17-003630 Vmob, Llc, D/B/A Cheap On Howard vs. Department Of Revenue
 Status: Closed
Recommended Order on Tuesday, April 10, 2018.


View Dockets  
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.

1STATE OF FLORIDA

4DIVISION OF ADMINISTRATIVE HEARINGS

8DEPARTMENT OF REVENUE,

11Petitioner,

12vs. Case No. 17 - 3452

18VMOB, LLC, d/b/a CHEAP ON

23HOWARD,

24Respondent.

25_______________________________/

26VMOB, LLC, d/b/a CHEAP ON

31HOWARD,

32Petitioner,

33vs. Case No. 17 - 3630

39DEPARTMENT OF REVENUE,

42Respondent.

43_______________________________/

44RECOMMENDED ORDER

46Pursuant to notice, a final hearing in this cause was held

57by video teleconference between sites in Tampa and Tallahasse e,

67Florida, on January 17 , 2018, before Linzie F. Bogan,

76Administrative Law Judge of the Division of Administrative

84Hearings.

85APPEARANCES

86For Petitioner Department of Revenue :

92Mark S. Urban, Esquire

96Florida Office of t he Attorney General

103The Capitol, Plaza Level 01

108Tallahassee, Florida 32399

111For Respondent VMOB, LLC, d/b/a Cheap on Howard :

120William B. Meacham, Esquire

124308 East Plymouth Street

128Tampa, Florida 33603

131STATEMENT OF THE ISSUE S

136The issues are as follows: 1) Whether grounds exist to

146revoke the Certificate of Registration to collect taxes held by

156VMOB, LLC, d/b/a Cheap on Howard ; 2) Whether factual and legal

167grounds support the Department of RevenueÓs jeopardy findings

175and assessments for October 2016, November 2016, December 2016,

184and February 2017; and 3) Whether factual and legal grounds

194support the Department of RevenueÓs assessment of personal

202liability against VMOBÓs m anaging member, Verna Bartlett.

210PRELIMINARY STATEMENT

212The Department of Revenue ( Department) seeks to revoke the

222Certificate of Registration issued to VMOB, LLC , d/b/a Cheap on

232Howard ( VMOB). The Department entered into a Compliance

241Agreement with VMOB on August 18, 2017. VMOB allegedly violated

251the terms of the Compliance Agreement by : not timely making

262Compliance Agreement payments ; not timely remittin g current tax

271obligations ; and not contacting the Department 10 days prior to

281the final Compliance Agr eement payment due date to renegotiate

291the final installment .

295The Department , for the months October through December

3032016, and February 2017, also issued Notice s of Jeopardy

313Fin di ngs and Notices of Final Assessments because the Department

324believed that co llection of the tax, penalty, fees, or interest

335for those months was in jeopardy.

341The Department also issued Ms. Bartlett, managing member of

350VMOB, a Notice of Assessment of Personal Liability pursuant to

360sect ion 213.29, Florida Statutes, due to Ms. Bartl ettÓs alleged

371willful attempts to evade or defeat tax , or payment of tax owed .

384VMOB requested a formal hearing to contest these actions by

394the Department in Division of Administrative Hearings ( DOAH )

404Case Nos. 17 - 3452 and 17 - 3630. The cases were consolida ted and

419a formal hearing was held. At the formal hearing, the

429Department called two witnesses, Kimb erly Ridgeway and Rolinda

438Smoak. Department Exhibits 1 through 37 and 40 through 43 were

449ad mitted into evidence. VMOB cal led one witness, Verna

459Bartlett. VMOBÓs Exhibits 1 through 13 were admitted into

468evidence.

469At the conclusion of the hearing, the parties advis ed that

480a transcript of the final hearing would be ordered , and that

491proposed recommended orders would be due 20 days after the

501filing of the tran script . The Transcript of the final hearing

513was filed on February 14, 2018. After the granting of three

524additiona l days for the filing of proposed recommended orders,

534each party, on March 9, 2018, filed its Proposed R ecommended

545O rder, and the same were c onsidered in preparation of this

557Recommended Order .

560STATEMENT OF FACT S

564I. 1 7 - 3 452 Revocation Action

5721. The Department is charged with the responsibility of

581implementing and administering the revenue laws of the State of

591Florida, including the laws relat ing to the imposition and

601collection of the stateÓs sales and use tax, pursuant to

611c hapter 212, Florida Statutes. 1/

6172. VMOB is a Florida limited liability company with its

627principal address a t 31 7 South Howard Avenue, Tampa, Florida

63833606.

6393. VMOB is re gistered with the Department as a dealer

650pursuant to section 212.18, and was issued Sales and Use Tax

661Certificate of Registration number 39 - 8016555696 - 3 (Certificate

671of Registration) .

6744. Ms. Bartlett is, and has been since its inception,

684VMOBÓs managing m ember responsible for collecting and remitting

693VMOB's sales and use tax.

6985. Lewis Mustard , Jr., is Ms. BartlettÓs husband .

707Mr. Mustard became VMOBÓs Power of Attorney (POA) in October of

7182016.

7196. The Department issued and filed against VMOB delinquent

728tax warrants, notices of liens, and judgment lien certificates

737for the collection of delinquent sales and use tax.

7467. On or about July 28, 2015, the Department commenced the

757process of revoking VMOBÓs Certificate of Registration by

765sending VMOB a Notice o f Conference on Revocation of Certificate

776of Registration (Notice of Conference).

7818. The Notice of Conference informed VMOB that : an

791informal conference to discuss the grounds for revocation would

800be held on September 3, 2015 ; the Department intended to revoke

811VMOBÓs C ertificate of R egistration based upon VMOBÓs alleged

821violation of Florida tax law ; and VMOB would have a final

832opportunity at the conference to present evidence regarding the

841DepartmentÓs intended revocation or enter into a compliance

849agreem ent.

