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STATE OF FLORIDADEPARTMENT OF REVENUE

HIGH-TECH YACHT' SHIP INC.,

Petitioner,

vs.

DEPARTMENT OF REVENUE,

Respondent.--------------/

D.O.A.H. Case No. 95-1791DOR No. :J:>D R Ct'1- 1- J=" D l="

FINAL ORDER

This cause came before me, as Executive Director of the

Department of Revenue, on an Recommended Order issued by the

Division of Administrative Proceedings. The parties filed a joint

stipulation to extend the time to file exceptions to the

Recommended Order. The Respondent filed exceptions. Copies of the

~ Recommended Order and the Respondent's exceptions are attached to

this Order.

FINDINGS OF FACT

The Department adopts the Findings of Fact set forth in this

Recommended Order.

CONCLUSIONS OF LAW

The Department adopts the following Conclusions of Law set

forth in the Recommended Order: Numbers 23, 24, 26-32. Number 25

is stricken as being based on a misapprehension of the law.

The Hearing Officer correctly placed the burden of proof on

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the Petitioner since an assessment was being challenged. Placement

of the burden of proof on the Petitioner does not rest on

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principles developed in the field of ad valorem taxation, however.

section 12 0.575 (2), Florida Statutes, provides that after the

Department goes forward with proof of the assessment, the taxpayer

must show that it is incorrect by a preponderance of the evidence.

The following conclusion of law is sUbstituted in place of the

stricken paragraph:

Having met its statutory burden, Respondent's assessment is

valid and prima facie correct. Petitioner, as challenger, has the

burden of proof to show by a preponderance of the evidence that the

assessment is improper in whole or in part.

The remaining exceptions are not accepted.

CONCLUSION

Based upon the foregoing it is therefore ORDERED:

That the assessment of tax, penalty and interest in the total

amount of $7,052.61 plus accrued interest is upheld.

Any Party to this Final Order has the right to seek jUdicial

review pursuant to section 12 0.68, F. S., by filing a Notice of

Appeal pursuant to Rule 9.110, Fla. R. App. Pro., with the Clerk of

the Department in the Office of General Counsel, P.O. Box 6668,

Tallahassee, FL 32314-6668 and by filing a copy of the Notice

accompanied by the applicable filing fee with the appropriate

District Court of Appeal. The Notice must be filed within 30 days

from the date this Order is filed with the Clerk of the Department.

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DONE AND ENTERED in Tallahassee, Leon County, Florida thisoday of -::p....fJ&~I..k!...l.Lu....;f--' 1997.

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STATE OF LORIDADEPARTMENT OF REVENUE

Certificate of Filing

I HEREBY CERTIFY that the foregoing Order has beeno~ial records of the Department of Revenue this~_, 1997. ,

Copies to:

L. H. FuchsExecutive DirectorDepartment of RevenueRoom 104Carlton BuildingTallahassee, Florida 32399-0100

Linda LetteraGeneral CounselDepartment of Revenue201 Carlton BuildingTallahassee, Florida 32399-0100

Olivia P. KleinAssistant Attorney GeneralOffice of the Attorney GeneralThe Capitol - Tax sectionTallahassee, Florida 32399-1050

Denis Crowther, PresidentHigh-Tech Yacht & Ship, Inc.1535 S.E. 17th StreetFort Lauderdale, Florida 33316

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filed in the"'+h day of

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STATE OF FLORIDADIVISION OF ADMINISTRATIVE HEARINGS

HIGH-TECH YACHT & SHIP,INC.,

Petitioner,

vs.

DEPARTMENT OF REVENUE,

Respondent.

))))))))))

CASE NO. 95-1791

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RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case

on November 30, 1995, in Hollywood, Florida, before Errol H.

Powell, a duly designated Hearing Officer of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Olivia P. Klein1

Assistant Attorney GeneralOffice of the Attorney GeneralThe Capitol-Tax Sectiontallahassee, Florida 32399-1050

For Respondent: N. Denis Crowther, PresidentHigh-Tech Yacht & Ship, Inc.1535 Southeast 17th StreetFort Lauderdale, Florida 33316

STATEMEN~ OF THE ISSUE

The issue· for determination at final hearing is whether

Petitioner owes sales tax, plus interest and penalties, and if

so, what amount is owed.

