STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SOCIETY FOR PHOTOGRAPHIC )

EDUCATION, )

)

Petitioner, )

)

vs. ) Case No. 97-5867

)

DEPARTMENT OF REVENUE )

)

Respondent. )

)

RECOMMENDED ORDER

This cause came on for formal hearing before P. Michael Ruff, duly designated Administrative Law Judge of the Division of Administrative Hearings, in Daytona Beach, Florida, on March 6, 1998. The appearances were as follows:

APPEARANCES

For Petitioner: James J. Murphy, Executive Director

Society of Photographic Education Post Office 2811

Daytona Beach, Florida 32120-2811

For Respondent: Kevin J. O'Donnel, Esquire

Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668 STATEMENT OF THE ISSUE

The issue to be resolved in this proceeding concerns whether the Petitioner qualifies, pursuant to Section 212.08(7)(o)2.d., Florida Statutes, for a consumer's Certificate of Exemption as a state, district, or other governing or administrative office, the

function of which is to assist or regulate the customary activities of educational organizations or members.

PRELIMINARY STATEMENT

This cause arose upon an application for a consumer's Certificate of Exemption filed by the Society for Photographic Education (Society) or (Petitioner), pursuant to Section 212.08, Florida Statutes. The Department issued a Notice of Intent to Deny that application and a petition challenging that agency determination was duly filed.

The cause was ultimately assigned to the undersigned Administrative Law Judge and came on for hearing as noticed. The Petitioner at hearing presented the testimony of Mr. James Murphy, its executive director. He was cross-examined by counsel for the Department but no other witness was called.

Additionally, the Petitioner's Exhibits I, II and III were admitted into evidence. Upon conclusion of the hearing, the parties ordered a transcript thereof and requested an extended briefing schedule, which was allowed. Proposed Findings of Fact and Conclusions of Law have been submitted by the parties and have been considered in the rendition of this Recommended Order.

FINDINGS OF FACT

1. The Petitioner is a "not for profit" corporation that, for all relevant periods of time, has held an exemption from federal income tax as an educational institution pursuant to Section 501(c)(3) of the federal Internal Revenue Code. The

   purpose of the Society, the Petitioner, is to further the practice of the teaching of photography and to insure high standards in photographic education in the educational institutions in this country and in Florida, particularly post- secondary educational institutions. The Society has been provided facilities at the Daytona Beach Community College, including office space, telephones and facsimile lines. The community college provides publication and marketing services to the Society. There is no formal affiliation between the Society and any higher educational institutions. The community college provides these services to the Society in return for the prestige associated with its being home to the Society. The Society is not accredited as an educational institution in its own right. It is an educational organization consisting primarily of university, college and secondary school educators as members. Its purpose is to advance the field of photographic education and to assist its members in their collective interests and concerns as educators. The Society also assists colleges, universities, and other organizations in achieving their educational mission in terms of education in the field of photography. It therefore functions as an administrative office, " . . the function of which is to assist or regulate the customary activities of educational organizations and members."

2. The Society's national office assists the customary activities of the regional organizations under its umbrella

   through management of their data bases in support of their regional publications and conferences. The dominant function of those conferences is to promote educational standards in photography and related fields. They are typically attended by graduate students and educators in the field of photographic education.

3. Moreover, the Society's national office examines and approves regional budget funding proposals and disburses funds to regional organizations that are in accord with its national by-laws and policies, so as to provide appropriate control and regulation with regard to its educational mission. The treasurer of the Society for photographic education requires uniform accounting procedures for each of the regional treasury accounts.

4. The Society is thus an umbrella organization for eight regional societies located throughout the country. The Society provides money to these regional organizations and the regions are required to prepare and submit financial statements to the Society. These regional societies operate pursuant to the national by-laws and their officers serve at the pleasure of the national organization. Annual national conferences are held as are regional conferences by the regional societies.

   Participants at these conferences are offered seminar level courses and workshops in different areas of photography, such as digital imaging. There is also typically a trade show at these

   conferences where corporations demonstrate new products in the field of photography. Most of the persons attending these conferences are either graduate students or faculty members of various educational institutions. While the Society does not provide educational credit to attend these, the programs at these conferences are educational in nature, designed to further the education of the attendees in the aspects of the field of photographic education. The Society does not regularly provide educational curricula to other organizations.

