06-003958 C And C Mechanical Contractors vs. Department Of Revenue Status: Closed Recommended Order on Tuesday, February 27, 2007.

Summary: Petitioner`s failure to pay the undisputed portion of the tax assessment resulted in a jurisdictional dismissal of the challge to the disputed portion.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

C AND C MECHANICAL CONTRACTORS, )

)

Petitioner, )

)

vs. ) Case No. 0 6 - 3958

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER OF DISMISS AL

B ecause this case may be determined upon the pleadings and

papers filed, no final disputed - fact hearing has been held.

STATEMENT OF THE ISSUE

Whether this cause should be dismissed for Petitioner's

failure to comply with Section 120.80(14)(b)3. , Florid a

Statutes.

PRELIMINARY STATEMENT

This cause was referred to the Division of Administrative

Hearings on or about October 12, 2006.

On October 26, 2006, a Notice of final disputed - fact

hearing and an Order of Pre - hearing Instructions were entered.

On Nov ember 13, 2006, Respondent Agency filed its Motion to

Dismiss. Petitioner filed no timely response in opposition as

permitted by Florida Administrative Code Rule 28 - 106. 204 . On

November 28, 2006, Respondent filed an affidavit of Martha

Watkins in support of its Motion to Dismiss. In an abundance of

caution, oral argument was heard by telephonic conference call

on November 29, 2006 . B y an Order entered December 6, 2006, the

final disputed - fact hearing was cancelled; the Motion to Dismiss

was taken under advisement; and each party was permitted to file

a memorandum of law , on or before , January 11, 2007.

Respondent timely filed its Memorandum of Law, together

with a Second Affidavit of Martha Watkins. Petitioner filed its

Memorandum of Law late. On Jan uary 16, 2007, Respondent filed a

Motion to Strike Respondent' s late Memorandum. On January 17,

2007, Petitioner filed a Response to Respondent's Motion to

Strike. On January 18, 2007, Respondent filed a Reply to

Petitioner's Response, a pleading not aut horized by any rule .

Once again, in an abundance of caution, all filing s have

been considered.

FINDINGS OF FACT

1. Petitioner is co ntesting an assessment of taxes,

pursuant to an audit conducted by Respondent Department of

Revenue. The total amount of the assessment was $32,312.24.

2. Following the audit, in a letter to the Department's

auditor dated April 17, 2006, Petitioner's counsel stated that

taxes "in the amount of $5,744.80 is something [Petitioner]

would be obligated to pay under the laws of the State of

Florida, and as such, they are willing to do so. They would be

willing to pay interest due on this money." 1/ This statement

constitutes a clear admission that Petitioner owes the stated

amount of the tax, $5,744.80, plus interest that accru es daily.

3 . Petitioner's Memorandum makes the un - sworn statement

that:

At the time the parties met to discuss the

assessment with the representative of the

Department of Revenue, Martha Watkins, they

offered to pay $5,744.80 of the taxes but

were informe d it was part of the $32,312.24,

and they could either pay it all or contest

it.

At all times material hereto the p etitioners

have stood ready to pay the $5,744.80. On

April 17, 2006, we wrote a letter to Martha

Watkins making this offer for the second

time. On August 17, 2006, we again wrote to

the Department of R evenue attaching ou r

letter of April 17, 2006, again making this

offer. At no time was a response received

to either letter.

4. The August 17, 2006, letter alluded to in Petitioner's

Memor andum is not of record and neither a copy of th at letter ,

nor an affidavit of its contents , has been submitted by either

party .

5. At no time has Petitioner asserted that any amount of

tax money was unequivocally tendered to Respondent. No

affidavit to t hat effect has been filed in this case.

6 . The Second Affidavit of Martha Watkins, submitted with

the Department of Revenue's timely Memorandum states, in

pertinent part:

4. I conducted the audit of C AND C

MECHANICAL CONTRACTORS, INC., from which

arose the challenged assessment and this

controversy.

5. During the course of the audit, and

subsequent communication with C AND C

MECHANICAL CONTRACTORS, INC., regarding the

audit and assessment of taxes and interest,

C AND C MECHANICAL CONTRACTORS, INC., mad e

at least one settlement offer, that was

unacceptable, and was rejected by the

Department as such. At no time did C AND C

MECHANICAL CONTRACTORS, INC., unequivocally

tender to me, or unequivocally offer to

tender to me, the uncontested tax and

applicable interest, and at no time did I

refuse to accept any payment of taxes.

7 . On September 2 1 , 2006, a Request for Administrative

Hearing was filed with the Department of Revenue.

