01-000530 Department Of Business And Professional Regulation, Division Of Alcoholic Beverages And Tobacco, vs. Tim Of Tampa, Inc., D/B/A Gene`s Bar Status: Closed Recommended Order on Wednesday, June 13, 2001.

Summary: Alcoholic beverages vendor failed to prove the accuracy of its sales records. Petitioner proved vendor owed surcharge and penalty on alcoholic beverage sales for consumption on premises.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF ALCOHOLIC )

BEVERAGES AND TOBACCO, )

)

Petitioner, )

)

vs. ) Case No. 01-0530

)

TIM OF TAMPA, INC., d/b/a )

GENE’S BAR, )

)

Respondent. )

______________________________)

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division

of Administrative Hearings, conducted the final hearing in

Tampa, Florida, on April 10, 2001.

APPEARANCES

For Petitioner : Michael Martinez

Assistant General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399-2202

For Respondent : Thomas A. Smith

800 West Platt, Suite 3

Tampa, Florida 33606

STATEMENT OF THE ISSUES

The issues are whether Respondent has incurred and failed

to pay Petitioner a surcharge of $38,218.31 plus a penalty of

$25,946.18, in violation of Section 561.501, Florida Statutes,

and whether Respondent has failed to maintain the records

required by Section 561.501(2), Florida Statutes, and Rule

61A -4.063(8), Florida Administrative Code.

PRELIMINARY STATEMENT

By Administrative Action dated March 10, 2000, Petitioner

alleged that, from January 31, 1996, through December 31, 1998,

Respondent incurred and failed to pay a surcharge of $38,218.31

plus a penalty of $25,946.18, in violation of Section 561.501,

Florida Statutes.

By Motion to Amend Administrative Action filed February 26,

2001, Petitioner requested leave to add the allegation that,

from September 1 through December 31, 1998, Respondent failed to

maintain the records required by Section 561.501(2), Florida

Statutes, and Rule 61A-4.063(8), Florida Administrative Code.

On March 13, 2001, the Administrative Law Judge granted the

motion.

By Request for Hearing dated March 29, 2000, Respondent

disputed the material allegations and requested a formal

hearing.

At the hearing, Petitioner called two witnesses and offered

into evidence seven exhibits. Respondent called four witnesses

and offered into evidence one exhibit. All exhibits were

admitted.

The court reporter filed the transcript on April 16, 2001.

FINDINGS OF FACT

1. Respondent holds license number 39-04047 4COP.

Respondent owns and operates Gene's Bar located at 2932 North

22nd Street in Tampa.

2. Respondent sells alcoholic beverages, but is not a

“pouring bar.” In other words, Respondent’s employees sell the

alcoholic beverages, but never open and pour the alcoholic

beverage into a glass. Respondent sells mostly liquor and beer,

and lesser amounts of wine.

3. In the typical transaction, Respondent sells a bottle

or six-pack of alcoholic beverages to a patron, who may also

purchase from Respondent a nonalcoholic beverage to mix with his

alcoholic beverage, as well as cups and stirrers. Sometimes,

the patrons remain in the bar after the purchase, often sitting

at the half-dozen tables that Respondent provides for this

purpose, and consume their alcoholic beverages in the bar.

4. A sign on the premises prohibits patrons from taking

open containers of alcoholic beverages out of the bar.

Respondent has hired a security guard to enforce this

prohibition on busy nights.

5. Respondent’s accounting system is fairly simple.

Placing labels on each bottle, Respondent’s employees remove the

label each time that a bottle is sold. If a patron chooses to

consume his drink on the premises, the bartender is supposed to

record this fact on a piece of paper. Either the bartender or

Respondent’s manager records sales information on a daily sheet;

however, during the time period in question, if not also at

present, Respondent’s manager discarded this sheet after he

transfered the information to a weekly sheet.

6. Respondent also uses a two-tape cash register, but it

shows only the sale amount and is not computerized. Neither

tape reveals individual sales or whether the patron purchased

his alcoholic beverage for consumption on the premises.

Respondent’s manager uses the tape with the more detailed

information to reconcile any shortages. After doing so, or if

no shortages arise, the manager discards the more detailed tape.

7. During the audit, Respondent took the position that all

of its wine sales and 78 percent of its beer and liquor sales

were for off-premises consumption. However, despite repeated

requests from Petitioner’s auditor, Respondent never produced a

daily log or any documentation of individual transactions.

Instead, Respondent produced only highly summarized information

supporting its position. Respondent delayed providing the

auditor with copies of its purchase invoices for the alcoholic

beverages, although it eventually did so.

8. Petitioner’s auditor agreed to allow Respondent to

provide a detailed sample of sales from February to April, 2000.

When the auditor requested the documentation from this sampling

period, she received nothing.

9. Knowing that Respondent made some sales for consumption

off premises, Petitioner’s auditor allocated 20 percent of all

sales of alcoholic beverages for consumption off premises.

