95-001728 Department Of Revenue vs. Consumer Credit Counseling Service Of The Florida Gulf Coast, Inc. Status: Closed Recommended Order on Tuesday, June 4, 1996.

Summary: Credit educational agency qualifies as charitable inst. even where it is not so in classical sense where it provides service without charge to needy persons.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF REVENUE, )

)

Petitioner, )

)

vs. ) CASE NO. 95-1728

)

CONSUMER CREDIT COUNSELING SERVICE )

OF THE FLORIDA GULF COAST, INC., )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

A hearing was held in this case in Tampa, Florida on May 14, 1996, before

Arnold H. Pollock, a Hearing Officer with the Division of Administrative

Hearings.

APPEARANCES

For Petitioner: Kent L. Weissinger, Esquire

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314-6668

For Respondent: Leslie E. Joughin, III, Esquire

Akerman, Senterfitt & Eidson, P.A.

100 South Ashley Drive, Suite 1500

Post Office Box 3273

Tampa, Florida 33601-3273

STATEMENT OF THE ISSUE

The issue for consideration in this matter is whether Consumer Credit

Counseling Service of the Florida Gulf Coast, Inc. (CCS), qualifies for a

certificate of exemption from sales and use tax.

PRELIMINARY STATEMENT

By letter dated March 16, 1995 Shirley Towne, Agency Official for the

Department of Revenue, indicated the Department's intention to revoke Consumer

Credit Counseling Service of the Gulf Coast, Inc.'s (CCS) consumer certificate

of exemption number 39-22-124883-56C because, based on its evaluation of the

circumstances, it appeared the organization is not a charitable organization in

that it does not provide one of the seven charitable services listed in Chapter

212, Florida Statutes. Thereafter, Diane Lithart, then President of CCS,

requested a formal hearing and this hearing ensued.

Neither party presented testimony at the hearing. However, the parties

agreed to the admittance of Joint Exhibits 1 through 7 which included the

depositions of several individuals whose testimony was pertinent to the issues

involved, including Carl Doeing, President and Chief Executive Officer of the

Family Service Association of Greater Tampa; Karen Dakan, an instructor in the

"Challenge" program at the Women's Resource Center of Sarasota, Inc.; Lucious G.

Davis, manager of the Hillsborough County Department of Social Services; and

Mabel Bexley, Executive Director of The Spring of Tampa Bay, Inc.

No transcript was provided and neither counsel submitted Proposed Findings

of Fact, but subsequent to the hearing both counsel submitted written legal

argument which have been considered in the preparation of this Recommended

Order.

FINDINGS OF FACT

1. Each counsel presented a stipulation of facts signed by both counsel.

While the facts to which the stipulations relate appear to be fundamentally the

same, the approach to each fact agreed to is different to some degree and based

upon the relative position of the parties.

2. The parties agreed that CCS is a not-for-profit corporation organized

under the laws of the State of Florida, with its principal business located in

Tampa, though it operates offices in Hillsborough, Hernando, Manatee, Sarasota

and Lee counties. It is qualified as a non-profit corporation pursuant to

Section 501(c)(3) of the United States Internal Revenue Code. Its primary

purpose is to provide education and counseling services to individuals and

families who lack the basic knowledge of budgeting and financial management in

order to render them self-sufficient. It is an organization recognized by the

United Way and currently receives funding through that organization in

Hillsborough, Hernando and Lee counties. All such funding received from the

United Way is utilized exclusively for educational purposes. It is also a

member of the National Foundation for Consumer Credit Counseling.

3. The functions of CCS consist primarily of four types of services.

These include educational programs, individual budget counseling, debt

management, and referral services to agencies that provide other services or

benefits such as food, clothing, shelter, mental health services, marital and

parenting counseling and drug and alcohol abuse counseling to needy individuals.

None of the clients are charged for any of the services provided by CCS.

4. Until January 1, 1995, CCS held consumer sales tax exemption number,

39-22-124883-56C. Its prior number was 06-0138-00-39. The prior exemption was

granted to CCS in January, 1975.

