14-002538 Department Of Revenue vs. Pnc Llc, D/B/A Cheap Status: Closed Recommended Order on Monday, November 3, 2014.

Summary: Petitioner proved that Respondent breached the compliance agreement. Revocation of Respondent's certificate of registration is not warranted because Respondent satisfied its past-due tax obligation.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF REVENUE,

Petitioner,

vs. Case No. 14 - 2538

PNC LLC, d/b/a CHEAP,

Respondent.

_______________________________/

RECOMMENDED ORDER

On September 26, 2014 , a f inal admin istrative hearing in

this case was held by video teleconference at sites in

Tallahassee and Tampa , Florida, before Linzie F. Bogan,

Administrative Law Judge , Division of Administrative Hearings.

APPEARANCES

For Petitioner: Angela Lynn Huston, Esquire

Office of the Attorney General

PL - 01, The Capitol

Tallahassee, Florida 32399

For Respondent: William B. Meacham, Esquire

308 East Plymouth Street

T ampa, Florida 33603

STATEMENT OF THE ISSUE

W hether the Department of Revenue (Department or Petitioner)

may revoke the certificate of registration issued to Respondent

for failure to comply with the terms of a compliance agreement.

PRELIMINARY STATEMENT

The Department of Revenue seeks to revoke the c ertificate of

r egistration issued to PNC LLC , d/b/a Cheap ( Respondent ). The

Department entered into a c ompliance a greement with Respondent on

July 10, 201 3 . The Department cancelled the compliance agreement

on October 12, 2013, due to RespondentÓs failure to comply with

the terms thereof. On or about March 6, 2014, t he Department

filed an A dministrative C omplaint against Respondent alleging

that Respondent has a history of failing to abide by c hapter 212,

F lorida Statutes . The Administrative Complaint also alleges that

Respondent violated the compliance agreement by failing, for a

period of several months, to file the required sales and use tax

returns and remit the tax due. Respondent timely filed a reque st

for formal a dministrative h earing. On May 29, 2014, the

Department transmitted the case to the Division of Administrative

Hearings (DOAH) for final hearing.

At the f inal hearing, the Department presented the testimony

of its employees Mary Havens and Kimberly Ridgeway . Respondent

presented testimony from Verna Bartlett. Department Exhibits 1

through 8 were admitted into evidence and the undersigned took

official recognition of tax warrants recorded by the Department

against Respondent in the Official Records of Hillsborough

County, Florida. RespondentÓs Exhibits 1 through 16 were

admitted into evidence .

A Transcript of the final hearing was filed with DOAH on

October 7, 2014. The parties each submitted a Proposed

Recommended Order. The P roposed R e commended O rders submitted by

the parties have been considered in the preparation of this

Recommended Order.

FINDING S OF FACT

1. The Department is the state agency charged with

administering and enforcing Florida's revenue laws, including the

laws related to the imposition and collection of sales and use

taxes pursuant to chapter 212 , Florida Statutes (2013) . 1/

2. Respondent is a Florida limited liability company doing

business at 309 South Howard Avenue, Tampa, Florida , and is a

Ð dealer Ñ as defined at s ection 212.06(2).

3. Respondent holds a certificate of registration issued by

the Department (Certificate No. 39 - 8015401140 - 8) and is

statutorily required to file tax returns and remit taxes to the

Department .

4. The Department is authorized to cancel a dealer's

certificate of registration for failure to comply with state tax

laws. Prior to such cancellation, the Department is required by

statute to convene a conference with the dealer.

5. The Department initiated the process of revoking

RespondentÓs c ertificate of r egistration by sending Respondent a

Notice of Conference on Revocation of Certificate of Registration

(Notice of Conference) via regular mail and certified mail on

May 24, 2013.

6. The Department then hand - delivered a copy of the Notice

of Conference to Respondent Ós principal place of business on

June 21, 2013.

7. The Notice of Conference advised that the informal

conference would be held on June 26, 2013. The Notice of

Conference also informed Respondent that revocation was being

co nsidered because of Respondent Ós failure to submit sales and

use tax and reemployment tax . The notice further advised that at

the informal conference Respondent would have the opportunity to

make payment or present evidence to demonstrate why the

Departme nt should not revoke Respondent Ós c ertificate of

r evocation.

8. Verna Bartlett and Aubrey Grantham appeared on behalf of

Respondent , at the informal conference.

