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A & S Entertainment, LLC v. Florida Department of Revenue

Florida Court of Appeals, Third District

September 18, 2019

A & S ENTERTAINMENT, LLC, Appellant,
v.
FLORIDA DEPARTMENT OF REVENUE, Appellee.

Page 906

          An Appeal from the State of Florida, Department of Revenue. Lower Tribunal No. AUDIT# 200199515, BPN:0003398990

         DiRuzzo & Company, Joseph A. DiRuzzo, III, and Daniel M. Lader (Fort Lauderdale), for appellant.

         Ashley Moody, Attorney General, and Randi E. Dincher, Assistant Attorney General, (Tallahassee), for appellee.

         Before LINDSEY, HENDON and GORDO, JJ.

         OPINION

         GORDO, J.

         This case is a direct appeal pursuant to Florida Statutes section 120.68 from a "Notice of Decision" issued on November 16, 2018, by the Florida Department of

Page 907

Revenue (the "Department") following the Department’s audit of Appellant, A & S Entertainment, LLC ("A & S"). The Notice of Decision informed A & S that it owed the State of Florida sales and use tax, penalties and accrued interest totaling $1,925,953.17. A & S argues in this appeal that the Department denied it procedural due process throughout the course of the audit because the Department prepared its tax assessment without considering certain unverified documents untimely submitted by A & S. A & S further contends that the Department misapplied the law in categorizing certain fees as taxable income. As we conclude the Department afforded A & S procedural due process and properly applied the law during its audit, we affirm.

          FACTUAL & PROCEDURAL BACKGROUND

          A & S is a company that owns and operates adult entertainment establishments. In February of 2016, the Department issued A & S a "Notice of Intent to Audit Books and Records" and commenced an audit of its sales tax liability, for the time period of January 1, 2013, through December 31, 2015. The initial notice advised A & S of the audit commencement date and included an itemized list of required documentation.

          Throughout the pendency of the audit, the Department sent numerous correspondences to A & S, requesting federal income tax records, bank statements and other information, in order to assess A & S’s outstanding sales taxes. The Department’s auditor made written requests for specific documentation on April 7, 2016; May 13, 2016; July 19, 2016; October 17, 2016; November 10, 2016; December 14, 2016; December 23, 2016; January 4, 2017; January 17, 2017; and January 30, 2017.

          During the first field visit, A & S’s accountant and corporate representative advised the auditor that he was recently hired and was not in possession of the financial records evidencing and supporting the tax returns for the audit period. From April of 2016 to August of 2016, the auditor attempted to meet with A & S’s corporate representative an additional five times. The representative cancelled each meeting, stating that he was unavailable or did not have the requisite documents. By the time the auditor and corporate representative finally met at the end of August of 2016, the corporate representative was still not in possession of the requested documents.

          A & S failed to provide verifiable bank statements, cash register tapes, cancelled checks, an amended federal tax return for 2013 and filed federal tax returns for 2014 and 2015. On appeal, A & S concedes the records it provided to the Department were incomplete. Further, A & S casts doubt on the accuracy of even the ...


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