STATE OF FLORIDA DIVIStON OF ADMINISTRATIVE HEARINGS. Petitioner, Case No DOR QS-1- For.: DEPARTMENT OF REVE~UE Respondent.

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1 ( GAINESVILLE AMATEUR RADIO SOCIETY, INC., STATE OF FLORIDA DIVIStON OF ADMINISTRATIVE HEARINGS vs. Petitioner, Case No DOR QS-1- For.: DEPARTMENT OF REVE~UE Respondent. -:.- 1 FINAL ORDER ( This cause came on before the Department of Revenue for the purpose of issuing a final order. The hearing officer assigned by the Division of Administrative Hearings heard this cause and issued a, Recommended Order.,l A copy of the Recommended Order is attached... - '\ I 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. FINDINGS OF FACT The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order. CONCLUSIONS OF LAW The Department hereby adopts and incorporates by reference the findings of fact set:. forth in the Recommended Order. Based on the foregoing, it is, ORDERED that the petitioner's request for a consumers' certific,ate of exemption be denied. ENTERED in Tallahassee, Leon county, Florida this 2.'t+h day of August, 1995., DEll!2ENUE State o~ Flo7fda { L. ~J. FUCHS DIRECTOR EXECU~IVE

2 I~ CERTIFICATE OF FILING I HEREBY CERTIF~ that the foregoing Final Order has been filed in the official records of the Department of Revenue, this 244h day"f CLzyAt,19~5 --.,. "I 'i' Copies: i, Olivia P. Ktein Assistant Attorney General Department of Legal Affairs Tax Section', The Alexander Building Room 309 Tallahasse~~ FL o Donald R. :Alexander, Hearing Officer Division of. Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahasse~; FL Signey Schm~kler, Esq N.W. 20th Lane Gainesvillej FL Linda Lettera, General Counsel Jeff Kielbasa, Deputy General Counsel Department pf Revenue Room 204, Carlton Building Tallahassee,i~ FL Attachment' Hearing Officer's Recommended Order. j~ ~ o

3 y (J GAINESVILLE AMATEUR RADIO SOCIETY, INC., STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS vs. Petitioner, Case No DOR cts-1- ~C E DEPARTMENT OF REVENUE Respondent _/ FINAL ORDER o This cause came on before the Department of Revenue for the purpose of issuing a final order. The hearing officer assigned by the Division of Administrative Hearings heard this cause and issued a Recommended Order.. to this Final Order. A copy of the Recommended Order is attached No exceptions to the Recommended Order were filed and there are no proposed substituted orders to consider. The Department has jurisdiction of this cause. FINDINGS OF FACT The Department hereby adopts and incorporates by reference the, findings of fact set. forth in the Recommended Order. CONCLUSIONS OF LAW The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order. Based on the foregoing, it is, " ~ ORDERED that the petitioner's request for a consumers' certificate of exemption be denied., ENTERED in Tallahassee, Leon County, Florida this 3 {31 day of July, ( _

4 CERTIFICATE OF FILING I HEREBY CERTIFY that the foregoing Final Order has been filed in the official records of the Department of Revenue, this \310+day of --l~~~---'19cts. ~ CY CLERK Copies: Olivia P. Klein Assistant Attorney General Department of Legal Affairs Tax section, The Alexander Building Room 309 Tallahassee, Florida o Donald R. Alexander, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida Sidney Schmukler, Esquire 3922 N. W. 20th Lane Gainesville, Florida Linda Lettera, General Counsel Jeff Kielbasa, Assistant General Counsel Department of Revenue Room 204, Carlton Building Tallahassee, Florida Attachment Hearing Officer's Recommended Order C ---.._.._-_._------_.._.. ~--_.~-~

5 " STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS GAINESVILLE AMATEUR RADIO SOCIETY, INC., vs. Petitioner, DEPARTMENT OF REVENUE,. Respondent CASE NO. 94-l200 RECOMMENDED ORDER Pursilant.to notice, the above matter was heard before the Division of Administrative Hearings by its assigned Hearing (J Officer, Donald R. Alexander, on March l3, 1995, in Gainesville, Florida, and by telephone on March l7, APPEARANCES For Petitioner: Sidney Schmukler, Esquire 3922 N. W. 20th Lane Gainesville, Florida For Respondent: Olivia P. Klein, Esquire Department of Legal Affairs The Capitol-Tax Section Tallahassee, Florida l050 STATEMENT OF THE ISSUE The issue is whether petitioner qualifies for a consumer's certificate of exemption as a scientific organization within the meaning of Section 2l2.08(7 (o2.c., Florida Statutes. PRELIMINARY STATEMENT This matter began on December 2l, 1993, when petitioner, Gainesville Amateur Radio Society, Inc., filed an application as.~ a charitable organization for a consumer's certificate of

