STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA HOME BUILDERS ASSOCIATION, )

)

Petitioner, )

)

vs. ) CASE NO. 87-3877RE

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

FINAL ORDER

Pursuant to written notice a formal hearing was held in this case before Larry J. Sartin, a duly designated Hearing Officer of the Division of Administrative Hearings, on January 25 and 26, 1987, in Tallahassee, Florida.

The Petitioner, the Florida Home Builders Association, was represented by Neil Butler, Esquire. The Respondent, the Department of Revenue was represented by Kevin J. O'Donnell and Joseph C. Mellichamp, III, Assistant Attorneys General.

INTRODUCTION

On September 4, 1987, the Petitioner filed a Petition for Administrative Hearing to Invalidate the Emergency Rules of the Department of Revenue Regarding Sales Tax on Services. In this Petition, the Petitioner challenged various emergency rules of the Respondent implementing the sales tax on construction services as an invalid exercise of delegated legislative authority. In particular, the Petitioner challenged Rules 12AER87-31(1)(c), (5), (7)(b)(4), (7)(i), (7)(k), (8)(c), (1O)(12), (13), (14), (30) and (35), Florida

Administrative Code. At the commencement of the formal hearing the Petitioner withdrew its challenge to Rules 12AER87-31(14), (30) and (35), Florida Administrative Code.

The Petitioner also alleged that Rule 12AER87-31, Florida Administrative Code (hereinafter referred to as the "Emergency Rules") , were not adopted in accordance with Section 33, Chapter 87-6, 1987 Laws of Florida (1987), and Section 120.54(9), Florida Statutes.

Finally, the Petitioner alleged that the Emergency Rules violate the Due Process Clause of the Constitution of the State of Florida and the Constitution of the United States.

Pursuant to a Stipulation and Joint Motion for Continuance the parties waived the requirement of Section 120.56(4), Florida Statutes (1987), that the formal hearing of this case be held within fourteen days after the receipt of the Petition.

At the formal hearing the Petitioner presented the testimony of Melton H. McKown, John David Infintino and Riley Palmer. "Petitioner's" exhibits 1-8 were accepted into evidence. Francis, Ph.D. "Respondent's" exhibits 1-5 were accepted into evidence.

The parties also offered one Joint Exhibit, which was accepted into evidence.

At the commencement of the formal hearing the parties stipulated that the Petitioner has standing to file and pursue the instant rule challenge proceeding. A Motion to Strike previously filed by the Respondent was denied.

Subsequent to the conclusion of the formal hearing the Petitioner filed a letter dated March 21, 1988, in which it withdrew its challenge to Rules 12AER87-31(7)(b)(4) and (8)(c), Florida Administrative Code.

The parties have filed proposed final orders containing proposed findings of fact. The Petitioner has filed two separate proposed final orders. The proposed findings of fact in the shorter of the two proposed final orders are also included in the longer proposed final order. A ruling on each proposed finding of fact contained in the Petitioner's longer proposed final order and each proposed finding of fact contained in the Respondent's proposed final order has been made either directly or indirectly in this Final Order or the proposed findings of fact has been accepted or rejected in the Appendix which is attached hereto.

ISSUE

1. Whether the Emergency Rules on Sales and Use Tax on Services and Other Transactions adopted by the Respondent effective July 1, 1987, were adopted pursuant to Section 33, Chapter 87-6, l987 Laws of Florida, and Section 120.54(9), Florida Statutes (1987)?

2. Whether Rules 12AER87-31(1)(c), (5), (7)(i)(7)(k), (10), (12) and (13),

Florida Administrative Code, constitute an invalid exercise of delegated legislative authority?

FINDINGS OF FACT

1. The Respondent is an agency of the State of Florida. It is charged with the responsibility to implement, enforce and collect the taxes levied by the State of Florida, including Chapter 212, Florida Statutes (1987).

   
   

2. During the 1987 Legislative Session the Legislature enacted Committee Substitute for Senate Bill 777, which is codified as Chapter 87-6, 1987 Laws of Florida (hereinafter referred to as "Chapter 87-6"). This act, which amended Chapter 212, Florida Statutes, was signed into law by the Governor on April 23, 1987.

   
   

3. Section 5 of Chapter 87-6, created Section 212.0594, Florida Statutes. This new Section of Chapter 212 imposed a sales tax on construction services performed on or after July 1, 1987.

   
   

4. Section 33 of Chapter 87-6, authorized the Respondent to adopt emergency rules pursuant to Section 120.54(9), Florida Statutes, to implement the new law. In authorizing the adoption of emergency rules, the Legislature determined that the failure to promptly implement the provisions of Chapter 87-6

   would present an immediate threat to the welfare of the State because revenues needed for the operation of the State would not be collected.

   
   

5. On June 6, 1987, the Legislature enacted Committee Substitute for House Bill 1506, which is codified as Chapter 87-101, 1987 Laws of Florida (hereinafter referred to as "Chapter 87-101"). Chapter 87-101 is commonly known as the Sales Tax Glitch Bill. Chapter 87-101 was passed by the Legislature on June 6, 1987, signed into law by the Governor on June 30, 1987, and was effective beginning July 1, 1987.

   
   

6. Section 5 of Chapter 87-101 repealed Section 5 of Chapter 87-6. Section 6 of Chapter 87-101, created a new Section 212.0594, Florida Statutes, taxing construction services, in replace of the Section 212.0594, Florida -

   Statutes, previously created by Section 5 of Chapter 87-6. Thus the Legislature substantially changed the manner in which sales tax was to be imposed upon construction services.

   
   

7. Section 20 of Chapter 87-101 amended Section 33 of Chapter 87-6 but continued the authorization to adopt emergency rules and the justification for doing so.

   
   

8. On May 8, 1987, the Respondent published notice in the Florida Administrative Weekly of its intent to hold public meetings and workshops on May

   19 and 26, 1987, and June 6, 1987. Proposed rules relating to Chapter 87-6 were to be considered at these meetings and workshops.

   
   

9. On May 22, 1987, the Respondent published notice in the Florida Administrative Weekly of its intent to hold public meetings and workshops on May 26, 1987, and June 26, 1987. Proposed rules relating to Chapter 87-6 were to be considered at these meetings and workshops.

   
   

10. On May 29, 1987, the Respondent published notice in the Florida Administrative Weekly of its intent to hold a public meeting and workshop on June 6, 1987, to consider proposed rules relating to Chapter 87-6.

