STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

A. J. COYLE, )

)

Petitioner, )

)

vs. ) CASE NO. 77-426

)

DEPARTMENT OF REVENUE, )

STATE OF FLORIDA. )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in the above-captioned matter, after due notice, at Miami, Florida, on May 4, 1977, before the undersigned hearing officer.

APPEARANCES

For Petitioner: Robert A. Glassman, Esquire

903 Biscayne Building

19 West Flagler Street Miami, Florida 33130

For Respondent: Edwin J. Stacker, Esquire

Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32304 ISSUE

Petitioner's alleged liability for documentary stamp tax, penalty, and interest under Chapter 201, Florida.

FINDINGS OF FACT

1. The facts in this case are undisputed. On April l6, 1976, petitioner Arthur J. Coyle and his wife Katie Coyle, became the sole shareholders of Sara- Wolf, Inc., a Florida Corporation, whose assets consisted of an apartment building in Miami Beach, Florida. Thereafter, the Coyles decided to transfer the corporate assets to themselves as individuals. They were advised by their attorney that, in view of the 1975 decision of the First District Court of Appeal in Florida Department of Revenue v. DeMaria, 321 So 2d 101 (Fla. 1st DCA 1975) in a similar factual situation, no state documentary stamp tax would be due on the transaction. Therefore, relying upon that judicial decision, petitioner and his wife proceeded to execute a quit claim deed of the corporate real estate to themselves on May 13, 1976, and file the same in the public records of Dade County, Florida, on May 18, 1976, with payment of only nominal documentary stamp tax. The decision of the District Court of Appeal had been stayed by the Supreme Court on December 8, 1975. Subsequent to the decision of

   the Supreme Court in the DeMaria case on October 14, 1976, which quashed the lower court's decision, respondent issued a notice of proposed assessment of documentary stamp tax in the amount of $526.50 based on a taxable consideration of $175,500, less 30 cents tax paid, for a total tax due of $526.20 plus a like amount as a penalty, and $42.00 in interest, for a total asserted liability of

   $1,094.40. (Testimony of petitioner, Exhibits 1-3)

   
   

   CONCLUSIONS OF LAW

   
   

2. Petitioner seeks to avoid the imposition of a penalty under Section 201.17, Florida statutes,for failure to pay documentary stamp tax under Section 201.02, Florida Statutes. The pertinent statutory provision is as follows:

   
   

   "201.17 Penalties for failure to pay tax required.--

   * * *

   1. Any document, instrument, or paper upon which the tax under this chapter is imposed and which, upon audit or at time of recordation, does not bear the proper value of stamps shall subject the person or persons liable for the tax upon the document, instrument or paper to:

      1. Purchase of the stamps not affixed; and

      2. Payment of penalty to the Department of Revenue equal to the purchase price of the stamps not affixed. This penalty is to be in addition to and not in lieu of any other penalty imposed by law."

         
         

3. Petitioner concedes liability for payment of the tax itself under the current state of the law, but objects to payment of the penalty on the ground that the law required no tax to be paid on the quit claim deed in question at the time of its recommendation. Respondent takes the position that since the tax was not paid when due1 petitioner is liable for payment of the penalty in a like amount and that it has no discretion to excuse or modify the same.

   
   

4. As noted in the foregoing findings of fact, petitioner maintains that no penalty should be due because he relied upon his attorney s advice that the decision of the District Court of Appeal in the DeMaria Case absolved him from tax liability, and that it was not quashed by the Supreme Court until October 14, 1976, in Florida Department of Revenue v. DeMaria, 338 So 2d 838 (Fla. 1976). Since the quit claim deed was recorded on May 18, 1976, petitioner contends that assessment of a penalty for failure to pay other than minimal documentary stamp tax at that time would be unjustified as a retroactive application of the statute.

   
   

5. It is unnecessary here to determine the effect of good faith reliance upon the decision of an intermediate court of appeal as to imposition of a tax penalty. It cannot be considered that petitioner was entitled to such reliance because the decision of the District Court of Appeal had been stayed prior to recordation of the deed. Petitioner is chargeable with notice of that action even if, in fact, he was unaware of the Supreme Court's order. In short, petitioner relied upon a decision that was not operative at the time he filed his deed. It is therefore concluded that the proposed assessment of a penalty under Section 201.17, Florida Statutes, in the amount of $526.20 is valid and should be enforced against the petitioner.

RECOMMENDATION

That the proposed assessment of $1,094.40 against petitioner Arthur J. Coyle and Katie Coyle is valid and should be enforced.

DONE and ENTERED this 31st day of May, 1977 in Tallahassee, Florida.

THOMAS C. OLDHAM

Hearing Officer

Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

COPIES FURNISHED:

Robert A. Glassman, Esquire 903 Biscayne Building

19 West Flagler Street Miami, Florida 33130

Edwin J. Stacker, Esquire Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32304

Docket for Case No: 77-000426

Orders for Case No: 77-000426