The Issue Whether Respondent is entitled to a Consumer Certificate of Exemption under Section 212.08?
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Respondent is a nonprofit Florida corporation that was formed in 1980 to promote economic development and revitalization (and the resultant creation and retention of jobs) in targeted areas in the City of Miami and Dade County, Florida, by lending money to business desiring to locate or remain in these targeted areas. Article II of Respondent's Articles of Incorporation sets forth the "purposes" of the corporation. It reads as follows: This corporation is organized exclusively for charitable, education and economic development purposes which include promotion of community welfare by: (i) lessening of neighborhood tensions, (ii) lessening discrimination and (iii) combatting community deterioration by promoting and fostering the economic development of the City of Miami and Dade County, Florida. In furtherance of these purposes the corporation intends to engage in the following types of activities: Making investments in, and loans to, corporate or other business entities with monies which are directly or indirectly attributable to funds provided by the City of Miami, Dade County, Florida or other funds provided by the United States, the State of Florida or any agency or instrumentality of any of the foregoing, with funds generated by the repayment of the principal amount and accrued interest thereon of any loans made with such funds, or any dividends or other distributions paid to the corporation by any entity in which the corporation has an ownership interest, and with any funds contributed to the corporation by any individual or entity; Providing assistance for individuals, groups and organizations in planning and executing successful economic development projects; Providing professional assistance and counseling of all types, including business planning for individuals, organizations and their members where such counseling may be necessary for the economic development of low income or low employment areas; Acting as an intermediary, where appropriate, between various economic development programs and between organizations and individuals which may be involved in any capacity in economic development; Acquiring charitable contributions and assistance capital including seed money, which may be necessary for successful economic development projects; and Engaging in such other activities as the Board of Directors shall from time to time approve, provided that in no event shall this corporation be operated for purposes other than those permitted under Section 501(c)(3) of the Internal Revenue Code of 1954 or corresponding sections of any prior or future law. The corporation shall have the power, either directly or indirectly, either alone or in conjunction or cooperation with others, to do any and all lawful acts and things and to engage in any and all lawful activities which may be necessary, useful, suitable, desirable or proper for any and all of the purposes for which the corporation is organized, and to aid or assist other organizations whose activities are such as to further accomplish, foster or attain any of such purposes. Such activities shall include, but shall not be limited to, acceptance of gifts, grants, devises or bequests of funds, or any other property from any public or other governmental body and any private person, including but not limited to, private and public foundations, corporations and individuals. 2/ Notwithstanding anything herein to the contrary, this corporation may exercise any and all, but not other, powers as are in furtherance of the exempt purposes of organizations set forth in Section 501(c)(3) of the Internal Revenue Code of 1954 and its regulations as the same now exist, or as they may be hereafter amended from time to time. No part of the income or principal of this corporation shall inure to the benefit of or be distributed to any member, director or officer of the corporation or any other private individual in such a fashion as to constitute an application of funds not within the purpose of exempt organizations described in Section 501(c)(3) of the Internal Revenue Code of 1954. However, reimbursement for expenditures or the payment of reasonable compensation for services rendered shall not be deemed to be a distribution of income or principal. In the event of the complete or partial liquidation or dissolution of the corporation whether voluntary or involuntary, no member, director or officer shall be entitled to any distribution or division of the corporation's property or its proceeds, and the balance of all money and other property received by the corporation from any source shall, after the payment of all debts and obligations of the corporation in accordance with Chapter 617 of the Florida Statutes, be distributed and paid over by the Board of Directors to the City of Miami for public purposes. The corporation does not contemplate receiving any pecuniary gain or profit, incidental or otherwise. No substantial part of the activities of the corporation shall be the carrying on of propaganda or otherwise attempting to influence legislation, and the corporation shall not participate or intervene in, directly or indirectly, (including the publishing or distribution of statements) any political campaign on behalf of or in opposition to any candidate for public office. Over the past 16 years, Respondent has made 472 direct low interest business loans amounting to approximately $31.4 million. 3/ The recipients of these loans have collectively received from both public and private sources nearly $16.3 million in additional, matching funds. A potential borrower need not be disadvantaged or suffering from a hardship in order to receive a loan from Respondent. Indeed, as a general rule, Respondent will not make a loan unless the applicant demonstrates, during the application process, an ability to repay the loan. To this extent, and to this extent alone, Respondent takes into consideration the applicant's economic status in determining whether to grant the applicant's loan application. An intended 4/ by-product of Respondent's lending activities has been the creation and preservation of jobs in the targeted areas. The business investment that Respondent's activities have made possible has produced approximately 3,313 new jobs and preserved an estimated 1,391 jobs in these areas. The Internal Revenue Service treats Respondent as an exempt organization under Section 501(3)(c) of the Internal Revenue Code. In 1991, Respondent received from the Department a Consumer Certificate of Exemption, which, according to the cover letter that accompanied the Certificate, was "granted to [Respondent] in accordance with Section 212.08(7), Florida Statutes" and "exempt[ed Respondent] from the payment of sales and use tax on purchases of tangible personal property." The Certificate had an "issue date" of February 7, 1991, and an "expiration date" of February 7, 1996. Prior to the "expiration date," Respondent filed an application with the Department to renew the Certificate. The Department has preliminarily determined that the Certificate should not be renewed. It is this preliminary determination that is the subject of the instant controversy
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order finding that Respondent is not entitled to the Consumer Certificate of Exemption it is seeking pursuant to Section 212.08(7)(o)2.b.(IV), Florida Statutes. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 16th day of January, 1997. STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 16th day of January, 1997.
The Issue Whether Petitioner is entitled to a consumer's certificate of exemption from sales tax as a "charitable institution" as that term is defined by Section 212.08(7)(o)2b., Florida Statutes.
