The Issue Whether Petitioner qualifies for the renewal of a consumer certificate of exemption as a qualified religious organization pursuant to Section 212.08(7)(o), Florida Statutes?
Findings Of Fact Petitioner is an active not-for-profit corporation organized under the laws of the State of Florida. It maintains exempt status under Section 501(c)(3) of the Internal Revenue Code. The Respondent is the state agency charged with the administration of the tax laws of the State of Florida, including those dealing with the grant or denial of consumer certificates of exemption to qualified organizations. Reverend Roy Harthern is an ordained Assembly of God minister who previously had a career as a minister in several churches in Texas and Florida, as well as founding a Christian magazine and a Christian television station in Florida. The Reverend and Mrs. Harthern are evangelists and Bible teachers. In 1983, Reverend Harthern and his wife, Pauline, founded the organization from which the Reverend and Mrs. Harthern practice an itinerant ministry. They preach in different established churches each week, both inside and outside of the State of Florida and the United States. In the past, Reverend Harthern has had a regular religious show on television. Reverend Harthern also writes, records religious tapes and has a weekly radio program on a station owned by others. Petitioner does not have an established physical place of worship at which nonprofit religious services are regularly held; does not provide transportation for church members or other services; and does not provide services to state prisoners. There has been no substantial change in the type or nature of Petitioner's ministry since its founding in 1983. Respondent issued a certificate of exemption to Petitioner in 1983 as a "religious organization." Petitioner has renewed the exemption, in five-year intervals, ever since. Respondent has never sought to revoke or suspend Petitioner's exempt status since 1983. On July 18, 1997, Petitioner applied to renew its consumer certificate of exemption as a "religious organization." Its previous certificate was issued on October 6, 1992, and was due to expire on October 5, 1997 There has been no substantive changes to the implementing statute during the relevant time period. On October 13, 1997, Respondent issued its Notice of Intent to Deny to Petitioner on the grounds that Petitioner did not have an established physical place of worship at which nonprofit religious services and activities were regularly conducted.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Revenue enter a Final Order denying Petitioner's renewal application for exemption, and the provisions of Section 212.08(7)(o)2.1., Florida Statutes. DONE AND ENTERED this 9th day of April, 1998, at Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 9th day of April, 1998. COPIES FURNISHED: Roy Harthern, President Roy Harthern Ministries, Inc. Post Office Box 915971 Longwood, Florida 32791 Rex D. Ware, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue The issue for determination in this proceeding is whether Petitioner qualifies for a certificate of exemption as a charitable organization within the meaning of Section 212.08(7)(o)2.b., Florida Statutes. 1/
Findings Of Fact Petitioner is a Florida corporation with its principal place of business located in Winter Park, Florida. Petitioner operates 10 additional offices throughout Florida. Petitioner is a non-profit corporation for purposes of the federal income tax. Petitioner obtained an exemption from federal income tax in accordance with Section 501(c)(3) of the Internal Revenue Code. Petitioner is engaged in the business of providing financial counseling services to the general public. Financial counseling services include debt consolidation, debt management, financial counseling, and budgeting. Debt consolidation services are those in which Petitioner negotiates a payment plan between its clients and the clients' creditors. Debt management services are those in which a client makes one payment to Petitioner and Petitioner disburses the client's money in multiple payments to the client's various creditors. Financial counseling involves assistance in the management of client cash flow and the avoidance of default on client debts. Budgeting services are incidents of the other services. Petitioner does not provide its services free of charge. Petitioner derives its revenue from client fees and payments from creditors for collection and remittance on debts owed by clients. Client fees make up approximately 25 to 35 percent of Petitioner's revenues. Creditor payments make up approximately 65 to 75 percent of Petitioner's revenues. Client fees consist of a $20 registration fee and a monthly fee of up to $15 per month for disbursing payments to creditors. The amount of the monthly fee is determined at the discretion of Petitioner's counselors based on such factors as the total debt, number of creditors, nature of the bills, and the ability of the client to pay. Petitioner's counselors are instructed to offer services to anyone who requests it without charge. Counselors have the authority to waive the $20 registration fee in particular cases. Clients are required to sign a service agreement in which they employ Petitioner to represent them in negotiating with creditors and making payments required under the terms of a negotiated plan. A client who does not pay monthly payments required under a negotiated plan for three months is dropped as a client. Client funds are deposited into a regular checking account maintained by Petitioner. The client checking account is separate from Petitioner's checking account but does not pay interest on client funds. Petitioner has approximately 3,000 clients in Florida. The annual income of Petitioner's clients ranges from $6,000 to $120,000. 