15-006271PL Department Of Business And Professional Regulation, Board Of Accountancy vs. Ronald M. Shultz Status: Closed Recommended Order on Friday, April 8, 2016.

Summary: Respondent failed to provide a client's tax return and supporting documents in a timely manner despite multiple requests. Fine, reprimand, and one year of probation recommended.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND

PROFESSIONAL REGULATION,

BOARD OF ACCOUNTANCY,

Petitioner,

vs. Case No. 15 - 6271PL

RONALD M. SHULTZ,

Respondent.

_______________________________/

REC OMMENDED ORDER

On January 19, 2016, Administrative Law Judge Lisa Shearer

Nelson conducted a duly - noticed hearing pursuant to section

120.57(1), Florida Statutes (2015), by means of video

teleconferenc e with sites in Tallahassee and Gainesville,

Florida.

APPEARANCES

For Petitioner: Megan E. Kachur, Esquire

Cristin Erica White, Esquire

Stephen Johnson, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street , Suite 42

Tallahasse e, Florida 32399

For Respondent: James H. Cerveny, Esquire

James H. Cerveny, Attorney at Law LLC

1031 Northwest 6th Street , Suite F - 3

Gainesville, Florida 32601

STATEMENT OF THE ISSUE S

The issue to be determined is whether Responden t, Ronald M.

Shultz, violated section 473.323(1)(g) and (h), Florida Statutes

(2014) , and Florida Administrative Code Rule 61H1 - 23.002 (1)(a)

and (b), as alleged in the Administrative Complaint , and if so,

what penalty should be imposed.

PRELIMINARY STATEME NT

On July 15, 2015, Petitioner, Department of Business and

Professional Regulation (Petitioner or the Department), filed a

two - count Administrative Complaint against Respondent, alleging

that he violated section 473.323(1)(g) and (h), and rule 61H1 -

23.002 (1)(a) and (b), with respect to his handling of the tax

returns of Mr. and Mrs. William Beaty. Respondent disputed the

facts alleged in the Administrative Complaint and on August 5,

2015, the case was referred to the Divi sion of Administrative

Hearings (D OAH) for assignment of an administrative law judge

(ALJ) , and docketed as DOAH Case No. 15 - 4400 .

The case was originally noticed for hearing to take place

October 9, 2015. However, on August 31, 2015, the parties filed

a Joint Motion for Relinquishment of Jurisdiction, asking that

jurisdiction be relinquished to the Board of Accountancy (the

Board), for the Board to consider a Settlement Agreement .

Accordingly, on August 31, 2015, an Order was issued

relinquishing jurisdiction to the Board of Accountancy and

closing DOAHÓs file.

On November 4, 2015, Petitioner filed a Motion to Re - open

Case, stating that the Board rejected the partiesÓ proposed

settlement . The case was re - opened and docketed as DOAH Case

No. 15 - 6271.

On November 19, 2015, Respondent filed a Motion for Summary

Final Order (Motion) , which was amended the following day. T he

M otion asserted that the parties had entered into a settlement

a nd that the Board Ós approval was unnecessary . Respondent also

moved to amend his A nswer to the Administra tive Complaint. By

Orde r dated November 23, 2015, the M otion was denied, as ALJs do

not have final order authority to grant the M otion , and the

M otion overlooked the requirements of section 455.225(6) , Florida

Statutes . The Order allowed Respondent to am end his A nswer , and

directed Respondent to file a response to the Order Re - opening

File no later than November 25, 2015 .

On December 7, 2015 , a Notice of Hearing was issued

scheduling the hearing for January 19, 201 6 , by video

teleconference. The Order of Pre - hearing Instructions directed

the parties to file a Joint Pre - hearing Statement. T he parties

filed unilateral statements, citing the inability to meet.

The case commenced and was completed as scheduled, on

January 19, 2016. At hearing, Petitione r presented the testimony

of Leesha London, William Beaty, Jo Lee Beaty, and Barbara

Houston, and PetitionerÓs Exhibits 1 through 16 were admitted.

Respondent testified on his own behalf but presented no exhibits.

The Transcript of the hearing was filed with DOAH on February 24,

2016. PetitionerÓs Proposed Recommended Order was filed

February 23, 2016. Petitioner filed a Notice of Filing on

February 25, 2016, explai ning that it had a copy of the

T ranscript as of February 9, 2016, and had supplied a copy to

opposing counsel. The notice essentially inquired as to the

deadline for RespondentÓs proposed recommended order.

