STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JUNIOR LEAGUE OF TAMPA, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 95-5635

)

DEPARTMENT OF REVENUE )

)

Respondent. )

)

RECOMMENDED ORDER

On November 7, 1996, a formal administrative hearing in this case was held in Tampa and Tallahassee, Florida, before William

F. Quattlebaum, Administrative Law Judge, Division of Administrative Hearings. The hearing was conducted by videoconference.

APPEARANCES

For Petitioner: Jeremy P. Ross, Esquire

Bush, Ross, Gardner, Warren and Rudy, P.A.

220 South Franklin Street Tampa, Florida 33602

For Respondent: Ruth Ann Smith, Esquire

Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668

STATEMENT OF THE ISSUE

The issue in the case is whether the Petitioner qualifies as a “charitable institution” as defined at Section 212.08(7)

(o)2.b., Florida Statutes, and is therefore entitled to a consumer certificate of taxation exemption.

PRELIMINARY STATEMENT

The Junior League of Tampa, Inc., filed an application to renew an existing Consumer Certificate of Exemption. The Department of Revenue proposes to deny the application on the grounds that the League does not meet the requirements of Section 212.08(7)(0)2.b., Florida Statutes. The Petitioner filed a request for hearing.

At the hearing, the Petitioner called two witnesses.

Exhibits which were attached to the Petitioner's request for hearing have been admitted into evidence. The Respondent presented the testimony of one witness and had exhibits numbered 1-4 admitted into evidence. The prehearing stipulation filed by the parties was also admitted.

A transcript of the hearing was filed. Both parties filed proposed recommended orders which were considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. The Junior League of Tampa, Inc., (League) is a non- profit corporation exempt from federal income tax under Section 501(c)3 of the Internal Revenue Code.

2. The Articles of Incorporation for the League provide that the League is intended to foster member’s interests in local social, economic, educational, cultural, and civic conditions,

   
   

   and to make efficient use of members as volunteers. According to testimony offered at hearing, the purposes of the Junior League of Tampa are to offer social assistance to persons in the community, provide volunteers to various local organizations, and to offer volunteer training to League members.

3. The League provides member education regarding issues of local concern by offering bus tours through area communities, attendance at government meetings (school board, county commission, etc.) and training sessions focusing on the operation and activities of the League.

4. Members of the League pay dues which are used to support the administrative costs of the organization.

5. Members of the League are expected to provide volunteer services to community organizations through the League. No services are provided directly to individuals.

6. In addition to dues the League raises funds through local fund raising activities, including production of a cookbook and a thrift sale. Fund raising revenue is used to support community projects.

7. According to the financial statements for the fiscal year ending May 31, 1995, the League’s total operational expenses (excluding depreciation) were about $400,000. Expenses were allocated between “program services” and “support services.”

8. Total support services costs were approximately

   
   

   $269,000, including $94,576 for fund raising costs. Other costs

   
   

   allocated to support services included $103,827 in “administrative costs,” $11,089 in “association dues,” $20,493 in “membership expense” and almost $39,000 for the League’s membership publication, “The Sandspur.”

9. None of the support services expenditures were directly related to the community or volunteer efforts of the League.

10. Total program services costs were $131,655, including

    
    

    $21,642 for “program research and evaluation,” $25,876 for “association dues,” and $84,137 for “community projects.”

11. “Program research and evaluation” costs include the expenses of the community advisory board which assists the League in determining local needs and evaluating projects. Additional program research costs include expenses related to development and evaluation of League projects, expenses related to sending Tampa League members to meetings of the national League, other membership expenses, expenses of a public relations campaign, expenses related to preparation of a member brochure describing volunteer opportunities, and “ad hoc training.”

12. None of the expenses allocated to “program research and evaluation” are directly provided to recipient organizations through monetary donation or by provision of volunteers.

13. Expenses identified as “program services/association dues” include $25,876 paid to the American Association of Junior Leagues. The national organization offers information related to the anticipated success of specific league projects. None of the

    
    

    expenses allocated to “association dues” are directly provided to recipient organizations through monetary donation or provision of volunteers.

14. The “community projects” total expenditure of $84,137 represents actual funds donated by the League to recipient organizations.

15. In addition to actual donations, members of the League provide hours of free volunteer service to local IRC 501(c)(3) organizations.

16. During fiscal year 1985, League members provided 11,823 hours of volunteer service to local organizations and to the League’s own community projects.

17. The League asserts that many League members providing volunteer services are professionals and that such services should be valued at approximately $10.00 per hour. The evidence fails to establish that the volunteer services provided require professional education or certification or that the volunteer services should be valued at any more than the minimum wage,

    $5.00 during the time period relevant to this proceeding.

    
    

18. The League lists 22 local activities and organizations for which volunteer services were provided. The parties have stipulated that 12 of the 22 (Bereavement Camp, Kids Rights Fund, Child Life Program, Immunization, Ronald McDonald House, Parenting Power, Emergency Shelter, Georgia Flood Relief, Judeo Christian Health, Bay Area Legal Services, WestCoast Golden

    
    

    Services, and McDonald Training) are accepted as “charitable activities.”

