STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SCLERODERMA FEDERATION GULF COAST ) AFFILIATE, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 96-1220

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

A formal hearing was conducted in this proceeding before Daniel Manry, a duly designated Hearing Officer of the Division of Administrative Hearings, on May 14, 1996, in Ft. Myers, Florida. The court reporter, Petitioner, and Petitioner's witnesses attended the formal hearing in Ft. Myers. Respondent and the undersigned participated by video conference from Tallahassee, Florida.

APPEARANCES

For Petitioner: Ruth Ashmore, President

Scleroderma Federation Gulf Coast Affiliate, Inc.

4019 Southeast 20th Place, Number 601 Cape Coral, Florida 33904

For Respondent: William B. Nickell

Assistant General Counsel Department of Revenue

501 South Calhoun Street, Suite 304 Tallahassee, Florida 32399-1050

STATEMENT OF THE ISSUE

The issue for determination is whether Respondent should grant Petitioner's application for a sales tax exemption certificate as a charitable institution within the meaning of Section 212.08(7), Florida Statutes. 1/

PRELIMINARY STATEMENT

On February 8, 1996, Respondent denied Petitioner's request for a sales tax exemption certificate on the grounds that Petitioner does not satisfy the statutory criteria for a charitable institution. Petitioner timely requested a formal hearing.

At the formal hearing, Petitioner presented the testimony of two witnesses and submitted three exhibits for admission in evidence. Respondent called no witnesses and submitted two exhibits for admission in evidence.

The identity of the witnesses and exhibits, and the rulings regarding each, are set forth in the record of the formal hearing. Respondent timely filed its proposed recommended order ("PRO") on May 23, 1996. Petitioner did not file a PRO. Proposed findings of fact in Respondent's PRO are accepted in this Recommended Order.

FINDINGS OF FACT

1. Respondent is the governmental agency responsible for issuing sales tax exemption certificates in accordance with Section 212.08(7). Petitioner is a non-profit, Florida corporation and a charitable organization, within the meaning of Section 501(c)(3) of the Internal Revenue Code, for purposes of the federal income tax.

   
   

2. On December 29, 1995, Petitioner applied for an exemption from state sales and use tax ("sales tax") as a charitable institution. On February 8, 1996, Respondent denied Petitioner's application.

   
   

3. The parties stipulated that Petitioner is a non-profit corporation. The parties further stipulated that the only exemption under which Petitioner may qualify for a sales tax exemption is the exemption for a charitable institution.

   
   

4. In order to qualify as a charitable institution, Petitioner must provide one or more of seven services listed in Section 212.08(7). The parties stipulated that the only service Petitioner arguably provides as a charitable institution is that of raising funds for medical research within the meaning of Section 212.08(7)(o)2b(V).

   
   

5. It is uncontroverted that Petitioner does not provide medical research directly. Petitioner raises funds for its national organization. The national organization then disburses funds raised by local affiliates.

   
   

6. Petitioner failed to submit any competent and substantial evidence showing the disposition of funds by its national organization. Petitioner failed to show that its national organization either provides direct medical research or raises funds for one or more organizations that provide medical research.

   
   

   CONCLUSIONS OF LAW

   
   

7. The Division of Administrative Hearings has jurisdiction over the subject matter and parties in this proceeding. The parties were duly noticed for the formal hearing.

   
   

8. The burden of proof is on Petitioner. Petitioner must show by a preponderance of the evidence that it is entitled to a sales tax exemption as a charitable institution. Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981); Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977). Petitioner failed to satisfy its burden of proof.

   
   

9. Tax exemptions are matters of legislative grace. They must be strictly construed against the taxpayer and in favor of the state. State Department of Revenue v. Anderson, 403 So.2d 397, 399 (Fla. 1981); Green v. Pederson, 99 So.2d 292, 296 (Fla. 1957); Asphalt Pavers, Inc. v. Department of Revenue, 584 So.2d 55, 57 (Fla. 1st DCA 1991). Section 212.08(7)(o)2 provides in relevant part:

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

   
   

10. In order to qualify for a sales tax exemption, Petitioner must satisfy all of the criteria in Section 212.08(7)(o)2b. In relevant part, Petitioner's sole or primary function must be either to provide medical research or to raise funds for an organization that provides medical research.

    
    

11. It is uncontroverted that Petitioner is not a direct provider of medical research. Petitioner raises funds for its national organization.

    
    

12. Petitioner failed to show that its national organization either directly provides medical research or raises funds for providers of medical research. Petitioner failed to submit any competent and substantial evidence of the national organization's disposition of funds raised by Petitioner. 2/

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order and therein DENY

Petitioner's request for a sales tax exemption.

RECOMMENDED this 4th day of June, 1996, in Tallahassee, Florida.

DANIEL S. MANRY, 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 4th day of June, 1996.

ENDNOTES

1/ All references to statutory chapters and sections are to Florida Statutes (1995) unless otherwise stated,

2/ The documentary evidence and sworn testimony submitted by Petitioner to show the national organization's disposition of funds raised by its local members is hearsay. Hearsay can not be relied upon as a basis for a finding of fact, although it may be admissable to explain or supplement competent and substantial evidence related to the same matter. Sec. 120.58(1)(a). Petitioner failed to submit any competent and substantial evidence to show the national organization's disposition of funds raised by its local members.

PIES FURNISHED:

Larry Fuchs, Executive Director Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

Linda Lettera, General Counsel Department of Revenue

204 Carlton Building Tallahassee, Florida 32399-0100

Ruth Ashmore, President Scleroderma Federation Gulf Coast

Affiliate, Inc.

4019 Southeast 20th Place, Number 601 Cape Coral, Florida 33904

William B. Nickell Assistant General Counsel Department of Revenue

501 South Calhoun Street, Suite 304 Tallahassee, Florida 32399-1050

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: 96-001220

Orders for Case No: 96-001220