    
    

11. On June 5, 1987, the Respondent published notice in the Florida Administrative Weekly of its intent to hold a public meeting and workshop on June 12, 1987, to consider proposed rules relating to Chapter 87-6.

    
    

12. Ultimately, the Respondent held four workshops concerning the emergency rules: May 19 and 26, 1987, and June 6 and 12, 1987. The workshop conducted on June 12, 1987, was conducted to consider Rules 12AER87-31, Florida Administrative Code.

    
    

13. The rules considered at the June 12, 1987, workshop had been redrafted to implement Chapter 87-101. The rules considered at the workshop were available for a short period of time before the workshop and during the workshop.

    
    

14. Comments were received by the Department at the June 12, 1987, workshop from the public, including representatives of the construction industry. As a result of these comments, changes in the Emergency Rules were made following the workshop. The Emergency Rules took into account the method of taxing construction services provided for in Chapter 87-101 rather than the method previously provided for in Chapter 87-6.

15. The Respondent's emergency rules, including Rule 12AER87-31, Florida Administrative Code, were certified by the Executive Director of the Respondent and delivered to the Secretary of State for publication on June 18, 1987. The Respondent delivered the full text of the emergency rules, a statement of the specific reasons for finding an immediate danger, a statement of the reasons for concluding that the procedure followed to adopt the rules was fair under the circumstances and a summary of the purpose of the rules for publication in the first available issue of the Florida Administrative Weekly.

    
    

16. The emergency rules had to be filed with the Secretary of State no later than June 18, 1987, in order to be published in the Florida Administrative Weekly by July 1, 1987, the effective date of Chapters 87-6 and 87-101 and the emergency rules.

    
    

17. The full text of the emergency rules was published in the Florida Administrative Weekly on June 26, 1987. The text of this notice, which was accepted into evidence as Petitioner's exhibit 4, is hereby incorporated into this Final Order. The Emergency Rules had an effective date of July 1, 1987. Initially the Emergency Rules were to expire January 1, 1988, six months after their effective date, as specified in Chapter 87-101. Pursuant to Section 1, Chapter 87-539, 1987 Laws of Florida, the Emergency Rules are effective through June 30, 1988.

    
    

18. Representatives of the Respondent and the Petitioner met between the passage of Chapter 87-101 by the Legislature and June 18, 1987, and discussed the act.

    
    

19. The Respondent expended a great deal of time and effort in adopting the emergency rules implementing Chapters 87-6 and 87-101, and in providing information to the public. The method of taxation to be implemented was unique and, therefore, the Respondent was unable to look to other jurisdictions for guidance concerning implementation of the tax.

    
    

20. The taxation of construction services was one of a multitude of services taxed.

    
    

21. Chapter 87-101, required substantial redrafting of the emergency rules, including Rule 12AER87-31, Florida Administrative Code, within a relatively short period of time.

    
    

22. The new tax necessitated the registration of 100,000 to 150,000 new sales tax "dealers" by July 1, 1987.

    
    

23. Prior to July 1, 1987, the Respondent received thousands of telephone calls and thousands of written requests seeking information concerning the sales tax on services.

    
    

24. The Respondent was extensively involved with the Legislature during the period of time when Chapters 87-6 and 87-101 were adopted. Representatives of the Respondent discussed the acts with Legislative members and staff.

    
    

25. Dr. James Francis acted as a liaison between the Respondent and the Legislature. Dr. Francis also served on the Revenue Estimating Conference. In his capacity with the Revenue Estimating Conference, Dr. Francis prepared estimates of tax revenues from the services tax.

26. A revenue impact analysis of the services tax was also provided by the Respondent to the Legislature based upon each amendment and proposed amendment to Chapters 87-6 and 87-101.

    
    

27. Representatives of the petitioner expressed dissatisfaction with the method of taxation of construction services contained in Chapter 87-6 because of the required itemization of building material costs on each contract.

    
    

28. The Respondent prepared a revenue neutral (no loss of tax revenue previously estimated to be generated by Chapter 87-6) method of imposing the services tax on construction services without requiring itemization of building material costs. Pursuant to this method, a set percentage, generally equal to the average percentage of building material costs, is backed out of "contract price" or "cost price." The remainder is treated as the amount of the "contract price" or "cost price" attributable to the construction services.

    
    

29. The revenue estimated by the Respondent and provided to the Legislature, based upon the elimination of an average percentage of building material costs, was based upon the inclusion in "contract price" and "cost price" of all expenditures associated with the construction industry, including the total expenditures for building materials supplied by owners to contractors. The Legislature was aware of this fact before it adopted Chapter 87-101.

    
    

30. Fiscal notes for Chapter 87-101, which the Respondent had available prior to the adoption of the Emergency Rules, numerically quantified the estimated revenue to be generated by Chapter 87-101. The Respondent also knew what amounts were included in the estimate of revenue contained in the fiscal notes. These amounts were consistent with the revenue estimates provided by the Respondent to the Legislature.

    
    

31. The Emergency Rules represent a contemporaneous administrative construction of Chapters 87-6 and 87-101 by an agency charged with responsibility to administer the acts and which was intimately involved in the adoption of the acts.

    
    

32. The Petitioner has challenged the validity of Rules 12AER87-31(1)(c), (5), (7)(i), (7)(k), (10), (12) and (13) Florida Administrative Code. The Petitioner withdrew its challenge of other portions of the Emergency Rules.

    
    

33. Rule 12AER87-31(7)(i), Florida Administrative Code, defines the terms "contract price" which determines the amount of tax due on construction work performed pursuant to a contract and any speculative construction which is sold within six months of completion.

    
    

34. The Petitioner has challenged Rule 12AER87-31(7)(i), Florida Administrative Code, to the extent that contract price is defined to include the fair market value of materials used by a contractor if the value of those materials is not otherwise included in the contract price.

    
    

35. The Petitioner's contractor witnesses' understanding of Rule 12AER87- 31(7)(i), Florida Administrative Code, that the fair market value of materials supplied by the owner are to be included in the computation of contract price, is consistent with the Respondent's interpretation of the Rule.

    
    

36. Prime contractors often estimate the cost of building materials in their daily business activities.

37. The Respondent's interpretation of Rule 12AER87-31(1)(c), Florida Administrative Code, does not require a contractor or subcontractor who uses building materials which are purchased tax free to remit a tax. The rule simply makes it clear that there is not necessarily any link between the question of whether the purchase of building materials and the provision of construction services are tax exempt.

