05-001781 Boca Raton Resort And Club vs. Palm Beach County, Tax Collector Status: Closed Recommended Order on Thursday, June 1, 2006.

Summary: Petitioner failed to demonstrate that the assessment of the amount of the local option tourist development tax by Respondent was incorrect. Recommend that the assessment be affirmed.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BOCA RATON RESORT AND CLUB, )

)

Petitioner, )

)

vs. ) Case No. 05 - 1781

)

PALM BEACH COUNTY, TAX )

COLLECTOR, )

)

Respondent. )

________________________________)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was hel d in this case

on October 11, 2005, by video teleconference with connecting

sites in West Palm Beach and Tallahassee, Florida, before Errol

H. Powell, a designated Administrative Law Judge of the Division

of Administrative Hearings.

APPEARANCES

For Petitio ner: Joseph C. Moffa, Esquire

Law Offices of Moffa & Gainor, P.A.

One Financial Plaza, Suite 2202

Fort Lauderdale, Florida 33394

For Respondent: Usher L. Brown, Esquire

Brown, Garganes e, Weiss & D'Agresta, P.A.

Post Office Box 2873

Orlando, Florida 32802 - 2873

STATEMENT OF THE ISSUE

The issue for determination is whether Petitioner is liable

for the Local Option Tourist Development Tax assessment as s et

forth by Respondent's Notice of Reconsideration and Notice of

Final Assessment, dated March 10, 2005, for the audit period

October 1, 2000 through September 30, 2003.

PRELIMINARY STATEMENT

By Notice of Final Assessment, dated March 10, 2005, the

Tax Col lector of Palm Beach County (Tax Collector) notified Boca

Raton Resort and Club (Resort) that the Resort owed Local Option

Tourist Development Tax (TDT), for the audit period October 1,

2000 through September 30, 2003, inclusive, in the amount of

$88,775.2 8, plus penalties ($44,387.64) and interest through

March 31, 2005 ($29,081.06) minus overpayment ($19,583.64),

resulting in an assessment totaling $142,660.34. The Resort

disputed the assessment and requested a hearing. On May 17,

2005, this matter was referred to the Division of Administrative

Hearings.

At hearing, the Resort presented the testimony of four

witnesses and entered nine exhibits (Petitioner’s Exhibits

numbered 1, 2, 6, 7, 9, 14, 15, 17, and 18) 1 into evidence.

The Tax Collector presented t he testimony of two witnesses and

entered nine exhibits into evidence (Respondent's Exhibits

numbered 1 - 9).

A transcript of the hearing was ordered. At the request of

the parties, the time for filing post - hearing submissions was

set for more than ten days following the filing of the

transcript. The Transcript, consisting of one volume, was filed

on December 6, 2005. The Resort filed its post - hearing

submission on January 19, 2006, and the Tax Collector filed its

post - hearing submission on January 20, 200 6. Subsequently, on

January 25, 2006, the Tax Collector requested leave to file a

supplement to its post - hearing submission, filing the supplement

together with its request. The Tax Collector's supplement was

accepted, as filed, and the Resort was grante d leave to file a

supplement to its post - hearing submission, as well. The Resort

filed its supplement on February 24, 2006.

The parties' post - hearing submissions and supplements have

been considered in the preparation of this Recommended Order.

FINDINGS O F FACT

1. At all times material hereto, the Resort operated as a

hotel licensed under the provisions of Chapter 509, Florida

Statutes, and was located at 501 East Camino Real, Boca Raton,

Palm Beach County, Florida 33432.

2. At all times material hereto, the Resort’s taxpayer

identification number was 65 - 0762249 and Florida tax

registration number was 60 - 03 - 1871843 - 99.

3. No dispute exists that Palm Beach County e nacted the

TDT , authorized by Section 125.0204, Florida Statutes. No

dispute exists that T DT is levied on room rental revenues in

Palm Beach County pursuant to Section 125.0104, Florida

Statutes.

4. The Resort is subject to and is a dealer under the TDT.

Pursuant to an ordinance enacted by Palm Beach County, the

Resort is obligated to collect and remit to Palm Beach County

the TDT due on taxable transactions.

5. A TDT audit of the Resort’s business was performed by

the Tax Collector covering the period from October 1, 2000

through September 30, 2003. The Tax Collector relied upon the

informa tion and documents provided by the Resort in performing

the audit.

