09-001274 Department Of Revenue vs. Servers, Inc. Status: Closed Recommended Order on Friday, July 31, 2009.

Summary: Petitioner should revoke Respondent's sales tax registration certificate because Respondent was delinquent in remitting taxes.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF REVENUE, )

)

Petitioner, )

)

vs. )

) Case No. 09-1274

SERVERS, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

This case came before Administrative Law Judge John G.

Van Laningham for final hearing by video teleconference on

June 1, 2009, at sites in Tallahassee and Lauderdale Lakes,

Florida.

APPEARANCES

For Petitioner: Rachel W. Clark, Esquire

KaCee L. Widener, Esquire

Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399-1050

For Respondent: Servers, Inc., pro se

(By Bruce Drumm, its president)

35 East Acre Drive

Plantation, Florida 33317

STATEMENT OF THE ISSUES

The issues in this case are whether Respondent failed to

remit taxes, interest, penalties, and fees pursuant to a

Compliance Agreement between Respondent and Petitioner; and, if

so, whether Petitioner should revoke Respondent's sales tax

registration certificate in consequence thereof.

PRELIMINARY STATEMENT

On February 12, 2009, Petitioner Department of Revenue

issued an Administrative Complaint against Respondent Servers,

Inc., thereby notifying Respondent that its registration

certificate, which authorizes Respondent to engage in the

business of selling tangible personal property at retail as a

"dealer" responsible for collecting and remitting sales taxes to

the state, would soon be revoked unless Respondent requested a

hearing. As grounds for revocation, the Department alleged that

Respondent had failed to perform satisfactorily under a

Compliance Agreement, pursuant to which the Department earlier

had agreed not to revoke Respondent's certificate for nonpayment

of taxes if Respondent paid the overdue taxes, which it

admittedly owed, and satisfied other specified conditions.

Respondent timely exercised its right to be heard in a

formal administrative proceeding. On March 11, 2009, the

Department referred the matter to the Division of Administrative

Hearings, where the case was assigned to an Administrative Law

Judge.

The final hearing took place as scheduled on June 1, 2009,

with both parties present. The Department presented the

testimony of Tara Teague Schaffner, whom the Department

employed, at the time of the hearing, as a Senior Revenue

Consultant. In addition, Petitioner's Exhibits 1 through 6 were

received in evidence. Respondent's president, Bruce Drumm,

testified for Respondent, which also introduced Respondent's

Exhibit A into the record.

The final hearing transcript was filed on June 30, 2009.

Thereafter, the Department timely submitted a Proposed

Recommended Order, in accordance with the schedule established

at the conclusion of the hearing, which set July 10, 2009, as

the deadline. On July 22, 2009, Respondent filed a Belated

Motion for Enlargement of Time Within Which to File Recommended

Order ("Motion"), together with a Proposed Recommended Order.

The Department did not object to the relief sought in the

Motion.

The undersigned reviewed Respondent's untimely-filed

Proposed Recommended Order, effectively granting the Motion.

The Department's Proposed Recommended Order, too, has been

reviewed and considered.

Unless otherwise indicated, citations to the Florida

Statutes refer to the 2008 Florida Statutes.

FINDINGS OF FACT

1. Petitioner Department of Revenue ("Department") is the

agency of state government authorized to administer the tax laws

of the State of Florida.

2. Respondent Servers, Inc. ("Servers") is a Florida

corporation whose principal place of business is located in

Plantation, Florida. Servers sells tangible personal property

at retail and consequently is required to collect from its

customers, and remit to the Department, sales tax on every

transaction which is taxable under Chapter 212, Florida

Statutes. In connection with this responsibility, Servers is an

authorized "dealer," holding a sales tax certificate of

registration numbered 16-8012479332-4 (the "Certificate"), which

the Department issued on May 11, 2002.

3. On May 2, 2008, the Department issued a notice to

Servers, which initiated a proceeding to revoke Servers'

Certificate for failure to remit taxes. Servers was invited to

appear at an informal conference with the Department on June 18,

2008. At the informal conference, Servers would have the

opportunity to avoid revocation either by presenting evidence

refuting the charges regarding unpaid taxes, or by entering into

a compliance agreement pursuant to which the outstanding

liability would be satisfied.

