STATE OF FLORIDA, DEPARTMENT OF REVENUE TALLAHASSEE, FLORIDA FIRST UNION NATIONAL BANK OF FLORIDA VB. Petitioner, DEPARTMENT OF REVENUE, Respondent. ----------------- Case No. 95-5l24 FINAL ORDER This cause came on before the Department of Revenue for the' purpose of issuing a final order. The hearing officer assigned by thed:lvision of Administrative Hearings heard this cause and issued a Recommended Order. 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 hereby adopts and incorporates by reference the findings of fact "Get.forth in the Recommended Order. CONCLUSIONS OF 'LAW The Department hereby adopts and incorporates by reference the,(~ conclusions of law set forth in the Recommended Order.._---------._------_._-----_.._--_._---_._-.._---_._-
Based on the foregoing, ORDERED it is, that the Department's assessment against Petitioners of documentary stamp tax, plus applicable interest and penalties is upheld. ENTERED in Tallahassee, Leon County, Florida this ~ day of August, 1996. I HEREBY CERTIFY that the foregoing FINAL ORDER in FIRST UNION NATIONAL BANK OF FLORIDA vs. DEPARTMENT OF REVENUE, Case No. 95 5124, has been filed in the official records of the Florida Department of Revenue this ~ day of August,.1996.. C Copies furnished to: Don W. Davis, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 ~~. Adam G. Adams III; Esquire Attorney for First Union Corporation Thompson, Adams. & Hoffman, P.A. One Independent Drive, Suite 3131 Jacksonville, Florida 32202 Scott M. :Covel1,.Esquire Office of the Attorney General Tax Section, Department of Legal Affairs Koger Center, Ervin Building, Ste. 309 2020 S.E. Capital Circle Tallahassee, Florida 32301, Linda Lettera, General Counsel Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668...------.--------_.~_....._------_.._-_.---
NOTICE OF RIGHT TO JUDICIAL REVIEW A -party who is adversely affected by this final order is entitled to judicial review pursuant to Section 120.68 1 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 Division of Administrative Hearings and a second copyi accompanied by filing fees prescribed by law l with the District Court of Appeal I First District I 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. o
" STATE OF FLORIDA DIVISION OF ADMINISTRATIVE.HEARINGS FIRST UNION NATIONAL EANK OF FLORIDA, vs. Petitioner, DEPARTMENT OF REVENUE, Respondent. ----------------}.. } RECOMMENDED CASE NO. 95-5124 ORDER Following notice to all parties" Don W. Davis, a Hearing Officer for the Division of Administrative Hearings, held a inal hearing in the above-styled case on April 29, 1996, in Jacksonville, Florida. ~ APPEARANCES For Petitioner: William W. Gallogly, Esquire First Union Corporation Legal Division 225 Water Street Jacksonville, Florida 32202 For Respondent: Scott M. Covell,.Esquire Department of Legal Affairs Tax Section The Capitol Tallahassee,.Florida 32314-6668 STATEMENT OF THE ISSUE Whether Petitioner is liable for documentary stamp obligations due and unpaid by the origin~l holder upon a promissory no~e ahd mortgage currently held by Petitioner by virtue of assignment' of the asset from the Federal Deposit Insurance Corporation (FDIC, ( " / national bank. the Receiver of an insolvent
PRELIMINARY STATEMENT I~!, By Petition For Formal Hearing dated October. 1.7, 1.995, Petitioner challenged Respondent's assessment of tax and penalty for unpaid documentary stamps. On October 20, J.99S, the matter was referred to the Division -.. of Administrative Hearings for the conduct of formal proceedings. Following the granting of continuances requested by the parties, final hearing was eventually convened on April 29, 1.996, at which time the parties jointly presented II exhibits. Respondent also sought official recognition of an additional exhibit at the final hearing over Petitioner's objection. upon the request for official recognition of the exhibit, a Ruling copy of a certified copy of a document from judicial records of the (J Dade County, Florida Circuit Court, was deferred. Upon reflection and review, official recognition is granted the ey~ibit, designated as Respondent's exhibit one, in that the thrust of Petitioner's objection is to the lack of relevance of the entire document, notwithstanding that some portions of the document were jointly stipulated into evidence by the parties as part of other exhibits also admitted at final hearing. In addition to the joint exhibits, Petitioner presented the testimony of one witness, William, W. Gallogly. Respondent also presented testimony of one witness, James Silvey. A transcript of the final hearing was filed with the '\ Division of Administrative Hearings on May l6, 1996. The parties requested and were granted leave to submit proposed recommended --------------------'-----