6. During the audit period, guests desiring to reserve and

book a room at the Resort were required to pay a deposit, which

guaranteed the reservation, of one night’s room within 10 days

of making the reservation. No matter what the length of stay,

the deposit did not vary. The Resort did not collect any sales

tax or TDT on the deposits.

7. A deposit confirmation form (Confirmation Form) always

confirmed the deposit.

8. The front of the Confirmation Form contained the

abbreviation “Guar” for guaranteed and, among other things,

referred the guest to the reverse side of the Confirmation Form

for important information (“PLEASE SEE REVERSE SIDE FOR

IMPORTANT ADDITIONAL INFORMATION”). The gu arantee, as indicated

on the back of the Confirmation Form, was that the

accommodations were guaranteed to the confirming - guest from the

scheduled date of arrival through 2:00 a.m. of the next day.

9. The back of the Confirmation Form provided in pertinen t

part:

DEPOSITS – A deposit of one night’s room

revenue is required within 10 days of making

a reservation. Advance deposits made via

credit card will be billed at the time of

booking. Your deposit will hold a room

until 2 A.M. of the day following your

scheduled arrival date. Upon arrival, the

deposit is applied to your last confirmed

night of the reservation. In the event of

an early departure, the deposit is non -

refundable unless the Resort is notified

prior to or at check - in.

CANCELLATIONS – Depos its are refundable in

the event of cancellation, providing notice

is received at least 14 days prior to

scheduled arrival date between January 4th

to April 30th, 7 days between May 1st to

May 27th and October 1st to December 19th,

and 72 hours between May 28th to

September 30th. Cancellations, without

penalty, for the Holiday/Christmas period

(December 19th through January 3, 2004),

must be received prior to November 30, 2003

or deposit will be subject to full

forfeiture, in accordance with established

res ort policies. Please be sure to record

your cancellation number to insure proper

return.

ACCOMMODATIONS – We will make every effort

to meet requests for specific room types,

views, and bedding preferences, however, on

occasion, we cannot always accomplis h such

requests, and reserve the right to provide

alternate accommodations.

10. For the majority of the audit period, forfeited

deposits were identified as “no - show” revenue.

11. A block of rooms may be held available and reserved

for a group. Fees are charged for unused rooms within a

reserved room block. These fees are “attrition fees.”

12. The Resort was unable to separately identify no - show

revenue attributable to reservations for which persons failed to

check - in by the cutoff day and time, as opp osed to reservations

for which persons canceled but failed to cancel within the

required time - period. Furthermore, the Resort was unable to

separately identify the general category of no - show revenue

attributable to unused rooms within a reserved room blo ck.

13. For the first four months of the audit period, the

Resort asserted that it mistakenly included attrition fees in

the no - show revenue. For the remainder of the audit period, the

Resort asserts that attrition fees were not included in the no -

show r evenue. The Resort was unable to separately identify

attrition fees in the no - show revenue. Therefore, the attrition

fees could not be separately factored out of the no - show

revenue. Consequently, an inference is drawn and a finding of

fact is made that , as to the first four months of the audit

period , all revenue shown as no - show revenue is considered as

no - show revenue.

14. During the audit period, the Resort identified no - show

revenue in its monthly financial reports totaling $2,139,252.00.

15. No TDT was collected by the Resort on the no - show

revenue of $2,139,252.00 collected during the audit period.

16. No dispute exists that, during the audit period, the

TDT was due on the rental of the Resort’s rooms and that the TDT

was collected and remitted to the Tax Collector by the Resort.

17. Having conducted the audit, on March 1, 2004, the Tax

Collector issued a “DRAFT” Notice of Intent to Make Audit

Changes (Draft Notice). The Draft Notice indicated, among other

things, that $88,775.28 in TDT was du e, which included TDT in

the amount of $85,570.08 on the no - show revenue of $2,139,252.00

and included denied exempt rental in the amount of $3,205.20;

and that a credit in the amount of $19,583.64 was due, as an

overpayment of tax, discovered by the audit or. Furthermore, the

Draft Notice indicated that, as a result, a proposed total tax

assessment was due in the amount of $149,252.07, which included

penalties in the amount of $44,387.64 and interest in the amount

of $35,672.79 as of March 31, 2004, with a dditional interest of

$57.74 per day through the date of the Resort’s payment.

