STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SPACE COAST WRITER'S GUILD, )

)

Petitioner, )

)

vs. ) Case No. 97-3456

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

A formal hearing was held by the Division of Administrative Hearings, before Administrative Law Judge, Daniel M. Kilbride, in Melbourne, Florida, on March 19, 1998. The following appearances were entered:

APPEARANCES

For Petitioner: Edwin J. Kirschner, President

Space Coast Writer's Guild Post Office Box 804 Melbourne, Florida 32902

For Respondent: William B. Nickell

Assistant General Counsel Department of Revenue

501 South Calhoun Street, Suite 204 Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

Whether the Petitioner qualifies for renewal of a consumer's certificate of exemption as an "educational institution" as defined in Section 212.08(7)(o)2.d., Florida Statutes.

PRELIMINARY STATEMENT

Petitioner, Space Coast Writers Guild, Inc., filed an application to renew its consumer certificate of exemption with Respondent, Department of Revenue, on or about January 5, 1997. On April 28, 1997, Respondent issued its Notice of Intent to Deny Petitioner's application based on the grounds that Petitioner did not qualify as an "educational institution." Petitioner filed a Petition for formal administrative hearing and this matter was referred to the Division of Administrative Hearings (DOAH).

At the final hearing Petitioner presented the testimony of one witness, Edwin J. Kirschner, President, and offered two exhibits for evidence. Respondent called no witnesses. The parties stipulated to the admission of Joint Composite Exhibit One. Respondent moved for Judicial Recognition of two items.

Both were recognized as Final Orders previously issued by the Department in prior cases.

The Petitioner and Respondent stipulated and agreed that:

1. The only applicable exemption was as an "educational institution" for an "administrative office" as specified pursuant to Section 212.08(7)(o)2.d., Florida Statutes, and that, 2. The Petitioner is an organization in receipt of a Section 501(c)3 "letter" from the Internal Revenue Service. At the conclusion of the hearing, the Administrative Law Judge advised the parties that a proposed recommended order could be submitted within ten days by each party. No transcript was ordered. Respondent

   submitted its proposed recommended order on March 31, 1998. Petitioner has not submitted its proposals as of the date of this order.

   FINDINGS OF FACT

   
   

   Based on the evidence presented, the following findings of fact are made:

   1. Petitioner is an active not-for-profit incorporated organization, having its principal place of operation in the State of Florida. Petitioner is a recipient of a 501(c)3 Letter from the Internal Revenue Service (IRS) and maintains its exempt status thereunder.

   2. Respondent is the state agency charged with the administration of the tax laws of the State of Florida and is the agency responsible for issuing or denying certificates of exemption to qualified organizations.

   3. Petitioner applied for renewal of its certificate of exemption on or about January 5, 1997, as an educational institution.

   4. The application for exemption was denied by Notice of Intent to Deny rendered by Respondent, after several requests for information, on the grounds that Petitioner did not qualify under the statutory requirements for a consumer certificate of exemption.

   5. Petitioner, founded in 1981, is a nationwide organization of writers, located in east central Florida, which

      seeks to encourage, train, and develop professional and avocation writers. It holds an annual writers' conference for adults and students; sponsors writing contests in the public schools and community colleges; provides a community speakers' bureau in the community and schools of the area; bestows scholarship and awards service to deserving individuals; and publishes periodic newsletters and an annual directory.

   6. The only criteria Petitioner could meet as an educational institution was as an "administrative office." No evidence was presented to indicate that Petitioner could qualify under any other alternatives or options allowed under Section 212.08(7)(o)2., Florida Statutes.

   7. Petitioner is not an accredited educational institution with regular classes, a television or radio network, a museum, library, or an accepted and statutorily recognized continuing educational program.

   8. There was no evidence to show that Petitioner has any control of or any organizational nexus with any accredited educational institution; or that Petitioner functions to assist or regulate any specific educational institution within the meaning of the applicable statute as it has been defined by prior Final Orders of the Department. See Section 212.08(7)(o)2.d., Florida Statutes.

   9. There was no evidence to show that Petitioner customarily and routinely exercised any control over any specific

      educational institution or that an agreement of any kind with any educational institution existed.

   10. There was no evidence to show Petitioner functions or operates within a larger hierarchy of any educational institution, or that any administrative rules, policies or by- laws have been promulgated or adopted by any educational institution that specifically identify the Petitioner or the conditions in which Petitioner uses or controls public property, facilities, or personal services operated by an educational institution.

   11. The Florida Department of Education has not approved Petitioner as an educational institution or promulgated any administrative rules regarding the Petitioner.

   12. Petitioner has not provided or raised funds for any educational institutions or for the administrative assistance of any educational institutions, nor does it directly provide 50 percent of its expenditures to any educational institution; Petitioner provides no volunteers and raises no funds for any charitable or educational organizations; and does not provide 50 percent of its expenditures to statutorily provided educational or charitable programs.

   13. Petitioner is not organized or operated exclusively to receive, hold, invest and administer property and to make expenditures to or for the benefit of public education programs in this state, nor is Petitioner a Charter School under

       Section 228.056, Florida Statutes, a Direct Support Organization under Sections 237.40, 240.299, or 240.331, Florida Statutes, or a Nonprofit Cable Consortium.

       CONCLUSIONS OF LAW

       
       

   14. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this cause, pursuant to Sections 120.569 and 120.57(1), Florida Statutes.

   15. Respondent is authorized to issue and reissue tax exempt certificates to qualified entities pursuant to Section 212.084, Florida Statutes.