2/ Approximately 73 percent of client creditors are credit card companies, finance companies, and medical groups. The remaining 27 percent are other creditors. Approximately half of the clients' creditors pay Petitioner for collecting money from their debtors and remitting payments to them. The majority of creditors who pay Petitioner a fee for debt collection pay approximately 10 to 12 percent of the debt amount collected and remitted. Approximately 10 percent of the creditors pay Petitioner 15 percent of the debt amounts collected and remitted. Petitioner does not raise funds for any other charitable organization. Petitioner does not provide volunteers for other charitable organizations. Petitioner is not a member of the National Foundation for Consumer Credit Counseling. Petitioner does not receive any contributions from any charitable or civic organizations, including United Way. Petitioner does not provide any of the services prescribed under applicable state statutes or rules for qualification as a charitable organization. Petitioner does not provide social welfare services and does not provide the services it renders free of charge or at a substantially reduced rate. A reasonable percentage of Petitioner's clients are not persons who are unable to pay, disadvantaged, or who suffer a hardship.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order denying Petitioner's application for exemption from sales tax as a charitable organization. RECOMMENDED this 22d day of September, 1995, in Tallahassee, Florida. DANIEL MANRY 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 22d day of September, 1995.
The Issue The issue for consideration in this case is whether Petitioner should be issued a Consumer Certificate of Exemption from Florida sales tax.
Findings Of Fact By stipulation prior to the taking of any testimony, the parties agreed that the only option upon which Petitioner seeks an exemption from sales tax is that relating its status as an administrative office of the organization. Petitioner agrees that it does not conduct regular church services within the meaning of Section 212.08(7)(o), Florida Statutes. At all times pertinent to the issues herein, the Petitioner, Construction for Worldwide Evangelism, Inc., was a non-profit corporation registered as such with the Florida Secretary of State, which has been granted exemption from Federal Income Tax under Section 501(c)3, of the Internal Revenue Code. It was established in 1991, and its purpose is to build churches in Third World countries for church mission boards and other missionary organizations, including Baptist International Missionaries, Inc. (BIMI). BIMI trains and places missionaries and provides stewardship of individual members’ funds and insurance. Petitioner also builds facilities for the Association of Baptists for Worldwide Evangelism (ABWE). BIMI and ABWE are the largest and second largest missionary sponsoring organizations in the country with each sponsoring more than 1,000 missionaries in the field. Petitioner also works with other Baptist missionary organizations which are not as large as those previously mentioned. These organizations all have the same purpose -- to spread the word of redemption and salvation through Jesus Christ. Since its inception, Petitioner has been guided in its work by its mission statement and its statement of faith. Both are taken from scripture and are included in the basic tenets of Christian faith. It was founded specifically to fulfill God’s great purpose -- to preach to the world. The missionary organizations referenced above do not build their own missions but look to churches and organizations like the Petitioner to raise funds and build facilities including churches, medical clinics, bible institutes, and other educational buildings. When the Petitioner was founded, it was obvious that funds would be needed to do this work. There are other missionary organizations around the country which build facilities as Petitioner does. The difference between these organizations and Petitioner is that Petitioner has no paid staff, and it takes a project from design conception through completion. Other organizations seem to do their projects in stages, based on the availability of volunteers to do the required work. Nothing requires Petitioner to limit approval of requests to those from recognized missionary boards. Other denominational churches make requests to Petitioner but most are turned down because the other denominations have their own funding. Petitioner tries to limit itself to “independent” churches, but it has no formal agreement, other than the Bible, with any of the recognized missionary boards. The missionary boards do not provide their own funds to Petitioner. Financial support comes from individual churches which provide money to their missionary boards which is earmarked for mission construction. Requesters need not be a particular denomination of Baptist congregation. Petitioner will talk with any organization that will agree with its Statement of Faith. However, Petitioner’s Board of Directors has the final authority to decide if a request will be granted. Need for a specific project is communicated to Petitioner through the various missionary boards operating in this country; through direct contact from missions in the field; and from individual churches which need help in organizing a project they want to do. When Petitioner receives a request, because of the volume of requests received, the Board of Directors tries to evaluate the need in the area, the requester’s doctrinal position, and the availability of resources to the local group which will do the work if approved. The