Judges: DIANE K. KIESLING
Agency: Department of Revenue
Latest Update: Jan. 16, 1986
Summary: Petitioner bid knowing it would be liable for taxes on final conveyance to Dade County by warranty deed. Petitionerdoesn't fall within any exemptions and must pay taxes.
84-1425STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
COHEN-AGER, INC., a FLORIDA ) CORPORATION, )
)
Petitioner, )
)
vs. ) CASE NO. 84-1425
)
DEPARTMENT OF REVENUE, )
)
Respondent, )
and )
)
METROPOLITAN DADE COUNTY, )
)
Intervenor. )
)
RECOMMENDED ORDER
This cause came before the Division of Administrative Hearings by its designated Hearing Officer, Diane K. Kiesling, based on the waiver by the parties of their right to a formal hearing and based on the submission of stipulated facts Exhibits 1-9, proposed orders and memoranda of law. The issue for determination in this proceeding is whether the assessment by the Department of Revenue against Cohen-Ager, Inc. for documentary stamp taxes on a warranty deed from Cohen-Ager, Inc. to Metropolitan Dade County is valid.
APPEARANCES
For Petitioner: Lewis R. Cohen
1428 Brickell Avenue, Eight Floor Miami, Florida 33131
For Respondent: Linda Lettera, Esquire
Department of Legal Affairs Room LL04, The Capitol Tallahassee, Florida 32301
For Intervenor: Joni B. Armstrong
73 West Flagler Street, 16th Floor Miami, Florida 33130
The parties filed proposed findings of fact and conclusions of law as permitted by statute. All proposed findings of fact and conclusions of law have been considered. A ruling has been made on each proposed finding of fact in the Appendix attached and made a part of this Recommended Order.
FINDINGS OF FACT
Upon consideration of the stipulation of the parties and documents attached thereto, the following relevant facts are found:
On or about October 9, 1979, Dade County, a political subdivision of the State of Florida acting for the use and benefit of its Department of Housing and Urban Development, a public housing authority ("PHA"), entered into a Contract for Project Dade 8-10 ("Contract") with Irbye Giddens, Inc. and Cohen- Ager, Inc., a joint venture, for the construction of Project Dade 8-10, a/k/a Singer Plaza, a housing development for the physically handicapped.
The Contract was granted to Cohen-Ager, Inc. and Irbye Giddens, Inc. pursuant to competitive negotiations based on a document titled Dade 8-10 Request for Proposals. Cohen-Ager, Inc. and Irbye Giddens Inc. were selected on the basis of their bid submission as modified by the agreement of the parties due to delay in commencing construction. As indicated by the original bid submission of Cohen-Ager, Inc. and Irbye Giddens, Inc. the original price of the project was $2,576,000; but at the request of Cohen-Ager Inc. and Irbye Giddens, Inc., the contract price was eventually raised to the amount found in Part II of the Contract, $2,970,000.
On or about October 10, 1979, Dade County deeded the subject undeveloped property to Cohen-Ager Inc. and Irbye Giddens Inc., the joint venture, by "Quit-Claim County Deed Subject to Possibility of Reverter," ("Quit- Claim Deed"). The Quit-Claim Deed, which incorporated by reference the Contract described in paragraph "1," provided for automatic reverter to Dade County of all of the right, title, and interest of Cohen-Ager, Inc., in the property upon, among things, the termination, rescission or complete performance of the Contract.
Cohen-Ager, Inc., and Irbye Giddens, Inc. having obtained title to the property by virtue of the Quit-Claim Deed, rightfully used the property as collateral to obtain financing to cover the cost of construction of project 8- 10.
Cohen-Ager, Inc., and Irbye Giddens, Inc., were legally obligated under the Contract and the Quit-Claim Deed to complete construction of project 8-10 and to reconvey clear title to Dade County when the project was completed.
Cohen-Ager, Inc., and Irbye Giddens, Inc., fully performed under the terms of the Contract and Quit-Claim Deed, and reconveyed the property to Dade County by Warranty Deed dated February 12, 1981, and recorded March 12, 1981 ("Warranty Deed").
The Warranty Deed is the instrument on which the State of Florida Department of Revenue seeks to impose the documentary stamp tax at issue here.
The Warranty Deed was one step in a multi-step transaction used to finance the development and construction of project 8-10. Under this method of financing development of its property, Dade County transfers title to undeveloped property and "repurchases" developed property.
