ALJDEC decisions subject to certification as final

2015A-2402-ROC · Registrar of Contractors · 2015-09-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 8, 2015, at 1:00 p.m. APPEARANCES: The Arizona Registrar of Contractors (hereinafter “Registrar”) was represented by Assistant Attorney General Seth T. Hargraves. Yukon Valley Corporation dba Del Miller Construction (hereinafter “Yukon” or “Respondent”) was represented by its authorized representative, member and qualifying party, Jack Delbert Miller (hereinafter “Miller”). ADMINISTRATIVE LAW JUDGE: Suzanne Marwil _____________________________________________________________________ Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law, and Recommended Order are made: FINDINGS OF FACT Background Respondent is the holder of both License Nos. B.153221-R and B-1.280180-C issued by the Arizona Registrar of Contractors (“Registrar”). Respondent is also the holder of Transaction Privilege Tax No. 13032528 issued by the Arizona Department of Revenue.[1] On June 1, 2015, Claudia Dominguez of the Arizona Department of Revenue filed a complaint with the Registrar alleging that Respondent had a lien in place for failure to pay transaction privilege tax liabilities. Dominguez included a copy of the lien showing that Respondent owed the Arizona Department of Revenue $10,926.80 which represented unpaid tax liabilities, interest and penalties going back to 2010.[2] On June 15, 2015, the Registrar issued its NOTICE AND ORDER IMPOSING A.R.S. § 32-1154(C) SUSPENSION which notified Respondent of its intent to suspend both licenses immediately until the Respondent notified the Registrar that its tax debt had been paid.[3] On June 29, 2015, the Respondent requested a hearing and the matter was referred to the Office of Administrative Hearings. In its request for hearing, the Respondent acknowledged its tax liability but maintained that Miller had been attempting to receive validation from the Arizona Department of Revenue regarding the amount owed. Respondent indicated its willingness to pay all valid taxes owed.[4] Hearing Testimony Claudia Dominguez, field revenue officer for the Arizona Department of Revenue, testified that she was assigned the Yukon case in January 2014. She explained that her practice is to call and visit businesses that are delinquent on their transaction privilege taxes. She recalled visiting Miller, Respondent’s qualifying party, on three separate occasions and telling him that he was missing multiple transaction privilege tax monthly tax returns. At the time of her first contact with Miller, Yukon owed approximately $4300.00 in delinquent transaction privilege taxes. Dominguez recalled Miller telling her that he was unaware of the missing returns and would contact his CPA. She then granted him a 30-day extension. As of March 28, 2014, Yukon had not filed the missing returns so she left Miller, at Respondent’s address of record, a delinquency notice and a breakdown of the taxes owed and affording him another 30-day extension of the deadline. After Yukon failed to meet the deadline, Dominguez notified Miller of the Arizona Department of Revenue’s decision to commence an enforcement action and audit. The notice of the audit was sent to Respondent on October 20, 2014, but no one from Yukon participated in the audit. Dominguez sent Yukon two warning notices, dated March 2015 and May 2015, that the Arizona Department of Revenue intended to file a complaint to suspend Yukon’s Registrar of Contractor’s licenses. Dominguez indicated that the Arizona Department of Revenue was still missing monthly transaction privilege tax returns from Yukon from September 2014 to the present. She testified that Yukon’s current tax liability totaled $11,030.42 given the daily accrual of interest. Adam Stafford, Assistant Chief Counsel for the Registrar of Contractors, testified that after he received the complaint from the Arizona Department of Revenue showing that Yukon owed unpaid taxes, he signed a Notice and Order Imposing A.R.S.§ 32-1154(C) Suspension. Stafford said that the Registrar has no discretion when it receives a notice of an unpaid tax debt because the statute requires the Registrar to suspend the license until the tax debt is paid. No response from a contractor is required before this suspension is issued. The fact that Respondent received a letter informing it that it had 14 days to respond to the notice of suspension was a clerical error. Stafford indicated that both of Yukon’s licenses were currently suspended. He noted that he had received no documentation that the tax debt had been paid. Stafford said that in order to lift the suspension the Registrar needed notice that the tax debt had been paid to the satisfaction of the Arizona Department of Revenue. Miller acknowledged that Yukon owed some amount of transaction privilege tax that had not yet been paid. He noted that he requested that the Arizona Department of Revenue provide Yukon via certified mail an itemized breakdown of all taxes owed. He noted that Yukon intended to pay the taxes owed. Miller indicated that he believed it was a violation of its constitutional rights not to be given the opportunity to respond to the notice of suspension prior to its imposition. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119.[5] A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). A.R.S. § 32-1154(C) provides that: the registrar shall temporarily suspend or permanently revoke the license issued to a person under this chapter upon notice from the department of revenue that a tax debt related to income taxes, withholding taxes or any tax imposed or administered by title 42, chapter 5 that was incurred in the operation of the licensed business has become final and the person neglects to pay or refuses to pay the tax debt.

The undisputed evidence establishes that Respondent failed to pay transaction privilege taxes along with the interest and penalties associated with this failure. Although Respondent claims that it has not refused to pay the tax debt, the record reflects that the lien was recorded on April 15, 2015, affording Respondent more than 4.5 months’ notice of the amount of the debt in question. This Tribunal accordingly concludes that Respondent violated the charged provision of A.R.S. § 32-1154(C). RECOMMENDed order In view of the foregoing, it is recommended that License Nos. B.153221- R and B-1.280180-C be suspended until such time as Respondent furnishes the Registrar proof that it has satisfied its tax debt. 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, September 16, 2015.

/s/ Suzanne Marwil Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See Exhibits 2, 3 (license applications and history) and 1 (noting transaction privilege tax number) [2] See Exhibit 2 (complaint form and supporting documentation) [3] See Exhibit 4 (NOTICE AND ORDER IMPOSING A.R.S. § 32-1154(C) SUSPENSION) [4] See Exhibit 5 (Request for Hearing) [5] A.A.C. R2-19-119 provides as follows: A. Standard of proof. Unless otherwise provided by law, the standard of proof is a preponderance of the evidence. B. Burden of proof. Unless otherwise provided by law: 1. The party asserting a claim, right, or entitlement has the burden of proof; 2. A party asserting an affirmative defense has the burden of establishing the affirmative defense; and 3. The proponent of a motion shall establish the grounds to support the motion.

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