STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT ) OF REVENUE, )

)

Petitioner, )

)

vs. ) Case No. 96-3554

)

SEMINOLE TRIBE OF FLORIDA, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Administrative Law Judge, Susan B. Kirkland, held a formal hearing in this case on May 1, 1997, by video teleconference in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Tracy Allen

Assistant General Counsel Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668

For Respondent: Donald A. Orlovsky, Esquire

Kamen and Orlovsky, P.A. 1601 Belvedere Road

West Palm Beach, Florida 33406 STATEMENT OF THE ISSUES

Whether Respondent’s consumer tax exemption certificate should be revoked.

PRELIMINARY STATEMENT

On June 28, 1996, the Petitioner, Department of Revenue (Department), filed an Administrative Complaint against Respondent, Seminole Tribe of Florida (Tribe), seeking to revoke Consumer Certificate of Exemption Number 16-199584-51C, which had been issued to the Tribe. The Department contended that Chapter 212, Florida Statutes, does not grant the Department authority to grant an exemption certificate to Indians or Indian tribes. On July 11, 1996, the Tribe served a request for an administrative hearing. The case was referred to the Division of Administrative Hearings on July 25, 1996, for assignment to an administrative law judge.

The final hearing was scheduled for October 31, 1996. On September 10, 1996, Respondent filed a Motion to Reset Final Hearing. The motion was granted, and the case was rescheduled for March 5, 1997. By Order dated January 13, 1997, the final hearing was rescheduled for May 1, 1997.

At the final hearing, Petitioner called William David Young as its witness. Joint Exhibits 1-5 were entered in evidence.

Respondent called the following witnesses: Ross Holzman, Denise DeCarolis, Bonnie Garris, and Hans Walker, Jr. Respondent’s Exhibits 1 and 2 were admitted in evidence.

The depositions of Shirley Towne, Rick Hatson McClure, Haddie Harrell, and William David Young were entered in evidence as joint exhibits.

The parties agreed to file proposed findings of fact and conclusions of law within 20 days of the date of the filing of the transcript. The transcript was filed on May 19, 1997. The parties timely filed their proposed recommended orders.

FINDINGS OF FACTS

1. Respondent, The Seminole Tribe of Florida (Tribe), is a federally chartered Indian tribe pursuant to Section 16 of "The Indian Reorganization Act of 1934," 48 Stat. 987 (1934), (current version at 25 U.S.C.A. Sections 476-477 (1996)).

2. Petitioner, the Department of Revenue (Department) is the agency of the State of Florida which is authorized to administer the collection of taxes and the issuance of consumer certificates of exemption, pursuant to Chapter 212, Florida Statutes.

3. The consumer certificate of exemption at issue in this proceeding, certificate number 16-199584-51C, was issued to the Tribe by the Department on May 13, 1987. This certificate reflects an expiration date of July 13, 1992, and indicates that the Tribe is exempt as "Federal."

4. The Department has continuously treated the Tribe as an exempt organization since at least May of 1987 and possibly as early as 1960.

5. The Tribe timely sought renewal of certificate number 16-199584-51C by filing a DR-5R, "Renewal Application for Consumer Certificate of Exemption."

6. Prior to the time for renewal of the Tribe’s consumer certificate of exemption, its file was "flagged" for special review. Flagging is the standard procedure used by the Department when the Department becomes aware or receives information that a consumer certificate of exemption may have been issued in error.

7. Although the Tribe’s consumer certificate of exemption expired in 1992, the Tribe has been allowed to continue to use the exemption from the expiration date up to the present time. It is the policy of the Department to honor any expired consumer certificate of exemption until the Department either grants an application for renewal or enters a final order denying the renewal.

8. From May 7, 1992, to June 20, 1994, the Department sent five substantially identical form letters to the Tribe evidencing this policy of maintaining the status quo until a final determination is made. The letters contain the following statement:

   Please be advised the department does realize that the aforementioned organization is recognized as a political subdivision by the federal government. However, this office will require additional time to review pertinent documentation and assess the department’s technical opinion before responding to the organization’s request for renewal of its Consumer Certificate of Exemption.

   
   

   The Seminole Tribe of Florida is still authorized to make sales tax exempt purchases in the state of Florida. The organization’s

   Consumer Certificate of Exemption is still valid and shall remain in effect until the department has completed the review process.

   
   

9. On August 24, 1993, Rick McClure, an Assistant General Counsel of the Department, advised Bonnie Garris, an accounting administrator for the Tribe, that the Department took the position that the Tribe was not entitled to an exemption certificate, but that the Tribe would be immune from taxation on certain transactions. Mr. McClure further advised Ms. Garris that the Department was in the process of drafting a rule and a certificate dealing with immunity.

10. The Department has not promulgated a rule dealing with the subject of Indian tribes' immunity from sales and use taxation, and the Department has not developed immunity certificates.

