Findings Of Fact Prior to the hearing the parties jointly moved to consolidate the two (2) above styled cases and stated the stipulation would cover both 76-2197, D.O.A.H., and 77-604, D.O.A.H. The former involved six (6) deeds and the latter three (3) deeds. The following facts were stipulated to by the parties: The Respondent, Department of Revenue, imposed a documentary stamp tax upon six (6) deeds which transferred the title to properties from individual persons to Petitioner Corry. The transfer came about as a result of the following: In each of the six (6) transfers under question, Petitioner Corry sold property to certain individuals. The Petitioner gave to the individuals a deed and took back a purchase money mortgage. The purchasers made essentially no payments on the mortgage to Petitioner Corry and ultimately the purchasers deeded the property back to the Petitioner. The deeds were recorded in the courthouse records. In one of the deeds there is a specific statement that the deed is executed in lieu of foreclosure and that the purchaser is released from all liability. There is no such specific statement in the other deeds. By a Proposed Notice of Assessment dated August 3, 1976, the Respondent, Department of Revenue, sought to impose a documentary stamp tax upon the six (6) deeds. The consideration upon which the tax is based in cases like the instant case is usually the amount of mortgage debt forgiven but in the instant case no such information was provided and the tax was based on the assessed values of the property. Petitioner Corry is contesting the legal liability of Petitioner for the assessment and is not contesting the legal liability of Petitioner for the assessment and is not contesting the mathematical computation of the amount allegedly due. It is Petitioner's contention that the six (6) deeds are not subject to documentary stamp taxation inasmuch as the Petitioner paid nothing for the deeds and were signed by the mortgagors at the request of the Petitioner to clear title of the equitable owner. It is the Respondent Department of Revenue's contention that the six (6) deeds are subject to documentary stamp taxation since they are deeds in lieu of foreclosure or are deeds given when debts are rendered unenforceable. At the time the six (6) deeds were recorded on December 22, 1975, in Taylor County, the Deputy Clerk asked Petitioner how much he paid for the six (6) deeds in question and when he responded that he paid nothing for the deeds the Deputy Clerk advised him that he owed no documentary stamp tax or surtax thereon. Relying on the Deputy Clerk's advice, the deeds were recorded and no taxes were paid, only the recording fees. The Hearing Officer further finds: The deeds in question were secured for the purpose of clearing title to the equitable owner. The Petitioner paid nothing to the mortgagor for the deeds. The stipulation controls both cases No. 76-2197 and 77-604.
Recommendation Hold the assessments as valid assessment. DONE and ORDERED this 6th day of July, 1977, in Tallahassee, Florida. COPIES FURNISHED: Caroline C. Mueller, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 William W. Corry, Esquire Post Office Box 527 Tallahassee, Florida 32302 DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of July, 1977.
Findings Of Fact On December 27, 1976, Petitioner entered into an Assumption Agreement and Release of Seller, a copy of which is appended to this recommended order as Exhibit "A". The agreement contains, in writing, the obligation of Flagler Hospital, Inc., to pay Petitioner the sum of $238,464,52. The document is not a renewal of an existing obligation. On April 25, 1977, Respondent gave Petitioner notice that a penalty and interest under Section 201.08, Florida Statutes, had been assessed against it in the amount of $729.42 because the agreement constituted a note or written obligation to pay money. The agreement was executed in the State of Florida. No documentary stamp taxes have been paid regarding the agreement. The mathematical computation of the tax, penalty and interest is correct. The agreement represents the assumption of an existing debt between Petitioner and Inter-Medic Health Centers, Inc., by Flagler Hospital, Inc. The original debt is evidenced by a note and mortgage dated February 11, 1976. Documentary stamp taxes in the amount of $360.00 were paid as to the original note. No additional indebtedness was created by the agreement, but the agreement releases the original obligor, Inter-Medic Health Centers, Inc., from liability.
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 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.
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.
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 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 for consideration in this case is whether deeds by property owners which convey unencumbered real property to a corporation solely owned by them, are subject to a documentary stamp tax imposable under Section 201.021(1), Florida Statutes, and Rule 12B-4.013(7), Florida Administrative Code.
