14-003136 Nation Auto Sales Of South Florida, Inc. vs. Department Of Revenue Status: Closed Recommended Order on Wednesday, November 26, 2014.

Summary: Recommend the entry of a final order validating the assessment against Petitioner.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NATION AUTO SALES OF SOUTH

FLORIDA, INC.,

Petitioner,

vs. Case No. 14 - 3136

DEPARTMENT OF REVENUE,

Respondent.

_______________________________/

RECOMMENDED ORDER

This case came before Administrative Law Judge Todd P.

Resavage for final hearing by video teleconference on October 3,

2014, at sites in Tallahassee and Miami, Florida.

APPEARANCES

For Petitioner: Carrol Y. Cherry, Esquire

Department of Legal Affairs

PL - 01, The Capitol

Revenue Litigation Bureau

Tallahassee, Florida 32399 - 1050

For Respondent: Ari Abecasis, pro se

Nation Auto Sales of South Florida, Inc.

12263 Northwe st 49th Drive

Coral Springs, Florida 33076

STATEMENT OF THE ISSUE

Whether the Department of Revenue ' s ( " Department " )

assessment of tax, penalty, and interest against Nation Auto

Sales of South Florida, Inc., is valid and correct.

PRELI MINARY STATEMENT

On April 17, 2014, the Department issued a Notice of Final

Assessment to Petitioner for $192,501.80 in delinquent taxes,

$20,190.35 in penalties, and $66,031.36 in interest, for the

period of October 1, 2005 , through March 31, 2010. On Ju ly 3,

2014, Petitioner requested an administrative hearing. The matter

was referred to the Division of Administrative Hearings ( " DOAH " )

for assignment of an Administrative Law J udge on July 9, 2014.

On August 6, 2014, the Department served Petitioner wi th its

First Requests for Admission. Pursuant to notice, the final

hearing was conducted on October 3, 2014. At hearing, the

Department made an ore tenus motion to deem admitted the matters

contained in its First Requests for Admission, as Petitioner had

not served upon the Department written answers or objections to

same. The motion was granted.

At hearing, the Department presented the testimony of

Margaret " Peggy " Surles, Gweneth Watson, and Robert Taft, and

introduced six exhibits. Arie Abecasis te stified on behalf of

Petitioner.

No transcript of the final hearing was ordered. The

Department timely filed a Proposed Recommended O rder and the same

has been considered by the undersigned in issuing this

Recommended Order.

Unless otherwise indicated, all rule and statutory

references are to the 2014 versions .

FINDINGS OF FACT

1. The Department is the agency responsible for

administering the revenue laws of the State of Florida, including

the imposition and collection of the state ' s sales and use ta xes.

2. Petitioner, during the period of October 1, 2005 ,

through March 31, 2010 ( " assessment period " ), was engaged in the

business of selling used motor vehicles at retail in Broward

County, Florida. 1 /

3. Arie Abecasis was Petitioner ' s president and so le

corporate officer.

4. Petitioner was continuously registered with the

Department as a " dealer, " pursuant to chapter 212, Florida

Statutes.

5. Petitioner was continuously licensed by the State of

Florida Department of Highway Safety and Motor Vehicl es ( " DMV " )

as an independent motor vehicle dealer, pursuant to chapter 320,

Florida Statutes.

6. On September 3, 2008, the Department issued

correspondence to Petitioner advising that the Cri minal

Investigations process had received a referral from the

D epartment ' s collection sub process, concerning Petitioner ' s

possible failure to remit all of the sales tax collected from its

customers. In order to determine if a discrepancy existed, the

Department requested Petitioner to provide: (1) sales invoices/

b uyer ' s orders; (2) sales journals; (3) cash receipt and

disbursement journal; (4) general ledger; and (5) bank statements

for all depository accounts.

7. On September 9, 2008, Mr. Abecasis met with Robert Taft,

a criminal investigator for the Depart ment. Mr. Taft a dvised

Mr. Abecasis that there were two areas of concern:

(1) Petitioner ' s failure to file returns and remit collected sales

tax over several collection periods; and (2) that a comparison of

the Department and DMV records appeared to re veal a substantial

and repeated underreporting and under - remitting of collected sales

tax. Mr. Abecasis advised that he would fully cooperate and

provide records from 2005 on or before September 17, 2008.

8. Thereafter, Petitioner provided some 20 05 records, which

Mr. Taft compared with DMV records. After completing a review of

the same, on November 7, 2008, Mr. Taft issued correspondence to

Petitioner advising that Petitioner ' s license was used to transfer

vehicles for which Petitioner had failed to provide documentation.

The same records indicated sales tax collected but never remitted

to the Department . Accordingly, Mr. Taft requested all of the

documentation originally requested to be produced on or before

December 5, 2008.

9. The Departme nt did not receive the requested

documentation. Thereafter, Mr. Taft obtained additional records

from the DMV regarding a listing of all vehicles titled during the

period from October 1, 2005 , through March 31, 2010, using

Petitioner ' s motor vehicle deale r ' s license numbers.

