09-006512 Department Of Business And Professional Regulation, Division Of Alcoholic Beverages And Tobacco vs. Hub Bar, Inc., D/B/A The Hub Status: Closed Recommended Order on Thursday, April 15, 2010.

Summary: Respondent must pay liquor tax surcharge and penalty.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF ALCOHOLIC BEVERAGES )

AND TOBACCO, )

)

Petitioner, )

)

vs. ) Case No. 09-6512

)

HUB BAR, INC., d/b/a THE HUB, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice to all parties, a final hearing was

conducted in this case on February 11, 2010, in Tampa, Florida,

before Administrative Law Judge R. Bruce McKibben of the

Division of Administrative Hearings. Each of the parties was in

attendance at the final hearing and each was represented as set

forth below.

APPEARANCES

For Petitioner: Michael B. Golen, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 40

Tallahassee, Florida 32399-2022

For Respondent: Joseph R. Fritz, Esquire

Joseph R. Fritz, P.A.

4204 North Nebraska Avenue

Tampa, Florida 33603

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent failed to pay

tax surcharges, penalties and interest owed on the sale of

alcoholic beverages, and, if so, the amount that is currently

due and owing.

PRELIMINARY STATEMENT

On or about April 4, 2007, Petitioner, Department of

Business and Professional Regulation, Division of Alcoholic

Beverages and Tobacco ("Department"), issued an administrative

action against Respondent, Hub Bar, Inc., d/b/a The Hub. A

request for formal administrative hearing was filed by

Respondent in response to the administrative action and the

action was forwarded to the Division of Administrative Hearings

("DOAH"). The matter was assigned Case No. 09-1120. The

parties jointly moved for relinquishment of jurisdiction, and

the case was remanded to the Department. On November 24, 2009,

the Department filed a motion to re-open the file which had been

closed by DOAH. The file was re-opened under the above-styled

case number. A final hearing was held on the date set forth

above, and both parties were in attendance.

At the final hearing, Petitioner called the following

witnesses: Kelly Jewett, Tax Auditor III for the Department;

and Julie Keenan, senior tax audit administrator for the

Department. Petitioner offered seven exhibits into evidence,

each of which was admitted.

Respondent called two witnesses: Ferrell Melton and James

Smith. Respondent did not offer any exhibits into evidence.

A transcript of the final hearing was ordered by the

parties. The Transcript was filed at DOAH on March 4, 2010.

By rule, the parties were allowed ten days, i.e., up until

March 14, 2010, to submit proposed recommended orders.

March 14, 2010, fell on a Sunday, so the proposed recommended

orders were due on March 15, 2010. Petitioner timely submitted

a Proposed Recommended Order, and it was duly considered in the

preparation of this Recommended Order. On March 22, 2010,

Respondent moved for an extension of time to file its proposed

recommended order. Petitioner did not oppose the motion, and it

was granted, giving Respondent until April 6, 2010, to file its

proposed recommended order. Respondent's Proposed Recommended

Order was filed at DOAH on April 5, 2010, and was duly-

considered in the preparation of this Recommended Order.

Respondent's Proposed Recommended Order did not contain

citations to the final hearing transcript.

FINDINGS OF FACT

1. The Department is the state agency responsible for,

inter alia , the licensing of establishments that sell alcoholic

beverages. During the years 2000 to 2006, a statutory tax

surcharge existed on the sale of alcohol consumed on the

premises of licensed establishments. The Department was

responsible for ensuring that all such surcharges were paid by

licensed establishments.

2. Respondent is a licensed purveyor of alcoholic

beverages. Respondent's business, known as The Hub, has an area

for consumption of alcoholic beverages and a separate, but

attached, area for selling alcohol in sealed containers (i.e.,

in "package"). Alcohol served in package is not subject to the

surcharge mentioned above. Alcoholic beverages are stored in

five different areas of the establishment: in the bar, in the

package store area, in a large storeroom, in a wine room, and in

a walk-in cooler.

