Bayfront HMA Medical Center, LLC appeals the final order of the Florida Department of Revenue that sustained the agencys denials of Bayfronts taxpayer contest of assessment and two applications for tax refund. Because Bayfront failed to show the final order was an erroneous interpretation of law or an illegal exercise of discretion by DOR, the final order is affirmed. See § 120.68(7)–(8), Fla. Stat.
The administrative proceedings stemmed from Bayfronts challenge to sales and use taxes assessed by DOR upon the rent payments Bayfront paid to its landlord. Bayfront is a for-profit LLC which leases several floors within the landlords hospital building for use in Bayfronts obstetric medical business. Bayfront provides medical services to both inpatients and outpatients. Bayfront asserted in the administrative proceedings that it was exempt from the taxes at issue because: 1) its inpatient rooms were “used exclusively as dwelling units,” under section 212.031(1)(a)2., Florida Statutes, and 2) its rent payments qualified as tax exempt “sales for resale” under rule 12A-1.039(1)(b)4.–5., Florida Administrative Code, because Bayfront leases its patient space from its landlord for subsequent licensing to patients.
After a formal hearing under section 120.57, the administrative law judge made findings of fact and conclusions of law. Bayfront did not file an exception to the ALJs findings of fact or conclusion of law that Bayfronts inpatient rooms were not “used exclusively as dwelling units” under section 212.031(1)(a)2. As a result, Bayfront failed to preserve for our review the agencys denial of the “dwelling unit” exception. See Worster v. Dept of Health, 767 So. 2d 1239, 1240 (Fla. 1st DCA 2000) (holding that “a party cannot argue on appeal matters which were not properly excepted to or challenged before the agency”); Henderson v. Dept of Health, Bd. of Nursing, 954 So. 2d 77, 81 (Fla. 5th DCA 2007) (same).
Bayfront did file an exception to the ALJs conclusion that Bayfronts patients were not “tenants” and the inpatient rooms were not rented or “licensed as transient accommodations by the dealers tenants.” See Fla. Admin. Code 12A-1.039(1)(b)4.–5. But in the final order, DOR rejected Bayfronts exceptions as “founded on inaccurate statements of law ․ unsupported by the factual findings, and ․ unreasonable.” The agency found the ALJs conclusions of law denying the “sale for resale” exemption “more reasonable than those proposed” by Bayfront. The agency adopted the ALJs findings of fact and conclusions of law in full in the final order.
DORs conclusion that Bayfronts patients are not “tenants” was correct under the language of the rule and given the definition of “patients” in section 383.16(3), Florida Statutes (governing regional perinatal intensive care centers). The ALJ found that “Bayfront maintains the sole control and full use of its leased space” and as such “there is no applicable tax exemption under Florida law.” Furthermore, nothing in the context of rule 12A-1.039(3) shows that Bayfronts lease of its obstetrics care area within the hospital for subsequent patient use and occupancy qualifies it as a “registered dealer” licensing inpatient rooms to “tenants.”
While expressing its disagreement with the agencys legal conclusions in the final order, Bayfront fails to show that DOR misinterpreted or misapplied section 212.031, Florida Statutes, or rule 12A-1.039(1)(b), Florida Administrative Code, which requires “strict compliance” with the rule to entitle a taxpayer to an exemption. As a result, we find no ground to set aside the final order under section 120.68(7)(d) or (7)(e), Florida Statutes.
Affirmed.
Per Curiam.
B.L. Thomas, Bilbrey, and Nordby, JJ., concur.