Findings Of Fact Petitioner is a nonprofit organization incorporated under the laws of the State of Florida as a corporation. Petitioner has applied to Respondent for a certificate of exemption from sales and use tax based on its claim that it is a "charitable institution" within the meaning of, and pursuant to the provisions of, Section 212.08(7)(o)2.b., Florida Statutes. 2/ The Internal Revenue Service has determined that Petitioner is exempt from federal income tax under Section 501(a) of the Internal Revenue Code as an organization described in Section 501(c)(3). Edy Sanon, Petitioner's executive director, testified in general terms as to the services performed by Petitioner to persons of Haitian descent. Based on that general testimony, it cannot be determined with any degree of certainty the precise services performed by Petitioner. Mr. Sanon testified that his organization provides translation services and referral services that assist Haitian immigrants in adjusting to life in the United States, becoming employable, and obtaining services from various government agencies. Petitioner engages in fund raising and searches for governmental grants for a center where people can come for help. The extent of its resources expended on fund raising was not established. Mr. Sanon testified that Petitioner provides its services free of charge and that it served approximately 800 clients last year. Chapter 212, Florida Statutes, imposes a tax on sales, use and other transactions. Respondent is the agency of the State of Florida charged with administering Chapter 212, Florida Statutes, and its duties include the issuance of certificates of exemption from tax pursuant to Section 212.08(7)(o), Florida Statutes. Pursuant to its rule-making authority, Respondent has adopted Rule 12A-1.001, Florida Administrative Code, to implement the provisions of Section 212.08(7)(o), Florida Statutes. Although Petitioner has been recognized as a nonprofit organization by the Internal Revenue Service, Petitioner must receive a certificate of exemption from Respondent to be exempt from Florida's tax on sales, use, and other transactions imposed by Chapter 212, Florida Statutes. The provisions of Section 212.08(7)(o), Florida Statutes, and Rule 12A-1.001, Florida Administrative Code, provide the criteria for the exemption sought by Petitioner. Section 212.08(7)(o), Florida Statutes, provides, in pertinent part, an exemption from sales tax as follows: (o) Religious, charitable, scientific, educational, and veterans' institutions and organizations. There are exempt from the tax imposed by this chapter transactions involving: * * * b. Sales or leases to nonprofit religious, nonprofit charitable, nonprofit scientific, or nonprofit educational institutions when used in carrying on their customary nonprofit religious, nonprofit charitable, nonprofit scientific, or nonprofit educational activities . . . * * * The provisions of this section authorizing exemptions from tax shall be strictly defined, limited, and applied in each category as follows: * * * b. "Charitable institutions" means only nonprofit corporations qualified as nonprofit pursuant to s. 501(c)(3), Internal Revenue Code of 1954, as amended, and other nonprofit entities, the sole or primary function of which is to provide, or to raise funds for organizations which provide, one or more of the following services if a reasonable percentage of such service is provided free of charge, or at a substantially reduced cost, to persons, animals, or organizations that are unable to pay for such service: * * * (IV) Social welfare services including adoption placement, child care, community care for the elderly, and other social welfare services which clearly and substantially benefit a client population which is disadvantaged or suffers a hardship . . . 3/ Rule 12A-1.001(3)(g), Florida Administrative Code, implements the provisions of Section 212.08(7)(o), Florida Statutes, and provides, in pertinent part, as follows: (g)1. "Charitable institutions" means only nonprofit corporations qualified as nonprofit pursuant to s. 501(c)(3), United States Internal Revenue Code, 1954, as amended, and other nonprofit entities that meet the following requirements: the sole or primary function is providing a "qualified charitable service" as defined in this subsection; and a reasonable percentage of such service is provided free of charge, or at a substantially reduced cost, to persons, animals, or organizations that are unable to pay for such service. * * * 3.a. For the purpose of this subsection the following terms and phrases shall have the meaning ascribed to them except when the context clearly indicates a different meaning: I. "Persons unable to pay" means persons whose annual income is 150 percent or less of the current Federal Poverty Guidelines . . . * * * "Substantially reduced cost" means the normal charge, market price, or fair market value to a purchaser or recipient, diminished in an amount of considerable quantity. "Sole or primary function" means that a charitable institution, excluding hospitals, must establish and support its function as providing or raising funds for services as outlined in subparagraphs 1. and 2. above, by expending in excess of 50.0 percent of the charitable institution's operational expenditures towards "qualified charitable services", as defined in subparagraph 2.a. - g. within the charitable institution's most recent fiscal year. Petitioner established that it is a nonprofit organization. Petitioner did not present any financial data at the formal hearing. In the absence of that financial information, it cannot be found that Petitioner disburses more than fifty percent of its expenditures to provide or raise funds for a provider of a statutorily listed service. The absence of that information is fatal to Petitioner's application. 4/ The unchallenged testimony of Mr. Sanon was sufficient to establish for the purposes of this proceeding that Petitioner does not charge for its services. Petitioner did not establish at the formal hearing the ability of any of its client to pay a reasonable fee for the services provided by Petitioner. The general testimony of Mr. Sanon failed to establish that the translation, referral, and other services provided by Petitioner are "social welfare services" within the meaning of Section 212.08(7)(o)2.b., Florida Statutes. 5/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order that denies Petitioner's application for a certificate of exemption. DONE AND ENTERED this 1st day of December, 1998, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 1st day of December, 1998.
The Issue Whether the proposed rules, 60Z-1.026 and 60Z-2.017, Florida Administrative Code, published in the Florida Administrative Weekly on March 7, 2003 (Volume 29, No. 10, at pages 979-80), constitute an invalid exercise of delegated legislative authority.
Findings Of Fact Petitioner, Florida League of Cities, Inc. (“League”), is a not-for-profit Florida corporation located at 301 South Bronough Street, Suite 300, Tallahassee, Florida 32301. The League is a wholly owned instrumentality of its 405 member cities. The League’s purpose is to work for the general improvement of municipal government and its effective administration in this state, and to represent its members before the legislative, executive and judicial branches of Florida’s state government on issues pertaining to the welfare of its members. The League’s members include 175 cities with pension plans for firefighters established pursuant to Chapter 175; and 184 cities with pension plans for police officers established pursuant to Chapter 185. Petitioner Casselberry maintains a local law pension plan for its firefighters and police officers pursuant to Chapters 175 and 185. Casselberry’s pension plan was in effect on October 1, 1998. Casselberry’s pension plan meets all the minimum benefit requirements of Chapters 175 and 185. Casselberry’s police/fire pension plan provides benefits in addition to or greater than the pension benefits it provides to general employees that cost as much or more than the total amount of premium taxes received by the City of Casselberry. Petitioner Deerfield Beach maintains a local law pension plan for its police officers pursuant to Chapter 185, Florida Statutes. Deerfield Beach’s pension plan meets all the minimum benefit requirements of Chapter 185. Further, Deerfield Beach’s police pension plan provides benefits in addition to or greater than the pension benefits it provides to general employees that cost as much or more than the total amount of premium taxes received by the City of Deerfield Beach. Petitioner Greenacres maintains a local law pension plan for its firefighters and police officers pursuant to Chapters 175 and 185, Florida Statutes. Greenacres’ pension plan meets all the minimum benefit requirements of Chapters 175 and 185. Greenacres’ police/fire pension plan provides benefits in addition to or greater than the pension benefits it provides to general employees that cost as much or more than the total amount of premium taxes received by the City of Greenacres. Petitioner Kissimmee maintains a local law pension plan for its firefighters pursuant to Chapter 