98-002431 Vieetnam Veterans Of Florida Foundation, Inc. vs. Department Of Revenue Status: Closed Recommended Order on Monday, November 2, 1998.

Summary: 501(c)(3) organization failed to show that its primary purpose is to provide a reasonable percentage of the services enumerated in Section 212.08(7)(o) to persons who cannot afford those services or to raise funds for such an organization.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

VIETNAM VETERANS OF FLORIDA )

FOUNDATION, INC., )

)

Petitioner, )

)

vs. ) Case No. 98-2431

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

An administrative hearing was conducted on August 26, 1998,

in Melbourne, Florida, before Daniel Manry, Administrative Law

Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Ken Baker, President

Vietnam Veterans of Florida

Foundation, Inc.

1509 Tate Street

Cocoa, Florida 32922

For Respondent: George C. Hamm,

Assistant General Counsel

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314

STATEMENT OF THE ISSUE

The issue in this case is whether Petitioner is entitled to

an exemption as a charitable institution or as a military museum

fundraiser within the respective meanings of Sections

212.08(7)(o)2.b or (l), Florida Statutes (1997). (All Chapter

and Section references are to Florida Statutes (1997) unless

otherwise stated.)

PRELIMINARY STATEMENT

On April 22, 1998, Respondent issued its Notice of Intent to

Deny Petitioner's application for a certificate of exemption

authorized in Section 212.08(7). Petitioner timely requested an

administrative hearing. Respondent referred the matter to the

Division of Administrative Hearings to conduct the hearing.

At the hearing, Petitioner presented the testimony of two

witnesses, and submitted two exhibits for admission in evidence.

Respondent presented the testimony of one witness and submitted

two exhibits for admission in evidence.

The identity of the witnesses and exhibits, and the rulings

regarding each, are set forth in the transcript of the hearing

filed on September 21, 1998. Petitioner did not file a Proposed

Recommended Order ("PRO"). Respondent timely filed its PRO on

October 1, 1998.

FINDINGS OF FACT

1. Petitioner is a non-profit co rporation incorporated in

Florida. Respondent is the state agency responsible for the

issuance of certificates of exemption from sales and use tax in

accordance with the requirements of Chapter 212.

2. Petitioner applied for a certificate of exemption on

December 22, 1997. On April 22, 1998, Respondent denied

Petitioner's application. The application and denial are based

on information from Petitioner's 1997 tax year.

3. Petitioner is not a charitable organization within the

meaning of Section 212.08(7)(o)2.b. Petitioner is qualified as a

nonprofit corporation pursuant to Section 501(c)(3) of the

Internal Revenue Code. However, Petitioner failed to show by a

preponderance of the evidence that its sole or primary purpose

satisfies the requirements of Section 212.07(o)2.b. and Florida

Administrative Code Rule 12A-1.001(3)(g). (All references to

rules are to rules promulgated in the Florida Administrative Code

on the date of this Recommended Order.)

4. Petitioner failed to show that in 1997 it provided a

reasonable percentage of the services enumerated in Sections

212.08(7)(o)2.b.(I)-(VII) for free, or at a substantially reduced

charge, to persons who are unable to pay for those services.

Petitioner did not show that it raised funds for organizations

that provide a reasonable percentage of the statutorily qualified

services for free, or at a substantially reduced charge, to

persons who are unable to pay for those services.

5. Petitioner asserts that it provides some portion of its

computer time for qualified services and that Petitioner provides

volunteers for other qualified services. However, Petitioner

failed to show the value of the computer time, admitted that the

value of the computer does not satisfy the 50 percent test in

Rule 12A-1.001(3)(g), and was unable to quantify the amount or

value of its volunteer services.

6. Petitioner failed to show that it complied with the

requirements of Rule 12A-1.001(3)(g). Petitioner did not show

that more than 50 percent of its expenditures in 1997 directly

related to statutorily qualified services provided by Petitioner

to persons who cannot afford such services. Petitioner did not

show that more than 50 percent of its expenditures directly

related to raising funds for organizations that provide qualified

services to persons who cannot afford those services ("qualifying

organizations").