3. In September 2006, the Department conducted a tax

surcharge audit of Respondent's business for the period July 1,

2003 through June 30, 2006 (the "Audit Period"). A surcharge

audit is performed to ensure that an establishment has paid the

entire tax surcharge owed for the sale of alcohol consumed on

the premises. By letter dated September 25, 2006, the

Department advised Respondent that it had been selected for the

aforementioned audit. The letter included a questionnaire to be

filled out by Respondent to provide the Department information

to make the audit more accurate. Respondent was asked to

complete and mail the questionnaire on or before October 9,

2006.

4. Respondent did not respond to the September 25, 2006,

letter as requested. Therefore, an initial desk audit was

performed by the Department. A desk audit utilizes information

from the department's database in lieu of records and

information received directly from a licensee. The Department's

database included reports from major alcohol distributors

concerning deliveries made to Respondent during the Audit

Period. The sale and delivery of alcoholic beverages is

reported by distributors to the Department in the form of

gallons of alcohol delivered. The report does not list sizes of

bottles, numbers of bottles, or brand names. The tax surcharge

is based solely on gallons sold.

5. The initial desk audit was completed on or about

November 16, 2006. The audit found an unpaid surcharge amount

of $33,817.34, plus reporting penalties and interest of $183.02;

and underpayment penalties and interest of $23,755.98, for a

total liability of $57,810.34. Pursuant to its normal operating

procedures, the Department sent a letter by certified mail

advising Respondent of the audit findings. The letter also gave

Respondent the right to waive the underpayment penalties and

interest by paying the remaining balance within 30 days. The

letter further provided Respondent the right to make any

corrections to errors which it believed to exist within the

audit. The letter then asked Respondent to produce certain

records so that the audit findings could be confirmed.

6. The desk audit performed by the Department established

the number of gallons of beer, wine and liquor delivered to

Respondent by major distributors during the audit period. The

primary beer distributors were Pep Distributing and JJ Taylor;

the primary liquor distributors were Southern, National, and

Premiere. Adjustments to the gallonage (as it is referred to by

the Department) were made for spillage, alcohol used for

cooking, and other reasons. The desk audit revealed that 2.25

gallons of draft beer, 38,340.90 gallons of other beer, 721.19

gallons of wine, and 10,498.34 gallons of liquor had been

delivered to The Hub during the Audit Period.

7. Meanwhile, Respondent had been making some tax

surcharge payments on a regular basis during the Audit Period.

The surcharge payment was mailed in using a printed form

supplied by the Department. On the form, a business could elect

to pay the surcharge based on its sales or based on its

purchases of alcohol. Respondent chose to pay using the sales

method, i.e., payments were made on the amount of alcohol sold

for consumption on its premises.

8. The Department determined that despite the surcharge

payments made by Respondent during the Audit Period, Respondent

had underpaid by the sum of $33,871.34. The basis for this

finding was that of the 10,000 (plus or minus) gallons of

alcohol purchased during the Audit Period, there was proof of

consumption on the premises for only about 2,075 gallons.

Because The Hub had a 4-COP license (meaning it is allowed to

sell alcohol for consumption on the premises), the remainder of

the alcohol was presumed to have been consumed without a

surcharge being paid. Interest in the amount of $183.02 was

assessed, along with underpayment penalties and interest of

$23,755.98, for a total statutory liability of $57,810.34,

pursuant to the desk audit.

9. By letter dated November 16, 2006, the Department

notified Respondent of its findings and conclusions from the

desk audit. The letter was sent to The Hub via certified mail

and signed for on November 17, 2006, by Jeannie Robinson, an

employee (bartender) of Respondent.

