The Issue The sole issue posed herein is: Whether or not the transfer to Petitioner by individuals Hugh P. Conser, Stewart L. Krug and Sidney Barbane1 of certain real property located in Pinellas County, Florida, on or about October 26, 1974, constitutes a conveyance subject to the Documentary Stamp Tax Act, pursuant to Chapter 201, Florida Statutes.
Findings Of Fact On or about October 26, 1974, the Petitioner received title to certain real property located Pinellas County, Florida, from Stewart L. Krug, Sidney Barbanel and Hugh P. Conser, the principals in KBC Development Corporation, which was recorded in Official Records Book 4229, page 1052, Public Records of Pinellas County, Florida. The only consideration, as evidenced by the deeds filed in the case, is that the conveyance was for "good and valuable consideration and ten dollars". This other good and valuable consideration, according to Petitioner and the other record evidence, consisted of the issuance of all one hundred shares of the authorized stock of KBC Development Corporation, Petitioner, as evidenced by the Minutes of the Shareholders Meeting of such corporation which was held on July 18, 1973. (See the minutes reflected in an attachment to Petitioner's Exhibit Number 1.) The issued stock had a par value of $5.00. The corporate entity, KBC, as Petitioner, was formed for the purpose of taking title to the property in question and, as evidenced by the record, had no other assets when the subject property was conveyed. On May 6, 1975, the Florida `Department of Revenue, Respondent, recorded in the office of the Circuit Court of Pinellas County, Florida, a warrant for collection of delinquent documentary stamp taxes in connection with the above-referenced transaction in the amount of $27,599.70, plus an identical amount of penalty, for a total sum of $55,212.40. Said warrant is recorded in O.R. Book 4286, page 31, Public Records of Pinellas County, Florida. Following a conference with the Department of Revenue, the taxes were paid by the Petitioner under protest. That payment set the stage for the Petitioner's filing of the claim for refund with the Respondent, the Comptroller of the State of Florida, pursuant to Florida Statutes section 215.26. The Petitioner argues that the only taxable consideration resulting from the subject conveyance was the par value of the stock, of which amount sufficient documentary stamps were affixed to the deeds in question. In support of this position, the Petitioner cites the fact that there are no income tax returns filed by the corporation, FIG; no business activities pursued by the corporation; no bank account of the corporation; and no assets held by the corporation, except as agents for the three individuals, Krug, Barbanel and Conser, all of which were acknowledged by all of the mortgagees. Additionally, the Petitioner urges that the bank and lending institutions involved regarded and held each individual personally liable for the indebtedness in connection with the loans advanced for the property in question. Finally, the Petitioner urges that, based on the conveyance in question, there was no shift in the economic burden to the corporation and, therefore, no taxable transaction occurred when the property in question was conveyed from the individuals, Krug, Barbanel and Conser, to FIG Development Corporation.
Conclusions The documentary stamp tax provided by Florida Statutes section 201.02 is an excise tax imposed on particularly described transactions, and in the case of instruments relating to realty, is based upon the total consideration involved in the transfer or conveyance. Thus, the key point in determining whether documentary stamps are to be affixed to an instrument transferring an interest in realty is in the presence or absence of consideration for the transfer. Rule 12A-4 .14, Florida Administrative Code, describes conveyances not subject to the documentary stamp tax as those "conveyances of realty without consideration, including. . .a deed to or by a trustee not pursuant to a sale . . . ." The facts of this case clearly do not illustrate an express or resulting trust relationship between KBC Development Corporation and its principals, Stewart L. Krug, Sidney Barbanel and Hugh P. Conser. When KBC took title to the property from Krug, Conser and Barbanel, the consideration was $10.00 and other valuable consideration and, based on the face of the instrument, the conveyance was not made to KBC subject to payment of any mortgages, etc., by KPC (Petitioner's Exhibit No. 1). Section 201.02(1), Florida Statutes (1975). See Florida Department of Revenue v. De Maria, 338 So.2d 838 (Fla. 1976). Additionally, the facts herein reveal that the banks and lending institutions involved in the transaction required the personal guarantees of the individuals, Krug, Barbanel and Conser. No evidence was introduced indicating that Petitioner, KBC Development Corporation, was anything more than an entity whereby the lending institutions had advanced funds for the primary mortgages to Continental Investment and Development Company, which was in no way related to the present corporation, KBC, and that the corporate entity was used to protect the lending institutions from any possible violations of usurious transactions. As stated, the personal endorsements and/or guarantees of the individuals, Barbanel, Krug and Conser, were required by the lending institutions before the primary mortgagee, Continental Investment and Development Company, would be released. Krug, Barbanel and Conser were no more nor less obligated to pay and perform under the obligation, after the conveyance than before. Although there was a change in the form of the obligation, there was no change in the substance. See e.g., Straughn v. Story, 334 So.2d 337 (Fla. 1st DCA 1976) cert. discharged 348 So.2d 954 (1977). (See Petitioner's Exhibits 2, 3 and 4.) For all of these reasons, it is the considered opinion of the undersigned that the Respondents have failed to demonstrate that the consideration for the conveyances in question were anything more than the par value of the stock and, accordingly, documentary stamp taxes should only be assessed in the amount of $4.10. Accordingly, I shall recommend that the excess assessments which Petitioner paid under protest be refunded.