7. Petitioner's 1997 annual report shows that none of its

expenditures were made for statutorily qualified services

provided to persons who cannot afford those services. Similarly,

the report did not show that more than 50 percent of expenditures

were made to raise funds for qualifying organizations.

8. Petitioner is not a military museum fundraiser within

the meaning of Section 212.08(7)(l). Petitioner admitted that it

made no cash contributions to military museums during 1997.

9. Petitioner claims that it allowed other organizations to

use Petitioner's tax exemption under Section 501(c)(3) of the

Internal Revenue Code to facilitate in-kind contributions to

military museums or to related organizations which, in turn,

contributed the items to military museums. The primary item

Petitioner claimed to have obtained in this manner in 1997 was a

Huey helicopter allegedly donated by the U. S. Army to Vietnam

Veterans of Central Florida, Inc. ("Veterans Central").

10. Petitioner failed to show that the title to the

helicopter ever passed from the U. S. Army to Petitioner or to

any other organization designated by Petitioner to receive an in-

kind contribution. Petitioner failed to show that either

Petitioner or its designee otherwise obtained title to the

helicopter or any other in-kind contributions.

11. Petitioner claims that a contribution to Veterans

Central is a contribution to Petitioner because the two

organizations are members of the same group. The group

purportedly operates as the Vietnam Veterans of Florida State

Coalition (the "state coalition"). However, Petitioner failed to

provide any documentary evidence which establishes the

relationship between the two organizations or their membership in

the state coalition. Petitioner admits that the two

organizations have separate boards and that Petitioner does not

control or own stock in Veterans Central as required in Sections

617.0601 and 617.0721 (providing that corporate members of a not-

for-profit group have no voting rights and, unless otherwise

provided in the articles of incorporation and by-laws, the

directors of each corporation have sole voting rights for each

corporation and do not have voting rights in other member

corporations.)

CONCLUSIONS OF LAW

12. The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter. Section

120.57(1). The parties were duly noticed for the hearing.

13. The burden of proof is on Petitioner. Petitioner must

show by a preponderance of evidence that Petitioner is entitled

to an exemption. Green v. Pederson , 99 So. 2d 292, 296 (Fla.

1957). Petitioner failed to satisfy its burden of proof.

14. Tax exemptions are m atters of legislative grace.

Exemptions must be strictly construed against the taxpayer and in

favor of the taxing authority. Department of Revenue v.

Anderson , 403 So. 2d. 397, 399 (Fla. 1981); Asphalt Pavers, Inc.

v. Department of Revenue , 584 So. 2d. 55 (Fla. 1st DCA 1991).

15. Petitioner failed to show that it satisfies the

statutory requirements for an exemption under either Sections

212.08(7)(l) or (o)2.b. Petitioner relied primarily on the

testimony of its two witnesses. That testimony was not

corroborated by documentary evidence. Rather, Petitioner's

exhibits and the evidence adduced by Respondent either refuted

the testimony of Petitioner's witnesses or failed to corroborate

that testimony.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that Respondent enter a Final Order denying

Petitioner's application for a certificate of exemption.

DONE AND ENTERED this 2nd day of November, 1998, in

Tallahassee, Leon County, Florida.

___________________________________

DANIEL MANRY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 -3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing [phone]

Filed with the Clerk of the

Div ision of Administrative Hearings

this 2nd day of November, 1998.

COPIES FURNISHED:

Larry Fuchs, Executive Director

Department of Revenue

204 Carlton Building

Tallahassee, Florida 32399-0100

Linda Lettera, General Counsel

Department of Revenue

204 Carlton Building

Tallahassee, Florida 32399-0100

Ken Baker, President

Vietnam Veterans of Florida

Foundation, Inc.

1509 Tate Street

Cocoa, Florida 32922

George C. Hamm, Assistant General Counsel

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314

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.