8519. Ms. Bartlett appeared on behalf of VMOB at the

861revocation conference, and entered into a compliance a greement

870with the Department on August 18, 2015.

87710. The Compliance Agreement identifies Respondent as the

885ÐTaxpayerÑ and provides , in part , as follows:

8923. The Taxpayer has violated the tax laws

900of the State of Florida by failing to timely

909file returns/reports and pay all taxes due

916from the Taxpayer, resulting in the filing

923of a warrant, notice of lien, and/or

930judgment lien certificate.

9334. As a result of these violations, the

941Taxpayer admits a past due (Sales and Use

949tax) liability to the State of Florida of

957$52,088.90 which is comprised of $43,595.83

965tax, $2,469.18 interest, $3,463.20 penalty

972and $2,560.69 fees.

9765. As a result of these violati ons, the

985Taxpayer admits a past due (Re - employment

993tax) liability to the State of Florida of

1001$5,408.45 , which is comprised of $5,198.75

1009tax, $50.48 interest, $0.00 penalty and

1015$159.22

1016fees.

101711. The Compliance A greement also provides that ÐIN

1026CONSIDERATI ON for the Department refraining from pursuing

1034revocation proceedings at this time, the Taxpayer agreesÑ to the

1044following:

10457. Taxpayer agrees to timely remit all

1052payments to the Department as stated in

1059the attached payment schedule .

10648. To accurately com plete and timely

1071file all required tax returns and

1077reports for the next 12 months,

1083beginning with the first return/report

1088due following the date of this

1094agreement .

10969. T o timely remit payment in full for

1105all types of taxes, returns, and

1111reports due from t he Taxpayer for the

1119duration of this agreement (including

1124any extensions hereof) or for the next

113112 months following the date of this

1138agreement, whichever is longer.

114210. To comply with all provisions of

1149Chapter(s) 212, 213, [and] 443, Florida

1155Statutes.

11561 2. Numbered paragraph 13 of the Compliance Agreement

1165provides that Ðthere shall be no modification of the terms of

1176th[e] agreement other than in writing and signed by both

1186parties.Ñ The record herein contains no credible evidence that

1195the Compliance Agre ement was modified.

120113. Numbered paragraph 15 of the Compliance Agreement

1209provides that Ð[i]f the Taxpayer fails to comply with any

1219obligation under this agreement, the Department has the right to

1229pursue revocation of the TaxpayerÓs certificate of

1236registr ation/permit/license without further notice by filing an

1244Administrative Complaint pursuant to Section 120.60, Florida

1251Statutes.Ñ

125214. Numbered paragraph 17 of the Compliance Agreement

1260provides that Ð[t]he waiver by the Department of any breach of

1271this agre ement by the Taxpayer shall not constitute a waiver of

1283any other breach.Ñ

128615. Numbered paragraph 20 of the Compliance Agreement

1294provides that the Ð[p]ayment agreement schedule may be re -

1304negotiated for the balloon payment due . Taxpayer must contact

1314the Se rvice Center 10 days prior to the due date of the last

1328payment.Ñ

132916. The Compliance Agreement payment schedule established

133612 monthly payments, with the first payment of $16,760 due on

1348August 17, 2015, and the final balloon payment of $15,737.35 due

1360on Ju ly 25, 2016. The remaining payments under the agreement

1371were in amounts of $2,500 , with each of the installment s in

1384question due on the 25th day of the month. The payment schedule

1396also provides that Ð[a]ll payment must be made in certified

1406funds, money o rder, EFT, debit card, or credit card and received

1418at the Tampa Service Center by the close of business on the due

1431date.Ñ

143217. The Administrative Complaint alleges that:

1438Respondent violated the terms of the

1444Compliance Agreement by not timely

1449making the com pliance agreement

1454payments due on January 25, 2016, and

1461April 25, 2016; by not timely remitting

1468sales and use tax collected from

1474customers during June 2016 (returned

1479for non - sufficient funds), July 2016

1486(returned for non - sufficient funds),

1492August 2016 (ret urned for non -

1499sufficient funds), September 2016

1503(returned for non - sufficient funds),

1509and October 2016 (returned for non -

1516sufficient funds); and by not

1521contacting the Department 10 days prior

1527to the final payment due July 25, 2016,

1535to renegotiate the balloon payment.

1540A. Failure to Timely Make Compliance Agreement Payments

154818. As it specifically relates to the allegations herein,

1557VMOB, pursuant to the terms of the Compliance Agreement, agreed

1567to make payments of $2,500 on January 25, 2016, and

1578April 25, 20 16. The January payment was received and accepted

1589by the Department on January 27, 2016. VMOBÓs January 2016

1599Compliance Agreement payment was made beyond the date due, and

1609was appropriately deemed ÐlateÑ by the Department. VMOBÓs April

1618payment was recei ved by the Department on April 26, 2016, and

1630the evidence does not indicate that the Department treated this

1640payment as having been received Ðlate.Ñ 2 / By remitting its

1651January 2016 payment after the due date, VMOB failed to comply

1662with the terms of the Co mpliance Agreement.

167019. VMOB contends that the Department, by accepting the

1679January 2016 payment after the due date, waived Ðany breachÑ by

1690VMOB and is therefore estopped from purs u ing revocation of

1701VMOBÓs Certificate of Registration. As previously noted ,

1708numbered paragraph 17 of the Compliance Agreement provides that

1717Ð[t]he waiver by the Department of any breach of this agreement

1728by the Taxpayer shall not constitute a waiver of any other

1739breach.Ñ

174020. By accepting payment after the due date, it may be th e

1753case that the Department waived its right to pursue a revocation

1764action based on VMOBÓs Ðnon - paymentÑ of its obligation.

