11-004341 Jacksonville Entertainment Company, Llc vs. Department Of Revenue Status: Closed Recommended Order on Monday, March 19, 2012.

Summary: Section 212.18(3)(d) requires the Department to issue an administrative complaint before it may revoke a dealer's certificate of registration.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JACKSONVILLE ENTERTAINMENT )

COMPANY, LLC , )

)

Petitioner, )

) Case No . 11 - 4341

vs. )

)

DEPARTMENT OF REVENUE , )

)

Respondent. )

)

RECOMMENDED ORDER

A formal hearing was conducted in this case on January 26 ,

2012 , in Jacksonville , Florida, before Lawrence P. Stevenson, a

duly - designated Administrative Law Judge with the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: No appearance

For Respondent: Carrol Y. Cherry, Esquire

Office of the Attorney General

The Capitol, PL - 01

Revenue Litigation Bureau

Tallahassee, Florida 32399 - 1050

STATEMENT OF THE ISSUE

The issue is whether the Department of Revenue (the

"Department") may revoke the Certificate of Registration issued

to Petitioner for failure to post a $10,000 cash deposit, surety

bond, or irrevocable letter of credit.

PRELIMINARY STATEMENT

On May 18 , 2011 , the Department issued a Notice of Intent

to Revoke Registration ("Notice") to Petitioner, Jacksonville

Entertainment Company, LLC . The Notice stated as follows, in

relevant part:

Subsection 212.14(4), Florida Statute s,

requires the Department to obtain security

as a condition to any person obtaining or

retaining a sales & use tax dealer's

certificate of registration in all instances

where it is necessary to ensure compliance

with the sales and use tax laws (Chapter

21 2, Florida Statutes). The Department has

determined that you must post security for

the following reason(s):

1. It is delinquent in filing its Sales and

Use tax returns.

The amount of security you must provide is

$10,000. This amount was determined as

follows:

1. Twelve months of estimated Sales and Use

Tax due.

Accordingly, the Department is notifying you

of its intent to revoke your dealer's

certificate of registration unless security

in the form of a cash deposit, surety bond,

or irrevocable lett er of credit is posted in

the required amount. The Department must

receive the required security on or before

the date of the informal conference, set

forth below.

The Notice went on to state that the informal conference

would be held on June 21, 2011, t hat Petitioner would be allowed

to present evidence on its own behalf at the conference, and

that the Notice would become final on the date of the informal

conference unless Petitioner posted the required security or

reached some other agreement with the D epartment at the informal

conference.

The informal conference did not persuade the Department to

forego the security requirement set forth in the Notice. On

July 13, 2011, counsel for Petitioner filed with the Department

a Request for Formal Administrat ive Hearing contesting the

Department's finding that a bond was needed to guarantee tax

payments and disputing the Department's $10,000 estimate of the

taxes that would be paid by Petitioner over a twelve - month

period .

On August 24, 2011 , the Departme nt referred the Request for

Formal Administrative Hearing to the Division of Administrative

Hearings (" DOAH " ) . The case was initially set for hearing on

October 24, 2011.

On October 21, 2011, counsel for Petitioner filed a motion

requesting a continu ance and leave to withdraw from further

representation of Petitioner. Counsel stated that his

appearance on behalf of Petitioner had been limited to filing

the Request for Formal Administrative Hearing and appearing at

one meeting with the Department on b ehalf of Petitioner. The

owner of Jacksonville Entertainment Company, LLC, Bechara Richa,

had notified counsel that he intended t o represent the company

from that point forward. Counsel further stated that he had

been out of contact with Petitioner for s everal months and that

it was his understanding that Petitioner was no longer

conducting business.

Based on counsel's representations, the undersigned entered

separate orders on October 24, 2011 , that continued the final

hearing and allowed counsel to with draw his representation of

Petitioner in this proceeding. By order dated December 1, 2012,

the hearing was rescheduled for January 26, 2012, on which date

it was convened at 1:00 p.m.

