14-004647 Department Of Revenue vs. Tampa Hyde Park Cafe, Llc Status: Closed Recommended Order on Thursday, June 11, 2015.

Summary: Dealer failed to comply with the terms of a compliance agreement; revocation of certificate of registration recommended.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF REVENUE,

Petitioner,

vs. Case No. 1 4 - 4647

TAMPA HYDE PARK CAF E , d/b/a

THE HYDE PARK CAF E ,

Respondent.

_______________________________/

RECOMMENDED ORDER

This cas e was heard on March 4 , 201 5 , by video

teleconferenc ing at sites in Tallahassee and Tampa , Florida,

before D. R . Alexander, the assigned Administrative Law Judge of

the Division of Administrative Hearings (DOAH).

APPEARANCES

For Petitioner : Angela L ynn H uston, Esquire

Office of the Attorney General

Revenue Litigation Bureau

PL - 01, The Capitol

Tallahassee, Florida 32399 - 1050

For Respondent : W illiam Bart Meacham , Esquire

308 East Plymouth Street

Tampa, Florida 33603 - 5957

STATEMENT OF THE ISSUE

The issue is whether Respondent's Certificate of

Registration 39 - 8011930243 - 9 should be revoked for the reasons

stated in a n Administrative Complaint for Revocation of

Certificate of Registration (Administrative Complaint) issued by

the Department of Revenue (Department) on June 5, 2014.

PRELIMINARY STATEMENT

The Administrative Complaint propos es to permanently revoke

Responde nt's Certificate of Registration for failing to remit

taxes, interest, penalties, and fees as required by chapter s 212

and 443 , Florida Statutes (2014). Raising a number of alleged

procedural irregularities in the process , Respondent timely

requested a he aring, and the matter was transmitted by the

Department to DOAH to conduct a formal hearing.

At the final hearing, the Department presented the

testimony of one witness. Department Exhibits 1 - 7 were accepted

in evidence. Respondent presented the testim ony of one witness.

Respondent 's Exhibits 1 - 8 were accepted in evidence.

A T ra nscript of the hearing has been prepared . The parties

filed p roposed r ecommended o rders (PROs) , which have been

considered in the preparation of this Recommended Order.

FINDI NGS OF FACT

1. The Department is the state agency charged with

administering and enforcing the state revenue laws, including

the laws related to the imposition and collection of sales and

use tax es pursuant to chapter 212 .

2. Respondent is a Florida li mited liability corporation

doing b usiness as The Hyde Park Caf e at 1806 West Platt Street,

Tampa, Florida. For purposes of collecting and remitting sales

and use taxes, it is a dealer as defined in section 212.06(2)

and is required to comply with chapter 212.

3. Respondent holds Certificate of Registration number 39 -

8011930243 - 9 , which became effective on July 27, 2000. A

certificate of registration is required in order to do business

in the state and requires its holder to collect and remit sales

tax pursuant to chapter 212. See § 212. 0 5 (1), Fla. Stat.

4. Respondent is also an employing unit as defined in

section 443.036(2 0 ) and is subject to the unemployment

compensation tax ( UCT ) provisions of chapter 443, as provided in

section 443.1215. T hroug h an interagency agreement with the

Department of Economic Opportunity , t he Department provides

collection services for UCTs . See § 443.13 1 6 (1) , Fla. Stat. In

doing so, the Department is considered to be administering a

revenue law of the state . See § 4 43.1316(2), Fla. Stat.

5. A dealer must file with the Department sales tax

returns and remit the tax collected on a monthly basis. See

§ 212.15(1), Fla. Stat. A lso, a n employment unit must remit

payment to the Department for UCTs due and owing on a q uarterly

basis.

6. The Department is authorize d to revoke a dealer's

certificate of registration for failure to comply with state tax

laws. See § 212.18(3)(e), Fla. Stat. I f the Department files a

wa rrant, notice of lien, or judgment lien certificate against

the property of a dealer , it may also revoke a certificate of

registration. See § 213.692 (1) , Fla. Stat.