1774However, as contemplated by paragraph 17 of the Compliance

1783Agreement, the waiver of a claim based on non - payment does not

1796preclude t he Department from revoking VMOBÓs Certificate of

1805Registration based on the companyÓs Ðlate paymentÑ of its

1814obligation. In other words, the fact that payment was accepted

1824by the Department after the due date does not negate the fact

1836that payment was late . T herefore , the DepartmentÓs claim base d

1848on untimely payment survives the possible waiver by the

1857Department of any claim based on VMOBÓs non - payment.

186721. The DepartmentÓs acceptance of VMOBÓs late payment did

1876not result in a waiver of the Department Ós right to seek

1888revocation of VMOBÓs Certificate of Registration result ing from

1897VMOBÓs failure to timely remit payment as required by the

1907Compliance Agreement.

1909B. Not Timely Remitting Sales and Use Tax Payments

191822. T he Administrative Complaint alleges th at VMOB

1927violated the terms of the Compliance Agreement by fail ing to

1938timely remit sales and use tax collected from customers during

1948June and July 2015, and June through October 2016 . 3 /

196023. As previously noted, the Compliance Agreement was

1968executed on Augu st 18, 2015, and there is no credible evidence

1980that the Compliance Agreement was extended by the parties.

1989Therefore, VMOBÓs obligations under the Compliance Agreement

1996commenced on August 18, 2015, and ended on August 17, 2016.

200724. It is undisputed that s ales and use tax payments for

2019any particular month are late if not paid by the 20th day of the

2033following month.

203525. Regarding the June 2015 sales and use tax payment,

2045VMOB could not have breached the Compliance Agreement as alleged

2055because this payment wa s due on o r before July 20, 2015, which

2069is prior to the effective date of the agreement.

207826. The sales and use tax payment for July 2015 was due on

2091or before August 20, 2015 , which due date fell within the period

2103covered by the Compliance Agreement. Depa rtment Exhibit 25,

2112page 10, contains a handwritten note indicating that VMOB filed

2122a return for July 2015 but failed to remit payment. The record

2134is unclear as to whether VMOB ever satisfied this obligation,

2144and the Department, in its Proposed Recommended Order, makes no

2154mention of the absence of this payment as a basis for revoking

2166VMOBÓs Certificate of Registration due to the late payment of

2176the same.

217827. Regarding the July 2016 sales and use tax payment,

2188VMOB could not have breached the Compliance Agr eement as alleged

2199because this payment was due no later than August 20, 2016,

2210which was after the expiration of the Compliance Agreement. The

2220same is also true for the August 2016, September 2016, and

2231October 2016 sales and use tax payments.

223828. As for t he June 2016 sales and use tax payment, the

2251evidence is undisputed that $7,011.58 was due on or before

2262July 20, 2016 , and that VMOB did not pay the same until on or

2276about October 25, 2016. VMOB failed to remit this payment in

2287accordance with the terms of the Compliance Agreement.

229529. Paragraphs 13 and 14 of the Administrative Complaint

2304allege that VMOB failed to remit payment of the interest,

2314penalties , and fees resulting from the late payment of the sales

2325and use taxes that were due in June 2016. Neith er the

2337Administrative Complaint nor the DepartmentÓs Proposed

2343Recommended Order itemizes the interest, penalties , and fees

2351resulting from the late payment and , therefore , the exact amount

2361due cannot be determined based on the instant record.

237030. VMOB cont ends that the Department waived any breach by

2381VMOB because the Department accepted the late payment without a

2391reservation of rights and by accepting the monthly Compliance

2400Agreement payments from June 2016 through February 2017. By

2409accepting payment after the due date, it may be the case that

2421the Department waived its right to pursue a revocation action

2431based on VMOBÓs Ðnon - paymentÑ of its obligation. However, as

2442contemplated by paragraph 17 of the Compliance Agreement, the

2451waiver of a claim based on non - payment does not preclude the

2464Department from revoking VMOBÓs Certificate of Registration

2471based on the companyÓs Ðlate paymentÑ of its obligation. In

2481other words, the fact that payment was accepted by the

2491Department after the due date does not negate the fact t hat

2503payment was late . T herefore , the DepartmentÓs claim based on

2514untimely payment survives the possible waiver by the Department

2523of any claim based on VMOBÓs non - payment.

253231. The DepartmentÓs acceptance of VMOBÓs late payment of

2541sales and use tax d id not result in a waiver of the Department Ós

2556right to seek revocation of VMOBÓs Certificate of Registration

2565d ue to VMOBÓs failure to timely remit sales and use tax as

2578required by the Compliance Agreement.

2583C. Re employment Tax

258732. Paragraph 19 of the Admi nistrative Complaint alleges

2596that ÐRespondent failed to timely remit payment for the Re -

2607employment tax due and owing . . . for the calendar quarters

2619ending March 2016, June 2016, and September 2016. 4 /

262933. In paragraph 18 of its Proposed Recommended Order , the

2639Department, as to the only finding of fact proposed for this

2650issue, indicates that ÐNotice of Tax Liens were issued for the

2661failure to remit reemployment taxes . . . [and] [t]hese

2671reporting periods fall within the Compliance AgreementÓs

267812 - month per iod of required compliance.Ñ The mere issuance of

2690notices of tax liens, without supporting documentation, is

2698insufficient to prove that VMOB failed to timely remit the

2708reemployment payments as alleged.

2712D. Renegotiation of Balloon Payment

271734. Paragraph 2 8 of the Administrative Complaint alleges,

2726in part, that VMOB violated the terms of the Compliance

2736Agreement Ðby not contacting the Department 10 days prior to the

2747final payment due July 25, 2016, to renegotiate the balloon

2757payment.Ñ

275835. As previously not ed, p aragraph 20 of the Compliance

2769Agreement provides that the Ð[p]ayment agreement schedule may be

2778re - negotiated for the balloon payment due . T axpayer must

2790contact the Service Center 10 days prior to the due date of the

2803last payment.Ñ Contrary to the al legation, p aragraph 20 only

2814required VMOB to contact the Department within 10 days of the

2825due date of the fina l payment if VMOB desired to re negotiate the

2839balloon payment . There is no evidence that VMOB intende d to

2851renegotiate the final installment , and t he absence of such an

2862intent means that VMOB was under no obligation to contact the

2873Department within the stated 10 - day period .