   CONCLUSIONS OF LAW

   
   

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

6. The Department of Revenue is authorized to issue Tax Exemption Certificates to qualified entities pursuant to Section 212.08, Florida Statutes. Resolution of the issue presented by this application turns on whether the Society qualifies as an "educational organization" or "institution" as defined in Subsection 212.08(7)(o)2.d., Florida Statutes. That statutory provision provides in pertinent part:

   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 . . . private nonprofit organizations the purpose of which is to raise funds for schools teaching grades kindergarten through high school, colleges and universities . . .[and] state, district, or other governing or administrative offices

   the function of which is to assist or regulate the customary activities of educational organizations or members.

   
   

7. To qualify as an educational institution the Society must clearly come within the definition in Section 212.08(7)(o)2., Florida Statutes. Tax exemption statutory provisions must be strictly construed against the person claiming the exemption. Asphalt Pavers, Inc., v. Department of Revenue, 584 So. 2d 55, 57 (Fla. 1st DCA 1991); Department of Revenue v. Skop, 383 So. 2d 678, 680 (Fla. 5th DCA 1980), which last decision provides that while doubtful language in taxing statutes should be resolved in favor of the tax payer, the reverse is true in construing exceptions and exemptions to taxing statutes.

8. The burden of proof in this case is on the Petitioner to show by preponderant evidence that it is entitled to a sales tax exemption. Green v. Pederson, 99 So. 2d 292, 296

   (Fla. 1957).

   
   

9. In order to demonstrate that it is entitled to a sales tax exemption, the applicant must show that it meets all the criteria of one of the exemptions under the above-cited statute. See Gainesville Amateur Radio Society, Inc., v. Department of Revenue, DOAH Case No. 94-1200 (Final Order entered June 23, 1995). An organization meeting only part of the statutory requirement for exemption is not eligible for an exemption certificate.

10. Thus, the Society must show that it serves in the roll of a state, district or other governing administrative office and establish that as a governing or administrative office, its function is to assist or regulate the customary activities of educational organizations or members. See The Florida Chapter International Association of Arson Investigators, Inc., v. State Department of Revenue, DOAH Case No. 95-5668 (Final Order entered June 19, 1996). On balance it is concluded that in the testimony of Mr. Murphy it has been demonstrated that the Society's membership includes educational organizations and members largely consisting of faculty and students of colleges, universities, and other organizations who are all involved in the educational mission of advancing photographic education.

    His testimony indicates that the Society provides some assistance to colleges, universities, and other educational organizations in achieving that educational mission. Thus, it has been demonstrated that the Society functions as an administrative office whose function is to assist or regulate the "customary activities of educational organizations and members."

11. The Society is affiliated with regional societies and Mr. Murphy's testimony shows that these have an educational mission. Thus, in this sense, the Society is connected with these regional societies or subdivisions and can thus be said to be connected with educational organizations in addition to its

connection with the community college involved. The Society national office examines and approves regional budget funding proposals of these regional societies and disburses funds to the regional organizations in accordance with its national by-laws and policies so as to provide appropriate control and regulation with regard to the educational mission of these regional societies or organizations. Indeed, the treasurer of the national Society requires uniform accounting procedures to be enacted and followed by each of the regional organizations for their treasury accounts and they are required to periodically report to the national treasurer. The Society is a non-profit, member support organization, which already enjoys a similar exemption under Section 501(3)(c) of the United States Internal Revenue Code. On balance, the preponderant evidence shows that it is entitled to the subject exemption which it seeks.

RECOMMENDATION

Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore,

RECOMMENDED:

That the Department of Revenue enter a Final Order granting the consumer Certificate of Exemption applied for by the Petitioner.

DONE AND ENTERED this 7th day of July, 1998, in Tallahassee, Leon County, Florida.

P. MICHAEL RUFF Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 7th day of July, 1998.

COPIES FURNISHED:

Kevin O'Donnell, Esquire Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668

James J. Murphy, Executive Director Society for Photographic Education Post Office Box 2811

Daytona Beach, Florida 32120-2811

Linda Lettera, Esquire Department of Revenue

204 Carson Building

Tallahassee, Florida 32399-0100

Larry Fuchs, 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 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: 97-005867

Orders for Case No: 97-005867