STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PAUL CONLEY, )

)

Petitioner, )

)

vs. ) Case No. 07-0049

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was conducted in this case pursuant to Section 120.569, Florida Statutes, and Section 120.57(1), Florida Statutes,1 on February 19, 2007, by video teleconference at sites in Lauderdale Lakes and Tallahassee, Florida, before Stuart M. Lerner, a duly-designated Administrative Law Judge of the Division of Administrative Hearings (DOAH).

APPEARANCES

For Petitioner: Paul Conley, pro se

8671 Southwest 18th Place Davie, Florida 33324

For Respondent: John Mika, Esquire

Assistant Attorney General Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050

STATEMENT OF THE ISSUES

Whether the Department of Revenue (DOR) should grant Petitioner's request for a refund of the $1,433.40 in sales tax Petitioner paid in connection with his purchase of a mobile home from Dwight Hatfield Manufactured Homes, Inc.

PRELIMINARY STATEMENT

On July 27, 2006, DOR issued a Notice of Decision announcing its determination that Petitioner was "not entitled to a refund of the tax [he] paid to a dealer on the purchase of a new manufactured home" inasmuch as, "[a]t the time of purchase, the mobile home was properly sold as tangible personal property and thereby subject to tax." On January 3, 2007, after having received from Petitioner a pleading entitled, "Motion to Overturn Tax Refund Denial and Tax Refund Appeal," DOR referred the matter to DOAH for the assignment of a DOAH administrative law judge "to hold a hearing."

As noted above, the hearing was held on February 19, 2007. Two witnesses testified at the hearing: Petitioner and Douglas Rusmisell, a Senior Tax Specialist with DOR. In addition to Petitioner's and Mr. Rusmisell's testimony, a total of 19 exhibits (Petitioner's Exhibit 1, and Respondent's Exhibits 1 through 18) were offered and received into evidence.

At the close of the evidentiary portion of the hearing on February 19, 2007, the undersigned, on the record, advised that

proposed recommended orders had to be filed with DOAH no later than 20 days from the date of the filing with DOAH of the hearing transcript.

The hearing Transcript (consisting of one volume) was filed with DOAH on March 9, 2007.

DOR filed its Proposed Recommended Order on March 15, 2007.

To date, Petitioner has not filed any post-hearing pleading.

FINDINGS OF FACT

Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made:

1. In October 2002, Petitioner purchased a lot in a mobile home park in Davie, Florida (Petitioner's Property). There was a "worn out" mobile home on the property that Petitioner had "demolished and removed."

2. On May 30, 2003, Petitioner entered into a Purchase Agreement with Dwight Hatfield Manufactured Homes, Inc., wherein he agreed to purchase, for $23,890.00, a 2003 Homes of Merit mobile home that was not yet built (Purchased Mobile Home).

3. The Purchase Agreement provided that the Purchased Mobile Home was to be "drop shipped" directly from the manufacturer's facility to Petitioner's Property, where it would be "met by [Petitioner]."

4. The Purchase Agreement further provided, in pertinent part, as follows with respect the passing of title of the Purchased Mobile Home:

   Title to said equipment shall remain in the Seller until the agreed purchase price therefor is paid in full . . . ; thereupon title to the within described unit passes to the buyer as of the date of . . . full cash payment . . . .

   
   

5. Petitioner paid the full purchase price of the Purchased Mobile Home upon execution of the Purchase Agreement, but no sales tax was collected from him at that time.

6. On July 13, 2003, the Purchased Mobile Home was delivered to Petitioner's Property, where it has remained.

7. Thereafter, Larry Douglas, Sr., of Dwight Hatfield Manufactured Homes sent the following letter, dated September 11, 2003, to Petitioner:

   You have recently purchased a new Homes of Merit manufactured home from Dwight Hatfield Manufactured Homes, Inc. You have not provided us with proof that you are exempt [from] sales tax. Therefore, you owe Dwight Hatfield Manufactured Homes, Inc., the amount of $1,433.40 for the sales tax on your home.

   
   

   Your home will not be registered in your name until the balance is paid in full.

   
   

8. On or about September 15, 2003, Petitioner filed with the Broward County Property Appraiser an "application for the issuance an 'RP' License Plate to identify [the Purchased Mobile

   Home] as real property." In his application, Petitioner represented that the Purchased Mobile Home had been "permanently affixed on January 1 of the current year, [was] now permanently affixed, and it [was his] intention that [it] remain permanently affixed," to Petitioner's Property. At no time prior to the filing of the application had the Purchased Mobile Home been classified as real property.

9. The Broward County Property Appraiser, on September 15, 2003, issued a certificate stating that the Purchased Mobile Home was "included in an assessment for ad valorem taxation of [Petitioner's Property]."