18. After the issuance of the Draft Notice, the Tax

Collector’s auditor met with a representative of the Resort.

Of particular interest to the Resort was to return to its

mon thly financial reports and to separately indicate in the

monthly financial reports the categories of no - show revenue

representing failure to check - in, failure to timely cancel, and

failure to use rooms in block (attrition revenue).

19. However, the Resort was unable to identify and

separately indicate these categories of revenue.

20. Subsequently, the Resort was to provide the Tax

Collector’s auditor with an eight - month sample of financial

records “to address the issue of no show revenues versus

cancellat ion fees.” The eight - month sample would “represent the

transactions for the entire audit period.” However, the Resort

was unable to provide data that would allow for the separation

of the categories. The sample was not provided.

21. After the sample wa s not provided by the Resort, the

Resort took the position that none of its no - show revenue was

subject to the TDT.

22. On June 7, 2004, after the Resort changed its

position, the Tax Collector issued a Notice of Intent to Make

Audit Changes (Notice). Th e Notice indicated, among other

things, that, as of June 21, 2004, the tax assessment for the

audit period was in the amount of $153,986.75, which represented

TDT on no - show rentals in the amount of $85,570.08, a denial of

exempt rentals in the amount of $ 3,205.20, a credit for

overpayment of TDT in the amount of $ 19,583.64, penalties in the

amount of $44,387.64, and interest in the amount of $40,407.47,

plus additional interest of $57.74 per day through the date of

payment.

23. As to no - show revenues, the Notice indicated that such

revenues were taxable and also cited, as supporting authority,

Florida Administrative Code Rules 12A - 1.061(5)(b) and 12A -

1.061(5)(b)2. Citing Florida Administrative Code Rule 12A -

1.061(5)(b), the Notice provided the following:

“Rental charges or room rates include

deposits or prepayments that guarantee the

guest or tenant the use or possession, or

the right to the use or possession, of

transient accommodations during a specified

rental period under the provisions of an

agreement with the owner or owner’s

representatives of transient accommodations.

The owner or owner’s representative is

required to provide transient accommodations

to any guest or tenant that enters into such

an agreement and pays the required

prepayment or depos it, even when the guest

or tenant does not occupy the

accommodation.”

Citing Florida Administrative Code Rule 12A - 1.061(5)(b), the

Notice provided the following:

“Example: A hotel guarantees that it will

provide room accommodations on a designated

date to potential guests that make

reservations and pay a required room

deposit. To receive a refund of the

required room deposit, the potential guest

must cancel his or her reservation by 4:00pm

of the designated date. A potential guest

that has made reserva tions and has paid the

required room deposit fails to arrive at the

hotel on the designated date to use the

reserved room accommodations. Because the

potential guest fails to cancel the

reservations, the guest forfeits the room

deposit. Even though the g uest did not

occupy a room at the hotel, the forfeited

room deposit is subject to tax.”

Further, the Tax Collector indicated in the Notice that the

“stated policy of [the Resort] that a guest’s deposit will hold

a room (which is a guarantee to the guest t hat they will have a

room available) until the day following their scheduled arrival

date. . . whether or not the guest shows up. It is irrelevant

whether the guest shows up or not on the scheduled date of

arrival, their deposit has paid for a room and th is is a taxable

transaction.”

24. As to attrition and cancellation fees, the Notice

indicated that such fees were considered "penalties" and were,

therefore, "not taxable" revenue “because if a guest cancels

their reservation too late, their deposit is no t refunded even

though a room is not held for them.”

25. The Resort requested an audit conference. On

August 6, 2004, an audit conference was held at which the

parties were unable to reach an agreement.

26. On August 9, 2004, the Tax Collector issued a Notice

of Proposed Assessment (Proposed Assessment). The Proposed

Assessment indicated that the total assessment, including tax,

penalty and interest accrued through August 20, 2004, was in the

amount of $157,451.15. Additionally, the Proposed Assessmen t

contained, among other things, a re - citation of Florida

Administrative Code Rules 12A - 1.061(5)(b) and 12A - 1.061(5)(b)2.

The Resort protested the Proposed Assessment.

