94-006636RX Irvin L. Olden vs. Department Of Revenue Status: Closed DOAH Final Order on Thursday, April 20, 1995.

Summary: Petitioner lacked standing to challenge rule when agency withdrew reliance on rule for its assessment. Agency admitted rule could not be applied to Petitioner.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IRVIN L. OLDEN, )

)

Petitioner, )

)

vs. ) CASE NO. 94-6636RX

)

STATE OF FLORIDA, )

DEPARTMENT OF REVENUE, )

)

Respondent. )

_________________________)

FINAL ORDER

Pursuant to written notice a formal hearing was held in case number 93-

4326RGM before Larry J. Sartin, a duly designated Hearing Officer of the

Division of Administrative Hearings, on February 24, 1993, in Tallahassee,

Florida.

APPEARANCES

For Petitioner: Irvin L. Olden, pro se

9 Fox Valley Drive

Orange Park, Florida 32073

For Respondent: Francesco M. Negron, Jr.

Jeffrey M. Dikman

Assistant Attorneys General

Tax Section, Capitol Building

Department of Legal Affairs

Tallahassee, Florida 32399-1050

STATEMENT OF THE ISSUES

The issue in this case is whether Petitioner, Irvin L. Olden, has standing

to challenge the validity of Rule 12B-4.012(2), Florida Administrative Code,

pursuant to Section 120.56(1), Florida Statutes.

PRELIMINARY STATEMENT

On November 23, 1994, Petitioner, Irvin L. Olden, filed a Petition for

Administrative Determination of Invalidity challenging the validity of Rule 12B-

4.012(2), Florida Administrative Code, pursuant to Section 120.56(1), Florida

Statutes, with the Division of Administrative Hearings. The matter was assigned

case number 94-6636RX. The case was assigned to Hearing Officer Don W. Davis by

Order of Assignment entered December 8, 1994.

On December 12, 1994, Hearing Officer Davis entered an Order Establishing

Prehearing Procedure and a Notice of Hearing. The final hearing was scheduled

for January 4, 1995. A Joint Motion for Continuance was subsequently granted by

Order Granting Motion for Continuance entered December 22, 1995. The final

hearing was rescheduled for February 24, 1995.

On January 5, 1995, Petitioner filed a Motion for Summary Judgment. The

motion was denied by Hearing Officer Davis by Order Denying Motion for Summary

Judgment entered January 11, 1995. A Motion for Reconsideration of Summary

Judgment, filed on January 17, 1995, was denied by an Order Denying Motion for

Reconsideration entered January 24, 1995.

On January 30, 1995, Petitioner filed an Objection and Request for Hearing

Officer Recusal. On February 1, 1995, an Order of Recusal was entered. Hearing

Officer Davis recused himself and the case was assigned to the undersigned.

On February 17, 1995, Petitioner filed a Request for Determination/Delay

Pending Determination. Petitioner for the third time sought a final

determination of this matter by summary judgment. Petitioner also sought a

continuance of the hearing. A motion hearing was held by telephone on February

23, 1995 to consider Petitioner's Request. After hearing argument of the

parties, the Request was denied.

On February 24, 1995, immediately before the commencement of the final

hearing of this case, Respondent filed Respondent's Motion to Dismiss for Lack

of Standing. Argument on the Motion was heard after the commencement of the

final hearing. After hearing argument of the parties, the undersigned informed

the parties that the Motion to Dismiss for Lack of Standing would be granted by

Final Order. The parties were also informed that they could file written

arguments concerning the Motion by proposed final orders which would be

considered before this Final Order was entered.

On March 7, 1995, Petitioner filed an Amendment to Petition for

Administrative Determination of Invalidity. Pursuant to the Amendment,

Petitioner struck certain language from his Petition. Petitioner also filed a

pleading titled "Objections/Arguments Against Motion for Dismissal".

A transcript of the final hearing was filed on March 21, 1995. Proposed

final orders were, therefore, to be filed on or before March 31, 1995.

Respondent filed a proposed final order containing proposed findings of fact. A

ruling on each proposed finding of fact has been made either directly or

indirectly in this Final Order or the proposed finding of fact has been accepted

or rejected in the Appendix which is attached hereto. Petitioner did not file a

proposed final order.

