The Issue There are two issues raised in this case: Whether the transaction evidenced by the written instrument is taxable-under provisions of Sections 201.08, F.S., 201.01 and 201.08(1), F.S.; and Whether the amendment to the note and mortgage involved in this case is a promissory note taxable pursuant to Section 201.08(1), F.S.
Findings Of Fact There are two issues raised in this case: Whether the written document which evidences the transaction is taxable under the provisions of Sections 201.01 and 201.08(1), F.S.; and Whether the amendment to the note and mortgage involved in this case is a promissory mote or written obligation to pay money and taxable pursuant to Section 201.08(1), F.S. The facts are that on February 28, 1974, the Petitioners, except for Joe R. Hughes, III, and W. Comer Cherry, executed a promissory mote to Lewis State Bank for $405,000 with interest at 10 percent per annum, payable monthly, beginning March 1, 1974, with the entire amount of the principle ($405,000) due on or before February 28, 1975. Said Petitioners executed a mortgage to Lewis State Bank as security for said loan. On April 8, 1975, the due date of the principle was extended to August 28, 1975. The Lewis State Bank then assigned the note and mortgage to Thomas County Federal on July 7, 1975. On July 2 and July 7, 1975, the Petitioners including Hughes and Cherry, but not Rainey, signed the instrument in Tallahassee, Florida, upon which the tax being challenged is assessed. Rainey took the instrument which appears on its face to be an Amendment to the aforementioned Note and Mortgage dated February 28, 1974, to Thomas County Federal Savings and Loan, Thomas County, Georgia. The Amended Note and Mortgage was signed by Rainey and accepted by Thomas County Federal as assignee of said original note and mortgage in Thomas County, Georgia, on July 7, 1975. The other obligors who were jointly and severally liable had signed in Florida. See R-16-21. The purpose of the amendment to the note and mortgage was to refinance the Jefferson Towers Apartments project located in Tallahassee, Florida. See R-14. Thereafter, the money was tendered under the Amendment to Note and. Mortgage, in Georgia, by Thomas County Federal to the agent of the borrowers [Petitioners] Rainey. R-14. The Petitioners, on July 8, 1975, in Leon County, recorded the amendment to note and mortgage, the only instrument reflecting the new outstanding obligation of $412,000 and the only instrument setting forth the Petitioner's promise to pay this new obligation in O. R. Book 724, page 24, et. seq. The Petitioners affixed documentary stamp taxes in the amount of $10.50 on the amendment to the note and mortgage. (See R-21) Whether the instrument entered into between the Petitioners and Thomas County Federal is considered a new obligation or an amendment of the assigned note and mortgage, the essential factors are that the execution and delivery of the instrument, and exchange of the funds therefor occurred in Georgia. Based on the foregoing facts, the Department of Revenue finds as a matter of law that: To be taxed there must be a Florida transaction evidenced by a promissory note or written obligation to pay money. Sec. 201.08(1), F.S. The Amendment to Note and Mortgage involved in this case was made, signed and executed, in the State of Florida, save one signature of the multiple obligors, who were jointly and severally liable and the loan was used in Florida to refinance a Florida project which had been originally financed in Florida. The Amendment to Note and Mortgage, the only instrument reflecting the outstanding obligation of $412,000 and evidencing the Petitioners' promise to pay this new obligation, was recorded in Leon County, Florida, and has all essential factors of a Florida transaction percent thus subject to documentary stamp tax provided for in Sections 201.01 and 201.08(1), F.S. The Amendment to Note and Mortgage clearly evidences a transaction between the Petitioners and Thomas County Federal pursuant to which the Petitioners are obligated to pay suns of money to Thomas County Federal. Such a written obligation to pay money may be exempt if it meets the criteria of Sec. 201.09, F.S. The document in question does not meet the criteria of Sec. 201.09, F.S., because it did not extend or continue only the identical contractual obligations of the original promissory note but there was a substantial change in the principle amount. No documentary stamps have been affixed to the document which was recorded nor is there any notation on the document that said stamps were placed on any other document, except affixing of documentary stamps in the amount of $10.50; therefore, the document in question is subject to tax under Sec. 201.08(1), F.S., in the amount of $607.50 plus penalty at $607.50. Section 201.08(1) and Section 201.17(2), F.S. Regarding the issue of whether the document would have been taxable as an amendment to the original note and mortgage, the Department concurs with the findings of the Hearing Officer that the document does evidence a transaction in which the taxpayer would have been obligated to pay money to the lending institution. Because the principal amount was increased from $406,000 to $412,000 there was a substantial change in principal amount. Therefore, the exemption provision of Section 201.09, F.S., would not apply.