PRELIMINARY STATEMENT

In January 1994, the Department of Revenue (Respondent)

issued to High-Tech Yacht & Ship, Inc. (Petitioner) a notice of

o tax action for assessment of additional tax due in the amount of

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$4,680, plus interest and penalty. Petitioner responded to the

notice indicating that the amount in question represented the

sales tax on a purchase for which the buyer's check was

dishonored and that the buyer owes the money to Respondent, not

Petitioner. On March 12, 1994, Respondent issued a notice of

assessment and jeopardy finding. which, .in.essence, requested

paYment from Petitioner of ·the sales tax, plus interest and

penalty, tot&lling $7,052.61. ·.By letter dated March 22, 1994,

Petitioner protested the assessment. On February 8, 1995,

Respondent issued its notice of reconsideration in which

Respondent determined, among other things, that Petitioner was

responsible and liable for the sales tax, plus interest and

penalty. By letter dated March 15, 1995, Petitioner requested a

o formal hearing.

On April 12, 1995, this matter was referred to the Division

of Administrative Hearings.

written notice.

A hearing was scheduled pursuant to

At the hearing, Petitioner presented the testimony of four

witnesses and entered 13 exhibits into evidence. Respondent ..

prese.nted the testimony of one witness and entered one composite

exhibit into evidence.

A transcript of the hearing was ordered. At the request of

the parties, the time for filing post-hearing submissions was set

for more than ten days following the filing of the hearing

transcript. Respondent filed proposed findings of fact which are

addressed in the appendix to this recommended order.

o did not file proposed findings of fact.

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Petitioner

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FINDINGS OF FACT

1. High-Tech Yacht & Ship, Inc. (Petitioner) is a Florida

corporation engaged in the business of retail sales of marine

vessels. Also, Petitioner is a registered retail dealer in the

State of Florida.

2. The President of Petitioner is its only corporate

officer .

.3. On or about September 2, 1993, Peti;·tioner, in the

capacity of a broker, sold a .motor yacht at retail to Regency

Group, Inc. (purchaser), through its representative, for $78,000.

The motor yacht is described as a 1988, 41' Amerosport' Chris

Craft, hull #CCHEU075E788, and called the IIMotivator ll •

4. At the closing of the sale, on or about Septemb.er 2,

~ 1993, the purchaser refused to pay the sales tax on the purchase,

which was $4,680. However, the purchaser agreed to pay the sales

tax after being informed by Petitioner that r without the payment

of the sales tax, there could be no closing.

5. The purchaser's representative submitted r at closing, a

personal check in the amount of $4,680 for the sales tax.

6. .AII of the necessary documents were completed for

ownership and registration to be transferred to the purchaser.

7. Subsequently r Petitioner received notice from its bank

that the check for the sales tax had been dishonored by the

purchaser's bank. The purchaser's representative had stopped

payment on the check.

8. In October 1993, Petitioner submitted its sales and use

~ tax return for the month of September 1993 to Respondent in which

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the sale of the yacht was reported.

reviews sales and use tax returns.

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Respondent automatically

Respondent/s review of

Petitionerls return revealed a shortage of sales tax collected in

the amount of $4,680 ..

9. In January 1994, Respondent issued a notice of tax

action. for assessment of additional tax in the amount of $4,710,

plus interest and penalty, to Petitioner. The $4,710 included

the loss of Petitionerls collection allowance of $30 1 which loss

resulted from Petitioner's failure to timely remit all taxes due.

10. Having received the notice of tax action l by letter

dated January 20, 1994, Petitioner generally informed Respondent

of the circumstances regarding the sales tax shortage, including

the dishonored check. Petitioner pointed out l among other

c=J things, that Respondent had the authority and the means to

collect the tax, while it (Petitioner) had limited means, and

suggested, among other things, that Respondent cancel the

purchaser's Florida registration of the yacht.

11. On or about January 31, 1994, approximately three

months after the check for sales tax was dishonored, Petitioner

issued a notice of dishonored check to the purchaser, in which

Petitioner requested payment of the sales tax. The notice

provided, among other things, that Petitioner could seek criminal

prosecution and civil action if the monies were not paid to

Petitioner.

12. Having not received the $4,680, Petitioner contacted

the local law enforcement agency. After investigation l the law

c=J enforcement agency informed Petitioner that a civil action would

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representative, had indicated that it was not satisfied with the(lhave to be instituted because the purchaser, through its

yacht.