27. By letter dated August 8, 2004, the Resort requested

from the Department of Revenu e (DOR) a Letter of Technical

Advice (LTA) regarding the taxation of cancellations and no -

shows. 2 By letter dated October 27, 2004, a representative of

DOR issued a LTA on the facts and circumstances presented to DOR

by the Resort, providing that the LTA was “not an official

statement or opinion of this Department [DOR] but, instead,

represents the opinion of the writer” and that if the Resort

wished “an official binding statement on the issues, you may

file a written request for a Technical Assistance Adv isement

. . . .” 3

28. A finding of fact is made that the LTA was not binding

on the parties. The LTA was not an opinion of DOR or a

statement of policy by DOR on the taxation of cancellations and

no - shows.

29. The Resort did not request a Technical Ass istance

Advisement from DOR.

30. On January 4, 2005, the Tax Collector issued a Notice

of Decision (Decision) denying the Resort’s protest and a Notice

of Final Assessment (Final Assessment).

31. The Decision contained, among other things, a part of

the provision of Florida Administrative Code Rule 12A -

1.061(3)(a) — “ Rental charges or room rates for the use or

possession, or the right to the use or possession, of transient

accommodations are subject to tax . . . ” — and the provisions of

Florida Administrative Code Rule 12A - 1.061(5)(b).

32. The Final Assessment indicated that the total

assessment was in the amount of $141,515.48, plus additional

interest of $19.40 per day, as of January 1, 2005, through the

date of payment. The total assessment was reduced due to the

Tax Collector discovering an error in the calculation of the

interest.

33. The Resort requested a reconsideration of the Final

Assessment. The Tax Collector denied the request for

reconsideration.

34. The Resort requested a hearing pursuant to C hapter

120, Florida Statutes (2005) .

CONCLUSIONS OF LAW

35. The Division of Administrative Hearings has

jurisdiction over the subject matter of this proceeding and the

parties thereto pursuant to Sections 120.569 and 120.57(1),

Florida Statutes (200 6 ).

3 6. Taxing statutes are strictly construed against a

taxing authority. See Department of Revenue v. Anderson , 403

So. 2d 397, 399 (Fla. 1981). Doubtful language in taxing

statutes should be resolved in favor of the taxpayer. United

States Gypsum Co. v. Green , 110 So. 2d 409, 413 (Fla. 1959).

37. The Resort, as challenger to the assessment, has the

burden of proof in showing by a preponderance of the evidence

that the assessment is improper, whether in whole or in part.

Homer v. Dadeland Shopping Center , Inc. , 229 So. 2d 834, 837

(Fla. 1969); § 120.57(j), Fla. Stat. (2005). A tax assessment

has a presumption of correctness and, in its proof, the Resort

must exclude every reasonable hypothesis of a valid assessment,

i.e., it must show that the assessment is so unreasonable as to

be arbitrary and capricious. Homer , supra ; District School

Board of Leon County v. Askew , 278 So. 2d 272, 277 (Fla. 1973).

38. Section 125.0104, Florida Statutes, entitled "Tourist

development tax; procedure for levying; authori zed uses;

referendum; enforcement," provides in pertinent part: 4

(1) SHORT TITLE . -- This section shall be

known and may be cited as the "Local Option

Tourist Development Act."

(2) APPLICATION; DEFINITIONS.

(a) Application. -- The provisions contained

in chapter 212 apply to the administration

of any tax levied pursuant to this section.

(b) Definitions . -- For purposes of this

section:

* * *

2. "Tourist" means a person who

participates in trade or recreation

activities outside the county of his or her

permanent residence or who rents or leases

transient accommodations as described in

paragraph (3)(a).

(3) TAXABLE PRIVILEGES; EXEMPTIONS; LEVY;

RATE.

(a) It is declared to be the intent of the

Legislature that every person who rents,

leases, or let s for consideration any living

quarters or accommodations in any hotel,

apartment hotel, motel, resort motel,

apartment, apartment motel, roominghouse,

mobile home park, recreational vehicle park,

or condominium for a term of 6 months or

less is exercising a privilege which is

subject to taxation under this section,

unless such person rents, leases, or lets

for consideration any living quarters or

accommodations which are exempt according to

the provisions of chapter 212.

(b) Subject to the provisions of t his

section, any county in this state may levy

and impose a tourist development tax on the

exercise within its boundaries of the

taxable privilege described in paragraph

(a), except that there shall be no

additional levy under this section in any

cities or towns presently imposing a

municipal resort tax as authorized under

chapter 67 - 930, Laws of Florida, and this

section shall not in any way affect the

powers and existence of any tourist

development authority created pursuant to

chapter 67 - 930, Laws of Flo rida. . .