Additionally, certified title applications for each of the title

transfer transactions were reviewed.

10. From the documents obtained, the Department was able to

determine the following information regarding vehicles sold by

Petitio ner : the acquisition month, dealer number, acquisition

date, title number, owner ' s last name, vehicle make, vehicle

body, vehicle ID, and tax credit.

11. The Department established that Petition er filed with

the Department Sales and Use Tax Returns, For m DR - 15, that were

not accompanied by payment of the tax due, for the following

months: April through July, 2008; and February through August

2009.

12. The Department established that Petitioner did not file

with the Department Sales and Use Tax Returns, Form DR - 15, for

February and March, 2010.

13. Petitioner collected at least $810,063.15 in sales tax.

Petitioner remitted to the Department $509,735.53 in sales tax.

14. Petitioner failed to remit to th e Department at least

$300,327.6 2 in sales tax collected from its customers.

15. On or about November 1, 2010, the Department referred

the matter to the Office of the State Attorney for the

Seventeenth Judicial Circuit of Florida for criminal prosecution.

On October 31, 2012, in the case styled Stat e v. Abecasis , Case

No. 11 - 0002423 CF 10A, Mr. Abecasis entered a plea of no contest

to the criminal charge of theft of state funds in an amou nt of

$20,000 or more, a second - degree felony. As a special condition

of his probation, Mr. Abecasis was ordered to make restitution to

the Department in the amount of $50,000.00. It is undisputed

that, on or before April 10, 2014, Petitioner satisfied the

restitution ordered.

16 . On April 17, 2014, the Department issued to Petitioner

a Notice of Jeopardy Finding and a Notice of Final Assessment.

The Notice of Final Assessment notified Petitioner that

$192,501.80 in tax, $20,190.35 in penalty, and $66,031.36 in

interest were due. 2 / The Notice of Jeopardy Finding averred that

the Department found " one or more of t he jeopardy conditions

provide d in Rule 12 - 21.005, Florida Administrative Code, which

tend to prejudice or render wholly or partly ineffectual the

normal conditions for collection of tax, penalty, or interest. "

The stated jeopardy condition was delay.

17 . On April 21, 2014, the Department recorded a warrant

for collection of delinquent sales and use tax against Petitioner

in the amount contained in the Notice of Final Assessment.

18 . Petitioner testified that, due to the nature of his

business, it was a frequent occurrence that potential vehicle

purchasers would require financing. Petitioner testified that it

was Petitioner ' s practice to allow the customer to obtain the

vehicle prior to financial approval from the lending institution.

Accordingly, wh en the customer was not ultimately approved for

financing or when the vehicle was repossessed, a true " sale " did

not occur, and, therefore, sales taxes were not collected and

remitted. The undersigned finds Petitioner ' s testimony not

credible and not othe rwise supported by the record evidence.

CONCLUSIONS OF LAW

19 . DOAH has jurisdiction over the subject matter and

parties to this proceeding pursuant to sections 120.569,

120.57(1), and 212.18, Florida Statutes.

20 . The Department is the agency authori zed to administer

the tax laws of the State of Florida. §§ 20.21 and 213.05, Fla.

Stat.

21 . The Florida sales and use tax is an excise tax on the

privilege of engaging in business in the state, not a tax on the

property sold. §§ 212.05 and 212.06, Fla . Stat. As noted in

section 212.05,

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

o f 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 su ch

property within the state.

(1) For the exercise of such privilege, a tax

is levied on each taxable transaction or

incident, which tax is due and payable as

follows:

(a)1.a. At the rate of 6 percent of the sales

price of each item or article of tangibl e

personal property when sold at retail in this

state, computed on each taxable sale for the

purpose of remitting the amount of tax due

the state, and including each and every

retail sale.

22 . Section 212.02(15) defines " sale " to include " [a] ny

transfer of title or possession, or both, exchange, barter,

license, lease, or rental, conditional or otherwise, in any

manner or by any means whatsoever, of tangible personal property

for a consideration. "

23 . Section 212.02(19) defines " tangible personal

property, " as follows:

" Tangible personal property " means and

includes personal property which may be seen,

weighed, measured, or touched or is in any

manner perceptible to the senses, including

electric power or energy, boats, motor

vehicles and mobile h omes as defined in

s. 320.01 (1) and (2), aircraft as defined in

s. 330.27 , and all other types of vehicles.

The term " tangible personal property " does

not include stocks, bonds, notes, insurance,

or other obligations or secu rities or pari -

mutuel tickets sold or issued under the

racing laws of the state.

24 . Section 212.06 defines the term " dealer. " There is no

dispute that Petitioner is a dealer within the meaning of that

definition. Every person who is engaged in busines s as a dealer

under the sales and use tax provisions of chapter 212, Florida

Statutes, must be registered by the Department to collect and

remit tax. § 212.18, Fla. Stat.