   16. Tax exemptions are matters of legislative grace. It is a well-recognized rule of law that tax exemptions must be strictly construed against the taxpayer seeking them and in favor of the state. Sebring Airport Authority v. McIntrye, 642 So. 2d 1072 (Fla. 1994); Capital City Country Club v. Tucker, 613 So. 2d

       448 (Fla. 1993); Asphalt Pavers, Inc. v. Dept. of Revenue, 584 So. 2d 55 (Fla. 1st DCA 1991); State Dept. of Revenue v. Anderson, 403 So. 2d 397, 399 (Fla. 1981); Green v. Pederson, 99 So. 2d 292, 296 (Fla. 1957). The Green case specifically states:

       It is well settled that he who would shelter himself under an exemption clause in a tax statute must show clearly that he is entitled under the law to an exemption; and the law is to be strictly construed. . . .

       
       

       Therefore, the burden is on the Petitioner to show clearly that it is entitled to a tax exemption. Ibid.

   17. Petitioner seeks a renewal of its exemption from tax- based upon the allegation that it qualifies as a "educational institution" pursuant to Section 212.08(7)(o)2.d., Florida Statutes, which provides:

       d. "Educational institutions' means state tax-supported or parochial, church and nonprofit private schools, colleges, or universities which conduct regular classes and courses of study. Nonprofit

       libraries, art galleries, performing arts centers that provide educational programs to school children. . . . The term "educational institutions" includes private nonprofit organizations the purpose of which is to raise funds for schools teaching grades kindergarten through high school, colleges, and universities. The term "educational institutions" includes any nonprofit newspaper of free or paid circulation primarily on university or college campuses which holds a current exemption from federal income tax under s. 501(c)(3) of the Internal Revenue Code. . . .The term "educational institutions" also includes state, district, or other governing or administrative offices the function of which is to assist or regulate the customary activities of educational organizations or members.

   18. The six criteria, to be strictly defined, limited, and applied, for Petitioner to obtain a certificate of exemption as an "administrative office" for an "educational institution" are:

1. A non-profit organization; 2. that is a state, district or other administrative office; 3. within a larger hierarchy; 4. whose function is to assist or regulate with some nexus or control; 5. the customary activities; 6. of educational organizations or members. See Section 212.08(7)(o)2.d., Florida Statutes, and Rule 12A-1.001(3), Florida Administrative Code.

   1. Subsection 212.08(7)(o)2.d allows an exemption only when a "governing or administrative office" "functions" to assist or regulate the customary activities of educational organizations or members, and is part of a larger organization, and within the hierarchy of the specific larger organization, the office must assist or regulate the customary activities of the specific educational institution. Petitioner is not part of a larger organization but is an independent entity with independent control and direction. See Section 212.08(7)(o)2.d., Florida Statutes; Florida Association of Arson Investigators v. Department of Revenue, 96-13 FOF; International Conference of Police Chaplains v. Department of Revenue, 96-32 FOF; Tel-World Ministries v. Department of Revenue, 96-25 FOF.

   2. The proper statutory construction of "other governing or administrative office" requires an office be a part of a specific, discrete educational organization. Where general words (other governing. . .) follow an enumeration of things of a specific meaning (state or district), they should be construed to be of the same kind or class. An organization as a whole cannot qualify as an administrative office for itself because such an interpretation would make the other educational institution alternatives unnecessary. See Section 212.08(7)(o)2., Florida Statutes; International Conference of Police Chaplains v. Department of Revenue, supra; Florida Association of Arson Investigators v. Department of Revenue, supra; Green v. State,

      604 So. 2d 471 (Fla. 1992); Consumer Credit Counseling Service of the Florida Gulf Coast v. Department of Revenue, 22 Fla. L. Wkly D1613 (Fla. 2nd DCA July 2, 1997).

   3. To "assist" or "regulate" requires a showing of participation or control, neither of which was shown by the Petitioner. An administrative office must direct, control, or oversee an educational organization or members thereof with some related nexus between the members and the administrative office in order to "assist or regulate" an organization. Petitioner does not assist or regulate any specific organization or membership. Section 212.08(7)(o)2., Florida Statutes; Florida Association of Arson Investigators v. Department of Revenue, supra; International Conference of Police Chaplains v. Department of Revenue, supra.

   4. The Department's interpretation of the statute is reasonable, and therefore permissible. The meaning of "other governing or administrative office" requires an office within a larger organization. The meaning of "assist or regulate" requires either participation or control. Neither of these requirements have been shown by the Petitioner. Consumer Credit Counseling v. State of Florida, supra.

   5. When a certificate expires, the Respondent can require persons or organizations, who have had a certificate issued previously, to submit a new application which will be reviewed by the Respondent under the same guidelines and criteria as a

completely new applicant. The uncontroverted evidence is that the Petitioner's mission has not changed since 1981 and neither has the statute. Although Petitioner is clearly providing an educational service within and out of Florida, Petitioner has not met the heavy burden to show the six required statutory criteria. Petitioner therefore does not qualify for an exemption pursuant to Sections 212.08(7)(o)2.d., Florida Statutes, and Rule 12A- 1.001(3), Florida Administrative Code.

RECOMMENDATION

Upon the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that the Department of Revenue enter a Final Order denying a consumer's certificate of exemption for Petitioner.

DONE AND ENTERED this 27th day of April, 1998, at Tallahassee, Leon County, Florida.

DANIEL M. KILBRIDE

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 27th day of April, 1998.

COPIES FURNISHED:

William B. Nickell, Esquire Department of Revenue

501 South Calhoun Street Carlton Building, Room 204 Tallahassee, Florida 32301

Dr. Ed Kirschner Petitioner's Representative Space Coast Writer's Guild Post Office Box 804

Melbourne, Florida 32902-0804

Linda Lettera, General Counsel Department of Revenue

Post Office Box 6668 Tallahassee, Florida 32314-6668

Larry Fuchs, Executive Director 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: 97-003456

Orders for Case No: 97-003456