175. Kissimmee’s firefighter pension plan meets all the minimum benefit requirements of Chapter 175. Kissimmee’s firefighter pension plan provides benefits in addition to or greater than the pension benefits it provides to general employees that cost as much or more than the total amount of premium taxes received by the City of Kissimmee. Petitioner New Port Richey maintains a local law pension plan for its firefighters pursuant to Chapter 175. New Port Richey’s firefighter pension plan meets all the minimum benefit requirements of Chapter 175, and provides benefits in addition to or greater than the pension benefits it provides to general employees. These benefits cost as much or more than the total amount of premium taxes received by the City of New Port Richey. Chapters 175 and 185, govern the establishment and operation of defined benefit retirement plans for municipal police officers and firefighters employed by cities and special districts. These Chapters also contain a revenue sharing program that allows participating cities and districts to receive a portion of the state excise tax on property and casualty insurance premiums collected on policies covering property within each jurisdiction. In order to qualify for the annual distribution of premium tax revenues provided by Chapters 175 and 185, the local government pension plan must comply with the applicable provisions of those statutes. Sections 175.351(1) and 185.35(1), respectively, of those Chapters were amended in 1999 by Chapter 99-1, Laws of Florida. The two Sections are virtually identical and can be treated interchangeably for the purposes of this proceeding. Section 175.351(1), in pertinent part, reads as follows: PREMIUM TAX INCOME.--If a municipality has a pension plan for firefighters, or a pension plan for firefighters and police officers, where included, which in the opinion of the division meets the minimum benefits and minimum standards set forth in this chapter, the board of trustees of the pension plan, as approved by a majority of firefighters of the municipality, may: Place the income from the premium tax in Section 175.101 in such pension plan for the sole and exclusive use of its firefighters, or for firefighters and police officers, where included, where it shall become an integral part of that pension plan and shall be used to pay extra benefits to the firefighters included in that pension plan; or Place the income from the premium tax in Section 175.101 in a separate supplemental plan to pay extra benefits to firefighters, or to firefighters and police officers where included, participating in such separate supplemental plan. The premium tax provided by this Chapter shall in all cases be used in its entirety to provide extra benefits to firefighters, or to firefighters and police officers, where included. However, local law plans in effect on October 1, 1998, shall be required to comply with the minimum benefit provisions of this chapter only to the extent that additional premium tax revenues become available to incrementally fund the cost of such compliance as provided in Section 175.162(2)(a). When a plan is in compliance with such minimum benefit provisions, as subsequent additional premium tax revenues become available, they shall be used to provide extra benefits. For the purpose of this chapter, ‘additional premium tax revenues’ means revenues received by a municipality or special fire control district pursuant to Section 175.121 that exceed that amount received for calendar year 1997 and the term ‘extra benefits’ means benefits in addition to or greater than those provided to general employees of the municipality. Local law plans created by special act before May 23, 1939, shall be deemed to comply with this chapter. (Underscored language was enacted by Chapter 99-1, Laws of Florida.) The above-quoted underscored language of Sections 175.351 and 185.35 became effective March 12, 1999. The Division of Retirement advised all cities and districts that they could use additional premium tax revenues received in excess of the amount received for 1997 solely to pay for new extra benefits adopted after March 12, 1999. The additional premium tax revenues could not be used to pay for extra benefits adopted before March 12, 1999. Consequently, responsibility for the cost to local governments for extra benefits adopted prior to March 12, 1999, is not defrayed by additional premium tax benefits and must be absorbed by the particular local government. As established by testimony of Respondent's Actuary, Charles Slavin, along with Article X, Section 14 of the Florida Constitution and Part VII, Chapter 112, governmental pension plans must be funded on a “sound actuarial basis.” A plan is actuarially funded when funded by contributions which, when expressed as a percent of active member payrolls or a fixed dollar amount, will remain approximately level from year to year and will not have to be increased in the future, in the absence of benefit improvements. Actuarial funding is based on reasonable assumptions, predictable events and variables so that all the funds necessary to pay employees' future benefits are accumulated by the expected date of benefit payments. A pension plan is funded on a sound actuarial basis when a funding program has been established which, with the payment of level contributions and investment returns over the lifetime of the participants, will fund the difference between the value of expected promised benefits and the available assets. Although pension benefits increase in future years from increased salaries and other facts, pension plans are usually funded on a constant level percentage of payroll. Such funding pays the normal fiscal cost and amortizes unfunded liabilities as required by Chapter 112, Part VII. Payroll growth helps pay for increases in the cost of benefits because employee contributions, based on a level percentage of payroll produce increased funding. Liability increases are offset by payroll growth. Extra benefits for firefighters and police officers in excess of those provided general employees, that were enacted by local governments, prior to or after March 12, 1999, were required by law to be funded on a sound actuarial basis. Premium tax revenues to the local governments are not within the control of those local governments since the amount of tax levied is set by the legislature through statutory enactment. Accordingly, inclusion of future revenues in future years from the premium tax is not a proper actuarial assumption in the funding of extra benefits. Some local governments, despite this categorization of the premium tax revenue, enacted special benefits in reliance upon possible future increases in revenues from the tax to fund special benefits. All local government Petitioners in the present proceeding meet the minimum benefit requirements of Sections 175.162 and 185.16. The cost of extra benefits enacted by Petitioners prior to the effective date of Chapter 99-1 (March 12, 1999), generally exceeded the amount of the premium tax received by Petitioners. Respondent's requirement that Petitioners set aside additional premium tax revenues to fund solely future benefit increases prevented the reduction of future funds for future benefits. Respondent's proposed rules, 60Z-1.026 and 60Z-2.017, are identical with exception that one is applicable to Sections 175.351(1) and 185.35(1), respectively, and read as follows: Use of premium tax revenues: For pension plans that were in effect on October 1, 1998, that have not met the minimum benefit requirements described in Section 185.16, benefits shall be increased incrementally as additional premium tax revenues become available. For pension plans that were in effect on October 1, 1998, that provide benefits that meet or exceed the minimum benefits described in Section 185.16, increases in premium tax revenues over the amount collected for calendar year 1997, must be used in their entirety to provide extra benefits in addition to those benefits provided prior to the effective date of Chapter 99-1, Laws of Florida. For plans that were not in existence on October 1, 1998, premium tax revenues must be used in their entirety to provide extra benefits. Respondent interprets "additional premium benefits" as defined in Sections 175.351 and 185.35 to mean premium tax benefits greater than those received in 1997 and distributed to cities in 1998, prior to enactment of Chapter 99-1. "Extra benefits" means benefits greater than those afforded general employees and in addition to or greater than those benefits enacted prior to the effective date of Chapter 99-1. These definitions presume that amendments in Chapter 99-1 are to be applied prospectively, or after the effective date of that legislative enactment. Extra benefits enacted prior to that date must be funded from premium tax dollars received prior to that date. No evidence was presented by Petitioners of legislative intent that "additional premium tax revenues" should or could be used to fund existing extra benefits enacted prior to Chapter 99-1.
The Issue The issue in this case is whether Petitioner is entitled to a consumer certificate of exemption as a religious or charitable institution.