Petitioner sends evaluators to the field to examine the proposed facilities. All procedures are included in its Project and Guideline Manual which details with particularity how Petitioner will do each step from evaluation, through purchasing of supplies after design, through securing and forwarding of volunteers to completion, close-down, and the return of the volunteers. Each proposed project is evaluated in accordance with the terms of the Manual. In a typical project, a determination is first made whether the applicant is an existing church which needs help. This is a requirement because Petitioner does not start churches. Once they are satisfied the applicant is an existing church, the evaluators determine how much of a project is needed and how much resources the local organization has, and then look to further evaluation against the twenty-five or so other factors for consideration. Most of this information is gathered from the applicant or a mission board either by Mr. Puleo, an electrical contractor who is president of the Petitioner organization, or by the vice-president of the organization. Once all pertinent information is on hand and the project deemed worthy, a project profile is developed. Petitioner has several projects ongoing at the same time. The initial step is to pray for guidance from God as to which project to do. Once a project is approved, an on-site inspection is conducted to develop information as to whether there is a real need for Petitioner to be involved or whether the local people can accomplish the project by themselves. This on- site inspection is usually done by a member of the Petitioner’s Board and by a committee chairperson. The on-site survey determines what is available at the site, and information is developed as to the logistics needed and the personnel required. Another part of the planning relates to the ministry to be supported. An evaluation is conducted of the on-site missionary and how well that individual operates, how long he plans to stay there, and whether he is flexible enough to work with both locals and volunteers. After this evaluation is completed, a conclusion is drawn as to whether Petitioner can take on the project and what will be needed. After prayer and consideration, a decision is made as to whether to go forward with the project. The funds to do the work and to buy the required materials come from Baptist churches across the country, businesses, other organization, and individuals. All the workers come from individual churches who support Petitioner’s program. They work on a volunteer basis without pay. When a church contacts Petitioner to have a facility built, a representative of the Petitioner goes to that church, conducts a service, and tries to enlist the financial and volunteer support of the church membership. In addition, periodically, conferences of pastors seek a presentation from Petitioner. Any funds received as a result of those presentations usually come from the specific church’s general fund and volunteers for the project from that church’s membership. In support of its fund and volunteer raising activities, Petitioner publishes a brochure regarding its activities which is widely distributed through supporting churches. It outlines how readers of the brochure can assist or seek other information. Petitioner also published a newsletter which is circulated to any volunteer who has gone on a project with it, to churches, and to others on the organization’s mailing list. This newsletter describes what is happening in the organization and what is planned. A tract is also passed out to the public by which Petitioner seeks to raise funds and attract disciples. No one who works with Petitioner is paid. All funds raised go to the cost of constructing the building, to the cost of travel and support of personnel at the building site, and to the cost of transportation of supplies. In that regard, a portion of the supplies and equipment needed for a project is often donated as is the cost of transporting that material to the job site. It should be noted that when Petitioner works on a project in a foreign country, often volunteers from that local church subsequently help with work and funds on other projects within that country. Included in every program is a devotional component. Guidelines exist which cover the duties and responsibility of the devotional committee of each work force, the chairman, and the individuals. These guidelines are prepared for each day of the program’s existence and call for a thirty minute to one hour devotional each night. Petitioner, which originated in Florida, now has branches in both Georgia and Michigan which are recognized by those states. Both the Georgia and Michigan organizations do work identical to that done by the Florida group, but everything they do is coordinated and controlled through the Petitioner’s Tampa office. Since its inception in 1991, Petitioner has built seventeen or eighteen facilities - ten or eleven were churches, two were Bible institutes, and one a radio station in the Caribbean area and South America. The average church costs between $45,000 and $50,000, although one church in Bolivia was built for $15,000 and one will be built for $20,000. Medical facilities are more expensive. The facilities constructed by Petitioner have a positive impact on the mission for which they are constructed. They tend to enhance the success of the mission and improve its local standing. Petitioner previously held a Certificate of Exemption from sales tax from the Department. Neither the Petitioner’s organization nor the statute under which certificates are granted has changed in the interim between the granting of the prior certificate and the denial of the current application for renewal.