Findings Of Fact By Warranty Deed dated April 30, 1991, W. Dewey Kennell sold eight condominium apartments, units 1731, 1733, 1735, 1737, 1741, 1743, 1745 and 1747, in Baywood Colony Southwood Apartments IV, a condominium, to Kurt Rabau and Ronald Rabau, his son, residents of Germany. The Rabaus purchased the properties as an investment in rental property for income. At the time of the sale, the property was subject to mortgages totaling $250,000, which the Rabaus paid off on May 24, 1994. Sometime after the purchase, the Rabaus were advised to incorporate and hold title to the properties in a corporate capacity to protect themselves against personal liability. Thereafter, on September 14, 1994, the Rabaus formed Kuro, Inc., the Petitioner herein, to take and hold title to the properties, with Kurt Rabau and Ronald Rabau each owning 50% of the corporate stock. There were no other owners of stock in the corporation. On October 12, 1994, the Rabaus transferred all eight properties to Kuro, Inc. Kuro, Inc. had no assets other than the eight apartments, and did no business prior to the transfer of those apartments to it. Consequently, the stock of Kuro, Inc. was valueless prior to the receipt of the transferred apartments. The corporation’s federal tax form relating to transfer of property to a corporation, the “Corporation’s Statement on Transfer of Property Under Code Section 351” reflects that the Rabaus “transferred the jointly owned property [described therein] for which Kuro Inc. issued the stock”. From the evidence presented it is clear that the Kuro Inc. stock was issued in exchange for the contribution of the apartments to the corporation. Other documents in the corporation’s 1994 tax return indicate that the property was valued at fair market value at the time of transfer to the corporation, and the transferee’s, (corporation’s) adjusted basis was identical after the transfer. Each of the Rabaus received 500 shares of the corporation’s stock which was valued at $618,642. Of that amount, $617,642 was considered additional paid-in capital. There was no additional property received or possessed by the corporation. A minimal documentary stamp tax was paid by the parties at the time the eight Warranty Deeds for the apartments were transferred to the corporation. The consideration reflected on the face of each deed was “...the sum of $10.00 and other valuable consideration.” Subsequent to the transfer, the Department conducted an audit of the Clerk of Circuit Court in Sarasota County and, on November 10, 1994, issued a Notice of Intent to Make Documentary Stamp Tax and Discretionary Surtax Audit Changes, by which it indicated its intent to impose a documentary tax of $4,207.00 on the transfers, a 50% penalty of $2,103.50, and interest totaling $38.73 through November 10, 1994, with additional interest to accrue at the rate of 1% per month, prorated daily ($1.38), until date of payment. Thereafter, on March 27, 1995, the Department issued a Notice of Proposed Assessment to Kuro, Inc., and Petitioner timely filed a protest. Subsequent to that action, on January 11, 1996, the Department issued its Notice of Decision sustaining the proposed assessment, penalty and accrued interest, and Petitioner requested formal hearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Revenue enter a final order imposing a tax in the amount of $4,207.00 with interest from date of filing at 1 percent per month based on the amount of tax not paid to date of payment. DONE and ENTERED this 22nd day of April, 1997, in Tallahassee, Florida. ARNOLD H. POLLOCK 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) 921-6947 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of April, 1997. COPIES FURNISHED: C. Samuel Whitehead, Esquire 2199 Ringling Boulevard Sarasota, Florida 34237 James F. McAuley, Esquire Office of the Attorney General The capitol - Tax Section Tallahassee, Florida 32399-1050 Linda Lettera General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs Executive Director Department of Revenue Tallahassee, Florida 32399-1011
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
The Issue Whether petitioner is liable for documentary stamp surtax, penalty and interest, pursuant to Proposed Notice of Assessment, dated November 17, 1976. The parties stipulated to the relevant facts set forth in the petition. They also stipulated that the amounts of the proposed assessment are properly computed and due, if petitioner is determined to be liable therefor.
Findings Of Fact Petitioner is a Netherland Antilles Corporation, duly authorized to do business in the State of Florida. On April 9, 1974, petitioner executed a mortgage deed to Seville Management, a partnership, whereby it encumbered its long-term lease on certain real property located in Miami Beach, Florida, in the amount of $2,500,000. The lease contained an option to purchase the land in the amount of $1,500,000, which was later increased to $1,550,000. Paragraph 33 of the deed provided that petitioner would be obligated to consummate the exercise of the option to purchase on or before June 1, 1976, and that failure to do so would constitute a default of the mortgage on the leasehold interest. (Testimony of Cassel, Petition) In June 1976, Petitioner obtained fee simple title to the property in question through the exercise of the option to purchase for the sum of $1,550,000, by warranty deed dated June 27, 1976, from the trustees of Central States, Southeast and Southwest Areas Pension Fund as grantor. The deed provided that the lease was thereby "extinguished, canceled and terminated, the Grantee herein being owner of the interest of the Lessor and the Lessee in such lease. Petitioner recorded the warranty deed on July 6, 1976, and affixed the state documentary stamps on a consideration of $1,550,000. However it only affixed the nominal sum of 55 cents for documentary surtax, At the time of the conveyance, the mortgage balance on the property exceeded the purchase price of $1,550,000. (Testimony of Cassel, Petition) Subsequently, respondent assessed documentary surtax in the amount of $1704.45 and a penalty in a like amount, plus interest in the amount of $74.31 against petitioner with respect to the transaction based on a consideration of $1,550,000. On November 4, 1976, an informal conference was held with the respondent and thereafter by letter of November 17, 1976, respondent issued a Notice of Proposed Assessment in the total amount of $3,483.21 for delinquent documentary surtax, penalty and interest. (Petition, Exhibit 1)
Recommendation That the proposed assessment against petitioner in the amount of $3483.21 for documentary surtax, penalty, and interest under Section 201.021, F.S., be upheld and assessed. DONE and ENTERED this day of April, 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: Edwin J. Stacker, Esquire Assistant Attorney General The Capitol Tallahassee, Florida 32304 Craig B. Sherman, Esquire Broad and Cassel Barnett Bank Building 1108 Kane Concourse Bay Harbor Islands, Florida 33154
