17-003452 Department Of Revenue vs. Vmob, Llc, D/B/A Cheap On Howard Status: Closed Recommended Order on Tuesday, April 10, 2018.

Summary: Department of Revenue proved that VMOB, LLC's Certifcate of Registration to collect sales and use tax should be revoked, that certain taxes collected are or were in jeopardy, and that Verna Bartlett is personally liable.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF REVENUE,

Petitioner,

vs. Case No. 17 - 3452

VMOB, LLC, d/b/a CHEAP ON

HOWARD,

Respondent.

_______________________________/

VMOB, LLC, d/b/a CHEAP ON

HOWARD,

Petitioner,

vs. Case No. 17 - 3630

DEPARTMENT OF REVENUE,

Respondent.

_______________________________/

RECOMMENDED ORDER

Pursuant to notice, a final hearing in this cause was held

by video teleconference between sites in Tampa and Tallahasse e,

Florida, on January 17 , 2018, before Linzie F. Bogan,

Administrative Law Judge of the Division of Administrative

Hearings.

APPEARANCES

For Petitioner Department of Revenue :

Mark S. Urban, Esquire

Florida Office of t he Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399

For Respondent VMOB, LLC, d/b/a Cheap on Howard :

William B. Meacham, Esquire

308 East Plymouth Street

Tampa, Florida 33603

STATEMENT OF THE ISSUE S

The issues are as follows: 1) Whether grounds exist to

revoke the Certificate of Registration to collect taxes held by

VMOB, LLC, d/b/a Cheap on Howard ; 2) Whether factual and legal

grounds support the Department of RevenueÓs jeopardy findings

and assessments for October 2016, November 2016, December 2016,

and February 2017; and 3) Whether factual and legal grounds

support the Department of RevenueÓs assessment of personal

liability against VMOBÓs m anaging member, Verna Bartlett.

PRELIMINARY STATEMENT

The Department of Revenue ( Department) seeks to revoke the

Certificate of Registration issued to VMOB, LLC , d/b/a Cheap on

Howard ( VMOB). The Department entered into a Compliance

Agreement with VMOB on August 18, 2017. VMOB allegedly violated

the terms of the Compliance Agreement by : not timely making

Compliance Agreement payments ; not timely remittin g current tax

obligations ; and not contacting the Department 10 days prior to

the final Compliance Agr eement payment due date to renegotiate

the final installment .

The Department , for the months October through December

2016, and February 2017, also issued Notice s of Jeopardy

Fin di ngs and Notices of Final Assessments because the Department

believed that co llection of the tax, penalty, fees, or interest

for those months was in jeopardy.

The Department also issued Ms. Bartlett, managing member of

VMOB, a Notice of Assessment of Personal Liability pursuant to

sect ion 213.29, Florida Statutes, due to Ms. Bartl ettÓs alleged

willful attempts to evade or defeat tax , or payment of tax owed .

VMOB requested a formal hearing to contest these actions by

the Department in Division of Administrative Hearings ( DOAH )

Case Nos. 17 - 3452 and 17 - 3630. The cases were consolida ted and

a formal hearing was held. At the formal hearing, the

Department called two witnesses, Kimb erly Ridgeway and Rolinda

Smoak. Department Exhibits 1 through 37 and 40 through 43 were

ad mitted into evidence. VMOB cal led one witness, Verna

Bartlett. VMOBÓs Exhibits 1 through 13 were admitted into

evidence.

At the conclusion of the hearing, the parties advis ed that

a transcript of the final hearing would be ordered , and that

proposed recommended orders would be due 20 days after the

filing of the tran script . The Transcript of the final hearing

was filed on February 14, 2018. After the granting of three

additiona l days for the filing of proposed recommended orders,

each party, on March 9, 2018, filed its Proposed R ecommended

O rder, and the same were c onsidered in preparation of this

Recommended Order .

STATEMENT OF FACT S

I. 1 7 - 3 452 Revocation Action

1. The Department is charged with the responsibility of

implementing and administering the revenue laws of the State of

Florida, including the laws relat ing to the imposition and

collection of the stateÓs sales and use tax, pursuant to

c hapter 212, Florida Statutes. 1/

2. VMOB is a Florida limited liability company with its

principal address a t 31 7 South Howard Avenue, Tampa, Florida

33606.