19. The Department asserts that the ten remaining activities and organizations do not meet the relevant definition of acceptable charitable services and can not be included in the League’s total charitable effort for purposes of tax exemption. The ten activities include Puppet Troupe, Children’s Museum, McKay Bay Learning Lab, Funbook, Tampa Tickets, Tampa Area Playground, Tampa Museum of Art, Tampa Bay Youth Orchestra, Musicale and Federated Club and H. B. Plant Museum.

20. The “Puppet Troupe” consists of the preparation and performance of a puppet show for residents of nursing homes and for hospitalized children. The evidence fails to establish that the League's participation in Puppet Troupe is an acceptable charitable service for purposes of the tax determination.

21. The Tampa Children’s Museum is an admission-charging, public museum, open to all, designed to provide learning opportunities for children and parents. The evidence fails to establish that the League's participation in Tampa Children's Museum is an acceptable charitable service for purposes of the tax determination.

22. The McKay Bay Learning Lab offers educational programs to children of elementary school ages. The programs are targeted to special needs children, but are open to all. The evidence fails to establish that the League's participation in the McKay

    
    

    Bay Learning Lab is an acceptable charitable service for purposes of the tax determination.

23. “Funbook” is a coloring book focused on Tampa history and distributed to hospitalized children. The evidence fails to establish that the League's participation in Funbook is an acceptable charitable service for purposes of the tax determination.

24. “Tampa Tickets” is a grant of funds to the Tampa Performing Arts Center and is intended to subsidize the cost of admission to cultural events at the Center. The evidence fails to establish that the League's participation in Tampa Tickets is an acceptable charitable service for purposes of the tax determination.

25. The Tampa Area Playground is a public playground which was constructed with funds and volunteer labor contributed by many local organizations including the League. The evidence fails to establish that the League's participation in the Tampa Area Playground is an acceptable charitable service for purposes of the tax determination.

26. The Tampa Museum of Art is a public admission-charging museum for which the League funded a curriculum guide for use in local schools. The evidence fails to establish that the League's participation in the Tampa Museum of Art is an acceptable charitable service for purposes of the tax determination.

27. The Tampa Bay Youth Orchestra received funds from the

    
    

    League directed towards purchasing musical instruments for children who could not afford them. The evidence fails to establish that the League's participation in the Tampa Bay Youth Orchestra is an acceptable charitable service for purposes of the tax determination.

28. The Musicale and Federated Clubs is a performing arts organization. The League provided a grant of funds to cover the costs of termite treatment for the Club facility. The evidence fails to establish that the League's participation in the Musicale and Federated Clubs is an acceptable charitable service for purposes of the tax determination.

29. The H. B. Plant Museum is a public admission-charging museum. The League contributed funds to purchase two computers used in the museum’s membership solicitation program. The evidence fails to establish that the League's participation in the H. B. Plant Museum is an acceptable charitable service for purposes of the tax determination.

30. The evidence establishes that the McKay Bay Learning Lab, the Children’s Museum, the Tampa Museum of Art, and the H.

    B. Plant Museum are educational institutions, rather than charitable institutions. Expenditures of funds or volunteer time contributed to educational organizations which do not otherwise meet the requirements for qualification as charitable institutions are properly disallowed from the calculation of the League’s charitable effort.

    
    

31. The evidence is insufficient to establish that expenditures related to the Puppet Troupe and Funbook projects, the Tampa Tickets program, the Tampa Area Playground, the Tampa bay Youth Orchestra, or the Musicale and Federated Clubs meet applicable requirements for qualification as a charitable expenditures by the League. Such expenditures are properly disallowed from the calculation of the League’s charitable effort.

32. Based on examination of the total acceptable charitable effort of the League, both donations of volunteer time and actual funds, the evidence fails to establish that the sole or primary purpose of the League is to provide such services.

    CONCLUSIONS OF LAW

    
    

33. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.

34. The Petitioner has the burden of proving by a preponderance of the evidence that it meets the applicable requirements for issuance of a Consumer’s Certificate of Exemption. Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (1st DCA 1977). The evidence fails to meet the burden.