Pursuant to the terms of the Contract, Dade County transferred title to the undeveloped property site to Cohen-Ager, Inc. and prohibited the transfer of the contract or property except (1) to an entity to which the contract is assigned with the written prior approval of the PHA and (2) to a mortgagee for the purpose of obtaining financing of the completion of the property.
Dade County paid for the development of project 8-10 with the proceeds of Special Housing Revenue Bonds issued for that project pursuant to Chapters
159 and 166, Florida Statutes, Dade County Ordinance No. 79-49, and Dade County Board of County Commissioners' Resolutions R-1270-79 and R-1423-79. The Special Housing Revenue Bonds were issued under a Trust Indenture.
When the property was reconveyed to Dade County by the Warranty Deed, Dade County paid to Cohen-Ager, Inc., and Irbye Giddens, Inc. the contract price, $2,970,000, from the proceeds of the bonds.
The Department of Revenue seeks to impose the documentary stamp tax on the total amount of the contract price as the consideration for the Warranty Deed. The documentary stamp tax on $2,970,000 is $11,880.00, or $.40 per $100 of consideration.
Article VII, paragraph (c), of the contract of Sale, attached to and made a part of the Contract, specifies in part that the Contractor (herein Cohen-Ager, Inc.) "shall pay all documentary stamps and taxes applicable to" the coveyance of the property to Dade County by warranty deed.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57, Florida Statutes.
Section 201.02, Florida Statutes (1979), which imposes a tax on deeds and other instruments relating to realty or interests in realty provides in pertinent part as follows:
(1)(a) On deeds, instruments, or writings whereby any lands, tenements, or other realty, or any interest therein, shall be granted assigned, transferred, or otherwise conveyed to, or vested in; the purchaser, or any other person by his direction, on each
$100 of the consideration therefor the tax shall be 40 cents. . .
Section 201.01, Florida Statutes, imposes the liability for the payment of the documentary stamp tax upon any person:
who makes, signs, executes, issues, sells, removes, consigns, assigns, records, or ships the same, or for whose benefit or use the same are made; signed, executed, issued,
sold, removed, consigned, assigned, recorded, or shipped in the state. (e.s)
Such language imposes the liability for payment of the documentary stamp tax on both parties to a taxable document.
Documentary stamps are required upon documents within the taxing purview of Chapter 201, Florida Statutes, even though one of the parties is tax exempt or tax immune. The nonexempt or nonimmune party is liable for the purchase and affixation of documentary stamps since Chapter 201 places the burden of payment upon both parties to the document. Only in those situations
where both parties to the documents are exempt or immune would documentary stamps not be required to be affixed to otherwise taxable documents. See, AGO 75-206.
The Florida Department of Revenue's Rule 12B-4.02(3)(a), Florida Administrative Coded specifically addresses this situation and provides as follows:
The state, county, municipality, or any political subdivision thereof is not liable for the tax with respect to a document transferring any interest in realty to which it is a party. However, the transaction is not exempt from tax, and the non-exempt party to the trans- action is liable for the tax. The affixing of stamp tax to an instrument by the state, county, municipality, or a political subdivision thereof does
not constitutes payment of the tax, and the non-exempt party remains liable for the tax in such case.
In this case, Dade County is a tax immune entity and the liability for the documentary stamp tax falls on the other party to the Warranty Deed, Cohen- Ager, Inc. Cohen-Ager, Inc., is liable for the tax unless it falls within one of the exemptions or it is also a tax immune entity. It is concluded that Cohen- Ager Inc., is not a tax immune entity. Further, Cohen-Ager Inc., does not share Dade County's tax immune status.
Cohen-Ager, Inc., argues that it is exempt from tax on the Warranty Deed for several reasons. First, it argues that it is exempt under Rule; 12B- 4.14(2)(b), Florida Administrative Code, in that the Warranty Deed is a reconveyance of legal title from a trustee to the beneficial owner thereof. In support, reference is made to River Park Joint Venture 3150076 v. Dickinson, 303 So.2d 654 (Fla. 1st DCA 1974), and Howell v. Fiore, 210 So.2d 253 (Fla. 1st DCA 1968). On their face, the documents in question are clear and unambiguous. These documents contain no evidence sufficient to support a conclusion that a trust relationship was intended or created. The determination of liability for or exemption from the documentary stamp tax must be based solely on the form and the face of the instrument in question and not on proof of extrinsic facts. See Hialeah, Inc., v. Department of Revenues 380 So.2d 562 (Fla. 3rd DCA 1980); State, Department of Revenue v. McCoy Motel, Inc., 302 So.2d 440 (Fla. 1st DCA 1974). It is therefore concluded that Cohen-Ager, Inc., is not exempt from this tax under Rule 12B-4.14(2)(b).
