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  County Attorney's Report     10. 1.    
BCC Regular Meeting Discussion  
Meeting Date: 09/01/2016  
Issue:    Notice of Proposed Assessment For Sales and Use Tax
From: Kristin Hual
Department: County Attorney's Office  
CAO Approval:

RECOMMENDATION:
 
Recommendation Concerning the Notice of Proposed Assessment for Sales and Use Tax from the Florida Department of Revenue.

That the Board consider the following options concerning the Notice of Proposed Assessment for Sales and Use Tax from the Florida Department of Revenue:
 
A.  Remit payment in full to the Florida Department of Revenue in the total assessed amount of $94,465.82 plus additional daily interest accruing at a rate of $15.59 per day from August 9, 2016, through the date of payment;
 
OR
 
B.  File an informal protest with the Florida Department of Revenue objecting to the proposed assessment and request a determination by the Office of Technical Assistance and Dispute Resolution.  The resulting Notice of Decision may be appealed by filing a petition for formal protest with the Florida Department of Revenue (Option C below) or filing a complaint in the appropriate circuit court (Option D below);
 
OR
 
C.  File a petition for formal protest with the Florida Department of Revenue, Office of General Counsel, objecting to the proposed assessment and request an administrative hearing with either the Department or the Division of Administrative Hearings (DOAH), in which case the Board would waive any right to proceed with a judicial proceeding in circuit court.  The resulting Final Order may be appealed to the First District Court of Appeal;
 
OR
 
D.  File a formal complaint against the Florida Department of Revenue in the Circuit Court of the First Judicial Circuit to contest the legality of the assessment, in which case the Board would waive any right to proceed with an administrative proceeding under Chapter 120.  When filing the Complaint, the contested amount must be secured by a cash or surety bond or tendered into the registry of the court pending final disposition.  The resulting judgment may be appealed to the First District Court of Appeal.
BACKGROUND:
The County’s records were recently audited by the Florida Department of Revenue (DOR) for sales and use tax liability pursuant to Chapter 212, Florida Statutes.  The audit period extended from October 1, 2012, through September 30, 2015.  Following the DOR’s investigation, the Clerk’s Office received a Notice of Intent to Make Audit Changes, dated June 8, 2016, citing a deficiency for unpaid sales taxes in the amount of $104,873.83 plus interest.  The auditor’s report included proposed assessments for payments received by the County for two different types of transactions that occurred during the audit period. 
 
The first assessment related to consideration paid for the rental of stalls at the County’s Equestrian Center, which were deemed taxable transactions pursuant to §212.12, Florida Statutes.  A sales tax was imposed for payments received during the audit period in an amount equal to $20,783.59, exclusive of any interest or penalties.   
 
The second assessment related to monthly commission payments received from the inmate phone service provider, Centurylink, which were calculated as a percentage of the provider’s monthly gross revenue as defined in the service agreement.  While the provider pays a tax on the gross revenue, the DOR determined the commission payments paid to the County represented a separate taxable transaction as consideration for a license to use space.  For all commission payments received during the audit period, a sales tax was imposed in an amount equal to $84,090.24, exclusive of any interest or penalties.  
 
On July 6, 2016, representatives of the Clerk’s Office and the County Attorney’s Office attended an informal conference with the auditor, William Herman, and the auditor supervisor, Jane Sturgill, to discuss the proposed audit changes.  The parties agreed to the proposed audit changes related to the stall rental payments, but remained opposed as to the taxability of the commission payments. 
 
Following the conference, the Clerk’s Office remitted payment to the DOR in the amount of $23,334.99 for the uncontested portion of the assessment, and on August 8, 2016, the Clerk’s Office received a Notice of Proposed Assessment for the remainder in the amount of $94,465.82 plus additional interest accruing at a rate of $15.59 per day from August 9, 2016, through the date of payment.  The County has sixty (60) calendar days from the date of the notice to either pay the proposed assessment plus interest or request review through an informal protest, an administrative hearing, or a judicial proceeding.
 
BUDGETARY IMPACT:
The commission payments that are the subject of the proposed assessment are deposited into the inmate welfare fund, and the fund retains a balance sufficient to pay the deficiency. 
LEGAL CONSIDERATIONS/SIGN-OFF:
The County Attorney’s Office has been in consultation with the Clerk’s Office during the audit process.
PERSONNEL:
N/A
POLICY/REQUIREMENT FOR BOARD ACTION:
N/A
IMPLEMENTATION/COORDINATION:
N/A

Attachments
Notice of Proposed Assessment

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