7. Before revoking a certificate of registration , the

Department must convene a n informal conference that the dealer

is required to attend . See § 213.692(1)(a), Fla. Stat. At the

conference, the dealer may either present evidence to refute the

Department's allegations of noncompliance or enter into a

compliance agreement with the Department to resolve the dealer's

failure to comply with ch apter 212. Id. After a c ompliance

a greement is executed by the dealer, the Department may revoke

the certificate of registration if the dealer fails to comply

with its terms and conditions . See Pet'r Ex. 6, p. 2, ¶ E. If

a breach occurs, the entire amo unt is due and payable

immediately. Id. at ¶ G.

8. An informal conference can be characterized as the

Department's last administrative re medy to collect delinquent

taxes before beginning revocation proceedings. A dealer can

also enter into a diversion p rogram with the State Attorney's

Office to resolve liabilities, but the record shows that

Respondent defaulted on that arrangement. According to the

Department, collection problems with this dealer first began in

2003.

9 . Department records show that Re spondent failed to remit

required sales taxes for the months of January 2012, August

through December 2012, January through December 2013, and

January and February 2014. In addition, Respondent fail ed to

remit UCTs for the calendar quarters ending Septemb er 2010,

December 2010, March 2011, June 2011, September 2011, December

2011, March 2012, June 2012, September 2012, December 2012, and

March 2013 . Respondent does not dispute that it failed to

timely remit and pay the foregoing taxes for the time periods

listed above.

10 . For the purpose of collecting the delinquent taxes,

t he Department issued and filed against Respondent delinquent

tax warrants, notices of lien, or judgment lien certificat e s in

the Hillsborough County public records. See Pet'r Ex. 3 .

1 1 . Be fore seeking revocation of Respondent's certificate

of registration, o n February 5, 2014, the Department 's Tampa

Service Center served on Respondent a N otice of C onference on

Revocation of Certificate of Registration (Notice) . See Pet'r

Ex. 4. T he Notice scheduled an informal conference o n March 21,

2014 . It listed 16 periods of sales and use tax noncompliance

and 11 periods of re - employment tax noncompliance and provided

the total tax liability as of that date . This number was

necessarily flui d, as the taxes owed were accruing interest ,

penalties , and/or fees on a daily basis.

1 2 . The purpose of the informal conference was to give

Respondent a final opportunity to make full payment of all

delinquent taxes, or to demonstrate why the Departmen t should

not revoke its Certificate of Registration. As pointed out by

the Department, an informal conference allows a dealer to bring

up "any concerns" that it has regarding its obligations.

1 3 . Respondent's manager and registered agent, Christopher

Sco tt, appeared at the conference on behalf of Respondent. 1/ At

the meeting, h e acknowledged that the dealer had not timely paid

the taxes listed in the Notice and that the money was used

instead to keep the business afloat . However, Mr. Scott

presented pap erwork representing that sales and use tax returns

and payments for the months of Nove mber 2013 through February

2014 had just been filed online, and checks in the amount of

$8,101.41 and $9,493.99 were recently sent to Tallahassee.

1 4 . It takes 24 hour s for online payments to show up i n

the system, and even more time for checks to be processed in

Tallahassee . Accordingly , the Department agreed that Mr. Scott

could have a few more days before signing a compliance

agreement . This would allow the Departm ent to verify that the

payments were posted and re calculate the amount of taxes still

owed. Also, before entering a compliance agreement, Respondent

was required to make a down payment of around $20,000.00.

Mr. Scott had insufficient cash , a nd a delay of a few days would

hopefully allow him to secure the necessary money for a down

payment .

1 5 . When none of the payments had posted by March 25,

2014, the Department calculated a total liability of

$ 113 , 448.13 , consisting of sales and use taxes and UCTs ,

penalties, interest, and fees . As of that date, n one of the

taxes listed in Finding of Fact 9 had been paid.

1 6 . On March 25, 2014, Respondent's controller , who did

not attend the informal conference, sent an email t o the

Department requesting a breakdow n on the new tax liability. In

response to her request, the Department faxed a copy of the

requested information. See Resp. Ex. 4. After getting this

information, t he controller continued to take the position that

the Department's calculations overstate Respondent's tax

liability.

1 7 . On March 31, 2014, Mr. Scott signed the compliance

agreement. See Pet'r Ex. 6. Despite the controller testifying

that she did not agree with the numbers, no question was raised

by Mr. Scott when he signed the agreement. By then, the check

in the amount of $8,101.41 had cleared and been credited to

Respondent's account . Along with other funds, it was used

t owards the down payment of $20,000.00 . The record does not

show the status of the other payments that Mr. Scott cla imed

were mailed or filed online prior to the informal conference ;

however, on March 31, 2014, except for the one check, none had

yet posted .

