STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CONSTRUCTION FOR WORLDWIDE )

EVANGELISM, INC., )

)

Petitioner, )

)

vs. ) Case No. 97-1379

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in this case in Tampa, Florida on

July 18, 1997, before Arnold H. Pollock, an Administrative Law Judge with the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Mark M. Schabacker, Esquire

Schabacker, Simmons and Dunlap Post Office Box 3328

Tampa, Florida 33601-3328

For Respondent: William B. Nickell, Esquire

Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668

STATEMENT OF THE ISSUES

The issue for consideration in this case is whether Petitioner should be issued a Consumer Certificate of Exemption from Florida sales tax.

PRELIMINARY MATTERS

By Notice dated February 19, 1997, Shirley Towne, Agency

Official for the Department of Revenue, advised Petitioner that the Department intended to deny its application for a Consumer’s Certificate of Exemption from Florida sales tax because it determined, the “organization does not have an established physical place for worship at which nonprofit services and activities are regularly conducted and carried on” and because “there is no indication that [Petitioner] is part of a larger organization within the hierarchy of that larger organization, nor does it assist or regulate the activities of these beneath it in the organizational hierarchy.” On the basis of those alleged deficiencies, the Department concluded that Petitioner failed to meet the qualifications for sales tax exemption as defined in Section 212.08, Florida Statutes. Petitioner thereafter requested formal hearing, and this hearing ensued.

At the hearing, Petitioner presented the testimony of Paul N. Puleo, its President, and introduced Petitioner’s Exhibits 1 through 12, 15, and 17 through 20. Petitioner’s Exhibits 13, 14, and 16 were not admitted into evidence.

Respondent did not present any witnesses or offer any exhibits. At the request of the Respondent’s counsel, and with the concurrence of Petitioner’s counsel, the undersigned officially recognized all statutes and rules of the State of Florida and the Department of Revenue pertinent to the issues herein and those prior Final Orders of the Department of Revenue cited in its Request for Judicial Recognition filed prior to the hearing. The

undersigned declined to officially recognize the statute passed by the 1997 Florida Legislature entitled “An act relating to taxation, . . .” which was subsequently vetoed by Governor Lawton Chiles in the Governor’s veto message relating thereto.

No transcript of the proceedings was furnished to the Administrative Law Judge. However, counsel for both parties submitted post-hearing matters which were carefully considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. By stipulation prior to the taking of any testimony, the parties agreed that the only option upon which Petitioner seeks an exemption from sales tax is that relating its status as an administrative office of the organization. Petitioner agrees that it does not conduct regular church services within the meaning of Section 212.08(7)(o), Florida Statutes.

2. At all times pertinent to the issues herein, the Petitioner, Construction for Worldwide Evangelism, Inc., was a non-profit corporation registered as such with the Florida Secretary of State, which has been granted exemption from Federal Income Tax under Section 501(c)3, of the Internal Revenue Code. It was established in 1991, and its purpose is to build churches in Third World countries for church mission boards and other missionary organizations, including Baptist International Missionaries, Inc. (BIMI).

3. BIMI trains and places missionaries and provides

   stewardship of individual members’ funds and insurance. Petitioner also builds facilities for the Association of Baptists for Worldwide Evangelism (ABWE). BIMI and ABWE are the largest and second largest missionary sponsoring organizations in the country with each sponsoring more than 1,000 missionaries in the field.

4. Petitioner also works with other Baptist missionary organizations which are not as large as those previously mentioned. These organizations all have the same purpose -- to spread the word of redemption and salvation through Jesus Christ. Since its inception, Petitioner has been guided in its work by its mission statement and its statement of faith. Both are taken from scripture and are included in the basic tenets of Christian faith. It was founded specifically to fulfill God’s great purpose -- to preach to the world.

5. The missionary organizations referenced above do not build their own missions but look to churches and organizations like the Petitioner to raise funds and build facilities including churches, medical clinics, bible institutes, and other educational buildings. When the Petitioner was founded, it was obvious that funds would be needed to do this work. There are other missionary organizations around the country which build facilities as Petitioner does. The difference between these organizations and Petitioner is that Petitioner has no paid staff, and it takes a project from design conception through

   completion. Other organizations seem to do their projects in stages, based on the availability of volunteers to do the required work.