10. On or about December 6, 2006, Respondent (through the

person of Scott Imrich, a manager of the establishment)

contacted the Department and provided answers to the

questionnaire that had been sent out with the November 16, 2006,

letter to Respondent. The questionnaire contained two pertinent

pieces of information: 1) The Hub did not have any draft beer;

the draft beer indicated in the distributors' reports was

actually a certain kind and size of canned beer that Respondent

did not know how to classify, so they placed it in the draft

beer column; and 2) The Hub also had a package store and

24-to-25 percent of The Hub's "total sales" were made in the

package store. That is, Respondent was saying that the package

sales were not subject to the surcharge.

11. Imrich did not specify whether his comments about

percentage of sales in the package store were meant to reflect

total dollar amounts or total gallons sold. His letter simply

stated: "We are currently looking at a 24-25% rate (over the

three year audited period) in total beer (container), liquor,

and wine sales from our package store, from our total sales."

The Department interpreted that statement to mean 25 percent of

total gallons sold. Respondent's witnesses at final hearing

said that Imrich meant 25 percent of the total dollar amounts of

sales. Imrich did not appear at final hearing to clarify what

he actually meant. The current owner of The Hub, who was a

bartender during the Audit Period, estimated that approximately

30 percent of revenues were generated in the package store at

that time, but could not provide any estimation as to percentage

of gallons sold.

12. After receipt of Imrich's letter, the Department

revised its audit findings. A credit was given to Respondent

for package sales. (Respondent was also given credit for

spillage amounting to five percent of beer and wine.) Beer

gallonage was reduced from 36,423 gallons to 27,319.91 gallons.

Wine gallonage actually increased, but that was due to

Respondent's identifying one distributor (Johnson Brothers) that

the Department had not previously considered. Respondent's wine

inventory went from 721 gallons to 997 gallons, minus the

25 percent allowance, for a total of 816.7 gallons. 1 Liquor

gallonage was also affected by Johnson Brothers deliveries, but

liquor went from 9,448.55 gallons to 7,163.77 gallons.

13. The adjustments referred to above reduced the amount

of the surcharge to $22,915.48 and reduced the reporting

penalties to $121.68. The underpayment penalties and interest

calculation was reduced to $16,036.81 for a total statutory

liability of $39,073.97. A letter advising Respondent of the

revised audit was mailed on December 20, 2006, and again advised

that prompt payment could reduce the total amount owed. James

Smith, who was a primary owner of The Hub at that time, was

notified about the audits, but Smith told his manager, Imrich,

to handle the situation. Imrich apparently failed to do so.

14. When no response to the revised audit findings was

received by the auditors for the Department, the matter was

referred to the Department's Enforcement Division for further

action. The Enforcement Division then conducted a visit to The

Hub to advise Respondent as to the existing determination of

money owed. That visit was made on March 6, 2007. A form

memorializing the visit was filled out and signed by Kelly

Primo, a bartender at The Hub. Respondent was given 14 days to

respond to the Department or else an administrative action would

be filed to collect the outstanding tax surcharge charges.

15. Imrich thereafter provided cash register tapes

(called Z Tapes) to the Department. The Z Tapes were purported,

by Imrich, to establish the amount of alcohol actually sold for

consumption on the premises. There were thousands of Z Tapes

(two tapes per day from the bar during the Audit Period)

provided to the Department. Imrich also provided cash register

receipts from the package store portion of the establishment.

The Z Tapes distinguished purchases for beer versus wine versus

liquor. The package store receipts did not identify what kind

of alcohol was purchased, only the dollar amount of the

purchase. It is, therefore, impossible to ascertain from the

cash register receipts how many gallons of alcoholic beverage

were sold in the package store. If the Z Tapes are correct and

if they reflect all sales during the audit period, then one

might extrapolate--using a one ounce per drink assumption--the

total gallonage sold at the bar. However, the Z Tapes were not

introduced into evidence and cannot be relied upon to make a

finding herein. Respondent did prepare some general summaries

of the Z Tapes, but no competent evidence was presented to give

those summaries any credibility. Thus, they also cannot be

relied upon to make a finding herein.