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 Petitioner an exemption from sales and use tax. DONE AND ENTERED this 26th day of August, 1997, in Tallahassee, Leon County, 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 26th day of August, 1997. COPIES FURNISHED: Mark M. Schabacker, Esquire Schabacker, Simmons and Dunlap Suite 2500 100 North Tampa Street Tampa, Florida 33602 William B. Nickell, Esquire Department of Revenue Suite 304 501 South Calhoun Street Tallahassee, Florida 32301 Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Linda Lettera General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact The Alarm Association of Florida, Inc. ("Association") is a trade association that was incorporated on July 12, 1976, as a Florida not-for-profit corporation. The Association was organized to provide an opportunity for its members to exchange ideas and share information concerning trade practices, business conditions, technical developments, and related subjects concerning the electrical protection industry. The Association has two primary types of membership. Regular Membership is open to any individual, partnership, firm, or corporation engaged in the business of installing or providing alarm service in the electrical protection field for one year preceding the application. Associate Membership is open to any individual, partnership, firm, or corporation that is not engaged directly in the electrical protection business, but may supply goods or services to Regular Members. Officers and directors of the Association are selected by the voting members, which are limited to Regular Members. About 25 percent of the Association membership consists of nonvoting members. Sometime prior to November 1, 1985, a representative or representatives of the Association requested Dealers Association Plan ("DAP") to make a presentation concerning an employee benefit plan that the Association was considering establishing. The Association had previously formed a committee to investigate the feasibility of sponsoring such a plan, which its members could join. DAP is licensed in Florida to administer self-insured and insured health insurance programs, including the type in which the Association was interested. The Association thereafter decided to sponsor an employee benefit plan and use DAP as the plan administrator. DAP prepared or caused to be prepared the necessary documents. These documents included a trust agreement between Ronald D. LaFontaine, John Black, Robert Neely, Robert Adams, and Terry Akins, as trustees ("Trustees"), and the Association ("Trust," or "Trust Agreement"); the Alarm Association of Florida Health and Welfare Benefit Plan ("Plan"); and the Administrator Agreement between the Association and DAP. Each document was executed and delivered on November 1, 1985. The Trust Agreement states that the Trust was to be funded by the contributions made by the members of the Plan and the Trust funds would be maintained as a reserve against claims by Plan participants. The Trust Agreement provides that the Association may remove a Trustee at anytime and replace a Trustee who has resigned or been removed. The Trust Agreement states that the Plan Administrator, which was designated as DAP, shall administer the day-to-day operations of the Trust, including the payment of claims, providing of "consulting and actuarial services necessary for the continuing successful operation of the Plan," and establishment of procedures for "Employee Contributions." "Employees" are "all qualified members of the Association and their employees." The Administrator Agreement, which is authorized by the Trust Agreement, provides that DAP could use the Trust funds to review and pay claims and pay premiums on policies purchased by the Plan or Trustees. The Administrator Agreement authorizes DAP to negotiate and purchase reinsurance contracts to provide stop-loss coverage or avoid catastrophic losses, as well as spread the risk of excessive claims. The Administrator Agreement states that DAP is to receive 20 percent of the monthly contributions as its administrative fee. The Plan provides a detailed statement of the available benefits and various administrative matters, including claim procedures. In general, the Plan covers a wide range of medical, accident, and dental expenses. In capital letters on the first page, the Plan states: This is a self-funded, trade association member employee benefit plan established under Public Law 93-406 [Employee Retirement Income Security Act ("ERISA")], available only to qualified participating employers and their qualified employee participants. It is not available for individual coverage. The Trust Agreement likewise states that it "shall be interpreted in a manner consistent with its