6. Nothing requires Petitioner to limit approval of requests to those from recognized missionary boards. Other denominational churches make requests to Petitioner but most are turned down because the other denominations have their own funding. Petitioner tries to limit itself to “independent” churches, but it has no formal agreement, other than the Bible, with any of the recognized missionary boards. The missionary boards do not provide their own funds to Petitioner. Financial support comes from individual churches which provide money to their missionary boards which is earmarked for mission construction. Requesters need not be a particular denomination of Baptist congregation. Petitioner will talk with any organization that will agree with its Statement of Faith. However, Petitioner’s Board of Directors has the final authority to decide if a request will be granted.

7. Need for a specific project is communicated to Petitioner through the various missionary boards operating in this country; through direct contact from missions in the field; and from individual churches which need help in organizing a project they want to do. When Petitioner receives a request, because of the volume of requests received, the Board of Directors tries to evaluate the need in the area, the requester’s

   doctrinal position, and the availability of resources to the local group which will do the work if approved.

8. The Petitioner sends evaluators to the field to examine the proposed facilities. All procedures are included in its Project and Guideline Manual which details with particularity how Petitioner will do each step from evaluation, through purchasing of supplies after design, through securing and forwarding of volunteers to completion, close-down, and the return of the volunteers. Each proposed project is evaluated in accordance with the terms of the Manual.

9. In a typical project, a determination is first made whether the applicant is an existing church which needs help. This is a requirement because Petitioner does not start churches. Once they are satisfied the applicant is an existing church, the evaluators determine how much of a project is needed and how much resources the local organization has, and then look to further evaluation against the twenty-five or so other factors for consideration. Most of this information is gathered from the applicant or a mission board either by Mr. Puleo, an electrical contractor who is president of the Petitioner organization, or by the vice-president of the organization. Once all pertinent information is on hand and the project deemed worthy, a project profile is developed.

10. Petitioner has several projects ongoing at the same time. The initial step is to pray for guidance from God as to

    which project to do. Once a project is approved, an on-site inspection is conducted to develop information as to whether there is a real need for Petitioner to be involved or whether the local people can accomplish the project by themselves. This on- site inspection is usually done by a member of the Petitioner’s Board and by a committee chairperson.

11. The on-site survey determines what is available at the site, and information is developed as to the logistics needed and the personnel required. Another part of the planning relates to the ministry to be supported. An evaluation is conducted of the on-site missionary and how well that individual operates, how long he plans to stay there, and whether he is flexible enough to work with both locals and volunteers. After this evaluation is completed, a conclusion is drawn as to whether Petitioner can take on the project and what will be needed. After prayer and consideration, a decision is made as to whether to go forward with the project.

12. The funds to do the work and to buy the required materials come from Baptist churches across the country, businesses, other organization, and individuals. All the workers come from individual churches who support Petitioner’s program. They work on a volunteer basis without pay. When a church contacts Petitioner to have a facility built, a representative of the Petitioner goes to that church, conducts a service, and tries to enlist the financial and volunteer support of the church

    membership. In addition, periodically, conferences of pastors seek a presentation from Petitioner. Any funds received as a result of those presentations usually come from the specific church’s general fund and volunteers for the project from that church’s membership.

13. In support of its fund and volunteer raising activities, Petitioner publishes a brochure regarding its activities which is widely distributed through supporting churches. It outlines how readers of the brochure can assist or seek other information. Petitioner also published a newsletter which is circulated to any volunteer who has gone on a project with it, to churches, and to others on the organization’s mailing list. This newsletter describes what is happening in the organization and what is planned. A tract is also passed out to the public by which Petitioner seeks to raise funds and attract disciples.

14. No one who works with Petitioner is paid. All funds raised go to the cost of constructing the building, to the cost of travel and support of personnel at the building site, and to the cost of transportation of supplies. In that regard, a portion of the supplies and equipment needed for a project is often donated as is the cost of transporting that material to the job site. It should be noted that when Petitioner works on a project in a foreign country, often volunteers from that local church subsequently help with work and funds on other projects

    within that country.