orders more than ten days after receipt of the transcript of the final hearing, thereby waiving provisions of Rule 28-5.402, Florida Administrative Code. Proposed findings of fact submitted, by the parties have been reviewed and are addressed in the appendix-:-_to this recommended order. FINDINGS OF FACT Stipulated Facts Findings contained in paragraphs 1-28, were stipulated to by the parties. 1. GaryD. Miller and Katherine A. Miller made a note to Southeast Bank, '(.~~utheast dated March 27,,1.990, in the stated amount of $80,000 '(the Note. 2. Gary D. Miller and Katherine A. Miller (the Millers (, executed a Future Advance Note, Modification and Cross Collateralization Agreement (the Mortgage in favor o,f Southeast ~ated March 27, 1990, and recorded -in Volume 41.78, page 2981, of the official records of Orange County, Florida. 3. Southeast was doing business and in good standing on March 27, 1990. 4. The Note was consolidated with a promissory note made by the Millers dated June 7, 1988 in the stated amount of $350,000' and replaced by a Consolidated Replacement Note dated April 9, 1991,,in the stated amount of $371,250 (the Consolidated Note.,5. The Cons~lidated Note was defined and secured in a Mortgage Modification Agreement between Southeast and the Millers dated April 9, 1991 and recorded at volume 4278, page 0065 of the official records of Orange County, Florida. 3
/ April 9, ~99~. 6. Southeast was doing business and in good standing on '7. First Union National Bank of Florida (First Union is (. the owner and holder of the Note, the Consolidated Note and the Mortgage identified in paragraphs 1,2, and 4 above.. _- 8. The Department timely assessed documentary' stamp taxes on the Note. The assessment covers the. Consolidated Note. 9. There is no evidence that documentary stamps are attached or affixed to the Note, the Consolidated Note or the Mortgage. 10. No documentary stamp. tax were paid on the Note, the Consolidated Note or the Mortgage. 11. The Office of the Comptroller of the currency declared (j '-.. / Southeast insolvent and appointed the FDIC as receiver for 'Southeast on September 19, J.991. 12. The FDIC, as receiver, became the owner and holder of all of the.promissory notes and mortgages formerly held by Southeast. 13. The FDIC (as Receiver of Southeast, and corporately and First Union entered into an Assistance Agreement dated September 19, 1991, under which the FDIC, as Receiver, sold and assigned to First Union the Consolidated Note and the Mortgage. 14. The FDIC, as Receiver, executed an Assignment of Mortgage, subsequently, filed in volume 588, page 589, of the official records of Or~ge County, Florida. 15. First Union is not the same entity as Southeast (by name or otherwise. \ / 4
,, 16. First Union purchased no portion of, the stock ownership of Southeast, rather First Union purchased only those assets and liabilities of Southeast detailed in the Assistance Agreement. 17. Under terms of the Assistance Agreement, First Union expressly assumed only certain specified liabilities. ~8. First Union did not expressly assume any liabilities of Southeast relating to payment of taxes under Chapter 20J., Florida Statutes. 19. Under the terms of the Assistance Agreement, the FDIC and First Union contractually agreed that the FDIC would indemnify First Union for llcosts, losses, liabilities, expenses, judgments, fines and amounts paid in settlement reasonably incurred in connection with claims against ll First Union based o upon a First Union. liability of Southeast that was not expressly assumed by 20. A claim entitling First Union to indemnification from the FDIC under the terms of the Assistance Agreement' is a claim for a liability for IItaxes ll of Southeast. 21. The definition of IItaxes ll in the,assistance Agreement includes stamp taxes imposed by states, including interest and penalty. 22. By a Notice dated January 5, 1995, Respondent issued an Official Request for Information 'to IISoutheast Bank, National Association, Firs~ Union Bank/Barbara H. Smith. 1I 23. On March 1, 1995, Respondent issued to llsoutheast Bank, ( NA, First Union Bank, N.A;II a Notice of Intent to Make 5, L-,~~~ ~_~ ~,