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby, RECOMMENDED: That the Petitioner be refunded the amount of taxes and penalties it paid to the Respondent, Department of Revenue, under protest, over and above the amount it should have paid on the par value of the stock of KBC Corporation when the abovedescribed conveyance was made during October, 1974. RECOMMENDED this 3rd day of April, 1979, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings Room 101, Collins Building MAILING ADDRESS: 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Donald R. Hall, Esquire Goza, Hall & Peacock, P.A. 100 North Belcher Road Clearwater, Florida 33518 Cecil L. Davis, Jr., Esquire Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32304 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA, DEPARTMENT OF REVENUE TALLAHASSEE, FLORIDA KBC DEVELOPMENT CORPORATION, Petitioner, vs. CASE NO. 76-1596 GERALD LEWIS, as COMPTROLLER OF THE STATE OF FLORIDA, AND DEPARTMENT OF REVENUE, Respondents. / NOTICE TO: DONALD R. HALL, ESQUIRE ATTORNEY FOR PETITIONER GOZA, HALL & PEACOCK, P.A. 100 NORTH BELCHER ROAD CLEARWATER, FLORIDA 33518 CECIL L. DAVIS, JR., ESQUIRE ATTORNEY FOR RESPONDENTS ASSISTANT ATTORNEY GENERAL THE CAPITOL LL04 TALLAHASSEE, FLORIDA 32304 You will please take notice that the Governor and Cabinet, acting as head of the Department of Revenue at its meeting on the 12th day of June, 1979, approved the Respondent's Substituted Order, in lieu of the Division of Administrative Hearing's Recommended Order dated April 3, 1979. A copy of the Respondent's Proposed Substituted Order is attached. This constitutes final agency action by the Department of Revenue. JOHN D. MORIARTY, ATTORNEY DIVISION OF ADMINISTRATION DEPARTMENT OF REVENUE STATE OF FLORIDA ROOM 104, CARLTON BUILDING TALLAHASSEE, FLORIDA 32301 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing Notice was furnished by mail to Donald R. Hall, Esquire, Goza, Hall & Peacock, P.A. 100 North Belcher Road, Clearwater, Florida 33518, Attorney for Petitioner; by hand delivery to Cecil L. Davis, Jr., Esquire, Assistant Attorney General, The Capitol LL04, Tallahassee, Florida 32304, Attorney for Respondents and James E. Bradwell, Esquire, Hearing Officer, Division of Administrative Hearings, Department of Administration, Room 530, Carrolton Building, Tallahassee, Florida 32304, this 14th day of June, 1979. JOHN D. MORIARTY, ATTORNEY Attachment STATE OF FLORIDA
Findings Of Fact On or about January 31, 1974, the Petitioner purchased a certain tract of property from Rio Branco Corporation. As a part of the purchase price, the Petitioner executed a secured promissory note, and a purchase money mortgage. A copy of the mortgage and the promissory note were received in evidence as Joint Exhibit 1. Although the promissory note is in the form of a direct obligation for the Petitioner to pay the face amount of the note to Rio Branco Corporation, its obligations were limited. The note provides in Paragraph 12 as follows: "Mortgagor, (Petitioner] assumes no corporate liability for the payment of the debt evidenced by this note and mortgage. Mortgagee [Rio Branco Corporation] waives any corporate liability and agrees to look solely to the property securing such debt for payment thereof." Petitioner apparently defaulted on the mortgage and the promissory note, and a foreclosure suit was initiated by Rio Branco Corporation. Petitioner was named as the defendant in this suit which was filed in Sarasota County, and given case number CA-75-1107. Prior to the completion of the foreclosure action, Petitioner executed a quitclaim deed conveying its interest in the subject property back to Rio Branco Corporation. The quitclaim deed was executed in lieu of foreclosure. A copy of the quitclaim deed was received in evidence as Joint Exhibit 2. The Petitioner stipulated that, it executed Joint Exhibit 2 in order to prevent any deficiency from being entered following a judicial sale in connection with the foreclosure proceeding. Despite the stipulation it is apparent that Rio Branco Corporation could not have enforced any such deficiency against the Petitioner due to the above quoted provision of the promissory note. The quitclaim deed was apparently recorded by a representative of Rio Branco Corporation. Through a proposed notice of assessment dated September 9, 1976, the Respondent is seeking to impose documentary stamp taxes, documentary surtaxes, penalties and interest in the total amount of $745.13 upon Petitioner. It is not clear whether the Respondent is also seeking to impose the same taxes upon the grantee of the quitclaim deed, Rio Branco Corporation. Respondent contends that the Petitioner is liable for the documentary stamp taxes on the quitclaim deed, and that the amount of consideration for the deed is the amount of mortgage debt extinguished as a result of execution of the deed. Petitioner contends that as the grantor of the instrument, it has no responsibility for paying documentary stamp taxes, and that further no consideration was given for the deed as a matter of law since no debt which the Petitioner could have been forced to pay was extinguished.