being ... a Welfare Benefit Plan pursuant to ... ERISA..." Each Association member enrolled in the Plan makes a monthly contribution, which is paid to DAP. The contribution is equal to the number of employees of the enrollee who have elected to participate in the Plan multiplied by the contribution rate. The Trustees set the contribution rate based upon the advice of DAP. On at least one occasion, the Trustees increased the rate upon the advice of DAP. At all times, the Trustees and DAP have intended to keep the Plan and Trust actuarially sound. DAP uses the contributions to pay claims that it has received. As long as DAP has determined that the claims are valid, the Trustees do not review the claims. The Trustees consider a claim only when a participant appeals a rejected claim. DAP uses the contributions to pay itself its 20 percent administrative fee. DAP pays any remaining funds to the Trustees, who hold such funds in the Trust as reserves against future claims. The Trust is liable for all claims. If the valid claims presented to DAP exceed the contributions received for that month, the Trust provides the difference. However, the Trustees have reinsurance under which third-party insurers are liable to pay any claim in excess of $25,000, but not more than $1,000,000. Since the Plan has been adopted, DAP and the Association have solicited enrollees. The most important source of solicitation has been by direct mail, for which DAP is responsible. In the case of new enrollees that are not already members of the Association, DAP may take a Plan application and Association membership application at the same time. In April, 1988, the Association comprised 425-450 members. A couple of years ago, the Association had only about 65 members. About 85 members have enrolled in the Plan. These enrollees are all employers. About 300 employees participate in the Plan. All of these employees are employed by enrolled employers. The record fails to disclose whether all of the enrollees are voting members of the Association. Petitioner's Exhibit Number 5 lists the names of the enrollees. It appears from the names of the businesses that all, or nearly all, of them qualify for voting membership in the Association. The Plan has never obtained a certificate of authority from Petitioner, pursuant to the Act, to operate the Plan. The Plan, the Association, and DAP have never attempted to comply with any provision of the Act, based on the position that ERISA preempts all or part of the Act. The Plan is not fully insured and has no exemption from the Secretary of Labor, as these terms are discussed below.
Recommendation Based on the foregoing, it is recommended that a Final Order be entered finding Respondent guilty of failing to hold a subsisting certificate of authority while operating or maintaining a multiple-employer welfare arrangement, ordering Respondent to cease and desist from writing any new or renewal business and accepting any contributions or premiums from current or prospective enrollees or participants, and imposing an administrative fine against Respondent in the amount of $5000. ENTERED this 1st day of June, 1988, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of June, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-3046 Treatment Accorded Petitioner's Proposed Findings 1-4. Adopted. Rejected as unsupported by the evidence. The exhibit discloses the names of about 85 employers. Rejected as unsupported by the greater weight of the evidence. The Plan documents limit enrollees to employers. Adopted. Rejected as irrelevant and not a proper finding. The proposed finding goes to the weight of other testimony. Adopted, except that the second to last sentence is rejected as unsupported by the greater weight of the evidence. Adopted. First two lines are rejected as unsupported by the greater weight of the evidence. The remainder is adopted. Adopted. Adopted in substance. 14-18. Adopted. 19. Rejected as irrelevant. 20 and 23. Adopted in substance. 21-22, 24-25. Rejected as irrelevant and, in the case of paragraph 22, legal argument. Treatment Accorded Respondent's Proposed Findings All of Respondent's proposed findings are rejected as legal argument, except that paragraph 1 and the first sentence of paragraph 2 are adopted. COPIES FURNISHED: R. Terry Butler, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32399-8300 Geoffrey B. Dobson, Esquire Meredith & Dobson 77 Bridge Street St. Augustine, Florida 32804-1957 Honorable William Gunter State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Don Dowdell General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300
The Issue The issue in this case is whether Petitioner is entitled to an exemption from sales and use tax as a religious or charitable organization.