1 8 . T he compliance agreement required scheduled payments

for 12 months, with the final payment , a balloon payme nt in an

undisclosed amount , b eing subject to renegotiat ion in the last

month. Payments one and two were $1,500.00, while payments

three through 11 were $2,900.00. The compliance agreement

reflected a balance owed of $95,887.36 , consisting of $60,504.34

in sales taxes and $35,347.02 in UCTs . 2/

1 9 . In return for the Department refraining from pursuing

revocation proceedings, t he compliance agreement required

Respondent to "remit all past due amounts to the Department as

stated in the attached payment ag reement," "accurately complete

and timely file all required tax returns and reports for the

next 12 months," and "timely remit all taxes due for the next 12

months." Pet'r Ex. 1, p. 1. In other words, the compliance

agreement addressed both delinquent ta xes and current taxes that

would be due during the following 12 - month period , and it

required that both categories of taxes be timely paid in the

manner prescribed by the agreement .

2 0 . To summarize the salient points of the agreement , all

taxes were to be timely paid; delinquent taxes were to be paid

by certif ied check, money order, or cash and were to be mailed

or hand delivered to the Tampa Service Center and not

Tallahassee ; and w hile not specifically addressed in the

agreement, the dealer was instru cted to pay all current

obligations electronically , as required by law . O therwise ,

Respondent was in violation of the compliance agreement.

2 1 . A Payment Agreement Schedule for past due taxes was

incorporated into the compliance agreement and provided th at the

first payment was due April 30, 2014, payable to: Florida

Department of Revenue, Tampa Service Center, 6302 East Dr.

Martin Luther King, Jr. Boulevard, Suite 100, Tampa, Florida

33619. Payment s 2 through 12 were to be mailed or hand

delivered to the same address. This meant , with no ambiguity,

that money should not be sent to Tallahassee. There is no

credible evidence that these instructions were misunderstood.

2 2 . Unless a waiver is granted, Respondent is required by

statute and rule to elec tronically file sales and use tax

returns and UCT reports. See § 213.755, Fla. Stat. ; Fla. Admin.

Code R. 12 - 24.009 (where a taxpayer has paid its taxes in the

prior state fiscal year in an amount of $20,000.00 or more,

subsequent payments shall be made e lectronically) . No waivers

have been approved. In 2003, t he Department notified Respondent

of these requirements and Responde nt complied with this

directive until 2009. For reasons not disclosed, in 2009

Respondent voluntarily quit filing electronically . The record

is silent on why this was allowed. 3 / In any event, a t the

informal conference, Mr. Scott was specifically told that all

current returns , reports , and taxes must be filed

electronically, and not by mail, and that no money should be

sent to Ta llahassee. There is no credible evidence that he

misunderstood these instructions.

2 3 . In its PRO, Respondent correctly points out that the

requirement to file current returns electronically was not

specifically addressed in the compliance agreement. Th is is

because the compliance agreement does not set forth every

statut ory and rule requirement that applies to a dealer. If

this amount of detail were required, a dealer could ignore any

otherwise applicable rule or statute not found in the compliance

agr eement. Th is contention has no merit.

2 4 . Respondent failed to electronically file the current

sales and use tax return and payment for the month of March

2014 , due no later than April 21, 2014. Instead, it sent a

paper check , which was returned by the bank for insufficient

funds . This constituted a breach of the compliance agreement.

2 5 . Despite repeated instructions on how and where to pay

the delinquent taxes, p ayment 1, due on April 30, 2014, was paid

by regular check and sent to Tallahassee, rathe r than the Tampa

office. This contravened the compliance agreement. When

payment was not timely received by the Tampa Service Center,

Respondent was told that a check must be delivered to the Tampa

office by May 9. Respondent hand delivered a second che ck , this

one certified, to the Tampa Service Center on May 9, 2014 , or

after the April 30 due date . Th e second check was treated as

payment 1.

26. Respondent points out that on May 7 the Tampa Service

Center granted its request for an extension of time until May 9

in which to deliver the certified check. While this is true,

the extension was allowed in an effort to " work with " the

Respondent on the condition that the account would be brought

current by that date; otherwise , revocation proceedings would

begin. Even if th e extra ten days is construed as a grace

period for payment 1 , there were other violations of the

compliance agreement set forth below.