Documentary Stamp Tax and Discretionary' Surtax Audit (the Notice of Audit. 24, The Notice of Audit was received by First Union on March 22, 2995. 25.,_First Union timely responded to the Notice of Audit by letter dated May.31,.1995, stating that "any transaction prior to September 19, J.991, which might precipitate liability becomes the responsibility of the FDIC." 26. Respondent treated the May 31, 1995 letter of First Union as a protest of the audit. 27. On June 20, 1995, Respondent issued to "Southeast Bank, N.A. -First Union Bank, N.A." a Notice of Proposed Assessment of $150.00 representing tax and interest on the original $80,000 C note of March.27, 1990,.the Consolidated Note. or an assessment of tax and interest on 28. Southeast Bank remains under the receivership of the FDIC. Additional Facts 29. FDIC's sale of the Note and Consolidated Note to First Union under terms of the September 19, 1991 Assistance Agreement imbued First Union with ownership rights inclusive of the right to receive payments of principal and interest on the Note and Consolidated Note, as well as the right to foreclose on the makers of the Note, and Consolidated Note for nonpayment. 30. Neither the ~ote or Consolidated Note qualify for exemption from documentary stamp taxes levied pursuant to C- provisions of Chapter 201, Florida Statutes. 6
" (1 31. Documentary stamp taxes constitute.an excise tax on documents, as opposed to a tax,on the underlying transaction. CONCLUSIONS OF LAW 32. The Division of Administrative Hearings has jurisdiction over this matter. Section 120.57(1, Florida Statutes. 33,. The gravamen ofpeti,tioner' s argument is that FDIC receivership of the assets subsequently purchased by Petitioner in the instant case, operated to totally extinguish pre-existing.liability for unpaid documentary stamp taxes on the Note and Consolidated Note. Petitioner's argument is unpersuasive. 34. Although 12 U.S.C.A. Section 1825(b, clearly provides C that exemption does not expressly extend to subseguentasset exemption to FDIC, in its capacity of receiver, from state taxes, holders. such as Petitioner. Congressional enactment of 12 U.S.C.A. 1823 (d (3 (A to expressly extend these protections to FDIC in its corporate capacity further emphasizes that omission of such exemption to entities such as Petitioner in the instant case was not a ~asual oversight. 35. Property burdened by tax liabilities and penalties attaching before the initiation of receivership (as present in this case assignee. remains subject to such burdens in the hands of an Carrolton-Farmers Branch Independent School District v. Federal Depos~t Insurance Corp., 776 F.Supp. 1180 (N.D. Tex. 1991 i affirmed in Irving Independent School District v. Packard Properties, 970 F.2d 58 (5th Cir. 1992. 7
36. The Note and Consolidated Note, both covered in the assessment 'of documentary stamp taxes, are "promissory notes" or "written obligations to pay money" made in the state and as such are subject to documentary stamp taxes. Section 201.08, Florida statutes.._ 37. Notwithstanding Petitioner's attempts to argue the rights of FDIC as receiver in this matter, FDIC is not a party and Petitioner is without standing to make such arguments. The sole issue presented is whether Respondent properly assessed Petitioner. RECOMMENDATION Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered upholding o Respondent's full assessment of tax and penalty against.petitioner. DONE and ENTERED in Tallahassee, Florida, this 25th day of June, 1996. DON W. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904 488-9675 SunCom 278-9675 Filed with.the Clerk of the Division of Administrative Hearings this 25th day of June, 1996. ( 8
Q, APPENDIX In accordance with prov.isions of section ~20. 59, Florida Statutes, the following rulings- are made on the proposed findings of fact submitted on behalf of the parties. Petitioner's Proposed Findings Petitio+t~r's proposed findings (other than the.28 paragraphs of stipulated findings of fact consisted of seven paragraphs denominated by letters.a-g.no citation to the record was included in these proposed findings. Accordingly,the proposed findings, while reviewed and addressed to the -extent possible by the foregoing findings of fact, arere:1ected. Respondent's Proposed Findings ~. -28. 29.-32. Stipulated facts adopted. Adopted, although not verbatim. COPIES FURNISHED: o William W. Gallogly, Esquire First Union Corporation Legal Division 225 Water Street Jacksonville, Florida 32202 Scott M. Covell, Esquire Dept. of Legal Affairs The Capitol - Tax Section Tallahassee, Florida 323~4-6668 Linda Lettera, Esquire Department of Revenue 204 Carlton Building Tallahassee, Florida Larry Fuchs, Executive Department of Revenue ~04 Carlton Building Tallahassee, Florida 32399-0100 Director 32399-0100 ' j' (..-..-... 9.
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 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 co:g.cerning 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. o 10