Findings Of Fact Petitioner has submitted seven (7) exceptions to the Hearing Officer's Findings of Fact in the Recommended Order. Exceptions 1, and 3 through 6 filed by Petitioner are rejected. Exception 2 is accepted to the extent it states that Petitioner does not hold worship services. The remainder of this exception is rejected. Exception 7 is rejected, except for the first sentence which indicates that the date of purchase of the vehicle was 1995, not 1993. Petitioner's First Exception-- Finding of Fact No. 1: Petitioner's statements as to how Petitioner was advertised are not relevant and, therefore, are rejected. Petitioner's Second Exception-- Finding of Fact No. 2: Accepted that Petitioner does not have worship services. This determination has been made by the Hearing Officer's Findings of Fact. See Findings of Fact No. 2 and 3. The remainder of this exception is rejected as being irrelevant. Petitioner's Third Exceptions-- Finding of Fact No. 3: The Hearing Officer's Finding of Fact, Paragraph 3 of the Proposed Recommended Order, that Christian-Muslim Church of God (ALLAH) is not part of any established religion is supported by substantial competent evidence. Thus, Petitioner's exception to this finding is rejected. The statement that Petitioner's founder will write a "Consolidated Moral Bible" is not relevant, and is therefore rejected. The Hearing Officer's finding that Petitioner has generalized plans to establish regular religious services, but has not yet done so, is supported by substantial competent evidence. Therefore, Petitioner's exception to this finding is rejected. The statement as to how assemblies of the church will be organized by Petitioner in the future is not relevant, and is therefore rejected. Petitioner's Fourth Exceptions- Finding of Fact No. 4: Petitioner's statements as to where Petitioner's funds are deposited is not relevant, and therefore is rejected. Petitioner's statements as to the type of donations its founder, Mr. Savas, personally makes are not relevant and, therefore, are rejected. The Hearing Officer found that Petitioner does not qualify as a "religious institution" under s212.08(7)(o) 2.a., Florida Statutes. The Hearing Officer's finding is supported by substantial competent evidence. Thus, Petitioner's exception to this finding is rejected. Petitioner's statement as to why Petitioner needs the sales tax exemption is not relevant and, therefore, is rejected. Petitioner's Fifth Exceptions-- Finding of Fact No. 5: The Hearing Officer found that Petitioner is not registered as, or classified as, any type of legal entity. The Hearing Officer also found that the Petitioner is not a church or charitable institution as those terms are defined under s212.08(7), Florida Statutes for purposes of sales tax exemption. The Hearing Officer's findings are supported by the record and by substantial competent evidence. The remainder of Petitioner's exceptions are not material. Therefore, all of Petitioner's exceptions to Paragraph 5 are hereby rejected. Petitioner's Sixth Exception-- Finding of Fact No. 6: The Hearing Officer found that Petitioner is not registered as, or classified as, any type of legal entity and that Petitioner does not qualify as a "charitable institution" pursuant to s 212.08(7)(o)2.b., Florida Statutes. These findings are supported by substantial competent evidence. Therefore, Petitioner's exception to this paragraph is rejected. Petitioner's Seventh Exceptions-- Finding of Fact No. 7: Accepted that Petitioner's founder purchased his car in 1995, and applied for a consumer's certificate of exemption at that time. The statements as to the beliefs of Petitioner's founder are irrelevant or immaterial, and are rejected accordingly.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Revenue enter a final order denying a consumer certificate of tax exemption to Petitioner, the Christian-Muslim Church of God (Allah). DONE and ENTERED this 18th day of March, 1996, in Tallahassee, Florida. CAROLYN S. HOLIFIELD 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 18th day of March, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-4076 To comply with the requirements of Section 120.59(2), Florida Statutes (1995), the following rulings are made on the parties' proposed findings of fact: Respondent's Proposed Findings of Fact. 1. - 11. Accepted and incorporated to the extent not subordinate or unnecessary. COPIES FURNISHED: Ruth Ann Smith, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 John Savas 1416 Hill Drive Largo, Florida 34640 Linda Lettera, Esquire Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact The Petitioner, a nonprofit corporation, was licensed by the Respondent to operate as a vocational, technical, or trade school during 1977. The school was designed to teach business machine repair and maintenance skills to students. The Petitioner applied for a renewal of the license with the Respondent for 1978. By letter dated August 14, 1978, the Respondent advised the Petitioner that it would not reissue the license. The Petitioner requested an administrative hearing, and this proceeding ensued. Beginning in January, 1977, the Petitioner was funded by the "CETA Administration" as a service delivery agent. Under this funding, the Petitioner would submit requests for reimbursement based upon its expenditures in providing an educational program to its students, and the Petitioner was funded directly. Petitioner enjoyed this status from January through September, 1977, and received a total of $87,806.07 in direct funding. As of October 1, 1977, the Petitioner's funding status with CETA changed. After that date the Petitioner became what was called a "sub-subgrantee" of the vocational education component of the local CETA Administration. The vocational education component of CETA became the service delivery agent, and was directly funded. The Petitioner thereafter was not able to do its own recruiting of students, and no longer received direct funding from CETA. Rather, CETA would pay to students a stipend adequate to compensate them for tuition, and other costs of the program. On October 1, the Petitioner had eleven students. Despite the Petitioner's efforts to provide the new service delivery agent with the names of persons interested in participating in the Petitioner's program, CETA did not refer new students to the program. The school lost approximately one student per month from October, 1977 through May, 1978. CETA discontinued all funding of the Petitioner on June 7, 1978. Since that date the Petitioner has had no students. The financial statement submitted by the Petitioner to the Respondent in connection with the renewal application revealed that the Petitioner was operating with a net income loss of $524.76; had total assets of minus $203.57; a fund balance of minus $446.96; and total liabilities of more than two hundred dollars. The projected finances for the period October 1, 1978 through September 30, 1979 indicates that the school will lose approximately ten thousand dollars. The Petitioner, in its renewal application, did not reveal that it had had a drastic change in its funding status, and that it had lost all of its students. During the time that it was in operation, only approximately five persons completed the Petitioner's course work. The Petitioner submitted with its renewal application, a copy of its school catalog. The catalog revealed that certain persons remained on the school's board of directors, who in fact had resigned from these positions. This failure is excusable. The catalog that was submitted was the same catalog that had been used the year before. Due to the loss of its CETA funding, the Petitioner could not afford to have new catalogs printed.
