95-000654 Atheists Of Florida, Inc. vs. Department Of Revenue Status: Closed Recommended Order on Friday, March 8, 1996.

Summary: Petitioner's principal activities are not within exemptions allowed by law.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ATHEISTS OF FLORIDA, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 95-0654

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

____________________________)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its

designated Hearing Officer, Joyous D. Parrish, held a formal hearing in the

above-styled case on January 19, 1996, in Miami, Florida.

APPEARANCES

For Petitioner: Mark Trop

Shoreview Building

9999 Northeast Second Avenue, Suite 201

Miami, Florida 33138

For Respondent: Ruth Ann Smith

Assistant General Counsel

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314-6668

STATEMENT OF THE ISSUES

The central issue in this case is whether the Petitioner, Atheists of

Florida, Inc., is entitled to a certificate of exemption pursuant to Section

212.08, Florida Statutes.

PRELIMINARY STATEMENT

This case began on January 24, 1995, when the Department of Revenue

(Department) issued a notice of intent to deny regarding Petitioner's

application for a consumer's certificate of exemption pursuant to Section

212.08, Florida Statutes. The denial alleged that from the application and

supporting documentation, Petitioner failed to meet the qualifications for a

sales tax exemption as set forth in the statute.

Petitioner contested the denial and by letter dated February 2, 1995,

requested a hearing to appeal the action. The matter was forwarded to the

Division of Administrative Hearings for formal proceedings on February 14, 1995.

On January 8, 1996, in anticipation of the hearing, the parties filed a

joint prehearing stipulation that set forth each party's position with regard to

the matter at issue. Petitioner contends that it qualified for exemption

pursuant to Section 212.08(7)(n), or (o), Florida Statutes. The Department

argues that the Petitioner's activities do not meet the statutory and rule

requirements as to an educational institution or as a charitable institution.

At the hearing, the Petitioner presented the testimony of Christos

Tzanetakos, president of the Atheists of Florida, Inc. Its exhibits numbered 1,

2, 3, and 4 were admitted into evidence. David Young, a tax specialist I with

the Department, testified on behalf of Respondent. The Department's exhibit

numbered 1 was entered into evidence.

The transcript of the proceeding was filed on February 6, 1996, and the

parties were afforded ten days from that time within which to file their

proposed recommended orders. Specific rulings on the proposed findings of fact

are included in the appendix at the conclusion of this order.

FINDINGS OF FACT

1. The Petitioner is a Florida not-for-profit corporation which is exempt

from federal income tax under Section 501(c)(3) of the Internal Revenue Code.

2. The Petitioner has established a Mark Twain Scholarship Fund the

purpose of which is to give recipients funds to pay for post-secondary tuition

and books.

3. On or about September 26, 1994, Petitioner filed an application with

Respondent for a consumer certificate of exemption and stated as its basis

"other." The applicant then identified itself as "state/church separation"

organization. Petitioner did not check any of the other categories for

exemptions such as "religious," "educational," or "charitable."

4. The application was reviewed by the Department considering all of the

categories listed on the application and available under the pertinent statute.

Based on the criteria set forth in Section 212.08(7), Florida Statutes, the

Department reached a preliminary decision which denied the Petitioner's

application for a certificate of exemption.

5. Petitioner was notified of the denial and timely challenged the agency

action.

6. All of the members of the Petitioner's group are voluntary, unpaid,

participants who pay yearly dues to join the organization. Students pay $10.00,

individuals $30.00, and couples $35.00. If someone were to allege poverty,

Petitioner would arrange a free membership for such individual. No evidence of

members of that category was presented.

7. The only information about its members Petitioner seeks is their

educational background. Documentation regarding financial circumstances of each

member is not requested nor kept.

8. Petitioner provides benefits to minors by providing speakers for

various topics at the university and high school levels, and by allowing

students to attend monthly meetings.

9. Monthly meetings for the south Florida group are held in the Fort

Lauderdale library. Other chapters in Tampa and Sarasota also hold meetings

periodically and such meetings are, presumably, available to students. In

Tampa, for example, Petitioner has an information booth on the campus of the

University of South Florida.

10. Petitioner attempts to offer a "scientific and more rationale" point

of view to young adults.

11. For the south Florida meetings, approximately 5 to 10 persons under 18

years of age might attend. The average attendance of all members is 20 to 40

persons.