16. The Z Tapes purportedly indicate that 2,075 gallons of

alcoholic beverages were sold in the bar portion of the

establishment during the Audit Period. There is no disagreement

by the Department that at least 2,075 gallons were sold at the

bar. Ferrell Melton, who was a bartender during the Audit

Period but has since become an owner of The Hub, estimated that

approximately 70 percent of the Respondent's revenues generated

during the Audit Period were from the bar sales. There was no

documentary evidence to support his estimation.

17. Based upon the Z Tapes and further conversations with

Respondent, the Department agreed to give Respondent the benefit

of the doubt. An allowance for sales in the package store was

then increased to 40 percent (from 25 percent) of total sales

for purposes of calculating the surcharge. 2

18. The 40-percent revision reduced the surcharge to

$16,646.78; the reporting penalties and interest were reduced to

$88.02; the underpayment penalties and interest were reduced to

$11,630.98, for a total statutory liability of $28,365.78 (as

compared to $57,810.34 in the original audit, a 50-percent

reduction). A letter dated June 13, 2007, was sent to

Respondent setting forth the revised amounts.

Converting Dollar Sales to Gallons

19. The package store area constituted a small portion of

the entire establishment. There was a door connecting the

package store to the bar area, but it was kept locked at all

times relevant to this dispute. A sign on the door advised

potential customers to ask the bartender for assistance when

items needed to be purchased from the package store. When

asked, the bartender would leave the bar area, unlock the

package store, and ring up the purchase on the cash register

located in the package store. The door would then be re-locked

until another customer asked for assistance. The package store

sold beer, wine and liquor. The liquor in the package store was

sold in several bottle sizes: 50 ml, 100 ml, 200 ml, 375 ml,

and 1.75 liters. By way of example, Respondent provided an

inventory for the week ending May 6, 2007, which showed the

following numbers of bottles of liquor in each size:

50 ml--1844 bottles (24.3566 gallons)

100 ml--48 bottles (1.26802 gallons)

200 ml--1766 bottles (93.3055 gallons)

375 ml--925 bottles (91.6346 gallons)

1.75 liters--150 bottles (69.3750 gallons)

Total for these bottles: 433.09 gallons

750 ml--773 bottles (153.153 gallons)

Liters--743 bottles (196.279 gallons)

Total for these bottles: 349.432 gallons

The beer inventory was 773 12-ounce bottles (522 gallons) and

743 16-ounce bottles (196.279 gallons). The wine inventory was

666 bottles (131.953 gallons).

20. Gallonage Theory: The larger size bottles were used

in the bar area. Thus, a considerably larger number of bottles

would have to be sold in the package area to generate 8,000

gallons of liquor. It is difficult to imagine how the small

package store, using a bartender as its cashier on an

intermittent basis, could generate enough sales of smaller

bottles to sell four times as much alcohol as the bar area.

Presumably some wine and beer was also sold in the package

store.

21. Revenue Theory: A 33-ounce (one liter) bottle of

liquor would sell in the package store for a set price. The

price of $10.00, although not realistic, was used at final

hearing by way of example. That same 33-ounce bottle would

generate far more if sold by the drink in the bar area. For

example, at $3.00 per drink containing one ounce of alcohol, the

bottle would provide $99.00 in revenue at the bar versus $10.00

if sold in the package area. Thus, alcohol sold in the bar area

would definitely generate more revenue than package alcohol.

22. Respondent did not have any record as to how many

gallons were sold in the package store, but maintains that all

liquor, except for what was sold in the bar area, would have

been package store sales. For the Audit Period (per findings in

the second revised audit), 10,584.32 gallons were purchased, and

Respondent paid tax on 2,075.55 gallons. Thus 8,508.77 gallons

were presumed to have been sold as package. If, as Respondent

asserts, liquor sold in the bar generates ten times as much per

ounce more than liquor sold in package, than at a theoretical

$1.00 per gallon, the package store would generate $8,508.77 and

the bar would generate $20,755.50 (2,075.55 gallons times

$10.00).

