Were university revenue bonds issued by a direct-support organization on behalf of a state board exempt from Florida taxes?

Plain-English summary

The Series 2001 university bonds were exempt from Florida documentary stamp and intangible personal property taxes. A nonprofit university direct-support association issued the bonds on behalf of a state university board to finance university projects and refund earlier bonds. The board authorized the association to act as its agent.

Chapter 243 exempted the bond issuance from documentary stamp tax. For intangible tax, the board was an exempt state agency, so the association acting as agent had no duty to pay tax on the board's exempt assets. The state-issued-bond exemption also applied because the association issued the bonds on the board's behalf.

What this means for you

The result depended on both the express Chapter 243 exemption and a documented principal-agent relationship with an exempt state board. It was not based merely on the association's nonprofit status.

Common questions

Q: Were the bonds subject to documentary stamp tax? No.

Q: Why was the association not liable for intangible tax? It acted for a state agency whose intangible assets and bonds were exempt.

Q: Did execution outside Florida matter to the stated holding? It was part of the facts, but the Department grounded the exemptions in agency status and the cited statutes.

Citations and references

• Fla. Stat. §§ 199.052(9) and 199.185(1)(d) — agent filing and exempt state-issued bonds
• Fla. Stat. §§ 201.07 and 243.105 — bond tax and Chapter 243 exemption
• Fla. Stat. § 240.2093(2) — direct-support organization issuing for the board
• Fla. Admin. Code r. 12B-4.014(5) — agent and principal
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02M-001

Original ruling text

SUMMARY

QUESTION: Are bonds issued by a direct support organization
(Association) on behalf of the Board pursuant to s.
243.105, F.S., exempt from the Florida intangible personal
property tax imposed by Chapter 199, F.S., and the
documentary stamp tax imposed by Chapter 201, F.S.?

ANSWER - Based on Facts Below: Yes. The Association is
acting as an agent for the Board. Additionally, a tax
exemption is provided for the issuance of the bonds under
s. 243.105, F.S. Therefore, the Series 2001 Bonds are
exempt from documentary stamp tax imposed on bonds under s.
201.07, F.S.

The Association would normally be required to pay the
annual tax on the intangible assets that it owned, managed
or controlled. However, in this case, the Board is exempt
from the intangible tax since it is a state agency.
Therefore, the Association, acting as agent for the Board,
can issued bonds on behalf of the Board, that are exempt
under s. 199.185(1)(d), F.S.

Apr 25, 2002

Re: Technical Assistance Advisement No. 02M-001
Issuance of Bonds under Chapter 243, F.S.
Documentary Stamp Tax and Intangible Tax
Sections 199.185, 201.02, 201.07, 240.2093(2), and 243.105,
F.S.
Rule 12B-4.014(5), F.A.C.
XXX (Association)
XXX (Board)
XXX (University)

Dear :

This is in response to your request for a Technical

Assistance Advisement regarding an exemption for documentary
stamp tax and intangible tax for bonds issued under Chapter 243,
F.S.

FACTS PRESENTED BY TAXPAYER

The Association issued Series 2001 Bonds on behalf of the
Board, pursuant to s. 240.2093(2), F.S., which authorizes a
direct support organization to issue bonds on behalf of the
Board. The Bonds were issued to finance all or a portion of the
cost of certain projects and additions and improvements to the
University, and also to refund outstanding bonds. Upon
completion of the project, title will vest in the State of
Florida.

The Association is a Florida not for profit corporation and
has been designated statutorily by the Board as a "University
Direct Support Organization." The Association was created to
directly support various athletic activities of the University.

Concurrently with, and as a condition to the issuance of
Bonds, the Association delivered to the Trustee an irrevocable,
direct-pay letter of credit, issued by a national banking
association (Credit Facility Provider). The Trustee is the
beneficiary of the Credit Facility Provider, which can draw on
the Credit Facility as set forth in the indenture. The letter
of credit was issued pursuant to a reimbursement agreement
between the Association and the Credit Facility Provider,
whereby the Association agrees to reimburse the Credit Facility
Provider for draws made under the letter of credit and certain
other expenses. Both the Series 2001 Bonds and reimbursement
agreement were executed outside of Florida, and neither is
secured by a mortgage on Florida real property.

REQUESTED RULING

You seek a ruling that: (1) Pursuant to s. 243.105, F.S.,
the Series 2001 Bonds are exempt from the Florida intangible
personal property tax imposed by Chapter 199, F.S., and the
documentary stamp tax imposed by Chapter 201, F.S., because they
were issued pursuant to Chapter 243, F.S.; and/or (2) the Series

2001 Bonds are exempt per s. 243.105, F.S., from the Florida
intangible personal property tax imposed by Chapter 199, F.S.,
and the documentary stamp tax imposed by Chapter 201, F.S.,
because the Board was the actual issuer of the Series 2001 Bonds
pursuant to Chapter 243, F.S., and the Association was merely
acting as an agent for the Board.

LAW AND DISCUSSION

Chapter 201, F.S., levies and imposes an excise tax on
documents, including, but not limited to deeds, mortgages,
notes, original issues of stocks, and bonds. Section 201.07,
F.S., prescribes that the rate of tax on bonds is $.35 on each
$100 or fraction thereof, based on the face value. However,
certain transactions are not subject to tax, typically including
those where an agent/principal relationship exists. Section
199.052(9), F.S., provides that when an agent has control or
management of intangible personal property, the principal is
primarily responsible for filing the return and paying the tax,
but the agent shall file the return and pay the tax on behalf of
the principal if the principal fails to do so. However, if the
intangible personal property owned by the principal is exempt
from the intangible tax, the agent has no liability to file a
return on behalf of an entity whose assets are exempt.
Additionally, s. 199.185(1)(d), F.S., exempts all bonds issued
by the State of Florida, its municipalities, counties, or other
taxing districts.

The exemption from taxation in s. 243.105(1), F.S.,
provides that all properties, revenues, or other assets for
which revenue certificates are issued under this part, and all
revenue certificates issued hereunder and the interest therein,
shall be exempt from taxation by any agency of a county,
municipality, or the state.

In this case, the Board (principal), per s. 240.2093, F.S.,
is allowed to authorize the Association, a direct support
organization, to issue bonds on its behalf. Therefore, the
Association is acting as an agent for the Board.

DETERMINATION

Per all of the documentation and information provided, the
Association is acting as an agent for the Board. Additionally, a
tax exemption is provided for the issuance of the bonds under s.
243.105, F.S. Therefore, the Series 2001 Bonds are exempt from
documentary stamp tax imposed on bonds under s. 201.07, F.S.

The Association, in acting as agent for the Board, would
normally be required to pay the annual tax on the intangible
assets of its principal only if the Board failed to do so. In
this case, the Board is exempt from the intangible tax, since it
is a state agency and has no filing requirement. Therefore, the
Association is also exempt from the intangible tax under s.
199.052(9), F.S., as agent for the Board, since all of the
Board's intangible assets are exempt by statute. Additionally,
since the Series 2001 Bonds are issued on behalf of the Board,
the exemption in 199.185(1)(d), F.S., is applicable.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice, as specified in s. 213.22. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment from that
which is expressed in this response.

You are further advised that this response, your request
and related backup are public records under Chapter 119, F.S.,
and are subject to disclosure to the public under the conditions
of s. 213.22, F.S. Confidential information must be deleted
before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Joy B. Eldred, C.P.A.
Tax Law Specialist
Technical Assistance and Dispute Resolution
Office of the General Counsel

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