4. The informal conference took place as scheduled. Bruce

Drumm, Servers' president, appeared on behalf of the

corporation. At the conference, the Department and Servers

entered into a written compliance agreement (the "Agreement").

Under the Agreement, Servers admitted that it owed the State of

Florida a grand total of $10,868.60, a sum which comprised

$8,453.45 in unpaid taxes, $1,557.86 in interest, fees in the

amount of $40.00, and a penalty of $817.29.

5. Servers agreed to pay its debt in installments, in

exchange for the Department's promise to forbear from revoking

Servers' Certificate. The Agreement called for Servers to make

a down payment of $1,500 on June 25, 2008, followed by six

monthly payments in the respective amounts of $750 (July through

October) and $1,200 (November and December), due on specific

dates beginning July 16, 2008, and ending December 16, 2008.

The balance remaining after Servers' payment of $6,900 pursuant

to foregoing schedule was "to be renegotiated on December 16,

2008."

6. The Agreement did not provide that time was of the

essence with regard to Servers' duty to make the installment

payments, nor was there a grace period applicable to the payment

deadlines. The Agreement did, however, state as follows:

E. If the certificate holder fails to

comply with any obligation under this

agreement, the Department has the right

to initiate revocation procedures by

filing an Administrative Complaint,

with a copy to the certificate holder,

but without further notice to the

certificate holder of the default. In

the event of an action to revoke the

certificate the Department shall

introduce this Agreement into evidence

as proof of the facts recited herein.

* * *

G. If the certificate holder fails to

perform any of the obligations under

this agreement, including the timely

filing of returns and payment of all

taxes, penalties and interest as they

become due, all amounts of the tax,

interest and penalty settled under this

agreement and any unpaid balance shall

be immediately due and payable and

collectible by all legal means.

7. In addition to promising to pay the outstanding

indebtedness, Servers agreed:

A. To accurately complete all past due

sales tax returns and file them no

later than Due date.

B. To remit all past due payments to the

Department as stated in the attached

payment agreement.

C. To accurately complete and timely file

all required sales tax returns for the

next 12 months, beginning with the

period 07/2008 through 06/2009.

D. To timely remit all sales tax

collections due for the next 12 months,

associated with the periods stated

above.

E. To comply with all other provisions of

Chapter 212, Florida Statutes.

8. Servers delivered each of the seven scheduled payments

to the Department, fulfilling this particular financial

obligation. Two of the payments (for October and December,

respectively), however, were tendered on the next day after the

due date, and one payment (September) was tendered on the second

day after the due date. The Department accepted these late

payments.

9. The Department claims that each of these brief delays

in performance on Servers' part amounted to a substantial

violation of the Agreement. It alleges also that Servers

further breached the Agreement by filing late returns for July

and September 2008, and by being overdue in payment of taxes for

the months of October and November 2008. Of these additional

alleged breaches, only one was clearly proved. Based on the

evidence presented, the undersigned finds that Servers' payment

of the taxes due in November 2008 was delinquent.

10. The proof of Servers' delinquency came in the form of

an admission, which was offered against Servers during the

cross- examination of the Department's sole witness, Tara Teague

Schaffner. The damaging testimony, in other words, was elicited

not by the Department, but by Servers' representative, Mr.

Drumm. The admission, moreover, was memorialized in the

Department's business records, from which Ms. Schaffner (in

response to Mr. Drumm's questions) read lengthy excerpts out

loud, thereby "publishing" the contents of the Department's

internal documents into the evidentiary record of this

proceeding. The business records from which Ms. Schaffner

quoted were not offered into evidence.

11. That the Department's records constituted "business

records" for purposes of the business-records exception to the

hearsay rule was established through Mr. Drumm's interrogation

of Ms. Schaffner. Prompted by Mr. Drumm's questioning, Ms.

Schaffner testified credibly, and the undersigned finds, that

the Department's file on Servers contains, among other things,

notes concerning conversations with the taxpayer, which were

made contemporaneously, in the performance of a regular business

activity, by a person with knowledge of the conversations, and

which were kept in the regular course of the Department's

business.

