STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PANHANDLE LIBRARY ACCESS )

NETWORK, INC., )

)

Petitioner, )

)

vs. ) Case No. 98-0019

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Notice was provided and on May 8, 1998, a formal hearing was held in this case. Authority for conducting the hearing is set forth in Sections 120.569 and 120.57(1), Florida Statutes. The hearing location was the Bay County Courthouse, Panama City, Florida. The hearing was conducted by Charles C. Adams, Administrative Law Judge.

APPEARANCES

For Petitioner: Dr. William P. Conniff, Executive Director Personal Representative

Panhandle Library Access Network Miracle Strip Loop, Suite 2 Panama City Beach, Florida 32407

For Respondent: William B. Nickell, Esquire

Department of Revenue

501 South Calhoun Street, Suite 204 Tallahassee, Florida 32399-0100

STATEMENT OF THE ISSUE

Is Petitioner entitled to a tax exemption certificate based upon its status as an "educational institution" as defined in Section 212.08(7)(o)2.d, Florida Statutes?

PRELIMINARY STATEMENT

Petitioner had applied to Respondent for a Florida Consumer's Certificate of Exemption from taxation. That request was made in accordance with Section 212.08(7), Florida Statutes. On December 9, 1997, Respondent noticed its intent to deny that application. On December 26, 1997, Respondent received Petitioner's letter requesting a hearing to contest the preliminary decision to deny the application. On January 5, 1998, the Division of Administrative Hearings received a request from Respondent to hold the hearing to resolve the dispute between the parties. The case was assigned and the hearing conducted on the aforementioned date.

At hearing Dr. William P. Conniff testified in support of the application for tax exemption certificate. Petitioner's Exhibits one through five and Exhibit eight were admitted.

Ruling was reserved on the admission of Petitioner's Exhibits six and seven. Those exhibits are denied admission. Respondent did not present witnesses or exhibits. The parties offered a written stipulation of facts into the record. That stipulation of facts was accepted and the facts may be relied upon for fact finding in the recommended order. Official recognition was given to Petitioner's reference to Sections 254.40 through 257.42, Florida Statutes. At Respondent's request, official recognition was given to the cases International Conference of Police Chaplains, Petitioner vs. Department of Revenue, Respondent, DOAH Case

No. 96-1935/DOR No. 96-32-FOF, Final Order; Florida Chapter International Association of Arson Investigators, Inc.

Petitioner, vs. State of Florida, Department of Revenue, Respondent, DOAH Case No. 95-5668/DOR No. 96-13-FOF, Final Order; and Space Coast Writers Guild, Petitioner vs. Department of Revenue, Respondent, DOAH Case No. 97-3456, Recommended Order.

A hearing transcript was not prepared. Additional time was requested to file proposed recommended orders. The time for filing was extended until May 25, 1998. The parties filed proposed recommended orders. Those proposals have been considered in preparing the recommended order.

FINDINGS OF FACT

1. Petitioner is a non-profit organization. Its purpose is to identify and improve library resources and services within the Florida Panhandle geographic area. More specifically, Petitioner provides services and information to support interlibrary cooperative activities, that will strengthen resource sharing among libraries in the Panhandle and improve the effectiveness of the member libraries, with the ultimate goal being to facilitate access to library materials by library users.

2. Respondent is an agency of the State of Florida which has the responsibility to consider applications for Consumer Certificates of Exemption from taxation. See Section 212.008(7), Florida Statutes. When Respondent refused to grant Petitioner a Consumer Certificate of Exemption, for reasons stated in its

   notice of intent, Petitioner challenged that preliminary

   decision. As indicated in the notice of intent to deny, the reason for denial is as follows:

   1. Your organization is not a state tax- supported, parochial, church or nonprofit private school, college or university which conducts 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 Christian Colleges and Schools, Inc.

      
      

   2. The purpose of your organization is not to raise funds for schools teaching grades kindergarten through high school, colleges or universities.

      
      

   3. Your organization is not a state, district, or other governing or administrative office the function of which is to assist or regulate the customary activities of educational organizations and members.

      
      

   4. Your organization fails to meet the qualifications for exemption from sales and use taxation, as set forth in Section 212.08(7), Florida Statutes.

      
      

3. The grounds for denial found in the third and fourth paragraph constitute the remaining dispute between the parties to be resolved. Paragraph three is in relation to language set forth in Section 212.08(7)(o)2.d., Florida Statutes.

4. Petitioner provides its services and support to member organizations who provide library services. The member organizations include university, community college, other college, military, county school district, municipal, county and

   other governmental public libraries. A list of the members is found in Petitioner's Exhibit one.

5. Petitioner receives funding through grant programs sponsored by federal and state government. Some of the budget for the Petitioner comes from local sources, such as membership dues.