    
    

    CONCLUSIONS OF LAW

    
    

38. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.56, Florida Statutes (1987).

    
    

39. The Petitioner has instituted the instant proceeding based upon the following allegations: (1) "The adoption of the Emergency Rules violates the Due Process Clause of the Florida Constitution and the Federal Constitution";

    1. "The methods employed by the DOR in the adoption of the Emergency Rules are contrary to the procedures required by Section 33 of Chapter 87-6, Laws of Florida and Section 120.54(9), F.S. (1986)"; and (3) "The following Emergency Rules of DOR constitute an invalid exercise of delegated legislative authority for the reasons stated with respect to each such rule..." The specific rules challenged are Rules 12AER87-31(1)(c), (5), (7)(i), (7)(k), (10), (12) and (13), Florida Administrative Code.

       
       

       1. Constitutional Challenge.

          
          

40. The Division of Administrative Hearings has no jurisdiction to dispose of the Petitioner's allegation concerning the constitutionality of the Emergency Rules. See, Key Haven Associated Enterprises, Inc. v. Board of Trustees of Internal Imp. Trust Fund, 427 So.2d 153 (Fla. 1st DCA 1982).

    
    

    1. Challenge to the Method of Adopting the Emergency Rules.

       
       

41. In Section 33 of Chapter 87-6 and Section 20 of Chapter 87-101 the Legislature specifically found that there would be an immediate threat to the welfare of the State if Chapters 87-6 and 87-101 were not promptly implemented. The Respondent was therefore specifically authorized to adopt emergency rules to implement Chapter 87-6, as amended by Chapter 87-101 pursuant to the provisions of Section 120.54(9), Florida Statutes. The Petitioner has contended that the Respondent has failed to comply with Section 33 of Chapter 87-6 and Section 120.54(9), Florida Statutes, in adopting the Emergency Rules.

    
    

42. The facts in this case proved that Chapter 87-6 became law on April 23, 1987. Pursuant to this law, the Respondent began drafting emergency rules, including emergency rules to implement the taxation of construction services, prior to July 1, 1987, the effective date of Chapter 87-6. On June 6, 1987, the Legislature passed Chapter 87-101. Pursuant to Chapter 87-101 the Legislature adopted a different method of taxing construction services. Subsequent to the passage of Chapter 87-101, but before the act was signed into law, the Respondent drafted emergency rules implementing the taxation of construction services pursuant to the method of taxation created in Chapter 87-101. A workshop on the Emergency Rules was conducted on June 12, 1987, they were filed with the Secretary of State on June 18, 1987, and they were published in the Florida Administrative Weekly on June 26, 1987. All of these events took place before the Governor signed Chapter 87-101 into law. It was not until June 30, 1987, that Chapter 87-101 was signed by the Governor and became law.

43. In challenging the method by which the Respondent adopted the Emergency Rules, the Petitioner has contended first that the Respondent's authority to adopt emergency rules was derived solely from Chapters 87-6 and Chapters 87-101. The Petitioner then makes the following argument:

    
    

    The Department of Revenue has never adopted any valid emergency rules regarding sales tax on construction services. Although the original sales tax bill (87-6) contained a provision for emergency rules to be adopted

    by the Department, this grant of authority was limited to the provisions of 87-6.

    
    

    The Department's authority to promulgate emergency rules to implement the Glitch Bill (87-101) became effective on the day that the bill was signed into law -- June 29, 1987 [June 30, 1987]. Rule 12AER 87-31 on

    construction services, is based solely upon the Glitch Bill method for taxing those services. Since June 29, 1987, the Department has taken no action to promulgate any emergency rules. Any actions taken by the Department prior to June 29, 1987, which related to the implementation of the Glitch Bill, were a nullity.

    
    

44. In essence, the Petitioner has contended that the adoption of the Emergency Rules by the Respondent constitutes an invalid exercise of delegated legislative authority because the Emergency Rules implement a law which was not technically the law on June 26, 1987, when the Emergency Rules were published.

    
    

45. The Petitioner's argument is without merit. For the Petitioner's argument to be acceptable it would have to be concluded that the Emergency Rules became law on June 26, 1987. No authority has been cited by the Petitioner in support of such a conclusion. While the Emergency Rules may have been published on June 26, 1987, before Chapter 87-101 became law, the effective date of the Emergency Rules was July 1, 1987. On the effective date of the Emergency Rules the law which they implemented--Chapter 87-101 was the law of the State. If Chapter 87-101 had not become law the Emergency Rules might have been considered an invalid exercise of delegated legislative authority on July 1, 1987 since they would be effective before the law they are intended to implement became effective. That, however, did not occur. When the Emergency Rules became effective, Chapter 87-101 was the law of the State. Therefore, on July 1, 1987, when the Emergency Rules became effective, they were not an invalid exercise of delegated legislative authority.

    
    

46. The Petitioner has also contended that the Emergency Rules are invalid because the Respondent has failed to comply with the requirements of Section 120.54(9), Florida Statutes (1987). As pointed out by the Respondent in its proposed final order, the Division of Administrative Hearings lacks jurisdiction to decide this issue. See Florida Home Builders Association v. Division of Labor, 355 So.2d 1245 (Fla. 1st DCA 1978); and Postal Colony Co., Inc. v. Askew,

    348 So.2d 338 (Fla. 1st DCA 1977). Section 120.54(9)(a)3, Florida Statutes, provides, in pertinent part, that "[t]he agency's findings of immediate danger,

    necessity, and procedural fairness shall be judicially reviewable." [Emphasis added]. The Division of Administrative Hearings, a part of the executive branch of Florida government, is not authorized to undertake "judicial review."

    
    

    1. Challenge to Specific Rules.

    
    

47. The Petitioner's substantive challenge to specific Emergency Rules is a challenge to the facial validity of the challenged rules. No evidence was presented by the Petitioner to prove the specific application of the challenged rules by the Respondent in any particular situation. To the extent that the Petitioner presented evidence in an effort to support a challenge to any Emergency Rule as it may be applied by the Respondent, such evidence is irrelevant. Any challenge to the Emergency Rules based upon the manner in which they may be applied in the future would be based upon conjecture and provide no basis for concluding that a rule is invalid.

