Court Ruling Sets Precedent on Certain Deed Transfer Taxes

The case on which the high court ruled was Crescent Miami Center LLC vs. the Florida Department of Revenue. It arose in 2000 after Fort Worth-based Crescent Real Estate Equities transferred its interest in Crescent Miami Center, a 35-story, 782,210-sf building at 201 S. Biscayne Blvd., to its subsidiary, Crescent Miami Center LLC and was levied a Documentary Stamp Tax of just over $1.2 million. Crescent filed for a refund. The department denied the request and issued a motion to a trial court for a summary judgment. Crescent issued a cross-motion for a summary judgment. The judgment was entered in favor of the DOR, setting off a round of appeals leading to the high court.

"Crescent's view was always that this represented a paper-only--a book transaction and, therefore, was not taxable," Fred O. Goldberg, a shareholder in the locally based law firm of Berger Singerman, tells GlobeSt.com. Goldberg represented Crescent in the case. Asked if the high court's ruling means Crescent will recover the $1.2 million, he says, DOR has 10 business days to seek reconsideration of the court's ruling. It has not yet done so, and time runs out next week. "Based on what I see and what I know, this would not be raised to the level of the US Supreme Court," he says.

The likely ramifications of the ruling are significant for Crescent and for others that were taxed under similar circumstances. It allows Crescent to not only recover the initial tax payment, but also to interest from 90 days after it submitted its request for a refund. Goldberg says the over the five years the interest rate has varied between 4% and 9%. "I haven't calculated an amount," he says, adding, "the rate will be determined by DOR."

As for the further-reaching impact of the ruling, he says, the statute of claims allows those who dispute a tax to seek refunds for up to three years following the taxed transaction. "People that see the Crescent opinion are now realizing they may have been unfairly taxed. I know of one companion case that came along with the Crescent case that will be affected by the ruling, and we have received a number of phone calls from people that either believe they have been unfairly taxed or are in the process of transferring property under similar circumstances."

Principals of Crescent could not be reached by deadline. Asked if Crescent's decision to carry the case to the state Supreme Court level was based on financial recovery or a larger issue of fairness, Goldberg says that despite the costs, "the financial recovery, particularly when the interest is factored in, is significant. They weren't tilting windmills; they are businessmen."