12. For reasons that will be discussed below, the

undersigned has concluded that the contents of the Department's

business records, though presented in an unusual manner,

nevertheless constitute admissible evidence which clearly and

convincingly proves that Servers committed at least one material

breach of the Agreement, namely being delinquent with regard to

payment of taxes due in November 2008.

13. To facilitate the forthcoming analysis of the

admissibility of the dispositive evidence, and to show the basis

for the finding that Servers breached the Agreement, the

critical testimony is quoted here:

Q [by Mr. Drumm] And do you [ i.e. the

Department] have any comments [in your

records] regarding the 12/16 payment [for

which the schedule in the Agreement

provided]?

A [by Ms. Schaffner] We have a note on the

17th of December [2008]. It says received

stip payment due December 16th, twelve

hundred dollars, hand delivered on December

17th.

Q Are there any comments in the notes

regarding my request to negotiate the

balance due at that time?

A On the 21st it says that Ms. Aboite [an

employee of the Department] called you. She

spoke to Bruce Drumm, the owner, reference

delinquency for October and November 2008.

He said that the return of payment was

mailed yesterday for November and December

2008 , informed him about the payment for

October, stated he claimed to check the

records and call me back. Advised he was

informed all current returns should be

mailed to the Hollywood Service Center for

the 12th month, informed Mr. Drumm stip

payment late, was due on December 17th.

T. 44-45 (emphasis added).

14. There are, to be sure, some discrepancies in Ms.

Schaffner's testimony, which might be attributable to her

misreading of information contained in the Department's records,

or to inaccuracies in the entries themselves. For example, the

"21st" of December 2008, which is when Ms. Aboite reportedly

fell on a Sunday. While it is possible that Ms. Aboite

transacted official business on Sunday, December 21, 2008, the

undersigned doubts that such occurred, and declines to so find.

The undersigned does find, however, that the conversation

recorded in the notes took place around (and most likely after)

December 17, 2008. This much is clear from the context of the

comments. Ms. Schaffner's testimony, after all, came in

response to a question of Mr. Drumm's inquiring about his

request to negotiate with the Department "at that time," meaning

the period of December 16-17, 2008.

15. Similarly, the comment that the payment "was due" on

December 17, 2008, is not correct. The payment was due on

December 16 and was received by the Department on December 17,

2008. These facts are not disputed. Either the witness, or the

maker of the notes from which the witness read, was mistaken.

16. These are minor points, however, that ultimately do

not seriously discredit Ms. Schaffner's testimony that,

according to the Department's records, Servers' owner, Mr.

Drumm, admitted on or about December 17, 2008, having just

recently (the day before) mailed the tax payment due in November

2008. That payment (as will be discussed below) was delinquent

as a matter of law if it were mailed after November 20, 2008——

which Mr. Drumm plainly admitted was the case.

17. In sum, whatever other defaults under the Agreement

Servers might have committed, the established fact is——as the

evidence clearly and convincingly proves——that Servers failed to

timely remit all sales tax collections due in November 2008.

This failure was a material and substantial breach of the

Agreement.

CONCLUSIONS OF LAW

18. The Division of Administrative Hearings has personal

and subject matter jurisdiction in this proceeding pursuant to

Sections 120.569 and 120.57(1), Florida Statutes.

19. Section 212.05, Florida Statutes, provides, in

pertinent part, as follows:

It is hereby declared to be the legislative

intent that every person is exercising a

taxable privilege who engages in the

business of selling tangible personal

property at retail in this state, including

the business of making mail order sales, or

who rents or furnishes any of the things or

services taxable under this chapter, or who

stores for use or consumption in this state

any item or article of tangible personal

property as defined herein and who leases or

rents such property within the state.

