STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CHRISTIAN TELEVISION )

CORPORATION, INC. )

)

Petitioner, )

)

v. ) CASE NO. 86-0456

)

STATE OF FLORIDA, )

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on July 21, 1986, in St. Petersburg, Florida. The issue for determination in this proceeding is whether petitioner's Consumer's Certificate of Exemption should be revoked.

APPEARANCES

For Petitioner: Jon H. Anderson, Esquire

Post Office Drawer 6839 Lakeland, Florida 33807-6839

For Respondent: Edwin A. Bayo, Esquire

Assistant Attorney General Department of Legal Affairs Tax Section, Capitol Building Tallahassee, Florida 32301

INTRODUCTION

In support of its position that petitioner, Christian Television Corporation, Inc., is entitled to a sales tax exemption as a church and/or a religious institution, petitioner presented the testimony of its president, Robert D'Andrea; Reverend James Yates, its director of prayer counselors; Reverend Howard Drewitz, its director of community ministries, and Reverend James Campbell. The deposition testimony of Waverly Palmore and Mark A. Zych was also offered and received. Joint Exhibits 1 through 17 and 21 through 24 were received into evidence.

The respondent, Department of Revenue, presented no witnesses at the hearing.

Subsequent to the hearing, both parties submitted proposed findings of fact and proposed conclusions of law. The parties' proposed factual findings have been accepted and/or incorporated in this Recommended Order, except as noted in the Appendix hereto.

FINDINGS OF FACT

1. Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:

   
   

2. Petitioner, Christian Television Corporation, is a not for profit Florida corporation formed in April of 1977. It is exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code (1954). Its first application for a Florida Consumer's Certificate of Exemption was initially denied by the Department of Revenue in December of 1977. After petitioner was successful in a rule-challenge proceeding to a portion of the Department's rules defining a "church", the Department reversed its initial decision and issued the petitioner a Consumer's Certificate of Exemption. Based on that issuance, petitioner dismissed its request for a formal administrative hearing regarding the initial denial of exempt status.

   
   

3. In 1983, the Legislature enacted Section 212.084, Florida Statutes, which required the Department of Revenue to review every sales tax exemption certificate issued before July 1, 1983, to ensure that the possessor of the certificate was actively engaged in an exempt endeavor. The Department was given the authority to revoke the certificates of those entities found to be no longer qualified for an exemption. Section 212.084(3), Florida Statutes. Pursuant to this statute, the respondent notified the petitioner that an application for renewal of its previously issued Certificate would be required. Petitioner submitted such an application and the respondent gave notice of its intent to revoke petitioner's Certificate effective January 29, 1986.

   
   

4. According to its Articles of Incorporation, the petitioner was organized

   
   

   "to produce and broadcast to the general public religious television and radio programs and thereby educate and instruct the general public in religious matters, and make available guidance to promote the general public welfare..."

   
   

   In furtherance of this purpose, the petitioner operates a facility in Largo, Florida, in a 43,000 square foot building. The building contains two television broadcasting studios, control rooms, storage rooms, administrative offices, a counseling area and a chapel.

   
   

5. The petitioner views its purpose as one of assisting churches of all denominations in presenting the gospel to the community. It produces many programs in its Largo studios and considers these programs to be ministries in themselves. Live audiences are often present in the studios, which can accommodate from 30 to 100 people, depending upon the program. For example, during the production of "Joy Junction", children from various Christian schools in the area attend the taping. Senior adults come to the Largo studios to attend the "Action Sixties" program, and single adults attend the taping of "Solo Act". In addition, the petitioner sells air time to local churches and ministries.

   
   

6. The petitioner also conducts benevolence activities in cooperation with area churches and local agencies. These include fund-raisers for other

   ministries and raising money or collecting clothing and food for the needy. Petitioner provides on-air announcement services for area churches and ministerial associations and allows other ministries to utilize its broadcasting facilities. Petitioner's staff also attempts to work with "non-Christian people" within the community and "pass them through our ministry into other churches".

   
   

7. The petitioner provides a telephone counseling service from its Largo facility. For this purpose, it utilizes 45 regular, and 100 substitute, volunteer counselors. These counselors are trained by petitioner's staff, and callers receive Biblical answers to their questions and problems. Many who call in want prayer for some particular need. Callers perceived to have a more severe problem are referred to a Christian counselor in the area. Approximately 32,000 calls per year are received on petitioner's "prayer lines".

