Did receivables of a non-Florida corporation acquire Florida taxable situs when its representatives regularly called on Florida customers?

Subject

Property Subject to Tax - Accounts Receivable - Taxable Situs

Plain-English summary

The accounts receivable arising from the company's Florida sales activity were subject to Florida's intangible personal property tax. The non-Florida corporation's representatives regularly visited customers at Florida locations, including at least two trips each year.

The Department concluded that the receivables arose from business transacted in Florida and received the benefit and protection of Florida law and courts. That gave the receivables a Florida business situs even though the corporation was domiciled elsewhere.

What this means for you

Under this historical regime, an out-of-state owner's domicile did not prevent taxation when its representatives regularly conducted the receivable-producing business in Florida.

Common questions

Q: Did regular sales visits create Florida situs for the receivables? Yes.

Q: Did the corporation's non-Florida domicile avoid the tax? No.

Q: Why did Florida say the accounts received state protection? The ruling said claims against Florida persons or property had to be enforced through Florida courts.

Citations and references

• Fla. Stat. § 199.175(2)(a)2. — Florida business situs for intangible property
• Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93C2-029

Original ruling text

Oct 21, 1993

Re: Technical Assistance Advisement 93(C)2-029
Intangible Tax; Property Subject to Tax - Accounts
Receivable - Taxable Situs
Section 199.175, F.S.
XXX (Company)

Dear :

Your letter requesting a Technical Assistance Advisement
has been referred to this office for response.

The question posed for consideration is:

Will a non-Florida corporation having sales representatives
contacting customers, at the customer's location within
Florida, subject the accounts receivable arising out of
that contact to the Florida intangible tax?

Provisions of Law

Section 199.175, F.S., states in pertinent part:

"(2) Intangible personal property shall have a taxable
situs in this state when it is deemed to have a business
situs in this state and it is owned, managed, or controlled
by a person transacting business in this state, even though
the owner may claim a domicile elsewhere. This provision
shall apply regardless of where the intangible is created,
approved, or paid.
"(a) Intangibles shall be deemed to have a Florida business
situs when they receive the benefit and protection of
Florida laws and courts and they are derived from, arise
out of, or are issued in connection with the business
transacted in this state. For the purpose of this
paragraph:
"2. Business is transacted in this state when any
occupation, profession, or commercial activity, including

financing, leasing, selling, or servicing is regularly
conducted with customers in this state by or through
agents, employees, or representatives of any kind in this
state, whether or not such persons are vested with
discretionary authority."

Discussion of Law

It is Company's position that it has no taxable situs in
Florida, even though its representatives call on Florida
customers at the customers' Florida locations. It is further
the contention that the provisions of the Commerce Clause as
applied in the Complete Auto Transit v. Brady, 430 U.S. 274,
case are not met, and therefore, no intangible tax is due on the
intangible property arising out of the Florida business
activity.

In response to company's position; Florida's intangible tax
is an ad valorem property tax applying specifically to
intangible personal property. The Complete Auto Transit v.
Brady, supra, case dealt only with the application of a
corporate income or franchise tax measured by income. The
courts to date have chosen not to apply the provisions of the
commerce clause to ad valorem property tax. Next, not only do
the representatives of Company make regular trips to Florida (at
least two a year) but your accounts receivable must be enforced
in Florida. No other jurisdiction can effect a claim against a
person or property located in Florida other than the Florida
courts.

Conclusion

It is therefore the opinion of this office that the
accounts receivable arising out of the business conducted by
Company's representative in Florida are subject to Florida's
intangible tax.

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,

J.V. Parramore, Jr.
Tax Law Specialist
Technical Assistance

JVP/mh