Conclusions The assessment of the Department of Revenue in the amount of $607.50 under Section 201.08(1), F.S., for delinquent documentary stamp taxes on the amendment to Note and Mortgage and the assessment for penalty under Section 201.17(2), F.S., in the amount of $607.50 are valid. CERTIFICATION I certify that the foregoing is the Final Order of the Department of Revenue adopted by the Governor and Cabinet on July 20, 1976. J. Ed Straughn, Executive Director State of Florida Department of Revenue Room 102, Carlton Building Tallahassee, Florida 32304 Dated this 21st day of July, 1976
Recommendation The Hearing Officer recommends based on the foregoing findings fact and conclusions of law, than neither the tax or penalty be assessed. Done and ordered this 10th day of May, 1976, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Joseph C. Mellichamp, III, Esquire Assistant Attorney General Attorney for Respondent Department of Legal Affairs The Capitol Tallahassee, Florida 32304 Edgar M. Moore, Esquire Attorney for Petitioner Smith and Moore, P.A. P.O. Box 1169 Tallahassee, Florida 32302 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF REVENUE I. RAINEY, JR., et al., Mortgagors; THOMAS COUNTY FEDERAL, Thomasville, Georgia, Mortgagee, Petitioners, vs. CASE NO. 75-1899 DEPARTMENT OF REVENUE, Respondent. /
The Issue By this petition, American Foam Rubber Distributors, Inc. (AFRD) and Edward Rothbard seek to have the Department of Revenue's assessment for documentary stamp tax and penalties on a transfer of real property by quit claim deed from Edward Rothbard to AFRD set aside. Petitioners contend that the transfer was without consideration and therefore nontaxable under sec. 201.02, F.S. , while Respondent contends that consideration flowed to the grantor by virtue of the grantee making the mortgage payments; and therefore, documentary tax stamps were due on the deed of conveyance computed on the amount of the mortgage at the time of transfer. One witness testified in behalf of Petitioners and four exhibits were admitted into evidence. From the pleadings, interrogatories and evidence presented at the hearing, the facts are largely undisputed and are as follows:
Findings Of Fact Edward Rothbard owns 100 percent of the outstanding stock of AFRD and he has been the sole shareholder and chief executive officer of the company since the company s inception in 1962. On March 9, 1973 the Seaboard Coastline Railroad (SCL) entered into an agreement with AFRD to sell a tract of land in Miami to the latter at an agreed price of $116,978.00 with certain conditions. The principal condition was that the grantee erect a warehouse on the property within one year from the date of the transfer. By deed dated August 23, 1973 the property was conveyed by SCL to Edward Rothbard rather than as per the contract. This deed was apparently delivered in late October, 1973 and the proper documentary stamp tax was paid on this transaction. Mr. Rothbard's testimony that the sole reason for taking the property in his name was to expedite the transaction was not rebutted. In exhibits 1 and 2 copies of letters from SCL dated September 21 and 26, 1973, SCL referred to Rothbard as nominee of AFRD to be grantee of the property. Exhibit 4, the title page of an interim title insurance binder, indicates that the title insurance policy on the property purchased from SCL was intended to be in the name of AFRD. In August, 1974 the building erected on the site for the use and benefit of AFRD was completed and Edward Rothbard mortgaged the property to secure a note in the amount of $550,000.00. His wife also executed the note and mortgage. AFRD occupied the building in September, 1975 and made all mortgage payments to the mortgagee including the first payment. By quitclaim deed executed February 26, 1975 Edward Rothbard conveyed the property here involved to AFRD subject to the mortgage. Minimum documentary tax stamps were placed on this deed. On February 26, 1975 the outstanding balance due on the mortgage was $543,969.59.
Findings Of Fact Petitioner Kenneth Blume, an unmarried man, purchased real property in his name on December 19, 1988. Petitioner Kenneth Blume obtained a mortgage on the property in his own name with PNC Mortgage Servicing Company. Petitioner Kenneth Blume married Petitioner Tina Blume on November 3, 1990. Thereafter, Petitioner Kenneth Blume contacted a title company, Advance Title, Inc. to refinance the property and transfer the property from himself, as sole owner, to himself and his wife, Petitioner Tina Blume. On June 19, 1992, as part of the refinancing transaction, Petitioner Kenneth Blume transferred his individual mortgage with PNC Mortgage Servicing Company to Foundation Financial Services, Inc. which paid off Petitioner Kenneth Blume's original mortgage. On June 19, 1992, Petitioner Kenneth Blume gave Petitioner Tina Blume a legal interest in the property by transferring half of the encumbered property to her by quit claim deed. Petitioner Kenneth Blume executed the deed in the presence of Cheryl Scott, a notary public and an employee of Advance Title, Inc. Said deed lists Petitioner Kenneth Blume as grantor and Petitioner Kenneth Blume and his wife, Petitioner Tina Blume, as grantees. On June 19, 1992, as part of the refinancing transaction, Petitioners created a new first mortgage on the subject property in favor of Foundation Financial Services, Inc. This mortgage is the obligation of both Petitioners. The quit claim deed was prepared by Advance Title, Inc. on Petitioners' behalf. The quit claim deed showed that the consideration paid for the transfer of the encumbered property was $10. On June 24, 1992, Advance Title, Inc. went to the Clerk of the Circuit Court's Office to record the quit claim deed. As a condition precedent to the recordation of any deed transferring an interest in real property, Section 201.022, Florida Statutes, requires that the grantor, grantee, or agent for the grantee, execute and file a return with the Clerk of the Circuit Court. The return is identified as a Form DR-219, Return for Transfer of Interest in Real Property. On June 24, 1992, Advance Title, Inc. filled out and signed the Form DR-219, Return for Transfer of Interest in Real Property, as the agent of Petitioners. Advance Title, Inc., as Petitioners' agent, did not disclose the full amount of consideration on Form DR-219 as required by question 3. Instead, Advance Title, Inc. wrote