    
    

48. The only question concerning the specific Emergency Rules challenged by the Petitioner which can be addressed is the question of whether they constitute an "invalid exercise of delegated legislative authority." An "invalid exercise of delegated legislative authority" has been defined in Section 120.52(8), Florida Statutes (1987), as follows:

    
    

    "Invalid exercise of delegated legislative authority" means action which goes beyond the powers, functions, and duties delegated by the Legislature. A proposed or existing rule is an invalid exercise of delegated legislative authority if any one or more of the following apply

    1. The agency has materially failed to follow the applicable rulemaking procedures set forth in s. 120.54;

    2. The agency has exceeded its grant of rulemaking authority, citation to which is required by s. 120.54(7);

    3. The rule enlarges, modifies, or contravenes the specific provisions of law implemented, citation to which is required by s. 120.54(7);

    4. The rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency; or

    5. The rule is arbitrary or capricious.

       
       

49. The Emergency Rules were promulgated pursuant to the authority of Sections 212.17(6), 212.18(2), Florida Statutes, and Section 33 of Chapter 87-6. Rules promulgated pursuant to such authority, are quasi-legislative. General Telephone Co. of Florida v. Florida Public Service Commission, 446 So.2d 1063 (Fla. 1984).

    
    

50. Administrative rules interpreting Chapter 212, Florida Statutes, have been accorded considerable persuasive force and are not to be departed from unless clearly erroneous or unauthorized. State ex rel. Szabo Food Services, Inc. v. Dickinsons, 286 So.2d 529 (Fla. 1973). The courts have also indicated that a contemporaneous administrative construction of a tax statute by the

    agency responsible for the enforcement and interpretation of the statute is entitled to great weight. Green v. Home News Publishing Co., 90 So.2d 295 (Fla. 1956); and Department of Revenue v. Skop, 383 So.2d 678 (Fla. 5th DCA 1980).

    
    

51. The burden of demonstrating the invalidity of the Emergency Rules challenged by the petitioner is imposed upon the Petitioner. Agrico Chemical Company v. Department of Environmental Regulation, 365 So.2d 759 (Fla. 1st DCA 1978), cert. denied, 376 So.2d 74 (Fla. 1979). The burden is stringent. In order to prevail, the Petitioner must prove that the Respondent's Emergency Rules exceed the Respondent's authority, that the requirements of a Rule are inappropriate to the ends specified in the act which it implements, that the Rules are not reasonably related to the purpose of the legislation, that they are arbitrary and capricious or that the Rules are vague.

    
    

    Rule 12AER87-31(1)(c), Florida Administrative Code.

    
    

52. Rule 12AER87-3l(1)(c), Florida Administrative Code, provides the following:

    
    

    (1) Effective July 1, 1987, contractors who repair, alter, improve, and construct real property are subject to the following provisions for sales and use tax purposes

    . . . .

    (c) Contractors and subcontractors are considered the ultimate or final consumer of building materials they

    purchase or use in repairing, altering, improving, or constructing real property regardless of whether the construction services are taxable or exempt.

    
    

53. This rule was adopted by the Respondent pursuant to the following legislative authority contained in Section 6 of Chapter 87-101, creating Section 212.0594(2)(j), Florida Statutes:

    
    

    The prime contractor or subcontractor who purchases or uses building materials shall be considered the final consumer of the building materials.

    
    

54. The Petitioner has challenged Rule 12AER87-31(1)(c), Florida Administrative Code, "to the extent that it seeks to tax materials purchased by tax exempt or tax immune entities." In support of this challenge, the Petitioner has relied upon testimony from employees of the Respondent that the challenged rule could be interpreted to reach the result suggested by the Petitioner. That testimony was based upon an interpretation of Chapter 212, Florida Statutes, generally and not just the proper interpretation of the challenged rule. The testimony relied upon by the Petitioner does not support a conclusion that the challenged rule is intended to tax materials purchased by tax exempt or tax immune entities as suggested by the Petitioner. Nor does the language of the challenged rule support such an interpretation.

    
    

55. The Petitioner's position ignores the testimony of the Respondent's employees concerning the Respondent's interpretation of just the language of the rule. Pursuant to this interpretation the challenged rule does not require a

    contractor or subcontractor who uses building materials which are purchased tax free to remit a tax. The rule simply makes it clear that there is not necessarily any link between the question of whether the purchase of building materials and the provision of construction services are tax exempt. This interpretation of the challenged rule is within the range of the Respondent's permissible discretion. Kearse v. Department of Health and Rehabilitative Services, 474 So.2d 819 (Fla. 1st DCA 1985).

    
    

56. The Petitioner has failed to demonstrate that Rule 12AER87-31(1)(c), Florida Administrative Code, is an invalid exercise of delegated legislative authority.

    
    

    Rule 12AER87-31(5), Florida Administrative Code.

    
    

57. Rule 12 AER87-31(5), Florida Administrative Code, provides in pertinent part:

    
    

    In cases of written contracts which were signed prior to May 1, 1987, or offers submitted prior to such date

    which are binding on the offeror and are ultimately accepted by the offeree, or contracts which are funded by government bonds sold before May 1, 1987, or contracted to be sold prior to that date, for constructing improvements to real property, the prime contractor responsible for performing the contract shall not be required to remit any tax on the contractor's services for that portion of the contract services paid for prior to June 30, 1989, provided that:

    
    

    1. It is the responsibility of the prime contractor to remit tax;

       
       

58. Rule 12AER87-31(5), Florida Administrative Code, was promulgated pursuant to the authority of Section 31 of Chapter 87-6, as amended by Section

    18 of Chapter 87-101, which provides

    
    

    Notwithstanding any other provision of this act, in the case of written contracts which are signed prior to May 1, 1987, or offers submitted prior to such date which

    are binding of the offerer and are accepted, or contracts which are funded by government bonds sold before May 1, 1987, or contracted prior to such date to be sold, for constructing improvements to real property, prime contractors, as defined in s.212.0594, Florida Statutes, responsible for performing the contract shall not be required to remit any tax on services levied pursuant to

    s.212.059 or s.212.0594, Florida Statutes, provided that:

    1. Pursuant to s.2l2.0594, Florida Statutes, it is the responsibility of the prime contractor to remit the tax.

       
       

    2. The purchase of the services for which the tax is not being remitted is necessary to complete the contract and the tax cannot be legally collected from the final purchaser and cannot be included in the price charged the final purchaser under the terms of the contract.

