10-002836 Department Of Revenue vs. Abkey No. 1 Limited Status: Closed Recommended Order on Friday, February 18, 2011.

Summary: Petitioner demonstrated that Respondent, as a dealer, continued to fail to file required tax returns and remit sales tax. Recommended revocation of Respondent's Certificate of Registration.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF REVENUE, )

)

Petitioner, )

)

vs. ) Case No. 10 - 2836

)

ABKEY NO. 1 LIMITED, )

)

Respondent. )

_______________________________ )

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in this case

on October 6, 2010, in Miami, Florida, before Errol H. Powell,

an Administrative Law Judge of the Division of Administrative

Hearings.

APPEARANCES

For Petitioner: Carrol Y. Cherry , Esquire

Office of the Attorney General

Revenue Litigation B ureau

The Capitol, P laza L evel 01

Tallahassee, Florida 32399 - 1050

For Respondent: Betty Amos , pro se

Abkey No. 1 Limited

9275 Coral Reef Drive, Suite 107

Miami, Florida 33157

STATEMENT OF THE ISSUE

The issue for determination is whether Respondent committed

the offense s set forth in the Administrative Complaint for

Revocation of Ce rtificate of Registration issued on November 16,

2009, and, if so, what action should b e taken.

PRELIMINARY STATEMENT

The Department of Revenue , hereinafter Department, issued

an Administrative Complaint for Revocation of Certificate of

Registration, hereinafter Administrative Complaint, against

Abkey No. 1 Limited, hereinafter Abkey , on Nov ember 16 , 2009.

The Depar tment charged Abkey with the continued failure to file

required tax returns and remit sales tax in violation of chapter

212, Florida Statutes, by : (a) failing to file a tax ret urn and

pay the tax liability for the month of June 20 09; (b) failing to

remit sales tax due and owing for the periods of: (i) July and

September through December 2005 ; (ii) January, May and October

2006; and (iii) February, August and October 2007; (c) failing

to remit payment for interest due and owing; (d) failing to

remit payment for penalties due and owing; and (e) issuing a

dishonored check to the Department for the period of February

2007. Abkey, through its president, Betty Amos, disputed the

material allegations of fact and re quested a hearing. On

M ay 25, 2010 , this matter was referred to the Division of

Administrative Hearings.

At hearing, the Department presente d the testimony of one

witness and entered ten exhibits ( Petitioner' s Exhibits numbered

2 through 5, 8, 9, 20, and 21 through 23) into evid ence. Abkey

presented the testim ony of one witness, Ms. Amos , and entered

one exhibit (Respondent's Exhibit numbered 1) 1 into evidence.

A transcript of the hearing was not ordered. At the

request of the parties, the time for filing post - hearing

submissio ns was set for more than ten days follow ing the

conclusion of the final hearing . The parties timely filed their

post - hearing submission s. However, Abkey attached several

documents to its post - hearing submission that were neither

offered nor admitted into e vidence at hearing. Subsequently,

t he Department filed a Motion to Str ike, to which Abkey

objected. T he Department's Motion to Strike is granted.

Abkey's documents that were not admitted into evidence at

hearing and any proposed facts and conclusions based upon the

documents have not been considered in the preparation of this

Recommended Order. The Department's post - hearing submission has

been considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. There is no dispute that the De partment is the s tate

agency charged with the responsibility of regulating,

controlling, and administering the revenue laws of the State of

Florida, including the laws relating to the imposition and

collection of the s tate's sales and use tax pursuant to c hapter

212, Florida Statutes.

2 . There is no dispute that Abkey is a Florida corporation

whose principal address is 7800 Southwest 104th Street, Miami,

Florida 33156.

3. Abkey is a restaurant. A t the time of hearing, Abkey

had 33 employees and was oper ating at a deficit.

4 . There is no dispute that, a t all times material hereto,

Abkey possessed Florida sales tax certificate of registration

number 23 - 8012096448 - 9, issued by the Department on April 18,

1994.

5 . There is no dispute that Abkey is a dealer as defined

in section 212.06(2), Florida Statutes , and has been a dealer at

all times material hereto .

6 . For the month of June 2009, Abkey failed to file a

sales tax return. As a result of this failure, the Department

assessed Abkey an estimated sales tax due in the amount of

$9,500.00.

7 . For 2005, Abkey failed to remit its self - reported sales

tax liability t o the Department for the months of July,

September, October, November, and December . Abkey self - reported

its tax liability, by filing sales tax returns, for the said

months .

8 . For 2006, Abkey failed to remit its self - reported sales

tax liability to the Department for the months of Ja nuary and

May . Abkey self - reported its tax liability , by filing sales tax

returns , for t he said months . Also, fo r 2006, Abkey failed to

timely remit its sales tax liability for the month of October

for which the Department assessed a pe nalty an d an

administrative/collection/processing fee .