that the property was sold for $10. Advance Title, Inc. did not disclose the extinguished or refinanced mortgage on Form DR-219. In response to the question whether the sale was financed, Advanced Title, Inc. did not check the "yes" box on Form DR-219. Form DR-219 defines the word "consideration", in pertinent part, as follows: the purchase price of the property or the total amount paid or to be paid for the transfer of any interest in real property. Consideration includes: cash; new mortgages placed on the property to finance all or part of the purchase; existing mortgages on the property either assumed or taken subject to; mortgages that are cancelled, satisfied or rendered unenforceable, settled by the sale or transfer or in lieu or foreclosure . . . . This definition is consistent with the Legislature's definition of consideration set forth in Section 201.02(1), Florida Statutes (1991), applicable here. Advance Title, Inc., as Petitioners' agent, stated on Form DR-219 that documentary stamp tax in the amount of $.60 was due on the subject transfer of interest in real property. On June 24, 1992, Advance Title, Inc. presented the quit claim deed to the Clerk of the Circuit Court for recordation together with the Form DR-219. The Clerk recorded the quit claim deed and collected $.60 in documentary stamp tax based on information that Advance Title, Inc. provided on the Form DR-219. The Clerk did not tell Advance Title, Inc. or Petitioners that additional documentary stamp taxes were due on the transfer. Respondent conducted a routine audit of the Clerk's records and determined that additional documentary stamp taxes were due on the deed transferring an interest in the encumbered property to Petitioner Tina Blume. The record contains no competent substantial evidence to show that Petitioners fall within an exception to or exemption from paying the additional documentary stamp tax in question here. Moreover, there is no competent persuasive evidence that an agent of the state of Florida or Santa Rosa County misrepresented a material fact on which Petitioners relied to their detriment. Petitioners have not met their burden of proving by a preponderance of the evidence that they do not owe additional documentary stamp taxes on the real estate transaction at issue here.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is recommended that Respondent enter a Final Order upholding its assessments as revised in a Notice of Reconsideration dated January 9, 1995, of documentary stamp tax, plus applicable interest and penalties against Petitioners Kenneth and Tina Blume. RECOMMENDED this 23rd day of October, 1995, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD, Hearing Officer 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 23rd day of October, 1995. APPENDIX The following constitutes the undersigned's specific rulings pursuant to Section 120.59(2), Florida Statutes, on all proposed findings of fact submitted by the parties to this case. Petitioners' Proposed Findings of Fact Petitioners' proposed recommended order for the most part is a memorandum of law and does not designate proposed findings of fact. However, the undersigned rules as follows on statements of fact contained within Petitioners' memorandum: Accept that Petitioner Kenneth Blume chose to sign the quit claim deed. No competent persuasive evidence regarding the Clerk of the Circuit Court's directions to Advance Title, Inc. or Petitioners. Uncorroborated hearsay evidence. Accept that Petitioners were not aware of Respondent's hotline service at the time of the conveyance; however, irrelevant. Reject that Petitioners made prudent and reasonable attempts to learn the requirements of Section 201.02, Florida Statutes. Petitioners had constructive notice of the published statutes and rules which were in effect at the time of the conveyance. Reject that the "system" deceived Petitioners. No competent persuasive evidence to support this fact. Reject that the "system" or "state" failed to disclose the law controlling taxes on real estate transactions. Applicable statutes and rules read together with the definition of consideration set forth on the Form DR-219 constitute sufficient notice to Petitioners. The "system" or "state" did not draft the language in the quit claim deed; therefore, the state was not required to include any language relating to the cost of the transaction. The Form DR-219 included a definition of consideration which is consistent with the language in the applicable statutes and rules. Reject that the state added new terms or changed the terms of the agreement memorialized in the quit claim deed. The state was not a party to the agreement between Petitioners. Reject that the system failed to inform Petitioners of "all" the terms in the contract as "offered" by the state. Respondent's assessment does not involve a contractual relationship between Respondent and Petitioners with the Respondent as a "seller" and Petitioner Kenneth Blume as a "buyer." Respondent's Proposed Findings of Fact The undersigned accepts the substance of Respondent's Proposed Findings of Fact 1-28 as modified in Findings of Fact 1-23 of this Recommended Order. COPIES FURNISHED: Nancy Francillon, Esquire Mark T. Aliff, Esquire Office of the Attorney General The Capitol - Tax Section Tallahassee, FL 32399-1050 Kenneth and Tina Blume 159 W. 29th Court Fayetteville, AR 72701 Linda Lettera, Esquire Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100
Findings Of Fact 1. After an audit, the Department issued a Notice of Proposed Assessment (‘NOPA’) to Dever, Inc. (“Dever”) on April 7, 2009, finding Dever liable for additional documentary stamp taxes, plus interest. 