12. Petitioner also produces a public access cable television program

consisting of twelve half-hour episodes per year. Topics of this program have

included "Sin and Sexuality."

13. Petitioner established the scholarship fund indicated above. One

recipient was a woman in prison for life in California who wanted to attend the

University of California.

14. More recently, Petitioner conducted an essay contest and two men from

that event received awards.

15. None of the scholarship recipients was a minor. The total amounts

expended on scholarships by the Petitioner did not exceed 10 percent of its

total expenditures.

16. The Petitioner's group started with approximately 53 members but has

grown to over 200 members.

17. Petitioner provides support to its members who may encounter scorn or

harassment from the public and has a telephone line set up so that messages can

be taken twenty-four hours of the day. Someone from the organization can then

return the call and assist the caller.

18. Public harassment is not uncommon for members of the group. For

example, when Mr. Tzanetakos opposed the use of public monies in connection with

the Pope's visit to south Florida, he received so many telephone calls that he

had to change to an unpublished number.

19. Mr. Tzanetakos maintains that while his organization's views are an

unpopular minority in this country, that they are in the majority in Europe and

other places.

20. One of the purposes of the Petitioner's group is to advocate, support,

and defend "in all lawful ways the complete and absolute separation of church

and state."

21. Another purpose is to promote freedom of expression.

22. Thirdly, the group seeks to "protect the constitutional and civil

rights of Atheists as members of a free and democratic society."

23. According to its articles of incorporation, Petitioner promotes the

following concepts:

A. Because human beings, along with all other

species of animal and plants, evolved from a

primordial cell, Homo sapien is only a link in

the chain of living matter.

B. Because Homo sapiens is the species with

the most advanced brain and the most manipulative

hands, and because we have developed excessively

destructive weapons (nuclear and others), we are

solely responsible for the well-being of our own

species and to a great extent the rest of the

life on planet Earth.

C. Global population control is vital, and

the extinction of other living animal and plant

species must be avoided.

D. Cooperation and equality--not conflict--

among all peoples must be encouraged and promoted.

E. Because all humans have a common origin, and

because the classification of peoples by races and

ethnic groups is divisive and detrimental to our

species and to life itself, all inhabitants on

planet Earth (sic) [should?] be called "Homo

Sapiens", and the current national names to denote

the geographical origin of peoples and their

distinctive cultures.

24. Minors are not specifically mentioned in the Petitioner's articles of

incorporation nor given benefits of membership not available to other members

or, in the case of the television broadcasts, the public as a whole.

25. Mr. Tzanetakos conceded that one of the television topics,

"Euthanasia," may not have been of particular interest to minors. He further

acknowledged that it is difficult to get children to watch educational

television.

26. The Petitioner does not advertise its programs to the general public,

nor does it survey viewers to determine the numbers of minors, if any, that

support its television program.

27. Petitioner accepts only "what can be verified by the scientific method

and rejects supernatural entities, acceptable only as articles of faith."

Accordingly, Petitioner's members do not "worship" god or anything.

28. The Petitioner did not present evidence that it is qualified for

accreditation by, or membership in, the Department of Education, the Southern

Association of Colleges and Schools, the Florida Council of Independent Schools,

or the Florida Association of Christian Colleges and Schools.

CONCLUSIONS OF LAW

29. The Division of Administrative Hearings has jurisdiction over the

parties to, and the subject matter of, these proceedings.

30. Petitioner bears the burden of proof in this matter to establish it is

entitled to the certification sought.

31. Section 212.08(7), Florida Statutes, provides in pertinent part:

(7) MISCELLANEOUS EXEMPTIONS

* * *

(n) Organizations providing special educational,

cultural, recreational, and social benefits to

minors.--There shall be exempt from the tax

imposed by this part nonprofit organizations

which are incorporated pursuant to chapter 617

or which hold a current exemption from federal

corporate income tax pursuant to s. 501(c)(3)

of the Internal Revenue Code the primary purpose

of which is providing activities that contribute

to the development of good character or good

sportsmanship, or to the educational or cultural

development, of minors. This exemption is extended

only to that level of the organization that has a

salaried executive officer or an elected nonsalaried

executive officer.