Findings Of Fact Based upon the oral argument of the parties and the evidence adduced at the hearing, as well as the pleadings, the following pertinent facts are found: On June 30, 1973, an agreement for purchase and sale was executed between Bayshore 21, Inc., as purchaser, and Arthree, Inc., as seller, for the purchase and sale of real estate commonly known as the Carriage House. This agreement was executed by Bayshore 21, Inc. in its corporate name, and not as a trustee or other representative capacity. The provisions of this agreement were individually guaranteed by Marvin Glick, the president and sole stockholder of Bayshore 21, Inc. The purchase and sale agreement discloses that the total purchase price of the property is $19,500,000, payable by taking subject to a first mortgage held by the Prudential Insurance Company with the remainder, subject to certain prorations, to be paid in cash. An earnest money deposit in the amount of $500,000.00 was placed in escrow by Bayshore at the time of execution of the purchase and sale agreement. Bayshore 21, Inc. represented and warranted in said agreement that it was a corporation duly organized and in good standing with full capacity to make and execute the agreement and to consummate the transaction embodied therein. Further, Bayshore warranted that there was no provision in its charter or bylaws, nor was it a party to any agreement, which would limit or prevent its consummation of the agreement. Also, Bayshore reserved the right to assign it's interests to any other party upon the assignee's assumptions of Bayshore's obligations or to direct Arthree, Inc. that the deed or other closing instruments would run in favor of a designated grantee other than Bayshore. Pursuant to the agreement for purchase and sale described above, Arthree, Inc. conveyed the Carriage House to Bayshore 21, Inc. by warranty deed dated August 17, 1973. There was evidence that the transaction was not closed until August 23, 1973. Bayshore 21, Inc. took title in its own corporate name, and not as a trustee or in a representative capacity. Proper documentary stamps were attached to this document. On either August 22 or 23, 1973, Bayshore 21, Inc. executed a $1,300,000.00 note and mortgage to Commercial Trading Company, Inc. and a $5,000,000.00 note and mortgage to Security Mortgage Investors. These notes and mortgages were in the corporate name of Bayshore 21, Inc. but were guaranteed by the petitioner and Marvin Glick. These guarantees contain language that the mortgagee may proceed directly against the guarantors in the event of default. There was evidence that utilization of Bayshore 21, Inc. to effectuate the loans from Commercial Trading Company and Security Mortgage Investors was required by said mortgagees because of the fact that the then prevailing interest rate levels were in excess of the noncorporate statutory interest limit. On August 23, 1973, a joint venture agreement was entered into between petitioner and Marvin Glick. This joint venture agreement provided that "The parties acknowledge that BAYSHORE 21, INC. has taken title to certain property as trustee for ZUCKERMAN-VERNON CORP. and MARVIN GLICK and, upon completion of the financing arrangements, will convey the property to ZUCKERMAN-VERNON CORP. and MARVIN GLICK, a fifty (50 percent) percent interest being conveyed to each party. The property that is the subject of this joint venture is the CARRIAGE HOUSE, located at 54th Street and Collins Avenue, Miami Beach, Florida, each party to this agreement having a fifty (50 percent) percent interest in said property." On August 27, 1973, title to the Carriage House was conveyed by quitclaim deed from Bayshore 21, Inc. to Marvin Glick and petitioner, each to have an undivided fifty percent interest. Minimal stamps were affixed to this document, which bore the notation "No documentary stamps are required on this Deed inasmuch as the Grantor took title solely as Trustee for the Grantees herein." Thereafter, the respondent Department of Revenue assessed the parties to this August 27, 1973 deed for the documentary stamp taxes due, based upon the $18,550,000.00 existing mortgages on the property at the time of the conveyance ($12,250,000.00 to Prudential, $5,000,000.00 to Commercial Trading Company and $5,000,000.00 to Security Mortgage Investors). The delinquent documentary stamp taxes were assessed in the amount of $55,649.70, and a penalty was assessed in a like amount, making the total amount due $111,299.40.
Recommendation Based upon the above findings of fact and conclusions of law, it is recommended that petitioner be assessed the taxes and penalties set forth In the proposed Notice of Assessment of Tax and Penalty under Chapter 201, Florida Statutes, dated April 23, 1975. Respectfully submitted and entered this 30th day of January, 1976, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Mr. Ed Straughn Executive Director Department of Revenue Room 102, Carlton Building Tallahassee, Florida 32304 Paul R. Lipton, Esquire 17071 West Dixie Highway North Miami Beach, Florida Harold F.X. Purnell, Esquire Assistant Attorney General The Capitol Tallahassee, Florida
The Issue The issue in this case is whether a tax on a warranty deed is an allowable property cost, as claimed in Petitioner’s Medicaid cost report.
Findings Of Fact Venice operates Sunset Lake, a licensed nursing facility that participates in the Florida Medicaid program as an institutional provider. AHCA is the agency responsible for administering the Florida Medicaid program. On or about June 1, 2005, Venice (or an affiliate, which need not be distinguished from Venice for purposes of this proceeding) purchased the nursing facility that is now known as Sunset Lake from Bon Secours-Venice Healthcare Corporation. Venice filed its initial Medicaid cost report with AHCA for the fiscal period ending December 31, 2005. The initial Medicaid cost report for a nursing facility is used to set the per diem rates at which the Medicaid program will reimburse the facility, both retroactively for the initial period of operations, and prospectively until the next cost report is filed and used to set a new per diem rate. AHCA contracted with an outside auditing firm to audit Venice’s initial cost report. The auditing firm produced an audit report, which identified proposed adjustments to Venice’s cost report. The audit report was reviewed by AHCA analyst Steven Diaczyk before it was finalized and sent to Venice. Venice initially contested 17 adjustments in the final audit report. Before the final hearing, Venice withdrew its challenge to 16 of the 17 adjustments. The only remaining dispute to be resolved in this proceeding is whether audit adjustment number four, which disallowed $49,540.00 of costs in the category of “Property Taxes – Real Estate,” should be reduced by $12,203.80. The disallowed $12,203.80 represents one-half of the tax assessed pursuant to section 201.02, Florida Statutes (2005),1/ on the warranty deed conveying the Sunset Lake real property (including the land, land improvements, and the building) to Venice. Venice claimed one-half of the tax on its cost report because that is the amount paid by Venice; the other half was paid by the seller. Venice contends that this tax is an ad valorem tax and/or a property tax,2/ which is an allowable property cost on the Medicaid cost report. AHCA contends that the tax on the warranty deed is an excise tax, not a property tax, and, therefore, not an allowable property cost. The audit report did not explain the reason for disallowing the $12,203.80 tax, as part of the $49,540.00 adjustment. Instead, the audit report explained the entire $49,540.00 adjustment as necessary to “disallow unsupported costs,” suggesting a lack of documentation. However, no non- hearsay evidence was offered at hearing to prove that Venice failed to give the auditors sufficient documentation of the costs disallowed in adjustment number four. At least with respect to the disallowed $12,203.80 item, sufficient documentation was offered at hearing to support the cost as an actual cost incurred by Venice. The question is whether the documented cost is allowable as an ad valorem tax or property tax, as Venice claims. Documentation for the $12,203.80 tax on the warranty deed is found in the buyer/seller closing statement and on the face of the warranty deed. The closing statement sets forth the total purchase price of $7,500,000.00, which is also the amount of a mortgage loan from Bank of America. The closing statement allocates the total purchase price to the land ($477,000.00), land improvements ($496,500.00), the building ($2,513,250.00), FFE--furniture, fixtures, and equipment ($992,250.00), and personal property ($3,021,000.00). The closing statement also shows a separate category called credits and/or prorations, to appropriately account for items accruing over the calendar year. The first line item in this category is for “Ad Valorem Taxes.” If ad valorem taxes were due for calendar year 2005, they would have been prorated. However, the amount is shown to be zero. As confirmed at hearing, no ad valorem taxes were due for the Sunset Lake property in 2005, because as of January 1, 2005, the property was owned by a not-for-profit entity, making the property exempt from ad valorem taxes. The second line item in this category, for “Non-Ad Valorem Assessments,” for which there was no exemption, shows a total amount for 2005 of $8,235.29, which was prorated to credit the buyer for $3,270.65. The closing statement proration had the effect of charging the seller with its share of the assessments for the part of the year prior to closing.3/ A separate category on the closing statement addresses “Recording Fees.” The first line item in this category is for “Transfer Tax-snf [skilled nursing facility].” The taxable amount is shown as $3,486,800.00. The tax of $24,407.60 is split equally between buyer and seller, with $12,203.80 charged to each. The next line is for “Stamp Tax on mtg. [mortgage].” The taxable amount is shown as $7,500,000.00, the amount of the mortgage loan. The tax of $26,250.00 is charged to the buyer. Another line item is shown for “Intangible Tax on mtg.” Again, the taxable amount is shown as $7,500,000.00, and the tax of $15,000.00 is charged to the buyer. The top right corner of the warranty deed conveying the Sunset Lake property contains the following printed or stamped text in the space marked “(Space reserved for Clerk of Court):” RECORDED IN OFFICIAL RECORDS INSTRUMENT # 2005117710 7 PGS 2005 JUN 01 05:01 PM KAREN E. RUSHING CLERK OF THE CIRCUIT COURT SARASOTA COUNTY, FLORIDA MMARSH Receipt#635187 Doc Stamp-Deed: 24,407.60 [Bar/Scan Code with instrument number] As Venice’s representative confirmed, the reference on the face of the warranty deed to “Doc Stamp-Deed: 24,407.60,” affixed by the clerk of the court in the official records entry, means that a documentary stamp tax on the deed in the amount of $24,407.60 was paid. Because the tax was split between buyer and seller, Venice actually paid $12,203.80. Although the closing statement shows that the tax at issue was called a transfer tax and categorized as a “recording fee,” and not an “ad valorem tax,” Venice contends here that the documentary stamp tax on the deed was an ad valorem property tax, because the tax was assessed on the value of the property. As Venice summarized its position: That irrespective of whether the transfer tax is called an excise tax, a doc stamp tax or any other type of tax, the fact that it is based solely on the value of the assets makes it an ad valorem tax, which is considered by the state of Florida in all cases under Medicaid cost reporting purposes [sic] as a property tax. (AHCA Exh. 3, p. 14). AHCA disagrees. AHCA contends that the documentary stamp tax on the deed is an excise tax, assessed on the consideration for the property transferred by the deed. The parties do agree that the documentary stamp tax rate, applied to either the value of the property or the consideration for the property, was 70 cents per $100.00.4/ The parties also agree that the “property” at issue, which was conveyed by the warranty deed, includes the land, land improvements, and the building. That being the case, it appears from the closing statement that the “taxable amount” used to determine the documentary stamp tax on the deed (referred to as the “transfer tax-snf”) was the sum of the purchase price allocations for the land ($477,000.00), land improvements ($496,500.00), and the building ($2,513,250.00).5/ The documentary stamp tax on the warranty deed was based on the consideration for the property stated in the closing statement.6/ Venice asserts that the documentary stamp tax was based on the “assessed value of the property (land, land improvements and the building) [of] $3,486.750.00[.]” (Venice PRO at ¶ 24, n. 1). However, Venice offered no evidentiary support for this assertion. The amount Venice calls the “assessed value” is actually the amount of the total purchase price allocated in the closing statement to the land, land improvements, and the building. In contrast, the “assessed value” for this property in 2005, according to the Sarasota County Tax Collector’s bill, was $3,724,300.00. The documentary stamp tax on the warranty deed was not based on the assessed value of the property. Venice also contends that subsequent action by the Department of Revenue supports Venice’s position that the documentary stamp tax on the deed was based on the value of the property and not on the consideration for