No representative of Petitioner appeared at the final

hearing on Januar y 26 , 2012, the commencement of which was

delayed by 1 0 minutes to allow Petitioner every opportunity to

be heard. The hearing proceeded in order to allow the

Department to present its prima facie case. The hearing

adjourned at approximately 1: 3 0 p .m.

On January 30 , 2012, the undersigned entered an order to

show cause directing Petitioner to provide, within 10 days,

reasons why the record in the case should not be closed and the

recommended order entered based on the current record.

Petitioner did not respond to the order to show cause. An order

closing the record was entered on February 14 , 2012.

At the hea ring, the Department presented the testimony of

Tammy Arnold, a Revenue Specialist III in the Department's

Jacksonville office, and of Blake Hartla nd, the Department's

Service Center Manager in Jacksonville. The Department 's

Exhibits 1 through 5 were admitted into evidence.

No transcript of the hearing was provided. The Department

timely filed a P roposed R ecommended O rder on February 15, 2012.

Pet itioner did not file a proposed recommended order.

Unless otherwise noted, all statutory references are to

Florida Statutes (2011). There has been no change to the

statutes cited in this R ecommended O rder at any time relevant to

this proceeding.

FINDINGS OF FACT

1. The Department is the agency of the state of Florida

charged with the duty to enforce the collection of taxes imposed

pursuant to chapter 212, Florida Statutes, to issue warrants for

the collection of taxes, interest, and penalties and, where

n ecessary, to require a cash deposit, bond, or other security,

as a condition to a person obtaining or retaining a dealerÒs

certificate of registration under chapter 212.

2. Petitioner is a Florida corporation with its principal

and mailing address at 580 0 Phillips H ighway, Jacksonville,

Florida 3221 6.

3. Petitioner is a "dealer" as defined in section

212.06(2), Florida Statutes. Petitioner holds Dealer's

Certificate of Registration No. 26 - 8015523525 - 2.

4. As a dealer, Petitioner was required to colle ct sales

and use taxes from customers and to submit monthly tax returns

and collected taxes to the Department. Sales and use taxes for

any given month are due on the first day of the succeeding

month, and must be paid to the Department on or before the 20 th

day of that succeeding month.

5 . Petitioner failed to file the required sales and use

tax returns for January through March 2011. In a delinquent tax

warrant dated May 18, 2011, the Department assessed Petitioner

estimated tax of $3,000 for the three months in question, along

with $32.79 in interest, $300.00 in penalties, and fees in the

amount of $20.00, for a total of $3 , 352.79.

6 . The Department estimated the tax due for the months of

January through March 2011 based on historical data, i.e.,

Petit ioner's previous sales and use tax returns.

7 . The Department issued the Notice on May 18, 2011. The

Notice was served on Petitioner on May 20, 2011.

8 . The Notice required Petitioner to post a $10,000 cash

deposit, surety bond, or irrevocable letter of credit as a

condition to retaining its Certificate of Registration. The

Notice further advised Petitioner of an informal conference ,

commonly referenced as a " bond hearing ," to be conducted on

June 21, 2011 , for the purpose of affording the Petitioner an

opportunity to resolve the delinquent tax issue.

9. The Notice also stated as follows, in relevant part:

This Notice of Intent to Revoke Registration

will become final on the date of the

informal conference if the required security

has not been posted, o r an agreement is not

reached at the informal conference, or you

fail to attend the informal conference.

NOTICE OF RIGHTS

Should this notice become final, you have

the right to request an administrative

hearing, which will be conducted in

accordance w ith s ection 120.57, Florida

Statutes. You may be represented by counsel

or other qualified representative and

present written or oral evidence or

statements in opposition of the Department's

intended action. If a disputed fact hearing

(formal hearing) is conducted pursuant to

s ubsection 120.57(1), Florida Statutes, you

may also take testimony, call or cross -

examine witnesses, have subpoena duces tecum

issued, and present written evidence.

* * *

If you fail to timely file a request for a

hearing that complies with the requirements

provided above, the Department will close

its file on this matter and consider this

Notice its final agency action, thereby

revoking your certificate of

registration. . . .

10 . At the bond hearing, Petitioner provided the

Department with sales and use tax returns for the months of

April through June 2011, but did not remit the taxes due on

those returns.