2882E. Electronic Filing and Payment

288736. In p aragraph 16 of its Proposed Recommended Order, the

2898Department contends that ÐVMOB was required to file and pay

2908sales and use taxes and reemployment taxes electronically

2916beginning January 2, 2016, [and that] VMOB, in violation of the

2927Compliance Agreement, has never filed or paid their sales and

2937use taxes or reemployment taxes electronically .Ñ As

2945appropriately noted by VMOB, Ðthe Department did not allege in

2955the Administrative Complaint that VMOB breached the Compliance

2963Agreement by . . . failing to file electronically.Ñ

29723 7. Because the Administrative Complaint did not give

2981notice to VMOB that its alleged failure to file electronically

2991was being used as grounds for revocation of its Certificate of

3002Registration, VMOBÓs argument is well taken that this issue is

3012not properly before DOAH . 5 /

3019II. 17 - 3630 Notices of Jeopardy Findings

302738. A Noti ce of Jeopardy Finding and a Notice of Final

3039Assessment , dated October 3, 2016 , were mailed to VMOBÓs mailing

3049address via certified mail and regular U . S . mail. The certified

3062mailing was returned to the Department as unclaimed , and the

3072regular U.S mailing was not returned. The Notice of Jeopardy

3082Finding advised that sales and use taxes for July 2016 and

3093August 2016 appeared to be in jeopardy because of the worthless

3104checks issued by VMOB for payment of these taxes. The notice

3115also advised VMOB of the oppo rtunity to appear at a conference

3127or otherwise challenge the assessment. VMOB did not formally or

3137informally protest the October jeopardy finding and assessment ,

3145and therefore waived its right to do so in the instant

3156proceeding. On or about June 2, 2017, VMOB paid the amount due

3168for sales and use taxes , as referenced in the notices of

3179October 3, 2016, but did not pay the amounts due for penalty,

3191interest , and fees.

319439. A Notice of Jeopardy Finding and a Notice of Final

3205Assessment , dated November 8, 2016 , were mailed to VMOBÓs

3214p rincipal address via certified mail and regular U.S . mail. The

3226certified mail was returned to the Department as unclaimed , and

3236the regular U.S. mailing was not returned. The Notice of

3246Jeopardy Finding advised that sales and use t axes for

3256September 2016 appeared to be in jeopardy because of the

3266worthless check issued by VMOB for payment of these taxes. The

3277notice also advised VMOB of the opportunity to appear at a

3288conference or otherwise challenge the assessment. VMOB did not

3297fo rmally or informally protest the November jeopardy finding and

3307assessment, and therefore waived its right to do so in the

3318instant proceeding. On or about June 2, 2017, VMOB paid the

3329amount due for sales and use taxes , as referenced in the notices

3341of Novem ber 8, 2016, but did not pay the amounts due for

3354penalty, interest , and fees.

335840. A Notice of Jeopardy Finding and a Notice of Final

3369A ssessment , dated December 12, 2016 , were mailed to VMOBÓs

3379mailing address via certified mail and regular U.S. mail. The

3389certified mail was returned to the Department as unclaimed , and

3399the regular U.S. mailing was not returned. Ms. Bartlett

3408acknowledged receiving the respective n otice s . The Notice of

3419Jeopardy Finding advised that sales and use taxes for October

34292016 appear ed to be in jeopardy because of the worthless check

3441issued by VMOB for payment of these taxes. The notice also

3452advised VMOB of the opportunity to appear at a conference or

3463otherwise challenge the assessment. VMOB did not timely

3471informally challenge the D ecember jeopardy finding and

3479assessment, however, VMOB did file a timely formal challenge to

3489the jeopardy finding and assessment. On or about June 2, 2017,

3500VMOB paid the amount due for sales and use taxes but did not pay

3514the amounts due for penalty, inter est , and fees. The sales and

3526use tax collected by VMOB for October 2016 are not currently in

3538jeopardy.

353941. A Notice of Jeopardy Finding and a Notice of Final

3550Assessment , dated February 3, 2017 , were mailed to VMOBÓs

3559mailing address via certified mail an d regular U.S. mail. The

3570certified mail was returned to the Department as unclaimed. The

3580Notice of Jeopardy Finding advised that sales and use taxes for

3591November 2016 and December 2016 appeared to be in jeopardy

3601because of the worthless checks issued by VMOB for payment of

3612these taxes. VMOB did not timely informally challenge the

3621February jeopardy finding and assessment, however, VMOB did

3629timely file a formal challenge to the jeopardy finding and

3639assessment. VMOB Exhibit 4 includes copies of checks remi tted

3649to the Department. None of the checks purport to be payment of

3661the jeopardy amounts for either November or December 2016. The

3671sales and use tax collected by VMOB for November and December

36822016 are in jeopardy. 6/

3687III. Personal Liability

369042. After VMOB breached the Compliance Agreement, the

3698Department , on January 9, 2017, issued a Notice of Assessment of

3709Personal Liability (NOPL) against Ms. Bartlett. The NOPL was

3718mailed to VMOBÓs principal address via certified mail and

3727regular U.S. mail. The cer tified mail was returned unclaimed,

3737but Ms. Bartlett acknowledged receiving the NOPL.

3744Ms. Bartlett/VMOB requested a formal hearing to contest the

3753NOPL. The NOPL relates to the time period of July 1, 2015 ,

3765through October 31, 2016.

376943. Ms. Bartlett had administrative control over VMOB and

3778was personally responsible for collecting VMOBÓs sales tax , and

3787remitting it to the Department during this time period.

