STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA CHAPTER INTERNATIONAL ) ASSOCIATION, )

)

Petitioner, )

)

vs. ) CASE NO. 95-5668

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing in this case was held on March 27, 1996, by videoconference between Tampa and Tallahassee, Florida, before Carolyn

S. Holifield, a Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Guy E. Burnette, Esquire

William R. Lewis, Esquire Butler, Burnette & Pappas Bayport Plaza, Suite 1100

6200 Courtney Campbell Causeway Tampa, Florida 33607

For Respondent: Ruth Ann Smith, Esquire

Tracy L. Allen, Esquire Florida Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668 STATEMENT OF THE ISSUE

The issue for determination is whether Petitioner qualifies for a consumer certificate of exemption as an educational institution.

PRELIMINARY STATEMENT

Petitioner, International Association of Arson Investigators, Florida Chapter, (AAI, Florida Chapter), filed an application for a certificate of exemption with Respondent, Department of Revenue (Department). On or about October 16, 1995, the Department denied the application on the grounds that the AAI, Florida Chapter, did not meet the statutory criteria for exemption as an educational institution. Petitioner challenged the determination and timely requested a formal hearing. By letter dated November 17, 1995, Respondent referred the matter to the Division of Administrative Hearings and this proceeding followed.

At the hearing, Petitioner presented the testimony of its legal counsel and designated representative, Guy Burnette, and had five exhibits admitted into evidence. Respondent called no witnesses and offered no exhibits into evidence.

A transcript of the proceeding was filed on March 29, 1996. Respondent timely filed a proposed recommended order. Petitioner filed proposed findings of fact and conclusions of law on April 15, 1996.

Explicit rulings on the proposed findings of fact contained in the parties' recommended orders may be found in the attached Appendix to Recommended Order, Case No. 95-5668.

FINDINGS OF FACT

1. Petitioner, the AAI, Florida Chapter, is an affiliate member of the International Association of Arson Investigators, Inc. AAI, Florida Chapter, is a nonprofit corporation exempt from federal income tax under Section 501(c)(6) of the Internal Revenue Code, and is located at 2302 North Wallen Drive, Lake Park, Florida.

   
   

2. The governing body for AAI, Florida Chapter, the International Association of Arson Investigators, is a world-wide organization dedicated to the suppression of arson and related criminal activities. The mission of the International Association of Arson Investigators is to provide education, training, and public awareness to combat these crimes. To this end, the International Association of Arson Investigators provides training through regional programs, seminars, and publications.

   
   

3. The AAI, Florida Chapter, exists pursuant to a grant of authority from the International Association of Arson Investigators. However, the AAI, Florida Chapter, is a separate and distinct legal entity from the International Association of Arson Investigators.

   
   

4. The membership of the AAI, Florida Chapter, is comprised of individuals involved in some professional aspect of arson suppression. Members are typically employed by fire departments, law enforcement agencies, and fire marshals' offices. Petitioner's membership also includes representatives from the Statewide Prosecutor's Office, the Florida Department of Law Enforcement, the various state attorneys' offices, and sheriffs' offices.

   
   

5. Petitioner provides training for state agencies and educational organizations, including the Florida Fire College, Federal Law Enforcement Training Center, the National Fire Academy, and school districts, community colleges and public universities in Florida. Petitioner provides the personnel, supplies, equipment and materials for the training programs which it conducts.

   
   

6. Some of the training seminars conducted by Petitioner receive law enforcement matching funds, and are approved for continuing education units for law enforcement personnel and for recertification contact hours for fire service personnel.

   
   

7. The educational training and programs provided by AAI, Florida Chapter, are offered to various entities on a contractual basis. Notwithstanding Petitioner's contractual relationships with several educational entities, it has no authority or control over those entities.

8. Petitioner is not accredited by nor is it a member of Southern Association of Colleges and Schools, the Florida Council of Independent Schools, or any other organization responsible for accrediting educational entities.

   
   

9. Petitioner applied for a consumer certificate of exemption as an educational institution, and contends that the basis for such exemption is that it is an administrative office whose function is to assist or regulate the customary activities of its members.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this proceeding. Section 120.57(1), Florida Statutes.