5. On November 8, 1994, Diane Lithart, then President and CEO of CCS,

submitted an application for renewal of CCS' certificate of exemption. Included

with the application was a background history of the organization containing the

charter, by-laws, certificates of incorporation and registration with the

state, financial statements and statements of agencies to which CCS refers

clients and from which clients are referred to CCS. After the submittal of that

application package, on March 16, 1995, the Department issued an Administrative

Complaint seeking to revoke CCS' certificate of exemption on the basis that the

organization was not a charitable organization with a sole or primary purpose

which fulfilled one of the seven criteria outlined in Section 212.08(7)(O)2.b.,

Florida Statutes.

6. By letter dated January 13, 1995, prior to the preparation of the

Administrative Complaint ultimately filed herein, Patricia M. Chin, Chief of the

Department's Bureau of Registration and Records in the Division of Tax

Processing, conveyed to Msithart the Department's position that CCS no

longer qualified for its exemption. This opinion was based upon the provisions

of Section 212.08(7)(o)2.b., Florida Statutes, which defines the requirements

which an organization must satisfy in order to be deemed a "charitable

institution" exempt from sale and use tax. It was the Department's position

that the primary purpose of CCS was to provide credit counseling which was not

one of the statutorily defined services, and on that basis, the exemption could

not be renewed.

7. The functions of CCS in detail are varied and extensive. The parties

agreed and stipulated that in 1995, CCS expended approximately twenty-one

percent of its budget in direct educational programs which were offered through

a number of other agencies such as Head Start, Salvation Army, Lighthouse for

the Blind, AARP and other similar organizations. The relationship between CCS

and these agencies is a collaborative effort in which all agencies seek to meet

the needs of the client. In 1995, of the target audience for the educational

programs which were conducted by CCS, seventy-two percent fell below federal

poverty guidelines, and in addition, in 1995, CCS conducted sixty-six programs

for in excess of twenty-eight hundred school age children in Hillsborough County

which focused on basic money management and budgeting.

8. Another thirty-seven percent of CCS' expenditures was devoted to budget

counseling for clients in individual counseling sessions, each lasting between

one and a half to two hours, and in which individuals and families are taught

the basic skills of prioritizing needs so that they can be self-sufficient and

provide for their basic needs in the area of food, clothing and shelter. In

this category, 5489 various counseling appointments were met, and of the

individuals and families who received this budget counseling, ninety-five

percent were also referred to another agency or source for food assistance;

sixty-one percent were referred to other agencies for additional help and

services; seventy-one percent were either unemployed or on reduced income;

fifty-three percent constituted separated, divorced or single individuals, many

with minor children; and many were in need of other services for the prevention

of or the rehabilitation of alcoholism, drug abuse, suicide prevention or the

alleviation or mental, physical or sensory health problems. Many of these

individuals faced the immediate prospect of losing their homes or having utility

service disconnected, and their financial difficulties were having severe,

adverse effects on their marital and family relationships.

9. In 1994, forty-eight percent of the individuals or families who

received budget counseling fell below the federal poverty guideline. In 1995,

thirty-nine percent fell within that category.

10. Of those individuals who received budget counseling, only twenty

percent went on a debt management plan pursuant to which CCS acted as an

intermediary between the client and the creditor and assisted the individual in

paying off the outstanding debt. In 1995, approximately twenty-four percent of

CCS' expenditures were devoted to service debt management plans, and eighteen

percent of those expenditures were for administrative purposes. Less than one

half of one percent of CCS' income was derived from interest on money deposited

by clients into trust accounts and which was thereafter distributed by CCS to

the clients' creditors.

11. In addition, in 1995, CCS assisted 708 families in retaining their

homes and avoiding foreclosure, with a success rate of ninety-eight percent.

The most common cause of the family financial problems in those cases was loss

of employment or reduced income. In that regard, CCS participates in the

Florida Department of Labor's Rapid Response Program which provides counseling

and educational services to employees who are losing their jobs as a result of

corporate lay-offs or down-sizing. It is not, however, the primary purpose of

CCS to assist individuals in establishing or re-establishing credit.