Second, Cohen-Ager, Inc., asserts that it is exempt from tax on the Warranty Deed under Rule 12B-4.14(2), Florida Administrative Coded in that the conveyance by Warranty Deed is unsupported by consideration. In support of this assertion, Cohen-Ager, Inc., argues that the contract price, which was the amount paid to Cohen-Ager, Inc., by Dade County in exchange for the Warranty Deed, does not specifically delineate a portion for the land. Instead, Cohen- Ager, Inc., takes the position that the contract price was for development and construction only and that, therefore, the conveyance of the land was unsupported by consideration. The cases cited in support of this contention are not on point and will not be individually distinguished herein. In the present case, the value of the land was merged with and became a part of the contract
and contract price. Because the consideration for the land and the consideration for the development and construction are indistinguishable in the contract price, it is concluded that the full contract price is the consideration for the Warranty Deed and that the exemption in Rule 12B-4.14(2) is inapplicable.
Third, Cohen-Ager, Inc. argues that it is exempt from tax on the Warranty Deed under Rule 12B-4.14(1), Florida Administrative Code, in that the conveyance was a reconveyance of realty conveyed to secure a debt upon payment of the debt. This argument must also fail. The exemption in Rule 12B-4.14(1) clearly encompasses those situations where an interest in realty is conveyed to secure a debt and that interest is reconveyed upon payment of the debt. Here Dade County conveyed the land to Cohen-Ager, Inc. so Cohen-Ager Inc., could use it to secure Cohen-Ager's debt to a bank for Cohen-Ager's construction costs. Cohen-Ager, Inc. conveyed its interest to the bank to secure its debt. When the bank reconveyed the interest to Cohen-Ager Inc., upon Cohen-Ager's payment of its debt this exemption might apply. However, Dade County did not convey the land to Cohen- Ager, Inc. to secure a debt owed by Dade County to Cohen-Ager, Inc., and Cohen-Ager Inc., did not reconvey the land to Dade County upon payment of a debt of Dade County to Cohen-Ager, Inc. The facts do not support the applicability of this exemption to the conveyance by Warranty Deed. It is concluded that the Rule 12B-4.14(1) is inapplicable to the tax on the Warranty Deed.
Fourth, Cohen-Ager, Inc., asserts that the Department of Revenue may not tax indirectly that which it cannot tax directly. It relies in this assertion on Lewis v. The Florida Bar, 372 So.2d 1121(Fla. 1979). However, the evidence does not support a finding that this assessment is an indirect assessment against an entity which cannot be taxed directly (that entity being Dade County a tax immune entity). Here Cohen-Ager, Inc., submitted a bid on the project with full knowledge and agreement that the contractor would be liable for payment of all documentary stamps and taxes on the final conveyance to Dade County by Warranty Deed. Cohen-Ager, Inc., agreed to pay the documentary stamps and taxes (See Finding of Fact 13). Cohen-Ager, Inc., now seeks to avoid payment of taxes which it agreed to as part of its contract by arguing that it is an indirect tax on Dade County and that the tax will be passed through as a cost to the immune entity. However, Cohen-Ager, Inc., fails to show how this tax will be passed to Dade County in the proceeding since Cohen-Ager Inc., has already agreed to pay the tax and since all sums due from Dade County under the Contract have already been paid. Additionally, Lewis, supra, involved a tax on a note containing a promise to pay money. This cause involves a tax on a deed or conveyance of realty. In response to the decision in Lewis, Section 201.24, Florida Statutes was enacted. This section codified the exemption carved out in the Lewis decision and specifically relates to an exemption from taxes on any obligation to pay money issued by a tax immune entity. Neither the decision in Lewis, supra, nor the act of of Legislature in enacting Section 201.24 can be construed or expanded to create an exemption from the documentary stamp tax on deeds involving a tax immune entity as one party to the transaction. It is concluded that assessment of the documentary stamp tax against Cohen-Ager Inc., is not and cannot be an indirect tax on the tax immune entity, Dade County.
