitioner any tax, fails to file timely with Petitioner any return for any tax,

or knowingly files a false return with Petitioner of any tax.

39. Petitioner may add such additional conditions as are reasonably

necessary to serve the best interests of the state, as long as those conditions

do not conflict with the terms and conditions set forth in the preceding

paragraph. Such conditions may include the inclusion of unpaid sales tax

deficiencies in the same promissory note on the same terms and conditions,

including the retirement of half the total sale tax deficiencies, including

penalties and interest, in a down payment before the retail dealer's fuel

license is reissued.

RECOMMENDATION

It is

RECOMMENDED that the Department of Revenue enter a final order: 1)

suspending Respondent's retail dealer's fuel license for the lesser of six

months from the date of the final order or until Respondent pays the sums

described in paragraphs 38 and 39 and executes a promissory note with the

conditions set forth in paragraphs 38 and 39 and 2) revoking Respondent's retail

dealer's fuel license at the expiration of six months from the date of the final

order unless Respondent has paid the above-described sums and entered into the

above-described promissory note.

ENTERED on October 27, 1995, in Tallahassee, Florida.

___________________________________

ROBERT E. MEALE

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

on October 27, 1995.

APPENDIX

Rulings on Petitioner's Proposed Findings

1-4: adopted or adopted in substance.

5-7: rejected as recitation of evidence and subordinate.

8: adopted or adopted in substance.

9-10: rejected as subordinate.

11: adopted or adopted in substance.

12-18: rejected as subordinate.

19-21: adopted or adopted in substance.

22-23: rejected as subordinate.

24-26: adopted or adopted in substance except the taxpayer is Respondent,

not Mr. Stellman individually.

27: rejected as subordinate.

28: adopted or adopted in substance.

29-35: rejected as subordinate.

36-37: adopted or adopted in substance.

38: rejected as subordinate.

39: rejected as unsupported by the appropriate weight of the evidence.

40-43: adopted or adopted in substance.

44: rejected as recitation of evidence.

Rulings on Respondent's Proposed Findings

1-7: adopted or adopted in substance, although the "great expense" in

paragraph 7 is rejected as unsupported by the appropriate weight of the

evidence.

8-10: rejected as unsupported by the appropriate weight of the evidence.

The financial problems were minor.

11: adopted or adopted in substance to the extent relevant.

12-13: rejected as subordinate.

14: rejected as speculative.

15: rejected as unsupported by the appropriate weight of the evidence.

16: rejected as irrelevant.

17: adopted or adopted in substance.

18-19: rejected as subordinate.

20: adopted or adopted in substance.

21: rejected as unsupported by the appropriate weight of the evidence

except that the filings is rejected as irrelevant.

COPIES FURNISHED:

Larry Fuchs, Executive Director

Department of Revenue

104 Carlton Building

Tallahassee, FL 32399-0100

Linda Lettera, General Counsel

Department of Revenue

204 Carlton Building

Tallahassee, FL 32399-0100

Francisco Negron, Jr.

Assistant Attorney General

Office of the Attorney General

The Capitol, Tax Section

Tallahassee, FL 32399-1050

Christian B. Felden

Felden and Felden

2590 Golden Gate Parkway

Suite 101

Naples, FL 33942

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended

Order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this Recommended Order. Any exceptions to this Recommended Order should be

filed with the agency that will issue the final order in this case.

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF REVENUE

DEPARTMENT OF REVENUE,

Petitioner,

vs. CASE NO. 95-2803

STELLMAN ENTERPRISES, INC.,

d/b/a CITGO FOOD MART,

Respondent.

______________________________/

FINAL ORDER

This cause came before me, as Executive Director of the Department of

Revenue, on an Order Declining Remand Without Prejudice entered January 24,

1996. The Department had previously entered an Order Remanding Proceedings to

the Division on January 19, 1996. This followed entry of a Recommended Order

issued on October 27, 1995, by the hearing officer assigned to conduct the final

hearing. The Respondent's exceptions were received on November 29, 1995.

Copies of these documents are attached to this Order.

FINDINGS OF FACT

The Department adopts the Findings of Fact set forth in the Recommended

Order.

CONCLUSIONS OF LAW

The Department adopts the following Conclusions of Law set forth in the

Recommended Order: Numbers 29, 30, 31 and 32. The remainder are stricken as

being based on a misapprehension of the law as described below.