FINDINGS OF FACT

1. The Respondent, the Florida Department of Revenue (hereinafter referred

to as the "Department"), notified Petitioner, Irvin L. Olden, by a Revised

Notice of Intent to Make Documentary Stamp Tax and Discretionary Surtax Audit

Changes (hereinafter referred to as the "Revised Notice"), that he owed $164.45

in documentary stamp tax, plus penalty of $41.11 and interest thru June 6, 1994

of $70.71. See Petitioner's exhibit 3. The Revised Notice was entered May 31,

1994.

2. Mr. Olden was informed in the Revised Notice that the "legal basis" of

the proposed audit changes was "Chapters 201.01, 201.02, 201.08, 201.17, F. S."

and "Rules 12B-4.012(1) and (2), F.A.C."

3. Mr. Olden filed a written protest to the Revised Notice by letter dated

June 23, 1994. On July 12, 1994, the Department issued a letter in response to

the written protest. Petitioner's exhibit 2. In pertinent part, Mr. Olden was

informed:

Your Quit Claim Deed recorded November 6, 1990,

transferred half interest in real estate from

Sue H. Olden to Irwin L. Olden. There was a

$60,000 mortgage on the property. According

to Rules 12B-1.012 (1) and (2), and 12B-1.013

(25) and (32), Florida Administrative Code,

this transfer is taxable because of the mortgage

on the property. The rules state that any deed

is taxable if consideration for the property is

given. The rules go on to state that a mortgage

on the property is consideration. The rules are

attached.

The letter incorrectly referred to Rule 12B-1.012(1) and (2), Florida

Administrative Code, and Rule 12B-1/013(25) and (32), Florida Administrative

Code. The Department intended to refer to Rules 12B-4.012 and 12B-4.013,

Florida Administrative Code.

4. Mr. Olden timely challenged the proposed assessment of tax pursuant to

Section 120.57(1), Florida Statutes.

5. On November 23, 1994, Mr. Olden also filed a petition with the Division

of Administrative Hearings challenging the validity of Rule 12B-4.012(2),

Florida Administrative Code, pursuant to Section 120.56, Florida Statutes.

6. Rule 12B-4.012(2), Florida Administrative Code (hereinafter referred to

as the "Challenged Rule"), provides, in pertinent part:

(2) Definitions:

(a) "Consideration" under s. 201.02, F.S.,

includes but shall not be limited to, money

paid or to be paid, the amount of any indebtedness

discharged by a transfer of any interest in real

property, mortgage indebtedness and other

encumbrances which the real property interest

being transferred is subject to, notwithstanding

the transferee may be liable for such indebtedness.

Where property other than money is exchanged for

interest in real property, there is the presumption

that the consideration is equal to the fair market

value of the real property interest being trans-

ferred. [Emphasis added].

7. Mr. Olden specifically challenged the portion of the Challenged Rule

emphasized in finding of fact 6. Mr. Olden alleged that the Challenged Rule is

an invalid exercise of delegated legislative authority as defined in Section

120.52(8)(b) and (c), Florida Statutes.

8. The language of the Challenged Rule which Mr. Olden has alleged is

invalid had an effective date of February 13, 1991.

9. Although not clearly stated in Mr. Olden's petition, Mr. Olden's

standing to challenge the Challenged Rule is based upon the fact that the

Department relied on the Challenged Rule in the Revised Notice and the letter in

response to Mr. Olden's written protest.

10. Pursuant to the Department's Motion to Dismiss for Lack of Standing

filed by the Department on February 24, 1995, the Department stipulated to the

following:

5. The Department stands by its assessment

in the assessment proceeding. The statute

which was recited in the Department's assessment

provides ample authority for the assessment

without reference to a subsequently promulgated

rule. . . .

6. The Department does not seek to retroactively

apply a rule to a transaction which preceded the

effective date of that rule. Any statement in

the Notice of Proposed Assessment which indicates

an intention to apply a rule on a retroactive basis

is hereby withdrawn.

. . .

9. However, while the rule is valid, it now

appears that Petitioner lacks standing to challenge

a rule which is not intended to be applied to

Petitioner. Petitioner has standing to challenge

the assessment and to challenge the Department's

prerule application of the Section 201.02, Fla.

Stat. (1990). . . .

10. Now that the Department formally withdraws

any reference to the rule in support of its

assessment against the Petitioner, there is no

reason for this matter to proceed further.