Having concluded that Cohen-Ager, Inc., is liable for the documentary stamp tax on the Warranty Deed unless it can avail itself of an exemption and having rejected the assertions by Cohen-Ager, Inc., that it falls within an exemption; it now must be concluded that Cohen-Ager, Inc., is liable for the
documentary stamp tax on the Warranty Deed. The proposed assessment of 11,880.00, plus penalties and interest, is correctly calculated pursuant to Section 201.02, Florida Statutes (1979); using the rate of $.40 per $100 of consideration, the consideration herein being $2,970,000.
RECOMMENDATION
Based upon the foregoing Findings of Fact and Conclusions of Law it is RECOMMENDED that the Department of Revenue enter a Final Order assessing
Cohen-Ager, Inc., for the documentary stamp tax due on the Warranty Deed to Dade County in the amount of $11,880.00, plus penalties and interest.
DONE and ORDERED this 16th day of January, 1986, in Tallahassee, Florida.
DIANE K. KIESLING
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 16th day of January, 1986.
APPENDIX TO RECOMMENDED ORDER IN CASE NO. 84-1425
The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case.
Rulings on Proposed Findings of Fact Submitted by Petitioner and Intervenor
Adopted in Finding of Fact
Adopted in Finding of Fact 2.
Adopted in substance in Finding of Fact 3 as regards the first two sentences of the proposed finding of fact. The last three sentences of the proposed finding of fact are rejected as unnecessary, as not supported by the evidence, as beyond the scope of the facts stipulated by the parties, and as being commentary.
Adopted in Finding of Fact 4.
Adopted in Finding of Fact 5.
Adopted in Finding of Fact 6.
Adopted in Finding of Fact 7.
Adopted in Finding of Fact 8.
Adopted in Finding of Fact 9.
Adopted in Finding of Fact 10.
Rulings on Proposed Findings of Fact Submitted by Respondent
Rejected as unnecessary and irrelevant. It is simply a recap of part of the history and issues in the case and is therefore unnecessary to a determination of the issues.
Adopted in substance in Findings of Fact 1, 6, and 7.
Adopted in substance in Findings of Fact 5 and 6.
There is an apparent typographical error in that the last two lines of Proposed finding of fact 3 are incomplete and the subject of the incomplete sentence is omitted. However it may be that the substance intended by Respondent is adopted in Finding of Fact 13.
There is no proposed finding of fact 4. It may be that the incomplete sentence referred to above was intended to be proposed finding of fact 4. If so, the ruling on it is incorporated above.
5. Adopted in substance in Findings of Fact 2, 11 and 12.
COPIES FURNISHED:
Lewis R. Cohen, Esquire 1428 Brickell Avenue Eight Floor
Miami, Florida 33131
Linda Lettera, Esquire Department of Legal Affairs Room LL04
The Capitol
Tallahassee, Florida 32301
Joni B. Armstrong Assistant County Attorney 16th Floor
73 West Flagler Street Miami, Florida 33130
Randy Miller Executive Director
102 Carlton Building Tallahassee Florida 32301
William D. Townsend General Counsel
104 Carlton Building Tallahassee, Florida 32301
=================================================================
AGENCY FINAL ORDER
=================================================================
DEPARTMENT OF REVENUE, STATE OF FLORIDA TALLAHASSEE FLORIDA
COHEN-AGER, INC., a FLORIDA CORPORATION,
Petitioner,
v. CASE NO. 84-1425
DEPARTMENT OF REVENUE,
Respondent,
and
METROPOLITAN DADE COUNTY,
Intervenor.
/
FINAL ORDER OF THE DEPARTMENT OF REVENUE
THIS CAUSE came on to be heard before Randy Miller, Executive Director, acting on behalf of the Governor and Cabinet, at a hearing held in 103 Carlton Building, Tallahassee, Florida, on the 31st day of March, 1986.
This cause came before the Division of Administrative Hearings, by its designated Hearing Officer, Diane K. Kiesling, based on the waiver by the parties of their right to a formal hearing and based on the submission of stipulated facts, Exhibits 1-9, proposed orders and memoranda of law. The issue for determination in this proceeding is whether the assessment by the Department of Revenue against Cohen-Ager, Inc., for documentary stamp taxes on a warranty deed from Cohen-Ager, Inc., to Metropolitan Dade County is valid.