9 . For 2007 , Abkey failed to remit its self - reported sales

tax liability to the Department for the month s of February and

August . Abkey self - reported its tax liability, by filing sales

tax returns, fo r the said months . Also, for 2007, Abkey failed

to timely remit its sales tax liability for the month of

October , for which the De partment assessed a penalty a nd an

administrative/collection/processing fee .

10 . In total, for 2005, 2006, and 2007, Abkey self -

reported sales tax due and failed to remit to the Department

sales tax reporte dly due in the amount of $122,35 5.36.

11 . As a r esult of Abkey's fai lure to file the sal es tax

return, to remit the $122,35 5.36 in sales tax , and to remit

timely sales tax , the D epartment assessed Abkey , as of

October 29, 2009, $16,287.59 in interest, $4,891.73 in

penalties , and $13,845.10 in a dministra tive/collection/

processing fees.

12 . Additionally, for the month of February 2007, Abkey

issued to the Department a dishonored check (electronic funds

transfer) on March 23, 2007, in the amount of $18,254.00 . The

Department assessed a $150.00 return che ck fee for the

dishonored check. Shortly after being notified of the

dishonored check by the Department, Abkey paid the $18,254.00.

13 . Abkey has a significant history of delinquency in

remitting p ayments to the Department. The Department made

several a ttempts, unsuccessfully, to collect the delinquent tax

liabilities, incl uding issuing Tax Warrants.

14 . In January 2007, the Department sought to revoke

Abkey's Certificate of Registration for delinquent returns a nd

outstanding liability and engaged in an informal conference with

Abkey . As a result of the informal conference, Abkey and the

Department entered i nto a Compliance Agreement executed on

February 15, 2010.

15 . The Compliance Agreement required Abkey, among other

things, to remit all past due pa yments; for 12 months (January

through December 2007), to timely file tax returns and to timely

remit all sales tax due; and to make a down payment of

$45,000.00 (in three monthly installments but no later than

April 1, 2007) , 11 monthly payments of $5,000 .00 (beginning

May 1, 2007) , and a balloon payment of $141,982.43 on April 1,

2008 .

16 . Further, regarding the balloon payment of $141,982.43,

the Compliance Agreement provided that the balloo n payment might

be negotiated for another 12 months. However, in order for

Abkey to take advantage of this provision, Abkey was required to

be compliant with the terms of the Compliance Agreement and its

account was required to be in good standing with the Department.

17 . In accordance with the Compliance Agreement, Abkey

paid the down payment of $45,000.00 ( in three monthly

installments) and the 11 payments of $5,000.00 although the 11

payments were late. Additionally , for the period of January

through December 2007 , Abkey was late filing tax returns and

remitting sales tax.

18 . Abkey requested a renewal of the Compliance Agreement.

Despite the late payment s , the Department approved the renewal

of the Compliance Agreement.

19 . A Compliance Agreement Renewal was executed on May 1,

2008. It required Abkey, among o ther things, to remit all past

due payments and to timely file tax returns and timely remit all

sales tax due for the next 12 months (May 1, 2008 through

April 30, 2009); and to make 11 monthly payments of $5 ,000.00

(beginning May 1, 2008), and a balloon p ayment of $120,749.14 on

April 1, 2009.

20 . Furthermore, regarding the balloon payment of

$120,749.14, the Compliance Agreement Renewal provided that the

balloon payment might be negotiated for another 12 months.

However, in order for Abkey to take advan tage of this provision,

Abkey was required to be compliant with the terms of the

Compliance Agreement Renewal and its account was required to be

in good standing with the Department.

21 . Under the Compliance Agreement Renewal, Abkey made

four payments o f $5,000.00 but the payments were late.

22 . Abkey requested a reduction in the amount of the

monthly payments from $5,000.00 to $2,000.00. The Department

granted Abkey's request. Abkey made 12 payments of $2,000.00

but the payments were late. Additiona lly, for the period of

May 1, 2008 through April 30, 2009, Abkey was late filing tax

returns and remitting sales tax.

23 . Further, Abkey failed to make the balloon payment of

$120,749.14 that was d ue on April 1, 2009. Abkey did not

request a renegotiatio n of the balloon payment .

24. At that time, Abkey did not request another Compliance

Agreement.

2 5 . As of September 28, 2010, Abkey owed the Department

$122,355.36 in actual sales tax (per Abkey's sales tax returns),

$9,500.00 in estimated tax, $4,419.73 in penalty 2 , $14,572.80 in

administrative/colle ction/processing fees 3 , $25,032.28 in

interest , and $20.00 in warrant fees; totaling $175,900.17.

26. The Department seeks to revoke Abkey's Certificate of

Registration.