On February 25, 2016, a Scheduling Order was issu ed,

indicating that RespondentÓs proposed recommended order was due

March 7, 2016, based on the date the Transcript was filed with

DOAH. Given that Petitioner had already filed its Proposed

Recommended Order, it was given the opportunity to file a

response to RespondentÓs proposed recommended order, should it

choose to do so, no later than M arch 15, 2016. To date,

Respondent has not filed a proposed recommended order. All

references in this Recommended Order are to the 2014 codification

in effect at the time of the alleged conduct, unless otherwise

specified.

F INDING S OF FACT

Based upon the documentary evidence and the witness

testimony presented, and the entire record of this proceeding,

the following findings of fact are found:

1. The Florida Board of Accountancy is the state agency

charged with the licensing and regulation of the pra ctice of

certified public accounting pursuant to section 20.165 and

chapters 455 and 473, Florida Statutes.

2. Respondent, Ronald M. Shultz, is a certified public

accountant (CPA) licensed in the s tate of Florida. Respondent

has been licensed since 1997 and holds license number AC 003065 .

His license is currently active, and he has no history of

discipline by the Board.

3. Responden tÓs address of record is 1031 Northwest

6th Street, Suite F - 2, Gainesville, Florida 32601.

4. At all times material to the allegations in the

Administrative Complaint, Respondent was the owner of a CPA firm

in the s tate of Florida, i.e., Ronald M. S hultz, CPA, PA. The

firmÓs license was first issued in May of 2006 , and is also in

active status.

5. Respondent is the presiden t and sole shareholder for his

firm. While he employed others who worked in the firm,

Respondent is ultimately responsible for all aspects of business

conducted by the firm.

6. Ronald M. Shultz, CPA, PA , is in the business of

providing tax services to cl ients, including the preparation of

federal income tax returns.

7. The normal procedure employed in RespondentÓs office

required that, once a clientÓs tax return had been prepared, the

client was called to come in and receive a copy of the return for

re view. The client also was given a copy of an IRS E - File

signature authorization form (Form 8879) , although the evidence

was unclear as to when the form was given to the client. In any

event, the client was usually told to review the return, and then

a me et ing would be scheduled to go over the return, especially in

those cases where the return was complex or had a lot of Ðmoving

parts.Ñ Once the client had an opportunity to review the return

and discuss it with Respondent, the client would provide a signe d

copy of Form 8879 and RespondentÓs firm Ós personnel would

electronically file the return. No return is supposed to be

filed without a signed Form 8879.

8. During the period giving rise to these proceedings,

Respondent had a part - time employee named Jef f Gruver, and a

former IRS - enrolled agent named Jeff Conklin. Mr. Gruver usually

answered the phones, took messages, provided co pies of returns to

clients, and, once things were finalized with a return,

electronically filed returns as directed. Mr. Gruve r could

answer simple tax - related questions such as, Ðthe return

indicates you are getting a refund of this amount,Ñ or the return

shows that you need to pay this much in taxes.Ñ Any more

complicated questions were fielded by Mr. Conklin, or if

necessary, Mr. Shultz.

9. Mr. Conklin is someone with whom Mr. Shultz had worked

previously, and actually prepared tax returns for the firm.

Mr. Shultz would generally review his work, and would go over the

return with the client.

10. During this time period , Res pondent relied on

Mr. Conklin to a greater extent tha n was his normal practice.

Mr. Shultz was in the midst of a protracted divorce, and helping

with the care of his father, who was in declining health.

11. Willia m and Jo Lee Beaty we re clients of Respon dent,

and ha d been clients for several years. RespondentÓs office

prepared their federal income taxes since at least 2009.

12. The BeatysÓ tax return generally has a lot of Ðmoving

parts.Ñ They typically request an extension of time for filing,

and brin g their paperwork to RespondentÓs office early in

October, in order to have the return prepared by the October 15

deadline. Normally, the Beatys will owe additional taxes. The y

generally review ed the return with Mr. Shultz, sign ed the Form

8879, and prov ide d a check to s end to the IRS when the return wa s

filed.

13. In 2014, Mr. Beaty took the documents necessary for the

preparation of the Beaty sÓ 2013 tax return to RespondentÓs

office . Mr. Beaty acknowledged that he often delivered the

documentation ver y late in the process Î - often just days before

the October 15 deadline -- but thought that this year, he had

delivered it as much as six weeks before . The complaint the

Beaty s filed with the Department indicates that the documents

were delivered on or about October 1. While Respondent had no

direct knowledge of when the documents were delivered to the

office, he testified that his office records indicated that it

was no earlier than October 1. 1/ After consideration of all of

the evidence, the documents were delivered most likely sometime

in very late September or on October 1, 2014. Respondent

directed Jeff Conklin to prepa re the Beaty sÓ tax return.