3. VMOB is re gistered with the Department as a dealer

pursuant to section 212.18, and was issued Sales and Use Tax

Certificate of Registration number 39 - 8016555696 - 3 (Certificate

of Registration) .

4. Ms. Bartlett is, and has been since its inception,

VMOBÓs managing m ember responsible for collecting and remitting

VMOB's sales and use tax.

5. Lewis Mustard , Jr., is Ms. BartlettÓs husband .

Mr. Mustard became VMOBÓs Power of Attorney (POA) in October of

2016.

6. The Department issued and filed against VMOB delinquent

tax warrants, notices of liens, and judgment lien certificates

for the collection of delinquent sales and use tax.

7. On or about July 28, 2015, the Department commenced the

process of revoking VMOBÓs Certificate of Registration by

sending VMOB a Notice o f Conference on Revocation of Certificate

of Registration (Notice of Conference).

8. The Notice of Conference informed VMOB that : an

informal conference to discuss the grounds for revocation would

be held on September 3, 2015 ; the Department intended to revoke

VMOBÓs C ertificate of R egistration based upon VMOBÓs alleged

violation of Florida tax law ; and VMOB would have a final

opportunity at the conference to present evidence regarding the

DepartmentÓs intended revocation or enter into a compliance

agreem ent.

9. Ms. Bartlett appeared on behalf of VMOB at the

revocation conference, and entered into a compliance a greement

with the Department on August 18, 2015.

10. The Compliance Agreement identifies Respondent as the

ÐTaxpayerÑ and provides , in part , as follows:

3. The Taxpayer has violated the tax laws

of the State of Florida by failing to timely

file returns/reports and pay all taxes due

from the Taxpayer, resulting in the filing

of a warrant, notice of lien, and/or

judgment lien certificate.

4. As a result of these violations, the

Taxpayer admits a past due (Sales and Use

tax) liability to the State of Florida of

$52,088.90 which is comprised of $43,595.83

tax, $2,469.18 interest, $3,463.20 penalty

and $2,560.69 fees.

5. As a result of these violati ons, the

Taxpayer admits a past due (Re - employment

tax) liability to the State of Florida of

$5,408.45 , which is comprised of $5,198.75

tax, $50.48 interest, $0.00 penalty and

$159.22

fees.

11. The Compliance A greement also provides that ÐIN

CONSIDERATI ON for the Department refraining from pursuing

revocation proceedings at this time, the Taxpayer agreesÑ to the

following:

7. Taxpayer agrees to timely remit all

payments to the Department as stated in

the attached payment schedule .

8. To accurately com plete 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 .

9. T o timely remit payment in full for

all types of taxes, returns, and

reports due from t he Taxpayer for the

duration of this agreement (including

any extensions hereof) or for the next

12 months following the date of this

agreement, whichever is longer.

10. To comply with all provisions of

Chapter(s) 212, 213, [and] 443, Florida

Statutes.

1 2. Numbered paragraph 13 of the Compliance Agreement

provides that Ðthere shall be no modification of the terms of

th[e] agreement other than in writing and signed by both

parties.Ñ The record herein contains no credible evidence that

the Compliance Agre ement was modified.

13. Numbered paragraph 15 of the Compliance Agreement

provides that Ð[i]f the Taxpayer fails to comply with any

obligation under this agreement, the Department has the right to

pursue revocation of the TaxpayerÓs certificate of

registr ation/permit/license without further notice by filing an

Administrative Complaint pursuant to Section 120.60, Florida

Statutes.Ñ

14. Numbered paragraph 17 of the Compliance Agreement

provides that Ð[t]he waiver by the Department of any breach of

this agre ement by the Taxpayer shall not constitute a waiver of

any other breach.Ñ

15. Numbered paragraph 20 of the Compliance Agreement

provides that the Ð[p]ayment agreement schedule may be re -

negotiated for the balloon payment due . Taxpayer must contact

the Se rvice Center 10 days prior to the due date of the last

payment.Ñ

16. The Compliance Agreement payment schedule established

12 monthly payments, with the first payment of $16,760 due on

August 17, 2015, and the final balloon payment of $15,737.35 due

on Ju ly 25, 2016. The remaining payments under the agreement

were in amounts of $2,500 , with each of the installment s in

question due on the 25th day of the month. The payment schedule

also provides that Ð[a]ll payment must be made in certified

funds, money o rder, EFT, debit card, or credit card and received

at the Tampa Service Center by the close of business on the due

date.Ñ

17. The Administrative Complaint alleges that:

Respondent violated the terms of the

Compliance Agreement by not timely

making the com pliance agreement

payments due on January 25, 2016, and

April 25, 2016; by not timely remitting

sales and use tax collected from

customers during June 2016 (returned

for non - sufficient funds), July 2016

(returned for non - sufficient funds),

August 2016 (ret urned for non -

sufficient funds), September 2016

(returned for non - sufficient funds),

and October 2016 (returned for non -

sufficient funds); and by not

contacting the Department 10 days prior

to the final payment due July 25, 2016,

to renegotiate the balloon payment.