23. Respondent's primary representative, who had been a

bartender at The Hub for 20 years before recently purchasing it,

estimates that 60 percent of The Hub's revenue currently comes

from sales at the bar area. During the Audit Period, he

believes approximately 70 percent of the revenue was generated

in the bar area. There is no documentary support for the

witness's estimation, and the witness's confusion concerning the

facts does not make the testimony very credible.

24. Using the theoretical amounts set forth in paragraph

23 above, $8,508.77 (package) plus $20,755.50 (bar), equates to

$29,264.27. Seventy percent of that figure equals $20,484.98,

i.e., very close to the amount that the 2,075 gallons of liquor

might generate in the bar on a per-drink basis. Using the prior

manager's figure of 75 percent of sales (if revenues is what he

meant) being from the bar, that would equate to $21,948 of sales

from the bar.

25. Thus, theoretically, Respondent's position could be

feasible. However, Respondent simply failed to provide

competent, substantial evidence to support its theory. The

unsubstantiated hearsay as to what Imrich meant or how much

alcohol Imrich sold through the package store is insufficient to

make a conclusive finding. So, too, is the general assertion by

Respondent as to demographics in the area, type of clientele,

etc.

26. None of the evidence at final hearing could establish

a definitive relationship between the gallonage sold and the

revenue received. None of the Z Tapes or cash register receipts

were offered into evidence to establish such a relationship.

There were apparently no records as to the number of bottles

sold in the package store. Rather, the tapes from the package

store show only a dollar amount; the gallonage per dollar cannot

be ascertained from the tapes. (Mr. Smith did take an inventory

each day when he was working at The Hub, but he would throw away

his inventory sheet each day. Besides, Mr. Smith was not

working full-time at the establishment during the Audit Period.)

27. Respondent's record-keeping for its alcohol sales is

inconsistent. For the bar area of its establishment,

Respondent's cash register tapes identify whether each purchase

is beer, wine or liquor. In the package store, the cash

register receipts show only a dollar amount, without identifying

what was sold.

CONCLUSIONS OF LAW

28. DOAH has jurisdiction over the parties to and the

subject matter of this proceeding pursuant to Section 120.569

and Subsection 120.57(1), Florida Statutes (2009).

29. For the time period at issue in this proceeding, a

surcharge on alcoholic beverages existed pursuant to Section

561.501, Florida Statutes (2006) 3 , which provided:

561.501 Surcharge on sale of alcoholic

beverages for consumption on the premises;

penalty . --

(1) Notwithstanding s. 561.50 or any other

provision of the Beverage Law, a surcharge

of 3.34 cents is imposed upon each ounce of

liquor and each 4 ounces of wine, a

surcharge of 2 cents is imposed on each

12 ounces of cider, and a surcharge of 1.34

cents is imposed on each 12 ounces of beer

sold at retail for consumption on premises

licensed by the division as an alcoholic

beverage vendor. However, the surcharges

imposed under this subsection need not be

paid upon such beverages when they are sold

by an organization that is licensed by the

division under s. 561.422 or s. 565.02(4) as

an alcoholic beverage vendor and that is

determined by the Internal Revenue Service

to be currently exempt from federal income

tax under s. 501(c)(3), (4), (5), (6), (7),

(8), or (19) of the Internal Revenue Code of

1986, as amended.

(2) The vendor shall report and remit

payments to the division each month by the

15th of the month following the month in

which the surcharges are imposed. For

purposes of compensating the retailer for

the keeping of prescribed records and the

proper accounting and remitting of

surcharges imposed under this section, the

retailer shall be allowed to deduct from the

payment due the state 1 percent of the

amount of the surcharge due. Retail records

shall be kept on the quantities of all

liquor, wine, and beer purchased,

inventories, and sales. However, a

collection allowance is not allowed on any

collections that are not timely remitted.