Mr. Conklin had prepared their tax return the year before.

14. In the days immediately preceding the Octobe r deadline,

Jo Lee Beaty started calling RespondentÓs office to see when she

and her husband would be able to review the return and determine

how much money they owed in taxes. She could not reach anyone

from the firm, despite repeated phone calls.

15. S omeone from RespondentÓ s office (presumably either

Mr. Conklin or Mr. Gruver) ele ctronically submitted the Beaty s Ó

2013 federal income tax return to the IRS on October 15, 2014.

However, Respondent did not review the return be fore it was filed

and the Bea ty s did not see it , and were not informed as to its

contents.

16. On or about November 6, 2014, Mr. Conkli n notified

Mr. Shultz that he was quitting his job, effective immediately.

He did not notify Respondent that there were any problems with

the Beatys Ó tax return.

1 7 . Respondent was knowledgeable a bout the Beaty s Ó prior

returns, and knew that the 2013 return would include a

significant amount of information, including multiple Schedule

Cs, Schedule K - 1s, significant information regarding business es

ow ned by the Beatys , and property rentals. Respondent was also

aware that the Beaty s typically wanted to review their tax return

with him prior to its filing.

1 8 . No t only were the Beaty s unable to contact Respondent

in order to sche dule a meeting prior to the tax - filing deadline,

but they were unable to contact him to determine whether the

return was actually filed or to determine how much money was

owed.

1 9 . Mrs. Beaty called the office the day after the deadline

and no one answered. The office was act ually closed that day.

20 . Mrs. Beaty made other calls to the office, although she

was unable to say specifically how many times . However, when she

was still unable to speak to anyone on November 13, 2014, nearly

a month after the filing deadline, she ma de a request to the IRS

to get a copy of the coupleÓs tax return. The IRS sent the

Beatys a transcript of their filed return that same day , although

it is unclear when they received it .

2 1 . Mrs. Beaty continued to attempt to reach Respondent,

with no suc cess. She even spoke to RespondentÓs wife on the

phone, and requested tha t she have Respondent return Mrs. BeatyÓs

phone calls. Responde nt first learned that the Beaty s were

trying to reach him when his wife called him with the message

from Mrs. Beaty.

2 2 . Respondent finally spoke to Mrs. Beaty on November 18,

2014. During this phone call, Respondent advised Mrs. Beaty that

he would have their materials ready the following week. The

Beatys did not receive the return or their documents as promised.

2 3 . On or about December 9, 2014, Mrs. Beaty sent

Respondent an email requesting their return and backup materials.

The email states:

Ron,

We were not given an opportunity to review

the return with you prior to you submitting

it to the IRS electronically. I called for

several days prior to the final October 15th

deadline to file trying to talk with you

an/or [ sic ] Jeff. No one was available. My

calls were not returned. October 14th and

15th I called more than once trying to find

out what we were going to owe so that we

could be prepared to include a check with

the return we would need to sign and send to

the IRS. Still no return phone call. Late

in the day on October 15, I was assured by

Jeff Gruver that the return would be filed

and we would be able to take care of

everything October 16th.

It is nearly two months now, we have not

reviewed our return with you, for accuracy,

as has been the procedure in years past. We

have not received the return for our

signatures and instructions for submission.

It i s not for a lack of trying. After the

filing deadline, on October 16th we began

calling the office on numerous occasions to

talk with you or Jeff and get our return.

We left messages both with Jeff Gruver and

on the various voice mailboxes to no avail.

I have driven to the office only to find the

man who was renting space from you there.

He knew nothing of your schedule or when I

might find you. He did indicate that

Jeff C. now [sic] longer worked there.

After calling Debra at the numbers on your

si gn twice you finally called. T hat was on

or about November 18 th or 19th. You told me

you needed to review the return and would

get it to us that week. I told you it

needed to b e before Friday November 21, 2014

as I was having surgery that day. You told

me it would be before my surgery.

We didnÓt hear from you as promised. I

called again the beginning of the next week

(Thanksgiving week) and left a message which

you returned early Tuesday afternoon I

believe. You said you would get it to me

later prob ably that day (this was a day that

you had an afternoon doctor appointment).

To date I have not heard from you again and

had it not been for my call to the IRS I

would have no proof that the return was

filed nor any idea of what we owe.

We are sorry to h ave to terminate our

relationship under these circumstances. We

had previously been very satisfied with your

service and as you know we had referred

people to you. Ron, your negligence and

non - feasance comes as a great surprise. It

is nonethe le ss inexcu sable. We are

contemplating reporting your inaction to the

Florida DBPR.