the property. Venice offered in evidence portions of correspondence between representatives of Venice’s parent company with the Department of Revenue in 2008 that resulted in a determination that Venice owed additional documentary stamp tax on the Sunset Lake warranty deed. According to Venice, “the Department [of Revenue] did not agree with the value of assets that Venice had reported and paid taxes on.” (Venice PRO at ¶ 32). Contrary to Venice’s characterization, the portions of correspondence with the Department of Revenue in evidence confirm that the documentary stamp tax on the Sunset Lake warranty deed was based on the consideration for the real property (i.e., the land, land improvements, and the building). The Department of Revenue sought additional information from Venice to establish what the consideration was. The Department of Revenue “Official Request for Information” form asked for “Total Consideration (Purchase/Transfer Price)” for the property conveyed by warranty deed. The form completed on Venice’s behalf reported that the consideration was $3,486,750.00--the purchase price allocation in the closing statement to the land, land improvements, and the building. Along with the completed form, a letter of explanation on Venice’s behalf (with attachments not offered in evidence) went into great detail in an attempt to justify these purchase price allocations, and ended on the following note: We are hopeful that the enclosed documentation and the foregoing explanation of the purchase price allocations will provide sufficient information for the Department to determine that the correct amount of documentary stamp taxes was paid on each of the deeds, based in each case on the agreed consideration paid for the respective real estate assets. Thus, from the evidence offered by Venice, the focus of the Department of Revenue inquiry, as well as the Venice response to the inquiry, was entirely on the consideration paid for the property. The fact that the Department of Revenue ultimately determined that Venice owed more documentary stamp taxes on the warranty deed than was paid is not evidence that the tax was assessed on the “value” of the real property, as Venice argues. Instead, the material suggests that the Department of Revenue disagreed with what Venice contended was the total consideration and/or with Venice’s allocation of the total purchase price to the real property (the land, land improvements, and the building) and to the other assets acquired in the transaction, including furniture, equipment, and personal property. Venice also takes the position that the tax on the warranty deed is an allowable cost pursuant to two provisions in the federal Provider Reimbursement Manual (PRM), which is one of the sources used to determine allowable costs. First, PRM section 2122.1 provides the “general rule” that “taxes assessed against the provider, in accordance with the levying enactments of the several States and lower levels of government and for which the provider is liable for payment, are allowable costs.” Next, PRM section 2122.2 provides in pertinent part: Certain taxes . . . which are levied on providers are not allowable costs. These taxes are: * * * C. Taxes in connection with financing, refinancing, or refunding operations, such as taxes on the issuance of bonds, property transfers, issuance or transfer of stocks, etc. Generally, these costs are either amortized over the life of the securities or depreciated over the life of the asset. They are not, however, recognized as tax expense. Venice contends that the documentary stamp tax paid on the warranty deed must be allowed because it is a tax that meets the general rule in section 2122.1, and it is not an excluded tax under section 2122.2(C). The documentary stamp tax paid by Venice on the warranty deed satisfies the general elements of section 2122.1; AHCA does not contend otherwise. Instead, AHCA contends that the documentary stamp tax must be considered an excluded tax under section 2122.2(C). AHCA is correct that the documentary stamp tax on warranty deeds transferring real property is essentially a transfer tax. However, it is not a tax in connection with financing, refinancing, or refunding operations. An example of such a tax would be the documentary stamp tax that Venice paid on the mortgage on Sunset Lake, because it was a tax in connection with the financing for the property. Venice correctly points out that, grammatically, section 2122.2(C) suggests that the only taxes excluded under that subsection are taxes in connection with financing, refinancing, or refunding operations. The use of the phrase “such as” suggests that everything that follows that phrase must be considered an example of what precedes the phrase. AHCA acknowledges that consideration of the grammatical structure of section 2122.2(C) alone would support Venice’s interpretation. However, AHCA’s expert testified, reasonably and without contradiction, that Venice’s interpretation would render the phrase “property transfers” meaningless. As AHCA’s expert explained, a tax on a property transfer is not a tax on financing, refinancing, or refunding operations. Therefore, despite the grammatical structure, taxes on property transfers must be considered a separate type of excluded tax under section 2122.2(C). As further support for this interpretation, AHCA’s expert pointed to the second sentence, providing that the excluded costs referred to in the first sentence “are either amortized over the life of the securities or depreciated over the life of the asset.” AHCA’s expert explained that taxes on financing, refinancing, or refunding operations would all be amortized, whereas taxes on property transfers would be depreciated over the life of the depreciable assets transferred (i.e., the land improvements and the building). Venice relies solely on the grammatical structure of section 2122.2(C), offering no response to AHCA’s reasoning for interpreting the subsection in a way that is contrary to the meaning suggested only by grammatical structure. Venice did not explain how a tax on property transfers could be considered a tax on financing, refinancing, or refunding operations (so as to give meaning to the phrase “property transfers”), nor did Venice explain when taxes on financing, refinancing, or refunding operations would be depreciated over the life of the asset (so as to give meaning to that phrase in the second sentence).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a Final Order disallowing $12,203.80 claimed as a property tax expense in Venice’s initial Medicaid cost report. DONE AND ENTERED this 25th day of July, 2014, in Tallahassee, Leon County, Florida. S ELIZABETH W. MCARTHUR Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 25th day of July, 2014.
