98-002858 Division Of Alcoholic Beverages And Tobacco vs. Betty J. Schmidt, D/B/A Smileys Tap
 Status: Closed
Recommended Order on Monday, November 23, 1998.


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Summary: Respondent failed to correctly report alcoholic beverage surcharges. As a result, Respondent is liable for penalties, unremitted taxes, and interest.

1STATE OF FLORIDA

4DIVISION OF ADMINISTRATIVE HEARINGS

8DEPARTMENT OF BUSINESS AND )

13PROFESSIONAL REGULATION, )

16DIVISION OF ALCOHOLIC )

20BEVERAGES AND TOBACCO, )

24)

25Petitioner, )

27vs. ) Case No. 98-2858

32)

33BETTY J. SCHMIDT, d/b/a )

38SMILEY’S TAP, )

41)

42Respondent. )

44___________________________________)

45RECOMMENDED ORDER

47Pursuant to notice, a formal administrative hearing was

55held in the above-styled cause by Don W. Davis,

64Administrative Law Judge with the Division of Administrative

72Hearings on November 5, 1998, in Daytona Beach, Florida.

81APPEARANCES

82For Petitioner: Elsa Lopez Whitehurst, Esquire

88Department of Business and

92Professional Regulation

941940 North Monroe Street

98Tallahassee, Florida 32399-1007

101For Respondent: Betty Schmidt, pro se

107Smiley’s Tap

1091161 North U.S. 1

113Ormond Beach, Florida 32174

117STATEMENT OF THE ISSUE

121The issue for determination is whether Respondent's

128alcoholic beverage license should be disciplined for

135violation of Chapter 561, Florida Statutes. Resolution of

143this issue requires a determination of whether Respondent

151correctly reported and remitted alcoholic beverage

157surcharges.

158PRELIMINARY STATEMENT

160By Notice to Show Cause dated April 29, 1998,

169Petitioner alleged Respondent failed to remit the correct

177surcharge tax amount to Petitioner as required by Section

186561.501, Florida Statutes.

189Respondent requested a formal administrative hearing

195and the matter was transferred to the Division of

204Administrative Hearings for conduct of formal proceedings

211pursuant to Section 120.57(1), Florida Statutes.

217At the final hearing, Respondent presented the

224testimony of two witnesses and three evidentiary exhibits.

232Petitioner presented four evidentiary exhibits and testimony

239of three witnesses.

242No transcript of the final hearing was provided. Both

251parties submitted proposed findings of fact which have been

260utilized where appropriate in the preparation of this

268Recommended Order.

270FINDINGS OF FACT

2731. Respondent is Betty Schmidt. At all times

281pertinent to these proceedings, she held alcoholic beverage

289license no. 74-00275, Series 2-COP, for a licensed premises

298located at 1161 North U.S. 1, Ormond Beach, Florida.

3072. Petitioner's auditor, Muriel Johnson, performs

313audits on vendors monthly surcharge reports in order to

322confirm the accuracy of those reports and ensure compliance

331with statutory and administrative rule requirements. The

338audit in the instant case covered the reporting period of

348Respondent from September 1, 1994 through August 31, 1997.

3573. Alcoholic beverage licensees are afforded an

364opportunity to elect to report and pay the surcharge by

374either the purchase method or the sales method. Under the

384purchase method, a licensee pays the surcharge on alcoholic

393beverages purchased from authorized distributors. Under the

400sales method, licensees pay the surcharge on alcoholic

408beverages sold for consumption on the premises. Respondent

416elected to report via the sales method.

4234. A licensee's reporting under the sales method is

432audited by the Sales Depletion Method. Under this

440methodology, a beginning inventory is ascertained. Second,

447purchases made by the licensee for the audit period are

457computed. Third, an ending inventory for the audit period

466is ascertained. Fourth, Gross Gallonage Available For Sale

474is computed by adding the beginning inventory to the

483purchases made during the audit period and then subtracting

492the ending inventory. Fifth, the Net Gallonage Available

500For Sale during the audit period is calculated by

509subtracting from the Gross Gallonage an allowance for

517spillage and a cooking adjustment. The end result is termed

527the Adjusted Sales Gallonage from which amount the amount of

537surcharge owed for the audit period is determined.