Findings Of Fact Having heard oral argument on the issues and considered the evidence presented in this cause, it is found as follows: Petitioner, Aerospace Workers, Inc., is a non-profit Florida corporation, which owns record title to the Union Lodge 166, located at 171 Taylor Avenue in Cape Canaveral, Florida. For the 1974 tax year, the Brevard County Property appraiser or Tax Assessor assessed the petitioner's lodge at full market value without allowance of any exemption. The reason given by the assessor for the disapproval of exempt status was that there is no provision under the Florida Statutes for the exemption of labor organizations. The petitioner, through its financial secretary, William J. Boydstun, then appealed the Tax Assessor's denial exempt status to the Brevard County Board of Tax Adjustment, claiming that the building should be tax exempt as one used for charitable purposes. Mr. Boydstun informed the BTA that the building in question "at any time we are not using it, has been thrown open to the public." The BTA was further informed that the building "has been used by the Brevard County Beach Erosion Control District by the Narc Aid Society, by the Avon and Winslow Beach Residents Assn., by the Roosevelt Garden Condominium Apartments, Inc. We have let local weddings take place. It has been used by the concerned Democrats and also by the County Commissioners in a couple of instances. Tomorrow we are letting the County use our building as a polling place." Mr. Boydstun also stated that petitioner's members donated $225,000.00 to the United Fund in Brevard County and had helped support the Brevard Junior Deputies, the Brevard Mental Health Center and various other organizations in the County. Also submitted to the BTA by Mr. Boydstun was a list of persons or groups who had used the building since December of 1973. Included in this list were the Mark Age Society (which petitioner stated during the hearing is a religious group), the Brevard County Beach Erosion Control District, the Avon by the Sea and Winslow Beach Residents' Association, the Roosevelt Garden Condominium Apartments, Inc., Concerned Democrats, political meetings for Senator Lawton Chiles, Mallory Horne and Governor Reubin Askew, and a minister for a local wedding. It was also stated that the building has been used as a polling place and for meetings for the United Fund Drive. The Tax Assessor represented to the BTA that he denied the exemption because labor unions are not given exemptions according to the Florida Law, and that the Department of Revenue denied an exemption for petitioner for that reason the previous year. At the meeting of the BTA on October 4, 1974, Chairman Hurdle moved that petitioner be granted a 50 percent charitable exemption on the basis that the property is used for charitable purposes. The motion carried by a vote of 2 to 1. The Tax Assessor did not concur. In its notice to the Executive Director of the Department of Revenue, the BTA explained its reasons for granting the Petitioner a fifty percent charitable exemption by stating that: "the Board found that the property should receive a 50 percent tax exemption because they felt that the use of the property provided a service which was of such a community service that its discontinuance could result in the allocation of public funds for the continuance of said services. The Board basically found that the use of the building by the general public met the requirements in the description of charitable purposes found in Chapter 196.012(6) of the Florida Statutes and therefore granted a 50 percent charitable tax exemption for the property described in Petition No. 11." In its "Notice of Proposed Agency Action to Invalidate Relief Granted by Board of Tax Adjustment," the Department of Revenue concluded in its "Staff Recommendation" that the BTA's findings and the evidence and testimony upon which they were based, were insufficient to support the ultimate finding that petitioner qualifies for a fifty percent exemption, and that the BTA had not come up with sufficient evidence to overcome the Property Appraiser's presumption of correctness. It was further concluded in said "Staff Recommendation" that there was no showing that the use of the property by the various community organizations was a use of more than 51 percent, and that the BTA's granting of a 50 percent exemption is expressly contrary to F.S. Section 196.012(3). SUMMARY OF ORAL ARGUMENTS The above factual findings constitute the record to which oral argument was limited at the hearing. It was the petitioner's position at the hearing that inasmuch as the Tax Assessor gave an invalid reason for denying the charitable exemption, there is no presumption of correctness attaching to his assessment. It was further contended that, given the reason for denial by the assessor (i.e., that labor organizations could not be exempt), petitioner did not believe it acceded to make a showing of predominant charitable usage. In the alternative, petitioner asserts that there was sufficient evidence before the BTA to permit the BTA to conclude that the property was used predominantly for charitable purposes. It was the respondent's position at the hearing that, regardless of the reason given by the assessor for his denial of exempt status, petitioner failed in its burden to prove the assessment wrong. In other words, it is the assessment itself which carries the presumption of correctness, and not the reasoning behind the assessment. Respondent contended that the record of the proceedings before the BTA is devoid of any evidence entitling petitioner to a charitable exemption.
Recommendation Based upon the findings of fact and conclusions of law, it is my recommendation that the action taken by the Brevard County Board of Tax Adjustment be invalidated and that the denial of exempt status made by the Brevard County Tax Assessor be affirmed. DONE and ORDERED this 4th day of October, 1975, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Collins Building, Room 104 Tallahassee, Florida 32399-1550 (904) 488-9675
The Issue The issues to be resolved in this proceeding concern whether the Petitioner, Community Health Charities of Florida (CHC), is entitled to an award of attorney's fees and costs as a "prevailing small business party" pursuant to Section 57.111, Florida Statutes (2008), by being a prevailing small business party in the underlying case of Community Health Charities of Florida, et. al v. Florida Department of Management Services, DOAH Case No. 07-3547, Recommended Order February 29, 2008; Final Order May 29, 2008. Also, at issue is whether the Respondent Agency's actions, with regard to the underlying case, were substantially justified or whether special circumstances exist which would render an award of attorney's fees and costs unjust.