A. Failure to Timely Make Compliance Agreement Payments

18. As it specifically relates to the allegations herein,

VMOB, pursuant to the terms of the Compliance Agreement, agreed

to make payments of $2,500 on January 25, 2016, and

April 25, 20 16. The January payment was received and accepted

by the Department on January 27, 2016. VMOBÓs January 2016

Compliance Agreement payment was made beyond the date due, and

was appropriately deemed ÐlateÑ by the Department. VMOBÓs April

payment was recei ved by the Department on April 26, 2016, and

the evidence does not indicate that the Department treated this

payment as having been received Ðlate.Ñ 2 / By remitting its

January 2016 payment after the due date, VMOB failed to comply

with the terms of the Co mpliance Agreement.

19. VMOB contends that the Department, by accepting the

January 2016 payment after the due date, waived Ðany breachÑ by

VMOB and is therefore estopped from purs u ing revocation of

VMOBÓs Certificate of Registration. As previously noted ,

numbered paragraph 17 of the Compliance Agreement provides that

Ð[t]he waiver by the Department of any breach of this agreement

by the Taxpayer shall not constitute a waiver of any other

breach.Ñ

20. By accepting payment after the due date, it may be th e

case that the Department waived its right to pursue a revocation

action based on VMOBÓs Ðnon - paymentÑ of its obligation.

However, as contemplated by paragraph 17 of the Compliance

Agreement, the waiver of a claim based on non - payment does not

preclude t he Department from revoking VMOBÓs Certificate of

Registration based on the companyÓs Ðlate paymentÑ of its

obligation. In other words, the fact that payment was accepted

by the Department after the due date does not negate the fact

that payment was late . T herefore , the DepartmentÓs claim base d

on untimely payment survives the possible waiver by the

Department of any claim based on VMOBÓs non - payment.

21. The DepartmentÓs acceptance of VMOBÓs late payment did

not result in a waiver of the Department Ós right to seek

revocation of VMOBÓs Certificate of Registration result ing from

VMOBÓs failure to timely remit payment as required by the

Compliance Agreement.

B. Not Timely Remitting Sales and Use Tax Payments

22. T he Administrative Complaint alleges th at VMOB

violated the terms of the Compliance Agreement by fail ing to

timely remit sales and use tax collected from customers during

June and July 2015, and June through October 2016 . 3 /

23. As previously noted, the Compliance Agreement was

executed on Augu st 18, 2015, and there is no credible evidence

that the Compliance Agreement was extended by the parties.

Therefore, VMOBÓs obligations under the Compliance Agreement

commenced on August 18, 2015, and ended on August 17, 2016.

24. It is undisputed that s ales and use tax payments for

any particular month are late if not paid by the 20th day of the

following month.

25. Regarding the June 2015 sales and use tax payment,

VMOB could not have breached the Compliance Agreement as alleged

because this payment wa s due on o r before July 20, 2015, which

is prior to the effective date of the agreement.

26. The sales and use tax payment for July 2015 was due on

or before August 20, 2015 , which due date fell within the period

covered by the Compliance Agreement. Depa rtment Exhibit 25,

page 10, contains a handwritten note indicating that VMOB filed

a return for July 2015 but failed to remit payment. The record

is unclear as to whether VMOB ever satisfied this obligation,

and the Department, in its Proposed Recommended Order, makes no

mention of the absence of this payment as a basis for revoking

VMOBÓs Certificate of Registration due to the late payment of

the same.

27. Regarding the July 2016 sales and use tax payment,

VMOB could not have breached the Compliance Agr eement as alleged

because this payment was due no later than August 20, 2016,

which was after the expiration of the Compliance Agreement. The

same is also true for the August 2016, September 2016, and

October 2016 sales and use tax payments.

