STATE OF FLORIDA, DEPARTMENT OF REVENUE TALLAHASSEE, FLORIDA. DOTAS, INC., Petitioner, Case No DOR 98-6-FOF vs.
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1 STATE OF FLORIDA, DEPARTMENT OF REVENUE TALLAHASSEE, FLORIDA DOTAS, INC., Petitioner, Case No DOR 98-6-FOF vs. DEPARTMENT OF REVENUE, Respondent. FINAL ORDER This cause came on before the Department of Revenue for the purpose of issuing a final order. The Administrative Law Judge assigned by the Division of Administrative Hearings heard this cause and issued a Recommended Order dated May 5, A copy of the Recommended Order is attached to this Final Order. No exceptions to the Recommended Order were filed and there are no proposed substituted orders to consider. The Department has jurisdiction of this cause. STATEMENT OF THE ISSUE The Department adopts and incorporates in this Final Order the Statement of the Issue in the Recommended Order. PRELIMINARY STATEMENT The Department adopts and incorporates in this Final Order the Preliminary Statement in the Recommended Order. Findings of Fact The Department adopts and incorporates by reference the findings of fact set forth in the Recommended Order. CONCLUSIONS OF LAW The Department adopts and incorporates in this Final order
2 the Conclusions of Law in the Recommended Order. Based on the foregoing, it is, ORDERED that DOTAS, INC., application for consumers' certificate of exemption be granted. ENTERED in Tallahassee, Leon County, Florida this 12th day of June, State of Florida DEPARTMENT OF REVENUE L.H. FUCHS EXECUTIVE DIRECTOR I HEREBY CERTIFY that the foregoing FINAL ORDER in DOTAS, INC. V. DEPARTMENT OF REVENUE, DOAH Case , has been filed in the official records of the Florida Department of Revenue this 12th day of June, JUDY LANGSTON AGENCY CLERK Copies furnished to: Stuart M. Lerner, Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida Pastor Morris J. Mays, President DOTAS, Inc. Post Office Box Miami, Florida Larry Fuchs, Executive Director Department of Revenue
3 104 Carlton Building Tallahassee, Florida Linda Lettera, General Counsel and William B. Nickell, Assistant General Counsel Florida Department of Revenue Post Office Box 6668 Tallahassee, Florida NOTICE OF RIGHT TO JUDICIAL REVIEW A party who is adversely affected by this final order is entitled to judicial review pursuant to Section , Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing one copy of a notice of appeal with the Agency Clerk of the Department of Revenue and a second copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the appellate District where the party resides. The Notice of appeal must be filed within 30 days of rendition of the order to be reviewed. STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS DOTAS, INC Petitioner, vs. Case No DEPARTMENT OF REVENUE, Respondent. RECOMMENDED ORDER Pursuant to notice, a Section (1) hearing was held in this case on March 20, 1998, by video teleconference at sites in
4 Miami and Tallahassee, Florida, before Stuart M. Lerner, a duly designated Administrative Law Judge of the Division of Administrative Hearings. APPEARANCES For Petitioner: Pastor Morris J. Mays, President DOTAS, Inc. Post Office Box Miami, Florida For Respondent: Rex D. Ware, Esquire Department of Revenue Office of the General Counsel Post Office Box 6668 Tallahassee, Florida STATEMENT OF THE ISSUES Whether Respondent is entitled to a Consumer Certificate of Exemption under Section , Florida Statutes. PRELIMINARY STATEMENT On December 9, 1997, the Department of Revenue (Department) mailed to Petitioner a Notice of Intent to Deny (Notice) advising that, for the following reasons, it intended to deny Petitioner's application for a Consumer Certificate of Exemption pursuant to Section , Florida Statutes: 1. Your organization does not have an established physical place of worship at which nonprofit religious services and activities are regularly conducted and carried on. 2. Your organization is not a state, district, or other governing or administrative office the function of which,
5 is to assist or regulate the customary activities of religious organizations or members. 3. Your organization fails to meet the qualifications for exemption from sales and use taxation, as set forth in Section (7), Florida Statutes. Petitioner, by letter dated December 12, 1997, requested a Section (1) hearing on the Department's proposed action. In its letter, Petitioner indicated that it "dispute[d] items (1) and (3)" of the Department's Notice and further stated the following: Under [Section (7)(o)2.a., Florida Statutes, DOTAS, INC., has only to meet one (1) of the numbered criteria to qualify as a religious exempt organization. DOTAS, INC meets every Sunday for two hours at Gibson Park for regular services as you are already aware of. Gibson Park is an established physical place for worship and we have many visitors each Sunday. On December 29, 1997, the Department referred the instant matter to the Division of Administrative Hearings (Division) for the assignment of a Division administrative law judge to conduct