    
    

11. The Department is authorized to control, administer, and enforce the revenue laws of this state. Sections 20.21 and 213.05, Florida Statutes.

    
    

12. Section 212.08, Florida Statutes, exempts certain groups from payment of sales tax on goods purchased by them which would otherwise be subject to sales tax. The exemption relevant in this case is described in the following pertinent provision of Section 212.08(7)(o)2.d, Florida Statutes.

    
    

    2. The provisions of this section author- izing exemptions from tax shall be strictly defined, limited, and applied in each cate- gory as follows:

    * * *

    d. "Educational institutions" means state tax-supported or parochial, church and nonpro- fit private schools, colleges, or universities which conduct regular classes and courses of study required for accreditation by, or member- ship 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 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 Depart- ment 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 kinder- garten through high school, colleges, and universities. The term "educational institutions" includes any nonprofit news- paper of free or paid circulation primarily

    on university or college campuses which holds a current exemption from federal income tax under s. 501(c)(3) of the Internal Revenue Code, and any educational television or radio network or system established pursuant to

    s. 229.805 or s. 229.8051 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) of the Internal Revenue Code. [The term "educational institutions" also includes state, district, or other governing or administrative offices the func- tion which is to assist or regulate the cust- omary activities of educational organizations or members.] The term "educational institu- tions" also includes a nonprofit educational cable consortium which holds a current exemp-

    tion from federal income tax under s. 501(c)(3) of the Internal Revenue Code of 1986, as amended, whose primary purpose is the delivery of educational and instructional cable tele- vision programming and whose members are composed exclusively of educational organiza- tions which hold a valid consumer certificate of exemption as defined in this sub-subpara- graph, or qualified as a nonprofit organiza- tion pursuant to s. 501(c)(3) of the Internal Revenue Code of 1986, as amended.

    [Emphasis Supplied]

    
    

13. To qualify as an educational institution, Petitioner must clearly come within one of the six statutory definitions set forth in Section 212.08(7)(o) 2.d., Florida Statutes. According to that provision, educational institutions include the following: (1) state tax-supported or parochial church and nonprofit private schools and colleges or universities which conduct regular classes or courses; (2) nonprofit libraries, art galleries, and museums open to the public;

    (3) private nonprofit organizations which raise funds for schools teaching kindergarten through twelfth grade and colleges and universities; (4) nonprofit newspapers of free or paid circulation primarily on college and university campuses and any nonprofit television or radio network or system; (5) state, district, or other governing or administrative offices which assist or regulate the customary activities of education organizations or members; and (6) nonprofit educational cable consortium whose primary purpose is the delivery of educational and instructional cable television programming

    
    

14. Petitioner is applying for an exemption from tax and seeks to qualify for exemption as a state, district, or other governing or administrative office, "the function of which must be to assist or regulate the customary activities of education organizations or members." Section 212.08(7)(o) 2.d., Florida Statutes. Petitioner has not sought to qualify under the other five definitions nor has Petitioner provided any evidence that it meets the criteria established in those definitions.

    
    

15. In order to qualify as an educational institution under the provision which Petitioner seeks to qualify, Petitioner must meet the two prescribed criteria. First, Petitioner must show that it serves in the role of a state,

    district, or other governing or administrative office. Second, Petitioner must establish that as a governing or administrative office, its function is to assist or regulate the customary activities of educational organizations or members.

    
    

16. In the instant case, Petitioner has failed to demonstrate that it is a state, district, or other governing or administrative office within the meaning of Section 212.08(7)(o) 2.d. Florida Statutes. The use of the terms "governing or administrative office" imply that a qualified applicant under this provision directs, controls, or oversees certain educational organizations or members thereof. In other words, there must be a nexus between the qualifying entity and at least one identifiable education organization or its members.

    
    

17. By its own admission, Petitioner operates pursuant to a grant of authority by the International Association of Arson Investigators. Petitioner presented no evidence that it is connected to or associated with any educational organization. Absent such connection, Petitioner can have no administrative or governing role as contemplated by Section 212.08(7)(o)2.d, Florida Statutes. Thus, Petitioner is not a state, district, or other governing or administrative office as required by statute.