5455. Because Respondent did not keep inventory figures,

553and based upon her assertion that her inventory was

562generally the same, Respondent and the auditor agreed upon

571zero as the starting inventory. Second, purchases of

579alcoholic beverages by Respondent during the audit period

587were computed based upon purchase figures provided by

595Respondent and verified independently through records

601obtained from distributors. Third, the ending inventory was

609agreed to be zero. Fourth, The gross gallonage available

618for sale was determined by adding the beginning inventory

627(zero) to the purchases made during the audit period and

637subtracting the ending inventory (also zero). Fifth,

644adjustments to net gallonage for sale included allowances

652for spillage and package sales. Notably, the audit revealed

661that Respondent was treating liquor mixers as wine coolers

670and paying a lower tax on that basis when in fact wine

682coolers are taxed at the rate of one ounce of liquor per

694container at a higher rate. Adjustments for this practice

703were also made. Finally, the total surcharge due for the

713audit period was calculated and compared to the amount

722already reported in order to determine the amount of under-

732reported or over-reported tax.

7366. Respondent sets up various disbursement stations

743for beer on her property during “bike week” in Daytona

753Beach. With only one cash register, the sales at the

763various stations are maintained by hand on clipboards.

771Additional staff is employed at this time and Respondent is

781not personally present at each station to monitor sales

790reporting.

7917. Frequent sources of alcoholic beverage sales that

799are not captured by a license’s cash register include theft,

809breakage, leakage, spillage, overpouring of drinks, and free

817drinks. The amounts of alcoholic beverage that are lost to

827a cash register in these ways are captured by Petitioner’s

837sales audit method.

8408. While Respondent keeps good records, no cash

848register method can ever capture all of the alcoholic

857beverages available for consumption on premises and

864consequently there will always be some discrepancy as the

873result of a sales method audit.

8799. As established by results of Petitioner's audit,

887Respondent underpaid surcharges for the audit period in the

896amount of $890. Additionally, it is established that

904Respondent owes $557.66 in penalties and $193.33 in interest

913on the payment deficiency.

917CONCLUSIONS OF LAW

92010. The Division of Administrative Hearings has

927jurisdiction over the parties and the subject matter.

935Section 120.57(1), Florida Statutes.

93911. Section 561.501, Florida Statutes, imposing a

946surcharge on the sale of alcoholic beverages, reads in

955pertinent part as follows:

959561.501 Surcharge on sale of alcoholic

965beverages for consumption on the

970premises; penalty.–

972(1) Notwithstanding s. 561.50 or any

978other provision of the Beverage Law, a

985surcharge of 10 cents is imposed upon

992each ounce of liquor and each 4 ounces

1000of wine, a surcharge of 6 cents is

1008imposed on each 12 ounces of cider, and

1016a surcharge of 4 cents is imposed on

1024each 12 ounces of beer sold at retail

1032for consumption on premises licensed by

1038the division as an alcoholic beverage

1044vendor.

1045(2) The vendor shall report and remit

1052payments to the division each month by

1059the 15th of the month following the

1066month in which the surcharges are

1072imposed. For purposes of compensating

1077the retailer for the keeping of

1083prescribed records and the proper

1088accounting and remitting of surcharges

1093imposed under this section, the retailer

1099shall be allowed to deduct from the

1106payment due the state 1 percent of the

1114amount of the surcharge due. Retail

1120records shall be kept on the quantities

1127of all liquor, wine, and beer purchased,

1134inventories, and sales. However, a

1139collection allowance is not allowed on

1145any collections that are not timely

1151remitted. If by the 20th of the month

1159following the month in which the

1165surcharges are imposed, reports and

1170remittances are not made, the division

1176shall assess a late penalty in the

1183amount of 10 percent of the amount due

1191per month for each 30 days, or fraction

1199thereof, after the 20th of the month,

1206not to exceed a total penalty of 50

1214percent, in the aggregate, of any unpaid

1221surcharges. The division shall

1225establish, by rule, the required

1230reporting, collection, and accounting

1234procedures. Records must be maintained

1239for 3 years. Failure to accurately and

1246timely remit surcharges imposed under

1251this section is a violation of the

1258Beverage Law.

126012. The sale which is the subject of the surcharge is

1271defined by Section 561.01(9), Florida Statutes, as follows:

1279(9) "Sale" and "sell" mean any transfer

1286of an alcoholic beverage for a

1292consideration, any gift of an alcoholic

1298beverage in connection with, or as a

1305part of, a transfer of property other

1312than an alcoholic beverage for a

1318consideration, or the serving of an

1324alcoholic beverage by a club licensed

1330under the Beverage Law.

133413. Respondent contends that Petitioner's failure to

1341use the cash register receipts provided by Respondent is

1350erroneous. Yet, pursuant to Rule 61A-4.063(4)(c), Florida

1357Administrative Code, it is Respondent who bears the burden

1366of proof to show that the method used by her in the

1378calculation of actual sales reported is accurate.

1385Respondent merely argued that her cash register was correct

1394and failed to show any error in the deficiency calculations

1404of Petitioner. Respondent's argument is unpersuasive.

