Could a qualifying citrus processor use Florida's single-factor apportionment method and source product sales by ultimate destination?

Plain-English summary

The Florida Department of Revenue concluded that a qualifying citrus processing company could apportion its income using Florida's single-factor method and source product sales to their ultimate destination.

The taxpayer conducted business inside and outside Florida and met the statutory citrus-processor definition based on its pre-1998 gross receipts. Destination sourcing was available if its business met NAICS National Number 311411.

The single-factor method required a timely election on a timely filed return, including extensions.

What this means for you

Citrus processors

Confirm the historical gross-receipts definition and current NAICS classification before using the special method.

Corporate tax teams

Track ultimate destinations and make the election on time; eligibility alone does not substitute for the return election.

Common questions

Q: Could the taxpayer apportion income?
A: Yes.

Q: Could it use single-factor apportionment?
A: Yes, with a timely election.

Q: Could it source sales by ultimate destination?
A: Yes, if it met the specified NAICS classification.

Citations and references

• Fla. Stat. §§ 220.03(1)(dd), 220.15(5)(b)1., 220.151(3), and 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 12C1-014

Original ruling text

Interim
Executive
Director
Marshall Stranburg

QUESTION #1: Is the taxpayer permitted to apportion its adjusted federal income?
ANSWER #1: The taxpayer is doing business within and without Florida and is eligible to apportion its
adjusted federal income.
QUESTION #2: Is the taxpayer eligible to use the single-factor apportionment formula authorized by
subsection 220.151(3), F.S.?
ANSWER #2: The taxpayer meets the definition of “citrus processing company,” provided by paragraph
220.03(1)(dd), F.S., and is eligible to use the single-factor apportionment formula authorized by
subsection 220.151(3), F.S.
QUESTION #3: May the taxpayer source sales of its products to the state that is the ultimate destination
of each sale?
ANSWER #3: In that the taxpayer meets the definition of “citrus processing company,” and is eligible to
apportion its income, it may source sales of its products to the state that is the ultimate destination of each
sale, provided it meets the NAICS classification requirement of subparagraph 220.15(5)(b)1.,F.S.
December 06, 2012
XXX
XXX
XXX
Re:

Technical Assistance Advisement 12C1-014
XXX., hereinafter “the Taxpayer”
Tax: Corporate Income Tax
Issue: Apportionment Factor
FEIN: XXX
Sections 220.03, 220.15, and 220.151, Florida Statutes (F.S.)

Dear XXX:
This is in response to your request dated XXX, for a Technical Assistance Advisement (TAA) pursuant to
section 213.22, F.S., and Rule Chapter 12-11, F.A.C., regarding the use of single-factor apportionment by
a citrus processing company for Florida corporate income tax purposes. An examination of your letter has
established that you have complied with the statutory and regulatory requirements for issuance of a TAA.
Therefore, the Department is hereby granting your request for a TAA.
Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – James McAdams, Director  Information Services – Tony Powell, Director

www.myflorida.com/dor
Tallahassee, Florida 32399-0100

Technical Assistance Advisement 12C1-014
Page 2

FACTS
The taxpayer incorporated in XXX on XXX, and processes citrus XXX, which it distributes and sells.
From its incorporation through December 31, 1997, the taxpayer derived more than 50 percent of its total
gross receipts from the processing of citrus products and the manufacture of citrus XXX. All of the
taxpayer’s property and employees are physically located in XXX, and all of its business is conducted in
XXX.
The majority of the taxpayer’s product is sold to customers located in XXX. Some of the citrus byproducts it produces are sold to customers in XXX. Products the taxpayer sells are shipped by common
carrier or on the purchaser’s vehicle.
The taxpayer files tax returns in XXX and XXX.
LEGAL AUTHORITY
Paragraph 220.03(1)(dd), F.S., states:
“Citrus processing company” means a corporation which, during the 60-month period ending on
December 31, 1997, had derived more than 50 percent of its total gross receipts from the
processing of citrus products and the manufacture of juices.
Subparagraph 220.15(5)(b)1., F.S., states:
Sales of tangible personal property occur in this state if the property is delivered or shipped to a
purchaser within this state, regardless of the f.o.b. point, other conditions of the sale, or ultimate
destination of the property, unless shipment is made via a common or contract carrier. However,
for industries in NAICS National Number 311411, if the ultimate destination of the product is to
a location outside this state, regardless of the method of shipment or f.o.b. point, the sale shall not
be deemed to occur in this state. As used in this paragraph, “NAICS” means those classifications
contained in the North American Industry Classification System, as published in 2007 by the
Office of Management and Budget, Executive Office of the President.
Subsection 220.151(3), F.S., states:
For any taxable year beginning on or after January 1, 1999, a citrus processing company may, if
required to apportion its taxable net income pursuant to the three-factor apportionment method
set forth in s. 220.15(1), elect to have such apportionment determined for that taxable year solely
by use of the sales factor, as set forth in s. 220.15(5). The election shall be made by the filing of
a return for the taxable year utilizing this method.
ISSUE PRESENTED
For purposes of Florida corporate income tax:

Technical Assistance Advisement 12C1-014
Page 3

1. Is the taxpayer permitted to apportion its adjusted federal income?
2. Is the taxpayer eligible to use the single-factor apportionment formula authorized by subsection
   220.151(3), F.S.?
3. May the taxpayer source sales of its products to the state that is the ultimate destination of each sale?
   DISCUSSION AND ANALYSIS
   Based on the information provided in the request for this TAA, the taxpayer is doing business within and
   without Florida and is, accordingly, eligible to apportion its income. Although the taxpayer did not exist
   prior to XXX, from the time it began business activity through December 31, 1997, 100 percent of its
   business activity was the processing of citrus, and XXX, XXX, and XXX, XXX. Therefore, the taxpayer
   meets the definition of “citrus processing company,” provided by paragraph 220.03(1)(dd), F.S., and may
   elect to use the single-factor apportionment formula authorized by subsection 220.151(3), F.S. It appears
   that the taxpayer made this election when its Florida corporate income tax return for the tax year ended
   XXX, was filed.
   In that the taxpayer meets the definition of “citrus processing company,” and is eligible to apportion its
   income, it may source sales of its products to the state that is the ultimate destination of each sale, as
   authorized by subparagraph 220.15(5)(b)1., F.S., provided the taxpayer’s business is classified in NAICS
   National Number 311411. The taxpayer must make a timely election on a timely filed return with
   extensions to use the single-factor apportionment formula authorized by subsection 220.151(3), F.S.
   CONCLUSION
   As stated above, the taxpayer is eligible to apportion its income using the single-factor apportionment
   method provided by subsection 220.151(3), F.S., and may source its sales to the state that is the ultimate
   destination of each sale, provided it meets the NAICS classification requirement of subparagraph
   220.15(5)(b)1., F.S. The taxpayer must make a timely election on a timely filed return with extensions to
   use the single-factor apportionment formula authorized by subsection 220.151(3), F.S.
   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, F.S. 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 than expressed in this response.
   You are further advised that this response, your request and related backup documents are public records
   under Chapter 119, F.S., which are subject to disclosure to the public under the conditions of s. 213.22,
   F.S. Your name, address, and any other details, which might lead to identification of the taxpayer, must
   be deleted before disclosure. In an effort to protect the confidentiality of such information, we request you

Technical Assistance Advisement 12C1-014
Page 4

provide the undersigned with an edited copy of your request for Technical Assistance Advisement, backup
material and response within fifteen days of the date of this advisement.
Sincerely,

Suzanne C. Paul
Tax Law Specialist
Technical Assistance and
Dispute Resolution
SCP/
Control No.:

114911