6 exemption with respondent, Department of Revenue. If approved, petitioner would be able to make tax exempt purchases that would otherw.isebe taxable under Chapter 212, Florida Statutes. On February 3, 1994, the application was denied on the ground petitioner did not qualify as a "charitable organization Jl within the meaning of the law. Thereafter, petitioner filed a petition seeking to contest the denial of its application. The matter. was referred by respondent to the Division of Administrative"Hearings on March 3, 1994, with a request that a hearing officer be assigned to conduct a formal hearing. By notice of hearing dated March 17, 1994, -a final hearing was scheduled on July 14, 1994, in Gainesville, Florida. At the parties' request, the matter was rescheduled to February 7, 1995, and then again to March 13, 1995, at the same location... A continued hearing was conducted by telephone on March 17, On April' 18, 1994, petitioner filed an amended petition _I along with a second application for a consumer's certificate of exemption, this time on the theory that it was a scientific organization. May 3, Leave to file the amended petition was granted on' At final hearing, petitioner presented the testimony of Dr. Leon W. Couch, II, George S. C. Barnes, Edward A. Slimak, Dr. Gary T. Gossinger, and Harold R. Blalack, all members of the organization. Also, it offered petitioner's exhibits 1-4. All exhibits were received In evidence. Respondent presented the testimony of Dr. Gary T. Gossinger, Daniel M. Wagner, Jr., a Department sales tax exemption examiner, and Sharon W. Bradley, 2 ---_.-.~.~ ~-.-

7 o an Internal Revenue Service tax technician. Also, respondent's exhibits land 2. Both exhibits were it offered received in evidence. Finally, the parties stipulated into evidence joint exhibits l-3. The transcript of hearing (two volumes was filed on May 3, 1995, and respondent's exhibit 2 was late-filed on June 20, Proposed findings of fact and conclusions of law were filed by petitioner and respondent on May 23 and June l, 1995, respectively. A ruling on each proposed finding has been made in the Appendix attached to. this Recommended Order. FINDINGS OF FACT Based upon all of the evidence, the following findings of fact are determined: (,-~. ~ A. Background 1. Petitioner, Gainesville Amateur Radio Society, Inc. (GARS or petitioner, a Florida non-profit corporation, was incorporated on December 31, Its stated purpose is to promote an interest in amateur radio operation. Among other things, GARS provides preparation for Federal Communication Commission licensing examinations, supports community activities with free communication services, and encourages public awareness of ham radio activities through the publication of a monthly newsletter called the GARS-MOUTH. 2. Respondent, 'Department of Revenue (DOR,'is charged with the responsibility of administering and implementing the Florida Revenue Act of 1949, as amended. It has the specific task of o collecting sales taxes and enforcing the state tax code and rules '---'-'-- ~~--~~--- I

8 - -~-----~ By law, certain transactions are exempt from the state sales and use tax. Among these are sales or lease transactions involving IIscientific organizations. 11 In order for an organ~zation to be entitled to an- exemption, it must make application with DOR for a consumer's certificate of exemption and demonstrate that it is a within the meaning of the law. qualified scientific - organization Once the application is approved, the certificate entitles the holder to make tax exempt purchases that are otherwise taxable under Chapter 212, Florida Statutes. In the case of petitioner., a certificate would enable it to save a hundred or so dollars per year Claiming that it was entitled to a certificate of exemption as a charitable organization, GARS filed an applicat:i-on with DOR on December 21,1993. After having the application preliminarily disapproved by DOR on the ground it did not expend II in excess of 50.0% of the organization's expenditures toward referenced charitable concerns, within (its most recent fiscal year, II a requirement imposed by DOR rule, GARS then amended its application to claim entitlement on the theory that it was a scientific organization. Although DOR never formally reviewed the amended application, it takes the position that GARS still does not qualify for a certificate under this new theory. B. Is GARS a Scientific Organization? 5. Under Section (7 (02.c., Florida Statutes, -a scientific organization is defined in relevant part as an organization which holds a current exemption from the federal income tax under section 501(c (3 of the Internal Revenue Code

9 o A DOR rule tracks this statute almost verbatim. Accordingly, as a matter of practice, in interpreting this statutory exemption, DOR simply defers to the final determination of the Internal Revenue Service (IRS If the IRS grants an organization a 501(c (3 status based on the determination that it is a scientific organization, then DOR accepts this determination at face value. DOR does not make an independent determination whether the organization is I1scientific l1 or question the decision of - the IRS. This statutory interpretation is a reasonable one and was not shown to be erroneous or impermissible. 6. GARS received a federal income tax exemption from the IRS regional of;fice in Atlanta, Georgia by letter dated August o 12, The record shows that GARS was granted an 11 exempt organization l1 status as a I1charitable organization l1 and as an 11 educational organization II under Treasury Regulation Section 1.501(c (3. However, GARS did not receive an exempt status as a I1scientific organization l1 nor did the IRS make that determination. Therefore, GARS does not qualify as a scientific organization within the meaning of the law. 7. While petitioner submitted evidence to show that it engages in what it considers to be a number of scientific endeavors, these activities, while laudable, are irrelevant under Florida law in making a determination as to whether GARS qualifies for a sales tax exemption. Therefore, the application must be denied. (J 5

