96-001556 Abraham Saada And Regina Saada vs. Department Of Revenue Status: Closed Recommended Order on Thursday, May 8, 1997.

Summary: Petition for documentary stamp tax refund should be dismissed because Petitioner owed tax as non-exempt party to real estate conveyance from Freddie Mac.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ABRAHAM SAADA and REGINA SAADA, )

)

Petitioner, )

)

vs. ) CASE NO. 96-1556

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

__________________________________)

RECOMMENDED ORDER OF DISMISSAL

Pursuant to notice, a hearing was held in this case via

telephone on December 19, 1997, before Patricia Hart Malono, a

duly-designated Administrative Law Judge of the Division of

Administrative Hearings, on the Respondent's Motion for

Recommended Summary Final Order.

APPEARANCES

For Respondent: Charles Catanzaro

Assistant Attorney General

Office of the Attorney General

The Capitol - Tax Section

Tallahassee, Florida 32399-1050

For Petitioner: Joseph R. Giaramita, Esquire

2016 Harrison Street

Hollywood, Florida 33020

STATEMENT OF THE ISSUES

Whether the petitioners are entitled to a refund of the

documentary stamp taxes paid on a Special Warranty Deed conveying

real property from the Federal Home Loan Mortgage Corporation to

one of the petitioners.

PRELIMINARY STATEMENT

On December 16, 1994, the Federal Home Loan Mortgage

Corporation ("Freddie Mac") filed an Application for Refund from

the State of Florida Department of Revenue ("Department"),

requesting that the Department refund $9,600.00 which it claimed

to have inadvertently paid as documentary stamp tax on a deed

from Freddie Mac to a "non-exempt party." In a letter dated

August 1, 1995, the Department notified Freddie Mac that it

proposed to deny the refund request, identified as claim number

95-72099, and that the denial would become final on October 2,

1995.

A protest letter dated November 29, 1995, was submitted to

the Department, and in a Notice of Decision of Refund Denial

issued January 24, 1996, the Department notified Joseph R.

Giaramita of its decision to sustain the refund denial. On March

25, 1996, Mr. Giaramita timely filed with the Department a

Petition for Chapter 120 Administrative Hearing to Contest Denial

of Stamp Tax Refund; the petition was filed on behalf of Abraham

and Regina Saada. In the Petition, the Saadas alleged that their

substantial interests would be affected by the Department's

decision to deny Freddie Mac's application for a documentary

stamp tax refund because "they overpaid $9,600.00 in documentary

stamp taxes on a deed from an instrumentality of the Federal

Government to a non-exempt party."

The Department forwarded the petition to the Division of

Administrative Hearings for the assignment of an administrative

law judge. At the request of the parties, this case has been in

abeyance while the parties pursued discovery and settlement

negotiations, and the formal hearing has never been scheduled.

On August 30, 1996, the Department filed a Motion for

Recommended Summary Final Order and Supporting Memorandum of Law.

A response in opposition to the motion was filed by the

petitioners on November 21, 1996, and a Memorandum of Law

Supplementing its Motion for Summary Judgment was filed by the

Department on December 4, 1996. Upon notice, a telephone hearing

was held on the motion on December 19, 1996.

FINDINGS OF FACT

Based on the facts alleged in the petition for

administrative hearing, the responses to requests for admission,

and the facts stipulated to at the hearing on the motion for

recommended summary final order, the following findings of fact

are made:

1. On September 27, 1994, Freddie Mac conveyed to Abe Saada

by a Special Warranty Deed real property located in Dade County,

Florida. Regina Saada is not a party to the Special Warranty

Deed.

2. The U.S. Department of Housing and Urban Development

Settlement Statement prepared for the closing on the property

showed that $9,600.00 in "state tax/stamps" was owed on the deed,

of which $4,800.00 was to be paid from the funds of the seller,

Freddie Mac, and $4,800.00 was to be paid from the funds of the

borrower, Abe Saada.

3. Pursuant to its agreement with Mr. Saada, Freddie Mac

paid $9,600.00 to the Clerk of Court as the documentary stamp tax

on the deed on or about September 28, 1994. The deed was

recorded in the Dade County Official Records at Book 16525 at

pages 3583-3585.

4. Abraham Saada is not exempt from the documentary stamp

tax.

CONCLUSIONS OF LAW

5. The Division of Administrative Hearings has jurisdiction

over the subject matter of this proceeding and of the parties

thereto pursuant to section 120.569 and .57(1), Florida Statutes

(Supp. 1996).

6. Section 201.01, Florida Statutes, imposes liability for

the payment of state excise tax as follows:

There shall be levied, collected, and paid

the taxes specified in this chapter, for and

in respect to the several documents, bonds,

debentures or certificates of stock and

indebtedness, and other documents,

instruments, matters, writings, and things

described in the following sections, or for

or in respect of the vellum, parchment, or

paper upon which such document, instrument,

matter, writing, or thing, or any of them, is

written or printed by any person who makes,

signs, executes, issues, sells, removes,

consigns, assigns, records, or ships the

same, or for whose benefit or use the same

are made, signed, executed, issued, sold,

removed, consigned, assigned, recorded, or

shipped in the state. Unless exempt under s.