13. Although Petitioner engaged the services of an attorney

for civil action, no civil action was commenced.

14. Additionally, Petitioner did not engage the services~f

a collection agency for assistance in collecting the sales tax.

15. Subsequent to its notice· of tax action,·, on or about

March 12, 1994, Respondent issued a notice of assessment to

Petitioner. The notice of assessment provided, among other

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things, that Petitioner was being assessed taxes in the amount of

$4,710, plus penalty' and interest in the amount of $2,342.61,

totalling $7,052.61.

16. Petitioner protested the assessment.

17. On February 8, 1995, Respondent issued its notice ·of

reconsideration in which Respondent determined, among other

things, that the assessment was appropriate and affirmed the

assessment of $7,052.61, plus interest and penalty. The interest

accrues at the rate of $1.55 per day.

18. Petit·ioner has not remitted any of the assessed tax,

including interest and penalty, to Respondent.

19. Petitioner has not identified on its federal tax return

the noncollection of the sales tax from the purchaser as a bad

debt.

20. Sales tax is part of the total sale price for an item.

Respondent considers the sales tax as collectable by a seller in

o the same manner as any other debt owed by a purchaser to a

seller.

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n 21. A retail dealer, who is also a seller, is considered to

be an agent for the State in the collection of sales tax. The

burden of collecting the sales tax .is placed upon the retail

dealer by Respondent.

22. Some of Respondent's employees have been sympathetic to

Petitioner's tax assessment matter. However, none of the

employees indicated to or advised Petitioner that Respondent was

or is in·error.

CONCLUSIONS OF LAW

23. The Division of Administrative Hearings has

jurisdiction over the subject matter 9f this proceeding and the

parties thereto pursuant to Subsection 120.57(1)/ Florida

oStatutes.

24. This matter is a taxpayer contest proceeding.

Respondent's burden of proof is limited to showing that an

assessment was made against Petitioner and to showing the factual

and legal grounds upon which the assessment was made. Subsection

120.575(2), Florida Statutes.

proof.

Respondent has met its burden of

25. Petitioner, as challenger, has the burden of proof in

showing that the assessment is improper, whether in whole or in

part. Homer v. Dadeland Shopping Center, Inc., 229 So.2d 834,

B37 (Fla. 1969). A tax assessment has a presumption of

correctness and in its proof, Petitioner must exclude every

reasonable hypothesis of a valid assessment, i. e ., Petitioner

must show the assessment to be so unreasonable as to be arbitrary

and capricious. Homer, supra; and District School Board of Lee

County v. Askew, 278 So.2d 272, 277 (Fla. 1973).

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26. Petitioner has failed to meet its burden of proof.

Petitioner has failed to demonstrate that the assessment is

improper.

27. Further, Petitioner contends that Respondent should

look to the purchaser of the vessel, instead of to it, for

payment of the assessment. Petitioner bases its position on the

purchaser failing or refusing to pay the sales tax through the

purchaser's. action of stopping payment on the check given to

Petitioner for payment of the sales tax. Petitioner's contention

is not persuasive.

28. Section 212.07, Florida Statutes, provides in pertinent

part:

o(1) (a)measuredby theconsumer.

The privilege tax herein leviedby retail sales shall be collecteddealers from the purchaser or

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(2) A dealer shall, as practicable, add theamount of the tax imposed under this chapterto the sale price, and the amount of the taxshall be separately stated as ~lorida tax onany. . invoice, or other tangible evidenceof sale. Such,tax shall constitute a part ofsuch price, charge, or proof of sale whichshall be debt from the purchaser or consumerto the dealer until paid, and shall berecoverable at law in the same manner asother debts Except as otherwisespecifically provided, any dealer whoneglects, fails, or refuses to collect thetax herein provided upon any, every, and allretail sales made by him or his agents oremployees of tangible personal property orservices which are subject to the tax imposedby this chapter shall be liable for and paythe tax himself.

29. Sales tax is a tax on the privilege of engaging in

business and is levied against the business person, not the

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consumer. Ryder Truck Rental, Inc. v. Bryant, 170 So.2d 822, 825

(Fla. 1964).

