Findings Of Fact By warranty deed dated July 9, 1973, Floyd L. and Michael Lewis conveyed the fee simple title to certain realty in North Miami Beach to Petitioners Eugene J. Howard and Herbert Seidel. The purchase price for the property was $405,000. The property sold consisted of a twenty-two (22) unit apartment building with twenty (20) furnished apartments and included storage shed, a pool, patio and dock furniture. The closing statement signed by the sellers and purchasers stated: "Florida documentary stamps - on deed - $1,215.00, Florida documentary surtax - on deed - $132.20." $1,347.20 was credited to the Petitioners Howard and Seidel. Petitioners actually paid $10.85 surtax and $132.20 documentary tax. The 1974 tax assessment of the Dade County Property Appraiser for the property was $241,769.00 realty and $14,500.00 for the personalty. Petitioner contends: That part of the purchase price was applicable to -personal property. That the Hearing Officer should make an allocation of the realty included and an allocation for the personalty included. That the Petitioners believe they are entitled to the equitable defense of laches in that the Respondent did not advise Petitioners of the possible error of miscalculation until approximately two years had passed. That if the stamp tax is found to be due and if a penalty is included, the penalty is "excessive penalty" under the Eighth Amendment of the Constitution of the United States of America, and Article I, Section 17, of the Florida Constitution. Respondent contends: That there was an agreement between the Parties, in a signed document that $1,215 in documentary stamps and $132.20 in surtax stamps, reflecting the actual consideration paid for the realty under consideration, would be affixed to the conveyance. That Petitioners failed to fulfill such a an agreement and affixed $132.20 in documentary stamps and $10.85 in surtax stamps to the deed. . That the Department is entitled to the delinquent taxes plus penalty. That the assessment is dated July 9, 1975 and a three- year statute of limitations is applicable. The Hearing Officer further finds: The purchase price for the property under consideration was $405,000. Documentary stamps required on such a purchase were $1,215.; that stamps actually paid were in the amount of $132.20, that $10.85 was actually paid and still due and owing is $121.35. That the Petitioners as well as the Sellers were aware of the proper amount of tax due and signed a receipt reflecting the monies allocable for documentary and surtax stamps. That the Petitioners failed either intentionally or negligently to pay the proper amount of documentary and surtax stamps at the time of recording the deed.
Recommendation Assess the documentary stamps and the documentary surtax against Petitioners together with applicable penalties. DONE and ORDERED this 9th day of July, 1976, in Tallahassee, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Eugene J. Howard, Esquire 2212 Biscayne Blvd. Miami, Florida 33137 Harold F. X. Purnell, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304
The Issue Whether Respondent Office of the Comptroller should refund to Petitioner taxes paid pursuant to Chapter 199 and 201, Florida Statutes.
Findings Of Fact The parties stipulated to the facts set forth in paragraphs 1 through 9 of the Petition herein, as follows: The agencies affected in this action are the Department of Revenue, Tallahassee, Florida, and the Office of the Comptroller, Tallahassee, Florida. The Petitioner is Zimmer Homes Corporation, 777 Southwest 12th Avenue, Pompano Beach, Florida. Zimmer Homes Corporation, on or about December 12, 1974, conveyed a piece of property described as follows: All of that part of the Southeast quarter of Section 10, Township 44 South, Range 42 East, of Palm Beach County, Florida, lying North of the North right-of-way (r/w) line of Forest Hill Boulevard, less the West 40 feet thereof for road right-of-way and less the East 40 feet thereof. The sellers paid the necessary excise tax on documents and intangible tax as follows: a. $11,250.00 total consideration $3,750,000.00 of Section Florida 201.02(1) Statutes b. 3,900.00 based upon note of $2,600,000.00 Section Florida 201.07 Statutes c. 1,542.00 based upon note of $1,027,906.00 Section Florida 201.07 Statutes d. 4,125.00 based upon total consider- ation of $3,750,000.00 Section Florida 201.021(1) Statutes e. 5,200.00 based upon mortgage secur- ing note of $2,600,000.00 Section Florida 199.032(2) Statutes f. 2,055.81 based upon mortgage secur- ing note of $1,027,906.00 Section Florida 199.032(2) Statutes A lawsuit was commenced for reasons not relevant to this Petition and the Circuit Court of the Fifteenth Judicial Circuit of Florida entered a Final Judgment on July 12, 1978, a copy of which is attached hereto as Exhibit "A". In the