379644. The evidence clearly and convincingly establishes that

3804Ms. Bartlett did not submit a payment o n behalf of VMOB with the

3818sales and use tax return for the period of July 2015 ; and that

3831Ms. Bartlett issued worthless checks on behalf of VMOB for sales

3842and use tax due for the periods of June 2016 through October

38542016. Tax warrants were issued and judgm ent liens were recorded

3865for these reporting periods.

386945. The outstanding tax owed by VMOB through October 31,

38792016 , was $40,530.02. Pursuant to section 213.29, the Department

3889assessed against Ms. Bartlett a penalty of double the tax owed by

3901VMO B, thus totaling $81,060.04. In addition to the $40,530.02

3913outstanding tax due by VMOB for the period July 1, 2015 , through

3925October 31, 2016, there were also penalties, interest, and fees

3935for th is period totaling $5,649.54. Additional interest and fees

3946in the am ount of $3,773.73 , as calculated in accordance wi th

3959sections 213.235 and 213.24 a nd Tax Information Publication

3968N o. 17ADM - 02, have accrued through March 7, 2018 , resulting in an

3982obligation of $9,423.27 , in penalty, interest, and fees.

399146. A tax liabilit y of $40,530.02 , plus $9,423.27 in

4003penalty, interest, and fees , totals $49,953.29 , which is the

4013amount ow ed for the period July 1, 2015 , through October 31,

40252016.

402647. After the NOPL was issued, the following payments

4035were made towards the liability for this period: $7,357.44 on

4046January 26, 2017; $1,557.13 on February 27, 2017; and the

4057following four payments on June 2, 2017: $9,437.47, $8,716.50,

4068$7,067.28, and $6,619.90 for a total of $40,755.72.

407948. Ms. Bartlett contends that through these payment s , she

4089satisfied the taxes owed on the periods associated with the NOPL

4100and should accordingly have the NOPL eliminated. B ecause

4109warrants and liens have been filed and recorded against VMOB, the

4120Department applied the payments towards VMOBÓs liabilities i n the

4130following order, pursuant to sec tion 213.75(2) : (a) f irst,

4141against the costs to record the warrant or lien, if any;

4152(b) s econd, against the administrative collection processing fee,

4161if any; (c) t hird, against any accrued interest; (d) f ourth,

4173agains t any accrued penalty; and finally , (e) against any tax

4184due. Given this hierarchy of payment prioritization , taxes (as

4193well as penalty, interest, and fees) for this period remain

4203outstanding. The total outstanding liability through March 7,

42112018 ( for the period July 1, 2015 , through October 31, 2016 ) , is

4225$ 9 , 197.57 ($49,953.29 - $40,755.75) , of which $8,750.96 is tax.

423949. Ms. Bartlett contends that it was not until the end of

4251May 2017 that she became aware that VMOB issued worthless checks

4262for the period in question . Ms. BartlettÓs assertion is not

4273supported by the credible and competent evidence.

428050. The credible evidence establishes that f or each

4289returned check, the DepartmentÓs system automatically mail ed out

4298a bill, and the regular mail sent to VMOB containing these bills

4310was never returned as undeliverable.

431551. The credible evidence establishes that o n November 28,

43252016, Ms. Smoak explained to Mr. Mustard , in his capacity as POA

4337for VMOB , that VMOB c ould not continue to write worthless checks

4349to the Department.

435252. The credible evidence shows that on December 6, 2016, a

4363fax was sent by the Department to Mr. Mustard , which set forth

4375VMOBÓs liabilities owed to the Department.

438153. The credible evidence establishes that on December 28,

43902016, Ms. Smoak asked Mr. Mustard to again inform Ms. Bartlett

4401that she c ould not c ontinue to submit worthless checks to the

4414Department .

441654. The credible evidence establishes that i n January of

44262017, Ms. Bartlett received and responded to the NOPL.

443555. The credible evi dence establishes that on or about

4445January 3, 2017, Ms. Bartlett sent correspondence to the

4454Department regarding the December 2016 Notice of Jeopardy

4462Finding.

446356. The credible evidence establishes that on or about

4472February 27, 2017, Ms. Bartlett sent corr espondence to the

4482Department regarding the February 3, 2017, Notice of Jeopardy

4491Finding.

449257. Despite being its managing member, Ms. Bartlett admits

4501that from June 2016 through October 2016 , she had limited

4511involvement with VMOB, did not monitor its checki ng accounts or

4522finances, and pre - signed the worthless checks that were tendered

4533to the Department as payment for VMOBÓs obligations.

4541CONCLUSIONS OF LAW

454458. The Division of Administrative Hearings has

4551jurisdiction over the subject matter and the parties he reto

4561pursuant to section 120.569, Florida Statutes.

456759. The Department is an agency of the State of Florida

4578lawfully created and organized pursuant to section 20.21,

4586Florida Statutes.

458860. Pursuant to chapter 212, t he Department is vested with

4599the respons ibility of implementing and administering the revenue

4608laws of the State of Florida, including the laws relating to the

4620im position and collection of the S tateÓs sales and use tax.

463261. The Department has the burden of proving by clear and

4643convincing evide nce the allegations in the Administrative

4651Complaint on which the Department relies to s eek revocation of

4662Respondent's Certificate of R egistration. Dep't of Banking &

4671Fin. v. Osborne Stern & Co . , 670 So. 2d 932, 935 (Fla. 1996).

4685As stated by the Florida Supreme Court:

4692Clear and convincing evidence requires

4697that the evidence must be found to be

4705credible; the facts to which the

4711witnesses testify must be distinctly

4716remembered; the testimony must be

4721precise and explicit and the witnesses

4727must be lacking in co nfusion as to the

4736facts in issue. The evidence must be

4743of such weight that it produces in the

4751mind of the trier of fact a firm belief

4760or conviction, without hesitancy, as to

4766the truth of the allegations sought to

4773be established.