The issue in this case is whether the Department may revoke Respondent's

license to sell fuel at retail. According to the Hearing Officer, the

Department met the burden of proof necessary to revoke the Respondent's license

to sell fuel at retail since it proved by clear and convincing evidence that

Respondent failed to timely file required returns and to pay motor fuel tax as

required by law.

According to the Recommended Order, the licensee repeatedly promised to

make payments that did not materialize and it made those promises during a time

when the motor fuel tax collected from customers was still being applied to

other debts. The licensee failed to establish that there had been a good faith

offer to pay the delinquency, or that any such offer was arbitrarily denied.

The Hearing Officer originally recommended a conclusion that the licensee

was entitled to be given an opportunity to enter into a payment plan as an

alternative to license revocation. The Hearing Officer's recommended conclusion

was premised solely on Section 213.015(10), Florida Statutes, which grants

taxpayers:

The right to procedures for the retirement

of tax obligations by installment payment

agreements which recognize both the taxpayer's

financial condition and the best interests of

the state, provided that the taxpayer gives

accurate, current information and meets all

other tax obligations on schedule (see s.

213.21(4)

The Hearing Officer mistakenly concluded that Section 213.015(10) is self-

executing. The section is intended to compile in one document the obligations

of the Department and rights of taxpayers provided for elsewhere. The

introductory paragraph provides:

The rights afforded taxpayers to assure their

privacy and property are safeguarded and

protected during tax assessment and collection

are available only insofar as they are

implemented in other parts of the Florida

Statutes or rules of the Department. The

rights so guaranteed Florida taxpayers in the

Florida Statutes and the departmental rules

are:. . . (10)(the section relied on by the

Hearing Officer). .

Chapter 12-17, Florida Administrative Code, contains the Department's

policies regarding payment scheduling and was not considered by the Hearing

Officer when he issued his Recommended Order. Because the Recommended Order's

finding that the licensee was entitled to a payment plan was based upon a

misapprehension of the law, the matter was remanded to the Division.

The Hearing Officer then entered an Order Declining Remand Without

Prejudice. This Order reconfirms that the licensee owes $181,205.07 through

August 1, 1995, plus interest thereafter. The Order confirms that the Hearing

Officer's recommended conclusion that the licensee was entitled to a payment

plan was based on a misapprehension of law. The Order finds that nothing in

Section 213.21(4), Florida Statutes, imposes a duty on the Department to

exercise its discretion in accepting installment agreements.

CONCLUSION

Based upon the foregoing it is therefore ORDERED: That the Petitioner's

license number 21-000828 is hereby revoked.

Any Party to this Order has the right to seek judicial review of the Order

pursuant to Section 120.68, F.S., by filing a Notice of Appeal pursuant to Rule

9.110, Fla. R. App. Pro., with the Clerk of the Department in the Office of

General Counsel, P.O. Box 6668, Tallahassee, Florida 32314-6668 and by filing a

copy of the Notice accompanied by the applicable filing fee with the appropriate

District Court of Appeal. The Notice must be filed within 30 days from the date

this Order is filed with the Clerk of the Department.

DONE AND ENTERED in Tallahassee, Leon County, Florida this 9th day of February,

1996.

STATE OF FLORIDA

DEPARTMENT OF REVENUE

__________________

L. H. FUCHS

Executive Director

Certificate of Filing

I HEREBY CERTIFY that the foregoing Order has been in the official records of

the Department of Revenue this 9th day of February, 1996.

__________________

Judy Langston

Agency Clerk

Copies to:

L. H. Fuchs

Executive Director

Department of Revenue

Room 104

Carlton Building

Tallahassee, Florida 32399-0100

Linda Lettera

General Counsel

Department of Revenue

201 Carlton Building

Tallahassee, Florida 32399-0100

Francisco Negron, Jr.

Assistant Attorney General

Office of the Attorney General

The Capitol - Tax Section

Tallahassee, Florida 32399-1050

Christian B. Felden

Felden and Felden

2590 Golden Gate Parkway

Suite 101

Naples, Florida 33942

Sharyn L. Smith

Director

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Robert E. Meale

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

=================================================================

AGENCY ORDER REMANDING

=================================================================

STATE OF FLORIDA

DEPARTMENT OF REVENUE

DEPARTMENT OF REVENUE,

Petitioner,

vs. D.O.A.H. Case No. 95-2803

DOR No. DOR 96-1-0

STELLMAN ENTERPRISES, INC.,

d/b/a CITGO FOOD MART,

Respondent.