Final Judgment the Court determined that the Purchasers had a right to rescind the transaction. The Court ordered that all obligations of the parties arising out of the Purchase and Sale Agreement were cancelled and that the Purchasers were entitled to a sum of money in order to restore the parties to their original positions. (Petitioner's Exhibit 1). On March 22, 1979, pursuant to Section 215.26, Florida Statutes, Zimmer Homes Corporation applied for a refund of the excise tax on the documents in an amount as specified in Paragraphs 4(a), 4(b), 4(c) and 4(d), above. (Petitioner's Exhibit 4). On April 3, 1979, pursuant to Section 199.252, Florida Statutes, and Section 215.26, Florida Statutes, Zimmer Homes Corporation applied for a refund of the intangible tax paid in an amount as specified in Paragraphs 4(e) and 4(f) above. (Petitioner's Exhibit 4). According to a letter from the Office of the Comptroller dated April 23, 1979, a copy of which is attached hereto as Exhibit "B", the Office of the Comptroller indicated that they concurred with the findings and conclusions of the Department of Revenue in denying the refund request on the excise tax on documents as specified in paragraph 6 above. As grounds therefore, it was indicated that the refund requests were denied because the statute of limitations under Section 215.26, Florida Statutes, barred the request for refund. (Petitioner's Exhibit 3). By letter dated April 26, 1979, a copy of which is attached hereto as Exhibit "C", the Office of the Comptroller indicated that they concurred with the findings of the Department of Revenue on denying the refund for intangible taxes which had been paid as specified above. As grounds therefore it was indicated that the request was denied because the applicable statute of limitations had run. (Petitioner's Exhibit 2).
Recommendation That Petitioner's application for refund of tax paid under Chapters 199 and 201, Florida Statutes, be approved. DONE AND ENTERED this 6th day of September 1979 in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of September 1979. COPIES FURNISHED: Richard B. Burk, Esquire Scott, Burk, Royce and Harris 450 Royal Palm Way Palm Beach, Florida 33480 Barbara Harmon, Esquire Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32301 John D. Moriarty, Esquire Department of Revenue Room 104, Carlton Building Tallahassee, Florida 32301 Honorable Gerald A. Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32301
Findings Of Fact Stewart executed a mortgage note dated February 3, 1972 in the amount of $2,943,400 payable to City National Bank of Miami. This note was secured by a mortgage executed by Stewart as mortgagor to City National Bank of Miami as mortgagee of same date. This mortgage was recorded on February 8, 1972 at which time documentary stamp tax and intangible taxes were paid. The note was designated a mortgage note in the face amount of $2,943,400 and taxes paid were predicated on this sum. The mortgage provided, inter alia, in item 24 thereof: "That the funds to be advanced herein are to be used in the construction of certain improvements on the land herein described, in accordance with a building loan agreement between the mortgagor and the mortgagee dated February 8, 1972, which building loan agreement (except such part or parts thereof as may be inconsistent herewith) is incorporated herein by reference to the same extent and effect as if fully set forth and made a part of this mortgage; if the construction of the improvements to be made pursuant to said building loan agreement shall not be carried on with reasonable diligence, or shall be discontinued at any time for any reason other than strikes or lockouts, the mortgagee, after due notice to the mortgagor or any subsequent owner, is hereby invested with full and complete authority to enter upon said premises, employ watchmen to protect such improvement from depredation or injury, and to preserve and protect the personal property therein, and to continue any and all outstanding contracts for the erection and completion of said building or buildings, to make and enter into any contracts and obligation wherever necessary, either in its own name or in the name of the mortgagor, and to pay and discharge all debts, obligations, and liabilities incurred thereby. All such sums so advanced by the mortgagee (exclusive of advances of the principal of the indebtedness secured hereby) shall be added to the principal of the indebtedness secured hereby and shall be secured by this mortgage and shall be due and payable on demand with interest at the rate of the same rate as provided in the note secured hereby, but no such advances shall be insured unless same are specifically approved by the Secretary of Housing and Urban Development acting by and through the Federal Housing Commissioner prior to the making thereof. The