APPEARANCES
For Petitioner: Lewis R. Cohen
1428 Brickell Avenue Eight Floor
Miami, Florida 33131
For Respondent: Linda Lettera, Esquire
Department of Legal Affairs The Capitol
Tallahassee, Florida 32301
For Intervenor: Joni B. Armstrong
16th Floor
73 West Flagler Street Miami, Florida 33130
The parties filed proposed findings of fact and conclusions of law as permitted by statute. All proposed findings of fact and conclusions of law have been considered. A ruling has been made on each proposed finding of fact in the Appendix attached to and made a part of the Recommended Order.
FINDINGS OF FACT
Upon consideration of the stipulation of the parties and documents attached thereto, the following relevant facts are found:
On or about October 9, 1979, Dade County, a political subdivision of the State of Florida, acting for the use and benefit of its Department of Housing and Urban Development, a public housing authority ("PHA"), entered into a Contract for Project Dade 8-10 ("Contract") with Irbye Giddens, Inc. and Cohen-Ager, Inc., a joint venture, for the construction of Project Dade 8-10, a/k/a Singer Plaza, a housing development for the physically handicapped.
The contract was granted to Cohen-Ager, Inc. and Irbye Giddens, Inc. pursuant to competitive negotiations based on a document titled Dade 8-10 Request for Proposals. Cohen-Ager, Inc. and Irbye Giddens, Inc. were selected on the basis of their bid submission, as modified by the agreement of the parties due to delay in commencing construction. As indicated by the original bid submission of Cohen-Ager, Inc. and Irbye Giddens, Inc., the original price of the project was $2,576,000; but at the request of Cohen-Ager, Inc. and Irbye Giddens, Inc., the contract price was eventually raised to the amount found in Part II of the Contract, $2,970,000.
On or about October 10, 1979, Dade County deeded the subject undeveloped property to Cohen-Ager, Inc., and Irbye Giddens, Inc., the joint venture, "by Quit-Claim County Deed Subject to Possibility of Reverter," ("Quit- Claim Deed"). The Quit-Claim Deed, which incorporated by reference the Contract described in paragraph "1," provided for automatic reverter to Dade County of all of the right, title, and interest of CohenAger, Inc. in the property upon, among things, the termination, rescission or complete performance of the Contract.
Cohen-Ager, Inc., and Irbye Giddens, Inc. having obtained title to the property by virtue of the Quit-Claim Deed, rightfully used the property as collateral to obtain financing to cover the cost of construction of Project 8- 10.
Cohen-Ager, Inc. and Irbye Giddens, Inc., were legally obligated under the Contract and the Quit-Claim Deed to complete construction of Project 8-10 and to reconvey clear title to Dade County when the project was completed.
Cohen-Ager, Inc., and Irbye Giddens, Inc., fully performed under the terms of the Contract and Quit-Claim Deed, and reconveyed the property to Dade County by Warranty Deed dated February 12, 1981, and recorded March 12, 1981 ("Warranty Deed")
The Warranty Deed is the instrument on which the State of Florida, Department of Revenue, seeks to impose the documentary stamp tax at issue here.
The Warranty Deed was one step in a multi-step transaction used to finance the development and construction of Project 8-10. Under this method of financing development of its property, Dade County transfers title to undeveloped property and "repurchases" developed property.
Pursuant to the terms of the Contract, Dade County transferred title to the undeveloped property site to Cohen-Ager, Inc., and prohibited the transfer of the contract or property except (1) to an entity to which the contract is assigned with the written prior approval of the PHA and (2) to a mortgagee for the purpose of obtaining financing of the completion of the property.
Dade County paid for the development of Project 8-10 with the proceeds of Special Rousing Revenue Bonds issued for that purpose pursuant to Chapters
159 and 166, Florida Statutes, Dade County Ordinance NO. 79-49, and Dade County Board of County Commissioners' Resolutions R-1270-79 and R-1423-79. The Special Housing Revenue Bonds were issued under a Trust Indenture.
When the property was reconveyed to Dade County by the Warranty Deed, Dade County paid to Cohen-Ager, Inc., and Irbye Giddens, Inc., the contract price, $2,970,000, from the proceeds of the bonds.
The Department of Revenue seeks to impose the documentary stamp tax on the total amount of the contract price as the consideration for the Warranty Deed. The documentary stamp tax on $2,970,000 is $11,880.00, or $.40 per $100 of consideration.
Article VII, paragraph (C), of the contract of Sale, attached to and made a part of the Contract, specifies in part that the Contractor (herein Cohen-Ager, Inc.) "shall pay all documentary stamps and taxes applicable to" the conveyance of the property to Dade County by warranty deed.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57, Florida Statutes.