2. Dever informally protested the Department’s NOPA as permitted by Department rules, and the Department issued a Notice of Decision on March 25, 2010, and, subsequently, a Notice of Reconsideration on July 23, 2010. The Notice of Reconsideration set forth the Department's final position regarding. the documentary stamp taxes assessed against Dever. Filed November 1, 2011 4:14 PM Division of Administrative Hearings © 3. The Notice of Reconsideration included a section titled “Taxpayer Appeal Rights,” which explained that the Notice of Reconsideration constituted the final decision of the department, prior to court action or administrative proceedings, and that, pursuant to Section 72.011, Florida Statutes, no court action or administrative proceeding could be brought to contest the assessment after sixty (60) days from the date of the assessment. This section further stated, in regard to any request for administrative hearing, Pursuant to Sections 72.011, 120.569, 120.57, and 120.80(14), F.S., and Rule Chapter 12-6, F.A.C., you may contest the assessment in an administrative forum by filing a _ petition for a Chapter_120 administrative hearing with the Department of Revenue, Office of General Counsel, Post Office Box 6668, Tallahassee, FL 32314-6668. THE PETITION MUST BE RECEIVED BY THE DEPARTMENT WITHIN SIXTY (60) DAYS OF THE DATE OF THIS NOTICE OF RECONSIDERATION. . . . The requirements of Section 72.011(2) and (3)(a), F.S., are jurisdictional for any action contesting an assessment or refund denial under Chapter 120, F.S. See id. at 5. (capitalization in original). 4. Dever did not file a petition or court action within 60 days of the July 23, 2010, Notice of Reconsideration, to contest the tax assessment. On or about January 18, 2011, the Department issued a Notice of Intent to Levy (“Intent to Levy”) on certain bank accounts held by Dever. 5. On or about January 21, 2011, Dever filed a one-page letter with the Department stating that it was “a petition/request for an administrative hearing.” This petition was dismissed, with leave to amend, for failure to comply with Chapter 120, Florida Statutes, and Rule 28-106.201, Florida Administrative Code. O 6. On March 23, 2011, Dever filed its “Amended Petition For Reconsideration” (“Petition”), which resulted in the instant proceeding. The Petition, however, did not dispute any material facts regarding the Department's Intent to Levy. Neither did the Petition provide any legal basis to contest the levy. Instead, the Petition sought to challenge the underlying basis for the assessment of the documentary stamp taxes, as set forth in the Notice of Reconsideration. 7. The Department, pursuant to Rule 28-106.204, Florida Administrative Code, moved for entry of an order relinquishing jurisdiction back to the Department for entry of a final order of dismissal. The Department asserted that the Division was " without jurisdiction over the matter. Dever did not file a response in opposition. The Division entered an order on August 29, 2011, granting the Department’s Motion to Dismiss, and it relinquished jurisdiction back to the Department. 8. Dever did not file any exceptions or otherwise challenge the order of the Division.
Conclusions This cause came before the State of Florida, Department of Revenue ("Department"), for the purpose of issuing a final order.
Other Judicial Opinions Any party who is adversely affected by this final order has the right to seek judicial review of the order under section 120.68, Florida Statutes, by filing a notice of appeal under Rule 9.190 of the Florida Rules of Appellate Procedure with the Agency Clerk of the Department of Revenue in the Office of the General Counsel, Post Office Box 6668, Tallahassee, Florida 32314-6668 [FAX (850) 488-7112], AND by filing a copy of the notice of appeal accompanied by the applicable filing fees with the District Court of Appeal, First District or with the District Court of Appeal in the appellate district where the party resides. The notice of appeal must be filed within 30 days from the date this order is filed with the clerk of the Department. C) NY COPIES FURNISHED : Hon. Diane Cleavinger Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 Timothy E. Dennis, Esquire Office of the Attorney General The Capital, Plaza Level 01 400 South Monroe Street Tallahassee, Florida 32399-1050
Findings Of Fact On or about August 15, 1979, Mead Timber Company and Scott Timber Company conveyed certain property located in Suwannee County, Florida (hereinafter referred to as the "Property"), to Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch (hereinafter referred to as the "Original Conveyance"). The warranty deed for the Original Conveyance was recorded on August 15, 1979, at Official Records Book 187, page 444, of the Public Records of Suwannee County, Florida. In connection with said Original Conveyance the closing statement therefor showed a purchase price of Two Million Four Hundred Thousand Dollars ($2,400,000.00), said amount being the actual amount of the purchase and sale. In connection with the deed for said Original Conveyance, the closing statement indicated that Seven Thousand Two Hundred Dollars ($7,200.00) of documentary stamp taxes were paid based upon Thirty Cents ($.30) per One Hundred Dollars ($100.00) of consideration, and said Seven Thousand Two Hundred Dollars ($7,200.00) for documentary stamps was in fact paid. In connection with said Original Conveyance, a first mortgage and security agreement was given by Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch, to the Mutual Life Insurance Company of New York, said mortgage dated and filed August 15, 1979, at Official Records Book 187, page 451, of the Public Records of Suwannee County, Florida (hereinafter referred to as "First Mortgage"). The mortgage secured a note with a face amount of Three Million Dollars ($3,000,000.00) dated August 15, 1979. The First Mortgage showed a face amount of Three Million Dollars ($3,000,000.00). In connection with the First Mortgage, pursuant to the loan commitment dated April 13, 1979, only One Million Eight Hundred Thousand Dollars ($1,800,000.00) was disbursed thereunder. The parties thereto anticipated that an additional One Million Two Hundred Thousand Dollars ($1,200,000.00) would be disbursed at some future date, subject to conditions precedent that (a) the Borrowers place all of the Property encumbered thereby into cultivation, after having first cleared and prepared same for cultivation, and (b) that the Borrowers install twenty (20) 12-inch irrigation wells which would be appropriately drilled and equipped, and (c) that the Borrowers install twenty (20) automatic center-pivot irrigation systems thereon. The aforementioned conditions precedent have not been accomplished to date. The time period during which the conditions precedent set forth in paragraph seven (7) above could be completed, and during which time period the Borrowers could require the First Mortgage lender to make the additional disbursement under the First Mortgage, has expired, and the Borrowers have no further legal right to require any additional disbursements under the First Mortgage. The Petitioner has waived any right