STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ATHEISTS OF FLORIDA, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 95-0654

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its designated Hearing Officer, Joyous D. Parrish, held a formal hearing in the above-styled case on January 19, 1996, in Miami, Florida.

APPEARANCES

For Petitioner: Mark Trop

Shoreview Building

9999 Northeast Second Avenue, Suite 201

Miami, Florida 33138

For Respondent: Ruth Ann Smith

Assistant General Counsel Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668 STATEMENT OF THE ISSUES

The central issue in this case is whether the Petitioner, Atheists of Florida, Inc., is entitled to a certificate of exemption pursuant to Section 212.08, Florida Statutes.

PRELIMINARY STATEMENT

This case began on January 24, 1995, when the Department of Revenue (Department) issued a notice of intent to deny regarding Petitioner's application for a consumer's certificate of exemption pursuant to Section 212.08, Florida Statutes. The denial alleged that from the application and supporting documentation, Petitioner failed to meet the qualifications for a sales tax exemption as set forth in the statute.

Petitioner contested the denial and by letter dated February 2, 1995, requested a hearing to appeal the action. The matter was forwarded to the Division of Administrative Hearings for formal proceedings on February 14, 1995.

On January 8, 1996, in anticipation of the hearing, the parties filed a joint prehearing stipulation that set forth each party's position with regard to

the matter at issue. Petitioner contends that it qualified for exemption pursuant to Section 212.08(7)(n), or (o), Florida Statutes. The Department argues that the Petitioner's activities do not meet the statutory and rule requirements as to an educational institution or as a charitable institution.

At the hearing, the Petitioner presented the testimony of Christos Tzanetakos, president of the Atheists of Florida, Inc. Its exhibits numbered 1, 2, 3, and 4 were admitted into evidence. David Young, a tax specialist I with the Department, testified on behalf of Respondent. The Department's exhibit numbered 1 was entered into evidence.

The transcript of the proceeding was filed on February 6, 1996, and the parties were afforded ten days from that time within which to file their proposed recommended orders. Specific rulings on the proposed findings of fact are included in the appendix at the conclusion of this order.

FINDINGS OF FACT

1. The Petitioner is a Florida not-for-profit corporation which is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code.

   
   

2. The Petitioner has established a Mark Twain Scholarship Fund the purpose of which is to give recipients funds to pay for post-secondary tuition and books.

   
   

3. On or about September 26, 1994, Petitioner filed an application with Respondent for a consumer certificate of exemption and stated as its basis "other." The applicant then identified itself as "state/church separation" organization. Petitioner did not check any of the other categories for exemptions such as "religious," "educational," or "charitable."

   
   

4. The application was reviewed by the Department considering all of the categories listed on the application and available under the pertinent statute. Based on the criteria set forth in Section 212.08(7), Florida Statutes, the Department reached a preliminary decision which denied the Petitioner's application for a certificate of exemption.

   
   

5. Petitioner was notified of the denial and timely challenged the agency action.

   
   

6. All of the members of the Petitioner's group are voluntary, unpaid, participants who pay yearly dues to join the organization. Students pay $10.00, individuals $30.00, and couples $35.00. If someone were to allege poverty, Petitioner would arrange a free membership for such individual. No evidence of members of that category was presented.

   
   

7. The only information about its members Petitioner seeks is their educational background. Documentation regarding financial circumstances of each member is not requested nor kept.

   
   

8. Petitioner provides benefits to minors by providing speakers for various topics at the university and high school levels, and by allowing students to attend monthly meetings.

   
   

9. Monthly meetings for the south Florida group are held in the Fort Lauderdale library. Other chapters in Tampa and Sarasota also hold meetings

   periodically and such meetings are, presumably, available to students. In Tampa, for example, Petitioner has an information booth on the campus of the University of South Florida.

   
   

10. Petitioner attempts to offer a "scientific and more rationale" point of view to young adults.

    
    

11. For the south Florida meetings, approximately 5 to 10 persons under 18 years of age might attend. The average attendance of all members is 20 to 40 persons.

    
    

12. Petitioner also produces a public access cable television program consisting of twelve half-hour episodes per year. Topics of this program have included "Sin and Sexuality."

    
    

13. Petitioner established the scholarship fund indicated above. One recipient was a woman in prison for life in California who wanted to attend the University of California.