2 7 . Payment 2 for delinquent taxes , due on May 30, 2014,

was paid by regular check and sent by mail to Tallahassee rather

than the Tampa Service Center. 4/ This contravened the compliance

agreement.

2 8 . After the May 30, 2014 payment, Respondent made no

further payments pursuant to the Payment Agreement Schedule.

This constituted a violation of the co mpliance agreement.

2 9 . Respondent did not remit payment with its current

sales and use return for the month of August 2014. This

contravened the compliance agreement.

30 . Respondent did not file any current sales and use tax

returns or remit payment f or the months of July 2014 or

September through January 2015. This contravened the compliance

agreement.

3 1 . Beginning in March 2014, Respondent filed current

reemployment tax re turns and payments using the incorrect tax

rate on every return. This del ayed their processing and

resulted in penalties being imposed. In addition, even though

Respondent was repeatedly told that such returns must be filed

electronically, none were filed in that manner , as required by

statute and rule. This contravened the c ompliance agreement.

3 2 . In its PRO, Respondent contends the compliance

agreement cannot be enforced because there was no "meeting of

the minds" by the parties on all essential terms of the

agreement. Specifically, it argues that the total amount of

ta xes owed was still in dispute -- the dealer contended that it

owed $23,000.00 less than was shown i n the agreement; the

Payment Schedule A greement did not specify the amount of the

final balloon payment ; the compliance agreement fail ed to state

when paymen ts are due if the due date falls on a weekend or

holiday ; the compliance agreement d id not specify how the

dealer's payments w ould be allocated between UCTs and sales and

use taxes ; and the compliance agreement fail ed to address the

issue of filing electro nically . Although some of these issues

were not raised in the parties' Joint Pre - hearing Stipulation,

or even addressed by testimony at hearing, they are all found to

be without merit for the reasons expressed below.

3 3 . F irst, Mr. Scott did not dispute the amount of taxes

owed when he signed the agreement , and he brought no evidence to

the conference to support a different amount. Second, as

explained to Mr. Scott at the informal conference, the precise

amount of the balloon payment c an only be establis hed in the

12th month . This is because the exact amount depends on the

dealer's compliance with the agreement over the preceding 11

months , and the amount of interest, penalties, and /or other fees

that may have accrued during the preceding year. Third, t here

is no evidence that the dealer was confused when a due date for

a payment fell on a weekend or holiday. Even if it was

confused, reference to section 212.11 (1)(e) and (f) would answer

this question. Fourth, there is no statute or rule that

requires the Department to specify how the delinquent payments

are allocated. Moreover, neither Mr. Scott nor the controller

requested that such an allocation be incorporated into the

agreement before it was signed. Finally, the issue of filing

electronically alr eady has been addressed in Finding of Fact 22

and Endnote 3.

3 4 . At hearing, Respondent's controller testified that she

was out of town when the conference w as held, suggesting that

Mr. Scott, who is not an accountant, was at a disadvantage when

he attend ed the informal conference. However, Respondent had

six weeks' notice before the conference, and there is no

evidence that Respondent requested that the meeting be

rescheduled to a more convenient day . Also, Respondent does not

dispute that Mr. Scott was authorized to represent its interests

at the conference , or that he could have been briefed by the

controller before attend ing the informal conference or sign ing

the compliance agreement . See also E ndnote 1. Notably, at

hearing, the controller testified that she "was involved in

actually negotiating the agreement both before and after it was

actually signed" even though she did not attend the conference.

Tr. at 89.

35. Respondent also contends that after the Department

considered the compliance agreeme nt to be breached , the dealer

had no further obligation to make payments pursuant to the

agreement or state law until the parties negotiated a new

agreement . Aside from Respondent's failure to cite any

a uthority to support this proposition , nothing in the compliance

agreement comports with this assertion . To the contrary, the

compliance agreement specifically provides that if a breach

occurs, the entire tax liability becomes due immediately. See

Pet'r Ex. 6, p. 2, ¶ G. Thus, Respondent is obligated to p ay

the entire tax liability, which now exceeds $200,000.00.

36. All other arguments raised by Respondent have been

carefully considered and are rejected as being without merit.

