STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA FREE SPEECH FORUM, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 96-2940

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Upon due notice, this cause came on for formal hearing on August 9, 1996, in Gainesville, Florida, before Ella Jane P. Davis, a duly assigned Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Alice Primack, as Qualified Representative 3657 Northwest 40th Place

Gainesville, Florida 32605

For Respondent: Kent L. Weissinger, Esquire

Ruth Ann Smith, Esquire Florida Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668 STATEMENT OF THE ISSUE

Does Petitioner qualify for a consumer's certificate of exemption (sales tax exemption certificate) under Section 212.08(7)(o) F.S.?

PRELIMINARY STATEMENT

On March 25, 1996, Petitioner Florida Free Speech Forum, Inc. filed an application for a Consumer's Certificate of Exemption (DR-5). The Department of Revenue denied the application on the grounds that Petitioner did not meet the requirements for sales tax exemption as set forth in Section 212.08(7) F.S.

Petitioner timely requested a formal evidentiary hearing pursuant to Section 120.57(1) F.S. Respondent timely answered the Petition.

Upon appropriate inquiry at formal hearing, Alice Primack was accepted by the undersigned as "qualified representative" for Petitioner, pursuant to Rules 60Q-2.007 and 60Q-2.008 F.A.C. Ms. Primack also testified on behalf of Petitioner and had three exhibits admitted in evidence.

Respondent presented the oral testimony of David Sands and had one exhibit admitted in evidence.

A transcript of proceedings was filed on November 1, 1996.

All timely-filed proposed recommended orders have been considered. The previous obligation to comment on the fact proposals found within the proposed recommended orders through inclusion of an appendix to the recommended order was repealed on October 1, 1996, when Chapter 120, Florida Statutes, was amended by Chapter 96-159, Laws of Florida. Therefore, the recommended order has been entered without an appendix.

FINDINGS OF FACT

1. Petitioner is a membership organization that charges membership dues.

   
   

2. Petitioner applied for sales tax exemption as an "educational institution." Petitioner's witness conceded that the organization does not "exactly fit" the statutory criteria for an educational institution exemption.

   
   

3. During the review process with respect to each application for exemption, the Department of Revenue looks not only at the category marked on the application, which in this case was "educational institution," but also reviews the facts of the applicant's case to see if any other exemption category applies. In this case, the Department found no tax-exempt category for which Petitioner would qualify.

   
   

4. Petitioner is not a religious organization.

   
   

5. Petitioner is not a scientific organization.

   
   

6. Petitioner performs its educational function by encouraging rational examination of various issues through sponsored monthly luncheon forums and other discussion groups.

   
   

7. Petitioner provides "scholarships" to high school students and their teachers to attend Petitioner's monthly luncheon forums.

   
   

8. Petitioner's forums are broadcast on radio and cable television. However, Petitioner is not an educational television or radio network or system, nor is it a nonprofit educational cable consortium.

   
   

9. Petitioner does not hold any formal classes.

   
   

10. Petitioner does not provide any of the following: medical aid; physical necessities; services for the prevention of, or rehabilitation of persons from, alcoholism or drug abuse, or for the prevention of suicide, or for the alleviation of mental, physical or sensory health problems; social welfare services; medical research; or food, shelter, and medical care for animals, or adoption services for animals.

    
    

11. Petitioner does provide educational programs concerning animals about once every other year.

    
    

12. Petitioner is not a State tax-supported school, a church school, or parochial school. Petitioner also is not either a nonprofit private school, or a college, or a university.

13. Petitioner is not a nonprofit private school which conducts regular classes and courses of study which are accepted for continuing education credit by an accrediting authority.

    
    

14. Petitioner is not a nonprofit library, art gallery or museum open to the public.

    
    

15. Petitioner is not a nonprofit newspaper circulated primarily on federally-exempt university or college campuses.

    
    

16. Petitioner is not a private nonprofit corporation that raises funds for grade schools, high schools, colleges or universities.

    
    

17. Petitioner is not a state, district, or other governing or administrative office existing to assist or regulate the customary activities of educational organizations.

    
    

18. Petitioner is not a veterans' organization.

    
    

    CONCLUSIONS OF LAW

    
    

19. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this cause, pursuant to Section 120.57(1), F.S.

    
    

20. The burden of proof in this case is on the Petitioner to show by a preponderance of the evidence that it is entitled to a sales tax exemption.

    
    

21. To demonstrate that it is entitled to a sales tax exemption, an applicant must show that it meets all the criteria of one of the definitions under Section 212.08(7), F.S. See, Gainesville Amateur Radio Society, Inc. v. DOR, DOAH Case No. 94-1200 (Recommended Order entered June 23, 1995 Final Order filed August 2, 1995). An organization that meets only part of several categories of sales tax exemption is not eligible for an exemption certificate. "While doubtful language in taxing statutes should be resolved in favor of the taxpayer, the reverse is true in construction of exceptions and exemptions from taxation." See, Department of Revenue v. Skop, 363 So. 2d 678, at page 680 (Fla. 5th DCA 1980).