    
    

14. More recently, Petitioner conducted an essay contest and two men from that event received awards.

    
    

15. None of the scholarship recipients was a minor. The total amounts expended on scholarships by the Petitioner did not exceed 10 percent of its total expenditures.

    
    

16. The Petitioner's group started with approximately 53 members but has grown to over 200 members.

    
    

17. Petitioner provides support to its members who may encounter scorn or harassment from the public and has a telephone line set up so that messages can be taken twenty-four hours of the day. Someone from the organization can then return the call and assist the caller.

    
    

18. Public harassment is not uncommon for members of the group. For example, when Mr. Tzanetakos opposed the use of public monies in connection with the Pope's visit to south Florida, he received so many telephone calls that he had to change to an unpublished number.

    
    

19. Mr. Tzanetakos maintains that while his organization's views are an unpopular minority in this country, that they are in the majority in Europe and other places.

    
    

20. One of the purposes of the Petitioner's group is to advocate, support, and defend "in all lawful ways the complete and absolute separation of church and state."

    
    

21. Another purpose is to promote freedom of expression.

    
    

22. Thirdly, the group seeks to "protect the constitutional and civil rights of Atheists as members of a free and democratic society."

    
    

23. According to its articles of incorporation, Petitioner promotes the following concepts:

    
    

    1. Because human beings, along with all other species of animal and plants, evolved from a

       primordial cell, Homo sapien is only a link in the chain of living matter.

    2. Because Homo sapiens is the species with the most advanced brain and the most manipulative hands, and because we have developed excessively destructive weapons (nuclear and others), we are solely responsible for the well-being of our own species and to a great extent the rest of the life on planet Earth.

    3. Global population control is vital, and the extinction of other living animal and plant species must be avoided.

    4. Cooperation and equality--not conflict-- among all peoples must be encouraged and promoted.

    5. Because all humans have a common origin, and because the classification of peoples by races and ethnic groups is divisive and detrimental to our species and to life itself, all inhabitants on planet Earth (sic) [should?] be called "Homo Sapiens", and the current national names to denote the geographical origin of peoples and their distinctive cultures.

       
       

24. Minors are not specifically mentioned in the Petitioner's articles of incorporation nor given benefits of membership not available to other members or, in the case of the television broadcasts, the public as a whole.

    
    

25. Mr. Tzanetakos conceded that one of the television topics, "Euthanasia," may not have been of particular interest to minors. He further acknowledged that it is difficult to get children to watch educational television.

    
    

26. The Petitioner does not advertise its programs to the general public, nor does it survey viewers to determine the numbers of minors, if any, that support its television program.

    
    

27. Petitioner accepts only "what can be verified by the scientific method and rejects supernatural entities, acceptable only as articles of faith." Accordingly, Petitioner's members do not "worship" god or anything.

    
    

28. The Petitioner did not present evidence that it is qualified for accreditation by, or membership in, the Department of Education, the Southern Association of Colleges and Schools, the Florida Council of Independent Schools, or the Florida Association of Christian Colleges and Schools.

    
    

    CONCLUSIONS OF LAW

    
    

29. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

    
    

30. Petitioner bears the burden of proof in this matter to establish it is entitled to the certification sought.

31. Section 212.08(7), Florida Statutes, provides in pertinent part:

    
    

    (7) MISCELLANEOUS EXEMPTIONS

    * * *

    1. Organizations providing special educational, cultural, recreational, and social benefits to minors.--There shall be exempt from the tax imposed by this part nonprofit organizations which are incorporated pursuant to chapter 617

       or which hold a current exemption from federal corporate income tax pursuant to s. 501(c)(3)

       of the Internal Revenue Code the primary purpose of which is providing activities that contribute to the development of good character or good sportsmanship, or to the educational or cultural

       development, of minors. This exemption is extended only to that level of the organization that has a salaried executive officer or an elected nonsalaried executive officer.

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

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

          * * *

          b. Sales or leases to nonprofit religious, non- profit charitable, nonprofit scientific, or nonprofit educational institutions when used in carrying on their customary nonprofit religious, nonprofit charitable, nonprofit 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, synagogues, and established physical places for worship at which nonprofit religious services and activities are regularly conducted and carried on.