Section 201.02, Florida Statutes (1979), which imposes a tax on deeds and other instruments relating to realty or interests in realty, provides, in pertinent part as follows:
(1)(a) On deeds, instruments, or writings whereby any lands, tenements, or other realty, or any interest therein, shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser, or any other person by his direction, on each
$100 of the consideration there for the tax shall be 40 cents . . . .
Section 201.01, Florida Statutes, imposes the liability for the payment of the documentary stamp tax upon any person:
who makes, signs, executes, issues, sells, removes, consigns, assigns records, or ships the same, or for whose benefit or use
the same are made; signed, executed, issued, sold, removed, consigned, assigned, recorded, or shipped in the state. (e.s.)
Such language imposes the liability for payment of the documentary stamp tax on both parties to a taxable document.
Documentary stamps are required upon documents within the taxing purview of Chapter 201, Florida Statutes, even though one of the parties is tax exempt or tax immune. The nonexempt or nonimmune party is liable for the purchase and affixation of documentary stamps since Chapter 201 places the burden of payment upon both parties to the document. Only in those situations where both parties to the documents are exempt or immune would documentary stamps not be required to be affixed to otherwise taxable documents. See, AGO 75-206.
The Florida Department of Revenue's Rule 12B-4.02(3)(a), Florida Administrative Code, specifically addresses this situation and provides as follows:
The state, county, municipality, or any political subdivision thereof is not liable for the tax with respect to a document transferring any interest in realty to which it is a party. However, the transaction is not exempt from tax, and the non-exempt party to the transaction is liable for the tax. The affixing of stamp tax to an instrument by the state, county, municipality, or a political subdivision thereof does
not constitute payment of the tax, and the non-exempt party remains liable for the tax in such case.
In this case, Dade County is a tax immune entity and the liability for the documentary stamp tax falls on the other party to the Warranty Deed, Cohen-Ager, Inc. Cohen-Ager, Inc., is liable for the tax unless it falls within one of the exemptions or it is also a tax immune entity. It is concluded that Cohen Ager, Inc., is not a tax immune entity. Further, Cohen-Ager, Inc., does not share Dade County's tax immune status.
Cohen-Ager, Inc., argues that it is exempt from tax on the Warranty Deed for several reasons. First, it argues that it is exempt under Rule 12B- 4.14(2)(b), Florida Administrative Code, in that the Warranty Deed is a reconveyance of legal title from a trustee to the beneficial owner thereof. In support, reference is made to River Park Joint Venture 315006 v. Dickinson, 303 So.2d 654 (Fla. 1st DCA 1974), and Howell v. Flore, 210 So.2d 253 (Fla. 1st DCA 1968). On their face, the documents in question are clear and unambigious.
These documents contain no evidence sufficient to support a conclusion that a trust relationship was intended or created. The determination of liability for or exemption from the documentary stamp tax must be based solely on the form and
the face of the instrument in question and not on proof of extrinsic facts. See Hialeah, Inc., v. Department of Revenue, 380 So. 2d 562 (Fla. 3rd DCA 1980); State, Department of Revenue v. McCoy Motel, Inc., 302 So.2d 440 (Fla. 1st DCA 1974). It is therefore concluded that Cohen-Ager, Inc., is not exempt from this tax under Rule 12B-4.14(2)(b).
Second, Cohen-Ager, Inc., asserts that it is exempt from tax on the Warranty Deed under Rule 12B-4.14(2), Florida Administrative Code, in that the conveyance by Warranty Deed is unsupported by consideration. In support of this assertion, Cohen-Ager, Inc., argues that the contract price, which was the amount paid to Cohen-Ager, Inc., by Dade County in exchange for the Warranty Deed, does not specifically delineate a portion for the land. Instead, Cohen- Ager, Inc., takes the position that the contract price was for development and construction only and that, therefore, the conveyance of the land was unsupported by consideration. The cases cited in support of this contention are not on point and will not be individually distinguished herein. In the present case, the value of the land was merged with and became a part of the contract and contract price. Because the consideration for the land and the consideration for the development and construction are indistinguishable in the contract price, it is concluded that the full contract price is the consideration for the Warranty Deed and that the exemption in Rule 12B-4.14(2) is inapplicable.