Findings Of Fact Stewart executed a mortgage note dated February 3, 1972 in the amount of $2,943,400 payable to City National Bank of Miami. This note was secured by a mortgage executed by Stewart as mortgagor to City National Bank of Miami as mortgagee of same date. This mortgage was recorded on February 8, 1972 at which time documentary stamp tax and intangible taxes were paid. The note was designated a mortgage note in the face amount of $2,943,400 and taxes paid were predicated on this sum. The mortgage provided, inter alia, in item 24 thereof: "That the funds to be advanced herein are to be used in the construction of certain improvements on the land herein described, in accordance with a building loan agreement between the mortgagor and the mortgagee dated February 8, 1972, which building loan agreement (except such part or parts thereof as may be inconsistent herewith) is incorporated herein by reference to the same extent and effect as if fully set forth and made a part of this mortgage; if the construction of the improvements to be made pursuant to said building loan agreement shall not be carried on with reasonable diligence, or shall be discontinued at any time for any reason other than strikes or lockouts, the mortgagee, after due notice to the mortgagor or any subsequent owner, is hereby invested with full and complete authority to enter upon said premises, employ watchmen to protect such improvement from depredation or injury, and to preserve and protect the personal property therein, and to continue any and all outstanding contracts for the erection and completion of said building or buildings, to make and enter into any contracts and obligation wherever necessary, either in its own name or in the name of the mortgagor, and to pay and discharge all debts, obligations, and liabilities incurred thereby. All such sums so advanced by the mortgagee (exclusive of advances of the principal of the indebtedness secured hereby) shall be added to the principal of the indebtedness secured hereby and shall be secured by this mortgage and shall be due and payable on demand with interest at the rate of the same rate as provided in the note secured hereby, but no such advances shall be insured unless same are specifically approved by the Secretary of Housing and Urban Development acting by and through the Federal Housing Commissioner prior to the making thereof. The principal sum and other charges provided for herein shall, at the option of the mortgagee or holder of this mortgage and the note secured hereby, become due and payable on the failure of the mortgagor to keep and perform any of the covenants, conditions, and agreements of said building loan agreement. This covenant shall be terminated upon the completion of the improvements to the satisfaction of the mortgagee and the making of the final advance as provided in said building loan agreement;" Prior to the completion of the project for which the note and mortgage were executed and before the full amount stated in the note had been advanced Stewart went into receivership. No advances were made under the note and mortgage subsequent to December, 1974, and only $1,935,378 had been disbursed to Stewart prior to foreclosure. On March 17, 1976 Stewart requested a refund in the amount of $1512 for documentary stamp taxes and $2016 for intangible taxes paid on the difference between $2,943,400 and $1,935,378.29. By letters dated June 16 and 17, 1976, each of the refund requests was denied by the Comptroller on the ground advanced by Department of Revenue that the claims were barred as not being timely filed. Vanguard executed a note in the amount of $2,000,000 payable to the Chase Manhattan Bank secured by a building loan mortgage from Vanguard as mortgagor to Chase as mortgagee. This mortgage was recorded and documentary stamp taxes and intangible taxes were paid on April 19, 1973. Other than the amount of the note and the total advanced prior to Vanguard going into receivership, the basic facts were the same as in Stewart. At the time of the last payment in May, 1975 Vanguard had received $1,388,008 of the $2,000,000 evidenced by the note. Vanguard's application for refund of $1224 for intangible taxes paid was denied by the Comptroller for the same reason Stewarts was denied. Here the application dated April 19, 1976 was postmarked in Miami on April 20, 1976 and received by Respondent on April 22, 1976. Worthington executed a building loan note dated October 25, 1972 in the amount of $2,750,000 payable to Trustees of C. I. Mortgage Group which was secured by a mortgage loan of same date. Worthington also went into receivership in December, 1974 after $1,962,750 had been advanced. Application for refund of documentary stamp taxes in the amount of $1180.80 and intangible taxes in the amount of $1574.50 filed March 17, 1976 was denied by the Comptroller on the grounds that the application was not timely filed. All of the above loans, for which the mortgages were recorded, were construction loans and provided for periodic payments to the mortgagor as the construction progressed. Provided the mortgagor complied with the terms of the building agreement the mortgagee was legally required to advance funds when due. In determining valuation for the purpose of computing the intangible taxes due clerks of the circuit court follow 199.122(7) F.S. which provides that obligations for payment of money secured by a mortgage shall be valued at the principal amount of indebtedness evidenced by such transactions. Accordingly in the cases at hand the clerks would have refused to record the mortgages unless the intangible taxes and documentary stamp taxes computed using the principal amount of the obligation were paid. An application for refund of the intangible tax representing the difference between the face amount of the mortgage to secure future advances, and the amount advanced, will be disapproved by the Department of Revenue so long as advances on the face amount of the loan are still being made.
Findings Of Fact The facts in this case are undisputed. On April l6, 1976, petitioner Arthur J. Coyle and his wife Katie Coyle, became the sole shareholders of Sara- Wolf, Inc., a Florida Corporation, whose assets consisted of an apartment building in Miami Beach, Florida. Thereafter, the Coyles decided to transfer the corporate assets to themselves as individuals. They were advised by their attorney that, in view of the 1975 decision of the First District Court of Appeal in Florida Department of Revenue v. DeMaria, 321 So 2d 101 (Fla. 1st DCA 1975) in a similar factual situation, no state documentary stamp tax would be due on the transaction. Therefore, relying upon that judicial decision, petitioner and his wife proceeded to execute a quit claim deed of the corporate real estate to themselves on May 13, 1976, and file the same in the public records of Dade County, Florida, on May 18, 1976, with payment of only nominal documentary stamp tax. The decision of the District Court of Appeal had been stayed by the Supreme Court on December 8, 1975. Subsequent to the decision of the Supreme Court in the DeMaria case on October 14, 1976, which quashed the lower court's decision, respondent issued a notice of proposed assessment of documentary stamp tax in the amount of $526.50 based on a taxable consideration of $175,500, less 30 cents tax paid, for a total tax due of $526.20 plus a like amount as a penalty, and $42.00 in interest, for a total asserted liability of $1,094.40. (Testimony of petitioner, Exhibits 1-3)