4775In re Henson , 913 So. 2d 579, 590 (Fla. 2005)(quoting Slomowitz

4786v. Walker , 492 So. 2d 797, 800 (Fla. 4th DCA 1983)); accord

4798Westinghouse Electric Corp. v. Shuler Bros., Inc. , 590 So. 2d

4808986, 988 (Fla. 1st DCA 1991)(ÐAlthough this standard of proof

4818may be met where the evidence is in conflict . . . it seems to

4833preclude evidence that is ambiguous.Ñ).

483862. Every person desiring to engage in or conduct business

4848in this S t ate as a dealer, as defined in c hapter 212, must be

4864licensed by the Department , pursuant to section 212.18. VMOB is

4874a dealer within th e meaning of c hapter 212.

488463. P ursuant to section 212.05(1), certificates of

4892registration issued by the Department grant dealers the

4900privilege of engaging in or conducting business in this state.

491064. In accordance with section 212.15(1 ) and (2), the

4920tax es imposed pursuant to c hapter 212, become state funds at the

4933moment of collection, and the intentional failure to remit these

4943taxes constitutes theft of state funds.

494965. S ection 212.15(1) requires that dealers collect and

4958remit to the D epartment the tax imposed by c hapter 212 on a

4972monthly basis. The collected t ax es are due on the first day of

4986the succeeding calendar month and are considered late if not

4996paid to the Department by the 20 th day of the month when due.

501066. Section s 212.18 an d 213.692 authorize the Department

5020to revoke all certificates of registration, permits, or licenses

5029issued by the Department to a dea ler who fails to comply with a

5043Compliance A greement.

504667. The Department proved by clear and convincing evidence

5055that VMOB violated the terms of the Compliance Agreement by

5065failing to timely make the scheduled payment due on January 25,

50762016, and by not timely remitting the sales and use tax payment

5088due for June 2016.

509268. ÐThe department shall issue to the taxpayer, with any

5102jeopardy assessment, a notice or finding of the facts which

5112constitute a jeopardy to the revenue.Ñ § 213.732, Fla. Stat.

512269. The Department proved by clear and convincing evidence

5131that the sales and use taxes owed by VMOB, as reflected in the

5144Notice of Jeopardy Finding dated December 12, 2016, w ere in

5155jeopardy at the time of issuance of the notice and , accordingly ,

5166the DepartmentÓs jeopardy findings and assessments for this

5174period are sustained.

517770. The Department proved by clear and convincing evidence

5186that the sales and use taxes owed by VMOB for November and

5198December 2016 are in jeopardy and the DepartmentÓs jeopardy

5207findings and assessments for these months are sustained.

521571. Anyone required to collect sales and use tax who

5225willfully attempts in any manner to evade or defeat such tax or

5237the payment thereof, or any officer or director with

5246administrative control over the collection and payment of tax and

5256who willfully directs an employee of the corporation to evade or

5267defeat such tax or the payment th ereof, is liable to a penalty

5280equal to twice the total amount of the tax evaded or not

5292accounted for or paid over. § 213.29, Fla. Stat.

530172. ÐAn assessment of penalty made pursuant to this section

5311shall be deemed prima facie correct in any judicial or qua si -

5324judicial proceeding brought to collect this penalty.Ñ § 213.29,

5333Fla. Stat.

533573. The taxpayer must prove that the Department departed

5344from the requirements of law or that the assessment was not

5355supported by any reasonable hypothesis of legality. Cf. St raughn

5365v. Tuck , 354 So. 2d 368, 371 (Fla. 1978) (involving property tax

5377assessments under ch. 193, Florida Statutes); Harris v. DepÓt of

5387Revenue , 563 So . 2d 97, 99 (Fla. 1st DCA 1990) (citing Straughn ,

5400354 So. 2d at 371 , for assessments under c h . 212) .

541374. Se ction 212.14(3) provides that the filing of a return

5424not accompanied by payment is prima facie evidence of conversion

5434of the money due.

543875. The Department is authorized to estimate any unpaid

5447deficiencies in tax to be assessed against the sales tax deal er

5459upon such information as may be available to it , and to issue a

5472delinquent tax warrant for the collection of such tax, interest,

5482or penalties estimated to be due and payable, and any such

5493assessment is deemed prima facie correct. § 212.14, Fla. Stat.

55037 6. Florida law dictates the following priority order of

5513the application of payments, when a warrant has been filed and

5524recorded by the Department: (a) costs to record the warrant, if

5535any; (b) administrative collection processing fees, if any;

5543(c) accrue d interest, if any; (d) accrued penalty, if any; and

5555(e) tax due, if any. § 213.75(2), Fla. Stat.

556477. Florida law does not permit the taxpayer to dictate the

5575priority order of the application of the payments, when a warrant

5586has been filed and recorded. § 213.75(2), Fla. Stat.

5595Additionally, the Department applies payments to the oldest

5603warrants first.

560578. During the period of July 2015 through October 2016,

5615Ms. Bartlett had administrative control over the collection and

5624payment of sales and use tax for VMOB and willfully failed to

5636remit the collected tax to the Department.

564379. Although Ms. Bartlett disputes the assessment, the

5651evidence clearly and convincingly establishes that she willfully

5659evaded the tax owed by abandoning her duties as a managing

5670memb er, intentionally ignoring communications from the

5677Department, breaching the Compliance Agreement, and continually

5684issuing worthless checks.

568780. The Department has issued and filed delinquent tax

5696warrants and liens in the public records for the collection of

5707the delinquent tax liability , pursuant to section 212.15(4) .

571681. T he personal liability assessment for the period

5725July 1, 2015 , through October 31, 2016, is valid and correct ;

5736and, pursuant to section 213.29, Ms. Bartlett is liable for

5746$81,060.04 , wh ich is double the $40,530.02 in tax that was owed

5760by VMOB at the time of the assessment. Because tax remains due,

5772the penalty assessment is sustained.

