vs. ) CASE NO. 76-1374
) GERALD LEWIS, as COMPTROLLER ) OF THE STATE OF FLORIDA, and ) THE DEPARTMENT OF REVENUE, )
Respondents. )
Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, at 10:00
Mortgage, or said Note, or indebtedness secured hereby, without regard to any law, Federal or State, heretofore or hereafter enacted, imposing payment of all or any part thereof upon Mortgagee. In event of enactment of any law imposing payment of all or any portion of any such taxes upon Mortgagee, or the rendering by any court of last resort of a decision that the undertaking by Mortgagor, as herein provided to pay such taxes is legally inoperative, then, unless Mortgagor nevertheless pays such taxes, all sums hereby secured, without any deduction, shall at the option of Mortgagee become immediately due and payable, notwithstanding anything contained herein or any law heretofore or hereafter enacted to the contrary."
On August 3, 1975, the mortgage and mortgage note were recorded. Documentary stamps were not affixed to either document.
On September 17, 1975, the Florida Department of Revenue issued to the Barnett Bank of Tallahassee a proposed notice of assessment of tax and penalty under Florida Statutes Chapter 201, specifically citing F.S. 201.08. Mr. Fred
L. McCord, Executive Vice President of Barnett, sent the notice of assessment to petitioner, requesting petitioner to either settle the matter with the Department of Revenue or forward a check to the bank for remittance. According to Mr. McCord, the bank did not pay the assessment because
"The documents that we rather insist upon with all "tax exempt" bodies is part of the instrument here which requires that any tax or fees that are required is to be paid by the maker of the note, which is consistent with all other loans that we make in which any taxes are paid by the borrower, if any."
By check dated February 16, 1976, petitioner paid to the Department of Revenue the assessment of $1,350.00 tax and $1,350.00 penalty for a total of
$2,700.00. This payment was remitted under protest and a claim for refund was filed pursuant to F.S. 215.26. On March 15, 1976, respondent Department of Revenue notified petitioner that it was recommending denial of petitioner's claim for refund, stating that the Department did not believe that petitioner was an agency of the State of Florida within the context of Florida Administrative Code, Rule 12A-4.02(3).
By letter dated July 8, 1976, respondent Office of the Comptroller notified petitioner that its refund request was denied for the same reasons stated by the Department of Revenue.
Petitioner petitioned for an administrative hearing on the matter, and the undersigned was designated as the Hearing Officer. The original petition named only the Department of Revenue as respondent, and said Department moved to dismiss for failure to join an indispensable party - - the Office of the Comptroller pursuant to F.S. 215.26. After a prehearing conference on the issue of whether the Department of Revenue had the authority to issue a final order
determining the issues presented in the petition, petitioner filed an amended petition naming both Comptroller Gerald L. Lewis and the Department of Revenue as parties respondent. By letter dated November 17, 1976, the Assistant General Counsel of the Office of the Comptroller requested the Division of Administrative Hearings to conduct the hearing and designated an Assistant Attorney General, Ms. Patricia Turner, to represent it.
The hearing was originally scheduled for December 30, 1976. On December 16, 1976, respondents moved to continue the matter to make further discovery and also to amend its answer. In granting the motion for continuance, it was the intention of the undersigned Hearing Officer to also grant the motion to amend respondent's answer, though the latter grant was never reduced to writing. Over the objection of petitioner, the undersigned orally granted the motion to amend at the hearing held on February 1, 1977, giving petitioner the opportunity to request a continuance if it so desired. No such continuance was requested, and the hearing on the issues as framed by the amended petition and the amended answer was conducted.
The parties stipulated, and the Hearing Officer so finds, that The Florida Bar is an agency of the State of Florida.
CONCLUSIONS OF LAW
The issue in this case is whether the petitioner is entitled to a refund of the $2,700.00 paid into the State treasury on the ground that no documentary stamp tax was due on the documents recorded on August 3, 1975.