_____________________________/

ORDER REMANDING PROCEEDING

TO THE DIVISION OF ADMINISTRATIVE HEARINGS

This cause came before me, as Executive Director of the Department of

Revenue, on a Recommended Order issued on October 27, 1995, by the hearing

officer assigned to conduct the final hearing. The Respondent's exceptions were

received on November 29, 1995. Copies of these documents are attached to this

Order.

The issue in this case is whether the Department may revoke Respondent's

license to sell fuel at retail. According to the Hearing Officer, the

Department met the burden of proof necessary to revoke the Respondent's license

to sell fuel at retail since it proved by clear and convincing evidence that

Respondent failed to timely file required returns and to pay motor fuel tax as

required by law.

According to the Recommended Order, the licensee repeatedly promised to

make payments that did not materialize and it made those promises during a time

when the motor fuel tax collected from customers was still being applied to

other debts. The licensee failed to establish that there had been a good faith

offer to pay the delinquency, or that any such offer was arbitrarily denied.

The Respondent has raised exceptions to the Recommended Order which, while not

material to the claim that it made an offer to pay the tax debt which was

arbitrarily denied, point to the exceptional circumstances requiring remand of

this case to the Division of Administrative Hearings. Essentially, the licensee

seeks modification of a recommended conclusion which was based on a

misapprehension of the law.

The Hearing Officer recommends a conclusion that the licensee is entitled

to be given an opportunity to enter into a payment plan as an alternative to

license revocation. The Hearing Officer's recommended conclusion is premised

solely on Section 213.015(10), Florida Statutes, which gives taxpayers:

The right to procedures for the retirement

of tax obligations by installment payment

agreements which recognize both the taxpayer's

financial condition and the best interests of

the state, provided that the taxpayer gives

accurate, current information and meets all

other tax obligations on schedule (see s.

213.21(4)

The Hearing Officer mistakenly concludes that Section 213.015(10) is self-

executing. The section is intended to compile in one document the obligations

of the Department and rights of taxpayers provided for elsewhere. The

introductory paragraph provides:

The rights afforded taxpayers to assure their

privacy and property are safeguarded and

protected during tax assessment and collection

are available only insofar as they are

implemented in other parts of the Florida

Statutes or rules of the Department. The

rights so guaranteed Florida taxpayers in the

Florida Statutes and the departmental rules

are: . . . (10)(the section relied on by the

Hearing Officer). . .

Chapter 12-17, Florida Administrative Code, contains the Department's

policies regarding payment scheduling and was apparently not considered by the

Hearing Officer. It lists certain factors that must be considered if a payment

proposal is to be made in compliance with the procedures outlined in the rule.

The recommended finding that the licensee is entitled to a payment plan is

based upon a misapprehension of the law. There is' no entitlement to a payment

plan as such. Facts were not placed into the record in light of the factors

specified in Chapter 12-17. The present record does not support a conclusion

that the licensee is entitled to a payment plan under the rule. The conclusion

that events occurring subsequent to service of the administrative complaint may

be relied upon to show an entitlement to a payment plan is unsupported. Before

a payment schedule is recommended, the record must reflect a consideration of

the factors specified in Chapter 12-17.

WHEREFORE, the Department finds that the proceeding below did not comply

with the essential requirements of law and that exceptional circumstances exist

requiring a remand.

CONCLUSION

Based upon the foregoing it is therefore ORDERED: That the matter is

remanded to the Division of Administrative Hearings to conduct such proceedings

as are deemed necessary in light of the directions above.

DONE AND ENTERED in Tallahassee, Leon County, Florida this 17th day of January,

1996.

STATE OF FLORIDA

DEPARTMENT OF REVENUE

__________________

L. H. FUCHS

Executive Director

Certificate of Filing

I HEREBY CERTIFY that the foregoing Order has been filed in the

official records of the Department of Revenue this 17th day of January, 1996.

__________________

Judy Langston

Agency Clerk

COPIES FURNISHED:

L. H. Fuchs

Executive Director

Department of Revenue

Room 104

Carlton Building

Tallahassee, Florida 32399-0100

Linda Lettera

General Counsel

Department of Revenue

201 Carlton Building

Tallahassee, Florida 32399-0100

Francisco Negron, Jr.