8 . On September 28, 2006, the Executive Director of the

Department of Revenue entered an Order Dismissing the Petition

with Leave to Amend. That Order reads, in pertinent part:

On September 21, 2006, the Florida

Department of Revenue received a "Request

for Administrative Hearing" from Petitioner,

C & C Mechanical Contractors. Wh ile the

document clearly is a request for hearing,

the petition does not state what the

Petitioner is disputing. A record search

shows that at least one Notice of Proposed

Assessment was issued by the Department on

June 15, 2006 to this Petitioner. It is

impossible to determine from the petition

whether this proposed assessment is being

challenged. However, because this request

was sent within the applicable time frame to

dispute the Notice of Proposed Assessment,

the Department will treat it as such.

As required by law, the notice stated that a

formal protest for an administrative hearing

had to be received in the Office of the

General Counsel within sixty days after the

assessment became final an d had to be in

compliance with c hapter 120, Florida

Stat utes. The petition fails to meet the

requirem ents contained in c hapter 120,

Florida Statutes and Uniform Rule 28 -

106.201, Florida Administrative Code, the

appropriate rule for use in filing a

petition requesting a hearing involving

disputed issues of mate rial fact. A copy of

the appropriate rule is provided with this

order.

Specifically, the petition does not contain:

(1) a statement of when and how the

Petitioner received notice of the agency

decision; (2) all disputed issues of

material fact. If ther e are none, the

petition must so indicate; (3) a concise

statement of the ultimate facts alleged,

including the specific facts the Petitioner

contends warrant reversal or modification of

the agency's proposed action; (4) a

statement of the specific rules o r statutes

the Petitioner contends require reversal or

modification of the agency's proposed

action, and (5) a statement of the relief

sought by the Petitioner, stating precisely

the action the petitioner wishes the agency

to take with respect to the agenc y's

proposed action.

Because of these deficiencies, Petitioner's

documentation must be dismissed.

IT IS ORDERED:

The petition for hearing filed by Petitioner

is DISMISSED. Such dismissal is without

prejudice to Petitioner to amend the

petition to provi de the information listed

above. . . .

9 . On October 11, 2006, the Amended Petition for

Administrative Hearing was filed with the Department of Revenue.

That Amended Petition stated, in pertinent part:

1. The Petitioner received a certified

letter date d June 15, 2006, stating taxes

were due and owing in the amount of

$32,312.24. This amount included $5,774.80

in fabrication cost taxes which the

Petitioner does not object too [sic] . The

balance of the $32,312.24 was for taxes on

items sold to non - taxab le entit ies . The

Petitioner would object to these taxes and

gives as grounds the following:

a) Items sold to non - taxable entities are

not subject to the Florida Tax Code.

b) The department made a determination the

items sold to the non - taxable entitie s were

taxable stating the contractor, in this case

the Petitioner, was the end user.

c) Florida Tax Code states in part " . . . a

determination whether a particular

transaction is properly characterized as an

exempt sale to a government entity or a

taxab le sale to a contractor shall be based

on the substance of the transaction rather

than the form in which the transaction is

cast. " The department " shall adopt rules

that give special consideration to factors

that govern the status of the tangible

personal property before its affixation to

real property. "

d) The Department of Revenue has adopted a

rule which is in violation of the incident

[sic] of legislature and contrary to Florida

Statute 212.08. 2/ (Emphasis supplied).

10 . The Amended Petition cons titutes a clear admission

that the $5,744.80 portion of the taxes due under the audit were

both uncontested and owed, as of October 11, 2006.

1 1 . The first Affidavit of Martha Watkins, filed

November 28, 2006, in support of the pending Motion to Dismiss ,

states, in pertinent part:

1. I am a [sic] sui juris and otherwise

competent to testify in this matter.

2. I am employed by the Florida Department

of Revenue in the position of Tax Auditor

III.

3. I am familiar with the accounts,

accounting methods, a nd maintenance of

records at the Florida Department of Revenue

for sales tax, interest, and penalties.

4. I am authorized by the Department of

Revenue to make affidavit regarding the

payment status of sales taxes, interest and

penalties relative to regis tered Florida

dealers.

5. I have reviewed, and have personal

knowledge of the accounts of the Florida

Department of Revenue regarding tax payment

of C&C MECHANICAL CONTRACTORS, INC., a

Florida corporation that has in the past

been issued a Certificate of Registration by

the Department of Revenue.

6. According to the records of the

Department of R evenue, as of November 27,

2006, C&C MECHANICAL CONTRACTORS, INC., has

not paid any sums to the Department of

Revenue against the assessed outstanding

balance o f sales tax, interest or penalties,

since prior to April 16, 2006.