   
   

8. The petitioner's staff includes two ministers. One serves as the director of the benevolence ministry and the counseling department, and the other serves as director of community ministries and does the liaison work with other churches. Both were previously Pastors of their own churches, and feel that Christian Television is as much or more of a "church" as the more traditional churches they formerly pastored. They described the use of video technology as an advantage and an asset, rather than as a substitute for more traditional forms of religious training.

   
   

9. Worship services are conducted in the petitioner's chapel by both the staff ministers and other volunteer or paid ministers. The chapel, containing 1200 square feet and having a seating capacity of about 150, has high ceilings and contains an organ, an altar, a pulpit and chairs. The estimated value of the assets within the chapel is ten or twenty thousand dollars. The chapel is actively utilized during the week for staff devotionals and communion services, and is open to the public for special services and advertised programs conducted by those using a Biblical approach. Other approved ministries are permitted to utilize the chapel without charge for Bible studies or special prayer times.

   The chapel is not used as a production or broadcasting studio.

   
   

10. As of December 31, 1983, the value of petitioner's assets, including plant, property and equipment, was $2,185,564.00. During 1983, petitioner received contributions totalling $1,137,000.00, and realized slightly more than one million dollars in revenue by providing broadcast and production time to various religious organizations.

    
    

    CONCLUSIONS OF LAW

    
    

11. The petitioner contends that it is either a church and/or a religious institution eligible for an exemption from state sales tax pursuant to Section 212.08(7)(a), Florida Statutes. Also, petitioner argues that the respondent is somehow estopped or barred from revoking its prior Certificate of Exemption due to a prior administrative proceeding which was terminated after the issuance of the initial Certificate. The respondent contends that petitioner's prime activity is producing and transmitting television programming and that the mere presence of a chapel within its facility does not qualify petitioner as a church or a religious institution for sales tax exemption purposes.

    
    

12. The guidelines for determining which entities are exempt from taxation are clear. While doubtful statutory language should generally be resolved in favor of the taxpayer, the reverse is true in construing exceptions and exemptions from taxation. Department of Revenue v. Skop, 383 So.2d 678 (Florida

    5th DCA, 1980). Exemptions from taxing statutes are a matter of legislative grace, not a matter of right, and are to be strictly construed against the taxpayer. State ex rel. Szabo Food Service v. Dickinson, 286 So.2d 529 (Fla. 1974).

    
    

13. With these principles in mind, it is necessary to carefully examine the statutes enacted by the Legislature and the regulations adopted by the Department of Revenue. The controlling statutory language is found in Section 212.08(7), Florida Statutes, and reads, in pertinent part, as follows:

    
    

    "(7) MISCELLANEOUS EXEMPTIONS.--

    1. Religious, charitable, scientific, educational, and veterans' institutions and organizations.--

       1. There are exempt from the tax imposed by part I of this chapter transactions involving:

          1. Sales or leases directly to churches or sales or leases of tangible personal property by churches;

          2. Sales or leases to nonprofit religious, nonprofit charitable, nonprofit scientific

             or nonprofit educational institutions when used in carrying on their customary non- profit religious, nonprofit charitable, non- profit scientific, or nonprofit educational activities, including church cemeteries; and

       2. The provisions of this section authorizing exemptions from tax shall be strictly defined, limited, and applied in each category as follows:

          1. "Religious institutions" means churches and established physical places for worship in this state at which nonprofit religious services and activities are regularly

       conducted and carried on. The term "religious institutions" includes nonprofit corporations the sole purpose of which is to provide free transportation services to church members, their families, and other church attendees."

       
       

       It appears from these statutes that the Legislature intended to draw a distinction for sales tax exemption purposes, between "churches" and "nonprofit religious institutions." While the former enjoy a two-way exemption (on purchases and sales), the latter enjoys the exemption from taxation only on purchases. However, the distinction is somewhat blurred by the statutory definition of a "religious institution" and the regulatory definition of a "church". The Department of Revenue's Rule 12A- 1.001(4)(b) and (c), Florida Administrative Code, contains the following language

       
       

       "(b) "Church" shall mean a religious institution having an established physical place of worship in this state.

       (c) Religious organizations whose functions are radio broadcasting or conducting services for short periods of time at temporary locations are not considered to be churches."