the Section (1) hearing Respondent had requested. As noted above, the Section (1) hearing was held on March 20, Pastor Morris Mays, Petitioner's President, was the only witness to testify at the hearing. In addition to Pastor Mays' testimony, eight exhibits (Petitioner's Exhibits 1, 2, 3, 4, and 5 and Respondent Exhibits 1, 2a and 2b) were offered and received into evidence. At the conclusion of the evidentiary portion of the hearing, the undersigned, on the record, advised the parties that the deadline for the filing of proposed recommended orders was 15 days from the date of the Division's receipt of the transcript of the hearing. The hearing transcript was filed with the Division on April 15, Petitioner filed a proposed recommended orders on April 10, 1998, which the undersigned has carefully considered. On May 1, 1998, the undersigned received a
6 copy of a letter from counsel for the Department to Petitioner advising that the Department did not "intend to file a Proposed Recommended Order" inasmuch as the Department, based upon Pastor Mays' sworn testimony at the final hearing, had "changed its position" regarding Petitioner's entitlement to a Consumer Certificate of Exemption. FINDINGS OF FACT Based upon the evidence adduced at hearing and the record as a whole, the following findings of fact are made: 1. 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. 2. 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. 3. Petitioner's by-laws reflect that it is a "full-gospel ministry" comprised of "Christian believers." 4. Its "civil officers" include a President, who also serves as the Pastor of the Gibson Park Church, which Petitioner operates. 5. 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. 6. Morris Mays is presently the President of Petitioner and
7 Pastor of the Gibson Park Church. 7. 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). 8. 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.) 9. Pastor Mays donates the use of his apartment, and also volunteers his time, to Petitioner. 10. 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. 11. 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.(EN 1) 12. 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 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. 14. Every other Sunday, following regular morning services, Petitioner, with the help of guest "DJs," conducts special youth services.
8 15. 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. CONCLUSIONS OF LAW 16. The Department is authorized, pursuant to Section , Florida Statutes, to issue (and reissue) to qualified institutions, organizations and individuals tax exemption certificates that are valid for five years. 17. Petitioner has applied for such a certificate from the Department. It claims that its application should be granted because it is a "church" or "religious institution," within the meaning of Section (7)(o), Florida Statutes, which provides, in pertinent part, as follows: 1. There are exempt from the tax imposed by this chapter transactions involving: a. Sales or leases directly to churches or sales or leases of tangible personal property by churches; [and] b. Sales or leases to nonprofit religious... institutions when used in carrying on their customary nonprofit religious... activities, including church cemeteries The provisions of this section authorizing exemptions shall be... applied in each category as follows: a. "Religious institutions" means churches, synagogues, and established physical places for worship at which nonprofit religious services and activities are regularly conducted and carried on.... The term "church, as used in Section (7)(o), Florida Statutes, is defined in Rule 12A-1.001(3)(c), Florida Administrative Code, as follows:
9 "Church" means a religious institution having an established physical place of worship where persons regularly assemble for worship and instruction for religious purposes. Religious organizations whose functions are radio or television broadcasting or those organizations conducting services for short periods of time at temporary locations, and religious associations that provide are not considered to be churches.(en 2) 18. "The provisions of... [S]ection [212.08(7)(o) Florida Statutes, authorizing tax exemptions must] be strictly defined, limited and applied. Section (7)(o)2b, Florida Statutes; see also Asphalt Pavers, Inc. v. Department of Revenue, 584 So. 2d 55, 57 (Fla. 1st DCA 1991) ("[A]n exemption clause in a tax statute is to be strictly construed against the person claiming the exemption."); Department of Revenue v. Skop, 383 So. 2d 678, 680 (Fla. 5th DCA 1980) ("While doubtful language in taxing statutes should be resolved in favor of taxpayer, the reverse is true in the construction of exceptions and exemptions from taxation."); Wanda Marine Corporation v. Department of Revenue, 305 So. 2d 65, 69 (Fla. 1st DCA 1974) ("[T]ax exemptions must be strictly construed against the claimant."). 19. The burden was on Petitioner, at the final hearing held in this case, to establish, by a preponderance of the evidence, that it is a "church" or "nonprofit religious institution," within the meaning of Section (7)(o), Florida Statutes, entitled to the tax exemption certificate it is seeking. See Department of Banking and Finance v. Osborne Stern and Company, 670 So. 2d 932, 934 (Fla. 1996) ; Pershing Industries, Inc. v. Department of Banking and Finance, 591 So. 2d 991, (Fla. 1st DCA 1991); Department of Transportation v. J.W.C. Company, Inc., 396 So. 2d 778, (Fla. 1st DCA 1981); Section (1)(h), Florida Statutes ("Findings of fact shall be based on a preponderance of the evidence, except in penal or licensure disciplinary proceedings or except as otherwise provided by statute."). 20. Petitioner met its burden of proof. It demonstrated
