JAMES E. CORRY, )
vs. ) CASE NOS. 76-2197
Respondent. )
Pursuant to notice a hearing was held in the above styled cases in Room 104, Collins Building, Tallahassee, Florida, on May 16, 1977, at 2:00 p.m. before Delphene C. Strickland, Hearing Officer, Division of Administrative Hearings, Department of Administration. The cases were consolidated upon joint motion of the parties at time of hearing.
For Petitioner: William W. Corry, Esquire
For Respondent: Caroline C. Mueller, Esquire
Whether Petitioner James E. Corry owes additional tax, surtax, interest and penalties on nine (9) deeds which transferred the title to properties from individual persons to Petitioner Corry.
Prior to the hearing the parties jointly moved to consolidate the two (2) above styled cases and stated the stipulation would cover both 76-2197, D.O.A.H., and 77-604, D.O.A.H. The former involved six (6) deeds and the latter three (3) deeds.
The Respondent, Department of Revenue, imposed a documentary stamp tax upon six (6) deeds which transferred the title to properties from individual persons to Petitioner Corry. The transfer came about as a result of the following:
In each of the six (6) transfers under question, Petitioner Corry sold property to certain individuals. The Petitioner gave to the individuals a deed and took back a purchase money mortgage. The purchasers made essentially no payments on the mortgage to Petitioner Corry and ultimately the purchasers deeded the property back to the Petitioner. The deeds were recorded in the courthouse records. In one of the deeds there is a specific statement that the deed is executed in lieu of foreclosure and that the purchaser is released from all liability. There is no such specific statement in the other deeds.
By a Proposed Notice of Assessment dated August 3, 1976, the Respondent, Department of Revenue, sought to impose a documentary stamp tax upon the six (6) deeds. The consideration upon which the tax is based in cases like the instant case is usually the amount of mortgage debt forgiven but in the instant case no such information was provided and the tax was based on the assessed values of the property. Petitioner Corry is contesting the legal liability of Petitioner for the assessment and is not contesting the legal liability of Petitioner for the assessment and is not contesting the mathematical computation of the amount allegedly due.
It is Petitioner's contention that the six (6) deeds are not subject to documentary stamp taxation inasmuch as the Petitioner paid nothing for the deeds and were signed by the mortgagors at the request of the Petitioner to clear title of the equitable owner.
It is the Respondent Department of Revenue's contention that the six
(6) deeds are subject to documentary stamp taxation since they are deeds in lieu of foreclosure or are deeds given when debts are rendered unenforceable.
At the time the six (6) deeds were recorded on December 22, 1975, in Taylor County, the Deputy Clerk asked Petitioner how much he paid for the six
(6) deeds in question and when he responded that he paid nothing for the deeds the Deputy Clerk advised him that he owed no documentary stamp tax or surtax thereon. Relying on the Deputy Clerk's advice, the deeds were recorded and no taxes were paid, only the recording fees.
The Hearing Officer further finds:
The deeds in question were secured for the purpose of clearing title to the equitable owner.
The Petitioner paid nothing to the mortgagor for the deeds.
The stipulation controls both cases No. 76-2197 and 77-604.
CONCLUSIONS OF LAW
Section 201.02, Florida Statutes, Tax on deeds and other instruments relating to lands, etc.-, provides in part:
"(1) On deeds, instruments, or writings whereby any lands, tenements, or other realty, or any interest therein, shall
be granted, assigned, transferred, or other- wise conveyed to, or vested in, the pur- chaser, or any other person by his direc-
tion, on each $100 of the consideration therefor the tax shall be 30 cents. When the full amount of the consideration for the execution, assignment, transfer, or conveyance is not shown in the fact of
such deed, instrument, document or writing, the tax shall be at the rate of 30 cents for each $100 or fractional part thereof
of the consideration therefor."
Rule 12A-4.12(2)(f), Florida Administrative Code, provides: "(2) Consideration - Documentary Stamps:
The term 'consideration' under Section
201.02, F.S., includes:
* * * *
(f) Conveyance where outstanding mort-
gage debt, lien or encumbrance is cancelled, satisfied or otherwise rendered unenforce- able by the conveyance."
Section 201.021, Florida Statutes, Surtax on documents relating to land; Land Acquisition Trust Fund, provides in part:
"(1) A documentary surtax, in addition to the tax levied in s. 201.02, is levied on those documents taxed by s. 201.02 at the rate of 55 cents per $500 of the consideration paid; provided, that when real estate is sold, the consideration,
for purposes of this tax, shall not include amounts of existing mortgages on the real estate sold. If the full amount of the consideration is not shown on the face of the document, then the tax shall be at the rate of 55 cents on each $500 or fractional part thereof of the consideration."
