Under Florida's 1983 rules, was bullion taxable when sold while held outside Florida, and what happened if it was later brought into the state?

Plain-English summary

Florida sales tax did not apply when the gold or silver bullion was physically outside Florida at the moment of sale. Although the Department treated bullion as tangible personal property generally subject to sales tax, the bank acted only as the customer's agent and the bullion stayed in out-of-state depositories during the purchase and sale.

Use tax was a separate issue. The ruling said use tax could apply if a customer later brought the bullion into Florida. Under the historical rule quoted, property used in another state for at least six months before import was presumed not to have been bought for Florida use; the Department applied that treatment to bullion held for appreciation outside Florida for six months or longer.

The ruling did not decide whether the customer's precious-metal certificate was subject to intangible tax.

What this means for you

The answer turned on where the bullion was located at the sale and what happened afterward. It is a historical ruling and does not establish current bullion or remote-transaction treatment.

Common questions

Was bullion generally tangible personal property? Yes, under the rule quoted in the ruling.

Was Florida sales tax due on these sales? No, because the bullion was outside Florida when sold.

Could later Florida delivery create use tax? Yes, subject to the historical six-month analysis described in the ruling.

Did the ruling decide tax on the certificate itself? No.

Citations and references

• Fla. Stat. § 212.05 — sales tax on retail sales of tangible personal property in Florida
• Fla. Admin. Code r. 12A-1.37(12)(b) — gold and silver bullion as tangible personal property
• Fla. Stat. § 212.06(8) — historical use-tax rule for property imported into Florida
• Fla. Stat. ch. 212 — sales and use tax
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 83A-013

Original ruling text

Mar 31, 1983

Re: Technical Assistance Advisement #83(A)-013 Taxability of Gold and Silver Bullion Under Certain Condition

Dear

This is in response to your letter of February 22, 1983, requesting a technical assistance advisement from the Department regarding the following circumstances:

"XXX Bank, a Florida corporation engaged in the general commercial banking business, intends to market gold and silver bullion to investors. The Bank shall act as purchasing and selling agent, and will not trade for its own account. Investors wishing to purchase gold or silver bullion will place their orders at certain branches of the Bank. All the branches of the Bank are located within Florida.

"Upon receipt of the purchase order and available funds, the Bank will purchase the bullion for the account of the customer. Purchases will be made directly from dealers, or by matching such purchase orders with bullion sales orders from other Bank customers. In either case, at the time of the purchase of the bullion, the bullion will physically be located in a depository outside of Florida. The Bank will charge a purchase commission for this service.

"Purchasers will receive a Precious Metal Certificate registered in the purchaser's name. The Certificate will evidence the purchaser's ownership of an undivided interest in a fungible bulk of gold or silver bullion. This bullion will be held for the purchaser, and for other holders of the Certificates issued by the Bank and outstanding from time to time, at various depositories. In all cases, the depositories will be located outside Florida.

"Investors who wish to liquidate their investment will be given the opportunity by the Bank to sell their bullion. Upon surrender of the Certificate to the Bank and completion of a sales order, the Bank will sell, for the account of the customer, at the market bid price per ounce, the bullion, and remit the sales price, net of a sales commission and other fees, to the seller. Sales will either be made directly to dealers, or by matching the sales orders to purchase orders received by the Bank on the same business day. At the time the sales order is received and the sale executed, the bullion will be physically located outside of Florida.

"The gold and silver bullion will be marketed as a portfolio investment for individuals seeking appreciation in the bullion. Accordingly, it is not anticipated that owners will actually take physical delivery of the bullion. In some circumstances, however, the purchaser may wish to take physical possession of the bullion. In those circumstances, upon surrender of the Certificate to the Bank, and completion of a request form, the Bank will cause to be shipped, from a depository outside Florida, an amount of bullion equal to the amount of the surrendered certificate. Because the bullion initially purchased would be a part of a large fungible mass, the Bank will arrange with a dealer, to ship to the customer the specific number of ounces represented by the surrendered Certificate, in exchange for reducing, by an equal amount, the Bank's customers' interest at the dealer in the fungible, undivided mass. The bullion will be shipped by registered mail or common carrier to the address selected by the purchaser, which address may be within or without Florida."

Section 212.05, F.S., provides in part:

"212.05 Sales, storage, use tax. It is hereby declared to be the legislative intent that every person is exercising a taxable privilege who engaged in the business of selling tangible personal property at retail in this state. (Emphasis Supplied)

Rule 12A-1.37(12)(b), F.A.C., provides:

"(b) The sale, by a dealer, of gold and silver bullion is deemed to be a sale of tangible personal property and is subject to sales tax."

Therefore, the Florida Department construes the sale of gold and silver bullion to be a taxable sale. As outlined under section 212.05, F.S., the Florida retail sales tax is imposed on the sales price of each item of tangible personal property when sold at retail in this state. However, the tax does not apply to sales which are not within the tax powers of this state. As long as the bullion is not located in the State of Florida at the moment of sale, no Florida sales tax is applicable.

A use tax may be applicable if the bullion is brought into Florida subsequent to the sale. Section 212.06(8), F.S., provides in part:

"Use tax will apply and be due on tangible personal property imported or caused to be imparted into this state for use, consumption, distribution or storage to be used or consumed in this state; provided, however, that it shall be presumed that tangible personal property used in another state for 6 months or longer before being imported into this state was not purchased for use in this state..."

The Department would construe that bullion held for appreciation in an out-of-state depository for 6 months or longer before being imported into Florida was not purchased for use in this state and therefore, not subject to Florida use tax.

This response does not address the application of intangible tax to the gold certificate, but is confined to the application of sales tax as defined under Chapter 212, 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 and your request 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 only other details which might lead to identification of the taxpayer must be deleted by the department before disclosure. In an effort to protect confidential information, we request you notify the undersigned in writing within 15 days of any deletions you wish made to the request or this response.

You may call me at (904) 488-3845 for further assistance.

Sincerely,

W.D. Mayo
Technical Assistant

WDM/pb