10. On September 18, 2003, Petitioner reluctantly paid the

    
    

    $1,433.40 that Dwight Hatfield Manufactured Homes claimed was due "for the sales tax on [the Purchased Mobile Home]."

11. On September 19, 2003, the Department of Highway Safety and Motor Vehicles issued a certificate of title for the Purchased Mobile Home in Petitioner's name.

12. In March 2006, Petitioner applied to DOR for a refund of the $1,433.40 he had paid to Dwight Hatfield Manufactured Homes in sales tax for the Purchased Mobile Home.

13. On July 27, 2006, DOR issued its Notice of Decision of Refund Denial.

    CONCLUSIONS OF LAW

    
    

14. DOAH has jurisdiction over the subject matter of this proceeding and of the parties hereto pursuant to Chapter 120, Florida Statutes.

15. Pursuant to Section 212.05(1)(a)1.a., Florida Statutes, "[t]he State of Florida levies a tax [of six percent of the sales price] on 'each taxable transaction or incident' which includes 'tangible personal property when sold at retail in this state.' The legal incidence of the Florida sales tax falls upon the purchaser or consumer [pursuant to Section 212.07(1), Florida Statutes]. However, while the legal incidence of the tax falls upon the purchaser, the obligation to collect and ultimately pay the state sales tax falls upon the party, defined as a 'dealer,'[2] making the retail sale [pursuant to that same statutory provision]. Accordingly, the dealer must add the amount of the tax to the sale price and separately state the amount, which then becomes part of the price of the sale." Florida Department of Revenue v. Naval Aviation Museum

    Foundation, Inc., 907 So. 2d 586, 587 (Fla. 1st DCA 2005); see also § 212.06(1)(a)("The aforesaid tax at the rate of 6 percent of the retail sales price as of the moment of sale . . . shall be collectible from all dealers as herein defined on the sale at retail . . . in this state of tangible personal property . . . taxable under this chapter.").

16. "Tangible person property," as that term is used in Chapter 212, Florida Statutes, includes "mobile homes."

    § 212.02(19), Fla. Stat. "Thus, [as a general rule] the 'sale at retail' of a mobile home is taxable under Section 212.05(1)(a) as the sale of tangible personal property, unless an exemption applies." Park Place Manufactured Housing, Inc.,

    v. Department of Revenue, No. 04-0415, 2004 Fla. Div. Adm. Hear. LEXIS 1866 *13 (Fla. DOAH June 25, 2004)(Recommended Order).

    Exemptions are strictly construed against those claiming their applicability, and such persons bear the burden of proving their claims. See State Department of Revenue v. Anderson, 403 So. 2d 397, 399 (Fla. 1981)("Although taxing statutes are strictly construed against a taxing authority, exemptions are strictly construed against the taxpayer."); and Green v. Pederson, 99 So. 2d 292, 296 (Fla. 1957)("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 exemption; and the law is to be strictly construed as against the person claiming the exemption and in favor of the taxing power.").

17. A "sale at retail," as that term is used in Chapter 212, Florida Statutes, is "a sale to a consumer or to any person for any purpose other than for resale in the form of tangible personal property or services taxable under [Chapter 212, Florida Statutes]." § 212.02(14)(a), Fla. Stat. A "sale," as

    that term is used in Chapter 212, Florida Statutes, is "[a]ny transfer of title or possession, or both, exchange, barter, license, lease, or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property for a consideration." § 212.02(15)(a), Fla. Stat. Under Florida's version of the Uniform Commercial Code, "[u]nless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes her or his performance with reference to the physical delivery of the goods . . . ." § 672.401(2), Fla. Stat.

18. The Department has a rule, Florida Administrative Code Rule 12A-1.007, which specifically addresses the taxation of mobile home sales. It provides, in pertinent part, as follows:

    (11) Mobile Homes.

    
    

    1. For purposes of this subsection the term "mobile home" means and includes a structure, transportable in one or more sections, which is 8 body feet or more in width and which is built on an integral chassis and designed to be used as a dwelling when connected to the required utilities and includes the plumbing, heating, air-conditioning, and electrical systems contained therein.

       
       

    2. 1. The sale or use of a mobile home which is not classified as real property is considered a sale or use of tangible personal property and is taxable. A mobile home is tangible personal property if it is located in a mobile home park or other place

    where the land on which the mobile home is located is not owned by the mobile home owner.

    
    

    1. If a mobile home is classified as tangible personal property, the sale, including the occasional or isolated sale, the use, consumption, or storage for use in this state is taxable on the full sales price.

       
       

    2. The sale of a mobile home independent of the realty to which it is affixed at the time of sale constitutes a legal severance of the mobile home from the realty and the sale of the mobile home is taxable as the sale of tangible personal property even though the mobile home may have an "RP" decal affixed thereto at the time of sale.