    
    

15. Included in every program is a devotional component. Guidelines exist which cover the duties and responsibility of the devotional committee of each work force, the chairman, and the individuals. These guidelines are prepared for each day of the program’s existence and call for a thirty minute to one hour devotional each night.

16. Petitioner, which originated in Florida, now has branches in both Georgia and Michigan which are recognized by those states. Both the Georgia and Michigan organizations do work identical to that done by the Florida group, but everything they do is coordinated and controlled through the Petitioner’s Tampa office.

17. Since its inception in 1991, Petitioner has built seventeen or eighteen facilities - ten or eleven were churches, two were Bible institutes, and one a radio station in the Caribbean area and South America. The average church costs between $45,000 and $50,000, although one church in Bolivia was built for $15,000 and one will be built for $20,000. Medical facilities are more expensive. The facilities constructed by Petitioner have a positive impact on the mission for which they are constructed. They tend to enhance the success of the mission and improve its local standing.

18. Petitioner previously held a Certificate of Exemption from sales tax from the Department. Neither the Petitioner’s

    organization nor the statute under which certificates are granted has changed in the interim between the granting of the prior certificate and the denial of the current application for renewal.

    CONCLUSIONS OF LAW

    
    

19. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.

20. In the instant case, Petitioner seeks a certificate of exemption from Florida's sales and use taxes as provided for in Chapter 212, Florida Statutes. Section 212.08(7)(o)2. defines the term, "religious institutions." It provides:

    "Religious institutions" means churches, synagogues, and established physical places for worship at which nonprofit religious services and activities are regularly conducted and carried on. The term "religious institutions" includes nonprofit corporation the sole purpose of which is to provide free transportation services to church members, their families, and other church attendees. The term "religious institutions" also includes state, district, or other governing or administrative offices the function of which is to assist or regulate the customary activities of religious organizations or members . . . .

21. Within the terms of the statute, which, itself, requires strict definition, limitations, and application, Petitioner clearly is not a church, synagogue, or established place for worship at which nonprofit religious services and activities are regularly carried on or conducted. Petitioner is

    made up of a group of individuals who have joined together for a most worthwhile purpose and whose work creates a benefit to the recipient thereof. By the same token, Petitioner is not a corporation which provides free transportation services to church members, their families, or others.

22. Petitioner contends it is a religious institution based on its inclusion within the overall Church of Jesus Christ, and there can be little doubt it consists of a group of Christians joined together for a Christian purpose. It is also clear that Christian ethics and beliefs are espoused and followed by those working within the group, and the benefits of a Christian way of life are made plain to others by the words, actions, and deeds of the members of the organization.

23. It is well accepted that tax exemptions must be strictly construed against the taxpayer seeking them. Capital City Country Club v. Tucker, 613 So. 2d 448 (Fla. 1993), Section 212.08(7)(o)2, Florida Statutes. Petitioner must clearly show its entitlement to the exemption.

24. Here, Petitioner has not shown that it is a "religious institution" as defined by the statute. It is an organization of religious Christian individuals, but, notwithstanding the previous issuance of a certificate of exemption to it, it is not, legally, a "religious institution." It does not meet the organizational and regulatory requirements of the statute. The activities of the Petitioner, though clearly worthwhile and for a

charitable purpose, are not the customary activities of a religious organization. The daily services conducted on site for volunteers working on a given project do not bring it within that definition.

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 Petitioner an exemption from sales and use tax.

DONE AND ENTERED this 26th day of August, 1997, in Tallahassee, Leon County, Florida.

_ ARNOLD H. POLLOCK

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) 921-6947

Filed with the Clerk of the Division of Administrative Hearings this 26th day of August, 1997.

COPIES FURNISHED:

Mark M. Schabacker, Esquire Schabacker, Simmons and Dunlap Suite 2500

100 North Tampa Street Tampa, Florida 33602

William B. Nickell, Esquire Department of Revenue Suite 304

501 South Calhoun Street Tallahassee, Florida 32301

Larry Fuchs Executive Director

Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

Linda Lettera General Counsel

Department of Revenue

204 Carlton Building Tallahassee, Florida 32399-0100

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: 97-001379

Orders for Case No: 97-001379