Applying this 20 percent factor, Petitioner’s audit determined

that, from January 1, 1996, through December 31, 1998,

Respondent incurred a surcharge liability of $38,218.31, as well

as a penalty of $25,946.18, for a total liability of $64,164.49,

taxes and penalty.

CONCLUSIONS OF LAW

10. 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. All references to Rules are to the Florida

Administrative Code.)

11. Section 561.501(1) imposes a surcharge on the sale by

licensed vendors of specified volumes of alcoholic beverages

"sold at retail for consumption on premises." Section

561.501(2) requires that vendors pay the surcharge in the

following month to Petitioner and requires the imposition of a

penalty for late payments. Section 561.501(2) requires

Petitioner to "assess a late penalty in the amount of 10 percent

of the amount due per month for each 30 days, or fraction

thereof, after the 20th of the month, not to exceed a total

penalty of 50 percent, in the aggregate, of any unpaid

surcharges."

12. Rule 61A-4.063(1)(b) states that a "sale," under

Section 561.501, " occur[s] at the serving of any alcoholic

beverage for consumption on premises" and includes "any transfer

of an alcoholic beverage for a consideration." Rule

61A -4.063(4)(c) states: "If the vendor chooses the sales

method, the vendor will bear the burden of proof that the method

used accurately reflects actual sales. If the vendor uses the

purchases method, the vendor will bear the burden of proof that

purchases are accurately recorded."

13. Rule 61A-4.063(8) provides:

Each vendor licensed in any manner for

consumption on premises shall maintain

complete and accurate records on the

quantities of all alcoholic beverages

purchases, inventories, and sales. Records

include purchase invoices, inventory

records, receiving records, cash register

tapes, computer records generated from

automatic dispensing devices, and any other

records used in determining sales. In the

event a licensee maintains an active

consumption-on-premises license but has no

surcharge sales for a specific period of

time , the licensee must file monthly

surcharge report DBR form 44-005, Retail

Surcharge Report, showing no activity.

Records may be maintained on optical or

visual storage retrieval systems capable of

being viewed, retrieved and reproduced upon

request by the division. All records must

be maintained for a period of 3 years.

14. Rule 61A-4.063(9) provides:

Employees of the division shall have access

to and shall have the right to examine the

accounting records, invoices, or any other

source documents used to determine a

vendor's compliance with this rule. Each

vendor is required to give the division the

means, facilities and opportunity to verify

the accuracy of the surcharge imposed by

section 561.501, Florida Statutes. In order

to determine whether the monthly reports

submitted by the vendor are accurate, the

division shall use the formula of beginning

inventory plus purchases for the period,

less ending inventory, less the spillage

allowance, to ascertain sales for the

period. Adjustments made to this formula in

favor of the licensee will be based on

factual, substantiated evidence. The

results of the formula will represent sales

transactions as defined herein and in

section 561.01(9), Florida Statutes, for the

period under review.

15. Respondent has elected to account for its alcoholic

beverages transactions through the sales method. By rule,

Respondent bears the burden of proving that its sales are

accurately recorded. Respondent has failed to satisfy its

burden of proof in this regard because it has failed to maintain

sufficiently detailed records to permit the reliable

differentiation between retail sales for consumption on premises

and all other sales.

16. Respondent's focus on the condition of the container

when transferred to the customer is misplaced. Under the

statute imposing the surcharge, the focus is on where the

customer consumes the beverage , not who opens the container. If

the customer consumes the beverage on premises, the surcharge is

due.

17. Petitioner has therefore proved the accuracy of its

audit establishing that Respondent owes a surcharge of

$38,218.31. However, the statute limits the penalty to 50

percent of the surcharge deficiency, so the penalty may not

exceed $19,109.15, for a total liability of $57,327.46.

18. This is the sole relief sought by Petitioner in its

original and amended charging pleadings, as well as the

prehearing stipulation, so it is unnecessary to consider further

the inadequacy of Respondent's records.

RECOMMENDATION

It is

RECOMMENDED that the Division of Alcoholic Beverages and

Tobacco enter a final order finding Respondent liable for

$38,218.31 in surcharge and $19,109.15 in penalty, for a total

liability of $57,327.46.

DONE AND ENTERED this 13th day of June, 2001, in

Tallahassee, Leon County, Florida.

___________________________________

ROBERT E. MEALE

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 [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 13th day of June, 2001.

COPIES FURNISHED:

Richard Turner, Director

Division of Alcoholic Beverages and Tobacco

Department of Business and

Professional Regulation

1940 North Monroe Street, Northwood Centre

Tallahassee, Florida 32399-2202

Hardy L. Roberts, III, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street, Northwood Centre

Tallahassee, Florida 32399-2202

Michael Martinez

Assistant General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399-2202

Thomas A. Smith

800 West Platt, Suite 3

Tampa, Florida 33606

Captain John L. Blair

1313 Tampa Street

Park Trammel Building, Suite 702

Tampa, Florida 33602

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 must be filed with the agency that

will issue the final order in this case.