to seek or obtain the additional One Million Two Hundred Thousand Dollars ($1,200,000.00) from the holder of the First Mortgage. In connection with the First Mortgage for the Original Conveyance, the Borrowers paid Four Thousand Five Hundred Dollars ($4,500.00) as documentary stamp taxes on the promissory note secured by the First Mortgage, and paid Six Thousand ($6,000.00) in intangible taxes. In connection with the Original Conveyance, a second mortgage was given by Tommy M. Faircloth, Sam L. Rudd and Alvin C. Futch to Mead Timber Company and Scott Timber Company in the original principal sum of Three Hundred Thousand Dollars ($300,000.00), said mortgage dated and filed August 15, 1979, at Official Records Book 187, page 461, of the Public Records of Suwannee County, Florida (hereinafter referred to as the "Second Mortgage"). On or about October 1, 1980, Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch conveyed a portion of the Property to Timber River, Inc., a Florida corporation, by warranty deed which instrument was filed October 2, 1980, at Official Records Book 203, page 790, of the Public Records of Suwannee County, Florida (hereinafter referred to as the "Second Conveyance"). In connection with the deed for said Second Conveyance, only minimum documentary stamps in the amount of Forty Cents ($.40) were attached and affixed thereto. The Respondent herein has alleged that, since the Second Conveyance was subject to both the First Mortgage and the Second Mortgage, the taxable consideration should be Three Million Three Hundred Thousand Dollars ($3,300,000.00)(the face amount of the two [2] mortgages combined), and therefore the documentary stamps which should have been affixed to the deed would be Thirteen Thousand Two Hundred Dollars ($13,200.00), leaving an additional tax due in the amount of Thirteen Thousand One Hundred Ninety-nine and Sixty One-hundredths Dollars ($13,199.60). Timber River, Inc., the grantee of the Second Conveyance, is a corporation which was wholly owned by Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch in equal proportions at the time of the Second Conveyance. Timber River, Inc., in consideration of Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch conveying to said corporation the property described in the deed of the Second Conveyance, issued its common stock to said individuals in equal proportions. Timber River, Inc., took the Property subject to the First Mortgage and second Mortgage, and did not assume or agree to assume either the First Mortgage or the second Mortgage. Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch, individually, have at all times been or are presently liable to the mortgagee, Mutual Life Insurance Company of New York, and are personally responsible for making all payments under said mortgage. All payments under said mortgage both prior to and subsequent to the Second Conveyance have been made by Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch, individually.
Findings Of Fact On October 29, 1973, R. Bartow Rainey and J. Howard Nichols leased an unimproved parcel of land located in Tallahassee, Florida, from William Welsh Boyd and Patricia Boyd McLain. The term of the lease was for a period of 30 years at an annual base rental and a percentage of annual gross income derived from the property. Article 10.03 provided in part: "All buildings, alterations, rebuildings, replacements, changes, additions, improvements, equipment and appurtenances on or in the premises at the commencement of the term, and which may be erected, installed or affixed on the premises during the term, shall be deemed to be and immediately become part of the realty . . ." Article 15 contemplated the securing of a mortgage on the lease-hold interest by the tenants which would be a first lien upon both the fee and leasehold estates by virtue of the landlord joining therein up to $2,500,000.00 on a loan having a term not in excess of 30 years, and further providing that the mortgage loan must be one where the proceeds were to be used to construct improvements mentioned in the lease. The aforesaid lease was recorded in the public records of Leon County, Florida, on November 14, 1973 (Exhibit 3). The lessees of the property executed a promissory note on November 13, 1973, payable to the Commonwealth Corporation, Tallahassee, Florida, in the principal sum of$1,800,000.00, secured by a mortgage of their leasehold interest of the same date which also was duly recorded in the public records of Leon County. The lessees thereafter improved the property constructing apartment buildings consisting of 200 to 500 units (Exhibit 4, Counsel for Petitioners). By an amendment to the aforementioned note and mortgage, dated May 22, 1975, Schumacher Mortgage Company, Inc., a Delaware Corporation, succeeded to the rights of Commonwealth Corporation as mortgagee, and the principal sum of the mortgage was increased to $1,850,000,00 (Exhibit 4). The lease then was assigned to Petitioners on July 1, 1975, subject to the terms and conditions of the lease which the assignees assumed and agreed to discharge, and they also mortgaged the leasehold estate as security for a promissory note, dated July 1, 1975, in the principal amount of $458,000.00. The mortgage was entered into on June 3, 1975, with R. Bartow Rainey and J. Howard Nichols as mortgagees. Also on July 1, 1975, Rainey and Nichols as "grantor" executed a warranty deed to Petitioners purporting to convey in fee simple the improvements located on the real property in question subject to the existing first mortgage of November 13, 1973 (Exhibit 2, 7, 8). By Notice of Proposed Assessment, dated October 14, 1975, Respondent seeks to collect from Petitioners documentary stamp tax under Section 201.02(1), Florida Statutes, in the amount of $5,549.70 and a penalty in a like amount for a total of $11,099.40. The tax liability was levied against the aforesaid assignment of lease and warranty deed, based upon consideration of $550,000.00 cash and for the assignment, and $1,850.000.00 under the amendment to the note and mortgage, for a total taxable consideration of $2,400,000.00. The base tax was $7,200.00, less tax previously paid in the amount of $1,650.30, leaving a sum of $5,549.70 as tax due, plus a penalty in a like amount. The parties stipulated that the computation of the tax and the amount of delinquency as assessed are correct assuming that the tax and penalty are due and owing.
