Were a donor's life payments and a hospital-support charity's interest under a charitable gift annuity exempt from Florida's former intangible tax?

Subject

Exemption - Persons - Property

Plain-English summary

Both interests described in the charitable gift annuity were exempt from Florida's former intangible personal property tax. The donor's right to quarterly lifetime payments qualified as exempt "money" because the cited definition included the cash equivalent of annuities.

The hospital-support corporation was a section 501(c)(3) organization. The Department concluded that, as an exempt charitable entity, it had no intangible personal property tax liability for its interest in the agreement.

The agreement was irrevocable and non-assignable. The donor contributed money or other property to the corporation in exchange for a fixed payment during the donor's life, with the final payment due in the calendar quarter immediately before death.

What this means for you

The ruling separately analyzed the donor's payment right and the charity's interest. Its result depended on the annuity's described legal form and the corporation's charitable status; it did not declare every planned-giving arrangement exempt.

Common questions

Q: Why was the donor's life interest exempt? The ruling treated the annuity's cash equivalent as exempt money under the cited statutes.

Q: Did the hospital-support corporation owe intangible tax on its interest? No. The Department treated the section 501(c)(3) corporation as an exempt entity.

Q: Did the ruling address an assignable annuity? No. The agreement described in the ruling was irrevocable and non-assignable.

Citations and references

• Fla. Stat. § 199.023(2) — money includes the cash equivalent of annuities
• Fla. Stat. § 199.185(1)(a) — money exemption
• Fla. Stat. § 199.183(2) — charitable-institution exemption
• Fla. Admin. Code r. 12C-2.003(1) — cited in the advisement heading
• I.R.C. §§ 501(c)(3), 642(c)(5) — charitable status and cited agreement provision
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93C2-015

Original ruling text

May 12, 1993

Re: Technical Assistance Advisement No. 93(C)2-015
Exemption - Persons - Property
Intangible Tax - Charitable Gift Annuity Payments
Sections 199.023(2), 199.185(1)(a), and 199.183(2), F.S.
Rule 12C-2.003(1), F.A.C.
XXX (Hospital)
XXX (Corporation)
XXX (Agreement)

Dear :

Your request for a technical assistance advisement has been
forwarded to this office. Check number 072979 in the amount of
$5.00 received with your request was returned with my letter
dated May 4, 1993, since there is no charge for issuing a
technical assistance advisement.

Facts

The Hospital was established in 1916, and has grown through
six major expansions. Today the Hospital operates as a full
service hospital, with new and modern surgical, emergency room,
radiological and intensive care facilities. The Hospital also
operates one of the most modern facilities for child birth and
neonatal care in the State of Florida and is a voluntary, nonprofit institution. Since its founding, the Hospital has
primarily relied upon financial support of the area residents
for its essential expansions.

In 1977 the Corporation was established, and it received
its exemption from federal income tax as a 501(c)(3)
organization in 1987. The purpose of the Corporation is to
administer funds given to the Hospital and to provide funds
which will enable the Hospital to accomplish its objectives.
The Corporation is governed by a Board of Directors consisting
of seventeen (17) members. Outright gifts, bequests and trusts
have been given to the Corporation by persons who are committed

to the support of the Hospital. None of the gifts and
contributions are used for the operating costs of the Hospital,
but they are, instead, used for the improvement of facilities
and equipment which enable the Hospital to maintain state of the
art technology.

As part of the Corporation's planned giving programs, the
Corporation maintains several alternative charitable gifting
arrangements. One such arrangement is an Agreement whereby a
donor contributes a sum of money or other property to the
Corporation, and in exchange, receives the right to a certain
sum of money for the donor's life. Such annuity payments are
paid at the end of each calendar quarter. The last of the
annuity payments occurs on the calendar quarter immediately
preceding the death of the donor. The Agreement is irrevocable
and non-assignable by the donor and is governed by the laws of
this state and Section 642(c)(5) of the Internal Revenue Code of
1986.

Requested Advisement

The Corporation requests a ruling that the life annuity
interests under its charitable gift annuity agreements are
exempt from Florida intangible personal property taxes as
"money". Also, that its interest in the Corporation's Agreement
is exempt.

Discussion and Law

Section 199.185(1)(a), F.S., exempts money from intangible
personal property taxes, and money is defined under s.
199.023(2), F.S., as including the cash equivalent of annuities.

In addition, s. 199.183(2),F.S., provides that a charitable
institution qualified as such under s. 501(c)(3), of the United
States Internal Revenue Code of 1954 is exempt from intangible
personal property tax on property which it owns.

Conclusion

Based on the statutory provisions and the information

provided in your letter, the donor's life interest in the
Agreement would be exempt from intangible personal property
taxes. Furthermore, the Corporation as an exempt entity would
have no intangible personal property tax liability for any
interest in the Agreement.

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 any other details which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Nadine C. Posey
Technical Assistant
Technical Assistance

NCP/mh