STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ROBERT P. HERRING, )

)

Petitioner, )

)

vs. ) CASE NO. 82-3055

) STATE OF FLORIDA, DEPARTMENT OF ) REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this matter before Marvin

1. Chavis, duly designated Hearing Officer of the Division of Administrative Hearings, on March 24, 1983, in Orlando, Florida.

   
   

   APPEARANCES

   
   

   For Petitioner: Frank M. Townsend, Esquire

   Post Office Box 847 Kissimmee, Florida 32741

   
   

   For Respondent: Ms. Linda Lettera

   Department of Legal Affairs The Capitol, LL04 Tallahassee, Florida 32301

   
   

   ISSUES AND BACKGROUND

   
   

   This case involves the issue of whether the Petitioner, Robert P. Herring, should be required to pay documentary tax and documentary surtax on three quitclaim deeds transferring his ex-wife's interest in jointly owned property to the Petitioner. On May 3, 1982, the Department of Revenue, by letter, notified Mr. Robert P. Herring, through his counsel, Mr. Frank M. Townsend, that the Department intended to make an audit change pursuant to Chapter 201 of the Florida Statutes based upon a mortgage executed by Mr. Herring and recorded at Official Record Book 439, Page 654 of the Official Records of Osceola County.

   This mortgage was given by Mr. Herring in exchange for his ex-wife's transfer of her interest in the three parcels, which were the subject of the three quitclaim deeds referred to above. In response to the audit report, the Petitioner, on November 1, 1982, filed his request for a formal hearing and his written objection to the audit change.

   
   

   At the formal hearing in this matter, the Petitioner testified on his own behalf and called no other witnesses. The Respondent called as its only witness, Mr. John H. McCormick, a tax auditor for the Department of Revenue.

   The Petitioner offered and had admitted seven exhibits and the Respondent offered and had admitted nine exhibits.

   Counsel for the Petitioner and counsel for the Respondent submitted proposed findings of fact and conclusions of law for consideration by the undersigned Hearing Officer. To the extent that those proposed findings of fact and conclusions of law are not adopted in this order, they were considered by the Hearing Officer and determined to be irrelevant to the issues in this cause or not supported by the evidence.

   
   

   FINDINGS OF FACT

   
   

   1. Prior to June 20, 1979, the Respondent, Robert P. Herring, along with his wife, Patricia L. Herring, owned three parcels of real estate located in Kissimmee, Florida. Those three parcels were held by Mr. and Mrs. Herring as tenants in the entirety. The parcels are more fully described as:

      
      

      1. A certain lot or parcel of land known as

         S. Florida RR survey Block 19, beginning at the most Northerly corner of Lot 3 and

         running South 47 degrees East, 142 Ft. South,

         43 degrees West, 25 ft. North, 47 degrees West, 142 Ft. North, 43 degrees East, 25 ft. to the point of beginning, and more particu larly described in that instrument recorded in OR Book 364, Page 340, in the Public Records of Osceola County, Florida.

      2. A certain lot or parcel of land known as St. Cloud Block 251, Lots 19 thru 22 and more particularly described in that instru ment recorded in OR Book 339, Page 155 and

         158 of the Public Records of Osceola County, Florida.

      3. A certain lot or parcel of land beginning at a point 110 ft. West of the Easterly line of Gov. Lot 3, plus 15 ft. at right angle to the center line of the Old Highway South 33 degrees West, 62.3 ft. South, 53 degrees East, 60.9 ft. North, 33 degrees East, 34.3 ft. North, 42 degrees West along the highway to the point of beginning and more particularly described in that instru ment recorded in OR Book 314, Page 391 of

         the Public Records of Osceola County, Florida.

         
         

   2. On June 20, 1979, Patricia A. Herring executed three quitclaim deeds transferring all her right title and interest in the above three parcels to the Petitioner, Robert P. Herring. The transfer was part of a divorce settlement and the stated consideration in the three quitclaim deeds was "love and affection". (See Respondent's Exhibits 2, 3, and 4). Prior to the transfer, there was outstanding indebtedness on the three parcels and these debts were secured by mortgages. The Petitioner and his wife were both liable on these debts and mortgages.

      
      

   3. In exchange for the transfer of Patricia A. Herring's interest in the three parcels, the Petitioner executed and delivered to Patricia A. Herring a promissory note in the amount of $58,800 secured by a mortgage on the three parcels. The Petitioner, Robert Herring, also assumed full liability for the outstanding indebtednesses on the three parcels. The Petitioner is and has been

      since June, 1979, making monthly payments of $529.05 to Patricia A. Herring, his ex-wife, in payment on the $58,800 promissory note and mortgage.