Recommendation That Petitioners be held liable for an assessment of $11,099.40 for delinquent documentary stamp taxes and penalty under Chapter 201, Florida Statutes. DONE and ORDERED this 17th day of May, 1976, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Edgar M. Moore, Esquire Smith and Moore, P.A. P. O. Box 1169 Tallahassee, Florida 32302 Patrician S. Turner, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304
Findings Of Fact The parties in the person of their counsel have stipulated to the evidential facts which shall serve as the basis for the determination of the matters in dispute. The stipulation of facts and its attendant exhibits are attached to this Recommended Order and made a part thereof. As can be seen in the examination of the stipulated facts and supporting exhibits, the amount of $940.80 tax due and $940.80 for penalty is the total amount pertaining to certain notes, including notes in the names of Newth and Smith, copies of which notes appear as Exhibits C and D to the stipulated facts. A review of the total audit, Exhibit A in the stipulated facts, reveals that the amount in issue on the notes of Newth and Smith totals $885.75 alleged tax due and $885.75 alleged penalty due. The balance of the $940.80 documentary stamp tax and $940.80 in penalty pertaining to notes of other named individuals have been conceded by the Petitioner as due and owing and are not in controversy through this hearing process. The original notes on the accounts of Newth and Smith were issued in 1969. The Newth note was drawn on September 17, 1969, and the Smith note on April 14, 1969. At the time the notes were issued, national banks were immune from state and local taxes whose categories were not within the purview of Section 5219 of the Revised Statutes (12 USCA Sec. 548). Documentary stamp taxes were not one of the classes of taxes enumerated in Section 5219. Consequently, no documentary stamp taxes could be imposed against the notes drawn on accounts in the First National Hank of Pompano Beach because in 1969 it was a national bank, a status which it has continued to hold through the time of these proceedings. The prohibition against documentary stamp taxes being imposed by a state government on transactions between a national bank and its customers existed until December, 1969, at which point Public Law 91-156 was enacted, on December 12, 1969, and it amended Section 5219 of the Revised Statutes (12 USCA Sec. 548) and subsequent to that amendment, Title 12 USCA Sec. 3548 allowed state governments to tax national banks. In particular, the language of that latter provision provided: For the purpose of any tax law enacted under the authority of the United States or any State, a national bank shall be treated as a bank organized and existing under the laws of the State or other jurisdiction within which its principal office is located. This meant that transactions between the customers of a national bank and that bank with took place subsequent to the implementation of Title 12 USCA Sec. 3548 could be taxed pursuant to Chapter 201, Florida Statutes, by the process of a documentary stamp tax being levied. (The exhibits attached to the statement of facts show that Newth renewed his note with the Petitioner on April 20, 1971, and again on December 31, 1975. Smith renewed his note on June 12, 1973, and on December 31, 1975. Through the renewal process, documentary steep taxes were not paid on $683,000.00 involving the note of Newth and on $15,500.00 involving the note of Smith.) The Petitioner claims that it need not pay the documentary stamp tax and penalty on the Newth and Smith notes, because it is except from the payment of such tax. While the Petitioner agrees with the Respondent that Subsection 201.08(1), Florida Statutes, calls for the payment of documentary taxes on promissory notes and the renewal of those promissory notes, Petitioner believes that Section 201.09, Florida Statutes, exempts it from the necessity to pay documentary stamp taxes and related penalties in the matter of the renewal of the Newth and Smith notes which took place on December 31, 1975. The provision of Section 201.09, Florida Statutes, states: 201.09 Renewal of existing promissory note; exemption.--Then any promissory note is given in renewal of any existing promissory note, which said renewal note only extends or continues the identical contractual obligations of the original promissory note and evidences part or all of the original indebtedness evidenced thereby, not including any accumulated interest thereon and without enlargement in any way of said original contract and obligation, such renewal note shall not be subject to taxation under this chapter if such renewal note has attached to it the original promissory note with canceled stamps of fixed thereon showing full payment of the tax due thereon. Petitioner reads this provision to mean that the prohibition against the State of Florida levying taxes on the transactions that took place on the Newth and Smith notes in 1969, under the protection afforded by Section 5219 of the Revised Statutes (12 USCA Sec. 548); was tantamount to a declaration that full payment of the tax due thereon had been rendered and when the State attempted to impose the documentary stamp tax on the renewals which took place on December 31, 1975, Section 201.09, Florida Statutes, exempted the Petitioner from the payment of that tax. Under this theory, it was only necessary to attach the original promissory note issued in the Newth and Smith matters in 1969 to the renewal notes of December 31, 1975, and even though canceled stamps were not affixed to the 1969 notes, this could be analogous to attaching promissory notes with canceled stamps to renewal note documents. The analogy is supported in the mind of the Petitioner because both in the instance of the latter promissory notes with documentary stamp taxes attached and in the cases of Newth and Smith where original promissory notes were attached without canceled stamps attached; the key point was that under the hypothetical situation of documentary stamp taxes affixed to the original notes or the actual situation in the Newth and Smith cases, both had the real effect or effect in law of providing full payment of taxes due thereon. The perception of the Petitioner does not comport with the basis for the exemption created by Section 201.09, Florida Statutes. That exemption only applies when tax has actually been paid on the original promissory note, which did not occur here, and that failure to pay tax on the original promissory notes precludes any claim for exemption when the notes were renewed. There exists one further possibility open to the Petitioner in its efforts to resist the payment of the documentary stamp tax rate penalty on the notes of Newth and Smith. That possibility resides in the idea that the prohibition against taxing the notes when they were drafted in 1969, such prohibition appearing in the guise of Section 5219 of the Revised Statutes (12 USCA Sec. 548); it would continue to exist for the life of the note making all renewals exempt from taxation. That interpretation does not pass muster when viewed in the light of Title 12 USCA Sec. 3548, which removed future transactions from their exempt status and made them subject to tax by the Respondent. This change in position allowed Subsection 201.08(1), Florida Statutes, to be imposed on the renewals to the promissory notes, which occurred on December 31, 1975. In summary, Petitioner having failed to demonstrate its entitlement to the exemption set out in Section 201.09, Florida Statutes, it is liable in the lull amount claimed for the payment of documentary stamp taxes and penalties in a like amount in accordance with the provisions of Chapter 201, Florida Statutes, on all transactions addressed in the audit, which is Exhibit A to the statement of facts.