12. As was stated previously, CCS operates educational programs in

conjunction with other service organizations. One of these is The Women's

Resource Center of Sarasota, a Section 501(c)(3) organization which serves women

of a certain age who are seeking to enter the job market as a result of divorce,

widowhood or other non-self-caused conditions. The majority of these clients

find themselves unable to provide their own g n i c a f d n a s e i a t s s e c e n c i s a b  i n

uncertain future. They are lacking in the financial skills to manage their

limited resources and many are facing the loss of their home. A large

percentage have minor children, and the Center helps these women provide for

themselves and their children by giving them the basic skills they need to

survive. As a part of this program, CCS teaches classes in basic budgeting

skills, money management, credit and spending, and provides assistance in

avoiding foreclosure. CCS also instructs these clients on accessing other

community resources which might help, but the fundamental goal of both agencies

is to teach the clients to handle their finances and to be able to provide for

themselves. These consumer credit services are provided at no cost to the

client, and though no direct aid, such as food, clothing or shelter is provided

by CCS, the education assists the client in learning to provide for herself.

13. Similarly, CCS operates a collaborative educational program with The

Spring of Tampa Bay, also an exempt organization. The Spring is a domestic

violence center which provides comprehensive services to violent families, the

majority of whom are brought in by law enforcement agencies. These clients are

almost uniformly poor who come to The Spring with nothing but their immediate

belongings in a garbage bag. Approximately one third of the clients are victims

of aggravated battery and all are in immediate danger and have no place else to

go. CCS offers a series of monthly programs to clients of The Spring. These

programs are designed to assist the women in becoming functional so that they

can get back on their feet and move toward leading normal lives. The courses

are designed to teach the women how take care of themselves, and CCS educates

the women in the management of their personal finances. The emphasis is

decidedly not on reestablishing credit. Any client who can establish credit is

not a suitable candidate for The Spring or, thereby, CCS. Neither The Spring

nor the client pays CCS anything for its services.

14. A third collaborative effort of CCS is that with The West Tampa

Neighborhood Service Center, operated by Hillsborough County's Department of

Social Services. This is a multipurpose human service facility that provides

help to low income families including direct assistance in medical treatment,

utility and rent payments and emergency assistance in the form of blankets,

heaters, fans and food. All of the clients of West Tampa fall within the

federal poverty guidelines.

15. West Tampa has identified core agencies which it wants housed in its

facility to promote a team approach to addressing the needs and services

required by its low income clients. CCS workshops are a part of this team

effort made up of other agencies providing such things as indigent care, medical

assistance and the like. The concept of the West Tampa program is to develop

the individual to allow that person to help himself, and CCS provides basic

budget instruction to the individuals who seek assistance from West Tampa.

These individuals are experiencing severe financial problems as a result of poor

money management or poor budgeting skills, and need basic information in

budgeting, in financial planning, in establishing a bank account and in avoiding

the stigma of being characterized as a low income individual who lives off the

system.

16. CCS has also collaborated with the Family Services Association of

Greater Tampa which provides counseling and psychotherapy to individuals,

couples or families suffering from alcoholism, drug abuse or other difficulties.

This organization also addresses marital and parent/child issues and

unemployment/financial issues, and it is in that latter area that CCS

participates. The individuals at risk have problems with daily living because

of an inability to find or keep a job as a result of lack of skill, insufficient

technology and inability to cope. Approximately fifty percent of the

individuals in this category serviced by this agency fall below the federal

poverty guidelines.

17. The services provided by CCS, in conjunction with the agencies listed

above, are comparable with similar programs in which it participates with

several other agencies in the geographical area serviced and described

previously herein.

18. In all of its efforts and in the programs it presents CCS does not, as

its sole or primary function, provide or raise funds for organizations which

provide medical aid for the relief of disease, injury or disability. It does

not, as its sole or primary function, provide or raise funds for organizations

which provide regular physical necessities such as food, clothing or shelter.