20. Section 212.06, Florida Statutes, states:

(1)(a) The aforesaid [sales and use] tax at

the rate of 6 percent of the retail sales

price as of the moment of sale, 6 percent of

the cost price as of the moment of purchase,

or 6 percent of the cost price as of the

moment of commingling with the general mass

of property in this state, as the case may

be, shall be collectible from all dealers as

herein defined on the sale at retail, the

use, the consumption, the distribution, and

the storage for use or consumption in this

state of tangible personal property or

services taxable under this chapter. The

full amount of the tax on a credit sale,

installment sale, or sale made on any kind

of deferred payment plan shall be due at the

moment of the transaction in the same manner

as on a cash sale.

* * *

(2)(a) The term "dealer," as used in this

chapter, includes every person who

manufactures or produces tangible personal

property for sale at retail; for use,

consumption, or distribution; or for storage

to be used or consumed in this state.

(b) The term "dealer" is further defined to

mean every person, as used in this chapter,

who imports, or causes to be imported,

tangible personal property from any state or

foreign country for sale at retail; for use,

consumption, or distribution; or for storage

to be used or consumed in this state.

(c) The term "dealer" is further defined to

mean every person, as used in this chapter,

who sells at retail or who offers for sale

at retail, or who has in his or her

possession for sale at retail; or for use,

consumption, or distribution; or for storage

to be used or consumed in this state,

tangible personal property as defined

herein, including a retailer who transacts a

mail order sale.

* * *

(3)(a) Except as provided in paragraph (b),

every dealer making sales, whether within or

outside the state, of tangible personal

property for distribution, storage, or use

or other consumption, in this state, shall,

at the time of making sales, collect the tax

imposed by this chapter from the purchaser.

21. Section 212.11(1)(e), Florida Statutes, provides that

where, as here, the dealer remits taxes through the mail, the

dealer's returns are timely as a matter of law "if postmarked on

or before the 20th day of the month" in which the taxes are due.

(If "the 20th day falls on a Saturday, Sunday, or . . . legal

holiday, returns shall be accepted as timely if postmarked on

the next succeeding workday." Id. )

22. Section 212.15(1), Florida Statutes, provides as

follows:

The taxes imposed by this chapter shall,

except as provided in s. 212.06(5)(a)2.e.,

become state funds at the moment of

collection and shall for each month be due

to the department on the first day of the

succeeding month and be delinquent on the

21st day of such month. All returns

postmarked after the 20th day of such month

are delinquent.

(Emphasis added.)

23. In accordance with Section 212.18(3)(a), Florida

Statutes, every "person desiring to engage in or conduct

business in this state as a dealer . . . must file with the

department an application for a certificate of registration for

each place of business, showing the names of the persons who

have interests in such business and their residences, the

address of the business, and such other data as the department

may reasonably require." Upon receiving such an application,

the Department "will grant to the applicant a separate

certificate of registration for each place of business, which

certificate may be canceled by the department or its designated

assistants for any failure by the certificateholder to comply

with any of the provisions of . . . chapter [212]."

§ 212.18(3)(b), Fla. Stat. No "person shall engage in business

as a dealer . . . without first having obtained such a

certificate or after such certificate has been canceled." Id.

24. Section 212.18(3)(d), Florida Statutes, provides as

follows:

The department may revoke any dealer's

certificate of registration when the dealer

fails to comply with this chapter. Prior to

revocation of a dealer's certificate of

registration, the department must schedule

an informal conference at which the dealer

may present evidence regarding the

department's intended revocation or enter

into a compliance agreement with the

department. The department must notify the

dealer of its intended action and the time,

place, and date of the scheduled informal

conference by written notification sent by

United States mail to the dealer's last

known address of record furnished by the

dealer on a form prescribed by the

department. The dealer is required to

attend the informal conference and present

evidence refuting the department's intended

revocation or enter into a compliance

agreement with the department which resolves

the dealer's failure to comply with this

chapter. The department shall issue an

administrative complaint under s. 120.60 if

the dealer fails to attend the department's

informal conference, fails to enter into a

compliance agreement with the department

resolving the dealer's noncompliance with

this chapter, or fails to comply with the

executed compliance agreement .

(Emphasis added.)

25. A proceeding to revoke a license is penal in nature.

State ex rel. Vining v. Florida Real Estate Commission , 281 So.