Assistant Attorney General

Office of the Attorney General

The Capitol - Tax Section

Tallahassee, Florida 32399-1050

Christian B. Felden

Felden and Felden

2590 Golden Gate Parkway

Suite 101

Naples, Florida 33942

Sharyn L. Smith

Director

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Robert E. Meale

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

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ORDER DECLINING REMAND WITHOUT PREJUDICE

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STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF REVENUE, )

)

Petitioner, )

)

vs. ) CASE NO. 95-2803

)

STELLMAN ENTERPRISES, INC., )

d/b/a CITGO FOOD MART, )

)

Respondent. )

_________________________________)

ORDER DECLINING REMAND WITHOUT PREJUDICE

By Order Remanding Proceeding to the Division of Administrative Hearings

filed January 19, 1996, Petitioner remanded the case to the Division of

Administrative Hearings for further proceedings consistent with the remand

order. The remand order corrects a misunderstanding of the hearing officer as

to the law, but directs further proceedings that do not appear to be authorized

or, if authorized, necessary.

Respondent owes Petitioner $181,205.07 through August 1, 1995, plus

interest thereafter, for unpaid motor fuel taxes, interest, and penalties

arising out of the retail sale of fuel by Respondent's convenience store.

Petitioner entered an emergency order of suspension of Respondent's license as a

motor fuel dealer, after which Respondent lawfully continued to make nonfuel-

related sales. The remand order does not involve these findings of the

recommended order.

The recommended order finds that Respondent cooperated with Petitioner

after the suspension of Respondent's license and that, although the record is

not entirely clear, it is more likely than not that Respondent timely paid all

taxes following the suspension. During this period, Respondent offered

installment payments, which Petitioner refused to accept. The recommended order

finds that Respondent's financial condition is precarious and its ability to

continue to operate and simultaneously retire a substantial tax liability is

doubtful. Based on these facts, the hearing officer, misreading Section

213.015(10), Florida Statutes, concluded in the recommended order that

Petitioner was obligated to accept a downpayment of half of the deficiency and

the remainder in 60 equal monthly installments.

The flush language of Section 213.015 explains that the section "compiles,

in one document, . . . the rights . guaranteed Florida taxpayers in the Florida

Statutes and the department rules [including]"

(10) The right to procedures for retirement

of tax obligations by installment payment

agreements which recognize both the

taxpayer's financial condition and the best

interests of the state, provided that the

taxpayer gives accurate, current information

and meets all other tax obligations on

schedule (see s. 213.21(4)).

The hearing officer mistakenly concluded that the right to a installment

payments was self-executing, but additional flush language in Section 213.015

leaves no doubt that the rights enumerated in Section 213.015 are only rights to

the extent that they are so provided elsewhere in the statutes or rules:

The rights afforded taxpayers to assure that

their privacy and property are safeguarded

and protected during tax assessment and

collection [are available only insofar as they

are implemented in other parts of the Florida

Statutes or rules of the Department of

Revenue]. (Emphasis supplied.)

As the remand order points out, the fact is that there is no right of a

taxpayer to insist that Petitioner accept installment payments. The "right"

compiled in Section 213.015(10) is based on Section 213.21(4), which states in

its entirety: "The department is authorized to enter into agreements for

scheduling payments of taxes, interest, and penalties." This substantive

provision confers no rights upon taxpayers. Rather, it confers a right upon

Petitioner to enter into installment agreements for unpaid taxes, penalties, and

interest. Nothing in Section 213.21(4) imposes a duty on Petitioner to exercise

its discretion in accepting installment agreements--reasonably or unreasonably.

This much of the remand order is clear and correct. However, the remand

order concludes that the case must be remanded to the Division of Administrative

Hearings. The reasoning for the remand is expressed largely in the following

paragraphs:

Chapter 12-17, Florida Administrative Code,

contains the Department's policies regarding

payment scheduling and was apparently not

considered by the Hearing Officer. It lists

certain factors that must be considered if a

payment proposal is to be made in compliance

with the procedures outlined in the rule.

The recommended finding that the licensee is

entitled to a payment plan is based upon a

misapprehension of the law. There is no

entitlement to a payment plan as such. Facts

were not placed into the record in light of

the factors specified in Chapter 12-17. The

present record does not support a conclusion

that the licensee is entitled to a payment

plan under the rule. The conclusion that

events occurring subsequent to service of the

administrative complaint may be relied upon

to show an entitlement to a payment plan is

unsupported. Before a payment plan is

recommended, the record must reflect a

consideration of the factors specified in

Chapter 12-17.

It does not follow from Petitioner's correction of the hearing officer's

misreading of Section 213.015(10) that there is any issue left to be tried. To

the contrary, there appear to be no disputed issues of material fact for two

reasons.

