STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BEACON OF FAITH MINISTRIES, )

)

Petitioner, )

)

vs. ) Case No. 98-2443

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

On August 13, 1998, a formal administrative hearing was held in this case in Tallahassee, Florida, before J. Lawrence Johnston, Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioner: No Appearance

For Respondent: George C. Hamm, Esquire

Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668 STATEMENT OF THE ISSUE

The issue in this case is whether the Respondent, the Department of Revenue (the Department or DOR), should grant the Petitioner's application for a consumer's certificate of exemption as a "religious institution," as set forth in Section 212.08(7)(o)(2)b, Florida Statutes, (1997).

PRELIMINARY STATEMENT

On April 29, 1998, the Department issued a Notice of Intent

to Deny the application for a consumer's certificate of exemption

as a religious organization filed by the Petitioner, the Beacon of Faith Ministries.

In response, the Petitioner filed a document, with attachments, captioned "Christian Church Response to Notice of Intent to Deny," dated May 4, 1998. DOR decided that, although not containing a specific request for hearing, the document was sufficiently close in form to a petition to warrant forwarding the matter to the Division of Administrative Hearings (DOAH) for formal proceedings.

The matter was referred to DOAH on May 29, 1998. The Petitioner failed to respond to the Initial Order requesting available dates and suggested hearing locations. Based on DOR's response, a Notice of Final Hearing was issued on June 23, 1998, scheduling final hearing for August 13, 1998, at the Division of Administrative Hearings (DOAH), in Tallahassee, Florida. The Notice of Final Hearing also provided: "Failure to appear at the final hearing shall be grounds for dismissal of a petition, or entry of a default order."

On August 12, 1998, the Petitioner fax-filed a document entitled "Notice of Authority" which primarily contended that DOAH had no jurisdiction and that no hearing was appropriate but which also requested "reconsideration of the time, place and purpose of the hearing." Counsel for the Department was informed of the contents of the document, the request for reconsideration was denied, and the hearing proceeded as scheduled.

The Petitioner failed to appear at the final hearing on August 13, 1998, and the Department moved to terminate the proceedings. The motion was taken under advisement, and the Department had Respondent's Composite Exhibit 1 admitted in evidence. It consisted of the complete file on the Petitioner's Application for a Consumer Certificate of Exemption, including Articles, Bylaws, correspondence, Notice of Intent to Deny, Petitioner's petition/response, and relevant statute and rules. The Department called no witnesses.

At the conclusion of the hearing, proposed recommended orders were required to be filed within ten days. No transcript was ordered.

FINDINGS OF FACT

1. The Petitioner, the Beacon of Faith Ministries, applied for a consumer's certificate of exemption from sales and use tax on or about February 17, 1998, claiming to be an exempt religious institution.

2. On or about February 27, 1998, the Department requested additional information, which was received on March 12, 1998. On April 29, 1998, the Department gave notice of intent to deny Petitioner's application for an exemption certificate on the ground that Petitioner did not qualify as a religious organization under Section 212.08(7)(o)(2)b., Florida Statutes (1997).

3. The Petitioner's application and additional information

   demonstrate: (1) that the Petitioner "does not have an established physical place of worship at which nonprofit religious services and activities are regularly conducted and carried on"; and (2) that the Petitioner "is not a state, district, or other governing or administrative office the function of which is to assist or regulate the customary activities of religious organizations or members."

4. Upon receipt of the Notice of Intent to Deny issued by the Department, Petitioner responded with a document entitled "Christian Church Response to Notice of Intent to Deny," dated May 4, 1998. This document demanded the issuance of an exemption certificate. It contended that the Petitioner was entitled to an exemption as a matter of constitutional right and that the Department had no jurisdiction or authority to deny the Petitioner an exemption regardless whether the Petitioner had "an established physical place of worship" or whether the Petitioner was "a state, district, or other governing or administrative office." The document contained no specific language requesting a hearing.

5. The Petitioner did not appear at final hearing; no evidence was introduced in support of the Petitioner's application, other than the Department's file on the matter.

   CONCLUSIONS OF LAW

   
   

6. Under Sections 120.569 and 120.57(1), Florida Statutes (1997), the Division of Administrative Hearings (DOAH) has

   jurisdiction over a request for an administrative proceeding upon issuance of a notice of intent to deny an application for a sales and use tax exemption certificate, when such a request is referred to DOAH by the Department of Revenue. In this case, while the Petitioner never specifically requested an administrative proceeding, the Petitioner responded to the notice of intent to deny by demanding the issuance of an exemption certificate. The demand was treated as a request for an administrative proceeding.

7. As applicant, the Petitioner had the burden of proving entitlement to a consumer's certificate of exemption. Department of Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern and Co., 670 So. 2d 932 (Fla. 1996).

8. Tax exemptions are matters of legislative grace. It is well-recognized rule of law that tax exemptions must be strictly construed against the taxpayer seeking them and in favor of the State. Capital City Country Club v. Tucker, 613 So. 2d 448 (Fla. 1993); Szabo Food Services, Inc. v. Dickenson, 286 So. 2d 529 (Fla. 1973); and Asphalt Pavers, Inc. v. Department of Revenue, 584 So. 2d 55 (Fla. 1st DCA 1991).

9. Section 212.08(7)(o)(2)b., Florida Statutes (1997), provides a sales and use tax exemption for "religious institutions." The statute defines the term "religious institutions" to mean "churches, synagogues, and established physical places for worship at which nonprofit religious services

   and activities are regularly conducted and carried on." It also includes "nonprofit corporations the sole purpose of which is to provide free transportation services to church members, their families, and other church attendees." It 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."

   
   

10. The definitions in Florida Administrative Code Rule 12A-1.001(3)(a)-(e) are consistent with the statutory definitions. In addition, subparagraph (c) further defines "church" to mean "a religious institution having an established physical place of worship where persons regularly assemble for worship and instruction for religious purposes."

11. The Petitioner failed to appear at the final hearing, failed to meet its burden of proof, and failed to meet the requirements for consumer's certificate of exemption from sales and use taxation as a "religious institution" under Section 212.08(7)(o)(2)b., Florida Statutes (1997), and Florida Administrative Code Rule 12A-1.001(3)(a)-(e).

12. While having jurisdiction over this administrative proceeding, DOAH does not have jurisdiction in this proceeding to rule on the constitutionality of Section 212.08(7)(o)(2)b., Florida Statutes (1997), or Rule 12A-1.001(3)(a)-(e), Florida Administrative Code. See Dept. of Revenue v. Amrep, 358 So. 2d

1343, 1348 (Fla. 1978); Dept. of Revenue v. Young American Builders, 330 So. 2d 864, 865 (Fla. 1st DCA 1976).

RECOMMENDATION

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

RECOMMENDED that the Department of Revenue enter a final order denying the Petitioner's application for a consumer's certificate of exemption from sales and use tax.

DONE AND ENTERED this 10th day of September, 1998, in Tallahassee, Leon County, Florida.

J. LAWRENCE JOHNSTON 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 10th day of September, 1998.

COPIES FURNISHED:

Larry Fuchs, Executive Director Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

Linda Lettera, General Counsel Department of Revenue

Post Office Box 6668 Tallahassee, Florida 32314-6668

Frank Madden, Pastor Beacon of Faith Ministries 4255 Gulf Drive

Holmes Beach, Florida 34217

George C. Hamm, Esquire 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: 98-002443

Orders for Case No: 98-002443