Third, Cohen-Ager, Inc., argues that it is exempt from tax on the Warranty Deed under Rule 12B-4.14(1), Florida Administrative Code, in that the conveyance was a reconveyance of realty conveyed to secure a debt upon payment of the debt. This argument must also fail. The exemption in Rule 12B-4.14(1) clearly encompasses those situations where an interest in realty is conveyed to secure a debt and that interest is reconveyed upon payment of the debt. Here Dade County conveyed the land to Cohen-Ager, Inc., so Cohen-Ager, Inc., could use it to secure Cohen-Ager's debt to a bank for Cohen-Ager's construction costs. Cohen- Ager, Inc., conveyed its interest to the bank to secure its debt. When the bank reconveyed the interest to Cohen-Ager, Inc., upon Cohen-Ager's payment of its debt, this exemption might apply. However, Dade County did not convey the land to Cohen Ager, Inc., to secure debt owed by Dade County to Cohen-Ager, Inc., and Cohen-Ager, Inc., did not reconvey the land to Dade County upon payment of a debt of Dade County to Cohen-Ager, Inc. The facts do not support the applicability of this exemption to the conveyance by Warranty Deed. It is concluded that the Rule 12B-4.14(1) is inapplicable to the tax on the Warranty Deed.
Fourth, Cohen-Ager, Inc., asserts that the Department of Revenue may not tax indirectly that which it cannot tax directly. It relies in this assertion on Lewis v. The Florida Bar, 372 So.2d 1121 (Fla. 1979). However, the evidence does not support a finding that this assessment is an indirect assessment against an entity which cannot be taxed directly (that entity being Dade County, a tax immune entity). Here Cohen-Ager, Inc., submitted a bid on the project with full knowledge and agreement that the contractor would be liable for payment of all documentary stamps and taxes on the final conveyance to Dade County by Warranty Deed. Cohen-Ager, Inc., agreed to pay the documentary stamps and-taxes (See Finding of Fact 13). Cohen-Ager, Inc., now seeks to avoid payment of taxes which it agreed to as part of Its contract by arguing that it is an indirect tax on Dade County and that the tax will be passed through as a cost to the immune entity. However, Cohen-Ager, Inc., fails to show how this tax will be passed to Dade County in the proceeding since Cohen-Ager, Inc., has already agreed to pay the tax and since all sums due from Dade County under the Contract have already been paid. Additionally, Lewis, supra, involved a tax on
a note containing a promise to pay money. This cause involves a tax on a deed or conveyance of realty. In response to the decision in Lewis, Section 201.24, Florida Statutes was enacted. This section codified the exemption carved out in the Lewis decision and specifically relates an exemption from taxes on any obligation to pay money issued by a tax immune entity. Neither the decision in Lewis, supra, nor the act of legislature in enacting Section 201.24 can be construed or expanded to create an exemption from the documentary stamp tax on deeds involving a tax immume entity as one party to the transaction. It is concluded that assessment of the documentary stamp tax against Cohen-Ager Inc., is not and cannot be an indirect tax on the tax immune entity, Dade County.
Having concluded that Cohen-Ager, Inc., is liable for the documentary stamp tax on the Warranty Deed unless it can avail itself of an exemption and having rejected the assertions by Cohen-Ager, Inc., that it falls within an exemption, it now must be concluded that Cohen-Ager, Inc., is liable for the documentary stamp tax on the Warranty Deed. The proposed assessment of $11,880.00, plus penalties and interest, is correctly calculated pursuant to Section 201.02, Florida Statutes (1979), using the rate of $.40 per $100 of consideration, the consideration herein being $2,970,000.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that the Department of Revenue enter this Final Order assessing
Cohen-Ager, Inc., for the documentary stamp tax due on the Warranty Deed to Dade
County in the amount of $11,880.00, plus penalties and interest.
DONE AND ENTERED this 16th day of April, 1986.
RANDY MILLER EXECUTIVE DIRECTOR DEPARTMENT OF REVENUE STATE OF FLORIDA
I HEREBY CERTIFY that a true and correct copy of the above Final Order was entered into the official records of the Department of Revenue this 16th day of April, 1986.
Agency Clerk
Docket for Case No: 84-001425
Orders for Case No: 84-001425
| Issue Date |
Document |
Summary |
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Apr. 16, 1986 |
Agency Final Order
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Jan. 16, 1986 |
Recommended Order
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Petitioner bid knowing it would be liable for taxes on final conveyance to Dade County by warranty deed. Petitionerdoesn't fall within any exemptions and must pay taxes.
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