ALJDEC decisions subject to certification as final

10F-F0020-ROC · Registrar of Contractors · 2010-05-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 12, 2010 at 8:15 a.m. APPEARANCES: The Complainant appeared by and through its attorney, David Womochil. The Respondent appeared on his own behalf. ADMINISTRATIVE LAW JUDGE: M. Douglas

Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT

1. The Respondent is the holder of License No. 116941, a Class C-61 License, issued by the Registrar of Contractors. 2. Credible testimony and evidence established that on June 30, 2008, a City of Flagstaff Municipal Tax Hearing Officer issued a Decision on June 30, 2008 wherein the Flagstaff Municipal Tax Hearing Officer found, in pertinent part, as follows: 17. The City determined there was $2,209,133.00 in gross income during the audit period versus $1,458,064.00 reported by taxpayer. 18. The City allowed deductions for subcontracting and out-of- City transactions totaling $1,661,559.00. 19. Subsequent to the hearing, Taxpayer provided additional documentation which was reviewed by the City. 20. After review of the documentation, the City adjusted the tax due to $2,851.46; the penalties were reduced to $712.88 and interest due reduced to $266.44. 21. Taxpayer did not file a reply to the City’s June 10, 2008 revised assessment. 3. The Municipal Tax Hearing Officer then concluded as follows; 1. Pursuant to A.R.S. § 42-6056, the Municipal Tax Hearing Officer is to hear all reviews of petitions for hearing or redetermination under the Model City Tax Code. 2. During the audit period. Taxpayer (Respondent) had underreported contracting income pursuant to Section 415. 3. Section 360 provides that all deductions and exemptions are conditional upon adequate proof and documentation being provided by the taxpayer. 4. It was proper for the City to review additional documentation that was provided after the hering and to make adjustments to the assessment as a result of the new documentation. 5. Taxpayer failed to provide adequate proof and documentation pursuant to Sections 415 and 360 for any additional adjustments. 6. Taxpayer’s protest should be partly granted and partially denied, consistent with the Discussion, Findings and Conclusion herein. 4. The Municipal Tax Hearing Officer then issued an Order which provides as follows: It is therefore ordered that the November 5, 2007 protest by AK Builders of a tax assessment made by the City of Flagstaff is hereby partially granted and partially denied consistent with the Discussion, Findings and Conclusions herein. It is further ordered that the City of Flagstaff shall revise its assessment consistent with the City’s June 10, 2008 letter. 5. Credible testimony and evidence established that the Respondent then had thirty days from date the Municipal Tax Hearing Officer’s Decision to file an appeal with the appropriate court. 6. There was no dispute that the Respondent did not file an appeal. 7. Since there was no appeal within the applicable thirty day time period the Decision of the Municipal Tax Hearing Officer is now final. 8. Credible testimony and evidence, presented at hearing, established that the Respondent now owes the Complainant the total sum of $3,961.00 in unpaid taxes, penalties and interest. 9. Notice is taken of the Respondent’s prior excellent License record with the Registrar of Contractors.

CONCLUSIONS OF LAW

1. Credible testimony and evidence, presented at hearing, supported findings that establish violations by the Respondent of the charged provision of A.R.S. § 32-1154 A(5) (Failure to pay income taxes, withholding taxes or any tax imposed by title 42 chapter 5, article 1 and an incurred in the operation of the licensed business).

RECOMMENDed order

In view of the foregoing, it is recommended commencing on the effective date of the Registrar’s Order that the Respondent’s Class C-61 License shall be suspended until the Registrar of Contractors receives and accepts written proof that the Respondent has paid the Complainant the sum of $3,961.00 for unpaid taxes, penalties and interest. It is further recommended that if the Respondent pays the Complainant the above described sum of money, on or before the effective date of this Order, then the above provided License suspension shall not take place and that this matter be closed. In the event of certification of this Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be 40 days from the date of the certification. Done this day, May 12, 2010.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors -----------------------

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826