* * *

(f) The tourist development tax shall be

charged by the person receiving the

consideration for the lease or rental, and

it shall be collected from the lessee,

tenant, or customer at the time of payment

of the consideration for such l ease or

rental.

(g) The person receiving the consideration

for such rental or lease shall receive,

account for, and remit the tax to the

Department of Revenue at the time and in the

manner provided for persons who collect and

remit taxes under s. 212.03. The same

duties and privileges imposed by chapter 212

upon dealers in tangible property,

respecting the collection and remission of

tax; the making of returns; the keeping of

books, records, and accounts; and compliance

with the rules of the Department of Revenue

in the administration of that chapter shall

apply to and be binding upon all persons who

are subject to the provisions of this

section. . . .

* * *

(k) The Department of Revenue shall

promulgate such rules and shall prescribe

and publish s uch forms as may be necessary

to effectuate the purposes of this section.

* * *

(4) ORDINANCE LEVY TAX; PROCEDURE.

(a) The tourist development tax shall be

levied and imposed pursuant to an ordinance

containing the county tourist development

plan prescribed under paragraph (c), enacted

by the governing board of the county. . .

* * *

(10) LOCAL ADMINISTRATION OF TAX.

(a) A county levying a tax under this

section or s. 125.0108 may be exempted from

the requirements of the respective section

that:

1. The tax collected be remitted to the

Department of Revenue before being returned

to the county; and

2. The tax be administered according to

chapter 212,

if the county adopts an ordinance providing

for the local collection and administration

of the tax.

* * *

(c) A county adopting an ordinance

providing for the collection and

administration of the tax on a local basis

shall also adopt an ordinance electing

either to assume all responsibility for

auditing the records and accounts of

dealers , and assessing, collecting, and

enforcing payments of delinquent taxes, or

to delegate such authority to the Department

of Revenue. If the county elects to assume

such responsibility, it shall be bound by

all rules promulgated by the Department of

Revenu e pursuant to paragraph (3)(k), as

well as those rules pertaining to the sales

and use tax on transient rentals imposed by

s. 212.03. The county may use any power

granted in this section to the department to

determine the amount of tax, penalties, and

int erest to be paid by each dealer and to

enforce payment of such tax, penalties, and

interest. The county may use a certified

public accountant licensed in this state in

the administration of its statutory duties

and responsibilities. . . .

39. Section 2 12.03, Florida Statues, entitled "Transient

rentals tax; rate, procedure, enforcement, exemptions," provides

in pertinent part: 5

(1) It is hereby declared to be the

legislative intent that every person is

exercising a taxable privilege who engages

in the business of renting, leasing,

letting, or granting a license to use any

living quarters or sleeping or housekeeping

accommodations in, from, or a part of, or in

connection with any hotel, apartment house,

roominghouse, or tourist or trailer camp.

However, any person who rents, leases, lets,

or grants a license to others to use,

occupy, or enter upon any living quarters or

sleeping or housekeeping accommodations in

apartment houses, roominghouses, tourist

camps, or trailer camps, and who exclusively

enters into a bona fide written agreement

for continuous residence for longer than 6

months in duration at such property is not

exercising a taxable privilege. For the

exercise of such taxable privilege, a tax is

hereby levied in an amount equal to 6

percent of and on the total rental charged

for such living quarters or sleeping or

housekeeping accommodations by the person

charging or collecting the rental. Such tax

shall apply to hotels, apartment houses,

roominghouses, or tourist or trailer camps

whether or no t there is in connection with

any of the same any dining rooms, cafes, or

other places where meals or lunches are sold

or served to guests.

40. DOR promulgated Florida Administrative Code Rule 12A -

1.061, entitled "Rentals, Leases, and Licenses to Use Tra nsient

Accommodations," which addresses the TDT and provides in

pertinent part: 6

(1) Except as provided in paragraphs (a)

through (d), every person is exercising a

taxable privilege when engaging in the

business of renting, leasing, letting, or

granting licenses to others to use transient

accommodations, unless the rental charges or

room rates are specifically exempt.

* * *

(2) DEFINITIONS. For the purposes of this

rule, the following terms are defined:

* * *

(e) "Rental charges or room rat es" means

the total consideration received solely for

the use or possession, or the right to the

use or possession, of any transient

accommodation. See subsection (3) of this

rule.

