STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

VIETNAM VETERANS OF FLORIDA )

FOUNDATION, INC., )

)

Petitioner, )

)

vs. ) Case No. 98-2431

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

An administrative hearing was conducted on August 26, 1998, in Melbourne, Florida, before Daniel Manry, Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Ken Baker, President

Vietnam Veterans of Florida Foundation, Inc.

1509 Tate Street

Cocoa, Florida 32922

For Respondent: George C. Hamm,

Assistant General Counsel Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314

STATEMENT OF THE ISSUE

The issue in this case is whether Petitioner is entitled to an exemption as a charitable institution or as a military museum fundraiser within the respective meanings of Sections 212.08(7)(o)2.b or (l), Florida Statutes (1997). (All Chapter

and Section references are to Florida Statutes (1997) unless otherwise stated.)

PRELIMINARY STATEMENT

On April 22, 1998, Respondent issued its Notice of Intent to Deny Petitioner's application for a certificate of exemption authorized in Section 212.08(7). Petitioner timely requested an administrative hearing. Respondent referred the matter to the Division of Administrative Hearings to conduct the hearing.

At the hearing, Petitioner presented the testimony of two witnesses, and submitted two exhibits for admission in evidence. Respondent presented the testimony of one witness and submitted two exhibits for admission in evidence.

The identity of the witnesses and exhibits, and the rulings regarding each, are set forth in the transcript of the hearing filed on September 21, 1998. Petitioner did not file a Proposed Recommended Order ("PRO"). Respondent timely filed its PRO on October 1, 1998.

FINDINGS OF FACT

1. Petitioner is a non-profit corporation incorporated in Florida. Respondent is the state agency responsible for the issuance of certificates of exemption from sales and use tax in accordance with the requirements of Chapter 212.

2. Petitioner applied for a certificate of exemption on December 22, 1997. On April 22, 1998, Respondent denied Petitioner's application. The application and denial are based on information from Petitioner's 1997 tax year.

3. Petitioner is not a charitable organization within the meaning of Section 212.08(7)(o)2.b. Petitioner is qualified as a nonprofit corporation pursuant to Section 501(c)(3) of the Internal Revenue Code. However, Petitioner failed to show by a preponderance of the evidence that its sole or primary purpose satisfies the requirements of Section 212.07(o)2.b. and Florida Administrative Code Rule 12A-1.001(3)(g). (All references to rules are to rules promulgated in the Florida Administrative Code on the date of this Recommended Order.)

4. Petitioner failed to show that in 1997 it provided a reasonable percentage of the services enumerated in Sections 212.08(7)(o)2.b.(I)-(VII) for free, or at a substantially reduced charge, to persons who are unable to pay for those services. Petitioner did not show that it raised funds for organizations that provide a reasonable percentage of the statutorily qualified services for free, or at a substantially reduced charge, to persons who are unable to pay for those services.

5. Petitioner asserts that it provides some portion of its computer time for qualified services and that Petitioner provides volunteers for other qualified services. However, Petitioner failed to show the value of the computer time, admitted that the value of the computer does not satisfy the 50 percent test in Rule 12A-1.001(3)(g), and was unable to quantify the amount or value of its volunteer services.

6. Petitioner failed to show that it complied with the requirements of Rule 12A-1.001(3)(g). Petitioner did not show that more than 50 percent of its expenditures in 1997 directly related to statutorily qualified services provided by Petitioner to persons who cannot afford such services. Petitioner did not show that more than 50 percent of its expenditures directly related to raising funds for organizations that provide qualified services to persons who cannot afford those services ("qualifying organizations").

7. Petitioner's 1997 annual report shows that none of its expenditures were made for statutorily qualified services provided to persons who cannot afford those services. Similarly, the report did not show that more than 50 percent of expenditures were made to raise funds for qualifying organizations.

8. Petitioner is not a military museum fundraiser within the meaning of Section 212.08(7)(l). Petitioner admitted that it made no cash contributions to military museums during 1997.

9. Petitioner claims that it allowed other organizations to use Petitioner's tax exemption under Section 501(c)(3) of the Internal Revenue Code to facilitate in-kind contributions to military museums or to related organizations which, in turn, contributed the items to military museums. The primary item Petitioner claimed to have obtained in this manner in 1997 was a Huey helicopter allegedly donated by the U. S. Army to Vietnam Veterans of Central Florida, Inc. ("Veterans Central").

10. Petitioner failed to show that the title to the helicopter ever passed from the U. S. Army to Petitioner or to any other organization designated by Petitioner to receive an in- kind contribution. Petitioner failed to show that either Petitioner or its designee otherwise obtained title to the helicopter or any other in-kind contributions.

11. Petitioner claims that a contribution to Veterans Central is a contribution to Petitioner because the two organizations are members of the same group. The group purportedly operates as the Vietnam Veterans of Florida State Coalition (the "state coalition"). However, Petitioner failed to provide any documentary evidence which establishes the relationship between the two organizations or their membership in the state coalition. Petitioner admits that the two organizations have separate boards and that Petitioner does not control or own stock in Veterans Central as required in Sections 617.0601 and 617.0721 (providing that corporate members of a not- for-profit group have no voting rights and, unless otherwise provided in the articles of incorporation and by-laws, the directors of each corporation have sole voting rights for each corporation and do not have voting rights in other member corporations.)

    CONCLUSIONS OF LAW

12. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter. Section 120.57(1). The parties were duly noticed for the hearing.

13. The burden of proof is on Petitioner. Petitioner must show by a preponderance of evidence that Petitioner is entitled to an exemption. Green v. Pederson, 99 So. 2d 292, 296 (Fla. 1957). Petitioner failed to satisfy its burden of proof.

14. Tax exemptions are matters of legislative grace. Exemptions must be strictly construed against the taxpayer and in favor of the taxing authority. Department of Revenue v. Anderson, 403 So. 2d. 397, 399 (Fla. 1981); Asphalt Pavers, Inc. v. Department of Revenue, 584 So. 2d. 55 (Fla. 1st DCA 1991).

15. Petitioner failed to show that it satisfies the statutory requirements for an exemption under either Sections 212.08(7)(l) or (o)2.b. Petitioner relied primarily on the testimony of its two witnesses. That testimony was not corroborated by documentary evidence. Rather, Petitioner's exhibits and the evidence adduced by Respondent either refuted the testimony of Petitioner's witnesses or failed to corroborate that testimony.

RECOMMENDATION

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

RECOMMENDED that Respondent enter a Final Order denying Petitioner's application for a certificate of exemption.

DONE AND ENTERED this 2nd day of November, 1998, in Tallahassee, Leon County, Florida.

DANIEL MANRY

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 2nd day of November, 1998.

COPIES FURNISHED:

Larry Fuchs, Executive Director Department of Revenue

204 Carlton Building Tallahassee, Florida 32399-0100

Linda Lettera, General Counsel Department of Revenue

204 Carlton Building Tallahassee, Florida 32399-0100

Ken Baker, President Vietnam Veterans of Florida

Foundation, Inc.

1509 Tate Street

Cocoa, Florida 32922

George C. Hamm, Assistant General Counsel Department of Revenue

Post Office Box 6668 Tallahassee, Florida 32314

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: 98-002431

Orders for Case No: 98-002431