6. The arrangements promoted by the Petitioner create library consortia among the members in Petitioner's network.

7. To become a member the respective libraries have to execute a letter of agreement and be approved by Petitioner's Board of Directors. To maintain the membership, a member library must agree to freely loan materials outside its library, have their records added to the Florida Bibliographic and Serials databases, and to upkeep the library records in the databases. (Reference to serials databases, refers to periodicals available through the member libraries.) The failure to meet those requirements would cause a member library to be dropped from membership.

8. In executing the letter of agreement, the member libraries commit to the following:

   1. Abide by the Bylaws and Articles of Incorporation of PLAN.

      
      

   2. Provide free loan and photocopies of materials consistent both with the policies and procedures prescribed in the PLAN Interlibrary Loan Code, the Florida Library Information Network (FLIN) Manual of Policies, Protocols and Procedures, and with the library's customary lending policies.

      This service will be provided to PLAN participants.

      
      

   3. Share machine-readable bibliographic records for inclusion in the PLAN database. This database will be built on OCLC.

      
      

      1. Libraries with machine-readable records in MARC format agree to permit the loading of those records and the setting of the holdings information in the OCLC database. Conditions for loading those records will be subject to plans developed by the PLAN Board of Directors.

         
         

      2. Libraries with records in the OCLC database agree to allow their bibliographic and holdings records to be used in off-line products produced from the OCLC database for resource sharing activities of Panhandle libraries.

      
      

   4. Develop a plan and show evidence of progress in that plan toward (1) converting their records to MARC format, and (2) including their records in the PLAN database.

      
      

   5. Participate in further development of PLAN within bounds determined by participatory decision-making.

      
      

   6. Each library should provide the resources to meet the ordinary needs and interests of its primary clientele. Material requested from another library should generally be limited to those that do not conform to the library's collection development policy or for which there is no recurring demand.

      
      

   7. Have trained staff to handle both their in-house PLAN online services and management of their resource sharing responsibilities.

   
   

9. Petitioner's responsibilities under the agreement with its member libraries are as follows:

   1. PLAN will notify the [Member Library] through countersigning this letter whether its participating status is authorized or if

      there are any conditions which prevent it from being included.

      
      

   2. PLAN will notify the [Member Library] and all PLAN libraries of the date it will be accorded member library status by other PLAN libraries.

10. By its membership, the member library gains the following advantage:

    1. The [Member Library] will be entitled to all benefits as a PLAN member it chooses to utilize including, but not limited to, access to the Panhandle Union List of Serials (PULSE) and the PLAN fax/courier network, and eligibility for special projects and programs sponsored by the PLAN.

       
       

11. The procedures for removing a member from the network are as follows:

    1. Failure of the [Member Library] to comply with PLAN protocols and procedures or failure to fulfill its assurances as a participant will constitute grounds for PLAN to cancel the [Member Library]'s status as a PLAN library, in which case PLAN shall give written notice to the library. The [Member Library] may cancel its participation in PLAN at the end of any PLAN fiscal year by serving notice in writing at least thirty (30) days before the end of the fiscal year.

12. In fiscal year 1996 Petitioner held 52 workshops. Staff from all library members took part in workshops conducted by Petitioner. It is reasonably inferred that the purposes of

    the workshops coincided with the overall purpose of Petitioner in its coordinating function to facilitate sharing information among its library members.

13. Information through the program coordinated by the Petitioner is produced in several formats: on-line, CD-ROM and paper. That information is given to libraries at no cost, if the libraries produce their holdings as part of the exchange of information.

14. In the past Petitioner loaned member libraries CD-ROM players, fax machines, and PC's, together with other equipment that would assist its members. Petitioner has directly assisted in making information available to its membership by creating information and loading it on a database. This refers to conversion of paper card catalogs into machine readable electronic digital records. These activities by the Petitioner are at its costs.

15. In carrying out its functions Petitioner attempts to put its members in the position to individually carry out day to day service for the benefit of library patrons. Petitioner's role does not extend to the control of the operation of the member libraries in their provision of library services to the public.

16. In its brochure, Petitioner's exhibit 4, Petitioner's services are further described as:

    Internet Access - PLAN provides Internet access and training for its member libraries. Libraries without the necessary equipment may apply for a free equipment loan from PLAN.

    
    

    PULSE - The Panhandle Union List of Serials contains the periodical holdings of 33 member libraries and the State Library. Over 29,000 titles are currently accessible on-line, and in print. PLAN inputs and updates the member's periodical holding as well as providing each member with copies of PULSE.

    
    

    Interlibrary Loan - PLAN coordinates the addition of select libraries to become a Group Access member on the OCLC ILL subsystem. We also provide initial training

    and documentation on using OCLC Interlibrary Loan.

    
    

    Monographic Database - PLAN provides access through its monographic database to almost 4 million titles owned by PLAN members. Each year additional titles are added via updates and retrospective conversion.