Findings Of Fact By Application for Consumer Certificate of Exemption dated March 17, 1992, Petitioner requested a sales tax exemption as a religious organization. The application indicates that Petitioner was incorporated on February 18, 1992. At all times, the president of Petitioner has been Reverend Robert M. Rinaldi. By letter dated April 16, 1992, Respondent requested that Petitioner supply information concerning its primary purpose, including a list of all activities or services and to whom they are generally offered. The letter also requested, among other things, statements of receipts and expenditures and a copy of the letter determining that Petitioner is exempt from federal income tax. Petitioner submitted to Respondent evidence of 12 expenditures during the quarter ending March 31, 1992. The expenditures and their descriptions are as follows: Morrisons-- dinner business; Holiday Inn in Tampa--lodging for quarterly convention; Maas Brother in Naples--attire; Marshalls-- personal; Martha's Health Food Shop--personal; Things Remembered--card case/business cards; RJ Cafe Tropical--lunch interview; Beach Works Marco Island--attire; annual membership fee for vice president's American Express card; Las Vegas Discount golf and tennis in Naples--personal; Eckerd's Vision Works--medical eyeglasses; Quality Inn Golf Country Club in Naples--lodging during business travel; Avon Fashions/Hampton-- personal; Del Wright in Sarasota--automobile expenses and travel; JC Penney--personal; Amador's Restaurant in Naples-- dinner/lunch; Avon Fashions/Hampton--personal; annual membership fee for treasurer's American Express card; and Mobil Oil--business travel. Petitioner produced other evidence of similar types of expenditures, such as for fitness center fees, car insurance, car service, car payments, utilities, and rent. Nothing in the record links these expenditures to religious or charitable activities. There were expenditures for printing religious tracts and self- improvement educational materials, but they do not appear to be a substantial part of the total expenditures of Petitioner during the time in question. After receiving these materials, a representative of Respondent telephoned Reverend Rinaldi and stated that Petitioner would have to submit additional documentation of its income and expenses and formal affiliation with prison chapels where Petitioner reportedly conducted outreach programs. Respondent's representative also asked for evidence of Reverend Rinaldi's counselling credentials. Petitioner next submitted a copy of a letter from the Department of Treasury determining that Petitioner was exempt from federal income tax. Petitioner also submitted a budget for the year ending 1992 and a proposed budget for the year ending 1993. However, the budgets did not document a charitable purpose. The budget reveals that the largest disbursement was $4200, which was rent for an office and living quarters. The largest single receipt was $1764.27, which was a contribution from the incorporator, who was Rev. Rinaldi. There were no charitable receipts, such as from contributions from members, the public, or anonymous sources. On November 10, 1992, Respondent sent a letter to Petitioner requesting additional information, including statements of the primary purpose of the organization and of receipts and expenditures. The request asked for a description or explanation for each charity-related program expenditure. On November 18, 1992, Petitioner submitted a second Application for Consumer's Certificate of Exemption. The information was essentially unchanged from the first application. Rev. Rinaldi also sent Respondent a religious flyer. On February 10, 1993, Petitioner submitted a third Application for Consumer's Certificate of Exemption. The material was essentially unchanged from the preceding two applications. On March 30, 1993, one of Respondent's representatives sent a letter to Petitioner stating that Petitioner does not meet the criteria for exemption from sales tax. In response, Petitioner sent a letter to Respondent received April 8, 1993, requesting reconsideration of the denial. On May 4, 1993, Respondent sent Petitioner a letter stating that, as indicated during an earlier telephone conversation, Respondent had not yet received sufficient documentation to justify a sales tax exemption. Following up on Rev. Rinaldi's opinion that Petitioner qualified as a charitable organization, the letter suggests that he submit materials describing each charitable service or activity, the types of persons receiving such services, the frequency that the services are offered, the demonstrated benefit provided by Petitioner to disadvantaged persons, the fees charged by Petitioner, and the availability of Petitioner's services at the same or less cost elsewhere. The letter also asks for a statement of income and expenses. In response, Petitioner filed a fourth Application for Consumer's Certificate of Exemption on November 10, 1993. Rev. Rinaldi explained Petitioner's activities as informing people of the truth and the second coming of Jesus Christ and stopping addictions to drugs and alcohol. The enclosed materials included a church telephone number. The materials state that services are available 24 hours a day for no fees and are provided solely for the spiritual preparation of humanity. The materials also indicate several addresses at which religious activities are conducted. Upon investigation, Respondent learned that Petitioner's telephone number had been disconnected, the street address is Rev. Rinaldi's apartment, and the addresses at which religious activities are conducted are locations of Alcoholic Anonymous, from which Rev. Rinaldi and his church had been barred as