STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ROY R. and IVETTA N. BAILEY, )

)

Petitioners, )

)

vs. ) CASE No. 87-1077

)

OFFICE OF COMPTROLLER, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Panama City, Florida, before Robert T. Benton, II, Hearing Officer of the Division of Administrative Hearings, on July 21, 1987. Respondent filed a proposed order and a memorandum of law in support of the recommended order on August 5, 1987. The attached appendix addresses respondent's proposed findings of fact.

The petitioners appeared pro se. Respondent was represented by counsel:

D. Alan Burns, Esquire

Assistant Attorney General, The Capitol Tallahassee, Florida 32399-1050

In his order denying application for tax refund, the Comptroller recites that petitioners applied for a sales tax refund in the amount of $2,523.96 on or about September 12, 1985, and as grounds for denial, adopts the view of the Department of Revenue that, because "purchase of the modular home and land was two (2) separate transactions with Best Home, Inc., and Joint Venture the sales tax was due as assessed."

Petitioners made a timely request for formal administrative proceedings, and the Comptroller's Office referred the matter to the Division of Administrative Hearings, in keeping with Section 120.57(1)(b)3., Florida Statutes (1986 Supp.). After the hearing had concluded, petitioners mailed the hearing officer an appraisal report, apparently without furnishing the respondent a copy. By order entered August 12, 1987, respondent was given until August 26, 1987, to request an opportunity to rebut this material, but respondent made no such request.

ISSUE

Whether respondent should refund sales tax petitioners paid on account of their purchase of a manufactured home?

FINDINGS OF FACT

1. On September 12, 1984, petitioners made a $160 down payment on a 75 x

   150 foot lot in High Ridge Estates in Bay bounty by a check drawn in favor of Ed Franklin.

   
   

2. They wanted the lot in order to put a manufactured home on it. After acquiescing to a request by personnel of the Bay County building department that they pay $21.00 for a mobile home permit, the Baileys improved the property in anticipation of placing a manufactured home on it. They put in a septic tank and poured a concrete pad.

   
   

3. On November 21, 1984, the Baileys signed a form "FHMA SALES CONTRACT" as buyers. Petitioners' Exhibit No. 2. Jack Lee signed as seller on behalf of "DD&L Joint Venture." Id. Petitioners gave Lee a down payment of $13,400; DD&L undertook to procure from Fleetwood Homes of Georgia, Inc., a manufactured home to be placed on the High Ridge Estates lot. The form contract, which purported to obligate the Baileys for $53,000, describes the lot, but makes no mention of the manufactured home.

   
   

4. In December of 1984, the manufactured home arrived at High Ridge Estates, borne by temporary axles and wheels, which were unbolted after its arrival, and left with the truck that had brought it. Statewide of Florida, Inc., placed it on its new foundation. With an exterior of wood siding and an asphalt-shingled roof, the 25.7 by 54 foot structure met VA and FHA materials requirements for standard housing. Carpet was laid over plywood subflooring. Wall joists stand 24 inches apart. The Baileys added a carport, a driveway, three decks and a separate storage shed.

   
   

5. On March 13, 1985, Mr. and Mrs. Bailey borrowed money from Peoples First Financial Savings and Loan Association of Panama City (Peoples) to pay the balances they owed for the lot and home. Of the loan proceeds, $6,100.00 went to "C. Ed Franklin and wife, Frances P. Franklin," Hearing Officer's Exhibit No. 1, to pay for the lot on which the manufactured home stood; and $23,328.80 went to "ITT Comm. Finance." Id. To secure repayment of its loan to the Baileys, Peoples took a mortgage from the Baileys encumbering the lot and the manufactured home affixed to it. Petitioners' Exhibit No. 1.

   
   

6. Apparently the payment to "ITT Comm. Finance" retired indebtedness the Baileys incurred in acquiring their 1985 Fleetwood Chadwick 3523D. Mrs. Bailey executed a retail buyer's order for their manufactured home in December of 1986, although the form, which showed Best Home Center, Inc., as the "DEALER," was dated March 22, 1985. Hearing Officer's Exhibit No. 2. The form reflects a total price for the manufactured home of $29,045.87, the sum on which sales tax was computed at $1,452.53. The Baileys paid tax in this amount to Best Home Center, Inc., "upon the sales (sic) of tangible personal property." Hearing Officer's Exhibit No. 2. Best Home Center, Inc., forwarded the taxes they collected from the Baileys, along with other taxes collected in March of 1985, to the Florida Department of Revenue. Hearing Officer's Exhibit No. 2.

   
   

7. At the time the Baileys purchased the manufactured home it had no license tag. It never had a license tag and, at the time they purchased it, had never been assessed as real property. Best Home Center, Inc., made a written assignment to the Baileys of its rights, if any, to recover the sales tax the Baileys paid.