(f) "Transient accommodation" means each

living quarter or sleeping or h ousekeeping

accommodation in any hotel, motel, apartment

house, multiple unit structure (e.g.,

duplex, triplex, quadraplex, condominium),

roominghouse, . . or other structure, place,

or location held out to the public to be a

place where living quarters or sleeping or

housekeeping accommodations are provided to

transient guests for consideration. Each

room or unit within a multiple unit

structure is an accommodation.

* * *

(3) RENTAL CHARGES OR ROOM RATES.

(a) Rental charges or room rates for the

u se or possession, or the right to the use

or possession, of transient accommodations

are subject to tax, whether received in

cash, credits, property, goods, wares,

merchandise, services, or other things of

value.

* * *

(5) DEPOSITS, PREPAYMENTS, AND RESERVATION

VOUCHERS.

(a) The following deposits or prepayments

paid by guests or tenants to the owner or

owner's representative of transient

accommodations are NOT rental charges or

room rates and are not subject to tax:

1.a. Deposits or prepayments th at are

required to be paid to secure a potential

guest or tenant the right to rent, lease,

let, or license a transient accommodation by

a time certain. Such deposits do not

guarantee the transient guest or tenant the

use or possession, or the right to the use

or possession, of transient accommodations.

* * *

c. Example: A potential guest makes

reservations at a hotel for a designated

night. The hotel requires a deposit equal

to the room rate to hold a room until a time

certain, such as 6:00 p.m., o n the

designated night. The guest does not arrive

at the hotel and fails to cancel the

reservation. The hotel retains the deposit.

Because payment of the deposit did not

provide the potential guest the right to the

use of the room and the hotel did not

collect any tax from the potential guest,

the room deposit is not subject to tax.

* * *

(b) Rental charges or room rates include

deposits or prepayments that guarantee the

guest or tenant the use or possession, or

the right to the use or possession, of

transient accommodations during a specified

rental period under the provisions of an

agreement with the owner or owner's

representative of transient accommodations.

The owner or owner's representative is

required to provide transient accommodations

to any guest or tenant that enters into such

an agreement and pays the required

prepayment or deposit, even when the guest

or tenant does not occupy the accommodation.

* * *

2. Example: A hotel guarantees that it will

provide room accommodations on a designated

date to potential guests that make

reservations and pay a required room

deposit. To receive a refund of the

required room deposit, the potential guest

must cancel his or her reservations by 4:00

p.m. of the designated date. A potential

guest that has made reservations and has

paid the required room deposit fails to

cancel the reservations and fails to arrive

at the hotel on the designated date to use

the reserved room accommodations. Because

the potential guest fails to cancel the

reservatio ns, the guest forfeits the room

deposit. Even though the guest did not

occupy a room at the hotel, the forfeited

room deposit is subject to tax.

41. No dispute exists that Palm Beach County decided that

it would collect the TDT and took the appropriate steps to do

so. Furthermore, no dispute exists that Palm Beach County is

authorized to collect the TDT.

42. No dispute exists that, as a result of Palm Beach

County assuming all responsibility for the TDT, Palm Beach

County was bound by the rules promulg ated by DOR pertaining to

the TDT and the sales and use tax on transient rentals.

43. No dispute exists that the Resort rents hotel

accommodations for a term of six months or less.

44. The evidence demonstrates that, during the audit

period, the Resort w as exercising a taxable privilege by

engaging in the business of renting hotel/transient

accommodations. §§ 212.03 and 125.0104(3), Fla. Stat.

45. The Resort disputes that the deposits collected under

its circumstances of renting hotel/transient accommod ations are

subject to the TDT.

46. In Florida Administrative Code Rule 12A - 1.061, DOR

addresses deposits or prepayments of transient accommodations

and deposits or prepayments that are not rental charges or room

rates and are not subject to tax and that a re rental charges or

room rates and are subject to tax. The evidence demonstrates

that the rental charges or room rates include the deposits

collected by the Resort as no - shows and are, therefore, subject

to tax pursuant to Florida Administrative Code Rul es 12A -

1.061(5)(b) and 12A - 1.061(5)(b)2. The deposits guarantee the

potential guests the use or possession or right to the use or

possession of the Resort's transient accommodations. The Resort

guarantees to provide room accommodations on a designated da te

to potential guests who make a reservation and pay a required

room deposit. To receive a refund of the deposit, potential

guests must cancel the reservation by a time certain of the

designated date; but, if guests fail to cancel the reservations

and fa il to arrive at the Resort on the designated date in

accordance with the Resort's requirements, such potential guests

forfeit the deposit. The forfeited deposits are subject to tax.