Findings Of Fact This cause arose upon the filing of a motion or petition for attorney's fees and costs on July 22, 2008, by the Petitioners, CHC and the Charities (the American Liver Foundation, Cystic Fibrosis Foundation, Crohn's and Colitis Foundation, Prevent Blindness Florida, Children's Tumor Foundation, March of Dimes, Lupus Foundation of America, Florida Chapter, Florida Hospices and Palliative Care, Hemophilia Foundation of Greater Florida, National Parkinson Foundation, American Diabetes Association, Leukemia and Lymphoma Society, American Lung Association, ALS Association, Alzheimer's Association, Juvenile Diabetes Research Foundation, Arthritis Foundation, Florida SIDS Alliance, Sickle Cell Disease Association of Florida, Easter Seals Florida, St. Jude Children's Research Hospital, Muscular Dystrophy Association, Nami Florida, National Kidney Foundation, National Multiple Sclerosis Foundation, Huntington's Disease Society of America, and Association for Retarded Citizens). This attorney fee and cost motion was filed in connection with the above Charities having received distribution of undesignated contributions from the 2006 Florida State Employees' Charitable Campaign (FSECC). The Charities made application for the funds and then contested the initial decision of the Steering Committee charged with determining distribution of undesignated contributions (by fiscal agent area). Ultimately, after obtaining a Writ of Mandamus from the First District Court of Appeal, requiring an administrative proceeding and hearing before the Division of Administrative Hearings on the contested claims, the Charities received additional distribution of undesignated contributions. Those additional distributions represent an additional benefit the Charities received upon the entry of the Recommended Order and the Final Order in the underlying proceeding. Therefore, one Petitioner, CHC, in the motion for attorney's fees and costs asserts that it is thus a prevailing party and a small business for purposes of Section 57.111, Florida Statutes, and is entitled to an award of attorney's fees and costs. The Respondent is an Agency of the State of Florida with authority to establish an maintain the FSECC.1/ It administers the decision-making process involving distribution of undesignated funds and issued the Final Order in the original proceeding. The attorney fee and cost proceeding was initially assigned to Administrative Law Judge Charles Adams. Thereafter the case was re-assigned to Administrative Law Judge T. Kent Wetherell, II. He issued an Order, sua sponte, on July 29, 2008, instructing the Petitioners to show cause why the case should not be held in abeyance pending disposition of the appeal of the Final Order in Community Health Charities of Florida v. State of Florida, Department of Management Services, 1D08-3126, the appeal before the First District Court of Appeal. The Petitioners filed a response to the Order to Show Cause stating, in essence, that the issues preserved for appeal involved discreet claims under Section 120.56(4), Florida Statutes. The parties agreed that the portions of the Final Order in the underlying proceeding which granted undesignated fund distributions to the Charities were separable, and not the subject of the appeal to the First District Court of Appeal in the above-cited case. The parties thus stipulated that the case could proceed on the matter of fees and costs, notwithstanding the pending appeal. An Order was entered by Judge Wetherell on August 11, 2008, based upon the responses to the Order to Show Cause. The Order references the parties' agreement that the case could go forward notwithstanding the pending appeal of the Final Order in the underlying case and then, significantly, Judge Wetherell made the following finding: "a closer review of the motion [the motion seeking the award of attorney's fees and costs] reflects that the only Petitioner alleged to be a prevailing small business party entitled to an award of fees under that statute [Section 57.111, Florida Statutes] is Community Health Charities of Florida." Judge Wetherell thereupon proceeded to order that the case style be amended to identify Community Health Charities of Florida (CHC), as the "only Petitioner in this fee case." The Petitioner, CHC, is a Florida non-profit corporation that employs less than 25 full-time employees and has a net worth of less than two million dollars. It is a "federation" under the FSECC Act. A "federation" is defined as an umbrella agency that supplies "common fund raising, administrative and management services to . . . charitable constituent member organizations. . . ." Fla. Admin. Code R. 60L-39.0015(1)(j). Federations were required to file with the Committee (the Steering Committee) a Direct Local Certification Form, describing the direct services that each member charity provided in the various fiscal agent areas. In this capacity, the Petitioner CHC represented 27 member charities in the 2006 charitable campaign. Charitable organizations that provide "direct services in a local fiscal agent's area" are entitled to receive "the same percentage of undesignated funds as the percentage of designated funds they receive." § 110.181(2)(e), Fla. Stat. (2006). CHC is not a provider of services or direct services. Therefore, it, itself, did not receive any undesignated funds. The charitable organizations named above, are the entities which received undesignated funds related to direct services they provided in local fiscal agents' areas. Some received them through the initial decision of the subject Steering Committee, and some after the underlying administrative proceeding was litigated through Final Order. On February 28, 2007, the Steering Committee, under the Respondent's auspices, conducted a public meeting in which it found the charities named above provided direct services in 18 percent of the fiscal agent areas in which they had applied. The Committee therefore denied Charities their share of undesignated funds in the remaining fiscal agent areas. That Committee decision was announced by memorandum of March 12, 2007, which provided the Petitioners with a point of entry to dispute the initial decision in an administrative proceeding. On March 30, 2007, the Petitioners filed an Amended Petition which alleged that they had provided direct services in all the fiscal agent areas in which they applied for undesignated funds, and identified alleged deficiencies in the Committee's decision-making process. That Amended Petition was ultimately referred to the Division of Administrative Hearings for conduct of a formal proceeding, by Order of the First District Court of Appeal, requiring the Agency to refer the Amended Petition to the Division of Administrative Hearings. With the Amended Petition pending before the Division of Administrative Hearings, the Steering Committee called an unscheduled meeting on September 10, 2007, to further address the Petitioners' claims and re-visit the earlier decision denying some applications for undesignated funds. Thereafter, the Respondent changed its initial decision by increasing the percentages of fiscal agent areas where direct services were provided and undesignated funds awarded to the Petitioners, the Charities, as a result of the September 10, 2007, meeting. This percentage thus increased from 18 percent to 77 percent as a result of "additional review of material provided by Petitioners." The Respondent Agency ultimately rendered a Final Order that adopted the decision of the Statewide Steering Committee, approving 77 percent of the Petitioners' previous submittals, as well as the finding of the Administrative Law Judge with regard to the three additional member charities. The Respondent had maintained in the original proceeding that the Committee must limit its consideration to the Direct Local Certification Form. The Petitioners, on the other hand, argued that they were entitled to a de novo review of the Agency action before the Division of Administrative Hearings. Reserving ruling on that matter, Judge Adams permitted the Petitioners, at the Final Hearing, to introduce additional evidence of direct services provided in those fiscal agent areas in which their applications had been denied by the Committee. The issue of direct services was considered de novo before the Division. The judge considered not only the direct local services certification form, but also supporting evidence of direct services introduced by the Petitioners at the Final Hearing. On considering that evidence, the Administrative Law Judge found that three additional member charities, not previously approved by the Committee, had provided direct services, which entitled them to receive undesignated funds. The Final Order entered by the Respondent Agency adopted the Administrative Law Judge's ruling. No exceptions were filed to that Recommended Order, thus the Agency waived its appellate rights with respect to any issue it might have raised, and the Charities prevailed as to the relief they sought in the Amended Petition. In their affidavits filed with the Motion for Attorney's Fees and Costs on July 22, 2008, the attorneys Byrne and Hawkins, for the above-named Petitioners, stated that they were "retained" by those Petitioners, meaning all the above- named charities and also the Petitioner CHC. In the affidavits they stated that those Petitioners "incurred" the attorney's fees and costs to which the affidavits relate. As stated above, the attorney's fee Motion was filed and joined-in by all the above-named charities and CHC. The Petitioners in the underlying case, which was appealed to the First District Court of Appeal, were all the above-named charities and CHC. Nonetheless, the Petitioner CHC took the position at the hearing in this proceeding that an agreement or understanding existed with the affiliate charities, whereby CHC would bear the attorney's fees and costs on behalf of all the affiliate charities. CHC has an agreement concerning how revenue it receives is shared with its national office and member charities. CHC pays its national office a percentage of revenue. It sends money to the national office and the national office also sends an allocation of funds to CHC. CHC is a member of the Arlington, Virginia-based Community Health Charities of America. For the fiscal year beginning July 1, 2006, CHC withheld 25 percent of charitable donations from Florida employees to its affiliated charities as its fee. This is the maximum amount authorized by Florida law in order for it to participate in the FSECC. § 110.181(1)(h)1., Fla. Stat. (2006). In the 2006 campaign at issue, CHC did not file an application in its own name to the Steering Committee for receipt of undesignated funds. As Ms. Cooper testified "we did not apply." CHC received no allocation or award of undesignated funds either in the initial Steering Committee consideration process or as a result of the underlying proceeding through the Agency's Final Order. All the undesignated fund distributions were made to the charities themselves, who were the entities who filed applications to the Steering Committee seeking receipt of undesignated funds. The Steering Committee, which made the initial decisions about distribution of undesignated funds is composed of appointed volunteers. The members of the committee are not compensated and do not have support staff to assist them in their fact-finding review of applications concerning receipt of undesignated funds. The committee members personally review all applications. Review of the applications takes many hours by each member of the committee, much more time than is spent in actual committee meetings. The combined net worth and number of employees of some or all of the Charities, was not established. It was not established that the net worth of one or more of the charities filing this Motion for Attorney's Fees and participating as Petitioners in the underlying case, is less than two million dollars, nor that one or more of them have less than 25 employees. The legislature appropriated $17,000.00 dollars to DMS to administer the FSECC for 2006. Substantially more than that appropriated sum has been expended by DMS to administer the campaign. DMS has no insurance coverage which would pay attorney's fees and costs if they were awarded. DMS is also subject to at least a four percent budget "hold back" for the current fiscal year and is contemplating laying off employees in January 2009, due to budget reductions. If DMS is ordered to pay attorney's fees and costs to CHC, DMS will bill the fiscal agent, United Way, for payment of those amounts from the FSECC charitable contributions. Contrary to the situation with the Petitioner Charities, who made the original filing of the Amended Petition in the underlying case and were named as parties in the filing of the Motion for Attorney's Fees at issue in this case, CHC did offer evidence that its net worth was less than two million dollars and that it had less than 25 employees. Thus, it established this threshold for being considered a small business party. It is also true, however, that the Recommended Order from the Administrative Law Judge and the Final Order from the Agency in the underlying proceeding specifically make no mention of CHC as a prevailing party and award nothing of benefit to CHC, as opposed to the other actual charities, who filed the subject applications.
