STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SHARON GARDENS ASSOCIATES, )

MILTON SCHLINSKY, BARRY ) FLORESCUE and DONALD SCHUPAK, )

)

Petitioner, )

)

vs. ) CASE NO. 77-1966

) DEPARTMENT OF REVENUE, STATE OF ) FLORIDA, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Miami, Florida, before the Division of Administrative Hearings, by its duly designated Hearing Officer, Robert T. Benton, II, on February 21, 1978. The parties were represented by counsel:

For Petitioner: Glenn N. Smith, Esquire

Ruden, Barnett, McClosky, Schuster & Schmerer

Post Office Box 1900

Fort Lauderdale, Florida 33302

For Respondent: Patricia S. Turner, Esquire

Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32304

By notice of proposed assessment of tax, dated August 16, 1977, respondent asserted a sales tax deficiency against petitioners in the amount of ten thousand four hundred twenty-six and forty-six hundredths dollars ($10,426.46) , for the period September 1, 1974, through July 31, 1977. Of this sum, petitioners concede that they owe five hundred five and forty-three hundredths dollars ($505.43) . The remainder, nine thousand nine hundred twenty-one and three hundredths dollars ($9,921.03) represents four percent of the moneys collected by petitioners on account of sales to their customers of vaults and liners, less sales taxes paid by petitioners on account of purchases of vaults and liners from their suppliers. In addition, respondent proposed to assess interest and penalty.

FINDINGS OF FACT

1. Petitioners own a cemetery in Broward County, much of which is divided into burial plots. From September 1, 1974, through July 31, 1977, petitioners sold these burial plots, with assurances that they would be maintained in perpetuity. Before allowing a plot to be used for burial of the dead, petitioners required the underground installation of a vault or of a liner. Vaults and liners prevent depressions at gravesites which might otherwise occur

   upon the decomposition of caskets and their contents. Vaults are right rectangular parallelepipeds made of concrete reinforced with steel and are sealed after the casket is in place. Shaped like vaults, liners are also designed to hold caskets, but a liner is made of unreinforced concrete. The top or lid of a liner rests on the walls of the structure, which is not necessarily sealed.

   
   

2. From September 1, 1974, through July 31, 1977, petitioners offered vaults and liners for sale, but they also sold burial plots to persons who purchased vaults or liners elsewhere. Petitioners did not sell vaults or liners for installation in cemeteries other than their own. Petitioners purchased these vaults and liners from Roberts Vault Co., Inc., and paid a sales tax of four percent on all such purchases. Although vaults and liners are ordinarily installed when graves are dug, in two instances petitioners installed vaults ahead of time, at the request of their prospective occupants. Petitioners charged an "opening and closing" fee for digging a grave, pitching a tent, setting out chairs, making other preparations for grave-side services, and filling the grave after interment. When petitioners installed vaults or liners purchased elsewhere, they charged a fee for installation over and above the "opening and closing" fee they charged in every instance.

   
   

3. A price schedule prepared by petitioners quoted one price for "1 cemetery plot & vault, single bronze marker installed" and another price, higher by one hundred twenty-five dollars ($125.00), for the same items plus OPENING & CLOSING OF PLOT." Petitioners' exhibit No. 1. Similarly, the same schedule quoted one price for "2 cemetery plots & vaults, double bronze marker installed and another price, higher by two hundred fifty dollars ($250.00) , for the same items plus "OPENING & CLOSING OF PLOT." Id. On March 11, 1977, petitioners entered into a written agreement with one Sally Agronovitch to sell two plots, two vaults and a bronze memorial, as to each of which separate prices were stated. Petitioners' exhibit No. 1. "Opening and Closing for two plots at $125 each," id., was a separately stated item covered in the same agreement.

   Whenever petitioners quoted their customers prices for vaults or liners, the prices included installation. Whenever petitioners quoted prices for "opening and closing," the prices did not include installation of vaults or liners. If a vault or liner was acquired from petitioners, installation was paid for at the time of acquisition (although the price of installation was not stated separately from the price of the vault or liner) If a vault or liner was acquired elsewhere, petitioners charged for installation at the time of installation.

   
   

4. The foregoing findings of fact should be read in conjunction with the statement required by Stuckeys of Eastman, Georgia v. Department of Transportation, 340 So.2d 119 (Fla. 1st DCA 1976) , which is attached as an appendix to the recommended order.

   
   

   CONCLUSIONS OF LAW

   
   

5. Rule 12A-1.52, F.A.C., provides that Rule 12A-1.51, F.A.C., shall be applicable to cemetery organizations like petitioner Sharon Garden Associates. Pursuant to Rule 12A-1.51 (2)(d) , F.A.C., petitioners are obliged to collect and remit to respondent a sales tax on any transaction in which they alter real property and agree to sell specifically described and itemized materials . . . at an agreed price . . . and to complete the work . . . for an additional agreed price . On the other hand, petitioners are under no such obligation with respect to transactions in which they alter real property and agree "to furnish

   materials . . . and necessary services for a lump sum." Rule 12A-1.51(2)(a), F.A.C.

   
   

6. Petitioners' vault and liner transactions with its customers are distinct from, if not wholly independent of, their sales of unimproved plots and their sales of markers.

   
   

7. The dispute between the parties is a factual one: Whether or not the prices at which petitioners sold vaults and liners included installation? If so, the prices constituted "lump sums within the meaning of Rule 12A-1.51(2)(a) , F.A.C., and no sales tax is owing. But if petitioners' fees for "opening and closing" were in fact "an additional agreed price "for installation of vaults and liners, petitioners' sales of vaults and liners would be taxable transactions, pursuant to Rule 12A-1.51 (2)(d) , F.A.C.

   
   

8. Although it is impossible to install a vault or a liner underground without digging or "opening" a hole in the ground, and even though petitioners almost always installed vaults or liners at the time they dug graves, it was uncontroverted that petitioners did install two vaults while their prospective occupants were still alive and that they charged an installation fee for installing vaults and liners only if their customers had purchased them elsewhere. The evidence as a whole established that the prices petitioners charged for vaults and liners included installation. Such sales fall within the language of Rule 12A-1.51 (2)(a) , F.A.C., and are, therefore, exempt from sales tax.

RECOMMENDATION

Upon consideration of the foregoing, it is RECOMMENDED:

That respondent reduce its proposed assessment to five hundred five and forty-three hundredths dollars (505.43) together with interest and penalty.

DONE and ENTERED this 20th day of March, 1978, in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

APPENDIX

With the exceptions hereafter noted, petitioners' and respondent's proposed findings of fact have been adopted, in substance, insofar as relevant.

The evidence showed that the final sentence of the second paragraph of respondent's proposed findings of fact describes the usual practice but that there were two deviations from this practice, as noted in the findings of fact.

The transaction described in the third paragraph of respondent's proposed findings of fact took place between petitioners and Sally Agronovitch. This was not the only form transactions between petitioners and their customers took.

COPIES FURNISHED:

Glenn N. Smith, Esquire Ruden, Barnett, McClosky,

Schuster & Schmerer Post Office Box 1900

Fort Lauderdale, Florida 33302

Patricia S. Turner, Esquire Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32304

Docket for Case No: 77-001966

Orders for Case No: 77-001966