47. During the audit period, the forfeited deposits were

reflected by th e Resort as no - show revenue. The Resort asserts

that attritions were also reflected as no - show revenue in its

monthly financial reports during the first four months of the

audit period. In its Notice, the Tax Collector indicated that

attrition and cancel lation fees were considered penalties and

were, therefore, not taxable revenue. But, the Resort was

unable to identify the attritions and factor them out of the no -

show revenue. Consequently, all no - show revenue reflected by

the Resort's financial record s, during the audit period, and

provided to the Tax Collector by the Resort were taxable.

48. In order for the Resort's no - show revenue, during the

audit period, not to be subject to the TDT, the Resort must show

that it falls within an exemption from the tax. A tax exemption

is to be strictly construed against the claimer of the

exemption. Capital City Country Club, Inc. v. Tucker , 613 So.

2d 448 (Fla. 1993); State ex rel. Szabo Food Services, Inc. v.

Dickinson , 286 So. 2d 529 (Fla. 1973); Asphalt Paver s, Inc. v.

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

Moreover, doubtful language in exemption statutes is construed

against the taxpayer. United States Gypsum Co. v. Green , supra.

49. The Resort has the burden to demonstrate its

entitlem ent to the exemption. Green v. Pederson , 99 So. 2d 292

(Fla. 1957).

50. The Resort attempted to present evidence to

demonstrate that the forfeited deposits fell within Florida

Administrative Code Rule 12A - 1.061(5)(a), were not taxable and

were, therefore , not subject to the TDT. As set forth above,

the evidence demonstrates to the contrary. The evidence fails

to demonstrate that the Resort is exempt from the TDT tax.

Furthermore, the evidence fails to demonstrate that the

forfeited deposits are exempt from the TDT tax.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Palm Beach County Tax Collector enter

a final order affirming the final assessment of Local Option

Tourist Development Tax against B oca Raton Resort and Club, for

the audit period October 1, 2000 through September 30, 2003, in

the total amount of $141,515.48 (which includes tax, penalties,

and interest), plus additional interest of $19.40 per day, as of

January 1, 2005, through the day of payment .

DONE AND ENTERED this 1st day of June , 2006, in

Tallahassee, Leon County, Florida.

S

__________________________________

ERROL H. POWELL

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

12 30 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 1st day of June , 2006.

ENDNOTES

1/ As to Petitio ner's Exhibit 7, by Order dated October 4, 2005,

as a result of the Tax Collector filing a Motion in Limine and

Motion for Protective Order, limitations were placed on the use

of the Letter of Technical Advice from the Department of Revenue

during discover y and at hearing.

2/ Petitioner’s Exhibits 6 and 9 were admitted for the limited

purpose to show that the Resort sought the guidance from the

Department of Revenue through a Letter of Technical Advice.

3/ Id.

4/ The pertinent provisions of Section 12 5.0104, Florida

Statutes, did not change for the years 2000 through 2003 of the

audit period. Consequently, the citing of Section 125.0104,

Florida Statutes, is applicable for the years 2000 through 2003.

5/ The pertinent provisions of Section 212.03, F lorida Statutes,

did not change for the years 2000 through 2003 of the audit

period. Consequently, the citing of Section 212.03, Florida

Statutes, is applicable for the years 2000 through 2003.

6/ The pertinent provisions of Florida Administrative Code Rule

12A - 1.061 did not change for the years 2000 through 2003 of the

audit period. Consequently, the citing of Florida Administrative

Code Rule 12A - 1.061 is applicable for the years 2000 through

2003.

COPIES FURNISHED:

Joseph C. Moffa, Esquire

Law Offi ces of Moffa & Gainor, P.A.

One Financial Plaza, Suite 2202

Fort Lauderdale, Florida 33394

Usher L. Brown, Esquire

Brown, Garganese, Weiss & D'Agresta, P.A.

Post Office Box 2873

Orlando, Florida 32802 - 2873

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All par ties 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.