       
       

    3. On the first tax return of the prime contractor in which tax is not remitted pursuant to this section for a specific contract, the prime contractor must submit an application in a manner

       approved by the Department of Revenue by rule. A complete application shall include proof of the written contract, the amount of tax not being remitted, the anticipated date of completion of the contract, an estimate of the value of services expected to be performed under the contract subsequent to

       June 30, 1989, and a sworn statement, signed by the applicant or his representative, attesting to the validity of the application. Subsequent taxes not remitted pursuant to a specific contract must be identified as to amount and application authority at the time such taxes are not paid.

       
       

    4. The purchase of the service occurs before June 30, 1989.

       
       

    5. On or before March 1, 1988, the Department of Revenue shall provide the Legislature with an estimate of the value of construction services expected to be performed after June 30, 1989, on contracts that qualify for the exemption allowed pursuant to this section.

    
    

    Any person who fraudulently does not remit taxes pursuant to this section shall, in addition to being liable for the payment of any taxes fraudulently not remitted plus a mandatory penalty of

    100 percent of the taxes not remitted, be guilty of a misdemeanor of the second degree, punishable as provided in

    s. 775.082, s. 775.083, or s. 775.084,

    Florida Statutes.

59. In its Petition, the Petitioner has challenged Rule 12AER87-31(5), Florida Administrative Code, "to the extent that the Rule attempts to tax service transactions occurring before July 1, 1987..." In support of this position, the Petitioner has argued in its proposed final order that the Respondent correctly interprets Section 31 of Chapter 87-6, as amended by Section 18 of Chapter 87-101, to exempt construction support services and other non-construction services related to pre-May 1, 1987 contracts from the sales tax on services, but that Rule 12AER87-31(5), Florida Administrative Code, requires their taxation.

    
    

60. Section 31 of Chapter 87-6, as amended, does provide an exemption from taxation, if certain conditions are met, for services performed after July 1, 1987. The first condition which must be met for the exemption to apply is that "[pursuant] to s. 212.0594, Florida Statutes, it is the responsibility of the prime contractor to remit the tax." Based upon this provision of Chapter 87-6 the Respondent initially took the position that only taxes to be remitted by the prime contractor pursuant to Section 212.0594, Florida Statutes, were subject to the exemption. Any non-construction service taxes for which a prime contractor had no responsibility to remit the tax, according to the Respondent's previous position, would not be exempt pursuant to the exemption created by Section 31 of Chapter 87-6, as amended.

    
    

61. Rule 12AER87-31(5), Florida Administrative Code, was promulgated to implement the exemption of Section 31 of Chapter 87-6, as amended. Consistent with its position that the prime contractor is not responsible for the remittance of non- construction service taxes, the Respondent previously took the position that Rule 12AER87-31(5), Florida Administrative Code, did not apply to non-construction services.

    
    

62. As a result of In Re: Advisory Opinion to the Governor, Request of May 12, 1987, 12 F.L.W. 375 (Fla. July 14, 1987), the Respondent's position as to the taxation of non-construction services which relate to pre-May 1, 1987, construction contracts has changed. The Respondent now recognizes that these services may not be taxable for constitutional reasons. Based upon this change in position and the fact that the Respondent has not amended Rule 12AER87-31(5), Florida Administrative Code, to set out this position, the Petitioner has argued that the Rule invalidly precludes the exemption from taxation of the non- construction services which the Supreme Court of Florida has indicated are not taxable.

    
    

63. The Petitioner's argument misstates the Respondent's position with regard to Rule 12AER87-31(5), Florida Administrative Code. This Rule, regardless of the Respondent's position as to the taxability of other services, has always been intended to implement the exemption specifically provided by the Legislature for construction services related to pre-May 1, 1987, contracts. As to the taxability or exemption from taxation of non-construction services, including construction support services, Rule 12AER87-31(5), Florida Administrative Code, has always been, and still is, silent. The Petitioner has cited no authority which supports a conclusion that the failure of a rule to deal with a particular matter renders the rule invalid as to those matters which it does address. Nor has any such authority been found.

    
    

64. Based upon the foregoing it is concluded that the Petitioner has failed to prove that Rule 12AER87-31(5), Florida Administrative Code, is an invalid exercise of delegated authority.

    Rule 12AER87-31(5)(b), Florida Administrative Code.

    
    

65. Rule 12AER87-31(5)(b), Florida Administrative Code, provides the following condition which must be met for pre-May 1, 1987, contracts to be eligible for the exemption from taxation created by Section 31 of Chapter 87-6, as amended

    
    

    (b) The purchase of the service for which the tax is not being remitted is necessary to complete the contract and the tax cannot be legally collected from the principal and cannot be included in the price charged the principal under the terms of the contract. Types of contracts which may come under this provision are "lump sum," "fixed fee," or "guarantee price" contracts. In "cost plus" type contracts and "contracts whereby the contractor or subcontractor has agreed to sell specifically described and itemized materials at an agreed price or at the regular retail price and has agreed to complete the work on the basis of time consumed" the contractor can normally include the price of the tax he pays or accrues to the final purchaser. [Emphasis added].

    
    

66. In its Petition, the Petitioner has challenged the highlighted portion of the Rule as seeking "to impose a tax on time and material contracts contrary to the pre-May 1 contract exemption. "

    
    

67. The condition of Rule 12AER87-31(5)(b), Florida Administrative Code, is nearly identical to the condition contained in Section 31 of Chapter 87-6, as amended, except for the highlighted language. Upon close examination of the highlighted language it is apparent that its application is merely intended to provide guidance and that it has no application unless the language of the statute the Rule implements applies. The portion of the Rule which the Petitioner challenges only suggests types of contracts which may come within this condition of the exemption and types of contracts where a contractor "can normally include the price of the tax he pays or accrues to the final purchaser" and, thus, not meet the condition of the exemption dealt with in this Rule. The Rule does not establish any hard and fast rule or presumptions as to whether a particular contract will meet the condition for exemption of pre- May 1, 1987, contracts dealt with in the Rule.

    
    

68. Based upon the foregoing it is concluded that the Petitioner has failed to prove that Rule 12AER87-31(5)(b), Florida Administrative Code, is an invalid exercise of delegated authority.

    
    

    Rule 12AER87-31(5)(g), Florida Administrative Code.

69. Rule 12AER87-31(5)(g), Florida Administrative Code, provides the following:

    
    

    No exemption shall be approved on any contract entered into on or after May 1, 1987, except, that if construction services have been performed prior to July 1, 1987, such construction service shall not be subject to tax, provided that it can be separately stated and identified from the construction services performed on or after July 1, 1987.