9. Christopher Scott, Respondent Ós m anager and r egistered

a gent, entered into a Compliance Agreement with the Department on

July 10, 2013.

10. The c ompliance a greement states that , due to

Respondent Ós failure to timely file returns and pay all taxes

due, Respondent admits to a past due sales and use tax liability

of $43,586.23, consisting of t ax, penalty, interest and fees.

The c ompliance a greement also states that Respondent admits to a

past due reemployment tax liability of $19,215.75, consisting of

tax, penalty, interest and fees. The c ompliance a greement

required Respondent to make a down payment of $15,000 by July 10,

2013 , to make , beginning on August 10, 2013, monthly payments in

the amount of $4,000 for one year, and to make a final balloon

payment on July 10, 2014. The compliance agreement also provides

that:

IN CONSIDERATION for the Department

refraining from pursuing revocation

proceedings at this time, the taxpayer

agrees:

A. To accurately complete all past due tax

returns and reports and file them no later

than 7/10/13.

B. To remit all past due payments to the

Department as st ated in the attached payment

agreement.

C. To accurately complete and timely file

all required tax returns and reports for the

next 12 months, beginning with the first

return/report due following the date of this

agreement.

D. To timely remit all taxes due for the

next 12 months, following the date of this

agreement. 2/

11. On July 10, 2013, Respondent made the down payment of

$15,000 as required by the c ompliance a greement.

12. Per the c ompliance a greement , all payments were to be

made in certified funds, money order or cash and received by the

close of business on the due date at the DepartmentÓs Tampa

Service Center.

13. Per the compliance agreement, RespondentÓs second

monthly payment in the amount of $4,000 was due by the close of

business on September 10, 2013. The Department, as part of the

process associated with the execution and implementation of the

compliance agreement, provided Respondent with ÐStipulation

Agreement Payment CouponsÑ (Stipulation Coupons) to facilitate

the processing of RespondentÓs monthly payments. Although the

compliance agreement indicates that payments are to be received

by the close of business on the 10th calendar day of each month,

the Stipulation Coupon for September 2013 showed that payment

should be received Ðon or before September 12, 2013,Ñ at the

ÐTampa Service Center.Ñ

14. B oth the compliance agreement and the Stipulation

Coupon clearly indicate that payments are to be sent to the Tampa

Service Center . Nevertheless, Respondent sent its payment, by

check dated and mailed on September 12, 2013, to the DepartmentÓs

Tallahassee office.

15. Not only was the payment mailed to the incorrect

address, but it was also untimely. Furthermore, because

Respondent did not include a note on the memo portion of the

c heck or enclose a Stipulation Coupon with the check, the

Department applied the payment to a different account.

16. As a consequence of RespondentÓs failure to submit the

September 2013 payment in a manner consistent with either the

compliance agreement or the Stipulation Coupon, the Department

wrote Respondent and informed the company that effective

October 12, 2013, the compliance agreement was voided. The

compliance agreement was never reinstated by the parties. Due to

the compliance agreement havi ng been voided, all monies owed for

past due tax payments became due as of October 12, 2013. At some

point after the filing of the Administrative Complaint, and prior

to the final hearing, Petitioner satisfied all past due tax

liabilities covered by the c ompliance agreement.

17. The Administrative Complaint alleges that ÐRespondent

failed to file a tax return for the months of December 2013 and

January 2014Ñ which resulted in Ðan estimated tax liability of

$13,854.32.Ñ 3/ Additionally, the Department, in its Proposed

Recommended Order, argues that for the period July 2013 through

July 2014 Respondent failed to electronically file returns and

submit payment of sales and use tax and reemployment tax.

According to the Department, RespondentÓs omissions viol ate d the

terms of the compliance agreement.

18. Respondent annually reports more than $20,000 in sales

and use tax.

19. For the months July and August 2013 (September is not

included because the tax return and related payment were not due

until October 20, 2013, which is after the date of termination of

the compliance agreement), the undisputed evidence is that

Respondent did not electronically file its returns when due. 4/

The evidence also established that Respondent did not seek, nor

did the Departme nt grant, a waiver authorizing Respondent to file

its returns via non - electronic means. The evidence is

inconclusive regarding whether Respondent has paid any amounts

owed for these months.