577782. Once the remaining tax owed by VMOB of $8,750.96 is

5789paid, the $81,060.04 personal liability assessm ent against

5798Ms. Bartlett should be abated in accordance with sect ion 213.29 .

5810RECOMMENDATION

5811Based on the foregoing Findings of Facts and Conclusions of

5821Law, it is RECOMMENDED that the Department of Revenue enter a

5832final order:

58341. That revok es Certificate of Registration

584139 - 8016555696 - 3 issued by the Department to VMOB, LLC;

58532. That sustains the Jeopardy Findings and Notices of

5862Final Assessments dated December 12, 2016, and February 2, 2017;

5872and,

58733. That imposes a personal liability assessment against

5881V erna Bartlett in the amount of $81,060.04 , subject to

5892abatement .

5894DONE AND ENTERED this 10 th day of April , 2018 , in

5905Tallahassee, Leon County, Florida.

5909S

5910LINZIE F. BOGAN

5913Administrative Law Judge

5916Division of Administrativ e Hearings

5921The DeSoto Building

59241230 Apalachee Parkway

5927Tallahassee, Florida 32399 - 3060

5932(850) 488 - 9675

5936Fax Filing (850) 921 - 6847

5942www.doah.state.fl.us

5943Filed with the Clerk of the

5949Division of Administrative Hearings

5953this 10 th day of April , 2018 .

5961ENDNOTE S

59631/ All subsequent references to Florida Statutes will be to

59732017, unless otherwise indicated.

59772 / According to Departme nt Exhibit 29, page 37, VMOBÓs

5988Compliance A greement payment for March 2016 was Ðlate.Ñ The

5998Administrative Complaint does not, however, charge this act of

6007non - compliance as a basis for revocation.

60153 / Paragraphs 12 and 28 of the Administrative Complaint appear

6026to involve the same alleged conduct. Paragraph 12, however,

6035includes allegations for the months of June 2015 and July 2015.

60464 / The March 2016 reemployment tax period covered January 1,

60572016, through March 31, 2016. The June 2016 reemployment tax

6067period covered April 1, 2016, through June 30, 2016. The

6077September 2016 reemployment tax period covered July 1, 2016,

6086through September 30, 2016. According to Department Exhibit 13,

6095page 2, of the $4,807.46 total reemployment tax for this period,

6107only two cents represents the amount due for the September 2016

6118period. Obviously a portion of the September 2016 period occurs

6128beyond the end date of the Compliance Agreement.

61365 / See generally Conklin Center v. Williams , 519 So. 2d 38 (Fla.

61495th DCA 1988)(procedural due process requires that parties to an

6159administrative hearing be given notice of the matters to be

6169addressed during the hearing) . Additionally, section 120.60(5),

6177Florida Statutes (2017), provides in part that Ð[n]o revocation

6186. . . of any license is lawful unless . . . the agency has

6201served . . . an administrative complaint which affords

6210reasonable notice to the licensee of facts or conduct which

6220warrants the intended action.Ñ

62246/ On or about October 7, 2016, Ms. Bartlett executed a POA

6236designating Lewis Mustard, Jr. , as representative for VMOB.

6244Although Ms. Bartlett named Mr. Mustard as VMOBÓs

6252representative, she also indicated in the power of attorney that

6262all communications were to be sent to both her and her

6273representative. While the evidence indicates that the

6280Department did not provide copies of the jeopardy notices to

6290Mr. Mustard, this is of no moment given that all jeopa rdy

6302notices, and related documents, were provided to Ms. Bartlett.

6311COPIES FURNISHED:

6313Verna Bartlett

6315Tampa Hyde Park Cafe, LLC

6320303 South Melville Avenue

6324Tampa, Florida 33606

6327Mark S. Hamilton, General Counsel

6332Department of Revenue

6335Post Office Box 6668

6339T allahassee, Florida 32314 - 6668

6345(eServed)

6346Mark S. Urban, Esquire

6350Florida Office of the Attorney General

6356The Capitol, Plaza Level 01

6361Tallahassee, Florida 32399

6364(eServed)

6365William B. Meacham, Esquire

6369308 East Plymouth Street

6373Tampa, Florida 33603

6376(eServed)

6377Leon M. Biegalski, Executive Director

6382Department of Revenue

6385Post Office Box 6668

6389Tallahassee, Florida 32314 - 6668

6394(eServed)

6395NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

6401All parties have the right to submit written exceptions within

641115 days from the date of this Recommended Order. Any exceptions

6422to this Recommended Order should be filed with the agency that

6433will issue the Final Order in this case.