(o) Religious, charitable, scientific, educational,

and veterans' institutions and organizations.--

1. There are exempt from the tax imposed by this

part transactions involving:

* * *

b. Sales or leases to nonprofit religious, non-

profit charitable, nonprofit scientific, or nonprofit

educational institutions when used in carrying on

their customary nonprofit religious, nonprofit

charitable, nonprofit scientific, or nonprofit

educational activities, including church cemeteries;

and

* * *

2. The provisions of this section authorizing

exemptions from tax shall be strictly defined,

limited, and 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.

* * *

b. "Charitable institutions" means only non-

profit corporations qualified as nonprofit pursuant

to s. 501(c)(3), United States Internal Revenue

Code of 1954, as amended, and other nonprofit

entities, the sole or primary function of which

is to provide, or to raise funds for organizations

which provide, one or more of the following services

if a reasonable percentage of such service is

provided free of charge, or at a substantially

reduced cost, to persons, animals, or organizations

that are unable to pay for such service:

(I) Medical aid for the relief of disease,

injury, or disability;

(II) Regular provision of physical necessities

such as food, clothing, or shelter;

(III) Services for the prevention of or

rehabilitation of persons from alcoholism or

drug abuse; the prevention of suicide; or the

alleviation of mental, physical, or sensory

health problems.

* * *

d. "Educational institutions" means state

tax-supported or parochial, church and nonprofit

private schools, colleges, or universities which

conduct regular classes and courses of study

required for accreditation by, or membership in,

the Southern Association of Colleges and Schools,

the Department of Education, the Florida Council

of Independent Schools, or the Florida Association

of Christian Colleges and Schools, Inc., or non-

profit private schools which conduct regular classes

and courses of study accepted for continuing

education credit by a Board of the Division of

Medical Quality Assurance of the Department of

Business and Professional Regulation or which

conduct regular classes and courses of study

accepted for continuing education credit by the

American Medical Association. Nonprofit libraries,

art galleries, and museums open to the public are

defined as educational institutions and are eligible

for exemption. The term "educational institutions"

includes private nonprofit organizations the purpose

of which is to raise funds for schools teaching

grades kindergarten through high school, colleges,

and universities.

32. Rule 12A-1.001, provides, in part:

Specific Exemptions. Rulemaking power; rules

promulgated by the Department of Revenue cannot

be construed to extend exemptions beyond the

scope of those intended by the statutes.

* * *

(3) RELIGIOUS, EDUCATIONAL, CHARITABLE, VETERANS'

AND SCIENTIFIC ORGANIZATIONS, HOMES FOR THE AGED,

NURSING HOMES OR HOSPICES, FEDERAL AND STATE

CHARTERED CREDIT UNIONS, FLORIDA RETIRED EDUCATORS

ASSOCIATION AND LOCAL CHAPTERS, ORGANIZATIONS

PROVIDING SPECIAL EDUCATIONAL AND SOCIAL BENEFITS

TO MINORS, STATE THEATER CONTRACT ORGANIZATIONS,

MILITARY MUSEUM FUNDRAISERS, COAST GUARD

AUXILIARIES, AND CEMETERY ASSOCIATIONS.

(a) A sale or lease directly to or sales or

leases of tangible personal property by churches,

or a sale or lease directly to nonprofit religious,

nonprofit educational nonprofit charitable

institutions, and veterans' organizations, for

use in the course of their customary nonprofit

religious, nonprofit educational, nonprofit

charitable activities, and for use by veterans'

organizations, including church cemeteries, are

exempt from the tax imposed by Part I, Chapter 212,

F.S. Also exempt are scientific organizations and

organizations providing special educational and

social benefits to minors

* * *

(c) "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 administrative functions only, are

not considered to be churches.

(d) "Religious institutions" means churches,

synagogues, and established physical places for

worship at which nonprofit religious services

and activities are regularly conducted and carried on.

* * *

(f)1. Nonprofit educational institutions must

hold consumer's certificates of exemption in

order to be exempt from payment of tax on

materials and supplies which are purchased for

use by them in their customary educational

activities. See Rules 12A-1.038 and 12A-1.039, F.A.C.