30. Subsection 212.07(2) provides that the sales tax is a

debt from the purchaser to the seller. However, this provision

of Subsection 212.07(2) is conditional upon the seller's

compliance with the requirement to separately state the tax on

the invoice, or other tangible evidence of sale. Donoghue v.

Hallach, 455 So.2d 1085 (Fla. 2d DCA 1984) i Advanced Mobilehome

Systems of Tampa, Inc. v. Alumax Fabricated Products, Inc., 666

So.2d 166, 167 (Fla. 2d DCA 1995) .

31. Petitioner complied with the requirements of Subsection

212.07(2) in that it separately stated the sales tax, and,

therefore, the sales tax became a debt "from the purchaser to

n Petitioner. As an agent for the State in the collection of sales"'-j

tax, Petitioner had the responsibility to collect the sales tax.

Petitioner failed to collect the sales tax, and as such,

Petitioner is liable for and must pay the sales tax.

32. Petitioner's circumstances are unfortunate. However,

the sales tax is a debt from the purchaser to Petitioner and such

debt is recoverable at law by Petitioner as any other debt owed

to Petitioner.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Department of Revenue enter a final

order affirming the assessment of sales tax against High-Tech

~ Yacht & Ship, Inc. in the amount of $7,052.61, plus interest and

penalty.

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DONE AND ENTERED this 7th day of August 1996, in

Tallahassee, Leon County, Florida.

~.1JwEfJ4!:ringOfficerDivision of Administrative HearingsThe DeSoto Building1230 Apalachee ParkwayTallahassee, Florida 32399-1550(904) 488-9675

Filed with the Clerk of theDivision of Administrative Hearingsthis 7th day of August 1996.

ENDNOTE

1/ Francisco M. Negron, Jr., Assistant Attorney General wascounsel of record for the Department of Revenue during thehearing. Also, he filed the proposed findings of fact on behalfof the Department. Subsequently, Olivia P. Klein, Assistant·Attorney General was substituted as counsel of record.

APPENDIX

The following rulings are made on Respondent's proposedfindings of fact:

Respondent's Proposed Findings of Fact

I. Partially accepted in finding of fact I.2. Partially accepted in finding of fact 2.3. Partially accepted J.n finding of fact 3 .4. Partially accepted in finding of fact 3 .5. Partially accepted in findings of fact 4 and 18.6. Rejected as being subordinate.7 . Partially accepted in findings of fact 5 and 7.8. Partially accepted in finding of fact 11.9.· Partially accepted in findings of fact 13 and 14.10. Partially accepted in finding of fact 12.lI. Partially accepted in 'finding of fact 12.12. Partially accepted in finding of fact 8 .13. Rejected as being subordinate.14. Partially accepted in finding of fact 8.15. Partially accepted in findings of fact 9 and 17.16. Partially accepted in findings of fact 16 and 17.17. Rejected as being subordinate.18. Partially accepted in finding of fact 20.19. Partially accepted in finding of fact 21.

0 20. Partially accepted in finding of fact 19.2I. Partially accepted in finding of fact 22.22. Partially accepted in finding of fact 22.

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23. Partially accepted in finding of fact 22.24. See Preliminary Statement.

NOTE: Where a proposed finding has been partially accepted, theremainder has been rej ected as being irrelevant, unnecessary,cumulative, not supported by the more credible evidence, notsupported by the greater weight of the evidence, argument, or aconclusion of law.

COPIES FURNISHED:

Olivia P. KleinAssistant Attorney GeneralOffice of the Attorney GeneralThe Capitol-Tax. SectionTallahassee, Florida 32399-1050

N. Denis Crowther, PresidentHigh-Tech Yacht & Ship, Inc.1535 Southeast 17th StreetFort Lauderdale, Florida 33316

Larry FuchsExecutive DirectorDepartment of Revenue104 Carlton BuildingTallahassee, Florida 32399-0100

Linda LetteraGeneral CounselDepartment of Revenue204 Carlton BuildingTallahassee, Florida 32399-010D

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to thisrecommended order. .!>..ll agencies alloY-,' each party at least 10days in which to submit written exceptions. Some agencies allowa larger period within which to submit written exceptions. Youshould contact the agency that will issue the final order in thiscase concerning agency rules· on the deadline for filingexceptions to this recommended order. Any exceptions to thisrecommended order should be filed with the agency that will issuethe final order in this case.

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