201.24 or under any state or federal law, if

the United States, the state, or any

political subdivision of the state is a party

to a document taxable under this chapter, any

tax specified in this chapter shall be paid

by a nonexempt party to the document. The

documentary stamp taxes required under this

chapter shall be affixed to and placed on all

recordable instruments requiring documentary

stamps according to law, prior to

recordation. With respect to mortgages or

trust deeds which do not incorporate the

certificate of indebtedness, a notation shall

be made on the note or certificate that the

tax has been paid and that the proper stamps

have been affixed to the mortgage or trust

deed.

7. The exemptions stated in section 201.24, Florida

Statutes, are not applicable to the parties to this transaction.

8. Section 201.02, Florida Statutes, imposes the

documentary stamp tax on deeds and other instruments relating to

real property.

9. Rule chapter 12B-4, Florida Administrative Code,

contains the Department's rules for administration of the

documentary stamp tax. Rule 12B-4.014(9) provides that "[t]he

United States or its agencies are exempt from payment of the tax

and unless the instrument is exempted by any state or federal

law, the required tax is the responsibility of the non-exempt

party."

10. Even though Freddie Mac is not a governmental entity or

an agency or instumentality of the United States, American

Bankers Mortgage Corp. v. Federal Home Loan Mortgage Corp. , 75

F.3d 1401 (9 th Cir. 1996); Liberty Mortgage Banking Ltd. v.

Federal Home Mortgage Corp. , 822 F.Supp. 956, 958 (E.D.N.Y.

1993), it is exempt from state taxation pursuant to Title 12,

section 1452(d), United States Code. 1

11. There is no exemption provided by Congress for a

Special Warranty Deed issued by Freddie Mac, and, therefore, the

deed is a taxable instrument under Florida law.

12. Rule 12B-4.002, Florida Administrative Code, provides

in pertinent part:

(1)(a) Liability in general -- Except as

otherwise provided in paragraph (2) and (3)

of this Rule, the [documentary stamp] tax is

payable by any of the parties to a taxable

transaction. The parties to the transaction

may agree among themselves as to who shall

pay the tax, but such agreements do not

relieve the others from their liability in

the event the agreement is not followed.

13. The exemptions stated in rule 12B4.014(2) and (3) are

not applicable to the parties to this transaction.

14. Even though Freddie Mac agreed to pay one-half of the

$9,600.00 documentary stamp tax due to be affixed to the Special

Warranty Deed prior to its being recorded in the Dade County

Official Records, as the non-exempt party to the transaction, Mr.

Saada was responsible for paying the entire amount of the

documentary stamp tax due on the deed. See Cohen-Ager, Inc., v.

Department of Revenue and Metropolitan Dade County , 8 FALR 4912

(Dep't of Rev. 1986)(if document is taxed pursuant to chapter

201, Florida Statutes, documentary stamps are required even if

one party is tax exempt, and the tax must be paid by the non-

exempt party).

15. Because Mr. Saada is liable for the documentary stamp

tax on the Special Warranty Deed, he is not entitled to a refund

of any part of the $9,600.00 documentary stamp tax at issue in

this case. 2

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 Petition for Chapter 120

Administrative Hearing to Contest Denial of Stamp Tax Refund

filed by Abraham Saada and Regina Saada.

DONE AND ENTERED this 8th day of May, 1997, in Tallahassee,

Leon County, Florida.

___________________________________

PATRICIA HART MALONO

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 8th day of May, 1997.

ENDNOTES

1 That section provides:

The Corporation, including its

franchise, activities, capital, reserves,

surplus, and income, shall be exempt from all

taxation now or hereafter imposed by any

territory, dependency, or possession of the

United States or by any State, county,

municipality, or local taxing authority,

except that any real property of the

Corporation shall be subject to State,

territorial, county, municipal, or local

taxation to the same extent according to its

value as other real property is taxed.

2 Given this conclusion, it is not necessary to reach the issue

of whether Abraham and Regina Saada have standing to protest the

denial of the refund request submitted by Freddie Mac.

COPIES FURNISHED:

Charles Catanzaro

Assistant Attorney General

Office of the Attorney General

The Capitol - Tax Section

Tallahassee, Florida 32399-1050

Joseph R. Giaramita, Esquire

2016 Harrison Street

Hollywood, Florida 33020

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

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.

1 That section provides:

The Corporation, including its

franchise, activities, capital, reserves,

surplus, and income, shall be exempt from all

taxation now or hereafter imposed by any

territory, dependency, or possession of the

United States or by any State, county,

municipality, or local taxing authority,

except that any real property of the

Corporation shall be subject to State,

territorial, county, municipal, or local

taxation to the same extent according to its

value as other real property is taxed.

2 Given this conclusion, it is not necessary to reach the issue

of whether Abraham and Regina Saada have standing to protest the

denial of the refund request submitted by Freddie Mac.