The Issue The issue in this case is whether the Petitioner, Polish Mission Foundation, Inc., qualifies under Section 212.08(7)(o), Florida Statutes, for a consumer certificate of exemption as a "charitable institution," or as a "religious institution."
Findings Of Fact The Foundation is a recently organized not-for-profit corporation. It does not yet have any funds of its own. Having no funds, it has no history of expenditures. 1/ More specifically, the Foundation does not have a history of expending in excess of 50 percent of its operational expenditures towards "qualified charitable services," as defined in the Department's rules. The Foundation has not provided any such "qualified charitable services." The Foundation does not have an established physical place of worship where it regularly conducts religious services and activities. In the future, the Foundation plans to raise funds for the purpose of providing financial assistance to various activities of a church. Some of the activities to which the Foundation plans to provide financial assistance would be "qualified charitable services," others would not.
Recommendation Based on all of the foregoing, it is RECOMMENDED that the Department issue a final order in this case denying the Petitioner's application for a consumer certificate of exemption. DONE AND ENTERED this 21st day of January, 2000, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH 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 21st day of January, 2000.
The Issue Whether the contested and unpaid portions of the tax, penalty and interest assessment issued against Petitioners as a result of Audit No. 9317210175 should be withdrawn as Petitioners have requested?
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Shuckers is an oceanfront restaurant and lounge located at 9800 South Ocean Drive in Jensen Beach, Florida. In November of 1992, Petitioner Mesa's brother, Robert Woods, Jr., telephoned Mesa and asked her if she wanted a job as Shuckers' bookkeeper. Woods had been the owner of Shuckers since 1986 through his ownership and control of the corporate entities (initially Shuckers Oyster Bar Too of Jensen Beach, Florida, Inc., and then NAT, Inc.) that owned the business. Mesa needed a job. She therefore accepted her brother's offer of employment, notwithstanding that she had no previous experience or training as a bookkeeper. When Mesa reported for her first day of work on November 19, 1992, she learned that Woods expected her to be not only the bookkeeper, but the general manager of the business as well. Mesa agreed to perform these additional responsibilities. She managed the day-to-day activities of the business under the general direction and supervision of Woods. After a couple of weeks, Woods told Mesa that it would be best if she discharged her managerial responsibilities through an incorporated management company. Woods had his accountant draft the documents necessary to form such a corporation. Among these documents were the corporation's Articles of Incorporation. Mesa executed the Articles of Incorporation and, on December 3, 1992, filed them with the Secretary of State of the State of Florida, thereby creating Petitioner TAN, Inc. TAN, Inc.'s Articles of Incorporation provided as follows: The undersigned subscribers to these Articles of Incorporation, natural persons competent to contract, hereby form a corporation under the laws of the State of Florida. ARTICLE I- CORPORATE NAME The name of the corporation is: TAN, INC. ARTICLE II- DURATION This corporation shall exist perpetually unless dissolved according to Florida law. ARTICLE III- PURPOSE The corporation is organized for the purpose of engaging in any activities or business permitted under the laws of the United States and the State of Florida. ARTICLE IV- CAPITAL STOCK The corporation is authorized to issue One Thousand (1000) shares of One Dollar ($1.00) par value Common Stock, which shall be designated "Common Shares." Article V- INITIAL REGISTERED OFFICE AND AGENT The principal office, if known, or the mailing address of this corporation is: TAN, INC. 9800 South Ocean Drive Jensen Beach, Florida 34957 The name and address of the Initial Registered Agent of the Corporation is: Linda A. W. Mesa 9800 South Ocean Drive Jensen Beach, Florida 34957 ARTICLE VI- INITIAL BOARD OF DIRECTORS This corporation shall have one (1) director initially. The number of directors may be either increased or diminished from time to time by the By-laws, but shall never be less than one (1). The names and addresses of the initial directors of the corporation are as follows: Linda A. W. Mesa 9800 South Ocean Drive Jensen Beach, Florida 34957 ARTICLE VII- INCORPORATORS The names and addresses of the incorporators signing these Articles of Incorporation are as follows: Linda A. W. Mesa 9800 South Ocean Drive Jensen Beach, Florida 34957 On the same day it was incorporated, December 3, 1992, TAN, Inc., entered into the following lease agreement with the trust (of which Woods was the sole beneficiary) that owned the premises where Shuckers was located: I, Michael Blake, Trustee, hereby lease to Tan, Inc. the premises known as C-1, C-2, C-3, C-4, 9800 South Ocean Drive, Jensen Beach, Florida for the sum of $3,000.00 per month. This is a month to month lease with Illinois Land Trust and Michael Blake, Trustee. Mesa signed the agreement in her capacity as TAN, Inc.'s President. She did so at Woods' direction and on his behalf. No lease payments were ever made under the agreement. 3/ The execution of the lease agreement had no impact upon Shuckers. Woods remained its owner and the person who maintained ultimate control over its operations. At no time did he relinquish any part of his ownership interest in the business to either Mesa or her management company, TAN, Inc. Mesa worked approximately 70 to 80 hours a week for her brother at Shuckers doing what he told her to do, in return for which she received a modest paycheck. Woods frequently subjected his sister to verbal abuse, but Mesa nonetheless continued working for him and following his directions because she needed the income the job provided. As part of her duties, Mesa maintained the business' financial records and paid its bills. She was also required to fill out, sign and submit to Respondent the business' monthly sales and use tax returns (hereinafter referred to as "DR- 15s"). She performed this task to the best of her ability without any intention to defraud or deceive Respondent regarding the business' tax liability. The DR-15s she prepared during the audit period bore NAT, Inc.'s Florida sales and use tax registration number. On the DR-15 for the month of December, 1992, Mesa signed her name on both the "dealer" and "preparer" signature lines. Other DR-15s were co-signed by Mesa and Woods. In April of 1993, Woods told Mesa that she needed to obtain a Florida sales and use tax registration number for TAN, Inc., to use instead of NAT, Inc.'s registration number on Shuckers' DR-15s. In accordance with her brother's desires, Mesa, on or about May 