Recommendation That the proposed assessment of $1,094.40 against petitioner Arthur J. Coyle and Katie Coyle is valid and should be enforced. DONE and ENTERED this 31st day of May, 1977 in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Robert A. Glassman, Esquire 903 Biscayne Building 19 West Flagler Street Miami, Florida 33130 Edwin J. Stacker, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304
Findings Of Fact By warranty deed dated July 9, 1973, Floyd L. and Michael Lewis conveyed the fee simple title to certain realty in North Miami Beach to Petitioners Eugene J. Howard and Herbert Seidel. The purchase price for the property was $405,000. The property sold consisted of a twenty-two (22) unit apartment building with twenty (20) furnished apartments and included storage shed, a pool, patio and dock furniture. The closing statement signed by the sellers and purchasers stated: "Florida documentary stamps - on deed - $1,215.00, Florida documentary surtax - on deed - $132.20." $1,347.20 was credited to the Petitioners Howard and Seidel. Petitioners actually paid $10.85 surtax and $132.20 documentary tax. The 1974 tax assessment of the Dade County Property Appraiser for the property was $241,769.00 realty and $14,500.00 for the personalty. Petitioner contends: That part of the purchase price was applicable to -personal property. That the Hearing Officer should make an allocation of the realty included and an allocation for the personalty included. That the Petitioners believe they are entitled to the equitable defense of laches in that the Respondent did not advise Petitioners of the possible error of miscalculation until approximately two years had passed. That if the stamp tax is found to be due and if a penalty is included, the penalty is "excessive penalty" under the Eighth Amendment of the Constitution of the United States of America, and Article I, Section 17, of the Florida Constitution. Respondent contends: That there was an agreement between the Parties, in a signed document that $1,215 in documentary stamps and $132.20 in surtax stamps, reflecting the actual consideration paid for the realty under consideration, would be affixed to the conveyance. That Petitioners failed to fulfill such a an agreement and affixed $132.20 in documentary stamps and $10.85 in surtax stamps to the deed. . That the Department is entitled to the delinquent taxes plus penalty. That the assessment is dated July 9, 1975 and a three- year statute of limitations is applicable. The Hearing Officer further finds: The purchase price for the property under consideration was $405,000. Documentary stamps required on such a purchase were $1,215.; that stamps actually paid were in the amount of $132.20, that $10.85 was actually paid and still due and owing is $121.35. That the Petitioners as well as the Sellers were aware of the proper amount of tax due and signed a receipt reflecting the monies allocable for documentary and surtax stamps. That the Petitioners failed either intentionally or negligently to pay the proper amount of documentary and surtax stamps at the time of recording the deed.
Recommendation Assess the documentary stamps and the documentary surtax against Petitioners together with applicable penalties. DONE and ORDERED this 9th day of July, 1976, in Tallahassee, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Eugene J. Howard, Esquire 2212 Biscayne Blvd. Miami, Florida 33137 Harold F. X. Purnell, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304
Findings Of Fact On May 2, 1978 the Exchange Bank of Osceola and Tomlinson Motors, Inc., (Tomlinson) entered into a financing arrangement known as a floor plan agreement. In essence the agreement provides that the bank establish a line of credit in the amount of $100,000.00 which is represented by a promissory note in that amount. It will be referred to below as the "master note." Tomlinson then drew against that credit line as necessary to purchase used cars. These draws were secured by trust receipts under which the bank owned each car, but allowed Tomlinson to have possession of them until such time as they were sold. At the time of sale Tomlinson then paid back against the master note the amount of the initial draw needed to purchase the car. Once the draw was returned to the bank it was again available to be drawn down again for later car purchases; provided however, that at no time could the total outstanding draws exceed $100,000.00. The trust receipts which Tomlinson periodically executed had attached to them a detachable promissory note form. Each time Tomlinson signed a trust receipt he also executed the note for the amount of the particular draw he was making to purchase cars. For example, if he bought four cars and paid a total of $15,900.00 for them, he would sign the note form in the amount of $15,900.00. No evidence was produced on what was done with each detachable note form after the draw corresponding to that form was paid back to the bank. The execution of the detachable note form was not required of Tomlinson by the bank. The master note between the bank and Tomlinson had the proper amount of documentary stamps affixed for a $100,000.00 promissory note. None of the detachable notes had any documentary stamps affixed. The Department of Revenue has proposed assessing a stamp tax of $1,592.06 including penalties on the sum of all the detachable notes less credit for the stamps affixed to the $100,000.00 master note. Pursuant to the Dealer Floor Plan Agreement 1/ the bank had the authority to fill in the blanks on any of the forms such as the detachable notes, necessary to give effect to the Floor Plan Agreement. All of the detachable note forms were executed as follows in this example: PROMISSORY NOTE March 6, 1979 On demand, the undersigned (jointly and severally, if more than one) promises to pay to the order of Fifteen Thousand Nine Hundred and no/100 DOLlARS ($15,900.00) with interest at percent per annum after date. The makers, guarantors, indorsers and any other parties to this note hereby waive presentment, demand, protest and notice of dishonor and protest, and hereby agree that extension or extensions of time of payment of this note or any installment or part thereof may be made before, at, or after maturity by agreement with any maker without notice to and without releasing the liability of any other maker, guarantor, indorser, or other party, and all thereof waive the right to be sued in the county of their residence, and jointly and severally agree to pay all costs of collection, including reasonable attorney's fees, and all makers, guarantors, indorsers and other parties consent that any security for this note may be exchanged or surrendered at any time and from time to time without notice. Tomlinson Motors, Inc.(SEAL)By /s/ Billy E. Thomlinson (Owner, Officer or Partner --state which) Trustee) On none of them was the name of the payee filled in.
Recommendation Based on the foregoing findings of fact and conslusions of law, it is RECOMMENDED: That the Department of Revenue enter a final order determining that the excise tax on documents imposed by Section 201.08, Florida Statutes (1979) is not applicable to the executed promissory note forms attached to the trust receipts in this case. DONE and RECOMMENDED this 22nd day of October, 1981, in Tallahassee, Florida MICHAEL P. DODSON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of October, 1981.