141014. Petitioner bears the burden of proving the

1418allegations of the Notice To Show Cause by clear and

1428convincing evidence. Ferris v. Turlington , 510 So. 2d 292

1437(Fla. 1987). Petitioner has met that burden. The proof

1446establishes that Respondent was deficient in reporting,

1453surcharge payments for the period September 1, 1994, through

1462October 31, 1997, in the amount of $890.11, plus $557.66 in

1473penalties, and an additional $193.33 in interest for a total

1483liability of $1641.10, contrary to Section 561.501, Florida

1491Statutes.

1492RECOMMENDATION

1493Based on the foregoing, it is hereby

1500RECOMMENDED that a Final Order be entered requiring

1508payment by Respondent in the amount of $1641.10, the amount

1518of total tax and liabilities claimed by Petitioner to be

1528due.

1529DONE AND ENTERED this 23rd day of November, 1998, in

1539Tallahassee, Leon County, Florida.

1543_____________________________ ______

1545DON W. DAVIS

1548Administrative Law Judge

1551Division of Administrative Hearings

1555The DeSoto Building

15581230 Apalachee Parkway

1561Tallahassee, Florida 32399-3060

1564(850) 488-9675 SUNCOM 278-9675

1568Fax Filing (850) 921-6847

1572Filed with the Clerk of the

1578Division of Administrative Hearings

1582this 23rd day of November, 1998.

1588COPIES FURNISHED:

1590Elsa Lopez Whitehurst, Esquire

1594Department of Business and

1598Professional Regulation

16001940 North Monroe Street

1604Tallahassee, Florida 32399-1007

1607Betty Schmidt

1609Smiley's Tap

16111161 North U.S. 1

1615Ormond Beach, Florida 32174

1619Richard Boyd, Director

1622Division of Alcoholic

1625Beverages and Tobacco

1628Department of Business and

1632Professional Regulation

16341940 North Monroe Street

1638Tallahassee, Florida 32399-0792

1641Lynda L. Goodgame, General Counsel

1646Department of Business and

1650Professional Regulation

16521940 North Monroe Street

1656Tallahassee, Florida 32399-0792

1659NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

1665All parties have the right to submit written exceptions

1674within 15 days from the date of this Recommended Order. Any

1685exceptions to this Recommended Order should be filed with

1694the agency that will issue the Final Order in this case.

Select the PDF icon to view the document.
PDF
Date
Proceedings
Date: 02/04/2000
Proceedings: Final Order filed.
PDF:
Date: 01/10/2000
Proceedings: Agency Final Order
Date: 03/29/1999
Proceedings: Letter to Elsa Lopez Whitehurst (re transcript mailed) sent out.
Date: 03/22/1999
Proceedings: Transcript of Proceedings filed.
Date: 12/08/1998
Proceedings: Letter to R. Boyd from B. Schmidt Re: Response to the recommendation filed.
PDF:
Date: 11/23/1998
Proceedings: Recommended Order
PDF:
Date: 11/23/1998
Proceedings: Recommended Order sent out. CASE CLOSED. Hearing held 11/05/98.
Date: 11/18/1998
Proceedings: Petitioner`s Proposed Recommended Order (filed via facsimile).
Date: 11/17/1998
Proceedings: (Petitioner) Consented to Motion to Enlarge Time to File Department`s Proposed Recommended Order With Findings of Fact and Conclusions of Law (filed via facsimile).
Date: 11/16/1998
Proceedings: Letter to Judge D. Davis from B. Schmidt (RE: response to hearing) (filed via facsimile).
Date: 11/05/1998
Proceedings: CASE STATUS: Hearing Held.
Date: 11/03/1998
Proceedings: (Joint) Prehearing Stipulation (filed via facsimile).
Date: 08/24/1998
Proceedings: Notice of Hearing sent out. (hearing set for 11/5/98; 9:30am; Daytona Beach)
Date: 08/24/1998
Proceedings: Order of Prehearing Instructions sent out.
Date: 07/13/1998
Proceedings: (Petitioner) Response to Initial Order filed.
Date: 07/13/1998
Proceedings: Letter to Judge Smith from B. Schmidt Re: Responding to Initial Order filed.
Date: 07/02/1998
Proceedings: Initial Order issued.
Date: 06/25/1998
Proceedings: Agency Referral Letter; Request for Hearing Form; Administrative Action filed.

Case Information

Judge:
DON W. DAVIS
Date Filed:
06/25/1998
Date Assignment:
07/02/1998
Last Docket Entry:
02/04/2000
Location:
Daytona Beach, Florida
District:
Northern
Agency:
ADOPTED IN TOTO
 

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