02-003099 Department Of Business And Professional Regulation, Division Of Alcoholic Beverages And Tobacco, vs. Wackos, Inc., D/B/A Jazzco Status: Closed Recommended Order on Wednesday, November 20, 2002.

Summary: Respondent owes $84,804.46 in surcharge tax for alcoholic beverages sold for consumption on Respondent`s premises, and should have its alcoholic beverage license revoked for failure to file surcharge tax reports and pay tax, interest, and penalties.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF ALCOHOLIC BEVERAGES )

AND TOBACCO, )

)

Petitioner, )

)

vs. ) Case No. 02 - 3099

)

WACKOS, INC., d/b/a JAZZCO, )

)

Respondent. )

)

RECOMMENDED ORDER

A formal hearing was conducted in this case on October 16,

2002, via video teleconference with hearing sites located in

Tallahassee, Florida, and Jacksonville, Florida, before

Suzanne F. Hood, Administrative Law Judge with the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Sherrie Barnes, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

For Respondent: Charles E. Scantling

Corporate Representative

Wackos, Inc., d/b/a Jazzco

3484 Charmont Drive

Jacksonville, Florida 32277

STATEMENT OF THE ISSUES

The issues are as follows: (a) whether Respondent failed

to file surcharge tax reports and to remit surcharge tax in the

amount of $55,478.84 for the audit period January 1, 1994,

through Jul y 28, 1999; (b) whether Respondent failed to file

surcharge tax reports from August 1, 1999, and continuing to the

present; (c) whether Respondent failed to pay penalties and

interest in the amount of $29,325.62 for the period beginning

August 1, 1999, thr ough December 31, 1999; and, if so,

(d) whether Petitioner should revoke Respondent's alcoholic

beverage license.

PRELIMINARY STATEMENT

On February 8, 2000, Petitioner Department of Business and

Professional Regulation, Division of Alcoholic Beve rages and

Tobacco (Petitioner), issued an Administrative Action against

Wackos, Inc., d/b/a Jazzco (Respondent). The Administrative

Action stated that Petitioner intended to revoke, or otherwise

take disciplinary action against Respondent's alcoholic beve rage

license and to impose authorized administrative fines,

investigative costs, and/or late penalties against Respondent.

Count I of the Administrative Action alleged that

Respondent had violated Section 561.501, Florida Statutes, by

failing to pay $55 ,478.84 in surcharge tax for the January 1994

through July 1999 audit period. Count II of the Administrative

Action alleged that Respondent had violated Section 561.501,

Florida Statutes, by failing to submit surcharge reports and to

pay penalties and int erest from August 1999 to the present.

On or about September 5, 2001, Respondent requested an

administrative hearing to contest the charges. Petitioner

referred Respondent's request to the Division of Administrative

Hearings on August 5, 2002.

The und ersigned issued a Notice of Hearing by Video

Teleconference on August 29, 2002. The notice scheduled the

hearing for October 16, 2002.

During the hearing, Petitioner presented the testimony of

one witness and offered six exhibits that were accepted into

evidence. The undersigned requested Petitioner to file a copy

of its exhibits after the hearing. Petitioner complied with

that request by filing Petitioner's exhibits with the Division

of Administrative Hearings on November 8, 2002.

Petitioner's Exhibi t No. P1 was offered pursuant to an ore

tenus Motion to Deem Admissions Admitted and to Relinquish

Jurisdiction. The motion was based on Respondent's failure to

answer Petitioner's First Request for Admissions dated

September 16, 2002. The motion is her eby granted as to the

request to deem facts admitted but denied as to the request to

relinquish jurisdiction.

Respondent presented the testimony of its corporate

representative and no other witnesses. Respondent offered no

exhibits for admission into ev idence.

A Transcript of the proceeding was filed on October 28,

2002.

Petitioner filed a Proposed Recommended Order on

November 13, 2002. As of the date of issuance of this

Recommended Order, Respondent has not filed proposed findings of

fact or conclusions of law.

FINDINGS OF FACT

1. Petitioner is the state agency charged with enforcing

regulations related to alcoholic beverage licenses in Florida.

2. At all times material to this proceeding, Respondent

was licensed to sell alcoholic bevera ges for consumption on the

premises of its establishment in Jacksonville, Florida.

Respondent held License No. 26 - 0058.

3. Alcoholic beverage licensees may elect one of two ways

to calculate and pay the required surcharge tax on alcoholic

beverages for consumption on the premises. First, the licensee

may calculate, report, and pay the tax using the "sales method"

based on retail sales records. Second, the licensee may

calculate, report, and pay the tax using the "purchase method"

based on wholesale rec ords such as invoices from wholesale

distributors. In this case, Respondent elected to calculate,

report, and pay its surcharge tax using the "purchase method."

4. Licensees who are authorized to sell alcoholic

beverages for consumption on the premise s are required to submit

surcharge tax reports and to pay the tax for each month by the

15th day of the following month. Respondent submitted reports

and paid the tax for the months of January and February 1999.

The next time that Respondent submitted a report and paid the

tax was for the month of November 1999.

5. For a licensee who uses the "purchase method,"

Petitioner conducts an audit by comparing the licensee's sales

history and payment history. The sales history is based on

invoices for the pu rchase of alcoholic beverages from wholesale

distributors who report their sales to each licensee every

month. The payment history is based on the monthly surcharge

tax reports filed by the licensee.

