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May 16, 2002

Orlando Hair Salon Owner Arrested as Tax Cheat

An Orlando hair salon owner faces a felony charge of illegally claiming a tax exemption meant for purchases of business inventory items when she bought bedroom furniture for her home.

Bibi Hafeez, 40, of Orlando, faces charges of fraudulent use of a tax exemption, a felony. If convicted, she faces up to five years in prison and up to $5,000 in fines. Hafeez is the owner of the Absolute Salon at 3302 S. Conway Road. She was arrested May 8.

According to Revenue Department investigators, Hafeez entered an Orlando area furniture store in October 2000 and purchased bedroom furniture. When the store attempted to charge her sales tax, she presented the store with a copy of her 2000 Florida Annual Resale Certificate. The Department of Revenue issues these certificates annually to Florida businesses, which use them to purchase goods tax-free for their inventory. Businesses collect sales tax when the inventory items are sold to the ultimate consumer. State law restricts the use of this exemption to items that are bought for resale to consumers, rather than items that business people use themselves.

In this case, Revenue investigators said that Hafeez asked that the furniture be delivered to her home. When the furniture arrived, the store again vainly attempted to charge her sales tax. According to investigation records filed in court, a furniture store executive called to ask her to pay sales tax because the items had been purchased for personal use rather than for resale. Investigators reported that she told him that that the Department of Revenue would never know.

"Florida law provides this exemption for the benefit of hardworking business owners," said Dr. Jim Zingale, executive director of the Department of Revenue. "It's not there to allow tax cheats to shift the tax burden to honest, law-abiding citizens."

Florida lawmakers revised the state's Annual Resale Certificate law in 2000, creating a new annual resale system that is intended to curb examples of such abuse. As a part of the implementation of the new resale certificate system, DOR officials have cooperated with businesses to re-emphasize the appropriate uses of the resale certificate, Zingale said.

Zingale urged other business owners or residents who know of attempt tax fraud in the use of resale certificates, or any other kind of tax theft, to contact the Florida Department of Revenue. In Orlando, please call the Florida Department of Revenue investigations office at 407-623-1353.