Please respond to this email and tell me

what time bef ore 5:00 p.m. Tuesday,

December 9, 2014, so I can pick up all of

the documents we gave you to prepare our

2013 tax return, and copies of all of our

records.

With disappointment,

Jo Beaty

24. Respondent did not respond to this email in a timely

fashion and states that he did not do so because he was not

checking his email regularly due to the issues with his fatherÓs

health. As a consequence, his first response to the email was

dated December 22, 2014, in which he stated in part:

First speaking about your federal tax

return. Jeff Conklin told me your

return was complete. He then told me

basically he had to quit his current

p osit ion with me for personal reason

[sic] and simply walked out. When I

went to find your file, none o f your

paperwork had been copied for what we

call work papers . . . . Si nce Jeff

left your file is [sic] disarray, I had

to organize your paper work so that I

could do an accurate review of your

return. Yesterday I completed putting

all of your paper work together and is

no w ready for my review. My plan is to

complete the review tonight. And then,

we can arrange a time to meet to go

over your return.

25. Despite this communication over two month s after the

filing of the BeatysÓ tax return, they still did not receive their

tax return or supporting documentation.

26. The Beatys hand - delivered a complaint to the Department

on December 22, 2014. Respo ndent was sent a notification letter

regarding the complaint on December 29, 2014. He placed the

documentation in the BeatysÓ mailbox that same day. With the tax

return and supporting documentation was an invoice for his

services at a 50 - percent discount ed rate of $350.

27. The Beatys were going to owe money, including some

interest and penalt ies for being late, even had they paid their

taxes on October 15, because payment was actually due on April 15.

The IRS charges a failure to pay proper estimate penalty of $200 .

When taxes are paid after the due date, the I RS also charges a

penalty of .5 percent of the unpaid amount due per month, up to 25

percent of the amount due. Any portion of a month is treated as a

full month. On November 24, 2014, the I RS sent the Beatys a

letter notifying them that they owed their taxes, including the

$200 failure to pay proper estimated tax penalty; $879.08 in

penalties, and $406 in interest. Some , but not all , of the

penalties and interest are due to RespondentÓs fai lure to timely

provide a copy of their tax return.

28. The Department expended $260 in costs, not including

time by the legal section, in the investigation of this case.

CONCLUSIONS OF LAW

29 . The Division of Administrative Hearings has

jurisdiction o ver the parties and the subject matter pursuant to

sections 120.569 and 120.57(1), Florida Statutes (2015).

30 . This is a proceeding in which Petitioner seeks to

discipline Respondent's license as a certified public accountant .

Because disciplinary proce edings are considered to be penal in

nature, Petitioner is required to prove the allegations in the

Administrative Complaint by clear and convincing evidence. DepÓt

of Banking & Fin. v. Osborne Stern & Co. , 670 So. 2d 932 (Fla.

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

31 . Clear and convincing evidence Ðrequires more proof than

a Òpreponderance of the evidenceÓ but less than Òbeyond and to

the exclusion of a reasonable doubt.ÓÑ In re Graziano , 696 So.

2d 744, 753 (Fla. 1997). 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 distinctly remembered; the testimony

must be precise and lacking in confusion as

to the fact s in issue. The evidence must be

of such a 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 Davey , 645 So. 2d 398, 404 (Fla. 1994)( quoting, with

approval, Slomowitz v. Walker , 429 So. 2d 797, 800 (Fla. 4 th DCA

1983)); see also In re Henson , 913 So. 2d 579, 590 (Fla. 2005).

ÐAlthough this standard of proof may be met where the evidence is

in conflict, it seems to preclude evidence tha t is ambiguous.Ñ

Westinghouse Elec . Corp. v. Shuler Bros. , 590 So. 2d 986, 989

(Fla. 1991).

32 . The Adminis trative Complaint contains two c ounts

against Respondent. Count I charges Respondent with violating

section 473.323(1)(g), which makes it a bas is for discipline to

commit Ðan act of fraud or deceit, or of negligence,

incompetency, or misconduct, in the practice of public

accounting.Ñ The Administrative Complaint alleges that

Respondent violated this provision by filing the 2013 federal

tax retur ns for Mr. and Mrs. Beaty without discussing the tax

return with them.

33 . The Department has proven that Respondent committed

negligence by clear and convincing evidence, by his filing of

the BeatysÓ 2013 tax return without discussing the tax return

wit h them.

34. While the Department contends in its Proposed

Recommended Order that Respondent also committed fraud by

electronically submitting the t ax return without a signed

Form 8879, the Department did not make this allegation in the

Administrative Com plaint. Respondent can only be found guilty

of those allegations specifically referenced in the

Administrative Complaint. Trevisani v. DepÓt of Health , 908 So.