If by the 20th of the month following the

month in which the surcharges are imposed,

reports and remittances are not made, the

division shall 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. The

division shall establish, by rule, the

required reporting, collection, and

accounting procedures. Records must be

maintained for 3 years. Failure to

accurately and timely remit surcharges

imposed under this section is a violation of

the Beverage Law.

(3)(a) The division may compromise a

taxpayer's liability for the surcharge

imposed by this section upon the grounds of

doubt as to liability for or collectability

of such tax. A taxpayer's liability for

penalties as prescribed by this section may

be settled or compromised if the division

finds that the noncompliance is due to

reasonable cause and not to willful

negligence, willful neglect, or fraud. The

division shall maintain records of all

compromises, and the records must state the

basis for the compromise.

(b) The division may enter into agreements

for scheduling payments of taxes, interest,

and penalties prescribed in this section.

(c) The division shall establish by rule

guidelines and procedures for administering

this section.

(4) If any vendor fails to remit the

surcharge, or any portion thereof, by the

20th of the month following the month in

which the surcharges are imposed, there

shall be added to the amount due interest at

the rate of 1 percent per month of the

amount due from the date due until paid.

Interest on the delinquent tax shall be

calculated beginning on the 21st day of the

month following the month for which the

surcharge is due.

(5) All penalties and interest imposed by

this section are payable to and collectible

by the division in the same manner as if

they were a part of the tax imposed. The

division may settle or compromise any such

interest or penalty under paragraph (3)(a).

30. Florida Administrative Code Rule 61A-4.063 required

every vendor of alcoholic beverages licensed in this state to

select a method of calculating the surcharge. Vendors had the

option to select the purchase method or the sales method. The

purchase method required the vendor to multiply the units of all

alcoholic beverages purchased each month by the applicable

surcharge rate. The sales method required the vendor to

determine the amount of alcoholic beverages sold during the

month, using their sales records (or any other method approved

in writing by the Department). Respondent chose to use the

sales method for calculating its surcharge payments.

31. The general rule is that the burden or proof (apart

from statute) is on the party asserting the affirmative of an

issue before an administrative tribunal. See Balino v.

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

(Fla. 1st DCA 1977), citing Department of Agriculture and

Consumer Services v. Strickland , 262 So. 2d 893 (Fla. 1st DCA

1972). In the instant action, the Department has the initial

burden of proof.

32. The standard of proof for licensure revocation

proceedings is clear and convincing evidence. Ferris v.

Turlington, 510 So. 2d 292 (Fla. 1987). Inasmuch as the

administrative action in this matter contemplates licensure

revocation or suspension as potential relief, the clear and

convincing standard applies.

33. Clear and convincing evidence is an intermediate

standard of proof which is more than the "preponderance of the

evidence" standard used in most civil cases, but less than the

"beyond a reasonable doubt" standard used in criminal cases.

See State v. Graham , 240 So. 2d 486 (Fla. 2nd DCA 1970). Clear

and convincing evidence has been defined as evidence which:

Requires that the evidence must be found to

be credible; the facts to which the

witnesses testify must be distinctly

remembered; the testimony must be precise

and explicit and the witnesses must be

lacking in confusion as to the facts in

issue. The evidence must be of such weight

that it produces in the mind of the trier of

fact a firm belief or conviction, without

hesitancy, as to the truth of the

allegations sought to be established.

Slomowitz v. Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983)

(citations omitted).

34. The Department has proven by clear and convincing

evidence that 10,584.32 gallons of alcohol were delivered to

Respondent during the Audit Period. The evidence is equally

clear that a surcharge was paid by Respondent for only about

one-fourth of that amount (2,075 gallons). The evidence also

clearly establishes that an undisclosed amount of alcohol was

sold by Respondent in the package store portion of its licensed

premises.