Rule 12A-4.12(4)(e), Florida Administrative Code, provides: "(4) Consideration - Surtax: The term
'consideration' under Section 201.021, F.S., includes but is not limited to:
* * * *
(e) Conveyance where outstanding mortgage debt, lien or encumbrance is cancelled, satisfied, or otherwise rendered unenforce- able by the conveyance."
Rule 12A-4.12(3), Florida Administrative Code, provides: "(3) Documentary Surtax, Rate, Computation:
The tax rate under Section 201.021, F.S. is
55 cents on each $500 or fractional part thereof of the consideration paid, or to be paid, for the realty conveyed, that is the gross consideration less the amount of all
liens or encumbrances on the realty existing before the sale and not removed thereby. The tax is based upon the net consideration where it is definite in amount, or may be reasonable determined. In determining the anount (sic) of the consideration for the realty conveyed, only the amount of the liens and encumbrances on the property existing before the sale and not removed thereby may be deducted. Thus, for example, taxes or assessments which are liens on the property before the sale and are not paid at the time of sale are deductible.
No deduction shall be made on account of any lien or encumbrance whether represented by notes or otherwise placed upon the property in connection with the sale, or by reason of
deferred payments of the purchase price whether represented by notes or otherwise. Examples:
* * * * Example (6): B purchase real estate from A and gives A a purchase money mortgage in
the amount of $30,000 as part of the purchase price. B is unable to make the mortgage pay- ments and deeds the property back to A so that A will cancel or render unenforceable the
$30,000 mortgage. Documentary stamp tax and surtax would be required on the deed from B to A based upon the $30,000 mortgage."
Rule 12A-4.13(2), Florida Administrative Code, provides: "(2) Defaulting Mortgagor: Where a mort-
gagor, in full or partial satisfaction of
the mortgage indebtedness, conveys the mort- gaged premises to the mortgagee, documentary stamp taxes are due on the transaction. (At- torney General Opinion 059-203, Oct. 7, 1959,
1959-60 Biennial Report, Page 317)"
The statute imposes a tax on documents which convey an interest in real property. The tax is based on the "consideration." The rule has defined consideration for surtax purposes as applicable in the case sub judice as a "Conveyance where outstanding mortgage debt lien or encumbrance is cancelled, satisfied, or otherwise rendered unenforceable by the conveyance." The property involved herein evidenced by the deeds were subject to mortgages which were unpaid and were apparently unenforceable. The documents or deeds are subject to tax under Section 201.02 and for lack of knowledge as to the amounts of the mortgage, the Department of Revenue properly assessed the value of the consideration as the appraised value of the property. Documents that are subject to tax under Section 201.02 are also subject to the surtax under Section 201.021.
The assessments by the Department of Revenue were valid assessments pursuant to the statutes and rules and the case law cited by Respondent. Cf. Huttner and Shirley H. Huttner v. Department of Revenue, 75-1771, D.O.A.H.; Indian River Orange Groves, Inc. v. State of Florida Department of Revenue, Case No. 76-1124, D.O.A.H.; Investors Realty Trust v. Department of Revenue of the
State of Florida, Case No. 76-1362, D.O.A.H.; Myron Friedman v. Department of Revenue, Case No. 75-1304, D.O.A.H.
Rule 12A04.14(14), Florida Administrative Code, provides as follows: "(14) To Remove Cloud from Title:
Conveyance given for the purpose of clear- ing the title of an owner, the measure of taxes due is measured by the consideration given. Quit Claim Deeds from vendee to vendor when the contract has been voided
by failure to make payments, the tax is due on the amount the vendor pays for the deed,
not upon the amount of the contract cancelled."
The above cited rule relied on by the Petitioner is not dispositive of this issue inasmuch as the documents were deeds and mortgages and not "contracts" although the purpose of the deeds was merely to clear the title of the property involved in the conveyances. The rule falls short of holding that deeds and mortgages are included.
Hold the assessments as valid assessment.
DONE and ORDERED this 6th day of July, 1977, in Tallahassee, Florida.
Caroline C. Mueller, Esquire Assistant Attorney General Department of Legal Affairs The Capitol
William W. Corry, Esquire Post Office Box 527 Tallahassee, Florida 32302
DELPHENE C. STRICKLAND
Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304
Filed with the Clerk of the Division of Administrative Hearings this 6th day of July, 1977.