2d 487, 491 (Fla. 1973). Accordingly, the Department must prove

the charges against Servers by clear and convincing evidence.

Department of Banking & Fin., Div. of Sec. & Investor Protection

v. Osborne Stern & Co. , 670 So. 2d 932, 933-34 (Fla.

1996)(citing Ferris v. Turlington , 510 So. 2d 292, 294-95 (Fla.

1987)); Nair v. Department of Business & Professional

Regulation, Bd. of Medicine , 654 So. 2d 205, 207 (Fla. 1st DCA

1995).

26. Regarding the standard of proof, in Slomowitz v.

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

developed a "workable definition of clear and convincing

evidence" and found that of necessity such a definition would

need to contain "both qualitative and quantitative standards."

The court held that:

clear and convincing evidence 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 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.

Id. The Florida Supreme Court later adopted the Slomowitz

court's description of clear and convincing evidence. See In re

Davey , 645 So. 2d 398, 404 (Fla. 1994). The First District

Court of Appeal also has followed the Slomowitz test, adding the

interpretive comment that "[a]lthough this standard of proof may

be met where the evidence is in conflict, . . . it seems to

preclude evidence that is ambiguous." Westinghouse Elec. Corp.

v. Shuler Bros., Inc. , 590 So. 2d 986, 988 (Fla. 1st DCA 1991),

rev . denied , 599 So. 2d 1279 (Fla. 1992)(citation omitted).

27. As explained above, the evidence shows clearly and

convincingly that Servers failed materially to comply with the

Agreement when it caused or permitted the taxes due in the month

of November 2008 to become delinquent. This fact was

established by an admission, made by Mr. Drumm, as memorialized

in the business records of the Department. In the incriminating

statement, Mr. Drumm admitted that Servers had paid the sales

taxes "for November" 2008——which payment was delinquent if not

postmarked by November 20, 2008——in December 2008. Given the

importance of this admission, some discussion of its

admissibility is in order.

28. To begin, the Department's record containing the

crucial admission was not offered as evidence. Consequently, a

valid best-evidence objection might have been raised to Ms.

Schaffner's testimony, which effectively proved the contents of

the writing. See § 90.952 (best evidence rule); see also §

120.569(2)(h), Fla. Stat. (copies admissible in lieu of original

documents). No such objection was made at hearing, however;

indeed, Mr. Drumm himself elicited the testimony, on cross-

examination, when he inquired about Servers' request to

negotiate the balance due——a subject that had not been explored

on direct-examination. Thus, the best-evidence objection was

waived. See § 90.104(1)(a), Fla. Stat.; Lewis v. State , 403 So.

2d 568, 569 (Fla. 1st DCA 1981).

29. The contents of the Department's records, which Ms.

Schaffner published into the evidentiary record, are hearsay if

offered to prove the truth of the matters asserted. In an

administrative hearing, hearsay is admissible but cannot be the

exclusive basis for a finding of fact unless it falls within a

recognized exception to the hearsay rule. See § 120.57(1)(c),

Fla. Stat.

30. Section 90.803(6), Florida Statutes, provides that the

following are excepted from the hearsay rule:

(6) RECORDS OF REGULARLY CONDUCTED BUSINESS

ACTIVITY.–

(a) A memorandum, report, record, or data

compilation, in any form, of acts, events,

conditions, opinion, or diagnosis, made at

or near the time by, or from information

transmitted by, a person with knowledge, if

kept in the course of a regularly conducted

business activity and if it was the regular

practice of that business activity to make

such memorandum, report, record, or data

compilation, all as shown by the testimony

of the custodian or other qualified witness,

or as shown by a certification or

declaration that complies with paragraph (c)

and s. 90.902(11), unless the sources of

information or other circumstances show lack

of trustworthiness. The term "business" as

used in this paragraph includes a business,

institution, association, profession,

occupation, and calling of every kind,

whether or not conducted for profit.

Thus, to admit a business record, the proponent must show that

the document was:

1. made at or near the time of the event

recorded,

2. by or from information transmitted by a

person with knowledge, and

3. kept in the course of a regularly

conducted business activity and

4. that it was the regular practice of that

business to make such a record.