19. On the other hand, CCS does provide education and counseling services

to individuals who lack the basic knowledge of budgeting and personal financial

management so that they can provide for their own food, clothing and shelter,

and it constantly acts as a referring agency to other agencies that do provide

food, clothing and shelter.

20. CCS does not, as its sole or primary function, provide or raise funds

for organizations which provide medical research for the relief of disease,

disability or injury, and it does not, as its sole or primary function, provide

or raise funds for organizations which provide legal services. By the same

token, it does not, as its sole or primary function, provide or raise funds for

organizations which provide food, shelter or medical care for animals, or

adoption services, cruelty investigations or education programs concerning

animals. It also does not, as its primary function, provide or raise funds for

organizations which provide adoption, placement, child care or community care

for the elderly.

21. Article II of CCS' By-Laws, as approved in October 1994, defines its

community service as, "delivering professional consumer credit education,

confidential counseling and debt reduction programs," such services rendered to

"all segments of the community regardless of ability to pay." While CCS has no

income guidelines for its clients, consistent with the terms of its by-laws, it

will counsel anyone, regardless of ability to pay.

22. The funds which CCS receives from that small percentage of clients who

are eligible for debt management plan participation, (only twenty percent of

those seen in 1995), are deposited in an interest-bearing account.

Distributions to creditors are made from this account twice a month, timed to

coincide with receipt of the bulk of client funds. Any interest earned on the

deposited funds is used by CCS to offset the cost of providing services. This

earned interest amounts to less than one half of one percent of CCS' revenue.

23. Though CCS provides its services without charge, some clients

voluntarily donate funds as able. These donations, along with the interest

earned on client deposits, are also used to offset the costs of the debt

management programs and the educational and counseling programs made available

without charge to all segments of the community.

24. By far the greatest amount of revenue received by CCS in 1992 and 1993

came from contributions from business creditors of CCS' clients. Business

creditors are presented with an invoice with payment, but the creditor is under

no obligation to contribute. Nonetheless, during those years, that income

constituted eighty-five percent of revenue while client contributions

constituted only nine percent one year, and slightly more than ten percent the

next.

CONCLUSIONS OF LAW

25. The Division of Administrative Hearings has jurisdiction over the

parties and the subject matter in this case. Section 120.57(1), Florida

Statutes.

26. The Department of Revenue has declined to reissue and seeks to revoke

CCS' exemption from state sales tax on the basis that the organization does not

have an exclusive charitable purpose which falls within one of the seven

categories outlined in Section 212.08(7)(o)2.b., Florida Statutes.

27. To demonstrate it is entitled to a sales tax exemption certificate,

CCS must demonstrate it meets all the criteria of one of the definitions listed

in the cited portion of the statute. Since in the instant case CCS claims its

exemption as a charitable institution, it must show that it is a nonprofit

entity whose sole or primary purpose is either to provide one of the seven

services listed in the statute or provide funds to other organizations which

provide one of the seven services.

28. Section 212.08(7), Florida Statutes, defines "charitable institutions"

as:

... only nonprofit corporations qualified as

nonprofit pursuant to s. 501(c)(3), United

States Internal Revenue Code, 1954, as amended,

and any 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 organi-

zations that are unable to pay for such

services.

* * *

(II) Regular provision of physical necess-

ities 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 or mental, physical, or sensory

health problems;

(IV) Social welfare services including

adoption, placement, child care, community

care for the elderly, and other social wel-

fare services which clearly and substantially

benefit a client population which is disadvan-

taged or suffers a hardship;

29. Rule 12A-1.001(3)(g), F.A.C. provides, with respect to the term, "sole

or primary function":

[a] charitable organization, excluding

hospitals, must establish and support its

function as providing or raising funds for

services as outlined in subparagraphs 1 and

2 above, by expending in excess of 50 percent

of the charitable organization's expenditures

towards referenced charitable concerns, within

the charitable organization's most recent

fiscal year.