11 . Based on the newly filed returns, the Department

issued a delinquent tax warrant dated September 29, 2011, that

ass essed Petitioner tax of $2,418.50 for the three months in

question, along with $41.81 in interest, $335.20 in penalties,

and fees in the amount of $20.00, for a total of $2 , 815.51.

12. Pursuant to the Notice of Rights set forth in the

Notice, Petitioner f iled a Request for Formal Administrative

Hearing on July 13, 2011 . There is no record evidence that the

Department filed an Administrative Complaint in this case.

1 3 . As of the date of the hearing, Petitioner had not

posted with the Department a $10,000 cash deposit, surety bond,

or irrevocable letter of credit.

14 . Based on the available information, the Department's

requirement of a $10,000 cash deposit, surety bond, or

irrevocable letter of credit as a condition to Petitioner's

retaining its certifica te of registration was reasonable.

CONCLUSIONS OF LAW

15 . The Division of Administrative Hearings has

jurisdiction of the subject matter of and the parties to this

proceeding. §§ 120.569 and 120.57(1), Fla. Stat.

16 . The Department bears the burden of pro ving the

specific allegations of fact that support the relief sought in

the Notice of Intent to Revoke Registration by clear and

convincing evidence. § 120.57(1)(j), Fla. Stat.; Latham v. Fla.

Comm' n on Ethics , 694 So. 2d 83, 87 (Fla. 1st DCA 1997); see

a lso Dep't of Banking & Fin., Div. of Securities and Investor

Protection v. Osborne Stern and Co. , 670 So. 2d 932 (Fla. 1996);

Ferris v. Turlington , 510 So. 2d 292 (Fla. 1987); and Pou v.

Dep't of Ins. and Treasurer , 707 So. 2d 941 (Fla. 3d DCA 1998).

17 . In Evans Packing Co. v. Dep Ó t of Agric . & Consumer

Serv s. , 550 So. 2d 112, 116, n. 5 (Fla. 1st DCA 1989), the Court

defined clear and convincing evidence as follows:

[C]lear and convincing evidence requires

that the evidence must be found to be

credible; t he facts to which the witnesses

testify must be distinctly remembered; the

evidence 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 t he trier of fact the firm belief of

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).

18 . Judge Sharp, in her dissenting opinion in Walker v.

Fla . De p Ó t of Bus . & Prof Ó l Reg . , 705 So. 2d 652, 655 (Fla. 5th

DCA 1998) (Sharp, J., dissenting), reviewed recent

pronouncements on clear and convincing evidence:

Clear and convincing evidence requires more

proof than preponderance of evidence, but

less than bey ond a reasonable doubt. In re

Inquiry Concerning a Judge re Graziano , 696

So. 2d 744 (Fla. 1997). It is an

intermediate level of proof that entails

both qualitative and quantative [sic]

elements. In re Adoption of Baby E.A.W. ,

658 So. 2d 961, 967 (Fla. 1995), cert.

denied , 516 U.S. 1051, 116 S. Ct. 719, 133

L.Ed.2d 672 (1996). The sum total of

evidence must be sufficient to convince the

trier of fact without any hesitancy. Id.

It must produce in the mind of the fact

finder a firm belief or conviction as to the

truth of the allegations sought to be

established. Inquiry Concerning Davey , 645

So. 2d 398, 404 (Fla. 1994).

19 . Every person desiring to engage in or conduct business

in this state as a "dealer" must be licensed by the Department

pursuant to section 212.18, Florida Statutes , and Florida

Administrative Code Rule 12A - 1.060. At all times relevant to

this case, Petitioner was a dealer as defined at subsection

212.06(2)(a) who was required to register with the Department,

to collect sales and use taxes on behalf of the state, and to

remit them to the Department on a monthly basis.

20. Section 212.18, Florida Statutes, authorizes the

Department to issue a dealer's certificate of registration and

to revoke such registration upon the failure of a de aler to

comply with the requirements of chapter 212, Florida Statutes.