Recommendation It is recommended that the Petitioner, First National Bank of Pompano Beach, be required to pay documentary stamp taxes in the amount of $940.80 and penalties in the amount of $940.80 related to the transactions on these promissory notes set out in the stipulation of facts offered by the parties. DONE AND ORDERED this 15th day of June, 1979, in Tallahassee, Florida. CHARLES C. ADAMS, 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 15th day of June, 1979. COPIES FURNISHED: Bruce Culpepper, Esquire 716 Barnett Bank Building Tallahassee, Florida 32301 Barbara Staros Harmon, Esquire Assistant Attorney General The Capitol Tallahassee, Florida 32301 John D. Moriarty, Esquire Department of Revenue Room 104, Carlton Building Tallahassee, Florida 32301 ================================================================= AGENCY FINAL ORDER =================================================================
Findings Of Fact Petitioner is in the land development business. Petitioner sold residential lots to various purchasers and contracted through a sister corporation to construct homes on the lots. At the time the lots were conveyed no improvements had been made. Petitioner placed documentary tax stamps and documentary surtax stamps upon the deeds reflecting the consideration for the deeds as the price of the lots. Respondent contends that stamps should have been placed on the deeds reflecting the consideration as the price of the lots plus improvements. Accordingly Respondent is proposing to assess additional stamp taxes, surtaxes, penalties and interest upon the Petitioner in the total amount of $13,002.10. The pleadings, answers to interrogatories and responses to requests for admissions establish that unless Rule 12A-4.13(22), Florida Administrative Code is invalid, Petitioner is liable for the taxes Respondent proposes to assess. The transactions which form the basis of the proposed assessment are package deals within the meaning of the Rule.
The Issue Whether the petitioners are entitled to a refund of the documentary stamp taxes paid on a Special Warranty Deed conveying real property from the Federal Home Loan Mortgage Corporation to one of the petitioners.
Findings Of Fact Based on the facts alleged in the petition for administrative hearing, the responses to requests for admission, and the facts stipulated to at the hearing on the motion for recommended summary final order, the following findings of fact are made: On September 27, 1994, Freddie Mac conveyed to Abe Saada by a Special Warranty Deed real property located in Dade County, Florida. Regina Saada is not a party to the Special Warranty Deed. The U.S. Department of Housing and Urban Development Settlement Statement prepared for the closing on the property showed that $9,600.00 in "state tax/stamps" was owed on the deed, of which $4,800.00 was to be paid from the funds of the seller, Freddie Mac, and $4,800.00 was to be paid from the funds of the borrower, Abe Saada. Pursuant to its agreement with Mr. Saada, Freddie Mac paid $9,600.00 to the Clerk of Court as the documentary stamp tax on the deed on or about September 28, 1994. The deed was recorded in the Dade County Official Records at Book 16525 at pages 3583-3585. Abraham Saada is not exempt from the documentary stamp tax.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a Final Order dismissing the Petition for Chapter 120 Administrative Hearing to Contest Denial of Stamp Tax Refund filed by Abraham Saada and Regina Saada. DONE AND ENTERED this 8th day of May, 1997, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO 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 8th day of May, 1997.
The Issue The issue in this proceeding is whether the Petitioners are entitled to refund of documentary stamp taxes paid pursuant to Sections 201.01 and 201.08 Florida Statutes.