28. As for t he June 2016 sales and use tax payment, the

evidence is undisputed that $7,011.58 was due on or before

July 20, 2016 , and that VMOB did not pay the same until on or

about October 25, 2016. VMOB failed to remit this payment in

accordance with the terms of the Compliance Agreement.

29. Paragraphs 13 and 14 of the Administrative Complaint

allege that VMOB failed to remit payment of the interest,

penalties , and fees resulting from the late payment of the sales

and use taxes that were due in June 2016. Neith er the

Administrative Complaint nor the DepartmentÓs Proposed

Recommended Order itemizes the interest, penalties , and fees

resulting from the late payment and , therefore , the exact amount

due cannot be determined based on the instant record.

30. VMOB cont ends that the Department waived any breach by

VMOB because the Department accepted the late payment without a

reservation of rights and by accepting the monthly Compliance

Agreement payments from June 2016 through February 2017. By

accepting payment after the due date, it may be the case that

the Department waived its right to pursue a revocation action

based on VMOBÓs Ðnon - paymentÑ of its obligation. However, as

contemplated by paragraph 17 of the Compliance Agreement, the

waiver of a claim based on non - payment does not preclude the

Department from revoking VMOBÓs Certificate of Registration

based on the companyÓs Ðlate paymentÑ of its obligation. In

other words, the fact that payment was accepted by the

Department after the due date does not negate the fact t hat

payment was late . T herefore , the DepartmentÓs claim based on

untimely payment survives the possible waiver by the Department

of any claim based on VMOBÓs non - payment.

31. The DepartmentÓs acceptance of VMOBÓs late payment of

sales and use tax d id not result in a waiver of the Department Ós

right to seek revocation of VMOBÓs Certificate of Registration

d ue to VMOBÓs failure to timely remit sales and use tax as

required by the Compliance Agreement.

C. Re employment Tax

32. Paragraph 19 of the Admi nistrative Complaint alleges

that ÐRespondent failed to timely remit payment for the Re -

employment tax due and owing . . . for the calendar quarters

ending March 2016, June 2016, and September 2016. 4 /

33. In paragraph 18 of its Proposed Recommended Order , the

Department, as to the only finding of fact proposed for this

issue, indicates that ÐNotice of Tax Liens were issued for the

failure to remit reemployment taxes . . . [and] [t]hese

reporting periods fall within the Compliance AgreementÓs

12 - month per iod of required compliance.Ñ The mere issuance of

notices of tax liens, without supporting documentation, is

insufficient to prove that VMOB failed to timely remit the

reemployment payments as alleged.

D. Renegotiation of Balloon Payment

34. Paragraph 2 8 of the Administrative Complaint alleges,

in part, that VMOB violated the terms of the Compliance

Agreement Ðby not contacting the Department 10 days prior to the

final payment due July 25, 2016, to renegotiate the balloon

payment.Ñ

35. As previously not ed, p aragraph 20 of the Compliance

Agreement provides that the Ð[p]ayment agreement schedule may be

re - negotiated for the balloon payment due . T axpayer must

contact the Service Center 10 days prior to the due date of the

last payment.Ñ Contrary to the al legation, p aragraph 20 only

required VMOB to contact the Department within 10 days of the

due date of the fina l payment if VMOB desired to re negotiate the

balloon payment . There is no evidence that VMOB intende d to

renegotiate the final installment , and t he absence of such an

intent means that VMOB was under no obligation to contact the

Department within the stated 10 - day period .