11. Certificate number 16-199584-51C was not renewed by the Department; instead, on June 28, 1996, the Department issued an administrative complaint seeking to revoke the certificate on the basis that the Tribe does not meet the statutory requirements for exemption contained in Section 212.08(6), Florida Statutes.

12. The Tribe has its own government with a tribal constitution and by laws. All laws enacted by the tribal government must be approved by the federal government.

13. The reservation lands of the Tribe are owned by the federal government.

14. The Tribe has numerous contracts, grants, and cooperative agreements with the federal government. In particular, the Tribe enters into a large number of contracts in accordance with Public Law 93-638, codified in 25 U.S.C. Section

    450 et seq., known as the Indian Self Determination and Education Assistance Act (ISDEAA) of 1975, as amended in 1988 and thereafter. These contracts are hereinafter referred to as "ISDEAA contracts" or "self-determination contracts." Through the self-determination contracts, the Tribe provides law enforcement, education, medical, dental, and other health related services which would otherwise be provided directly by the federal government.

15. The Tribe submits budgets to the federal government for approval for the use of the federal funds for the self- determination contracts. These budgets do not account for state sales taxes.

    CONCLUSIONS OF LAW

    
    

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

17. Section 212.08(6), Florida Statutes, grants exemptions from the sales and use taxes imposed in Chapter 212, Florida Statutes, and provides:

    There are also exempt from the tax imposed by this chapter sales made to the United States Government, a state, or any county, municipality, or political subdivision of a

    state when payment is made directly to the dealer by the government entity. This exemption shall not inure to any transaction otherwise taxable under this chapter when payment is made by a government employee by any means, including but not limited to, cash, check, or credit card when that employee is subsequently reimbursed by the governmental entity. This exemption does not include sales of tangible personal property made to contractors employed either directly or as agents of any such government or political subdivision thereof when such tangible personal property goes into or becomes a part of public works owned by such government or political subdivision thereof, except public works in progress or for which bonds or revenue certificates have been validated on or before August 1, 1959. . . .

18. The consumer certificate of exemption at issue in this proceeding is a license within the meaning of Section 120.52(9), Florida Statutes (Supp. 1996).

19. "The authority to issue a certificate includes the authority to revoke the certificate." Cirnigliaro v. Florida Police Standards and Training Commission, 409 So. 2d 80, 83 (Fla. 1st DCA 1982), citing State Board of Education v. Nelson, 372 So. 2d 114 (Fla. 1st DCA 1979). Section 212.084(3), Florida Statutes, provides: "If the department determines that an entity no longer qualifies for an exemption, it shall revoke the tax exemption certificate of the entity."

20. Exemptions in tax laws are strictly construed against the party claiming them. Capital City Country Club, Inc. v. Tucker, 613 So. 2d 448 (Fla. 1993); State Department v. Anderson,

    403 So. 2d 397 (Fla. 1981); Florida Department of Revenue v.

    Canaveral Port Authority, 642 So. 2d 1097 (Fla. 5th DCA 1994); Mikos v. City of Sarasota, 636 So. 2d 83 (Fla. 2d DCA 1994).

21. The issue is whether the Tribe is the United States Government, a state, or any county, municipality, or political subdivision of a state.

22. "Strict construction of the subject language [Section 212.08(6), Florida Statutes] requires that the term 'state' as used therein be construed as meaning one of the states of the United States of America." Iberia Airlines of Spain v. Department of Revenue, Recommended Order, DOAH Case No. 94-2792. The Tribe is not one of the fifty states of the United States of America.

23. The Tribe argues that, because the Tribe is recognized pursuant to 26 U.S.C. Section 7871 as a state for certain purposes, it should be recognized as a state for purposes of Section 212.08(6), Florida Statutes. Section 7871 lists seven purposes for which "[a]n Indian tribal government shall be treated as a State . . ." None of these seven purposes include exemption from state taxation.

24. There was no evidence presented that the Tribe is a municipality or county, and the Tribe has not argued that it is a municipality or county for the purposes of Section 212.08(6), Florida Statutes.

25. Subsection 7871(d), 26 U.S.C., treats subdivisions of certain Indian tribal governments as political subdivisions of a

    state for the same purposes that Subsection 7871(a) treats Indian tribal governments as states. None of those purposes include exemption from state taxation.

26. The Tribe contends that it is a political subdivision of the federal government because the Tribe has entered into self-determination contracts with the federal government to provide certain services to the Tribe. It should be noted that Section 212.08(6), Florida Statutes, does not include an exemption for political subdivisions of the federal government. It provides an exemption for the United States government.