Findings Of Fact Stipulated Facts Findings contained in paragraphs 1-28, were stipulated to by the parties. Gary D. Miller and Katherine A. Miller made a note to Southeast Bank (Southeast) dated March 27, 1990, in the stated amount of $80,000 (the Note). Gary D. Miller and Katherine A. Miller (the Millers) executed a Future Advance Note, Modification and Cross-Collateralization Agreement (the Mortgage) in favor of Southeast dated March 27, 1990, and recorded in Volume 4178, page 2981, of the official records of Orange County, Florida. Southeast was doing business and in good standing on March 27, 1990. The Note was consolidated with a promissory note made by the Millers dated June 7, 1988 in the stated amount of $350,000 and replaced by a Consolidated Replacement Note dated April 9, 1991, in the stated amount of $371,250 (the Consolidated Note). The Consolidated Note was defined and secured in a Mortgage Modification Agreement between Southeast and the Millers dated April 9, 1991 and recorded at volume 4278, page 0065 of the official records of Orange County, Florida. Southeast was doing business and in good standing on April 9, 1991. First Union National Bank of Florida (First Union) is the owner and holder of the Note, the Consolidated Note and the Mortgage identified in paragraphs 1,2, and 4 above. The Department timely assessed documentary stamp taxes on the Note. The assessment covers the Consolidated Note. There is no evidence that documentary stamps are attached or affixed to the Note, the Consolidated Note or the Mortgage. No documentary stamp tax were paid on the Note, the Consolidated Note or the Mortgage. The Office of the Comptroller of the currency declared Southeast insolvent and appointed the FDIC as receiver for Southeast on September 19, 1991. The FDIC, as receiver, became the owner and holder of all of the promissory notes and mortgages formerly held by Southeast. The FDIC (as Receiver of Southeast, and corporately) and First Union entered into an Assistance Agreement dated September 19, 1991, under which the FDIC, as Receiver, sold and assigned to First Union the Consolidated Note and the Mortgage. The FDIC, as Receiver, executed an Assignment of Mortgage, subsequently filed in volume 588, page 589, of the official records of Orange County, Florida. First Union is not the same entity as Southeast (by name or otherwise). First Union purchased no portion of the stock ownership of Southeast, rather First Union purchased only those assets and liabilities of Southeast detailed in the Assistance Agreement. Under terms of the Assistance Agreement, First Union expressly assumed only certain specified liabilities. First Union did not expressly assume any liabilities of Southeast relating to payment of taxes under Chapter 201, Florida Statutes. Under the terms of the Assistance Agreement, the FDIC and First Union contractually agreed that the FDIC would indemnify First Union for "costs, losses, liabilities, expenses, judgments, fines and amounts paid in settlement reasonably incurred in connection with claims against" First Union based upon a liability of Southeast that was not expressly assumed by First Union. A claim entitling First Union to indemnification from the FDIC under the terms of the Assistance Agreement is a claim for a liability for "taxes" of Southeast. The definition of "taxes" in the Assistance Agreement includes stamp taxes imposed by states, including interest and penalty. By a Notice dated January 5, 1995, Respondent issued an Official Request for Information to "Southeast Bank, National Association, First Union Bank/Barbara H. Smith." On March 1, 1995, Respondent issued to "Southeast Bank, NA, First Union Bank, N.A." a Notice of Intent to Make Documentary Stamp Tax and Discretionary Surtax Audit (the Notice of Audit). The Notice of Audit was received by First Union on March 22, 1995. First Union timely responded to the Notice of Audit by letter dated May 31, 1995, stating that "any transaction prior to September 19, 1991, which might precipitate liability becomes the responsibility of the FDIC." Respondent treated the May 31, 1995 letter of First Union as a protest of the audit. On June 20, 1995, Respondent issued to "Southeast Bank, N.A.-First Union Bank, N.A." a Notice of Proposed Assessment of $150.00 representing tax and interest on the original $80,000 note of March 27, 1990, or an assessment of tax and interest on the Consolidated Note. Southeast Bank remains under the receivership of the FDIC. Additional Facts FDIC's sale of the Note and Consolidated Note to First Union under terms of the September 19, 1991 Assistance Agreement imbued First Union with ownership rights inclusive of the right to receive payments of principal and interest on the Note and Consolidated Note, as well as the right to foreclose on the makers of the Note and Consolidated Note for nonpayment. Neither the Note or Consolidated Note qualify for exemption from documentary stamp taxes levied pursuant to provisions of Chapter 201, Florida Statutes. Documentary stamp taxes constitute an excise tax on documents, as opposed to a tax on the underlying transaction.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered upholding Respondent's full assessment of tax and penalty against Petitioner. DONE and ENTERED in Tallahassee, Florida, this 25th day of June, 1996. DON W. DAVIS, 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 25th day of June, 1996. APPENDIX In accordance with provisions of Section 120.59, Florida Statutes, the following rulings are made on the proposed findings of fact submitted on behalf of the parties. Petitioner's Proposed Findings Petitioner's proposed findings (other than the 28 paragraphs of stipulated findings of fact) consisted of seven paragraphs denominated by letters A-G. No citation to the record was included in these proposed findings. Accordingly, the proposed findings, while reviewed and addressed to the extent possible by the foregoing findings of fact, are rejected. Respondent's Proposed Findings 1.-28. Stipulated facts adopted. 29.-32. Adopted, although not verbatim. COPIES FURNISHED: William W. Gallogly, Esquire First Union Corporation Legal Division 225 Water Street Jacksonville, Florida 32202 Scott M. Covell, Esquire Dept. of Legal Affairs The Capitol - Tax Section Tallahassee, Florida 32314-6668 Linda Lettera, Esquire Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
Recommendation Based on the foregoing findings of fact and conclusions of law the Hearing Officer recommends that the office of the Comptroller and the Department of Revenue honor the claims for refund of the documentary stamp taxes in the amount of $1,027.50 and the surtax stamp taxes in the amount of $376.75, refunding these amounts to the Petitioner. DONE AND ORDERED this 12th day of September, 1978 in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Maxie Broome Assist Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 G. Kristin Delano, Esquire Post Office Box 180 St. Petersburg, Florida 33731