30. Within the parameter of that definition, the charitable organization

must show that more than fifty percent of its total expenditure is used to

directly provide the statutory services described above, or is donated to other

charitable organizations that directly provide that service.

31. Section 212.08(7)(o)2.b., Florida Statutes, in relevant part, provides

that it is to be "strictly defined, limited, and applied in each category." The

law is well settled that tax exemptions are strictly construed against taxpayers

and in favor of the state. State, Department of Revenue v. Anderson, 402 So.2d

397, 399 (Fla.1981); Asphalt Pavers, Inc. v. Department of Revenue, 584 So.2d

55, 57 (Fla. 1st DCA 1991). Therefore, CCS has the burden to show, by a

preponderance of the evidence, that it is entitled to the sales tax exemption.

32. CCS is qualified as a nonprofit organization pursuant to Section

501(c)(3) United States Internal Revenue Code. The question remaining for

determination, then, is whether it has as its sole or primary function one of

the seven classifications defined by statute at Section 212.08(7)(o)23.b., and

whether it meets all the criteria outlined in one or more of those definitions.

Gainesville Amateur Radio Society, Inc. v. DOR, DOAH Case 94-1200 (Final Order

entered July 31, 1995).

33. By stipulation the parties agreed that CCS does not, as its sole or

primary function, provide or raise funds for the organizations described in

Section 212.08(7)(o)2.b.(I) or (V) - (VII). By the same token, it does not, as

its sole or primary function, provide or raise funds for those organizations

described in (II) - (IV) of the same statute, but it does provide budget and

financial education and counseling in conjunction with programs run by other

organizations which do have as their sole or primary function the regular

provision of physical necessities such as food, clothing or shelter; marital and

family counseling; drug and alcohol abuse counseling; and a myriad of other

social services, without which the clients of those organizations would not be

able to function.

34. A portion of the clients serviced by CCS, those somewhat more affluent

but still near poverty, receive debt management services from the organization,

but by far the majority of the clients serviced by CCS do not. They are beyond

debt management and require counseling and training to enable them to provide

food, clothing and shelter for themselves and their children; to manage within

or to escape from an abusive marriage; to combat the ravages of drug or alcohol

addiction; and to learn how to operate as a successful and productive member of

society. Many of these clients may be employed, but almost all are well within

one hundred and fifty percent of the federal poverty guidelines and owe far more

than they can afford to pay.

35. The evidence introduced at the hearing, regarding which there is no

dispute, shows that CCS is a nonprofit entity which expends by far the majority,

(far in excess of fifty percent), of its funds on assisting those most in need

by education and counseling in financial and life skills management targeted at

those individuals who have demonstrated an inability to manage the limited

financial resources at their disposal. The majority of the support provided is

through and in conjunction with the direct support agencies identified earlier

in this Order. The testimony of the directors of those organizations clearly

indicates that CCS' services are necessary to and an integral part of the

organizational objectives.

36. Though CCS receives a very small portion of its income by way of

donations from clients, the majority of its income comes from voluntary

contributions from business creditors of CCS clients and from the United Way.

Another source of income is generated by interest earned on client deposits as a

result of or during debt management services. Regardless of the source of CCS'

income, it is clear that it provides its services free of charge to persons

unable to pay for its service and no one is turned away merely because he or she

cannot pay.

37. It is clear that CCS services are provided free of charge to

individuals who receive the services which fall within the categories of

individuals described in Section 212.08(7)(o)2.b.(II) - (IV), Florida Statutes.

Since these services are provided to individuals who, without these services and

those rendered in conjunction therewith by the organizations with whom CCS

operates, could be classified as disadvantaged or suffering hardship, CCS

appears to be a "charitable institution" under the statute and to have

demonstrated its entitlement to the requested exemption and the exemption should

be granted. See Department of Revenue v. Pinellas Rebos Club, Inc., DOAH

Hearing 95-1800 (Final Order entered May 8, 1996).