    
    

18. For the reason stated above, Petitioner is not a state, district, or other governing or administrative office, and is ineligible for the exemption it seeks. However, even assuming that Petitioner is a governing or administrative office, it still fails to meet the second criteria which is that the governing or administrative office must regulate or assist the customary activities of educational organizations of members of such organizations. Evidence of this was not presented by PetitionerPetitioner asserts that it is providing assistance not to members of an education organization, but to its own members.

    
    

19. Petitioner's position is that all its members are involved is some professional aspect of arson suppression, and that Petitioner is an administrative office which assists its members in their customary activities. Petitioner contends that it provides such assistance to members of its organization by conducting various law enforcement and fire service related training seminars, programs, and courses.

    
    

20. The Department interprets the applicable language in Section 212.08(7)(o)2.d., Florida Statutes, as requiring qualified governing or administrative office to regulate or assist the customary activities of educational organizations or members of educational organizations.

    
    

21. It is well established that exemptions to taxing statutes are special favors granted by the Legislature and are to be strictly construed against the taxpayer seeking them and in favor of the state. Asphalt Pavers, Inc., v. Department of Revenue, 584 So.2d 55 (Fla. 1st DCA 1991); State Department of Revenue v. Anderson, 403 So.2d 3979, 399 (Fla. 1981); Green v. Pederson, 99 So.2d 292, 296 (Fla. 1957). This rule of statutory construction is consistent with Section 212.08(7)(o)2., Florida Statutes, quoted above, which specifically provides that exemptions authorized under this section shall be "strictly defined, limited, and applied in each category. . ." Finally, any doubt in interpreting the exemption must be resolved in favor of the state. Orange Park Kennel Club, Inc. v. Department of Business and Professional Regulation, 644 So.2d 574, 576 (Fla. 1st DCA 1994).

    
    

22. In determining the merits of Petitioner's application, it is noted that Petitioner has the burden of proving entitlement to the exemption it seeks.

    To sustain its burden in this case, Petitioner must prove by a preponderance of evidence that it comes within the statutory definition of an educational institution. Petitioner has failed to meet its burden.

    
    

23. Applying the principles of statutory construction and the prescriptive language of Section 212.08(7)(o)2., Florida Statutes, clearly Petitioner does not qualify as an "educational institution" within the meaning of the statute.

    
    

24. The Department's interpretation is indeed a strict and limiting one. However, this is appropriate because the provision in question grants to qualified entities an exemption from tax. In such cases, the taxing statutes must be strictly construed against the person claiming the exemption. Likewise, this interpretation reflects the directive in Section 212.08(7)(o)2. Florida Statutes, which mandates that the exemptions enumerated therein be "strictly defined and limited."

    
    

25. For the reasons stated herein, Petitioner does not qualify as an "educational institution" within the meaning of Section 212.08(7)(o)2.d., Florida Statutes. Accordingly, Petitioner is ineligible for an exemption and its application for a certificate of exemption should be denied.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Revenue enter a final order denying a consumer certificate of tax exemption to Petitioner, the International Association of Arson Investigators, Florida Chapter.

DONE and ENTERED this 21st day of May, 1996, in Tallahassee, Florida.

CARLOYN S. HOLIFIELD, 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 21st day of May, 1996.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5668

To comply with the requirements of Section 120.59(2), Florida Statutes (1995), the following rulings are made on the parties' proposed findings of fact:

Petitioner's Proposed Findings of Fact.

1. 1-12. Accepted and incorporated to the extent not subordinate or unnecessary.

Respondent's Proposed Findings of Fact.

1. 1-18. Accepted and incorporated to the extent not subordinate or unnecessary.

COPIES FURNISHED:

Linda Lettera General Counsel

Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668

Ruth Ann Smith, Esquire Tracy L. Allen, Esquire Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668

Guy E. Burnette, Jr., Esquire William R. Lewis, Esquire Butler, Burnette & Pappas Bayport Plaza, Suite 1100

6200 Courtney Campbell Causeway Tampa, Florida 33607-1458

Larry Ruchs Executive Director

Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to the 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 consult with the agency that will issue the Final Order in this case concerning their 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: 95-005668

Orders for Case No: 95-005668