35. Respondent also has a burden of proof in this matter.

Florida Administrative Code 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 accurately reflects actual sales.

If the vendor uses the purchases method, the

vendor will bear the burden of proof that

purchases are accurately recorded.

36. Respondent chose the sales method of reporting. It

has the burden, therefore, to show that sales are accurately

reflected. Respondent's business records generally reflect that

2,075 gallons of alcohol were sold in the bar area. There is no

dispute that insofar as the bar's Z Tapes reflect the sale of

2,075 gallons of liquor during the Audit Period, Respondent paid

the required surcharge on that amount. The substantial amount

of alcohol which Respondent maintains was sold in the package

store area of its business is not accurately or precisely

established. Without determining precisely how much alcohol (by

volume) was sold in package, it is impossible to determine

whether Respondent accurately reflected all of its sales from

the bar. Respondent did not meet its burden of proof in this

matter.

37. The package store area was a small portion of the

overall establishment. In order to make a sale from the package

store, the bartender had to leave the bar, unlock the package

store, ring up the sale, lock the package store and return to

the bar. It is difficult to conceive that under such an

arrangement, the establishment would sell 75 percent more

alcohol (by volume) in the package store than at the bar. And

since Respondent could not accurately account for its sales in

the package store, it is proper for the Department to presume

that some of the missing alcohol was consumed on the premises

(based on the type of license held by Respondent).

38. Florida Administrative Code Rule 61A-2.022 sets forth

penalty guidelines to be used when a licensee violates any of

the provisions of statutes governing the sale of alcoholic

beverages. Penalty guidelines for violations of Section

561.501, Florida Statutes (2006), are set forth in a table

incorporated by reference to Florida Administrative Code Rule

61A-2.022. The table states that for a first offense the

following penalty should be assessed:

Corrective action and 25 percent of total

late surcharge principal payments if

licensee is current with surcharge reports

and payments, and did not willfully neglect

compliance with surcharge law based on a

written statement of mitigation.

39. The evidence supports the fact that Respondent was

"current" with surcharge reports and payments inasmuch as such

reports and payments are no longer required as of the date of

final hearing due to the repeal of Section 561.501, Florida

Statutes. Further, Respondent's explanation to the Department

concerning the existence of a package store at The Hub

constitutes a written statement of mitigation.

40. The late surcharge principal payments (only) amount to

$16,646.78 as set forth in the final version of the audit.

Twenty-five percent of that amount is $4,161.69.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that a final order be entered by Petitioner,

Department of Business and Professional Regulation, Division of

Alcoholic Beverages and Tobacco:

1. Upholding the Department's assessment of a surcharge in

the amount of $16,646.78; surcharge interest in the amount of

$88.02; and surcharge penalties in the amount of $11,3630.98,

for a total liability of $28,365.78; and

2. Assessing a penalty in the amount of $4,161.69.

DONE AND ENTERED this 15th day of April, 2010, in

Tallahassee, Leon County, Florida.

R. BRUCE MCKIBBEN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 15th day of April, 2010.

ENDNOTES

1/ Seventy-five percent of 997 is actually 747.75 gallons.

However, that calculation has no significance as to the decision

herein.

2/ Actually, the 40-percent reduction only applied to the

smaller sized bottles of liquor sold by The Hub. There was a

25-percent reduction for the larger size bottles, because some

of the larger bottles were used behind the bar for making

drinks.

3/ Section 561.501, Florida Statutes, was repealed on July 1,

2008.

COPIES FURNISHED :

John R. Powell, Director

Division of Alcoholic Beverages

and Tobacco

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

Reginald Dixon, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

Michael B. Golen, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 40

Tallahassee, Florida 32399-2022

Joseph R. Fritz, Esquire

Joseph R. Fritz, P.A.

4204 North Nebraska Avenue

Tampa, Florida 33603

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 that

will issue the Final Order in this case.