RECOMMENDATION

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

recommended that the Department of Revenue enter a final order dismissing the

Administrative complaint filed herein and approving the application for consumer

sales tax exemption submitted by Consumer Credit counseling Service of the

Florida Gulf Coast, Inc. as a charitable institution.

DONE and ENTERED this 4th day of June, 1996, in Tallahassee, Florida.

___________________________________

ARNOLD H. POLLOCK, 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 4th day of June, 1996.

COPIES FURNISHED:

Kent L. Weissinger, Esquire

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314-6668

Leslie E. Joughin, III, Esquire

Post Office Box 3273

Tampa, Florida 33601-3273

Larry Fuchs

Executive Director

Department of Revenue

104 Carlton Building

Tallahassee, Florida 32399-0100

Linda Lettera

General Counsel

Department of Revenue

204 Carlton Building

Tallahassee, Florida 32399-0100

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to the 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 consult with the agency that will issue the

Final Order in this case concerning their 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.

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF REVENUE

FLORIDA DEPARTMENT OF REVENUE

Petitioner,

Case No. 95-1728

vs. DOR 96-17-FOF

CONSUMER CREDIT COUNSELING SERVICE

OF THE FLORIDA GULF COAST, INC.

Respondent.

_____________________________________/

FINAL ORDER

This cause came on before the Department of Revenue for the purpose of

issuing a final order. The hearing officer assigned by the Division of

Administrative Hearings heard this cause and issued a Recommended Order dated

June 4, 1996. 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 Issues in the Recommended Order.

PRELIMINARY STATEMENT

The Department adopts and incorporates in this Final Order the Preliminary

Statement in the Recommended Order except that the notification dated March 16,

1995, sent by Shirley Towne to Consumer Credit Counseling Service of the Florida

Gulf Coast, Inc.

("CCS") bore the title of "Administrative Complaint."

FINDINGS OF FACT

The Department hereby adopts and incorporates by reference the findings of

fact set 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 in paragraphs 25 through 27. The

Hearing Officer's conclusions of law, set forth in paragraphs 28 through 37 of

the Recommended Order, are rejected in their entirety and are hereby replaced as

follows:

28. The burden of proof in this case is on CCS to show that it is entitled

to a sales tax exemption.

29. Section 212.08(7)(o)2., Fla. Stat., reads in pertinent part as

follows:

2. The provisions of this section ... [shall be strictly

defined, limited, and applied in each category ...]

[Emphasis Supplied].

30. Tax exemptions are matters of legislative grace. It is a well-

recognized rule of law that tax exemptions must be strictly construed against

the taxpayer seeking them and in favor of the State. Asphalt Pavers, Inc. v.

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

Revenue v. Anderson, 403 So.2d 397, 399 (Fla. 1981); Green v. Pederson, 99 So.2d

292, 296 (Fla. 1957). Thus, CCS has the burden to show clearly that it is

entitled to a sales tax exemption.

31. Section 212.08(7)(o)2.b., Fla. Stat. reads in pertinent part as

follows:

"Charitable institutions" means only nonprofit 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;

(IV) Social welfare services including adoption placement,

child care, community care for the elderly, and other

social welfare services which clearly and

substantially benefit a client population which is

disadvantaged or suffers a hardship;

(V) Medical research for the relief of disease, injury,

or disability;

(VI) Legal services; or

(VII) Food, shelter, or medical care for animals or

adoption services, cruelty investigations, or

education programs concerning animals;

Emphasis Supplied].

32. Rule 12A-1.001(3)(g)3.d., F.A.C. (1994) defined "sole or primary

function" as follows:

"Sole or primary function" means that a charitable

organization, excluding hospitals, must establish and

support its function as providing or raising funds for

services as outlined in subparagraphs 1. and 2. above, by

expending in excess of 50 percent of the charitable

organization's expenditures towards referenced charitable

concerns, within the charitable organization's most recent

fiscal year.

Subparagraphs 1. and 2. of the rule contain a list of the seven services listed

in the statute. This rule was amended in December of 1995; the definition of

"sole or primary function" is now found at Rule 12A-1.001(3)(g)3.e., F.A.C.