E. Electronic Filing and Payment

36. In p aragraph 16 of its Proposed Recommended Order, the

Department contends that ÐVMOB was required to file and pay

sales and use taxes and reemployment taxes electronically

beginning January 2, 2016, [and that] VMOB, in violation of the

Compliance Agreement, has never filed or paid their sales and

use taxes or reemployment taxes electronically .Ñ As

appropriately noted by VMOB, Ðthe Department did not allege in

the Administrative Complaint that VMOB breached the Compliance

Agreement by . . . failing to file electronically.Ñ

3 7. Because the Administrative Complaint did not give

notice to VMOB that its alleged failure to file electronically

was being used as grounds for revocation of its Certificate of

Registration, VMOBÓs argument is well taken that this issue is

not properly before DOAH . 5 /

II. 17 - 3630 Notices of Jeopardy Findings

38. A Noti ce of Jeopardy Finding and a Notice of Final

Assessment , dated October 3, 2016 , were mailed to VMOBÓs mailing

address via certified mail and regular U . S . mail. The certified

mailing was returned to the Department as unclaimed , and the

regular U.S mailing was not returned. The Notice of Jeopardy

Finding advised that sales and use taxes for July 2016 and

August 2016 appeared to be in jeopardy because of the worthless

checks issued by VMOB for payment of these taxes. The notice

also advised VMOB of the oppo rtunity to appear at a conference

or otherwise challenge the assessment. VMOB did not formally or

informally protest the October jeopardy finding and assessment ,

and therefore waived its right to do so in the instant

proceeding. On or about June 2, 2017, VMOB paid the amount due

for sales and use taxes , as referenced in the notices of

October 3, 2016, but did not pay the amounts due for penalty,

interest , and fees.

39. A Notice of Jeopardy Finding and a Notice of Final

Assessment , dated November 8, 2016 , were mailed to VMOBÓs

p rincipal address via certified mail and regular U.S . mail. The

certified mail was returned to the Department as unclaimed , and

the regular U.S. mailing was not returned. The Notice of

Jeopardy Finding advised that sales and use t axes for

September 2016 appeared to be in jeopardy because of the

worthless check issued by VMOB for payment of these taxes. The

notice also advised VMOB of the opportunity to appear at a

conference or otherwise challenge the assessment. VMOB did not

fo rmally or informally protest the November jeopardy finding and

assessment, and therefore waived its right to do so in the

instant proceeding. On or about June 2, 2017, VMOB paid the

amount due for sales and use taxes , as referenced in the notices

of Novem ber 8, 2016, but did not pay the amounts due for

penalty, interest , and fees.

40. A Notice of Jeopardy Finding and a Notice of Final

A ssessment , dated December 12, 2016 , were mailed to VMOBÓs

mailing address via certified mail and regular U.S. mail. The

certified mail was returned to the Department as unclaimed , and

the regular U.S. mailing was not returned. Ms. Bartlett

acknowledged receiving the respective n otice s . The Notice of

Jeopardy Finding advised that sales and use taxes for October

2016 appear ed to be in jeopardy because of the worthless check

issued by VMOB for payment of these taxes. The notice also

advised VMOB of the opportunity to appear at a conference or

otherwise challenge the assessment. VMOB did not timely

informally challenge the D ecember jeopardy finding and

assessment, however, VMOB did file a timely formal challenge to

the jeopardy finding and assessment. On or about June 2, 2017,

VMOB paid the amount due for sales and use taxes but did not pay

the amounts due for penalty, inter est , and fees. The sales and

use tax collected by VMOB for October 2016 are not currently in

jeopardy.

41. A Notice of Jeopardy Finding and a Notice of Final

Assessment , dated February 3, 2017 , were mailed to VMOBÓs

mailing address via certified mail an d regular U.S. mail. The

certified mail was returned to the Department as unclaimed. The

Notice of Jeopardy Finding advised that sales and use taxes for

November 2016 and December 2016 appeared to be in jeopardy

because of the worthless checks issued by VMOB for payment of

these taxes. VMOB did not timely informally challenge the

February jeopardy finding and assessment, however, VMOB did

timely file a formal challenge to the jeopardy finding and

assessment. VMOB Exhibit 4 includes copies of checks remi tted

to the Department. None of the checks purport to be payment of

the jeopardy amounts for either November or December 2016. The

sales and use tax collected by VMOB for November and December

2016 are in jeopardy. 6/

III. Personal Liability

42. After VMOB breached the Compliance Agreement, the

Department , on January 9, 2017, issued a Notice of Assessment of

Personal Liability (NOPL) against Ms. Bartlett. The NOPL was

mailed to VMOBÓs principal address via certified mail and

regular U.S. mail. The cer tified mail was returned unclaimed,

but Ms. Bartlett acknowledged receiving the NOPL.

Ms. Bartlett/VMOB requested a formal hearing to contest the

NOPL. The NOPL relates to the time period of July 1, 2015 ,

through October 31, 2016.

43. Ms. Bartlett had administrative control over VMOB and

was personally responsible for collecting VMOBÓs sales tax , and

remitting it to the Department during this time period.

44. The evidence clearly and convincingly establishes that

Ms. Bartlett did not submit a payment o n behalf of VMOB with the

sales and use tax return for the period of July 2015 ; and that

Ms. Bartlett issued worthless checks on behalf of VMOB for sales

and use tax due for the periods of June 2016 through October

2016. Tax warrants were issued and judgm ent liens were recorded

for these reporting periods.