25 . The Department is authorized to prescribe the records

to be kept by all dealer s that are subject to sales and use tax.

§ 212.12(6)(a), Fla. Stat. Section 212.12(5) addresses the

Department ' s authorization to conduct audits and the consequence

of a dealer ' s failure to make records available:

(5)(a) The department is authorized to audit

or inspect the records and accounts of

dealers defined herein, including audits or

inspections of dealers who make mail order

sales to the extent permitted by another

state, and to correct by credit any

overpayment of tax, and, in the event of a

defi ciency, an assessment shall be made and

collected. No administrative finding of fact

is necessary prior to the assessment of any

tax deficiency.

(b) In the event any dealer or other person

charged herein fails or refuses to make his

or her records availa ble for inspection so

that no audit or examination has been made of

the books and records of such dealer or

person, fails or refuses to register as a

dealer, fails to make a report and pay the

tax as provided by this chapter, makes a

grossly incorrect repo rt or makes a report

that is false or fraudulent, then, in such

event, it shall be the duty of the department

to make an assessment from an estimate based

upon the best information then available to

it for the taxable period of retail sales of

such dealer, the gross proceeds from rentals,

the total admissions received, amounts

received from leases of tangible personal

property by such dealer, or of the cost price

of all articles of tangible personal property

imported by the dealer for use or consumption

or distribution or storage to be used or

consumed in this state, or of the sales or

cost price of all services the sale or use of

which is taxable under this chapter, together

with interest, plus penalty, if such have

accrued, as the case may be. Then the

de partment shall proceed to collect such

taxes, interest, and penalty on the basis of

such assessment which shall be considered

prima facie correct, and the burden to show

the contrary shall rest upon the dealer,

seller, owner, or lessor, as the case may be.

26 . The Department bears the initial burden to demonstrate

that the assessment has been made against Petitioner, and the

factual and legal grounds upon which the Department made the

assessment. The burden then shifts to Petitioner to demonstrate

by a p reponderance of the evidence that the assessment is

incorrect. See IPC Sports, Inc. v. Dep ' t of Revenue , 829 So. 2d

330, 332 (Fla. 3d DCA 2002); § 120.80(14)(b)2 , Fla. Stat .

27 . Here, the Department met its burden. Petitioner failed

to make its r ecords available for inspection, as requested. The

Department properly discharged its duty to make an assessment

( the Notice of Final Assessment ) , and proceeded to collect the

taxes, interest, and penalty on the basis of the assessment,

which is considere d prima facie correct.

28 . Petitioner contends the assessment is incorrect on the

grounds that the restitution paid, pursuant to the plea

agreement, satisfies any amounts outstanding to the Department.

Section 775.089(8), Florida Statutes, negates Petitioner ' s

argument and provides as follows:

The conviction of a defendant for an offense

involving the act giving rise to restitution

under this section shall estop the defendant

from denying the essential allegations of

that offense in any subsequent civil

proceeding. An order of restitution

hereunder will not bar any subsequent civil

remedy or recovery, but the amount of such

restitution shall be set off against any

subsequent independent civil recovery.

29 . Here, Petitioner paid the Departme nt $50,000 in

restitution . The Department presented unrefuted evidence that,

in calculating the Notice of Final Assessment, Petitioner was

given credit for the $50,000 paid in restitution.

30 . Additionally, no evidence was presented to support the

conclusion that the $50,000 paid by Petitioner as part of the

court ordered restitution would constitute a closing agreement or

compromise pursuant to section 213.21, Florida Statutes.

31 . Petitioner also contends that the assessment is

incorrect because the amounts alleged are based on car sales that

were cancelled or resulted in repossessions of vehicles, and

yielded no profits to Petitioner which would be taxable as a

sale. Petitioner failed to present sufficient evidence to

support this conten tion. Petitioner failed to establish by a

preponderance of the evidence that the assessment is incorrect.

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 validates

the assessment against Nation Auto Sales of South Florida, Inc.

DONE AND ENTERED this 26th day of November , 2014 , in

Tallahassee, Leon County, Florida.

S

TODD P. RESAVAGE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 26th day of November , 2014 .

ENDNOTE S

1 / The findings of fact refer to the assessment period, unless

otherwise indicated.

2 / The record fails to disclose to the undersigned the sequence

of events that transpired to explain the reducti on of taxes owed

from $300,327.6 2 to $ 192,501.80 (exclusive of penalties and

interest).

COPIES FURNISHED:

Nancy L. Staff, General Counsel

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314 - 6668

(eServed)

Carrol Y. Cherry, Esquire

Department of Legal Affairs

Office of the Attorney General

PL - 01, The Capitol

Revenue Litigation Bureau

Tallahassee, Florida 32399 - 1050

(eServed)

Ari Abecasis

Nation Auto Sales of South Florida, Inc.

12263 Northwest 49th Drive

Coral Springs, Florida 33076

Marshall Stranburg, Executive Dir ector

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314 - 6668

(eServed)

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 excepti ons

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.