(1995). The definition is substantially identical in the revised rule as it was

in the 1994 version of this rule.

33. CCS does not, as its sole or primary function provide, or raise funds

for organizations which provide, any of the services listed in paragraphs 1, II,

V, VI, or VII of Section 212.08(7)(o) 2.b., Fla. Stat. See Findings of Fact

paragraphs 18 through 20, in the Recommended Order.

34. CCS does not, as its sole or primary function, raise funds for

organizations which provide any of the services listed in paragraph III of

Section 212.08(7)(o)2.b, Fla. Stat. See Findings of Fact, paragraphs 7, and 8,

in the Recommended Order.

35. CCS does not provide the any of the services listed in paragraph III

of Section 212.08(7)(o)2.b., Fla. Stat. See Findings of Fact, paragraphs 2, 3,

7, 8, 12, 15, 19 and 21.

36. CCS appears to be taking the position that it should be entitled to a

consumers certificate of exemption as a "charitable institution" because it

provides its services in coordination with other organizations in the area that

do provide one or more of the services listed in the statute. See Findings of

Fact, paragraphs 3, 7, 8, 11, 12, 13, 14, 15, 16 and 17.

37. The exemption for "charitable institutions" clearly requires that the

recipient of such exemption provide one or more of the services listed in the

statute or provide funds to organizations that are providing one or more of the

services listed in the statute. No organization can ride in on the coattails of

another organization. Vicarious charitable activities do not constitute the

direct provision of one or more of the services listed in the statute and will

not qualify one for the "charitable institutions" exemption. National Christian

Network, Inc. v. Department of Revenue, Case No. 84-4115, Final Order entered on

December 17, 1985. The statutory requirements must be met for each applicant

before an exemption can be granted. CCS has failed to provide any evidence that

it provides any of the services listed in paragraph III of Section

212.08(7)(o)2.b., Fla. Stat. or that it raises funds for organizations providing

such services.

38. Paragraph IV of Section 212.08(7)(o)2.b., Fla. Stat. as quoted above

in paragraph 31 of this Final Order, includes the following services in the list

of statutorily authorized services to be rendered by an entity seeking exemption

as a "charitable institution": "Social welfare services including adoption

placement, child care, community care for the elderly, and other social welfare

services which clearly and substantially benefit a client population which is

disadvantaged or suffers a hardship."

39. CCS does not provide or raise funds for organizations which provide

adoption, placement, child care or community care for the elderly. See Findings

of Fact paragraphs 18 through 20, in the Recommended Order. Thus, CCS must show

that its services qualify as "other welfare services which clearly and

substantially benefit a client population which is disadvantaged or suffers a

hardship." This claim will be considered below applying this principle: "While

doubtful language in taxing statutes should be resolved in favor of the

taxpayer, the reverse is true in construction of exceptions and exemptions from

taxation." Department of Revenue v. Skop, 363 So.2d 678, 680 (Fla. 5th DCA

1980).