    
    

70. In its Petition, the Petitioner has contended that this Rule "imposes conditions upon the exemption from taxes which cannot legally be imposed by statute or rule. In addition, the Department is not granted any legislative authority to approve or disapprove applications made pursuant to Section 31 of Chapter 87-5 [sic], Laws of Florida (1987)." The Petitioner's proposed final order contains argument concerning the validity of Rule 12AER87-31(5)(g), Florida Administrative Code, which is apparently in support of this challenge.

    
    

71. In support of its challenge to Rule 12AER87-31(5)(g), Florida Administrative Code, the Petitioner has argued in effect that the requirement of the Rule that documentation must be provided to support a contractor's exemption from tax for services rendered prior to July 1, 1987, is unfair and discriminatory because it is not being required of other industries. The Petitioner has cited no authority which would support such a conclusion. Nor would such a conclusion be proper. At issue is the question of whether the Rule is an invalid exercise of delegated legislative authority. The evidence fails to support a conclusion that the documentation requirement of Rule 12AER87- 31(5)(g), Florida Administrative Code, is such an invalid exercise of authority. The requirement of the Rule is reasonable.

    
    

72. No argument has been offered by the Petitioner to support a conclusion that the Rule is invalid because the Respondent "is not granted any legislative authority to approve or disapprove applications made pursuant to Section 31 of Chapter 87-5 [sic], Laws of Florida." Nor does the language of the Rule attempt to create unauthorized authority in the Respondent to approve or disapprove exemptions other than through the Respondent's audit authority.

    
    

73. Based upon the foregoing it is concluded that the Petitioner has failed to prove that Rule 12AER87-31(5)(g), Florida Administrative Code, is an invalid exercise of delegated authority.

    
    

    Rule 12AER87-31(7)(i) and (k), Florida Administrative Code.

    
    

74. Rule 12AER87-3l(7)(i), Florida Administrative Code, defines "contract price" as follows:

    
    

    1. "Contract price" means:

       1. The total consideration paid pursuant to a contract for the construction, alteration, improvement or repair of realty, or in the case of new construction undertaken on a speculative basis, the total consideration paid

          pursuant to a contract to purchase the improved realty.

       2. In addition, the "contract price" shall be increased by the fair market value of any building materials used by the prime contractor or any subcontractor in rendering their construction services if the prime contractor or any subcontractor did not purchase the building materials or if the fair market value thereof is otherwise not included in the "contract price."

       3. However, the contract price shall not include:

          1. the fair market value of land and any improvements to the land existing prior to the contract for the construction, alteration, improvement or repair of the realty; or

          2. the value of construction support services provided by other than employees of the prime contractor, but see (8)(c)1. herein.

    
    

75. "Contract price" is defined in Section 6(g) of Chapter 87-101 as follows:

    
    

    "Contract price" means the total consideration paid pursuant to a contract for the construction, alteration, improvement or repair of realty, or in the case of new construction undertaken on a speculative basis, the total consideration paid pursuant to a contract to purchase the improved realty. However, the contract price shall not include the fair market value of land and any improvements to the land existing prior to the contract for the construction, alteration, improvement or repair of the realty, or the value of construction support services provided by other than employees of the prime contractor.

    
    

76. Rule 12AER87-31(7)(k), Florida Administrative Code, defines "cost price" as follows:

    
    

    (k) "Cost price" means, notwithstanding other provisions of Chapter 212, F.S., the direct and indirect costs of construction, including but not limited to, the cost of materials used, labor and service costs, interest charged, and overhead expenses, without any deduction

    whatsoever. In addition, the "cost price" shall be increased by the fair market values of any building materials used by the prime contractor or any subcontractor in rendering their construction services if the prime contractor or any subcontractor did not purchase the building materials or if the fair market value thereof is

    otherwise not included in the "cost price".

77. "Cost price" is defined in Section 6(i) of Chapter 87- 101 as follows: "Cost price" means the direct and

    indirect costs of construction,

    including but not limited to, the cost of materials used, labor and service costs, interest charged, and overhead expenses, without any deduction whatsoever.

    
    

78. The Petitioner has challenged the definition of "contract price" and "cost price" contained in the Emergency Rules contending that the Respondent has improperly expanded the definition of those terms contained in Chapter 87-101.

    
    

79. In support of its argument that the Respondent has improperly defined "contract price", the Petitioner has argued that "[t]he term consideration paid pursuant to the contract' means payments made in cash or in kind to the contractor and which the contractor is entitled to keep as his own."

    
    

80. In essence, the Petitioner equates the terms "consideration paid pursuant to the contract" with what a contractor walks away from a deal with. The Petitioner has offered no argument which would support such a limited construction of the term "consideration." Nor has the Petitioner offered any proof that the term "consideration" has acquired the popular meaning suggested by it in the tax area. See, City of Tampa v. Thatcher Glass Corp., 445 So.2d 578 (Fla. 1984).

    
    

81. The term "consideration" is a technical legal term with a fixed and precise legal definition. Therefore, it should be treated as having been used in Chapter 87-101 in its legal sense. See Ocasio v. Bureau of Crimes Compensation, 408 So.2d 751 (Fla. 3d DCA 1982); and see, Southern Bell Telephone & Telegraph Co. v. D'Alemberte, 521 So. 570 (Fla. 1987). In its technical legal sense, "consideration may consist of either a benefit to the promisor or a detriment to the promisee..." Bayshore Royal Company v. Doran Jason Company of Tampa, Inc., 480 So.2d 651, 656 (Fla. 2d DCA 1985). Where building materials are used by the prime contractor or subcontractor, the value of which is not otherwise included in the contract price, there has been such a benefit or detriment.

    
    

82. Chapter 201, Florida Statutes, imposes a documentary stamp tax based upon the consideration for the execution of certain documents. As pointed out by the Respondent in its proposed final order, the courts have interpreted the term "consideration" in the documentary stamp tax area in a manner consistent with the definition of the term "consideration" used by the Respondent in promulgating Rule 12AER87-31(7)(i), Florida Administrative Code. For example, in the documentary stamp tax area, where a mortgage is assumed, the courts have

    concluded that consideration has been given. Department of Revenue v. DeMaria,

    338 So.2d 838 (Fla. 1976); Kendall House Apartments, Inc. v. Department of Revenue, 245 So. 2d 221 (Fla. 1976).

    
    

83. It must be remembered that the tax being implemented by the Emergency Rules is a tax on the services rendered by a contractor. Those services are basically the same whether the materials are provided by the contractors or by the owner. Instead of requiring contractors to itemize the amount of the contract price attributable to materials and the amount attributable to services, the Legislature provided that the tax on services would be based upon

    50 percent of the total contract price. If the value of materials is not included in the contract price because an owner supplies the materials the amount of the tax on services can be arbitrarily reduced.