CONCLUSIONS OF LAW

3 7 . The Department has the burden of proving by clear and

convincing evidence the allegations in the Administrative

Complaint on which the Department relies to seek revocation of

Respondent's C ertificate of Registration . See Dep't of Banking

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

3 8 . A compliance agreement is a statutorily - controlled

agreement between the Department and the non - compliant dealer.

In return for the Department's agreement to stay its revocation

proceeding, the dealer agrees to remit the state tax monies

collected from cu stomers which the dealer converted to its own

use, and to comply with Florida law going forward -- both of

which are legal obligations of the dealer regardless of whether

a compliance agreement is executed. See Fla. Dep ' t. of Rev. v.

PNC, LLC , Case No. 14 - 2538, 2015 Fla. Div. Adm. Hear. LEXIS 29

at *4 (Fla. DOAH Nov. 3, 2014; Fla. DOR Jan. 23, 2015). If a

dealer fails to comply with the terms of a compliance agreement,

the Department is required to issue an administrative complaint.

Id. See also § 212.1 8(3) (e) , Fla. Stat. (the Department shall

issue an administrative complaint if the dealer fails to comply

with the executed compliance agreement).

3 9 . Section 212.18(3) states that the Department may

proceed to revoke a certificate after conducting a conf erence

with a dealer and offering the dealer an opportunity to provide

additional information or resolve the dispute through a

compliance agreement. Here, a conference occurred, and the

parties agreed to resolve the matter through the execution of a

compl iance agreement. By clear and convincing evidence, the

Department has shown that Respondent failed to comply with the

terms of the agreement.

40 . In summary, Respondent violated the compliance

agreement , and its Certificate of Registration should be

re voked.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Department of Revenue enter a final

order revoking Respondent's Certificate of Registration 39 -

8011930243 - 9.

DONE AND ENTERED this 11th day of June , 20 1 5 , in

Talla hassee, Leon County, Florida.

S

D . R. ALEXANDER

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.do ah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 11th day of June , 201 5 .

ENDNOTE S

1 / Mr. Scott is no stranger to this proce ss . He ha s participated

in at least one other informal conference for another business he

ma naged and/or owned.

2/ A Department witness explained that t he difference between the

taxes owed on the March 25 breakdown ($113,448.13) and th e amount

shown in the compliance agreement ($95, 887.36 ) was due to a

deduction of delinquent taxes that were th en in the diversion

program with the State Attorney . S ee Tr. a t 44 . The dealer

contends that the amount owed on March 31 was only around

$73,000.00 . On this issue, the Department's calculations have

been accepted.

3/ Respondent contends that it volunt arily stopped filing returns

and payments electronically in 2009 , and it had no obligation to

continue do so. As the record shows, however, a dealer can cease

filing electronically only if it beg an filing electronically on a

voluntary basis . There is no evidence that this was the case. A

fair inference from the evidence is that Respondent was required

by law to file electronically in 2003, and without an approved

waiver, which was never granted, it c annot voluntarily cease that

practice.

4/ The $1,500 .00 check mailed to Tallahassee as payment 1 was

cashed and the funds retained by the Department ; however, they

were not treated as satisfying payment 1 . Instead, t he second

check correctly hand delivered on May 9 to the Tampa Service

Center was treated a s payment 1. The dealer argues that because

the funds from the first check were retained by the Department,

that money should be treated as payment 2, due on May 30 . By

then, however, the compliance agreement had been breached, and

the entire amount was due. Presumably, t hat money has been

applied to Respondent's outstanding liability. By sending a

check to the wrong location, the dealer is responsible for this

confusion.

COPIES FURNISHED:

Angela L ynn Huston, Esquire

Office of the Attorney General

Re venue Litigation Bureau

PL - 01, The Capitol

Tallahassee, Florida 323 99 - 1050

(eServed)

W illiam Bart Meacham, Esquire

308 East Plymouth Street

Tampa, Florida 33603 - 5957

(eServed)

Nancy L. Staff , General Counsel

Department of Revenue

Post Office Box 6668

T allahassee, Florida 32314 - 6668

(eServed)

Marshall C. 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 to submit written exceptions within 15

days of the date of this Recommended Order of Dismissal . Any

exceptions to this Recommended Order of Dismissal should be filed

with the agency that will render a final order in this matter.