Findings Of Fact Both Petitioners are limited partnerships validly existing and in good standing under the laws of the State of Florida. (Petitioner's exhibits No. 1 and No. 5.) Sugar Creek Business Center Phase I, Ltd. ("Sugar Creek") As to this Petitioner, the parties have further stipulated: On or about March 27, 1986, Petitioner and First Union National Bank, a national banking association, with its principal office located in Charlotte, North Carolina (the "Lender"), entered into a certain Construction Loan Agreement (the "Loan Agreement"). Pursuant to the Loan Agreement, Lender agreed to make and Petitioner agreed to accept a loan in the amount of $6,300,000.00 (the "Loan") to be used solely for the purpose of paying for the cost of developing and constructing a commercial building in Charlotte, Mecklenberg County, North Carolina. The Lender retained the law firm of Fowler, White, Gillen, Boggs, Villareal & Banker, P. A., Post Office Box 1438, 501 E Kennedy Boulevard, Suite 1700, Tampa, Florida 33602, as its Florida counsel in connection with closing the Loan. Petitioner retained the law firm of Peirsol, Boroughs, Grimm, Bennett & Griffin, Professional Association, Post Office Box 3309, Orlando, Florida 32802, as its counsel in connection with closing the Loan. On or about March 27, 1986, the General Partners of Petitioner executed a promissory note in the amount of $6,300,000.00 payable to Lender (the "Note"), a Deed of Trust and Security Agreement securing the Note in favor of Gibson L. Smith, Jr. Trustee, and First Union National Bank, Beneficiary (the "Mortgage"), and all other loan closing documents pursuant to the Loan Agreement. The Mortgage encumbers only land and the improvements thereon located in Charlotte, Mecklenberg County, North Carolina and was filed in the Public Records of Mecklenburg County, North Carolina on March 27, 1986, subsequent to closing upon the Loan Agreement. The proceeds of the Loan evidenced by the Note and secured by the Mortgage were used solely to develop and construct a commercial building upon the land encumbered by the Mortgage in Charlotte, Mecklenburg County, North Carolina. Florida documentary stamps were purchased from the area office of the Department of Revenue located in Tampa, Florida on May 1, 1986 and affixed to the Note to evidence payment of Florida documentary stamp tax with respect to the Note in the amount of $9,450.00 pursuant to Sections 201.00 and 201.08, Florida Statutes. (Petitioner's Exhibit No. 1) John Simpson, Jr., Esquire of Peirsol, Boroughs, Grimm, Bennett and Griffin, P. A. represented Sugar Creek in the purchase of property and the acquisition and closing of construction financing for improvements. The loan documents were mailed to him. He gave them to his client in Orlando, who signed and delivered them back to him in escrow. Simpson took the documents to Charlotte, North Carolina, for the closing on or around March 27, 1986. The purchase of property and loan closed simultaneously and the funds were disbursed in Charlotte. (Testimony of John Simpson, Jr., Esquire) One Dezavala Center, Ltd. As to this Petitioner, the parties have stipulated: On or about July 30, 1985, Petitioner and the First National Bank of Chicago, a national banking association, with its principal office located in Chicago, Illinois (the "Lender"), entered into a certain Construction Loan Agreement (the "Loan Agreement"). Pursuant to the Loan Agreement, Lender agreed to make and Petitioner agreed to accept a loan in the amount of $6,600,000.00 (the "Loan") to be used solely for the purpose of paying for the cost of developing and constructing four commercial buildings located in San Antonio, Bexar County, Texas. The Lender retained the law firm of Holland & Knight, 1200 Brickel Avenue, Post Office Box 015441, Miami, Florida 33101, as its Florida counsel in connection with closing the Loan. Petitioner retained the law firm of Peirsol, Boroughs, Grimm, Bennett & Griffin, Professional Association, Post Office Box 3309, Orlando, Florida 32802, as its counsel in connection with closing the Loan. On or about July 30, 1985, the General Partners of Petitioner executed a promissory note in the amount of $6,600,000.00 payable to Lender (the "Note"), a Deed of Trust, Mortgage, and Security Agreement securing the Note in favor of Harry M. Roberts, Jr., Esquire, Trustee (the "Mortgage"), and all other loan closing documents as required under the Loan Agreement. The Mortgage encumbers only land and the improvements thereon located in San Antonio, Bexar County, Texas and was filed in the Public Records of Bexar County, Texas on August 1, 1985, subsequent to closing upon the Loan Agreement. The proceeds of the Loan evidenced by the Note and secured by the Mortgage were used solely to develop and construct four commercial buildings on the land encumbered by the Mortgage in San Antonio, Bexar County, Texas. Florida documentary stamps were purchased from the area office of the Department of Revenue located in Miami, Florida on August 5, 1985, and affixed to the Note to evidence payment of Florida documentary stamp with respect to the Note in the amount of $9,900.00 pursuant to Sections 201.00 and 201.08 Florida Statutes. John Simpson, Jr., Esquire, also represented One Dezavala in the closing for the acquisition of the property and the loan. The note and other loan documents were signed in Orlando by Petitioner's General Partners. The documents were given to the lender's Florida Counsel in escrow, who sent the documents to the lender's Texas counsel. Closing on the acquisition of property and the loan took place simultaneously in San Antonio, Texas and the funds were disbursed in San Antonio. (Testimony of John Simpson, Jr., Esquire) Photocopies of the notes and stamps were admitted as Exhibits No. 3 and No. 7. The parties, by oral stipulation at the final hearing, agreed that before the Comptroller could be compelled to issue a Final Order authorizing the refund of such money as may properly be found owing Petitioners, Petitioners would make available to the Comptroller or his representatives, for inspection, cancellation and/or obliteration, the original documentary stamps forming the basis for the request for refund.