2d 1108, 1109 (Fla. 1st DCA 2005); see also , Christian v. DepÓt

of Health , 161 So. 3d 416, 417 (Fla. 2d DCA 2014); Ghani v.

DepÓt of Health , 714 So. 2d 1113, 1114 - 15 (Fla. 1st DCA 1998).

35 . Count II of the Administrative C omplaint charges that

Respondent violated section 473.323(1)(h), which makes it a

basis for discipline to violate Ðany rule adopted pursuant to

this chapter or chapter 455.Ñ In support of this contention,

the Administrative Complaint identifies rule 61H1 - 23.002(1)(a)

and (b). At the time of the alleged conduct, the rule provided:

(1) A certified public accountant shall

furn ish to a client or former client upon

request and reasonable notice:

(a) Any accounting or other records

belonging to, or obtained from or on behalf

of, the client that were provided to the

certified public accountant; the certified

public accountant may make and retain copies

of such documents of the client when they

form the basis for work done by the

certified public accountant.

(b) Any accounting or other records that

the certified public accountant was not

specifically engaged to prepare that are

re lated to an issued work product of the

certified public accountant and that are not

in the clientÓs books and records or are

otherwise not available to the client, with

the result that the clientÓs financial

information is complete.

36 . The Department has proven Count II by clear and

convincing evidence. The rule does not specify that the

information has to be requested in writing: here, the backup for

the tax return should have been returned to the Beatys, along

with a copy of the tax return itself, on October 15, before the

return was filed with the IRS. The fact that the Beatys had to

make multiple requests for their records, and had to find out how

much money they owed by requesting a transcript from the IRS is

especially troubling.

37 . The Boar d of Accountancy has disciplinary guidelines to

establish a commonly - understood range of penalties for the

violation of its statutes and rules, to put both the public and

licensees on notice of the expected penalty for any proven

violation. For a violatio n of section 473.323(1)(g), rule 61H1 -

36.004 (1) (g) provides that for Ð[ f ] raud, deceit or misleading

(Sections 455.227(1)(a), (m), 473.323(1)(g), (k), F.S.),Ñ the

penalty for a fi rst offense is a reprimand, one - year suspension,

two years of probation and a $5,000 fine. However, rule 61H1 -

36.004 (1)(h) provides that for negligenc e or misconduct, the

minimum penalty for a first offense is a $250 fine, and the

maximum penalty is a reprimand and one year of probation.

38. As noted above, negligence or miscond uct, as opposed to

fraud or deceit , was demonstrated here. Therefore, a penalty in

the range listed in rule 61H1 - 36.004 (1) (h) is appropriate.

39. For a violation of rule 61H1 - 23.002, the penalty range

is a $250 fine to suspension until the records are r eturned.

Here, the records have been returned.

40. The undersigned has also considered the aggravating and

mitigating circumstances presented in this case. Respondent was

dealing with significant turmoil in his personal life, some of

which was beyond his control. However, he still owed a duty to

his clients to respond to their very legitimate requests in a more

timely manner. This is a case where the aggravating and

mitigating circumstances tend to balance each other, such that

there is no reason to deviate from the recommended range in either

direction.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that Florida Board of Accountancy enter a

final order finding that Respondent, Ronald M. Shultz, violat ed

section 473.323(1)(g) and (h), and rule 61H1 - 23.002(1)(a)

and (b). It is further recommended that RespondentÓs license be

reprimanded ; that he be placed on probation for a period of one

year, subject to conditions determined by the Board; and that he

p ay an administrative fine of $500 and investigative costs of

$260.00

DONE A ND ENTERED this 8th day of April , 2016 , in

Tallahassee, Leon County, Florida.

S

LISA SHEARER NELSON

Administrative Law Judge

Division of Admi nistrative 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 8th day of April , 2016.

EN DNOTE

1/ He did not, however, attempt to put these unidentified records

into evidence.

COPIES FURNISHED:

James H. Cerveny, Esquire

James H. Cerveny, Attorney at Law LLC

1031 Northwest 6th Street , Suite F - 3

Gainesville, Florida 32601

(eServed)

Megan E. Kachur, Esquire

Cristin Erica White, Esquire

Stephen Johnson, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street , Suite 42

Tallahassee, Florida 32399

(eServed)

Veloria A. Kelly, Director

Board of Accountancy

Depar tment of Business and

Professional Regulation

240 Northwest 76th Drive, Suite A

Gainesville, Florida 32607

(eServed)

William N. Spicola, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Ta llahassee, Florida 32399

(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 exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.