It is the petitioner's contention that the tax imposed by Section
201.08 of the Florida Statutes is a tax upon the promise to pay and that since an agency of the State of Florida was the maker of the promise to pay, the transaction is exempt from taxation. In support of this position, petitioner cites several Attorney General opinions to the effect that the tax imposed by
201.08 is a tax on the promise to pay. AGO 056-231; AGO 061-46. The case of State ex rel. Seaboard Air Line Railroad Company v. Green, 173 So.2d 129 (Fla. 1965), is also cited for the proposition that the tax is on the transaction and therefore since petitioner is the maker of the promise, the transaction is exempt from taxation. Petitioner also points to Rule 12A-4.53(4), F.A.C., which states that instruments made payable to governmental agencies are subject to the tax imposed by 201.08. It is argued that since said rule does not list instruments payable from governmental agencies, such instruments are by implication exempt from taxation.
In contrast, respondents take the position that liability for the tax imposed by F.S. Chapter 201 rests upon both parties to the transaction and that the transaction is only exempt from taxation when both parties thereto are exempt or immune from taxation. Respondents cite numerous Attorney General opinions in support of this position, including those contained in Rule 12A- 4.02(3), F.A.C., and the more recent AGO 075-206. Respondents contend that the fact that petitioner has, by the terms of the mortgage, contractually agreed to pay the costs of taxation is immaterial since the tax was not imposed upon the petitioner - - the exempt party. Petitioner merely assumed the liability to pay a cost it would not otherwise bear. Finally, respondent distinguishes the Green case, supra, on the grounds that the documents therein involved had been specifically exempt from state taxation by congressional authority.
The undersigned hearing officer has carefully considered the positions of the parties and the authority cited in support thereof. She has been unable
in her research to discover any judicial opinion which specifically either affirms or refutes the position of the respondents, as cited in the Attorney General Opinions, that the tax is due unless both parties to the transaction are exempt or immune from taxation inasmuch as Ch.201 imposes liability for the tax on both parties to the transaction. However, the language utilized in F.S.
201.01 appears to support the construction placed thereon by the Attorney General. Stripped of the wordage not pertinent to this issue, 201.01 reads as follows:
"There shall be levied, collected and paid the taxes specified . . . by any person, who makes, signs, executes . . . the same, or for whose benefit or use the same are made, signed, executed "
In the absence of a judicial opinion to the contrary, and in view of the fact that the Attorney General's opinions on the issue appear as rules of the Department of Revenue, the undersigned feels bound by the interpretation given therein. Rule 12A-4.02(3), F.A.C., specifically provides that while a state agency is not liable for the tax in respect to an instrument to which it is a party, "the transaction is not exempt from tax, and the non-exempt party to the transaction is liable for the tax."
In this case, The Florida Bar is an agency of the State of Florida and is therefore exempt from taxation. However, the Barnett Bank of Tallahassee is not exempt from taxation, and the notice of assessment was issued to the Bank. The fact that the Bar actually paid the assessment in accordance with the covenant contained in the mortgage has no bearing on the issue of whether a documentary stamp tax is due upon the note recorded on August 3, 1975. The taxes were imposed upon the Bank and the petitioner simply agreed to assume the liability to pay the taxes for which it would not otherwise be liable. Petitioner is therefore not entitled to a refund of the tax and penalty in the amount of $2,700.00.
Based upon the findings of fact and conclusions of law recited above, it is recommended that petitioner's request for a refund pursuant to F.S. 215.26 be denied.
Respectfully submitted and entered this 4th day of March, 1977 in Tallahassee, Florida.
DIANE T. TREMOR
Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304
Filed with the Clerk of the Division of Administrative Hearings this 4th day of March, 1977.
Gerald L. Lewis Comptroller State of Florida The Capitol
Carl R. Pennington, Jr. Pennington, Wilkinson and Sauls Post Office Box 3985 Tallahassee, Florida 32303
Patricia S. Turner Assistant Attorney General Department of Legal Affairs The Capitol