       
       

    3. The sales price of a mobile home which is considered tangible personal property is the total sales price of the mobile home which shall include, if applicable, the sales price of any tangible personal property included within or which becomes a part of, or is attached to the mobile home at the time of the sale of the mobile home. Such tangible personal property may include but is not limited to: interior equipment and furnishings; skylights; carport roof; or storage structures.

       * * * (d)1. The sale of a mobile home in

       conjunction with the sale of land at a time

       when the mobile home is not real property, either by its not bearing an "RP" decal or at the time of the sale the conditions of paragraph (g) not being satisfied, is a sale of tangible personal property and is taxable. The sales price of the mobile home at such sale, if not separately stated, shall be based upon the larger of:

       1. The fair market value; or

          
          

       2. The balance of any outstanding liens on the mobile home.

       
       

       2. When a person owns real property upon which he permanently affixes a mobile home, such person may request the county property appraiser to assess it as realty. Upon assessment as realty by the property appraiser, the owner may obtain an "RP" decal from the county tax collector. Any repairs, alterations, or improvements of any mobile home that bears an "RP" decal will be treated as the repair, alteration, or improvement to real property. Repairs, alterations, or improvements to mobile homes which do not bear an "RP" decal constitute repairs, alterations, or improvements to tangible personal property.

       
       

       (e)1. The sale of land and a mobile home which is classified as real property as a packaged deal is not taxable. The person converting the mobile home into realty is deemed a contractor engaged in improving realty. A mobile home is presumed to be real property when such mobile home bears a valid "RP" decal. A mobile home which does not bear a valid "RP" decal is classified as real property only if:

       
       

       1. The mobile home is permanently affixed to land owned by the owner of the mobile home. A mobile home is permanently affixed to land for sales tax purposes if the mobile home sits on a foundation with its wheels either removed or off the ground and if the mobile home is connected to utility services; and

          
          

       2. Prior to the sale, and not simultaneously thereto, the owner of the mobile home and of the realty to which it is affixed files with the county property appraiser a declaration requesting the mobile home be assessed as real property.

       2. The provisions of Rule 12A-1.051, F.A.C. (Sales to or by Contractors Who Repair, Alter, Improve, and Construct Real Property), shall not be construed to apply to any instance where a contractor is considered as improving realty by incorporating a mobile home therein nor to any sale of a mobile home to the extent that Rule 12A-1.051, F.A.C., refers to the sale of a mobile home as a sale of tangible personal property.

       
       

       * * *

       
       

       Simply stated, under the rule, the sale of a mobile home that has not been classified as real property as of the time of the sale is subject to sales tax. What the purchaser intends to do, or ultimately does, with the property after the sale is of no significance in terms of determining the taxability of the sale. Moreover, even if a mobile home has been classified as real property as of the time of the sale, its sale is nonetheless taxable if the mobile home is sold "independent of," and not as part of a "packaged deal" along with, land.

19. Once acquired, a mobile home is subject to either a license tax or ad valorem real property tax, depending on whether it is "permanently affixed" to land owned by the mobile home's owner. See Zapo v. Gilreath, 779 So. 2d 651, 654 (Fla. 5th DCA 2001)("Whether a mobile home is subject to ad valorem taxation as real property depends on whether the owner of the mobile home also owns the land upon which the mobile home is permanently affixed."). Article VII, Section 1(b), of the

    Florida Constitution provides, in pertinent part, that "mobile homes, as defined by law, shall be subject to a license tax for their operation in the amounts and for the purposes prescribed by law, but shall not be subject to ad valorem taxes." Section 320.015(1), Florida Statutes, which provides as follows, "takes mobile homes which are permanently affixed to land owned by the mobile home owner out of the definition of mobile homes, as referred to in [A]rticle VII, [S]ection 1(b) and puts them into the category of taxable real property":

    A mobile home, as defined in s. 320.01(2),[3] regardless of its actual use, shall be subject only to a license tax unless classified and taxed as real property. A mobile home is to be considered real property only when the owner of the mobile home is also the owner of the land on which the mobile home is situated and said mobile home is permanently affixed thereto. Any prefabricated or modular housing unit or portion thereof not manufactured upon an integral chassis or undercarriage for travel over the highways shall be taxed as real property once it is permanently affixed to real property. This subsection does not apply to a display home or other inventory being held for sale by a manufacturer or dealer of modular housing units.