45. The outstanding tax owed by VMOB through October 31,

2016 , was $40,530.02. Pursuant to section 213.29, the Department

assessed against Ms. Bartlett a penalty of double the tax owed by

VMO B, thus totaling $81,060.04. In addition to the $40,530.02

outstanding tax due by VMOB for the period July 1, 2015 , through

October 31, 2016, there were also penalties, interest, and fees

for th is period totaling $5,649.54. Additional interest and fees

in the am ount of $3,773.73 , as calculated in accordance wi th

sections 213.235 and 213.24 a nd Tax Information Publication

N o. 17ADM - 02, have accrued through March 7, 2018 , resulting in an

obligation of $9,423.27 , in penalty, interest, and fees.

46. A tax liabilit y of $40,530.02 , plus $9,423.27 in

penalty, interest, and fees , totals $49,953.29 , which is the

amount ow ed for the period July 1, 2015 , through October 31,

2016.

47. After the NOPL was issued, the following payments

were made towards the liability for this period: $7,357.44 on

January 26, 2017; $1,557.13 on February 27, 2017; and the

following four payments on June 2, 2017: $9,437.47, $8,716.50,

$7,067.28, and $6,619.90 for a total of $40,755.72.

48. Ms. Bartlett contends that through these payment s , she

satisfied the taxes owed on the periods associated with the NOPL

and should accordingly have the NOPL eliminated. B ecause

warrants and liens have been filed and recorded against VMOB, the

Department applied the payments towards VMOBÓs liabilities i n the

following order, pursuant to sec tion 213.75(2) : (a) f irst,

against the costs to record the warrant or lien, if any;

(b) s econd, against the administrative collection processing fee,

if any; (c) t hird, against any accrued interest; (d) f ourth,

agains t any accrued penalty; and finally , (e) against any tax

due. Given this hierarchy of payment prioritization , taxes (as

well as penalty, interest, and fees) for this period remain

outstanding. The total outstanding liability through March 7,

2018 ( for the period July 1, 2015 , through October 31, 2016 ) , is

$ 9 , 197.57 ($49,953.29 - $40,755.75) , of which $8,750.96 is tax.

49. Ms. Bartlett contends that it was not until the end of

May 2017 that she became aware that VMOB issued worthless checks

for the period in question . Ms. BartlettÓs assertion is not

supported by the credible and competent evidence.

50. The credible evidence establishes that f or each

returned check, the DepartmentÓs system automatically mail ed out

a bill, and the regular mail sent to VMOB containing these bills

was never returned as undeliverable.

51. The credible evidence establishes that o n November 28,

2016, Ms. Smoak explained to Mr. Mustard , in his capacity as POA

for VMOB , that VMOB c ould not continue to write worthless checks

to the Department.

52. The credible evidence shows that on December 6, 2016, a

fax was sent by the Department to Mr. Mustard , which set forth

VMOBÓs liabilities owed to the Department.

53. The credible evidence establishes that on December 28,

2016, Ms. Smoak asked Mr. Mustard to again inform Ms. Bartlett

that she c ould not c ontinue to submit worthless checks to the

Department .

54. The credible evidence establishes that i n January of

2017, Ms. Bartlett received and responded to the NOPL.

55. The credible evi dence establishes that on or about

January 3, 2017, Ms. Bartlett sent correspondence to the

Department regarding the December 2016 Notice of Jeopardy

Finding.

56. The credible evidence establishes that on or about

February 27, 2017, Ms. Bartlett sent corr espondence to the

Department regarding the February 3, 2017, Notice of Jeopardy

Finding.

57. Despite being its managing member, Ms. Bartlett admits

that from June 2016 through October 2016 , she had limited

involvement with VMOB, did not monitor its checki ng accounts or

finances, and pre - signed the worthless checks that were tendered

to the Department as payment for VMOBÓs obligations.

CONCLUSIONS OF LAW

58. The Division of Administrative Hearings has

jurisdiction over the subject matter and the parties he reto

pursuant to section 120.569, Florida Statutes.

59. The Department is an agency of the State of Florida

lawfully created and organized pursuant to section 20.21,

Florida Statutes.

60. Pursuant to chapter 212, t he Department is vested with

the respons ibility of implementing and administering the revenue

laws of the State of Florida, including the laws relating to the

im position and collection of the S tateÓs sales and use tax.