20. The compliance agreement required Respondent Ð[t]o

accurate ly complete . . . all required tax returns and reports.Ñ

The compliance agreement does not define the word Ðaccurately.Ñ

The root word ÐaccurateÑ is generally accepted to mean

Ðconforming exactly to truth or to a standard.Ñ Accurate

Definition, Merriam - Webster.com , http://merriam -

webster.com/dictionary/accurate (last visited Oct. 31, 2014).

There is nothing in the compliance agreement suggesting that the

parties intended a different meaning f or this term.

21. Section 213.755(1) and Florida Administrative Code

Rule 12 - 24.003 establish the standard by which Respondent was to

conduct itself and these provisions provide that a ny taxpayer

that has paid tax in the prior state fiscal year in an am ount of

$20,000 or more is required to file returns and remit payments by

electronic means, unless first obtaining a waiver. By not filing

its returns by electronic means, as required, Respondent did not

Ðaccurately completeÑ the returns for July and Augu st 2013

because the returns were not filed in accordance with Ðthe

standardÑ established by section 213.755 and Florida

Administrative Code Rule 12 - 24.003. RespondentÓs failure in this

regard was in violation of the then - in - effect compliance

agreement.

2 2. The Department has issued and recorded against

Respondent delinquent tax warrants and notices of lien in the

public records of Hillsborough County , Florida, to secure

collection of delinquent sales and use tax and reemployment tax

liability, plus penal ties, filing fees and interest. On April 6,

2013, the Department recorded against Respondent a tax warrant in

the amount of $10,323.40, and on May 15, 2013, another tax

warrant in the amount of $32,912.04 was also recorded. The tax

liability, and related penalties, fees and interest for these two

tax warrants were covered by the compliance agreement and have

since been satisfied. 5/

CONCLUSIONS OF LAW

23. DOAH has jurisdiction over the subject matter and

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

(2014).

24. The Department has the burden of proving by clear and

convincing evidence the allegations in the Administrative

C omplaint on which the Department relies to seek revocation of

Respondent's c ertificate of registration . Dep't of Banking &

Fin. v. Osborne Stern & Co. , 670 So. 2d 932, 935 (Fla. 1996). As

stated by the Florida Supreme Court:

Clear and convincing evidence requires that

the evidence must be found to be credible;

the facts to which the witnesses testify must

be distinc tly 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.

In re Henson , 913 So. 2d 579, 590 (Fla. 2005) (quoting Slomowitz

v. Walker , 492 So. 2d 797, 800 (Fla. 4th DCA 1983) ) ; accord

Westinghouse Electric Corp. v. Shuler Bros., Inc. , 590 So. 2d

986, 988 (Fla. 1st DCA 1991)( Ð Although this standard of proof may

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

precl ude evidence that is ambiguous.Ñ ).

25. As a dealer, Respondent is required to, and did, obtain

a certificate of registr ation from Petitioner. See § 212.18,

Fla. Stat., and Fla. Admin. Code R. 12A - 1.060.

26. Pursuant to section 212.18, the Department is

authorized to revoke Respondent Ós certificate of r egistration due

to Respondent Ós failure to timely file the required r eturns and

remit sales tax due as required by chapter 212 .

27. In accordance with section 212.15(1) and (2), the tax

imposed pursuant to c hapter 212 become s state funds at the moment

of collection, and the intentional failure to remit these taxes

constit utes theft of state funds.

28. Pursuant to section 212.15(1), tax is due on the first

day of the succeeding calendar month and must be paid to the

Department on or before the 20th of each month for tax collected

the preceding calendar month.

29. Sectio n 212.11(1)(b) requires Respondent to file tax

returns with the Department on a monthly basis.

30. Section 212.15(1) requires that Respondent collect

taxes from customers and remit such taxes to the Department on a

monthly basis.

31. Section 21 2 . 18 ( 3 )( e ) states that the Department may

proceed to revoke a certificate after conducting a conference

with a dealer and offering the dealer an opportunity to provide

additional information or resolve the dispute through a

compliance agreement. In th e present ca se, such a conference

occurred, and the parties agreed to resolve the matter through

execution of a c ompliance a greement. Respondent failed to comply

with the terms of the agreement which resulted in the Department

unilaterally cancelling the agreement on October 12, 2013.

Respondent has, however, paid all past due tax liabilities

covered by the compliance agreement and this militates against

revocation of RespondentÓs certificate of registration.

32. Section 213.692, Florida Statutes, specifically

aut horizes the Department to revoke a dealer's certificate of

registration if the Department has filed a warrant against a

dealer for the failure to file a tax return or to remit taxes.