10 CONCLUSIONS OF LAW ( 8." The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to section (1, Florida Statutes. 9. In determining the merits of petitioner's application, it, is first noted that as the party seeking an exemption, GARS bears the burden of proving its entitlem~nt to ~ certificate of exemption by a preponderance of the evidence. At the same time, it i's well established that an exemption clause in a tax statute must be' strictly construed against the person claiming the exemption. See, e. g., Asphalt Pavers, Inc. v. Dept. of Revenue, 584 So.2d 55, 57 (Fla. 1st DCA FinallYt Section (7 (0 2. t Florida Statutes, provides that lithe provisions of this section authorizing exemptions from tax shall be strictly defined, limitedt and applied in each category. II 10. Subsection (7 (o2.c., Florida Statutes, provides in relevant part as follows: c. "Scientific organizations II means scientific organizations which hold current e?<-emptions from federal income tax under s. 501(c (3 of the Internal Revenue Code Rule 12A-1.001(3 (g3.d., Florida Administrative Code, tracks the statutory definition almost verbatim. ll~ Because the evidence shows clearly that petitioner does not hold a II current exemption from federal income tax under s. 501 (c (3 of the Internal Revenue Code, II. as required by the statute and rule, it does not qualify as a scientific organization within the meaning of the law. This conclusion is consistent with the principles that the statutory exemption be '~~~~~~._._~-._-- ~~~~~~- ---_._ _------_.~~--~~~~~~_. 6

11 , " o "strictly" construed applied, against and that the the person taxing statute claiming the be strictly exemption. Accordingly, GARS' application should be denied. l2. Finally,' at the conclusion of the telephonic hearing on March l7, 1995, petitioner's counsel indicated that he intended to promptly file an application for exemption as a scientific organization with the IRS. If that application is ultimately approved, and a new application is then filed with DOR, petitioner would appear to qualify as a scientific organization and be eligible for a certificate of exemption. RECOMMENDATION Based on the foregoing findings of fact and conclusions of o RECOMMENDED that respondent enter a final order denying petitioner's application for a consumer certificate of exemption. law, it is DONE AND ENTERED this Tallahassee, Florida. ~6~ day of June, 1995, in D NALD R. ALEXANDE Hearing Officer Division 9f Administrative Hearings The DeSoto Building l230 Apalachee Parkway Tallahassee, FL l550 ( Filed with the Clerk of the Di~~~P;- f Administrative Hearings thl~~day of June, _._ _ _..._--._ _ -._- _- _---

12 Petitioner: APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-l Partially accepted in finding of fact Partially accepted in finding of fact Partially accepted in finding of fact Rejected as being irrelevant. 6. Rej ected as being unnecessary. 7. Partially accepted in finding of fact Partially accepted in finding of fact Partially accepted in finding of fact Partially accepted in finding of fact Partially accepted in finding of fact Rejected as being unnecessary. 14. Partially accepted in finding of fact 6. Respondent: l Partially accepted in finding of fact 1. Partially accepted in finding of fact 2. Rejected as being unnecessary. Rejected as being cumulative. Partially accepted in finding of fact 7. Partially accepted in finding of fact 4. Partially accepted in finding of fact 3. Covered in preliminary statement. Partially accepted in finding of fact 4. Partially accepted in finding of fact 6. Rejected as being unnecessary. Partially accepted in finding of fact 5. Parti~lly accept~d in finding of fact 6....,j ~., Note - Where a proposed finding has been partially accepted, the remainder has been rejected as being irrelevant, unnecessary for a resolution of the issues, not supported by the. evidence, cumulative, subord~nate, ora conclusion of law _.._------

13 (~ COPIES FURNISHED: Mr. Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL Linda Lettera, Esquire General Counsel Department of Revenue 204 Carlton Building Tallahassee, FL Sidney Schmukler, Esquire 3922 N. W. 20th Lane Gainesville, Florida Oiivia P. Klein,' Esquire bepartment of Legal Affairs The Capitol-Tax Section Tallahassee, Florida o NOTICE OF RIGHT TO SUBMIT EXCEPTIONS All parties have the right to submit to the agency written exceptions to this Recommended Order. All agencies allow each party at least ten days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the Final Order in this case concerning agency rules on the deadline for filing exceptions to 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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