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

convincing evide nce the allegations in the Administrative

Complaint on which the Department relies to s eek revocation of

Respondent's Certificate of R egistration. 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 distinctly

remembered; the testimony must be

precise and explicit and the witnesses

must be lacking in co nfusion 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)(ÐAlthough this standard of proof

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

preclude evidence that is ambiguous.Ñ).

62. Every person desiring to engage in or conduct business

in this S t ate as a dealer, as defined in c hapter 212, must be

licensed by the Department , pursuant to section 212.18. VMOB is

a dealer within th e meaning of c hapter 212.

63. P ursuant to section 212.05(1), certificates of

registration issued by the Department grant dealers the

privilege of engaging in or conducting business in this state.

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

tax es imposed pursuant to c hapter 212, become state funds at the

moment of collection, and the intentional failure to remit these

taxes constitutes theft of state funds.

65. S ection 212.15(1) requires that dealers collect and

remit to the D epartment the tax imposed by c hapter 212 on a

monthly basis. The collected t ax es are due on the first day of

the succeeding calendar month and are considered late if not

paid to the Department by the 20 th day of the month when due.

66. Section s 212.18 an d 213.692 authorize the Department

to revoke all certificates of registration, permits, or licenses

issued by the Department to a dea ler who fails to comply with a

Compliance A greement.

67. The Department proved by clear and convincing evidence

that VMOB violated the terms of the Compliance Agreement by

failing to timely make the scheduled payment due on January 25,

2016, and by not timely remitting the sales and use tax payment

due for June 2016.

68. ÐThe department shall issue to the taxpayer, with any

jeopardy assessment, a notice or finding of the facts which

constitute a jeopardy to the revenue.Ñ § 213.732, Fla. Stat.

69. The Department proved by clear and convincing evidence

that the sales and use taxes owed by VMOB, as reflected in the

Notice of Jeopardy Finding dated December 12, 2016, w ere in

jeopardy at the time of issuance of the notice and , accordingly ,

the DepartmentÓs jeopardy findings and assessments for this

period are sustained.

70. The Department proved by clear and convincing evidence

that the sales and use taxes owed by VMOB for November and

December 2016 are in jeopardy and the DepartmentÓs jeopardy

findings and assessments for these months are sustained.

71. Anyone required to collect sales and use tax who

willfully attempts in any manner to evade or defeat such tax or

the payment thereof, or any officer or director with

administrative control over the collection and payment of tax and

who willfully directs an employee of the corporation to evade or

defeat such tax or the payment th ereof, is liable to a penalty

equal to twice the total amount of the tax evaded or not

accounted for or paid over. § 213.29, Fla. Stat.

72. ÐAn assessment of penalty made pursuant to this section

shall be deemed prima facie correct in any judicial or qua si -

judicial proceeding brought to collect this penalty.Ñ § 213.29,

Fla. Stat.

73. The taxpayer must prove that the Department departed

from the requirements of law or that the assessment was not

supported by any reasonable hypothesis of legality. Cf. St raughn

v. Tuck , 354 So. 2d 368, 371 (Fla. 1978) (involving property tax

assessments under ch. 193, Florida Statutes); Harris v. DepÓt of

Revenue , 563 So . 2d 97, 99 (Fla. 1st DCA 1990) (citing Straughn ,

354 So. 2d at 371 , for assessments under c h . 212) .

74. Se ction 212.14(3) provides that the filing of a return

not accompanied by payment is prima facie evidence of conversion

of the money due.

75. The Department is authorized to estimate any unpaid

deficiencies in tax to be assessed against the sales tax deal er

upon such information as may be available to it , and to issue a

delinquent tax warrant for the collection of such tax, interest,

or penalties estimated to be due and payable, and any such

assessment is deemed prima facie correct. § 212.14, Fla. Stat.

7 6. Florida law dictates the following priority order of

the application of payments, when a warrant has been filed and

recorded by the Department: (a) costs to record the warrant, if

any; (b) administrative collection processing fees, if any;

(c) accrue d interest, if any; (d) accrued penalty, if any; and

(e) tax due, if any. § 213.75(2), Fla. Stat.

77. Florida law does not permit the taxpayer to dictate the

priority order of the application of the payments, when a warrant

has been filed and recorded. § 213.75(2), Fla. Stat.

Additionally, the Department applies payments to the oldest

warrants first.