21 . The sole relief sought by the Department in this

proceeding is the revocation of Petitioner's Dealer's

Certificate of Registration. The process by which such

revocation may be acc omplished is detailed in section

212.18(3)(d), Florida Statutes:

The depa rtment 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 depar tment must schedule

an informal conference at which the dealer

may present ev idence 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 t he 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

e vidence refuting the department' s intended

revocation or enter into a compliance

agreement with the depar tment which resolves

the dealer' s failure to comply with this

chapter. The department shall issue an

administrati ve complaint under s. 120.60 if

the dealer fails to attend the departmentÓs

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 com pliance agreement .

( e mphasis added) .

22 . The evidence presented at the hearing established that

the Department followed each step provided by section

212.18(3)(d) until the point at which the informal conference

failed to result in a compliance agreeme nt with Petitioner. At

th at point, it appears that both the Department and Petitioner

acted in accordance with the " Notice of Rights " that the

Department included in the Notice of Intent to Revoke

Registration , set forth in relevant part at Finding of Fac t 9,

supra . Petitioner submitted to the Department a Request for

Formal Administrative Hearing, which the Department forwarded to

DOAH. There is no record evidence that the Department ever

filed an Administrative Complaint against Petitioner .

23. In FMG Enterprises, Inc. v. Dep't of Rev. , Case No.

11 - 3548 ( Fla. DOAH Oct. 24, 2011; Fla. Dep't of Rev. Dec. 27,

2011), Administrative Law Judge E. Gary Early arrived at the

following conclusions, adopted herein:

34. Section 212.18(3)(d) clearly requires a

two - stage process le ading to revocation of a

dealer' s certificate of registration. The

first stage is the notice to the dealer of

an informal conference. That notice was

provided in the form of the Notice of Intent

to Revoke Registration. Only after the

inf ormal conference has been held is the

Department authorized to issue an

administrative complaint. Therefore, the

notice of its informal conferences Î - in

this case in the form of the Notice of

Intent to Revoke Registration -- and the

administrative compla int are sequential, and

cannot be construed to be the same document.

See , e.g. , Dep't of Rev. v. Linda Arnette,

d/b/a Giff's Sub Shop , Case No. 07 - 4051

(Fla. DOAH Mar. 14, 2008; Final Order not

available).

35. The legislative requirement that a

section 1 20.60 administrative complaint be

issued prior to revocation cannot be

disregarded. . . [The recommended order]

cannot include revocation as a remedy for

non - compliance until an administrative

complaint is issued by the Department.

24. Because of this pr ocedural deficiency, it is concluded

that the Department has not proven its entitlement to revoke

Petitioner's certificate of registration by clear and convincing

evidence .

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Department of Revenue enter a final

order that declines to revoke Dealer's Certificate of

Registration No. 26 - 8015523525 - 2 held by Jacksonville

Entertainment Company, LLC, until such time as the Department

fully complies with th e requirements of subsection 212.18(3)(d),

Florida Statutes by issuing an Administrative Complaint .

DONE AND ENT ERED this 1 9 th day of March , 2012 , in

Tallahassee, Leon County, Florida.

S

LAWRENCE P. STEVENSON

Administrati ve Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administra tive Hearings

this 1 9 th day of March , 201 2 .

COPIES FURNISHED:

Marshall Stranburg, Esquire

Department of Revenue

The Carlton Building, Room 204

501 South Calhoun Street

Tallahassee, Florida 32314 - 6668

Carrol Y. Cherry, Esquire

Office of the Attorney Ge neral

The Capitol, PL - 01

Revenue Litigation Bureau

Tallahassee, Florida 32399

[e-mail]

Bechara Richa

Jacksonville Entertainment Company, LLC

8474 Papelon Way

Jacksonville, Florida 32217

Nancy Terrel, Acting Gen eral Co unsel

Depar tment of Revenue

The Carlton Building, Room 204

501 South Calhoun Street

Post Office Box 6668

Tallahassee, Florida 32314 - 6668

Lisa Vickers, Executive Director

Department of Revenue

The Carlton Building, Room 1 04

501 South Calhoun Street

Tallahassee, Flor ida 32314 - 6668

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 issu e the Final Order in this case