             * * *

          2. "Charitable institutions" means only non- profit corporations qualified as nonprofit pursuant to s. 501(c)(3), United States Internal Revenue Code of 1954, as amended, and other nonprofit entities, the sole or primary function of which

    is to provide, or to raise funds for organizations which provide, one or more of the following services if a reasonable percentage of such service is provided free of charge, or at a substantially reduced cost, to persons, animals, or organizations that are unable to pay for such service:

    1. Medical aid for the relief of disease, injury, or disability;

    2. Regular provision of physical necessities such as food, clothing, or shelter;

    3. Services for the prevention of or rehabilitation of persons from alcoholism or

    drug abuse; the prevention of suicide; or the alleviation of mental, physical, or sensory health problems.

    * * *

    d. "Educational institutions" means state

    tax-supported or parochial, church and nonprofit private schools, colleges, or universities which conduct regular classes and courses of study required for accreditation by, or membership in, the Southern Association of Colleges and Schools, the Department of Education, the Florida Council of Independent Schools, or the Florida Association of Christian Colleges and Schools, Inc., or non-

    profit private schools which conduct regular classes and courses of study accepted for continuing education credit by a Board of the Division of Medical Quality Assurance of the Department of Business and Professional Regulation or which conduct regular classes and courses of study accepted for continuing education credit by the American Medical Association. Nonprofit libraries, art galleries, and museums open to the public are defined as educational institutions and are eligible for exemption. The term "educational institutions" includes private nonprofit organizations the purpose of which is to raise funds for schools teaching grades kindergarten through high school, colleges, and universities.

    
    

32. Rule 12A-1.001, provides, in part:

    
    

    Specific Exemptions. Rulemaking power; rules promulgated by the Department of Revenue cannot be construed to extend exemptions beyond the scope of those intended by the statutes.

    * * *

    1. RELIGIOUS, EDUCATIONAL, CHARITABLE, VETERANS' AND SCIENTIFIC ORGANIZATIONS, HOMES FOR THE AGED, NURSING HOMES OR HOSPICES, FEDERAL AND STATE CHARTERED CREDIT UNIONS, FLORIDA RETIRED EDUCATORS ASSOCIATION AND LOCAL CHAPTERS, ORGANIZATIONS PROVIDING SPECIAL EDUCATIONAL AND SOCIAL BENEFITS TO MINORS, STATE THEATER CONTRACT ORGANIZATIONS, MILITARY MUSEUM FUNDRAISERS, COAST GUARD AUXILIARIES, AND CEMETERY ASSOCIATIONS.

       1. A sale or lease directly to or sales or leases of tangible personal property by churches,

    or a sale or lease directly to nonprofit religious, nonprofit educational nonprofit charitable institutions, and veterans' organizations, for

    use in the course of their customary nonprofit religious, nonprofit educational, nonprofit charitable activities, and for use by veterans' organizations, including church cemeteries, are exempt from the tax imposed by Part I, Chapter 212,

    F.S. Also exempt are scientific organizations and organizations providing special educational and social benefits to minors

    * * *

    1. "Church" means a religious institution having an established physical place of worship where persons regularly assemble for worship and instruction for religious purposes. Religious organizations whose functions are radio or television broadcasting or those organizations conducting services for short periods of time

       at temporary locations, and religious associations that provide administrative functions only, are not considered to be churches.

    2. "Religious institutions" means churches, synagogues, and established physical places for worship at which nonprofit religious services

    and activities are regularly conducted and carried on.

    * * *

    1. 1. Nonprofit educational institutions must hold consumer's certificates of exemption in order to be exempt from payment of tax on materials and supplies which are purchased for use by them in their customary educational

       activities. See Rules 12A-1.038 and 12A-1.039, F.A.C.

       2.a. "Educational institutions" shall mean state tax supported or parochial, church and nonprofit private schools, colleges, or universities conducting regular classes and courses of study required for accreditation by, or membership in, the Southern Association of Colleges and Schools,

       State Department of Education, Florida Council

       of Independent Schools, or the Florida Association of Christian Colleges and Schools, Inc., or nonprofit private schools which conduct regular classes and courses of study accepted for continuing education credit by a Board of the Division of Medical Quality Assurance of the Department of Business and Professional Regulation or which conduct regular classes and courses of study accepted for continuing education credit by

       the American Medical Association.