27. ISDEAA or self-determination contracts are defined in

    
    

    25 U.S.C. Section 450b.(j) as follows:

    
    

    (j) 'self-determination contract’ means a contract (or grant or cooperative agreement utilized under section 450e-1 of this title) entered into under part A of this subchapter between a tribal organization and the appropriate Secretary for the planning, conduct and administration of programs or services which are otherwise provided to Indian tribes and their members pursuant to Federal law: Provided, that except as provided [in] the last proviso in section 450j(a) of this title, no contract (or grant or cooperative agreement utilized under section 450e-1 of this title) entered into under part A of the subchapter shall be construed to be a procurement contract.

28. The Congressional declaration of policy as to the ISDEAA is contained in 25 U.S.C. Section 450a. Paragraph (b) provides:

    The Congress declares its commitment to the maintenance of the Federal Government’s unique and continuing relationship with, and

    responsibility to, individual Indian tribes and to the Indian people as a whole through the establishment of a meaningful Indian self-determination policy which will permit an orderly transition from the Federal domination of programs for, and services to, Indians to effective and meaningful participation by the Indian people in the planning, conduct, and administration of those programs and services. In accordance with this policy, the United States is committed to supporting and assisting Indian tribes in the development of strong and stable tribal governments, capable of

    administering quality programs and developing

    the economies of their respective communities.

    
    

    The purpose of the ISDEAA is not to make Indian tribes a part of the federal government.

29. The Tribe argues that it is a federal instrumentality. Indian tribes have been held not to be federal instrumentalities. Askew v. Seminole Tribe of Florida, Inc., 474 So. 2d 877, 881 (Fla. 4th DCA 1985). See also Mescalero Apache Tribe v. Jones, 411 U.S. 145, 36 L.Ed. 2d 114, 93 S.Ct. 1267 (1973), wherein the United States Supreme Court rejected a federally chartered Indian tribe’s claim that it is a federal instrumentality.

30. The Tribe argues that the Department should be estopped from revoking the Tribe’s certificate of exemption because in the past the Department has recognized the Tribe as part of the federal government, has granted a certificate of exemption to the Tribe, and has promised to grant an "immunity certificate" to the Tribe.

31. In State Department of Revenue v. Anderson, 403 So. 2d

    
    

    397 (Fla. 1981), the Florida Supreme Court discussed the elements of equitable estoppel as applied to the state.

    As a general rule, equitable estoppel will be applied against the state only in rare instances and under exceptional circumstances. North American Co. v. Green,

    120 So. 2d 603 (Fla. 1959). Another general rule is that the state cannot be estopped through mistaken statements of the law. Department of Revenue v. Hobbs, 368 So. 2d

    367 (Fla. 1st DCA), appeal dismissed, 378 So. 2d 345 (Fla. 1979); Austin v. Austin, 350 So. 2d 102 (Fla. 1st DCA 1977), cert. denied, 357 So. 2d 184 (Fla. 1978). In order to demonstrate estoppel, the following elements must be shown: 1) a representation as to a material fact that is contrary to a later- asserted position; 2) reliance on that representation; and 3)a change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon. Greenhut Construction Co. v. Henry A. Knott, Inc., 247 So. 2d 517 (Fla. 1st DCA 1971). . . .

    Id. At 400.

    
    

32. The Department has not made a representation as to a material fact. Whether the Tribe is exempt from taxation pursuant to Section 212.08(6), Florida Statutes, is a matter of law not fact. Thus, whether in the past the Department had considered the Tribe to be a part of the federal government is a mistake of law not a mistake of fact.

33. The Tribe has not established that it has relied to its detriment on the Department's statement that it was going to draft a rule dealing with tribal immunity and a certificate of immunity. Any immunity that the Tribe currently has is valid

    whether the Department has promulgated a rule or developed an immunity certificate. The Department has not taken the position that the Tribe's immunity is equivalent to the exemption that the Tribe has enjoyed with its consumers' certificate of exemption.

34. The Tribe does not meet the criteria for a consumer certificate of exemption pursuant to Section 212.08(6), Florida Statutes.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that a Final Order be entered revoking the Seminole Tribe of Florida's consumer certificate of exemption.

DONE AND ENTERED this 7th day of July, 1997, in Tallahassee, Leon County, Florida.

SUSAN B. KIRKLAND

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 7th day of July, 1997.

COPIES FURNISHED:

Tracy Allen, Esquire Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668

Donald A. Orlovsky, Esquire Servico Centre South

1601 Belvedere Road, Suite 402 West Palm Beach, Florida 33406

John Mellichamp, III, Esquire Department of Legal Affairs The Capitol

Tallahassee, Florida 32399-1050

Linda Lettera, General Counsel Department of Revenue

204 Carlton Building Tallahassee, Florida 32399

Larry Fuchs, Executive Director Department of Revenue

104 Carlton Building Tallahassee, Florida 32399

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: 96-003554

Orders for Case No: 96-003554