public disturbances. Checking with the post office, the investigator learned that all mail for Rev. Rinaldi and Petitioner is being forwarded to an address in New York. Respondent asked for more information, and Petitioner supplied information no different than that previously supplied. By letter dated April 26, 1994, Respondent informed Petitioner that its application was denied. Following another exchange of correspondence, Respondent sent Petitioner a Notice of Intent to Deny dated June 17, 1994. The Notice of Intent to Deny states that Respondent determined that: [Petitioner] travels from church to church and does not assemble regularly at a particular established location. [Petitioner] conducts services for short periods of time at numerous temporary locations. [Respondent] has reviewed your application and supporting documents and has determined that the primary purpose of your organization fails to meet the qualifications for sales tax exemption authorized by Section 212.08(7), Florida Statutes. By letter dated June 24, 1994, Petitioner requested a formal hearing on its application for sales tax exemption. Petitioner does not regularly conduct services. Petitioner does not engage in other religious activities nor does Petitioner provide services typically associated with a church. Petitioner has no established physical place for worship. Petitioner has generalized plans to construct one or more places for worship. However, these plans are post-apocalyptic in nature and thus do not assure the commencement of construction in the immediate future.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Revenue enter a final order denying Petitioner's application for an exemption certificate from sales and use tax. ENTERED on December 20, 1994, in Tallahassee, Florida. ROBERT E. MEALE 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 on December 20, 1994. COPIES FURNISHED: Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Rev. Robert Rinaldi P.O. Box 1081 167 N. Collier Blvd. J-3 Marco Island, FL 33937-1081 Attorney Lisa M. Raleigh Office of the Attorney General The Capitol--Tax Section Tallahassee, FL 32399-1050
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 Whether Respondent is entitled to a Consumer Certificate of Exemption under Section 212.08, Florida Statutes.
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 1996 to serve the religious needs of persons living in Miami-Dade County's Overtown community, including, in particular, the homeless and young people in the area. Article II of Petitioner's Articles of Incorporation, which were filed with the Florida Department of State on May 10, 1996, sets forth the "purpose of the corporation" as follows: The Corporation is organized exclusively for charitable, religious, educational, and scientific purposes, including, for such purposes, the making of distributions to organizations that qualify as exempt organizations under section 501(c)(3) of the Internal Revenue Code, or the corresponding section of any future federal tax code. Petitioner's by-laws reflect that it is a "full-gospel ministry" comprised of "Christian believers." Its "civil officers" include a President, who also serves as the Pastor of the Gibson Park Church, which Petitioner operates. Gibson Park, after which the Gibson Park Church is named, is a park located in Overtown. It has, among other things, an open-air amphitheater, with a stage. Morris Mays is presently the President of Petitioner and Pastor of the Gibson Park Church. He resides in an apartment (apartment number 18) that he leases in his own name from the Church of God in Christ at 1767 Northwest Third Avenue in Miami-Dade County (Pastor Mays' Apartment). Pastor Mays' apartment presently serves as Petitioner's headquarters, as a sign in the window of the apartment reflects. Petitioner hopes to purchase, and move its headquarters to, a building across the street from Gibson Park. (The owner of the building has expressed, in writing, an interest in selling the building to Petitioner.) Pastor Mays donates the use of his apartment, and also volunteers his time, to Petitioner. There are other individuals, besides Pastor Mays, who help carry out the purposes of Petitioner. Like Pastor Mays, they also volunteer their time and are not compensated. Petitioner regularly conducts nonprofit worship and prayer services and other religious activities at Pastor Mays' apartment on Wednesday evenings and at the amphitheater in Gibson Park on Sundays. 1 Petitioner has been conducting Sunday morning services at the Gibson Park amphitheater since it received written permission from the City of Miami to do so in the late summer of 1997. These Sunday morning services (at which Pastor Mays preaches) are open to the general public and are advertised in a newsletter that Petitioner publishes and distributes in the Overtown community. The services are attended, on the average, by approximately 50 people, many of whom are homeless. Every other Sunday, following regular morning services, Petitioner, with the help of guest "DJs," conducts special youth services. Wednesday evening services at Pastor Mays' apartment are less formal and shorter than Sunday morning services. They are not publicized in Petitioner's newsletter. Attendance averages only about seven to ten people.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order finding that Petitioner is entitled to the Consumer Certificate of Exemption it is seeking pursuant to Section 212.08(7)(o), Florida Statutes. DONE AND ENTERED this 5th day of May, 1998, in Tallahassee, Leon County, Florida. STUART M. LERNER 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 5th day of May, 1998.
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.