10 that it regularly conducts nonprofit worship and services and other religious activities and does so at an "established physical place of worship" (Pastor Mays' apartment on Wednesday evenings and the Gibson Park amphitheater on Sundays[EN 3] at which persons gather to participate in these activities. 21. Because Petitioner has established that it qualifies as a tax-exempt "church" and "non-profit religious institution," within the meaning of Section (7)(o), Florida Statutes, its application for a Consumer Certificate of Exemption should be granted. 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 (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 (850) SUNCOM Fax Filing (850) Filed with the Clerk of the Division, of Administrative Hearings this 5th day of May, ENDNOTES
11 ENDNOTE 1 Petitioner also engages in nonprofit charitable and educational activities. It is unnecessary, however, to detail these activities because Petitioner is seeking an exemption based upon its status as a "church or "nonprofit religious institution" and does not claim that it should receive an exemption because it is a "nonprofit charitable or nonprofit educational institution." ENDNOTE 2 While this definition has been criticized as being "not entirely consistent with the statutory scheme of Section (7)(o)1 [, Florida Statutes, wherein] the Legislature distinguished between 'churches' and 'religious institutions' and explicitly required only that the latter must be 'established places of worship'" (2 Christ-- The Solution, Inc. v. Department of Revenue, DOAH Case No (DOAH December 20, 1994) (dictum)), it has not been invalidated pursuant to the rule challenge provisions of Chapter 120, Florida Statutes, and therefore must be applied in determining whether Petitioner is a "church", within the meaning of Section (7)(o), Florida Statutes. See Gadsen State Bank v. Lewis, 348 So. 2d 343, 345 n.2 (Fla. 1st DCA 1977) ("[A]gencies must honor their own substantive rules until they are amended or abrogated.) ENDNOTE 3 Neither Section , Florida Statutes, nor Rule 12A-1.001, Florida Administrative Code, requires that a "physical place of worship" be an enclosed structure (as opposed to an open-air facility). Cf. Roberts v. Atlanta Baptist Association, Inc., 241 S.E. 2d 224, (Ga. 1978) (for purpose of determining entitlement to exemption from ad valorem taxation, "place" need not be building to qualify as "place of worship"); Kerville Independent School District v. Southwest Texas Encampment Association, 673 S.W. 2d 256, 258 Tex. Ct. App. 1984) ("The Constitution permits the legislature to exempt from taxation actual places of worship, but fails to define the term. The legislature's definition, of course, must constitute a reasonable interpretation of the constitutional language in order to implement the intent of the constitutional framers.... Our Supreme Court in Davies v. Meyer, 541 S.W. 2d 827 (Tex. 1976),.. cited Church v. Bullock, 104 Tex. 1, 109 S.W. 115 (1908) in which the court defined the phrase as follows: 'As used in the Constitution the phrase place of worship
12 specifically means a place where a number of persons meet together for the purpose of worshipping God.... The worship of God is not prohibited in any place, but we are of the opinion that the spirit of the Constitution would include any place at which the worship might be indulged in so continuously and in such a manner as to give it the character of a place of worship.'... It is evident that the court in Church did not limit an 'actual place of worship' to an enclosed structure. This is confirmed in the Davies decision in that the court affirmed the trial court in its decision that an open-air chapel and one-acre surrounding it was exempt.") COPIES FURNISHED: Pastor Morris J. Mays, President DOTAS, Inc. Post Office Box Miami, Florida Rex D. Ware, Esquire Department of Revenue Office of the General Counsel Post Office Box 6668 Tallahassee, Florida Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida NOTICE OF RIGHT TO SUBMIT EXCEPTIONS All parties have the right to submit written exceptions within 15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.
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STATE OF FLORIDA, DEPARTMENT OF REVENUE TALLAHASSEE, FLORIDA
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