Quinn v. State , 662 So. 2d 947, 953 (Fla. 5th DCA 1995)(footnote

omitted).

31. To lay the proper predicate for invoking this

exception,

it is necessary to call a witness who can

show that each of the foundational

requirements set out in the statute is

present. . . . It is not necessary to

call the person who actually prepared the

document. The records custodian or any

qualified witness who has the necessary

knowledge to testify as to how the record

was made can lay the necessary foundation.

. . . If the offering party does not lay

the necessary foundation, the evidence is

not admissible under [the business-records

exception].

Forester v. Jewell , 610 So. 2d 1369, 1373 (Fla. 1st DCA

1992)(citations omitted).

32. Ms. Schaffner was a qualified witness for purposes of

laying the foundation needed to admit the Department's records

under the business-records exception. Her testimony established

that it is the regular practice of the Department to make, and

keep in its files, written records of contacts with taxpayers,

such the conversations between Mr. Drumm and Ms. Aboite, which

Ms. Aboite duly documented.

33. Ms. Schaffner's testimony concerning the Department's

business records was not itself sufficient, however, to make Mr.

Drumm's declaration——that the return of payment for November

2008 had just been mailed "yesterday," in December 2008——

admissible over a hearsay objection. This is because, to the

extent offered to prove the truth of the matters asserted (which

of course it was), Mr. Drumm's damaging out-of-court statement

(which is hearsay) actually constitutes hearsay within hearsay,

the "outer" hearsay being the declarations contained in the

Department's records——declarations which include the "inner"

hearsay of Mr. Drumm's statement. Mr. Drumm's incriminating

statement to Ms. Aboite, unlike other entries in the

Department's records, does not fall within the business-records

exception because, as the Quinn court wrote:

It is well established that although the

person who made the report need not have

personal knowledge of the matter recorded,

the information contained in the report

"must be supplied by persons with knowledge

who are acting within the course of the

regularly conducted business activity. If

the initial supplier of information is not

acting within the course of the business,

the information in the record cannot qualify

for admission. Statements from persons who

are not acting within the regular course of

the business may be admissible if they fall

within another exception." Charles

Ehrhardt, Florida Evidence Vol I (1994) at

625-6.

662 So. 2d at 953-54 (emphasis added); Harris v. Game and Fresh

Water Fish Com'n , 495 So. 2d 806, 808-09 (Fla. 1st DCA 1986);

see also Franzen v. State , 746 So. 2d 473, 474 (Fla. 2d DCA

1998)(Casanueva, J., explaining, in a concurring opinion, that

the predicate for admitting a business record includes the

requirement "that the source of the information be an employee

or agent of the business possessing the requisite knowledge of

the data or information.").

34. In other words, declarations are admissible under the

business-records exception only if they were written by a person

who, while conducting the regular affairs of the business ,

inscribed facts of which he had personal knowledge; or,

alternatively, recorded facts as told to him by someone else who

not only had personal knowledge of such facts, but also in the

ordinary course of the business "transmitted" the data or

information to the drafter of the record. The business-records

exception thus does not apply to Mr. Drumm's out-of-court

statements because he was neither an employee nor an agent of

the Department and was not acting within the regular course of

Department's business when he spoke with Ms. Aboite; in short,

Mr. Drumm, who was the source with personal knowledge of the

material fact (the untimeliness of Servers' payment of sales

taxes due in November 2008) was not under a "business duty" to

report the information accurately to the Department.

35. This is not the end of the matter, however, for

according to Section 90.805, Florida Statutes, "[h]earsay within

hearsay is not excluded under s. 90.802, provided each part of

the combined statements conforms with an exception to the

hearsay rule as provided in s. 90.803 or s. 90.804." See , e.g, ,

Harris , 495 So. at 809 ("The general rule is that a hearsay

statement which includes another hearsay statement is admissible

only when both statements conform to the requirements of a

hearsay exception."). In this instance, Mr. Drumm's out-of-

court statements are potentially admissible pursuant to Section

90.803(18)(d), which provides that certain statements by a party

or his agent fall under an exception to the hearsay rule. Such

statements include:

18) ADMISSIONS.--A statement that is

offered against a party and is:

* * *

(d) A statement by the party's agent or

servant concerning a matter within the scope

of the agency or employment thereof, made

during the existence of the relationship[.]