14, 1993, filed an application for a Florida sales and use tax registration number for TAN, Inc., which was subsequently granted. On the application form, Mesa indicated that TAN, Inc. was the "owner" of Shuckers and that the application was being filed because of a "change of ownership" of the business. In fact, TAN, Inc. was not the "owner" of the business and there had been no such "change of ownership." By letter dated June 22, 1993, addressed to "TAN INC d/b/a Shuckers," Respondent gave notice of its intention to audit the "books and records" of the business to determine if there had been any underpayment of sales and use taxes during the five year period commencing June 1, 1988, and ending May 31, 1993. The audit period was subsequently extended to cover the six year period from June 1, 1987 to May 31, 1993. Relying in part on estimates because of the business' inadequate records, auditors discovered that there had been a substantial underpayment of sales and use taxes during the audit period. The auditors were provided with complete cash register tapes for only the following months of the audit period: June, July, August and December of 1992, and January, February, March, April and May of 1993. A comparison of these tapes with the DR-15s submitted for June, July, August and December of 1992, and January, February, March, April and May of 1993 revealed that there had been an underreporting of sales for these months. Using the information that they had obtained regarding the three pre- December, 1992, months of the audit period for which they had complete cash register tapes (June, July and August of 1992), the auditors arrived at an estimate of the amount of sales that had been underreported for the pre- December, 1992, months of the audit period for which they did not have complete cash register tapes. The auditors also determined that Shuckers' tee-shirt and souvenir sales, 4/ Sunday brunch sales, cigarette vending sales, vending/amusement machine location rentals 5/ and tiki bar sales that should have been included in the sales reported on the DR-15s submitted during the audit period were not included in these figures nor were these sales reflected on the cash register tapes that were examined. According of the "Statement of Fact" prepared by the auditors, the amount of these unreported sales were determined as follows: TEE-SHIRT SALES: Sales were determined by estimate. This was determined to be $2,000/ month. No records were available and no tax remitted through May, 1993. SUNDAY BRUNCH SALES: Sales were determined by estimate. This was determined to be 100 customers per brunch per month (4.333 weeks). No audit trail to the sales journal was found and no records were available. CIGARETTE VENDING SALES: The estimate is based on a review of a sample of purchases for the 11 available weeks. The eleven weeks were averaged to determine monthly sales at $3/pack. VENDING MACHINE LOCATION RENTAL REVENUE: The revenue estimate is based on a review of a one month sample. TIKI BAR SALES: The sales estimate is based on a review of infrequent cash register tapes of February, 1993. The daily sales was determined by an average of the sample. The number of days of operation per month was determined by estimate. In addition, the auditors determined that TAN, Inc. had not paid any tax on the lease payments it was obligated to make under its lease agreement with Illinois Land Trust and Michael Blake, Trustee, nor had any tax been paid on any of the pre-December, 1992, lease payments that had been made in connection with the business during the audit period. According to the "Statement of Fact" prepared by the auditors, the amount of these lease payments were determined as follows: The estimate is based on 1990 1120 Corporate return deduction claimed. This return is on file in the Florida CIT computer database. The 1990 amount was extended through the 6/87 - 11/92 period. For the period 12/92 - 5/93 audit period, TAN's current lease agreement of $3,000/month was the basis. No documentation was produced during the audit supporting any the sales tax exemptions that the business had claimed during the audit period on its DR-15s. 6/ Accordingly, the auditors concluded that the sales reported as exempt on the business' DR-15s were in fact taxable. Using records of sales made on a date selected at random (February 1, 1993), the auditors calculated effective tax rates for the audit period. They then used these effective tax rates to determine the total amount of tax due. An initial determination was made that a total of $201,971.71 in taxes (not including penalties and interest) was due. The amount was subsequently lowered to $200,882.28. On or about December 22, 1993, TAN, Inc., entered into the following Termination of Lease Agreement with Ocean Enterprises, Inc.: TAN, Inc., a Florida corporation, hereby consents to termination of that certain lease of the premises known as C-1, C-2, C-3 and C-4 of ISLAND BEACH CLUB, located at 9800 South Ocean Drive, Jensen Beach, Florida, dated December 3, 1992, acknowledges a landlord's lien on all assets for unpaid rent; and transfers and sets over and assigns possession of the aforesaid units and all of its right, title and interest in and to all inventory, equipment, stock and supplies located on said premises 7/ in full satisfaction of said unpaid rent; all of the foregoing effective as of this 22nd day of December, 1993. FOR AND IN CONSIDERATION of the foregoing termin- ation of lease, OCEAN ENTERPRISES, Inc., a Florida corporation, hereby agrees to pay Linda Mesa, each month all of the net revenues of the operation of the bar and restaurant located on said premises, up to the sum of $15,000.00, for sales tax liability asserted against TAN, Inc. or Linda A. W. Mesa based upon possession or ownership of said premises or any of the assets located thereon, plus attorney's fees incurred in connection with defending or negotiating settlement of any such liability. Net revenue shall mean gross revenue, less operating expenses, includ- ing, but not limited to, rent, up to the amount of $5,000.00 per month, costs of goods sold, utilities, payroll and payroll expense and insurance. OCEAN ENTERPRISES, Inc. represents that it has entered into a lease of said premises for a term of five years commencing on or about December 22, 1993, pursuant to the terms and conditions of which OCEANFRONT [sic] ENTERPRISES, Inc. was granted the right to operate a restaurant and bar business on said premises. Ocean Enterprises, Inc., leases the property from Island Beach Enterprises, which obtained the property through foreclosure. TAN, Inc., has been administratively dissolved.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Revenue enter a final order withdrawing the contested and unpaid portions of the assessment issued as a result of Audit No. 9317210175, as it relates to TAN, Inc., and Linda A. W. Mesa. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 27th day of June, 1995. STUART M. LERNER 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 27th day of June, 1995.