The evidence established that the Petitioner has filed multiple

tax warr ants against Respondent for failing to file tax returns

or remit taxes. Only two of the warrants, as discussed in the

Findings of Fact, are at issue in this proceeding. RespondentÓs

tax liability covered by the two tax warrants at issue has been

satisfie d and this militates against revocation of RespondentÓs

certificate of registration.

33. Any taxpayer that has paid tax in the prior state

fiscal year in an amount of $20,000 or more is required to file

returns and remit payments by electronic means, unl ess first

obtaining a waiver. See § 213.755, Fla . Stat.

34. Returns required to be initiated though an electronic

data exchange are not timely if they are not received by the 20th

of each month for tax collected the preceding calendar month.

See § 212. 11(1)(e), Fla . Stat. The evidence established that

Respondent failed to file returns by electronic means for the

months of July and August 2013, and that Petitioner did not grant

Respondent a waiver which authorized Respondent to use an

alternative proces s for filing.

35. Section 213.755(6) provides that Ð[a] taxpayer who

fails to file returns [electronically] is liable for a penalty of

$10 for each report submitted, which is in addition to any other

penalty that may be applicable . Ñ It is unreasonable u nder the

facts of this case to elevate what would otherwise be a $20 fine

into a revocation proceeding because Respondent failed to

electronically file two tax returns while subject to a compliance

agreement.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Revenue issue a

final order that declines to revoke DealerÓs Certificate of

Registration No. 39 - 8015401140 - 8 held by PNC LLC , d/b/a C heap .

DONE AND ENTERED this 3rd day of November , 2 014 , in

Tallahassee, Leon County, Florida.

S

LINZIE F. BOGAN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Fili ng (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 3rd day of November , 2014 .

ENDNOTE S

1/ All subsequent references to Florida Statutes will be to 2013,

unless otherwise indicated.

2/ The compl iance agreement gives Respondent an opportunity to

satisfy past due tax liabilities by entering into an installment

payment plan. The compliance agreement also imposes on

Respondent a prospective obligation to timely file and remit, for

a period of 12 mon ths from the date of the agreement, all tax

returns, reports and taxes due. By imposing a 12 - month

prospective obligation on Respondent to timely file and remit tax

returns and taxes due, the Department, with the consent of the

Respondent, is by - passing t he conciliation process set forth in

sections 212.18 and 213.692, Florida Statutes, by making any

breaches by Respondent during this 12 - month period grounds for

immediate revocation. Because the Department voided the

compliance agreement on October 12, 20 13, the Department cannot

thereafter avail itself of the negotiated benefit of being able

to by - pass the conciliation process for any alleged violation

that occurred after the date upon which the Department voided the

agreement. Therefore, any alleged vio lations occurring after

October 12, 2013, are not properly before DOAH because the

Department has neither alleged nor proved that the conciliation

process provided for in sections 212.18 and 213.692, Florida

Statutes, has occurred with respect to any such alleged

violations. See generally , Jacksonville EntmÓt Co., LLC, v.

DepÓt of Rev. , Case No. 11 - 4341 (Fla. DOAH Mar. 19, 2012; Fla.

DOR July 9, 2012) ( c onciliation process must occur prior to the

filing of an administrative complaint seeking to revoke a

de alerÓs certificate of registration). The Department may issue

an Administrative Complaint for alleged violations occurring

after October 12, 2013, once the Department fully complies with

the requirements of sections 212.18(3)(e) and 213.692(1)(a). Id.

3/ No findings of fact are made with respect to the period

September 2013 through July 2014 because any alleged violations

by Respondent during this period were not governed by the

compliance agreement. See also , endnote 2.

4/ See endnotes 2 and 3.

5/ No findings of fact are made with respect to any tax warrants

filed after the Department voided the compliance agreement. See

endnote 2.

COPIES FURNISHED:

Verna Bartlett

Tampa Hyde Park Cafe, LLC

303 South Melville Avenue

Tampa, Florida 33606

Nancy L. Staff, General Counsel

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314 - 6668

(eServed)

Angela Lynn Huston, Esquire

Office of the Attorney General

PL - 01, The Capitol

Tallahassee, Florida 32399

(eServed)

William B. Meacham, Esqui re

308 East Plymouth Street

Tampa, Florida 33603

(eServed)

Marshall Stranburg, Executive Director

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314 - 6668

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right t o 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.