    
    

22. Section 212.08(7)(o)2. F.S. requires that exemptions be strictly construed. See, 2 Christ-The Solution, Inc. v. Department of Revenue, DOAH Case 94-4075 (Final Order entered February 27, 1995).

    
    

23. Tax exemptions are matters of legislative grace. It is a well- recognized rule of law that tax exemptions must be strictly construed against the taxpayer seeking them and in favor of the State. See, Asphalt Pavers, Inc.

    v. Dept. of Revenue, 584 So. 2d 55 (Fla. 1st DCA 1991); State Dept. of Revenue

    v. Anderson, 403 So. 2d 397, 399 (Fla. 1981); Green v. Pederson, 99 So. 2d 292,

    296 (Fla. 1957). Thus, the Petitioner has the burden to show clearly that it is entitled to a sales tax exemption.

    
    

24. The applicable statutory exemption scheme at Section 212.08(7)(o)2., F.S., reads in pertinent part:

    
    

    1. The provisions of this section. . . shall be strictly defined, limited, and applied in each category. . .

       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. The term "religious institutions" includes nonprofit corporations the sole purpose of which is to provide free trans- portation services to church members. . . .

          The term "religious institutions" also includes state, district, or other governing or administrative offices the function of which is to assist or regulate the customary activities of religious organizations or members. . . .

       2. "Charitable Institutions" means only nonprofit corporations qualified as nonpro- fit pursuant to section 501(c)(3), United States Internal Revenue Service Code, 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;

          4. Social welfare services including adoption placement, child care, community care for the elderly, and other social welfare services which clearly and sub- stantially benefit a client population

             which is disadvantaged or suffers a hardship;

          5. Medical research for the relief of disease, injury, or disability;

          6. Legal service; or

          7. Food, shelter, or medical care for animals or adoption services, cruelty investigations, or education programs concerning animals."

          1. "Educational institutions" means state supported 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

             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 course 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. 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 section 501(c)(3) of the Internal Revenue Code, and any educational television or radio network or system established pursuant to section 229.805 or section 229.8051 and any nonprofit television or radio station which is a part of such network or system and which holds a current exception from federal income tax under section 501(c)(3) of the Internal Revenue Code.

             The term "educational institutions" also includes state, district, or other governing or administrative offices the function of which so to assist or regulate the customary activities of educational organizations or members. The term "educational institutions" also includes a nonprofit educational cable consortium which holds a current exemption from federal income tax under section 501(c)(3) of the Internal Revenue Code of 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 certificate of exemption and which are either an educational institution as

             defined in this sub-subparagraph, or qualified as a nonprofit organization pursuant to section 501(c)(3) of the Internal Revenue Code of 1986, as amended.

          2. "Veterans' organizations" means nationally chartered or recognized veterans' organizations, including, but not limited to, Florida chapters of the Paralyzed Veterans of America, Catholic War Veterans

          of the U.S.A., Jewish War Veterans of the U.S.A., and the Disabled American Veterans, Department of Florida, Inc., which hold current exemptions from federal income tax under section 501(c)(4) or (19) of the Internal Revenue Code.

          
          

25. In consideration of the statutory language as applied to the facts or found, it is clear that Petitioner has not demonstrated that it meets the criteria for exemption as an "educational institution." Although Petitioner holds monthly luncheon forums broadcast on radio or television, it still is not any type of school, college or university which conducts regular classes and courses of study. Petitioner may give scholarships to students so that they may attend its forums, but it does not raise funds for grade schools, high schools, colleges and/or universities.

    
    

26. Petitioner is undoubtedly involved in good works that tend to educate and empower a free electorate, but that alone does not meet the narrow language of the "educational institution" exemption statute.

    
    

27. There is no evidence to show that Petitioner satisfies any of the categories for exemption as an educational institution, including the statute's definitional examples categories for nonprofit libraries, art galleries and museums open to the public; nonprofit newspapers circulated primarily on federally-exempt university or college campuses; educational television or radio networks or systems established pursuant to Sections 229.805 or 229.8051, F.S.; nonprofit educational cable consortiums; or for state, district or other governing or administrative offices, the function of which is to assist the customary activities of educational organizations or members.

    
    

28. Moreover, Petitioner is not qualified for exemption as either: a charitable institution, a scientific organization, a religious institution, or a veterans' organization.

RECOMMENDATION

Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Revenue enter a Final Order ratifying

its initial denial of a consumer's certificate of exemption to Petitioner.

RECOMMENDED this 18th day of November, 1996, at Tallahassee, Florida.

ELLA JANE P. DAVIS

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 18th day of November, 1996.

COPIES FURNISHED:

Florida Free Speech Forum, Inc. c/o ALICE PRIMACK

3657 NW 40th Place Gainesville, Florida 32605

Kent Weissinger, Esquire, and Ruth Ann Smith, Esquire Department of Revenue

Post Office Box 6668 Tallahassee, Florida 32314-6668

Larry Fuchs, Executive Director Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

Linda Lettera, Esquire Department of Revenue

204 Carlton Building Tallahassee, Florida 32399-0100

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of 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: 96-002940

Orders for Case No: 96-002940