Roberto v. United States, 66 Civ. 1139.
| Decision Date | 29 March 1973 |
| Docket Number | No. 66 Civ. 1139.,66 Civ. 1139. |
| Citation | 357 F. Supp. 862 |
| Parties | Ruperto ROBERTO, t/a Caborrojeno Caterers, Plaintiff, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Eisenberg & Solomon, Lake Success, N. Y., for plaintiff; Leonard M. Speier, of counsel.
Whitney North Seymour, Jr., U. S. Atty., S.D.N.Y., for defendant; Joseph D. Danas, V. Pamela Davis, Asst. U. S. Attys., of counsel.
OPINION, FINDINGS OF FACT AND CONCLUSIONS OF LAW
This is an action to recover $250.00 paid by plaintiff under protest in partial satisfaction of a cabaret excise tax assessment levied by the District Director of Internal Revenue in the amount of $164,741.77 for the calendar periods from July 1, 1958 through December 31, 1961. The United States counterclaims for the unpaid balance of the assessment, including penalties and interest in the amount of $164,491.77.
The case was tried to the court on November 6, 1972.
After hearing the testimony of the parties, examining the exhibits, the pleadings, the Proposed Findings of Fact and Conclusions of Law, this court makes the following Findings of Fact and Conclusions of Law:
FINDINGS OF FACT
1. This court has jurisdiction over the parties and the subject matter thereto.
2. On April 10, 1964 a federal cabaret tax assessment was made upon plaintiff by the District Director of Internal Revenue pursuant to Section 4231(6) of the Internal Revenue Code of 1954 in the amounts and for the periods as follows:
July 1, 1958 through December 31, 1958
Tax $14,627.33
Penalty 3,656.84
Interest 4,664.66
__________
$22,948.83
January 1, 1959 through December 31, 1959
Tax $39,079.07
Penalty 9,769.76
Interest 10,671.36
__________
$59,520.19
January 1, 1960 through February 28, 1960
Tax $8,311.43
Penalty 2,077.85
Interest 1,967.40
__________
$12,356.68
March 1, 1960 through December 31, 1960
Tax $25,150.48
Penalty 6,287.62
Interest 5,289.50
__________
$36,727.60
January 1, 1961 through December 31, 1961
Tax $23,670.59
Penalty 5,917.65
Interest 3,600.23
__________
$33,188.47
___________
TOTAL TAX ASSESSMENT $164,741.77
3. On or about June 17, 1965 plaintiff paid the United States the sum of $250.00, representing a $50.00 payment for each assessment period. On April 21, 1966 plaintiff brought this suit for a refund of the $250.00 and defendant counterclaimed in the amount of $164,491.77. (Pretrial order.)
4. From 1958 through 1961 plaintiff was doing business under the trade name of Caborrojeno Caterers with premises located at 3534 Broadway, New York, New York. The name "Club Caborrojeno" (sometimes referred to herein as the club) appeared on a large neon sign outside the establishment. (89, 106, 125; Ex. E, p. 7.)1
5. The total floor area of the club is approximately 10,000 square feet. (119; Ex. 3.) The club's dance floor is approximately 1,862 square feet comprising approximately 19% of the total area of the club. (Ex. 3.) The club's bar and kitchen are approximately 837 square feet, comprising approximately 8% of the area of the club. (Ex. 3.)
6. The total patron capacity of the club is between 350 and 450 persons. There are 121 tables at the club comprised of 103 tables seating four persons and 18 tables seating two persons, thus providing a total seating capacity for 448 persons. The club has a seating capacity at least equal to its total patron capacity, thus affording seating to all who are admitted. (120; Ex. 3.)
7. In order to gain admission to the club a patron must purchase a ticket at a booth on the first floor landing leading to the club. The price of admission ranged from $2.00 to $3.00 per person. The admission price was higher for men than for women. The patron, upon gaining admission, could find his own seat and table or be escorted to one by either Ruperto Roberto or one of his former partners. (11, 12, 43, 89-92, 116; Ex. E, p. 18.)
8. The Club Caborrojeno offered liquor, beer and soft-drink refreshments to its customers. The beverages were prepared at a bar which was 30 feet long and staffed by three or four bartenders. Liquor and beer were the most popular items. (111; Ex. E, p. 39.)