principal sum and other charges provided for herein shall, at the option of the mortgagee or holder of this mortgage and the note secured hereby, become due and payable on the failure of the mortgagor to keep and perform any of the covenants, conditions, and agreements of said building loan agreement. This covenant shall be terminated upon the completion of the improvements to the satisfaction of the mortgagee and the making of the final advance as provided in said building loan agreement;" Prior to the completion of the project for which the note and mortgage were executed and before the full amount stated in the note had been advanced Stewart went into receivership. No advances were made under the note and mortgage subsequent to December, 1974, and only $1,935,378 had been disbursed to Stewart prior to foreclosure. On March 17, 1976 Stewart requested a refund in the amount of $1512 for documentary stamp taxes and $2016 for intangible taxes paid on the difference between $2,943,400 and $1,935,378.29. By letters dated June 16 and 17, 1976, each of the refund requests was denied by the Comptroller on the ground advanced by Department of Revenue that the claims were barred as not being timely filed. Vanguard executed a note in the amount of $2,000,000 payable to the Chase Manhattan Bank secured by a building loan mortgage from Vanguard as mortgagor to Chase as mortgagee. This mortgage was recorded and documentary stamp taxes and intangible taxes were paid on April 19, 1973. Other than the amount of the note and the total advanced prior to Vanguard going into receivership, the basic facts were the same as in Stewart. At the time of the last payment in May, 1975 Vanguard had received $1,388,008 of the $2,000,000 evidenced by the note. Vanguard's application for refund of $1224 for intangible taxes paid was denied by the Comptroller for the same reason Stewarts was denied. Here the application dated April 19, 1976 was postmarked in Miami on April 20, 1976 and received by Respondent on April 22, 1976. Worthington executed a building loan note dated October 25, 1972 in the amount of $2,750,000 payable to Trustees of C. I. Mortgage Group which was secured by a mortgage loan of same date. Worthington also went into receivership in December, 1974 after $1,962,750 had been advanced. Application for refund of documentary stamp taxes in the amount of $1180.80 and intangible taxes in the amount of $1574.50 filed March 17, 1976 was denied by the Comptroller on the grounds that the application was not timely filed. All of the above loans, for which the mortgages were recorded, were construction loans and provided for periodic payments to the mortgagor as the construction progressed. Provided the mortgagor complied with the terms of the building agreement the mortgagee was legally required to advance funds when due. In determining valuation for the purpose of computing the intangible taxes due clerks of the circuit court follow 199.122(7) F.S. which provides that obligations for payment of money secured by a mortgage shall be valued at the principal amount of indebtedness evidenced by such transactions. Accordingly in the cases at hand the clerks would have refused to record the mortgages unless the intangible taxes and documentary stamp taxes computed using the principal amount of the obligation were paid. An application for refund of the intangible tax representing the difference between the face amount of the mortgage to secure future advances, and the amount advanced, will be disapproved by the Department of Revenue so long as advances on the face amount of the loan are still being made.
Findings Of Fact 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
The Issue Whether the Petitioner is liable for documentary stamp taxes and interest to the Respondent totaling $80,405.54, plus additional interest accruing from the date of the assessment, as reflected in the Notice of Proposed Assessment dated January 24, 2011.
Recommendation Based on the foregoing, Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order finding that Jorge Ramos does not owe documentary stamp taxes on the October 18, 2007, Warranty Deed and withdrawing the assessment in the amount of $80,405.54, plus interest at $11.89 per day from January 25, 2011. DONE AND ENTERED this 1st day of June, 2012, in Tallahassee, Leon County, Florida. S JUNE C. McKINNEY 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 1st day of June 2012.
The Issue The issues for determination are whether Petitioner paid sales and use tax on rental income from transient housing in Osceola and Polk counties, and whether Petitioner paid sales and use tax on the purchase of fixed assets in accordance with the requirements of Sections 212.03 and 212.06, Florida Statutes (1995). (Statutory references are to Florida Statutes (1995) unless otherwise stated.)
