STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

UNIVERSITY PARK CONVALESCENT ) CENTER, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 75-1144

) DEPARTMENT OF REVENUE OF THE ) STATE OF FLORIDA, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this matter came up for hearing in the 3rd floor conference room of the State Office Building, 800 Twigg Street, Tampa, Florida at 1:00 P.M. on August 26, 1975, before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Mr. Homer T. Ward, N.T.A.

Administrator/President

University Park Convalescent Center, Inc. 1818 East Fletcher Avenue

Tampa, Florida 33612

For Respondent: E. Wilson Crump, II, Esquire

Assistant Attorney General Department of Legal Affairs Tax Division, Northwood Mall Tallahassee, Florida 32303

INTRODUCTION

The issue presented for decision at the hearing was whether the respondent validly assessed a deficiency in petitioner's corporate income taxes for the fiscal year ending September 30, 1972. More specifically, the Issue is whether reimbursements of medicare payments received in 1972 for services provided by petitioner to patients in 1970 are subject to the Florida corporate income tax, which became effective on January 1, 1972.

It is the petitioner's contention that the amount received in January of 1972, $56,131.00, was a reimbursement representing funds owed petitioner under the medicare program for services provided to patients in the fiscal year ending September 30, 1970. Since Florida did not have a corporate income tax in 1970, funds received for services provided in that year are not subject to the Florida corporate income tax.

It is the respondent's position that the funds in question, representing a reimbursement of medicare payments for services rendered in 1970, are taxable under the Florida Income Tax Code inasmuch as they were reported in petitioner's federal income tax return for the fiscal year ending September 30, 1972.

FINDINGS OF FACT

Having listened to the testimony and considered the evidence presented in this cause, it is found as follows:

1. Petitioner is a domestic corporation.

   
   

2. Petitioner provided medicare services to patients in the 1969-70 fiscal year. An on-site audit by the medicare auditing team was concluded in December of 1971, and petitioner received $56,131.00 of medicare reimbursements in January of 1972, for the services provided in the 1969-70 fiscal year.

   
   

3. The petitioner did not file an amended federal income tax return for the fiscal year ending September 30, 1979.

   
   

4. The adjusted federal income reported on petitioner's federal income tax return for the fiscal year ending September 30, 1972, included the $56,131.00 of medicare reimbursements received by petitioner in January of 1972.

   
   

5. On petitioner's Florida income tax return for its fiscal year ending September 30, 1972, petitioner did not include the $56,131.00 figure in its adjusted federal income.

   
   

6. On March 31, 1975, the respondent notified petitioner of a proposed deficiency in the amount of $2,100.99 arising from the petitioner's omission of the medicare reimbursements from its adjusted federal income as shown on its Florida corporate income tax return for the fiscal year ending September 30, 1972.

   
   

7. Further correspondence ensued between the petitioner and the Corporate Income Tax Bureau of the respondent and the petitioner filed the present petition requesting a hearing on the issue. The respondent requested the Division of Administrative Hearings to conduct the hearing.

   
   

   CONCLUSIONS OF LAW

   
   

8. By enacting the Florida Income Tax Code, the legislature intended to subject corporations and other artificial entities to taxation for the privilege of conducting business, deriving income or existing within the State. Florida Statutes, 220.02(1). In order to minimize the expenses of the Department of Revenue and the difficulties in administering the Code and in order to minimize the costs and difficulties of taxpayer compliance, it was the intent of the legislature to utilize, to the greatest extent possible, concepts of law which have developed in connection with the federal income tax laws. Florida Statutes, 220.02(3). This theme runs throughout Chapter 220 of the Florida Statutes. For example, s. 220.42(1), reads in relevant part:

   
   

   "For purposes of this code, a taxpayer's method of accounting shall be the same as such taxpayer's method of accounting for federal income tax purposes..."

   For other examples, see Florida Statutes, s. 220.12(1), 220.13(2), 220.42(2) and 220.43.

   
   

9. A reading of Chapter 220 indicates that Florida has adopted federal accounting methods and periods, federal tax bases, federal tax rules and regulations, federal tax concepts of income realization and recognition, and federal procedures for filing returns and making tax payments. This is often referred to as the federal "piggyback." There is a clear intention to adopt federal principles of taxation in an attempt to minimize expenses and administrative difficulties for both the taxpayer and the Department.

   
   

10. While s. 220.02(4) states that it is the legislature's intent that the tax imposed by Chapter 220 be prospective in effect only, it is further the expressed legislative intent that income be deemed to be created for Florida Income tax purposes at the same time as said income is realized for federal income tax purposes. Florida Statutes, s. 220.02(4)(a).

    
    

11. It thus seems clear that the amount in question in the present dispute, although it represents a reimbursement for services provided in 1969 & 1970, is subject to the Florida corporate Income tax inasmuch as it was realized for federal income tax purposes in the fiscal year ending in 1972. Had petitioner elected to file an amended federal return for 1970 and included the medicare reimbursement in such return, the disputed amount would not have been subject to the Florida tax, which did not become effective until January of 1972. Having elected to include the medicare payments in the 1972 federal tax return, the same method of accounting was required for Florida corporate income tax purposes and was thus created for Florida income tax purposes in 1972.

RECOMMENDATION

Based upon the above findings of fact and conclusions of law, it is my recommendation that there is no legal basis for affording the petitioner any relief from the proposed deficiency and that said deficiency in the amount of

$2,100.00 be sustained.

Respectfully submitted and entered this 17th day of September, 1975, in Tallahassee, Florida.

DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

E. Wilson Crump, II, Esquire Assistant Attorney General Department of Legal Affairs Tax Division, Northwood Mall Tallahassee, Florida 32303

Homer E. Ward, N.H.A. Administrator/President

University Park Convalescent Center 1818 E. Fletcher Avenue

Tampa, Florida 33612

Docket for Case No: 75-001144

Orders for Case No: 75-001144