    
    

84. Based upon the foregoing, it is concluded that the Petitioner has failed to prove that Rule 12AER87-31(7)(i), Florida Administrative Code, is an invalid exercise of delegated legislative authority.

    
    

85. With regard to the challenge to the Respondent's definition of "cost price" the Petitioner has merely argued that "Rule 12 AER 87-31(7)(k), is the identical rule [to the rule defining "contract price"] applied to the definition of "cost price." Therefore, the Petitioner concludes that, since it believes that the definition of "contract price" is improper, the Respondent's definition of "cost price" is improper. It has been concluded, however, that the Petitioner has failed to prove that the Respondent's definition of "contract price" is an invalid exercise of delegated legislative authority. Like the definition of "contract price," the definition of "cost price" is reasonably related to the goal of preventing underreporting of sales tax on services.

    
    

86. The Petitioner has failed to prove that Rule 12AER87- 31(7)(k), Florida Administrative Code, is an invalid exercise of delegated legislative authority.

    
    

    Rule 12AER87-31(10), Florida Administrative Code.

    
    

87. Rule 12AER87-31(10), Florida Administrative Code, provides:

    
    

    (10) Elements of cost price will include those costs that directly or indirectly benefit or are incurred because of the construction, including but not limited to the following items, notwithstanding tax being paid:

    
    

    Ad valorem taxes;

    
    

    Building materials; (including

    building material manufactured, imported or purchased by the prime contractor upon which a sales tax has been paid); Building repair and maintenance; Depreciation on fixed assets;

    Direct labor;

    Electricity;

    Freight;

    Fringe benefits;

    Interest expense;

    Indirect labor;

    Indirect materials (not charged out as a direct building material item); Indirect Cost including but not limited to promotional and selling expense;

    Insurance expense (fire, liability, etc.);

    Office supplies, forms, etc.; Overhead expenses attributable to the construction cost;

    Payroll taxes;

    Rent;

    Sick pay;

    Vacation pay;

    Warehousing;

    Waste disposal; or

    Any other element of cost.

    
    

88. This Rule was promulgated by the Respondent to implement Section 212.0594(1)(i), Florida Statutes, which defines "cost price" as follows:

    
    

    (i) "Cost price" means the direct and indirect costs of construction, including but not limited to, the cost of materials used, labor and service costs, interest charged, and overhead expenses, without any deduction whatsoever.

    
    

89. The Petitioner has challenged the Respondent's attempt to list in Rule 12AER87-31(10), Florida Administrative Code, some of the items included within the definition of "cost price" as "vague and ambiguous" and as an attempt to tax items which do not constitute part of the "cost price" of construction.

    
    

90. "Cost price" is relevant under Chapter 87-101 where construction services subject to taxation are performed but the computation of "contract price" is not possible or practical. Thus, if new construction is undertaken for the contractor's own use or for speculation, there would not be a contract involved. Therefore, there would be no "contract price" upon which to determine tax.

    
    

91. In order to insure uniform application of the sales tax on construction services and to prevent the evasion of such tax where there is no contract price, "cost price" should include the elements of cost normally built into "contract price." Thus, Section 212.0594(1)(i), Florida Statutes, broadly provides that "cost price" means direct and indirect costs of construction and then lists some, but not all, of the elements included in "cost price," including overhead expenses. In implementing this definition, the Respondent has simply listed some of the specific direct and indirect elements of costs which may be part of the costs of construction. The Respondent has not attempted to provide an exhaustive list of the elements of cost which must always be included in "cost price." Consistent with Section 212.0594(1)(i), Florida Statutes, the elements listed in the Rule must also "directly or indirectly benefit" or be "incurred because of the construction..." in order to be considered part of "cost price." This requirement is consistent with the legislative intent of Section 212.0594(1)(i), Florida Statutes. The

    Respondent's definition of "cost price" is not vague and ambiguous. Nor does it require or result in the payment of tax on any of the items listed.

    
    

92. Based upon the foregoing, it is concluded that the Petitioner has failed to prove that Rule 12AER87-31(10), Florida Administrative Code, is an invalid exercise of delegated legislative authority.

    
    

    Rule 12AER87-31(12), Florida Administrative Code.

    
    

93. Rule 12AER87-31(12), Florida Administrative Code, provides the following:

    
    

    No unit of local government shall

    issue a certificate of occupancy for new construction until the prime contractor submits a Florida Department of Revenue Application for Certificate of Occupancy (DR-1C0), dated July, 1987, which is hereby incorporated in this Rule and made part of the Rule by reference, to the local government and certifies thereon that the new construction is substantially complete. Such form shall be provided to local governments by the Department of Revenue, and the completed forms shall be returned on the last business day of each month to the Department of Revenue by the local governments. Florida Department of Revenue Certificate of Occupancy (DR- 1C0), dated July, 1987, are [sic] available, without cost, upon written request directed to the Department of Revenue, Supply Section, Tallahassee, Florida 32399-0100.

    
    

94. The language of this Rule is almost identical to the language of Section 212.0594(3)(h), Florida Statutes. The Petitioner has challenged the Rule as "an invalid exercise of delegated legislative authority in that the application for certificate of occupancy includes items not authorized by statute." The Petitioner has not included any proposed findings of fact or conclusions of law explaining or specifically identifying those items which the Petitioner believes are not authorized.

    
    

95. The Respondent has suggested that the Petitioner's position is based upon an argument that Section 212.0594(3)(h), Florida Statutes, limits the items which may be included on the form to be promulgated by the Respondent to a certification that new construction is substantially completed. Such a position ignores the authority delegated to the Respondent to adopt rules to implement the sales tax pursuant to Sections 212.17(6), 212.18(2) and 213.06, Florida Statutes. With such authority, the Respondent may adopt rules consistent with the purposes of the legislation it is charged with administering.

    
    

96. The information which the Respondent requires on Florida Department of Revenue Application for Certificate of Occupancy forms and which must be certified by a prime contractor for new construction is information which will serve as a check and balance in insuring the accuracy of tax remissions.