6. Petitioner conducted a surcharge tax audit of

Re spondent's business for the period beginning January 1, 1994,

and ending July 28, 1999. The audit began on August 1, 1999,

and ended on August 17, 1999.

7. The audit established that Respondent owed $31,809.72

in surcharge tax, penalties, and interest for the audit period.

The Final Surcharge Audit Report established that Respondent

would owe $55,478.84 in surcharge tax, penalties, and interest

if Respondent did not pay the former amount within 30 days.

Respondent did not make the required payment.

8. Petitioner conducted a periodic surcharge tax audit for

the period beginning on August 1, 1999, and ending on

December 31, 2001. The audit was conducted on April 30, 2002,

and ended on June 4, 2002. The second audit established that

Respondent owe d an additional statutory tax, penalties, and

interest in the amount of $29,325.62.

9. Respondent's corporate representative testified that

Respondent stopped filing the surcharge tax reports after the

initial audit because there was a discrepancy betw een

Respondent's records (invoices for alcoholic beverages purchased

and delivered) and the records that Petitioner relied upon to

conduct the audit (wholesale distributors' invoices for

alcoholic beverages sold to Respondent). Respondent did not

present any documentation to support this testimony, which is

not credited. Additionally, there is no competent evidence that

Respondent's auditor advised Respondent to stop filing the

reports until the discrepancy was resolved.

10. Respondent's corporate repr esentative also testified

that Respondent gave away some alcoholic beverages to customers.

According to the corporate representative, this occurred when

Respondent charged the customers one fee at the door and allowed

them to drink free of charge. Respon dent did not present any

documentation to support this testimony, which is not credited.

11. Finally, the corporate representative agreed that

Respondent owed the assessed surcharge tax. However, he

objected to paying the statutorily assessed penalties and

interest because they were more than Respondent would have owed

if it had paid the tax when it was due. Respondent's argument

in this regard is without merit.

CONCLUSIONS OF LAW

12. The Division of Administrative Hearings has

jurisdiction over the p arties and the subject matter of this

proceeding. Sections 120.569 and 120.57(1), Florida Statutes.

13. Petitioner has the burden of proving by clear and

convincing evidence that Respondent has failed to file surcharge

tax reports and to pay its surcharg e tax, together with

penalties and interest, in the total amount of $84,804.46; and

that Respondent's alcoholic beverage license should be revoked.

Department of Banking and Finance, Division of Securities and

Investor Protection v. Osborne Stern and Comp any , 670 So. 2d 932

(Fla. 1996); Florida Department of Transportation v. J.W.C.

Company, Inc. , 396 So. 2d 778 (Fla. 1st DCA 1981); and Balino v.

Department of Health and Rehabilitative Services , 348 So. 2d 349

(Fla. 1st DCA 1979).

14. Section 561.29(1), F lorida Statutes, authorizes

Petitioner to revoke or suspend an alcoholic beverage license

when the licensee violates any laws of any state.

15. Section 561.501(1), Florida Statutes, establishes the

surcharge tax on alcoholic beverages sold at retail for

consumption on the premises. Section 561.501(2), Florida

Statutes, requires vendors to report and remit the tax to

Petitioner by the 15th of the month following the month in which

the surcharges are imposed. Sections 561.501(2) and 561.501(4),

Florida S tatutes, set forth the penalties and interest that

Petitioner must assess when reports and remittances are not made

in a timely manner.

16. Section 561.501(3), Florida Statutes, gives Petitioner

authority to compromise a taxpayer's liability for the s urcharge

tax if there is doubt as to liability for, or collectibility of,

the tax. Petitioner may compromise a taxpayer's liability for

penalties if the noncompliance is due to reasonable cause and

not to willful negligence, willful neglect, or fraud. Se ction

561.501(3), Florida Statutes.

17. In this case, Petitioner presented clear and

convincing evidence that Respondent had a surcharge tax

liability in the amount of $55,478.84 for the January through

July 1999 audit period. Clear and convincing evide nce also

indicates that Respondent had an additional tax liability in the

amount of $29,325.62 for the period beginning August 1, 1999,

and ending December 31, 2001.

18. On the other hand, Respondent presented no persuasive

evidence to cast any doubt a s to his liability for the surcharge

tax. He also failed to present any mitigating evidence that

would compel a reduction of his tax liability. Respondent's

noncompliance was not due to reasonable cause. Accordingly,

Petitioner should revoke Respondent' s license.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED:

That Petitioner enter a final order finding that Respondent

owes $84,804.46 in tax, interest, and penalties and revoking its

license to sell alco holic beverages for consumption on the

premises.

DONE AND ENTERED this 20th day of November, 2002, in

Tallahassee, Leon County, Florida.

___________________________________

SUZANNE F. HOOD

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 20th day of November, 2002.

COPI ES FURNISHED :

Sherrie Barnes, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

Captain Cynthia C. Britt

Division of Alcoholic Beverages

and Tobacco

Department of Business and

Prof essional Regulation

7960 Arlington Expressway

Suite 600

Jacksonville, Florida 32211

Charles E. Scantling

Corporate Representative

Wackos, Inc., d/b/a Wackos

3484 Charmont Drive

Jacksonville, Florida 32277

Peter Williams, Director

Division of Alcoholic Beverages

and Tobacco

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 0792

Hardy L. Roberts, III, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Ta llahassee, Florida 32399 - 2202

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 ag ency that

will issue the final order in this case.