Select the PDF icon to view the document.
PDF
Date
Proceedings
PDF:
Date: 04/16/2020
Proceedings: Amended Agency Final Order filed.
PDF:
Date: 04/15/2020
Proceedings: Agency Final Order
PDF:
Date: 04/15/2020
Proceedings: Amended Agency FO
PDF:
Date: 04/15/2020
Proceedings: Agency Final Order filed.
PDF:
Date: 02/06/2019
Proceedings: Agency Final Order filed.
PDF:
Date: 02/06/2019
Proceedings: Department of Revenue's Response to VMOB's Exceptions to the Recommended Order filed.
PDF:
Date: 02/06/2019
Proceedings: Agency Final Order filed.
PDF:
Date: 07/16/2018
Proceedings: Agency Final Order
PDF:
Date: 04/25/2018
Proceedings: Respondent's Exceptions to Recommended Order (filed in Case No. 17-003630).
PDF:
Date: 04/10/2018
Proceedings: Recommended Order
PDF:
Date: 04/10/2018
Proceedings: Recommended Order (hearing held January 17, 2018). CASE CLOSED.
PDF:
Date: 04/10/2018
Proceedings: Recommended Order cover letter identifying the hearing record referred to the Agency.
PDF:
Date: 03/09/2018
Proceedings: Respondent's Proposed Recommended Order filed.
PDF:
Date: 03/09/2018
Proceedings: Department of Revenue's Proposed Recommended Order filed.
PDF:
Date: 02/28/2018
Proceedings: Order Granting Extension of Time.
PDF:
Date: 02/27/2018
Proceedings: Respondent's Unopposed Motion for Extension of Time to File Proposed Recommended Order filed.
PDF:
Date: 02/14/2018
Proceedings: Transcript cover page filed.
Date: 02/14/2018
Proceedings: Transcript of Proceedings (not available for viewing) filed.
Date: 01/17/2018
Proceedings: CASE STATUS: Hearing Held.
Date: 01/11/2018
Proceedings: Respondent's Proposed Exhibits filed (exhibits not available for viewing).
Date: 01/09/2018
Proceedings: Department's Supplmental Exhibits #40-43 filed (exhibits not available for viewing).
PDF:
Date: 01/09/2018
Proceedings: Notice of Filing Supplemental Exhibits filed.
Date: 01/09/2018
Proceedings: Respondent's Exhibit List and Notice of Service filed (exhibits contain confidential information; not available for viewing).  Confidential document; not available for viewing.
PDF:
Date: 01/08/2018
Proceedings: Joint Pre-hearing Statement filed.
PDF:
Date: 10/26/2017
Proceedings: Order Rescheduling Hearing by Video Teleconference (hearing set for January 17, 2018; 9:30 a.m.; Tampa and Tallahassee, FL).
PDF:
Date: 10/26/2017
Proceedings: Notice regarding Dates Available for Final Hearing filed.
PDF:
Date: 09/28/2017
Proceedings: Joint Response to Order Granting Continuance filed.
PDF:
Date: 09/21/2017
Proceedings: Order Granting Continuance (parties to advise status by September 28, 2017).
Date: 09/19/2017
Proceedings: Department's Proposed Exhibits filed (exhibits not available for viewing).
PDF:
Date: 09/19/2017
Proceedings: Department of Revenue's Unilateral Prehearing Statement filed.
PDF:
Date: 09/19/2017
Proceedings: Notice of Filing Exhibits filed.
PDF:
Date: 09/19/2017
Proceedings: Response to Petitioner's Response in Opposition to Motion to Continue Final Hearing Scheduled for September 26, 2017, at 9:30 a.m., filed.
PDF:
Date: 09/19/2017
Proceedings: Department's Response in Opposition to VMOB's Motion to Continue Final Hearing Scheduled for September 26, 2017 at 9:30 A.M., filed.
PDF:
Date: 09/18/2017
Proceedings: Motion to Continue Final Hearing Scheduled for September 26, 2017 at 9:30 a.m. filed.
PDF:
Date: 09/13/2017
Proceedings: Request to Take Judicial Notice filed.
PDF:
Date: 08/28/2017
Proceedings: Notice of Appearance (William Meacham; filed in Case No. 17-003630).
PDF:
Date: 08/21/2017
Proceedings: Respondent's Notice of Serving Verified Answers to Petitioner's First Set of Written Interrogatories filed.
PDF:
Date: 08/21/2017
Proceedings: Order Rescheduling Hearing by Video Teleconference (hearing set for September 26, 2017; 9:30 a.m.; Tampa and Tallahassee, FL).
PDF:
Date: 08/21/2017
Proceedings: Respondent's Incorporated Response to Petitioner's First Request for Admissions and Response to Interlocking and Non-interlocking Discovery filed.
PDF:
Date: 08/21/2017
Proceedings: Respondent's Response to Petitioner's First Request for Production of Documents filed.
PDF:
Date: 08/15/2017
Proceedings: Response to Court's August 10, 2017 Order Concerning Rescheduling of Final Hearing filed.
PDF:
Date: 08/10/2017
Proceedings: Order Granting Continuance (parties to advise status by August 15, 2017).
PDF:
Date: 08/09/2017
Proceedings: Department's Response to VMOB's Motion (1) to Extend Time to Respond to Discovery; (2) for Extension to Comply with Order of Pre-hearing Instructions; and (3) to Continue Final Hearing filed.
PDF:
Date: 08/07/2017
Proceedings: Respondent's Response to Petitioner's First Request for Admissions filed.
PDF:
Date: 08/07/2017
Proceedings: Notice of Appearance, Motion for Extension of Time to Respond to Discovery, Motion for Extension of Time to Comply with Order of Pre-hearing Instructions, and Motion to Continue Final Hearing Scheduled for August 17, 2017 at 9:30 A.M. filed.
PDF:
Date: 08/07/2017
Proceedings: Notice of Appearance (William Meacham) filed.
PDF:
Date: 07/14/2017
Proceedings: Order of Consolidation (DOAH Case Nos. 17-3452 and 17-3630).
PDF:
Date: 06/30/2017
Proceedings: Order of Pre-hearing Instructions.
PDF:
Date: 06/30/2017
Proceedings: Notice of Hearing by Video Teleconference (hearing set for August 17, 2017, at 1:30 p.m., at Tampa and Tallahassee, FL).
PDF:
Date: 06/30/2017
Proceedings: Petitioner's Individual Response to Initial Order filed.
PDF:
Date: 06/29/2017
Proceedings: Respondent's Individual Response to Initial Order filed.
PDF:
Date: 06/29/2017
Proceedings: Notice of Appearance (Mark Urban) filed.
PDF:
Date: 06/22/2017
Proceedings: Initial Order.
PDF:
Date: 06/22/2017
Proceedings: Agency action letter filed.
PDF:
Date: 06/22/2017
Proceedings: Request for Administrative Hearing filed.
PDF:
Date: 06/22/2017
Proceedings: Agency referral filed.

Case Information

Judge:
LINZIE F. BOGAN
Date Filed:
06/22/2017
Date Assignment:
06/22/2017
Last Docket Entry:
04/16/2020
Location:
Tampa, Florida
District:
Middle
Agency:
ADOPTED IN TOTO
 

Counsels

Related Florida Statute(s) (13):