CONCLUSIONS OF LAW

2 7 . The Division of Administrative Hearings has

jurisdiction over the subject matter of this proceeding and t he

parties thereto pursuant to s ections 120.569 and 1 20.57(1),

Florida Statutes (2010 ).

2 8 . The Department has the burden of proof to show by

clear and convinc ing evidence that Abkey committed the offense s

set forth in the Administrative Complaint for Revocation of

Certificate of Registration . Dep' t of Banking & Fin . , Div . of

Sec . & Investor Prot . v. Osborne Stern & Co . , 670 So. 2d 932

(Fla. 1996); Ferris v. Turli ngton , 510 So. 2d 292 (Fla. 1987).

29. Chapter 212, Florida Statutes (2009) 4 , is the

authorizing statute in these proceedings.

30 . Pursuant to section 212.18 , the Department is

authorized to issue a certificate of registration to every

person desiring to engage in or conduct business in the State of

Florida as a dealer. The certificate of registration grants

dealers the privilege of engaging in or conducting business in

the State of Florida. § 212.05, Fla. Stat.

31 . " Dealer " is defined in section 212.0 6 . Abkey is a

dealer as defined in section 212.06.

32 . Pursuant to section 212.18, the Department is

authorized to revoke a dealer's certificate of registration for

failure to comply with the requirements of chap ter 212 .

33 . Dealers are required to col lect and remit to the

Department all sales and use tax due. § 212.06, Fla. Stat.

34 . All sales and use tax collected by dealers becomes the

property of the Department at the moment of collection.

§ 212.15, Fla. Stat.

35 . For the purpose of ascertainin g the amount of tax due

under chapter 212, a dealer is required to file with the

Department a sales and use tax return on or before the 20th day

of the succeeding month for the tax due the preceding calendar

month. § 212.11, Fla. Stat.

36 . Abkey failed t o remit to the Department sales tax due

for several months in 2005, 2006, and 2007 , and to timely remit

sales tax due for one month in 2006 and in 2007 . As a result,

the Department wa s authorized to assess a penalty , fees, and

interest. § 212.1 2(2), (3), and (4), Fla. Stat.

37 . Further, the Department was authorized to issue and

file tax warrants in the public records for collection of

Abkey's outstanding liability for tax, penalty, fees, and

interest. § 212.15(4), Fla. Stat.

38 . Abkey failed to comply with the terms of the

Compliance Agreement Renewal.

39 . If a dealer fails to file a tax return when due, the

Department is authorized to assess the dealer an estimated tax

due. § 212.12(5), Fla. Stat. As a result of Abkey 's failing to

file a tax return for June 2009, the Department was authorized

to assess an estimated tax due in the amount of $9,500.00.

40 . Additionally, Abkey failed to remit the estimated

sales tax due for June 2009. As a result, the Department was

authorized to assess a penalty, fe e, and interest.

§ 212.12(2), (3), and (4), Fla. Stat.

41 . Also, for the dishonored check, the Department was

authorized to assess a service fee. § 215.34(2), Fla. Stat.

(2009). The service fee of $150.00 was appropriate.

4 2 . The Department's assessm ent of $4,419.73 in penalty,

$14,572.80 in administrative/collection/processing fees, and

$25,032.28 in interest against Abkey was appropriate.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Depart ment of Revenue enter a final

order revoking the Certificate of Registration issued to and

held by Abkey No. 1 Limited.

DONE AND ENTERED this 18 th day of February, 2011 , in

Tallahassee, Leon County, Florida.

S

__________________________________

ERROL H. P OWELL

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

Divi sion of Administrative Hearings

this 18 th day of February, 2011 .

ENDNOTES

1/ Respondent's Exhibits numbered 1 through 4 were offered but

not admitted into evidence.

2/ As of October 29, 2009, for the late return of October 2007,

the Department assess ed a penalty in the amount of $524.44 .

However, as of September 28, 2010, for the late return of October

2007, the assessed penalty was revised to $52.44.

3/ As of October 29, 2009, for the late return of October 2007,

the Department assessed a n adminis trative/collection/processing

fee in the amount of $52.44 . However, as of September 28, 2010,

for the late return of October 2007, the assessed

administrative/collection/processing fee was revised to $0.00.

4/ All future references to chapter 212 will b e for 2009.

COPIES FURNISHED:

Carrol Y. Cherry, Esquire

Office of the Attorney General

Revenue Litigation Bureau

The Capitol, P laza L evel 01

Tallahassee, Florida 32399 - 1050

Betty Amos

Abkey No. 1 Limited

9275 Coral Reef Drive, Suite 107

Miami, Florid a 33157

Marshall Stranburg, General Counsel

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314 - 6668

Lisa Vickers, Executive Director

Department of Revenue

The Carlton Building, Room 204

501 South Calhoun Street

Tallahassee, Florida 32 399 - 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 f inal order in this case.