    
    

    Equipment Loan - PLAN offers a free equipment loan program to member libraries. Libraries may apply for the loan of a PC, fax machine, CD-ROM player, and/or modem. The fax machines can be used to send ILL requests and receive photocopied ILL materials.

    
    

    Workshops and Continuing Education - PLAN conducts many workshops on a variety of topics of interest to librarians. Tracks include cataloging, reference, management, technology and resource sharing. The workshops are conducted throughout the panhandle region. PLAN members may send two attendees to each workshop at no cost to the library.

    
    

    Consulting - PLAN provides its members with consulting services on automation and other library topics.

    
    

    Retrospective Conversion - PLAN provides conversion services for member libraries without MARC records.

    
    

    Documentary Delivery - PLAN is constantly striving to improve the delivery of documents between member libraries. In addition to fax and U.S. Postal Service, we provide UPS delivery of rush materials.

    
    

    FirstSearch - PLAN provides its members with access to OCLC's databases. These databases contain: books and other materials in libraries worldwide; index of articles and table of contents of nearly 12, 500 journals; index of articles with text online or by e- mail; U.S. government publications; journal articles and reports in education; and abstracted articles from medical journals, etc.

    CONCLUSIONS OF LAW

    
    

17. The Division of Administrative Hearings has jurisdiction over this subject matter and the parties to this action in accordance with Sections 120.569 and 120.57(1), Florida Statutes.

18. As the applicant seeking a Consumer Certificate of Exemption from taxation, Petitioner must prove its entitlement by a preponderance of the evidence. In accordance with the statute under which Petitioner claims its exemption, and court decisions, Petitioner's entitlement to the exemption is considered through a strict construction of the statute, in the statute's definitions, limitations and applications in the exemption categories it describes. See Sebring Airport Authority v. McIntyre, 642 So. 2d 1072 (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, 43 So. 2d 397 (Fla. 1981); and Green v. Pederson, 99 So. 2d 292 (Fla. 1957).

19. In particular, Petitioner's claim of exemption is premised upon Section 212.08(7)(o)2.d, Florida Statutes, which states:

    Sales, rental, use, consumption, distribution, and storage tax; specified exemptions. – The sale at retail, the rental, the use, the consumption, the distribution, and the storage to be used or consumed in this state of the following are hereby

    specifically exempt from the tax imposed by this chapter.

    
    

    * * *

    
    

    (7) MISCELLANEOUS EXEMPTIONS –

    
    

    * * *

    (o) Religious, charitable, scientific, educational, and veterans' institutions and organizations – [ . . .]

    
    

    2. The provisions of this section authorizing exemptions from tax shall be strictly defined, limited and applied in each category as follows: [. . . ]

    
    

    . . . . 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. . .

    
    

20. Petitioner is not entitled to the issuance of a Consumer Certificate of Exemption from taxation. Petitioner is not a state educational institution. Petitioner is not a district educational institution. Petitioner is not any other form of educational institution comparable to a state educational institution or a district educational institution. It is not an identifiable state or district educational institution or educational institution similar to a state or district educational institution. Petitioner is not principally involved with the provision of education in performing its coordinating role for the benefit of the member libraries. For those reasons, Petitioner does not meet the definition of "educational institution." Petitioner is not a educational institution

governing office. Petitioner can be considered an administrative office but not an administrative educational institution.

Petitioner's function does not include the regulation of the customary activities of educational organizations or educational members. In its administrative function, Petitioner assists the customary activities of educational organizations or educational members but Petitioner does not limit its assistance to educational organizations or educational members. Petitioner's involvement with educational organizations or educational members who participate in its network, when assisting those organizations and members in their customary activities, is in relation to the provision of library services by those educational organizations or educational members. In summary, Petitioner is not an educational institution, who through its administrative office, limits assistance to educational organizations or educational members in the performance of their customary activities. The combination of facts that pertain to Petitioner's activities do not sufficiently comply with the statement of authority granting the tax exemption that is under consideration here.

RECOMMENDATION

Based upon the facts found and the conclusions of law reached it is,

RECOMMENDED:

That a final order be entered which denies Petitioner's application for Consumer Certificate of Exemption from taxation.

DONE AND ENTERED this 22nd day of June, 1998, in Tallahassee, Leon County, Florida.

CHARLES C. ADAMS

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 22nd day of June, 1998.

COPIES FURNISHED:

Dr. William P. Conniff, Executive Director Panhandle Library Access Network

Miracle Strip Loop, Suite 2 Panama City Beach, Florida 32407

William B. Nickell, Esquire Department of Revenue

501 South Calhoun Street, Suite 204 Tallahassee, Florida 32399-0100

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

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: 98-000019

Orders for Case No: 98-000019