    Providing such a check and balance is consistent with the Respondent's responsibility to administer Florida's sales tax. The Petitioner has provided no proof that the information to be provided is inconsistent with such a purpose or the Respondent's authority.

    
    

97. Based upon the foregoing it is concluded that the Petitioner has failed to prove that Rule 12AER87-31(12), Florida Administrative Code, is an invalid exercise of delegated legislative authority.

    
    

    Rule 12AER87-31(13), Florida Administrative Code.

98. Rule 12AER87-31(13), Florida Administrative Code, provides: (13)(a) Contractors who operate

    fabricating or manufacturing plants

    which make items of tangible personal property for their own consumption and use in the performance of contracts for the construction or improvement of real property are subject to tax upon the fabricated or manufactured cost of such items.

    
    

    (b) The tax is based upon the cost price of the product manufactured, produced, compounded, processed or fabricated. Elements of the cost price include those costs that directly benefit or are incurred because of the manufacturing, producing, compounding, processing or fabricating including but not limited to the following items, notwithstanding tax being paid:

    Ad valorem taxes;

    Building repair and maintenance; Depreciation on Fixed Assets; Direct labor;

    Electricity;

    Freight in;

    Fringe benefits;

    Indirect benefits;

    Indirect materials (not charged out as a direct material);

    Insurance expense (fire, liability, etc.); Interest expense;

    Office supplies, forms, etc.; Overhead expenses attributable to the manufacture;

    Payroll-taxes; Raw materials; Rent;

    Sick pay;

    Vacation pay;

    Warehousing raw materials or materials in progress;

    Waste disposal; or

    Any other element of cost.

99. The Petitioner has contended that Rule 12AER87-31(13), Florida Administrative Code, is an invalid exercise of delegated legislative authority because it "seeks to impose a fabrication tax not included within the sales tax on services" and because it includes "items within `cost price' which are outside the scope of the statutory definition."

    
    

100. In the Petitioner's proposed final order the Petitioner has not presented any proposed findings of fact or conclusions of law to support its contention that Rule 12AERB7-31(13), Florida Administrative Code, seeks to impose a fabrication tax. Nor does the evidence presented at the formal hearing or the language of the Rule support such a conclusion. No fabrication tax has been created directly or indirect by Rule 12AER87-31(13), Florida Administrative Code.

     
     

101. The Petitioner's argument that the Rule includes items within cost price which are outside the scope of the statutory definition are, as pointed out by the Petitioner in its proposed final order, the same as its argument concerning Rule 12AER87- 31(10), Florida Administrative Code. The Petitioner has failed to substantiate its position with regard to Rule 12AER87-31(13), Florida Administrative Code, for essentially the same reasons that it failed to substantiate its position with regard to Rule 12AER87-31(10), Florida Administrative Code.

     
     

102. Based upon the foregoing it is concluded that the Petitioner has failed to prove that Rule 12AER87-31(13), Florida Administrative Code, is an invalid exercise of delegated authority.

     
     

     Paragraph 9 of the Petition.

     
     

103. In paragraph 9 of the Petition filed in this case the Petitioner has contended that the "Rules of the Department of Revenue are replete with instances in which construction services are sought to be taxed independent of the construction services section." In its proposed final order the Petitioner has indicated that it is the Respondent's interpretation of the definition of "construction services" as provided in Rule 12AER87-31)(5)(d), Florida Administrative Code, which is at issue.

     
     

104. The evidence presented at the formal hearing merely proved that whether a particular service directly involves the construction, alteration, improvement or repair of realty, and thus constitutes a construction service under the Rule, depends upon the particular activity and the context in which it occurs. This interpretation is consistent with the Respondent's statutory authority. The interpretation of construction services which the Petitioner has argued has been adopted by the Respondent was not supported by the evidence.

     Nor did the evidence prove that Rule 12AER87-31(5)(d), Florida Administrative Code, or any other Emergency Rule, provides an interpretation of construction services inconsistent with legislative authority.

     
     

105. Based upon the foregoing it is concluded that the Petitioned has failed to prove that Rule 12AER87-31(5)(d), Florida Administrative Code, is an invalid exercise of delegated authority.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is ORDERED:

1. The Petitioner has failed to prove that the methods

   employed by the Respondent in the adoption of the Emergency Rules are contrary to the procedures required by Section 33 of Chapter 87-6. The Petitioner's request that the Emergency Rules be declared invalid because of the method employed to adopt them is denied;

   
   

2. The Petitioner has failed to prove that Rules 12AER87-31(1)(c), (5)(7)(i), (7)(k), (10), (12) and (13) Florida Administrative Code, are an invalid exercise of delegated legislative authority. The Petitioner's request to declare these Rules invalid is therefore denied; and

   
   

3. The Petitioner has failed to prove that the "Rules of the Department of Revenue are replete with instances in which construction services are sought to be taxed independent of the construction services section." Therefore, the Petitioner's request that "[t]o the extent the rules impose a tax on any subcontractor performing construction services..." is denied.

DONE and ORDERED this 20th day of April, 1988, in Tallahassee, Florida.

LARRY J. SARTIN

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 20th day of April, 1988.

APPENDIX TO FINAL ORDER, CASE NO. 87-3877RE

The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Final Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted.

The Petitioner's Proposed Findings of Fact Proposed Finding Proposed Finding Paragraph Number in Final Order

of Fact Number of Acceptance or Reason for Rejection

1 Conclusion of Law

2 1.

3 2.

finding of fact is not supported by the weight of the evidence.

49-51 These proposed findings of fact are not supported by the weight of the evidence.

The Respondent's Proposed Findings of Fact Proposed

COPIES FURNISHED:

Neil Butler, Esquire General Counsel Florida Home Builders

Association

201 East Park Avenue Tallahassee, Florida 32301

Kevin O'Donnell, Esquire Department of Legal Affairs Tax Section - The Capitol

Tallahassee, Florida 32399-1050

William D. Townsend, Esquire General Counsel

Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

Sam D. Alexander Executive Director Department of Revenue

102 Carlton Building Tallahassee, Florida 32399-0100

Liz Cloud, Chief

Bureau of Administrative Code Room 1802, The Capitol Tallahassee, Florida 32399-0250

Carroll Webb, Executive Director Administrative Procedures Committee Room 120, Holland Building Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

Docket for Case No: 87-003877RE

Orders for Case No: 87-003877RE