First, Chapter 12-17 does not apply to this case. In the formal hearing,

Respondent claimed that it did not owe all or part of the assessed deficiency

and, if a deficiency were determined to exist, that Petitioner was obligated

accept installment payments.

The purpose of Chapter 12-17 is to guide Petitioner in formulating

installment agreements when Petitioner chooses to accept installment payments.

See Rule 12-17.001. Nothing in Chapter 12-17 suggests that Petitioner can be

compelled by a taxpayer to accept installment payments or accept taxpayer-

specified terms and conditions.

Rule 12-17.003(1) and (3) condition the availability of an installment

agreement upon concessions from the taxpayer that preclude an administrative

hearing of the type that was conducted in this case. Rule 12-17.003(1) requires

the taxpayer to "admit liability" for the deficiency finally determined by

Petitioner, and Rule 12-17.003(3) requires the taxpayer to "waive the right to

institute administrative or judicial proceedings under s. 72.011, F.S., with

respect to the liability."

Other rules in Chapter 12-17 similarly underscore Petitioner's absolute

authority as to whether to accept installment agreements. Rule 12-17.006(4)

requires an internal agency recommendation as to "whether the Department should

exercise its authority to enter in a payment agreement pursuant to s.

213.21(4), F.S." Rule 12-17.006(6) emphasizes the flexibility given Petitioner

by providing: "After consideration of the taxpayer's request for relief, the

Department may make a counterproposal, may reject the request in whole or in

part, or may accept the request . .

The only possible restrictions upon the exercise of Petitioner's discretion

are in Rule 12-17.005, whose heading negates any sense of the obligatory:

"Factors Which May Be Considered by the Department." Implementing Section

213.21(4), Rule 12-17.005 recites nine factors that Petitioner "will consider"

in deciding whether to accept installment payments. These nine factors do not,

on their face, require Petitioner to exercise its discretion, or to exercise its

discretion reasonably, in accepting installment payments. The nine factors

merely advise taxpayers of the issues that Petitioner will consider in deciding

whether to exercise its discretion to accept installment payments and, if so,

the terms and conditions that Petitioner will decide to accept.

It is possible that Petitioner, as a matter of policy, interprets Rule 12-

17.005 to entitle taxpayers to formal hearings on Petitioner's many decisions

whether to accept installment payments and, if so, what terms and conditions to

accept. Even so, the remand would be unjustified in the present case due to the

failure of Respondent to satisfy the above-cited preconditions of Rule 12-

17.003(1) and (3).

But the remand order is deficient on another basis. The hearing officer

labored under the misconception that Section 213.015(10) required fact finding

as to the "taxpayer's financial condition," the "best interests of the state,"

the taxpayer's cooperativeness, and the taxpayer's satisfaction of current tax

obligations (measured as of when the taxpayer offered installment payments).

The hearing officer advised the parties at the hearing that they needed to

address these issues, so the record includes evidence and findings of fact as to

these issues, which overlap considerably with the nine factors of Rule 12-

17.005.

If Petitioner concludes that certain findings are irrelevant, such as

Respondent's compliance following the issuance of the emergency order of

suspension, Petitioner can strike those findings. But the record and findings

are sufficient to permit Petitioner to prepare a final order, even if Petitioner

concludes as a matter of law that the exercise of its discretion whether to

accept installment payments and, if so, on what terms and conditions, are proper

subjects of a Section 120.57(1) hearings.

For the foregoing reasons, it is hereby

ORDERED that the Division of Administrative Hearings respectfully declines

the Order of Remand without prejudice to consideration of an Amended Order of

Remand addressing the issues in this order with detailed instructions as to the

scope of the factual issues to be tried and the law or guidelines to be applied.

ENTERED on January 24th, 1996 in Tallahassee, Florida.

___________________________________

ROBERT E. MEALE, Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 24th day of January, 1996.

COPIES FURNISHED:

Larry Fuchs, Executive Director

Department of Revenue

104 Carlton Building

Tallahassee, Florida 32399-0100

Linda Lettera, General Counsel

Department of Revenue

204 Carlton Building

Tallahassee, Florida 32399-0100

Francisco Negron, Jr.

Assistant Attorney General

Office of the Attorney General

The Capitol, Tax Section

Tallahassee, Florida 32399-1050

Christian B. Felden

Felden and Felden

2590 Golden Gate Parkway, Suite 101

Naples, Florida 33942