9. Hot and cold food entrees were served. If a patron desired, he could purchase a cheese ensemble, ham or cheese sandwiches, hot french fried potatoes or a hot Spanish meat pie. (31, 94, 117; Ex. E, p. 25.) The food could be purchased directly at the bar by a patron or at the tables served by waiters. On a Friday, Saturday or Sunday night there would be between four and six waiters to wait on tables. (Ex. E, p. 26.) A patron could order food until the club closed at 3:00 or 3:30 A.M. (127-128.)
* * * * * *
10. The club opened at 7:30 PM. and closed between 3:00 and 3:30 A.M. (120, 125-126.)
11. A featured attraction at Club Caborrojeno was its Spanish music and entertainment. At least one orchestra played from 9:30 P.M. until 12:30 A.M. From 1:00 A.M. until 3:00 A.M. piano and guitar "stroll" music was supplied by two musicians. Occasionally, singers who were not members of the orchestra were employed to appear at the club. The appearance of orchestras and vocalists was advertised in local newspapers and on radio. (120-126; Exs. A, E, p. 13.)
12. During the taxable periods in question the percentage of the gross revenue represented exclusively from the sale of refreshments varied from a low of 65.1% to a high of 74.7%. A quarterly breakdown is as follows:
Year & Gross Admissions Refreshment
Quarter Receipts and % and %
1959 1st $65,845.62 $20,345.50—30.8% $43,933.37—65.4%
1959 2nd 54,196.94 17,233.25—31.8% 36,397.94—67.1%
1959 3rd 54,079.38 17,918.25—31.2% 36,002.88—66.5%
1959 4th 75,943.56 25,007.00—33% 49,324.71—65.1%
1960 1st 68,557.30 21,962.25—32% 45,001.35—65.6%
1960 2nd 77,915.55 23,561.62—30% 52,601.81—67.5%
1960 3rd 79,722.50 22,957.98—28.7% 54,411.27—68.3%
1960 4th 81,327.78 21,836.12—26.8% 54,810.78—67.3%
1961 1st 62,872.89 14,878.15—23.8% 42,498.05—67.5%
1961 2nd 61,056.49 16,007.08—26.2% 44,514.66—72.8%
1961 3rd 62,584.32 15,288.67—24.4% 46,780.19—74.7%
1961 4th 84,733.64 21,708.47—25.6% 58,859.93—69.4%
(Ex. A, No. 4.)
13. During the taxable periods in question the percentage of the gross revenue representing revenue from admissions varied from a low of 23.7% to a high of 33.2%. A quarterly breakdown is as follows:
Year & Gross Admissions Other Revenue
Quarter Receipts and % and %
1959 1st $65,854.62 $20,345.50—30.4% $45,509.12—69.6%
1959 2nd 54,196.94 17,233.25—31.8% 36,963.69—68.2%
1959 3rd 54,079.38 17,918.25—33.2% 36,161.13—66.8%
1959 4th 75,453.56 25,007.00—33.2% 50,446.56—66.8%
1960 1st 68,557.30 21,962.25—32.1% 46,595.05—67.9%
1960 2nd 77,915.55 23,561.62—31.5% 54,353.93—68.5%
1960 3rd 79,722.50 22,957.98—28.8% 56,764.52—71.2%
1960 4th 81,327.78 21,836.12—26.8% 59,491.66—73.2%
1961 1st 62,872.89 14,878.15—23.7% 62,872.89—76.3%
1961 2nd 61,056.49 16,007.08—26.3% 45,049.41—73.7%
1961 3rd 62,584.52 15,288.67—24.6% 47,295.85—75.4%
1961 4th 84,733.64 21,708.47—24.5% 63,025.17—75.5%
(Ex. A, No. 4.)
14. The revenue derived from admissions did not equal the payroll expense for any taxable quarter in 1960 or 1961 (the only periods for which a payroll expense was provided):
Year & Payroll Admission
Quarter Expense Revenue
1960—1st $25,756.00 $21,962.25
1960—2nd 25,892.00 23,561.62
1960—3rd 24,315.17 22,957.98
1960—4th 22,439.83 21,836.12
1961—1st 22,749.50 14,878.15
1961—2nd 23,348.07 16,007.08
1961—3rd 22,414.48 15,288.67
1961—4th 24,089.55 21,708.47
(Ex. A.)
15. During 1958 through 1961 the price of admission chargel by the club ranged between $2.00 and $3.00 per patron. Since the range of admission is established for each quarter, the range of total revenue derived from admission and non-admission revenue and the range age amount spent by each patron per of the number of patrons and the aver-quarter can be determined:
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