2.a. "Educational institutions" shall mean state

tax supported or parochial, church and nonprofit

private schools, colleges, or universities

conducting regular classes and courses of study

required for accreditation by, or membership in,

the Southern Association of Colleges and Schools,

State Department of Education, Florida Council

of Independent Schools, or the Florida Association

of Christian Colleges and Schools, Inc., or

nonprofit private schools which conduct regular

classes and courses of study accepted for continuing

education credit by a Board of the Division of

Medical Quality Assurance of the Department of

Business and Professional Regulation or which

conduct regular classes and courses of study

accepted for continuing education credit by

the American Medical Association.

b. The term "educational institution" includes

any educational television or radio network or

system established pursuant to s. 229.805, F.S.,

or s. 229.8051, F.S., and any nonprofit television

or radio station which is a part of such network

or system and which holds a current exemption

from federal income tax under s. 501(c)(3),

United States Internal Revenue Code.

c. The term "educational institutions" shall

also include private nonprofit organizations

whose primary purpose is to raise funds for

schools teaching grades kindergarten through

high school, colleges, and universities.

* * *

g. On or after July 1, 1994, the term

"educational institutions" includes a nonprofit

educational cable consortium which holds a

current exemption from federal income tax under

s. 501(c)(3) of the Internal Revenue Code, 1986,

as amended, whose primary purpose is the delivery

of educational and instructional cable television

programming and whose members are composed

exclusively of educational organizations which

hold a valid consumer's certificate of exemption

and which are either an "educational institution"

as defined in this paragraph or qualified as a

nonprofit organization pursuant to s. 501(c)(3)

of the Internal Revenue Code, 1986, as amended.

* * *

(g)1. "Charitable institutions" means only

nonprofit corporations qualified as nonprofit

pursuant to s. 501(c)(3), United States Internal

Revenue Code, 1954, as amended, and other

nonprofit entities, whose sole or primary

function is providing or raising funds for

organizations providing one or more of the

following services, if a reasonable percentage

of such service is provided free of charge, or

at a substantially reduced cost, to persons,

animals, or organizations that are unable to

pay for such service:

a. Medical aid for the relief of disease,

injury, or disability;

b. Regular provision of physical necessities

such as food, clothing, or shelter;

c. Services for the prevention of or

rehabilitation of persons from alcoholism or

drug abuse; the prevention of suicide; or

the alleviation of mental, physical, or

sensory health problems;

* * *

2. Charitable institutions also include

groups providing volunteer manpower to

organizations designated as charitable

institutions hereunder.

33. In this case the Petitioner has failed to meet its burden of proof.

Based upon the criteria found in Section 212.08 (7), Florida Statutes,

Petitioner has not documented it is within any of the exemption categories. The

primary purpose of the organization does not contribute to the development of

good character or good sportsmanship, or does not foster educational or cultural

development of minors. If it accomplishes those goals, same is not supported by

this record.

34. Secondly, Petitioner is not a religious institution as its members do

not gather primarily for the purpose of worship. In fact, by admission the

Petitioner's members do not worship. If anything, the Petitioner established

that it promotes reason or rational discussion of topics relevant to its

members. This does not constitute a religious service under the statute or

rule.

35. Petitioner is not an educational institution nor does it conduct

activities related to education as a primary purpose for its organization. It

is not accredited by any of the entities listed in the statute. It does not

conduct classes required for accreditation. Further, its primary purpose is not

to raise funds for schools. In fact, less than a tenth of one year's

expenditures went to educational scholarship.

36. Finally, Petitioner fails to meet the definition of "charitable

institution." It does not raise funds to provide services listed in the

statute. The state standard for "charitable institution" is not solely Section

501(c)(3) status under the federal code. The legislature has carved a class of

organizations eligible for this exemption by specifying a list of the activities

which must be established. Petitioner has failed to present evidence supporting

any statutory requirement. It is concluded that Petitioner's telephone support

line, scholarship awards, or cable television program are inadequate to meet the

statutory definition for exemption.

RECOMMENDATION

Based on the foregoing, it is, hereby,

RECOMMENDED:

That the Department of Revenue enter a final order denying the application

for a consumer's certificate of exemption filed by Petitioner.

DONE AND ENTERED this 8th day of March, 1996, in Tallahassee, Leon County,

Florida.

___________________________________

JOYOUS D. PARRISH, 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 8th day of March, 1996.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-0654

Rulings on the proposed findings of fact submitted by Petitioner:

1. None timely submitted.

Rulings on the proposed findings of fact submitted by the Respondent:

1. Paragraphs 1 through 22 are accepted.

COPIES FURNISHED:

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

Mark Trop

Shoreview Building

9999 Northeast Second Avenue, Suite 201

Miami, Florida 33138

Ruth Ann Smith

Assistant General Counsel

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314-6668

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 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.