      
      

   4. The mortgage executed by Respondent and recorded in Official Record Book 439, Pages 654-656 of the Official Records of Osceola County and the assumption of the outstanding indebtedness on the three parcels were valuable consideration paid by the Petitioner to Patricia A. Herring for her interest in the three parcels.

      
      

   5. At the time of recording the three quitclaim deeds, the Petitioner paid no documentary tax as defined in Florida Statute 201.02 (1977) and paid no documentary surtax as defined in Florida Statute 201.021 (1977)

      
      

   6. After an examination of the official records of Osceola County, the Department of Revenue determined that the Petitioner owed documentary tax on the three quitclaim deeds in the amount of $176.40. The Department determined that the Petitioner owed documentary surtax on the three parcels in the amount of

      $64.90. On April 13, 1982, the Department of Revenue issued its Notice of Intent to Make Documentary Stamp Tax Audit Charges to Petitioner assessing the documentary tax in the amount of $176.40 and documentary surtax in the amount of

      $64.90.

      
      

   7. The documentary tax and documentary surtax assessed by the Department of Revenue were based upon the $58,800 promissory note and mortgage as the sole consideration paid by the Petitioner for the transfer of the three parcels. (See Respondent's Exhibit 9). Based upon the consideration of $58,800, the Petitioner owes documentary tax of $176.40 and documentary surtax of $64.90 on the three quitclaim deeds.

      
      

      CONCLUSIONS OF LAW

      
      

   8. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this action.

      
      

   9. Florida Statute Section 201.02(1)(1977), imposes a documentary tax on deeds and other instruments relating to the transfer of land and provides in relevant part:

      
      

      1. On deeds, instruments, or writings whereby any lands, tenements, or other realty, or any interest therein, shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser, or any other person by his direction, on each $100 of the considera tion therefor the tax shall be 30 cents.

         When the full amount of the consideration for the execution, assignment, transfer, or conveyance is not shown in the face of

         such deed, instrument, document, or writing, the tax shall be at the rate of 30 cents

         for each $100 or fractional part thereof of the consideration therefor.

         
         

   10. The tax imposed by Section 201.02(1), Florida Statutes, is based upon the consideration given for the transfer of the land. Rule 12B-4.12, Florida

       Administrative Code, defines the term "consideration" as used in Section 201.02 as:

       
       

       1. Cash

       2. Purchase money mortgage

       3. Corporation stock

       4. Conveyance subject to a vendor's lien

       5. Conveyance where outstanding mortgage debt, lien or encumbrance is cancelled, satisfied or otherwise rendered unenforceable by the conveyance.

       6. Value of any real or personal property given in exchange for realty.

       
       

   11. Section 201.021, Florida Statutes (1977), which was repealed effective October 1, 1979, imposed a documentary surtax on those documents described in Section 201.02(1) above. The surtax was in addition to the tax imposed by Section 201.02 (1) and was imposed at the rate of 55 cents per $500 of consideration paid for the transfer.

       
       

   12. The taxes imposed by Sections 201.02(1) and 201.021 apply to transfers or conveyances of "any land" where there is consideration paid for the transfer or conveyance. There is no exception in these statutory sections for transfers between husband and wife as part of a settlement in a divorce proceeding where valuable consideration is paid.

       
       

   13. The promissory note and mortgage in the amount of $58,800 were given by Petitioner to his ex-wife in exchange for her transfer of her interest in the three parcels which are also the collateral securing the payment of the $58,800 note and mortgage. The note, mortgage, and payments pursuant thereto constitute consideration as contemplated by Florida Statute 201.02(1) and Rule 12B-4.12, Florida Administrative Code.

       
       

   14. Based upon a consideration of $58,800, the Petitioner owes total documentary tax of $176.40 and total documentary surtax of $64.90 for the three quitclaim deeds, Respondent's Exhibits 2, 3, and 4.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:

That the Department of Revenue enter a Final Order requiring Petitioner to pay the documentary tax in the amount of $176.40 and documentary surtax of

$64.90, plus accrued penalties and interest.

DONE and ENTERED this 31st day of May, 1983, in Tallahassee, Florida.

MARVIN E. CHAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 31st day of May, 1983.

COPIES FURNISHED:

Frank M. Townsend, Esquire Post Office Box 847 Kissimmee, Florida 32741

Ms. Linda Lettera Department of Legal Affairs The Capitol, LL04 Tallahassee, Florida 32301

Mr. Randy Miller Executive Director

Room 102, Carlton Building Tallahassee, Florida 32301

Docket for Case No: 82-003055

Orders for Case No: 82-003055