Findings Of Fact Petitioner is a Florida corporation with its principal place of business located at 3501 West Vine Street, Suite 387, Kissimmee, Florida. Petitioner primarily engages in the business of renting and managing transient property in the Orlando-Disney World area for absentee owners. Respondent is the state agency responsible for the administration of the Florida sales and use tax pursuant to Section 213.05. Respondent selected Petitioner for audit because Petitioner filed several sales and use tax returns reporting no taxable income (zero returns). Zero returns are unusual for a tourist-based business in the Orlando-Disney area. Osceola County, Florida (Osceola), also audited Petitioner for the period December 1994 through December 1999. Osceola is a political subdivision of the state and is responsible for administering and assessing the Tourist Development Tax authorized in Section 212.03 and Section 13-16, Osceola County Code of Ordinances (Code). Osceola audited Petitioner because Petitioner failed to file any tax returns with Osceola. Osceola correctly assessed Petitioner $394,378.39 for tax, penalty, and interest. The mathematical computations in the Osceola audit are correct. Osceola conducted its audit in accordance with generally accepted auditing principals. The Osceola audit revealed that Petitioner began doing business on January 1, 1995, but reported that it began doing business on both November 16, 1999, and March 12, 1998. The Osceola audit revealed that Petitioner failed to maintain required tax records, including guest registration forms; cash receipts; a general ledger; and documents necessary to verify amounts reported in tax returns. Petitioner did not reconcile its bank statements and did not maintain records necessary to verify that all receipts from guest registrations were properly entered into Petitioner's computer system of record keeping. Respondent began its audit on January 8, 2001. However, Respondent was unable to examine most of Petitioner's books and records due to a lack of cooperation from Petitioner. Respondent made several attempts to obtain Petitioner's books and records, but Petitioner provided Respondent with only consumable purchase invoices. Respondent and Osceola have an agreement to share information. Respondent relied on information obtained by Osceola in the course of the Osceola audit. Osceola provided Respondent with copies of Osceola's work papers including a spreadsheet of undeclared revenue compiled from Petitioner's books and records. Osceola also provided Respondent with a list of 102 properties managed by Petitioner during the audit period. Approximately 61 properties are located in Osceola County and 41 are located in Polk County. Respondent bases its assessment on an estimate derived from the Osceola assessment, records, and work papers. Respondent conducted its audit in accordance with applicable law. The mathematical computations in Respondent's audit are correct. Petitioner owes sales and use tax in the respective amounts of $218,152.88 and $125,680.72, due on rentals derived from transient housing in Osceola and Polk counties. Petitioner also owes sales and use tax in the amount of $2,100 from the sale of fixed assets. Interest accrues at the daily rate of $98.13.
Recommendation Based upon the findings of fact and the conclusions of law, it is RECOMMENDED that Respondent enter a Final Order assessing Petitioner for tax, penalty, and accrued interest. DONE AND ENTERED this 11th day of July, 2003, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of July, 2003. COPIES FURNISHED: Carrol Y. Cherry, Esquire Office of the Attorney General, Tax Section The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 Martha F. Barrera, Esquire Office of the Attorney General, Tax Section The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 A.C.E. Property Management of Orlando, Inc. 3501 West Vine Street, Suite 387 Kissimmee, Florida 34741 Bruce Hoffmann, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 James Zingale, Executive Director Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact By Deposit Receipt dated June 12, 1975 (Exhibit 1) Kenneth H. Maxwell and Janet A. Maxwell contracted to purchase a lot for $7,000 from D & D Builders of Ft. Lauderdale, Inc. (D & D) with house to be built thereon for $29,900 in accordance with described plan. $3,690 was paid as earnest money deposit on this contract. It was intended that Maxwell would obtain a construction loan from the lending institution and before making the loan the lender required the value and plan number of the house to be included on the deposit receipt contract. The property was deeded to the Maxwells by Warranty Deed dated July 14, 1975 (Exhibit 2) and documentary stamp taxes in the amount of $21 was attached thereto. This is the correct amount for a $7,000 consideration for such a transfer. On July 15, 1975 a mortgage deed was executed by the Maxwells to the First Federal Savings and Loan Association of Highlands County to secure a loan in the amount of $33,200 and intangible taxes were paid thereon. At the time D & D and the Maxwells entered into their contract it was intended that Maxwell, who taught construction at a local junior college, would build his own house. When Maxwell attempted to get a building permit the county would not issue one because he was not a licensed contractor. He then arranged for D & D to pull the permit and for the bank to make the draws payable to D & D who would disburse the funds to the subcontractors, suppliers, and Maxwell. On July 15, 1975 the lender disbursed a check to D & D for $3,310 which, when added to the $3,690 initially paid by the Maxwells, completed the $7,000 payment for the lot to the seller D & D. Thereafter Maxwell constructed his house. D & D made the draws and disbursed the funds to suppliers, subcontractors, and to Maxwell. Exhibit 5 shows 8 checks were made payable to Maxwell totaling some $4,400. D & D did not supervise construction, received no compensations for its services, and acted only as a conduit for the construction loan.
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 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 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.