40. Under the statutory construction maxim "ejusdem generis," where

general words in a statute follow a designation of particular persons or

subjects, the meaning of the general words is limited to include only those

persons or subjects that are of the same kind, character, class or nature as

those specifically designated in the statute. See Green v. State, 604 So.2d 471

(Fla. 1992); Florida Police Benevolent Ass'n, Inc. v. Department of Agriculture

and Consumer Services, 574 So.2d 120 (Fla. 1991). Thus, the general phrase

"other social welfare services which clearly and substantially benefit a client

population which is disadvantaged or suffers a hardship" will refer to services

which are similar to adoption placement, community care for the elderly and

child care. All of these types of enumerated services are targeted at ensuring

that certain basic needs of individuals who are dependent upon special care

and/or attention are satisfied. In the case of adoption placement, the object

of the service is to provide a safe and secure environment for the child who is

incapable of self-care. In the case of community care for the elderly, the

object of the service is to provide either food or physical assistance to those

older members of the population who are incapable of self-care with respect to

daily activities of life (bathing, grooming, preparing meals, etc.) In the case

of day care, again the services are provided to children incapable of self-care

with respect to the activities of daily life. These types of services are in

the nature of what a state government might ordinarily provide that is, they are

services to help ensure the survival of individuals who because of some factor

such as age, mental or physical inability, or lack of a safe and secure home

environment might otherwise be unable to provide for themselves. Insurance may

be either unavailable to, or inapplicable to the particular needs of these

individuals. If a charitable organization provides those types of services on

behalf of the state, it obviously is saving state resources. In return for this

saving of state resources, the state is willing to forego some sales tax

revenue. CCS has not provided any evidence that it provides "social welfare

services" as that term is defined by Section 212.08(7), Florida Statutes.

41. CCS does make referrals, however it does not, as its sole or primary

function, as that term is defined in Rule 12A- 1.001(3)(g), F.A.C., coordinate,

network, or link other institutions designated as charitable institutions which

do provide the types of services listed in paragraphs I through VII of Section

212.08(7)(o)2.b., Fla. Stat., with those in need of their services. See

Findings of Fact, paragraphs 7 and 8, in the Recommended Order; Stipulation of

Facts, para. 2, submitted by CCS at the hearing and incorporated into the

Recommended Order in paragraph 2 of that Recommended Orders and the Articles of

Incorporation of CCS which were admitted into evidence as an exhibit.

42. A reasonable percentage of CCS' services are not provided free of

charge or at a substantially reduced cost. Rather, 85 percent of the cost of

CCS' services were reimbursed by the business creditors of CCS' clients and

between 9 percent and 10 percent of the cost of CCS's services are borne by the

clients. In addition, CCS uses the interest on money deposited by clients into

trust accounts and which CCS later distributes to the creditors of the its

clients to offset its expenses. It appears that CCS uses the funding it

receives from the United Way to offset the remaining 4-5 percent or so of the

costs of rendering the services. See paragraphs 2, 10, 23 and 24 of the

Findings of Fact in the Recommended Order.

43. CCS is not providing services free or at a substantially reduced rate

if it in fact receives payment for the services provided. See Consumer Credit

Consultants, Inc. v. Department of Revenue, Case No. 94-4076, Final Order

entered December 1, 1995, ("A reasonable percentage of the services provided ...

are not provided free of charge or at a substantially reduced cost. Rather,

Petitioner charges either its clients, the creditors of its clients, or

both...."), and Consumer Credit Counseling Service of Centra Florida v. DOR, 7

FALR 5433, 5436-5437, ("Petitioner's clients pay indirectly for the services,

through the interest earned on their money as well as the tax deductible

contributions creditors send Petitioner out of clients' funds.") Based on the

foregoing, it is,

ORDERED that CONSUMER CREDIT COUNSELING SERVICE OF THE FLORIDA GULF COAST,

INC.'s application for a consumers' certificate of exemption be denied.

ENTERED in Tallahassee, Leon County, Florida this 31st day of July, 1996.

State of Florida

DEPARTMENT OF REVENUE

________________________

L. H. FUCHS

EXECUTIVE DIRECTOR

I HEREBY CERTIFY that the foregoing FINAL ORDER in DEPARTMENT OF REVENUE vs.

CONSUMER CREDIT COUNSELING SERVICE OF THE FLORIDA GULF COAST, INC., DOAH Case

No. 95-1728, has been filed in the official records of the Florida Department of

Revenue this 31st day of July, 1996.

________________________

JUDY LANGSTON

AGENCY CLERK

COPIES FURNISHED:

Arnold H. Pollock, Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Leslie E. Joughin, III, Esquire

Post Office Box3273

Tampa, Florida 33601-3273

Linda Lettera, General Counsel

Kent Weissinger, Assistant General Counsel

Florida Department of Revenue

P.O. Box 6668

Tallahassee, Florida 32314-6668

NOTICE OF RIGHT TO JUDICIAL REVIEW

PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS 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.