11. Counsel for the Department reiterated the Department's position at

hearing.

CONCLUSIONS OF LAW

A. Jurisdiction.

12. The Division of Administrative Hearings has jurisdiction of the

parties to and the subject matter of this proceeding. Section 120.56, Florida

Statutes.

B. Burden of Proof.

13. The burden of proof in this proceeding was on Mr. Olden. See Adam

Smith Enterprises v. Department of Environmental Regulation, 553 So.2d 1260,

(Fla. 1st DCA 1990); and Agrico Chemical Co. v. Department of Environmental

Regulation, 365 So.2d 759 (Fla. 1st DCA 1979).

C. Standing.

14. Section 120.56(1), Florida Statutes, provides, in pertinent part, the

following:

(1) Any person substantially affected by a

rule may seek an administrative determination

of the invalidity of the rule on the ground

that the rule is an invalid exercise of

delegated legislative authority.

15. In order to conclude that a person is a "substantially affected"

person, it must be proved:

1) that he will suffer injury in fact which

is of sufficient immediacy to entitle him to

a . . . hearing, and 2) that his substantial

injury is of a type or nature the proceeding

is designed to protect.

Florida Society of Ophthalmology v. Board of Optometry, 532 So.2d 1279, 1285

(Fla. 1st DCA 1988), rev. denied, 542 So.2d 1333 (1989). See also Agrico

Chemical Company v. Department of Environmental Regulation, 406 So.2d 478 (Fla.

2d DCA 1981); and Professional Firefighters of Florida, Inc. v. Department of

Health and Rehabilitative Services, 396 So.2d 1194 (Fla. 1st DCA 1981).

16. When the Department expressly withdrew any reliance upon the

Challenged Rule for its Revised Notice, Mr. Olden could no longer prove that he

would suffer any injury from the Challenged Rule. Any injury that Mr. Olden may

now suffer will be caused by Chapter 201, Florida Statutes, and the Department's

application thereof to Mr. Olden.

17. Mr. Olden has failed to allege any facts in his petition, as amended

on March 7, 1995, that would support a finding that the Challenged Rule has had,

or will have, any application to Mr. Olden.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

ORDERED that the Petitioner has failed to allege sufficient facts which

would support a finding that he is substantially affected by Rule 12B-4.012(2),

Florida Administrative Code, Therefore, the Petition for Administrative

Determination of Invalidity, as amended, filed by Irvin L. Olden is DISMISSED.

DONE and ORDERED this 20th day of April, 1995, in Tallahassee, Florida.

___________________________________

LARRY J. SARTIN, Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 20th day of April, 1995.

APPENDIX

Case Number 94-6636RX

The Department has submitted proposed findings of fact. It has been noted

below which proposed findings of fact have been generally accepted and the

paragraph number(s) in the Final Order where they have been accepted, if any.

Those proposed findings of fact which have been rejected and the reason for

their rejection have also been noted. Mr. Olden did not file a proposed order.

The Department's Proposed Findings of Fact

1 Accepted in 1.

2 Accepted in 2.

3 Accepted in 5.

4 Accepted in 4.

5 See 2-3 and 9.

6 See 2 and 9.

7 Accepted in 3.

8 Accepted in 8.

9 Accepted in 10.

10 Accepted in 11.

11 Accepted in 10.

COPIES FURNISHED:

Irvin L. Olden

9 Fox Valley Drive

Orange Park, Florida 32073

Francesco M. Negron, Jr.

Assistant Attorney General

Tax Section, Capitol Building

Department of Legal Affairs

Tallahassee, Florida 32399-1050

Carroll Webb, Executive Director

Administrative Procedures Committee

Holland Building, Room 120

Tallahassee, Florida 32399-1300

Liz Cloud, Chief

Bureau of Administrative Code

The Capitol, Room 1802

Tallahassee, Florida 32399-0250

Larry Fuchs, Executive Director

Department of Revenue

104 Carlton Building

Tallahassee, Florida 32399

Linda Lettera

Department of Revenue

General Counsel

204 Carlton Building

Tallahassee, Florida 32399

NOTICE OF POSSIBLE RIGHT TO JUDICIAL REVIEW

ANY PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER MAY BE ENTITLED TO

JUDICIAL REVIEW PURSUANT TO SECTION 120.68, 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 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.