       1. The term "educational institution" includes any educational television or radio network or system established pursuant to s. 229.805, F.S., or s. 229.8051, F.S., and any nonprofit television or radio station which is a part of such network or system and which holds a current exemption

          from federal income tax under s. 501(c)(3), United States Internal Revenue Code.

       2. The term "educational institutions" shall also include private nonprofit organizations whose primary purpose is to raise funds for schools teaching grades kindergarten through high school, colleges, and universities.

       * * *

       g. On or after July 1, 1994, the term

       "educational institutions" includes a nonprofit educational cable consortium which holds a current exemption from federal income tax under

       s. 501(c)(3) of the Internal Revenue Code, 1986, as amended, whose primary purpose is the delivery of educational and instructional cable television programming and whose members are composed exclusively of educational organizations which hold a valid consumer's certificate of exemption and which are either an "educational institution" as defined in this paragraph or qualified as a nonprofit organization pursuant to s. 501(c)(3) of the Internal Revenue Code, 1986, as amended.

       * * *

    2. 1. "Charitable institutions" means only nonprofit corporations qualified as nonprofit pursuant to s. 501(c)(3), United States Internal Revenue Code, 1954, as amended, and other nonprofit entities, whose sole or primary function is providing or raising funds for organizations providing one or more of the following services, if a reasonable percentage of such service is provided free of charge, or at a substantially reduced cost, to persons, animals, or organizations that are unable to

       pay for such service:

       1. Medical aid for the relief of disease, injury, or disability;

       2. Regular provision of physical necessities such as food, clothing, or shelter;

       3. Services for the prevention of or rehabilitation of persons from alcoholism or drug abuse; the prevention of suicide; or the alleviation of mental, physical, or sensory health problems;

    * * *

    2. Charitable institutions also include groups providing volunteer manpower to organizations designated as charitable institutions hereunder.

    
    

33. In this case the Petitioner has failed to meet its burden of proof. Based upon the criteria found in Section 212.08 (7), Florida Statutes, Petitioner has not documented it is within any of the exemption categories. The primary purpose of the organization does not contribute to the development of good character or good sportsmanship, or does not foster educational or cultural development of minors. If it accomplishes those goals, same is not supported by this record.

    
    

34. Secondly, Petitioner is not a religious institution as its members do not gather primarily for the purpose of worship. In fact, by admission the Petitioner's members do not worship. If anything, the Petitioner established that it promotes reason or rational discussion of topics relevant to its members. This does not constitute a religious service under the statute or rule.

35. Petitioner is not an educational institution nor does it conduct activities related to education as a primary purpose for its organization. It is not accredited by any of the entities listed in the statute. It does not conduct classes required for accreditation. Further, its primary purpose is not to raise funds for schools. In fact, less than a tenth of one year's expenditures went to educational scholarship.

    
    

36. Finally, Petitioner fails to meet the definition of "charitable institution." It does not raise funds to provide services listed in the statute. The state standard for "charitable institution" is not solely Section 501(c)(3) status under the federal code. The legislature has carved a class of organizations eligible for this exemption by specifying a list of the activities which must be established. Petitioner has failed to present evidence supporting any statutory requirement. It is concluded that Petitioner's telephone support line, scholarship awards, or cable television program are inadequate to meet the statutory definition for exemption.

RECOMMENDATION

Based on the foregoing, it is, hereby, RECOMMENDED:

That the Department of Revenue enter a final order denying the application for a consumer's certificate of exemption filed by Petitioner.

DONE AND ENTERED this 8th day of March, 1996, in Tallahassee, Leon County, Florida.

JOYOUS D. PARRISH, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 8th day of March, 1996.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-0654

Rulings on the proposed findings of fact submitted by Petitioner:

1. None timely submitted.

Rulings on the proposed findings of fact submitted by the Respondent:

1. Paragraphs 1 through 22 are accepted.

COPIES FURNISHED:

Linda Lettera General Counsel

Department of Revenue

204 Carlton Building Tallahassee, Florida 32399-0100

Larry Fuchs Executive Director

Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

Mark Trop Shoreview Building

9999 Northeast Second Avenue, Suite 201

Miami, Florida 33138

Ruth Ann Smith

Assistant General Counsel Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 95-000654

Orders for Case No: 95-000654