35. In relevant part, Section 212.08(7)(o)2., Florida Statutes, provides as follows:

2. The provisions of this section shall be strictly defined, limited and applied in each category....

* * *

1. “Charitable organizations” means only nonprofit corporations qualified as nonprofit pursuant to s. 501(c )3 of the United States Internal Revenue Service Code, 1954, as amended, and other nonprofit entities, the sole or primary function of which is to provide, or to raise funds for organizations which provide, one or more of the following services if a reasonable percentage of such service is provided free of charge, or at a substantially reduced cost, to persons, animals, or organizations that are unable to pay for such service:

   
   

   1. Medical aid for the relief of disease, injury, or disability;

   2. Regular provision of physical necessities such as food, clothing or shelter;

   3. Services for the prevention of or rehabilitation of persons from alcoholism or drug abuse; the prevention of suicide; or the alleviation of mental, physical, or sensory health problems;

   4. Social welfare services including adoption placement, child care, community care for the elderly, and other social welfare services which clearly and substantially benefit a client population which is disadvantaged or suffers a hardship;

   5. Medical research for the relief of disease, injury, or disability;

   6. Legal service; or

   7. Food, shelter, or medical care for animals or adoption services, cruelty investigations, or education programs concerning animals;

and the term includes providing volunteer staff to organizations designated as charitable institutions under this sub-subparagraph; nonprofit organizations the sole or primary

purpose of which is to coordinate, network, or link other institutions designated as charitable institutions under this sub- subparagraph with those persons, animals, or organizations in need of their services; and nonprofit national, state, district, or other governing, coordinating, or administrative organizations the sole or primary purpose of which is to represent or regulate the customary activities of other institutions designated as charitable institutions under this sub-subparagraph....

* * *

d. “Educational institutions” means state supported parochial, church and nonprofit private schools, colleges, or universities which conduct regular classes and courses of study required for accreditation by, or membership in the Southern Association of Colleges and Schools, the Department of Education, the Florida Council of Independent Schools, or the Florida Association of Colleges and Schools, Inc., or nonprofit private schools which conduct regular classes and courses of study accepted for continuing education credit by a Board of the Division of Medical Quality Assurance of the Department of Business and Professional Regulation or which conduct regular classes and courses of study accepted for continuing education credit by the American Medical Association. Nonprofit libraries, art galleries, and museums open to the public are defined as educational institutions and are eligible for exemption.

1. Otherwise stated, in order to be defined as a charitable institution for purposes of sales tax exemption, the League must establish the following: 1) that it is a nonprofit entity, 2) that it is providing one or more of the seven identified services or providing funds and volunteers to other organizations providing such defined services, 3) that the “sole or primary purpose” of

   
   

   the organization is to provide such services or to provide funds and volunteers to other organizations providing such services, and

   4) that the organization provides such services free of charge or at a substantially reduced charge to persons, animals or organizations unable to pay.

2. The evidence establishes that the League is a nonprofit 501(c)(3) entity which provides funds and volunteers at no charge to either directly or via recipient organizations. The evidence fails to establish that the League's sole or primary purpose is the provision of one or more of the seven identified services, or the provision of funds and volunteers to other organizations providing such defined services

3. Most of the League’s charitable efforts are focused on delivering funds or volunteers to recipient organizations. In order to be included in determining the League’s charitable contributions, each recipient organization’s sole or primary function must be to provide (or to raise funds for organizations which provide) one or more of the seven specified services. A reasonable percentage of such services must be provided either free of charge or at a substantially reduced cost to persons, animals, or organizations that are unable to pay for such services.

4. As set forth in the preceding Findings of Fact, the parties have stipulated that some of the League’s charitable expenditures went to acceptable organizations and are properly included within

   
   

   the League’s charitable activities.

   
   

5. As to the remaining volunteer activities, the evidence fails to establish that such contributions of time and funds meet applicable requirements and therefore are not included in determining the charitable effort of the League.

6. The League appears to assert that because some recipient organizations are nonprofit IRC 501(c)(3) organizations, the League contributions to or through such recipients are qualified charitable contributions. A close reading of the statute clearly establishes that such recipient organizations must comply with the same requirements for qualification as a charitable institution as does the League for such contributions to be included within the calculation of the League’s charitable efforts.

7. The League asserts that a number of activities provided by the League or with contributions from the League, including Puppet Troupe, Funbook, and the Musicale and Federated Clubs, are “child care.” In addition, the League asserts that these three projects, as well as Tampa Tickets program, the Tampa Area Playground and the Tampa Youth Orchestra, constitute “social welfare” services which clearly and substantially benefit a client population which is disadvantaged and suffers hardship. The evidence fails to support the assertions.

8. The League also asserts that the Department must examine the records of the five fiscal years prior to application for renewal, rather than the last fiscal year prior to renewal, in determining

whether a tax-exemption certificate should be reissued. The evidence fails to support the assertion.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Revenue enter a Final Order denying the Petitioner’s application for renewal of a Consumer Certificate of Exemption.

RECOMMENDED this 8th day of January, 1997, in Tallahassee, Florida.

WILLIAM F. QUATTLEBAUM

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32301-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 8th day of January, 1997.

COPIES FURNISHED:

Linda Lettera, General Counsel Department of Revenue

204 Carlton Building Tallahassee, Florida 32399-0100

Larry Fuchs, Executive Director Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

Jeremy P. Ross, Esquire Bush, Ross, Gardner,

Warren and Rudy, P.A.

220 South Franklin Street Tampa, Florida 33602

Ruth Ann Smith, Esquire Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 95-005635

Orders for Case No: 95-005635