78. During the period of July 2015 through October 2016,

Ms. Bartlett had administrative control over the collection and

payment of sales and use tax for VMOB and willfully failed to

remit the collected tax to the Department.

79. Although Ms. Bartlett disputes the assessment, the

evidence clearly and convincingly establishes that she willfully

evaded the tax owed by abandoning her duties as a managing

memb er, intentionally ignoring communications from the

Department, breaching the Compliance Agreement, and continually

issuing worthless checks.

80. The Department has issued and filed delinquent tax

warrants and liens in the public records for the collection of

the delinquent tax liability , pursuant to section 212.15(4) .

81. T he personal liability assessment for the period

July 1, 2015 , through October 31, 2016, is valid and correct ;

and, pursuant to section 213.29, Ms. Bartlett is liable for

$81,060.04 , wh ich is double the $40,530.02 in tax that was owed

by VMOB at the time of the assessment. Because tax remains due,

the penalty assessment is sustained.

82. Once the remaining tax owed by VMOB of $8,750.96 is

paid, the $81,060.04 personal liability assessm ent against

Ms. Bartlett should be abated in accordance with sect ion 213.29 .

RECOMMENDATION

Based on the foregoing Findings of Facts and Conclusions of

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

final order:

1. That revok es Certificate of Registration

39 - 8016555696 - 3 issued by the Department to VMOB, LLC;

2. That sustains the Jeopardy Findings and Notices of

Final Assessments dated December 12, 2016, and February 2, 2017;

and,

3. That imposes a personal liability assessment against

V erna Bartlett in the amount of $81,060.04 , subject to

abatement .

DONE AND ENTERED this 10 th day of April , 2018 , in

Tallahassee, Leon County, Florida.

S

LINZIE F. BOGAN

Administrative Law Judge

Division of Administrativ e 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 10 th day of April , 2018 .

ENDNOTE S

1/ All subsequent references to Florida Statutes will be to

2017, unless otherwise indicated.

2 / According to Departme nt Exhibit 29, page 37, VMOBÓs

Compliance A greement payment for March 2016 was Ðlate.Ñ The

Administrative Complaint does not, however, charge this act of

non - compliance as a basis for revocation.

3 / Paragraphs 12 and 28 of the Administrative Complaint appear

to involve the same alleged conduct. Paragraph 12, however,

includes allegations for the months of June 2015 and July 2015.

4 / The March 2016 reemployment tax period covered January 1,

2016, through March 31, 2016. The June 2016 reemployment tax

period covered April 1, 2016, through June 30, 2016. The

September 2016 reemployment tax period covered July 1, 2016,

through September 30, 2016. According to Department Exhibit 13,

page 2, of the $4,807.46 total reemployment tax for this period,

only two cents represents the amount due for the September 2016

period. Obviously a portion of the September 2016 period occurs

beyond the end date of the Compliance Agreement.

5 / See generally Conklin Center v. Williams , 519 So. 2d 38 (Fla.

5th DCA 1988)(procedural due process requires that parties to an

administrative hearing be given notice of the matters to be

addressed during the hearing) . Additionally, section 120.60(5),

Florida Statutes (2017), provides in part that Ð[n]o revocation

. . . of any license is lawful unless . . . the agency has

served . . . an administrative complaint which affords

reasonable notice to the licensee of facts or conduct which

warrants the intended action.Ñ

6/ On or about October 7, 2016, Ms. Bartlett executed a POA

designating Lewis Mustard, Jr. , as representative for VMOB.

Although Ms. Bartlett named Mr. Mustard as VMOBÓs

representative, she also indicated in the power of attorney that

all communications were to be sent to both her and her

representative. While the evidence indicates that the

Department did not provide copies of the jeopardy notices to

Mr. Mustard, this is of no moment given that all jeopa rdy

notices, and related documents, were provided to Ms. Bartlett.

COPIES FURNISHED:

Verna Bartlett

Tampa Hyde Park Cafe, LLC

303 South Melville Avenue

Tampa, Florida 33606

Mark S. Hamilton, General Counsel

Department of Revenue

Post Office Box 6668

T allahassee, Florida 32314 - 6668

(eServed)

Mark S. Urban, Esquire

Florida Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399

(eServed)

William B. Meacham, Esquire

308 East Plymouth Street

Tampa, Florida 33603

(eServed)

Leon M. Biegalski, 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 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.