   CONCLUSIONS OF LAW

   
   

8. Questions have recently arisen about the precise reach of the Comptroller's power and authority in administrative refund cases to which the Department of Revenue has not been made a party. Florida Export Tobacco Co., Inc. v. Department of Revenue, 510 So.2d 936 (Fla. 1st DCA 1987) pet. rev. pndg sub nom. Lewis v. Florida Export Tobacco Co., No. 70,899 (Fla.; July 21, 1987). Pretermitting these jurisdictional issues, petitioners' case must fail on the merits, even if the Comptroller does have authority to grant refunds in appropriate cases.

   
   

9. The Comptroller takes the position that petitioners' manufactured home is tangible personal property subject to the sales tax, citing Rule 12A- 1.007(41)(c), Florida Administrative Code. Under this provision, unless a mobile home has "been assessed as real property, the sale of the mobile home constitutes the sale of a motor vehicle under Section 212.05(1), F.S., whether or not the land is sold in conjunction with the mobile home." Under Florida law, "every person is exercising a taxable privilege who engages in the business of selling tangible personal property at retail in this state . . . ." Section 212.05, Florida Statutes (1986 Supp.). "For the exercise of such privilege, a tax is levied . . . [a]t the rate of 5 percent of the sales prices of each item

   . . . ." Section 212.05(1)(a)1.a, Florida Statutes (1986 Supp.).

   
   

10. Petitioners argue that manufactured housing is not the same as a mobile home, and that Rule 12A-1.007(41)(c), Florida Administrative Code, does not apply to their situation, for that reason. But the rule contemplates that mobile homes may become real estate, and treats mobile homes that have been assessed as real property as real estate. By recognizing mobile homes as realty, the rule accords them the very status petitioners contend their manufactured home should enjoy. The distinction petitioners would draw between mobile homes and manufactured housing lacks significance for purposes of the sales tax. The dichotomy between "boats" and "floating structures" has no analogy on land. See Land v. State Department of Revenue, 410 So.2d 606 (Fla. 3d DCA 1987).

    
    

11. In this context, the difference between personalty and realty may be seen as one of timing. Mobile homes and manufactured homes, like unassembled building supplies, remain personalty until they are affixed to real estate. The lumber at the building supply store is personalty, and its sale is taxed accordingly. Once it has been incorporated in a house, it becomes a fixture of the real property, and a component of any tax predicated on the value of the real property as a whole corresponds, at least theoretically, to the value of the lumber.

    
    

12. The Baileys fell far short of proving that they purchased improved real estate, rather than purchasing first a lot then a manufactured home to be placed on the lot. The evidence suggests an elaborate, amateurish charade designed to create the impression of a unified transaction. (On the other hand, petitioners may have been victimized themselves in these garbled dealings.) The only document which names a single price for home and lot is Petitioners' Exhibit No. 2, an agreement between petitioners and DD&L Joint Venture. As far as can be told from closing statement, DD&L did not sell the petitioners either the lot or the manufactured home. It was the Franklins who sold the lot to the Baileys. Apparently Best Home Center, Inc., sold them the manufactured home.

As far as can be told from this record, Mr. and Mrs. Bailey are the first people who owned the lot and the home contemporaneously.

RECOMMENDATION

It is, accordingly, RECOMMENDED:

That respondent deny petitioners' application for refund.

DONE and ENTERED this 5th day of October, 1987, at Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 5th day of October, 1987.

APPENDIX

The second sentence of respondent's proposed finding of fact No. 1 and respondent's proposed findings of fact Nos. 3, 4, 6, 8, 9 and 10 have been adopted, in substance, insofar as material.

With respect to the first sentence of respondent's proposed finding of fact No. 1, it is not entirely clear who sold the Baileys the manufactured home. The documentation reflected a sale by Best Home Center, Inc., for $29,045.

With respect to respondent's proposed finding of fact No. 2, Ed Franklin and his wife conveyed the lot. The down payment was $160 and a $6,100 balance was paid in March.

With respect to respondent's proposed finding of fact No. 5, the Peoples Mortgage originated in March, with indebtedness secured by lot and home.

With respect to respondent's proposed finding of fact No. 7, the Bay County Building Department required them to purchase a permit on September 20, 1984.

COPIES FURNISHED:

The Honorable Gerald Lewis Comptroller, State of Florida The Capitol

Tallahassee, Florida 32399-0305

Charles Stutts, Esquire General Counsel

Office of the Comptroller The Capitol, Suite 1302

Tallahassee, Florida 32399-0305

Mr. and Mrs. Bailey 22012 High Ridge Drive Lot 24

Panama City Beach, Florida 32407

D. Alan Burns, Esquire Assistant Attorney General Department of Legal Affairs Tax Section, Capitol Building

Tallahassee, Florida 32399-1050

Docket for Case No: 87-001077

Orders for Case No: 87-001077