36. As Servers' owner and president, Mr. Drumm clearly was

an agent of Servers acting within the scope of the agency when

he spoke with Ms. Aboite concerning Servers' delinquent payment

of taxes. 1 Mr. Drumm's statement, which Ms. Schaffner offered

against Servers during the course of her cross-examination, is

therefore admissible as proof of the matters asserted under the

hearsay exception for admissions.

37. To summarize: Ms. Schaffner proved the contents of

the Department's records by reading from them aloud during her

testimony. No objection to this irregular method of proving the

records' contents was made. The contents of the Department's

records are admissible under the business-records exception to

the hearsay rule. Mr. Drumm's statement regarding Servers'

delinquent payment of taxes, which is hearsay included within

the admissible contents of the Department's business records, is

not admissible under the business-records exception as proof of

the truth of the matters asserted therein; it is admissible as

such proof, however, under the separate exception for admissions

by a party opponent .

38. Mr. Drumm's statement to Ms. Aboite establishes

clearly and convincingly that Servers did not pay the taxes due

in November 2008 until some time in December 2008. The actual

date of payment in December 2008 is irrelevant because such

taxes were due to be paid on November 1, 2008, and the payment

thereof was delinquent as a matter of law if not mailed to the

Department on or before November 20, 2008. The undersigned

concludes without hesitation that Servers' delinquent payment in

December 2008 of taxes due on November 1, 2008, constituted a

substantial and material breach of its obligation under the

Agreement to "timely remit all sales tax collections due for the

next 12 months . . . ."

39. Upon determining (as it did) that Servers had

committed a material breach of the Agreement, the Department had

the right under the Agreement, and the duty under Section

212.18(3)(d), Florida Statutes, to initiate a proceeding to

revoke Servers' Certificate (which it did). At hearing on the

Administrative Complaint, sufficient evidence, as described

above, was presented regarding Servers' material noncompliance

with the Agreement, to justify revocation of the Certificate. 2

40. In view of the foregoing findings and conclusions, it

is not necessary to decide whether Servers' few late installment

payments under the Agreement, without more, would have warranted

revocation.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department enter a final order

revoking sales tax certificate of registration numbered 16-

8012479332-4, which the Department issued to Servers, Inc., on

May 11, 2002.

DONE AND ENTERED this 31st day of July, 2009, in

Tallahassee, Leon County, Florida.

___________________________________

JOHN G. VAN LANINGHAM

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 31st day of July, 2009.

ENDNOTES

1 / The Department's business record refers to Mr. Drumm as "the

owner" of Servers and hence establishes the foundation for

admitting Mr. Drumm's statement as an "admission" within the

exception to the hearsay rule. See Harris , 495 So. at 809 (For

a "double hearsay" statement within a business record to be

admissible, the business record must establish the foundation

for the hearsay exception under which the "inner" hearsay

statement is urged to fall).

2 / The undersigned has not overlooked Servers' claim that its

failures, if any, to perform statutory or contractual

obligations resulted from Mr. Drumm's having been under medical

care for a chronic disease. The undersigned does not doubt that

Mr. Drumm was ill or that his medical condition adversely

impacted his business. These facts, however, do not constitute

a legal defense to the charges against Servers.

COPIES FURNISHED :

Rachel W. Clark, Esquire

KaCee L. Widener, Esquire

Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399-1050

Bruce Drumm

Servers, Inc.

35 East Acre Drive

Plantation, Florida 33317

Marshall Stranburg, General Counsel

Department of Revenue

The Carlton Building, Room 204

501 South Calhoun Street

Post Office Box 6668

Tallahassee, Florida 32314-6668

Lisa Echeverri, Executive Director

Department of Revenue

The Carlton Building, Room 104

501 South Calhoun Street

Tallahassee, 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 that will

issue the final order in this case.