CONCLUSIONS OF LAW

1 2 . The question of jurisdiction may be resolved in

response to the Motion to Dismiss upon the foregoing facts.

1 3 . Section 120.80(14)(b)3., Florida Statutes , read s, in

pertinent part:

(14) DEPARTMENT OF REVENUE. --

* * *

(b) Taxpayer contest proceedings. --

* * *

3.a. Prior to filing a petition under this

chapter, the taxpayer shall pay to the

applicable department the amount of taxes,

penalties, and accrued i nterest assessed by

that department which are not being

contested by the taxpayer. Failure to pay

the uncontested amount shall result in the

dismissal of the action and imposition of an

additional penalty of 25 percent of the

amount taxed.

b. The requir ements of s. 72.011(2) and

(3)(a) are jurisdictional for any action

under this chapter to contest an assessment

or denial of refund by the Department of

Revenue, the Department of Highway Safety

and Motor Vehicles, or the Department of

Busin ess and Profess ional Regulation .

(Emphasis supplied.)

14. Section 72.011(1)(a), Florida Statutes, specifically

addresses both circuit court and Chapter 120 actions. 3/ Section

72.011(2) and (3)(a) address es the time frame within which

actions may be brought and how t he uncontested tax and other

monies are to be handled if they are paid into the circuit court

action.

1 5 . Petitioner claims an estoppel, but has failed to prove

the necessary elements of an estoppel . Conditional offers to

pay do not equate with the tende r of a check for the uncontested

partial amount.

16 . Petitioner asserts that Respondent's failure to

respond to Petitioner's settlement offers led Petitioner to

believe its only course of action was the filing of a Section

120.57(1) petition, but this is fallacious reasoning. Silence

by a statutory taxing authority existing for the sole ultimate

purpose of collecting taxes cannot reasonabl y be equated with a

refusal to accept an offered partial payment. There was no

affirmative representation by the Age ncy, and thus no estoppel

lies against the Agency. If the audit/assessment was not to

become final, in whole or in part, a legally sufficient petition

was necessary, but that necessity does not change the clear

language of the statute , which makes payment of the uncontested

tax amount prerequisite to the filing of such a petition .

1 7 . While Petitioner did offer to compromise the

$32,312.24 by the payment of a fraction of that amount, there is

no evidence Petitioner attempted to actually pay the uncontest ed

portion of the assessment without qualification or condition

attached. In the absence of such unequivocal tender of payment,

this forum is required by law to dismiss the case as without

jurisdiction.

RECOMMENDATION

Based on the foregoing Findings of F acts and Conclusions of

Law, it is

RECOMMENDED that the Florida Department of Revenue enter a

final order dismissing the Amended Petition .

D ONE AND ENTERED this 27th day of February , 200 7 , in

Tallahassee, Leon County, Florida.

S

__________________________ _________

ELLA JANE P. DAVIS

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 wit h the Clerk of the

Division of Administrative Hearings

this 27th day of February, 2007.

ENDNOTES

1/ In compliance with Section 90.408, Florida Statutes,

proposed settlement terms were redacted from th is letter when it

was attached to Respondent's Motio n to Dismiss.

2/ Due to the recommendation of this instant Recommended Order

it is not necessary to address lack of jurisdiction of this

issue either due to Petitioner's failure to file a rule

challenge directly with the Division or with regard to Sectio n

120.57(1)(e) , within this cause.

3/ Section 72.011(3)(b)2, Florida Statutes provides, in

pertinent part, that "if . . . it is determined . . . that a

plaintiff, due to a good faith de minimis error failed to comply

[with the requirement that any uncont ested tax be paid], the

plaintiff shall be given a reasonable time within which to

comply before the action is dismissed." The statute goes on,

however, to define a de minimis error as limited to one that

involves an amount of unpaid and uncontested tax t hat is equal

to or less than five percent of the assessment, an d goes further

to specifically exclude from consideration for a waiver from

dismissal any case wherein an uncontested tax that exceeds five

per cent of the assessment is not paid. The statute discusses

oversight or excusable error, but not compromise.

COPIES FURNISHED:

J. Bruce Hoffmann, General Counsel

Department of Revenue

The Carlton Building, Room 204

Tallahassee, Florida 32399 - 0100

Jarrell L. Murchison, Esquire

Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399 - 1050

Thayer M. Marts, Esquire

1105 Hayes Street

Post Office Box 1814

Tallahassee, Florida 32302

James Zingale, Executive Director

Department of Revenue

The Carlton Building, Room 104

Tallah assee, Florida 32399 - 0100

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 tha t

will issue the final order in this case.