    
    

    Nordbeck v. Wilkinson, 529 So. 2d 360, 361 (Fla. 2nd DCA 1988). As recently pointed out in Greentree Servicing, LLC v. Decanio, 948 So. 2d 1033 (Fla. 5th DCA 2007), "[t]he legislature has [also] provided guidance on how mobile homes are to be taxed in

    Section 193.075(1) and (2), Florida Statutes," which provide as follows:

    1. A mobile home shall be taxed as real property if the owner of the mobile home is also the owner of the land on which the mobile home is permanently affixed. A mobile home shall be considered permanently affixed if it is tied down and connected to the normal and usual utilities. However, this provision does not apply to a mobile home, or any appurtenance thereto, that is being held for display by a licensed mobile home dealer or a licensed mobile home manufacturer and that is not rented or occupied. A mobile home that is taxed as real property shall be issued an "RP" series sticker as provided in s. 320.0815.

       
       

    2. A mobile home that is not taxed as real property shall have a current license plate properly affixed as provided in s. 320.08(11). Any such mobile home without a current license plate properly affixed shall be presumed to be tangible personal property.

    
    

20. The purchaser of a mobile home, following his purchase, may convert the status of such mobile home from tangible personal property subject to a license tax into real property subject to ad valorem taxation. Such a conversion, however, does not extinguish the purchaser's previously incurred sales tax liability that arose as a result of the purchase.

    This is because it is the status of a mobile home "as of the moment of sale" that determines whether its sale is taxable. See Anderson, 403 So. 2d at 398 ("Section 212.05 declares that selling tangible personal property at retail is a taxable

    privilege and imposes a sales tax on such transactions. Sales tax is due and owing as of the moment of sale.").

21. In the instant case, Petitioner is seeking a refund of the $1,433.40 he paid in sales tax on the Purchased Mobile Home. It was his burden, at hearing, to prove his entitlement to this refund. See Automated Petroleum and Energy Co., Inc., v.

    Department Of Revenue, No. 05-3780, 2006 Fla. Div. Adm. Hear. LEXIS 172 *7 (Fla. DOAH April 28, 2006)(Recommended Order)("As the party asserting the affirmative of this issue, the burden of proof is on Petitioner to demonstrate by a preponderance of the evidence that he is entitled to a refund."). He failed to meet his burden, however.

22. The record evidence undisputedly establishes that, "as of the moment of sale" (which was on May 30, 2003, when Petitioner paid the full purchase price and, pursuant to the provisions of the Purchase Agreement, title passed to him4), the Purchased Mobile Home had not been classified as real property and that, in any event, the Purchased Mobile Home was not sold to Petitioner as part of a "packaged deal" along with land. Accordingly, what Petitioner purchased was tangible personal property subject to sales tax. The Purchased Mobile Home's subsequent reclassification as real property, although having other tax consequences, did not operate to absolve Petitioner of

    his obligation to pay this sales tax (which obligation arose "as of the moment of sale").

23. In view of the foregoing, Petitioner is not entitled to a refund of the $1,433.40 in sales tax he paid on the Purchased Mobile Home.

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's refund request.

DONE AND ENTERED this 3rd day of April, 2007, in Tallahassee, Leon County, Florida.

S

STUART M. LERNER

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 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 3rd day of April, 2007.

ENDNOTES

1 All references to Florida Statutes in this Recommended Order are to Florida Statutes (2006).

2 "The term 'dealer' [as used in Chapter 212, Florida Statutes, is defined in Section 212.06(2)(c), Florida Statutes, as] including 'every person . . . who sells at retail . . . tangible personal property. . . .'" Id. at 587 n.1.

3 Section 320.01(2)(a), Florida Statutes, defines a "mobile home" as follows:

"Mobile home" means a structure, transportable in one or more sections, which is 8 body feet or more in width and which is built on an integral chassis and designed to be used as a dwelling when connected to the required utilities and includes the plumbing, heating, air-conditioning, and electrical systems contained therein. For tax purposes, the length of a mobile home is the distance from the exterior of the wall nearest to the drawbar and coupling mechanism to the exterior of the wall at the opposite end of the home where such walls enclose living or other interior space.

Such distance includes expandable rooms, but excludes bay windows, porches, drawbars, couplings, hitches, wall and roof extensions, or other attachments that do not enclose interior space. In the event that the mobile home owner has no proof of the length of the drawbar, coupling, or hitch, then the tax collector may in his or her discretion either inspect the home to determine the actual length or may assume 4 feet to be the length of the drawbar, coupling, or hitch.

4 See §§ 212.02(15)(a) and 672.401(2), Fla. Stat.

COPIES FURNISHED:

Paul Conley

8671 Southwest 18th Place Davie, Florida 33324

John Mika, Esquire Assistant Attorney General

Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050

James Zingale, Executive Director Department of Revenue

The Carlton Building, Room 104 Tallahassee, Florida 32399-0100

Bruce Hoffmann, General Counsel Department of Revenue

The Carlton Building, Room 204 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: 07-000049

Orders for Case No: 07-000049