STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MAYBELL, INC., A NETHERLAND ) ANTILLES CORPORATION, )

)

Petitioner, )

)

vs. ) CASE NO. 76-2272

)

DEPARTMENT OF REVENUE, )

STATE OF FLORIDA. )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in the above-captioned matter, after due notice, at Fort Lauderdale, Florida, on March 28, 1977, before the undersigned Hearing Officer.

APPEARANCES

For Petitioner: Craig B. Sherman, Esquire

Barnett Bank Building 1108 Kane Concourse

Bay Harbor Islands, Florida 33154

For Respondent: Edwin J. Stacker, Esquire

Assistant Attorney General The Capitol

Tallahassee, Florida 32304

ISSUE

Whether petitioner is liable for documentary stamp surtax, penalty and interest, pursuant to Proposed Notice of Assessment, dated November 17, 1976.

The parties stipulated to the relevant facts set forth in the petition. They also stipulated that the amounts of the proposed assessment are properly computed and due, if petitioner is determined to be liable therefor.

FINDINGS OF FACT

1. Petitioner is a Netherland Antilles Corporation, duly authorized to do business in the State of Florida. On April 9, 1974, petitioner executed a mortgage deed to Seville Management, a partnership, whereby it encumbered its long-term lease on certain real property located in Miami Beach, Florida, in the amount of $2,500,000. The lease contained an option to purchase the land in the amount of $1,500,000, which was later increased to $1,550,000. Paragraph 33 of the deed provided that petitioner would be obligated to consummate the exercise of the option to purchase on or before June 1, 1976, and that failure to do so would constitute a default of the mortgage on the leasehold interest.

   (Testimony of Cassel, Petition)

2. In June 1976, Petitioner obtained fee simple title to the property in question through the exercise of the option to purchase for the sum of

   $1,550,000, by warranty deed dated June 27, 1976, from the trustees of Central States, Southeast and Southwest Areas Pension Fund as grantor. The deed provided that the lease was thereby "extinguished, canceled and terminated, the Grantee herein being owner of the interest of the Lessor and the Lessee in such lease. Petitioner recorded the warranty deed on July 6, 1976, and affixed the state documentary stamps on a consideration of $1,550,000. However it only affixed the nominal sum of 55 cents for documentary surtax, At the time of the conveyance, the mortgage balance on the property exceeded the purchase price of

   $1,550,000. (Testimony of Cassel, Petition)

   
   

3. Subsequently, respondent assessed documentary surtax in the amount of

   $1704.45 and a penalty in a like amount, plus interest in the amount of $74.31 against petitioner with respect to the transaction based on a consideration of

   $1,550,000. On November 4, 1976, an informal conference was held with the respondent and thereafter by letter of November 17, 1976, respondent issued a Notice of Proposed Assessment in the total amount of $3,483.21 for delinquent documentary surtax, penalty and interest. (Petition, Exhibit 1)

   
   

   CONCLUSIONS OF LAW

   
   

4. Respondent asserts documentary surtax under Section 201.021, Florida Statutes, which provides pertinently as follows:

   
   

   "201.021 Surtax on documents relating to land; land acquisition trust fund --

   1. A documentary surtax, in addition to the tax levied in 201.02 is levied on those documents taxed by 201.02 at the rate of

      fifty-five cents per five hundred dollars 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 fifty-five cents on each five hundred dollars or fractional part thereof of the consideration." (Emphasis supplied)

      
      

5. Petitioner contends that it is not liable for the payment of surtax because the existing mortgage on the leasehold interest at the time title to the realty was acquired exceeded the purchase price for the property and that, therefore, under Section 201.021, since the amount of the mortgage exceeded the purchase price, there was no remaining "consideration" upon which such tax should be paid.

   
   

6. In determining the "consideration" for the conveyance of the property, it is noted that both parties view it to be the sum of $1,550,000. That amount is deemed to be the taxable "consideration" for purposes of the surtax. Petitioner's argument that the amount of the existing mortgage on the prior leasehold interest should be deducted from the taxable consideration prior to computing the tax cannot be accepted. The statute does not speak of deducting such amounts, but merely not including them. It is clear that the amount of the

existing mortgage was not included in the sum of $1,500,000 and thus tax is due as asserted on that amount. Put another way, the "gross" consideration for the transfer of title was $1,550,000, plus the amount of the existing mortgage balance (Rule 12A-4.12(3),F.A.C, which latter obligation petitioner concedes was not extinguished by transfer of title.

RECOMMENDATION

That the proposed assessment against petitioner in the amount of $3483.21 for documentary surtax, penalty, and interest under Section 201.021, F.S., be upheld and assessed.

DONE and ENTERED this day of April, 1977, in Tallahassee, Florida.

THOMAS C. OLDHAM

Hearing Officer

Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

COPIES FURNISHED:

Edwin J. Stacker, Esquire Assistant Attorney General The Capitol

Tallahassee, Florida 32304

Craig B. Sherman, Esquire Broad and Cassel

Barnett Bank Building 1108 Kane Concourse

Bay Harbor Islands, Florida 33154

Docket for Case No: 76-002272

Orders for Case No: 76-002272