       Thus, a church is a religious institution and a religious institution is a church. The Department itself has acknowledged this "dizzying whirlpool of circuitous definitions". National Christian Network, Inc. v. Department of Revenue, Case No. 84- 4115, Final Order entered on December 17, 1985. The common language in both the statute and the rule is the requirement that both churches and religious institutions have "an established physical place for worship". Neither the statutes nor the Department's rules require that the sole or dominant use of a facility be the conduct of on-premises church services. A "religious institution" must further regularly conduct and carry on nonprofit religious services and activities at its established physical place for worship. Indeed, religious organizations which broadcast or conduct services for only short periods of time at temporary locations can not qualify as a "church" for exemption purposes. Rule 12A-1.001(4)(c), Florida Administrative Code.

       
       

14. A nonprofit corporation which, among other activities, produces and broadcasts religious television programming does not fit neatly into the statutory categories entitled to an exemption; nor does it fit into the exclusions from exempt status. As was done in the case of Maumee Valley Broadcasting Association v. Porterfield, 279 N.E. 2d 863 (Ohio, 1972), the "total picture" of petitioner's organization and operation must be considered.

    
    

15. The record in this case demonstrates that the purpose and motive for petitioner's existence is to spread religious teaching and thinking to the community. It attempts to implement this objective through the medium of television, through counseling, through traditional services, and it treats and considers its various programs and activities as ministries in themselves. Like most "churches" and "religious institutions", petitioner's establishment provides a place for worship, bible studies, and religious instruction; as well as a site for religious counseling, benevolent activities and charitable activities. Its television studios, as well as its chapel, are utilized by both its own staff and the general public for religious activities. Its chosen use of television as a means of implementing its religious objectives should not obviate its exempt status as a religious institution. The additional ability to reach worshippers in their own homes does not defeat the fact that petitioner has and utilizes an established and permanent physical facility for regularly conducting and carrying on its religious activities. It is concluded from the facts adduced at the hearing that petitioner, through its own staff, volunteers and other religious groups and organizations in the community, regularly conducts on its premises nonprofit religious services and activities, and therefore qualifies as a religious institution entitled to a sales tax exemption.

    
    

16. This case is readily distinguishable from the case of National Christian Network, Inc. v. Department of Revenue, cited above. In that case, it was found that only some of the church services were produced in the facility's studio and that the facility's essence was "that of a conduit, a medium for other organizations to transmit religious worship services into the homes of its viewers and listeners" or for other organizations to conduct charitable and educational activities. There was no showing that the taxpayer, the general public or any other group utilized the physical facility for anything other than broadcasting activities. In the instant case, the petitioner's staff is actively engaged in many religious activities, which include broadcasting and producing religious television programs. It utilizes its staff, premises and facilities to provide religious services and programs to the public, to serve missions, to provide counseling services and to gather money, food and clothing

    for distribution to the needy. The fact that petitioner "airs" its efforts and objectives to the community does not defeat its tax-exempt status.

    
    

17. While the above conclusion renders unnecessary a determination regarding petitioner's estoppel theory, it is concluded that such a contention is without merit. Section 212.084, Florida Statutes, mandates that the Department review every prior tax exemption certificate to ensure that the entity qualifies for an exemption and to repeat that review every five years. The Legislature obviously contemplated that some previously exempted organizations might lose their exempt status, thus negating petitioner's contention that it has some vested continuing right to an exemption once granted.

RECOMMENDATION

Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that petitioner's Consumer Certificate of Exemption be reissued for a period of five (5) years.

Respectfully submitted and entered this 6th day of October, 1986.

DIANE D. TREMOR

Hearing Officer

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 6th day of October, 1986.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-0456

The proposed findings of fact submitted by the petitioner and the respondent have been carefully considered and are accepted and/or incorporated in this Recommended Order, except as noted below:

Petitioner:

3 - 5. Recitations of testimony accepted as correct, but not included as factualfindings.

7. Partially rejected as argument as opposed to factual findings.

COPIES FURNISHED:

Jon H. Anderson, Esquire NCNB Bank Building

5001 South Florida Avenue Lakeland, Florida 33803

Edwin A. Bayo, Esquire Assistant Attorney General Department of Legal Affairs The Capitol

Docket for Case No: 86-000456

Orders for Case No: 86-000456