Did a Wisconsin corporation have Florida tax nexus when its president controlled the business from a company-equipped Florida home office?

Subject

Nexus

Plain-English summary

The Wisconsin corporation had Florida corporate-income-tax nexus while its president and board chair controlled the business from Florida. The executive set policy, handled financing, made day-to-day decisions about products, equipment, and facilities, and worked from a home office equipped and maintained by the corporation.

The corporation had Florida property through that office equipment, Florida payroll through the executive's salary, Florida sales, and customer visits by the executive. The Department required corporate returns for the years the Florida resident controlled the corporation.

The corporation also owed the historical annual intangible personal property tax on receivables arising from business transacted in Florida with Florida customers.

What this means for you

A senior executive's home office was not treated as incidental remote work. Company-owned equipment plus substantive control and customer activity created in-state business presence.

Common questions

Q: Did the corporation need a separately rented Florida office? No. The company-equipped home office was part of the nexus finding.

Q: Did executive decision-making matter? Yes. The ruling emphasized policy, financing, daily operations, and capital decisions made from Florida.

Q: Which receivables were subject to the historical intangible tax? Receivables arising from Florida business with Florida customers.

Citations and references

• Fla. Stat. ch. 220 — corporate income and emergency excise taxes
• Fla. Admin. Code r. 12C-1.003(5) — doing business
• Fla. Stat. § 199.175(2) — Florida business situs of intangible property
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93M-006

Original ruling text

Sep 21, 1993

Re: Technical Assistance Advisement - 93(M)-006
Corporate Income Tax - Florida Nexus
Chapter 220, F.S.
Intangible Personal Property Tax - Taxable Situs
Section 199.175(2), F.S.

Your request for a Technical Assistance Advisement has been
referred to this office for response. The specific request is
for technical advice on whether Corp. should file Florida
Corporation Income Tax Returns based on the following facts.

Statement of Facts

Corp. was incorporated in the State of Wisconsin in 1951.
During the years 1988-1991, Employee worked for Corp. as
president and later chairman of the board. Employee controls
Corp. from Florida using telephone and fax equipment. Employee
is heavily involved in setting policies, handling financing and
making day-to-day decisions. Employee attends three or four
board of directors meetings each year in Wisconsin. Employee
makes decisions as to product development, equipment purchases,
building improvements and additions. The minutes of those
meetings attest to Employee's extensive involvement in Corp.
Employee's salary is used as the payroll factor in apportioning
income to Florida.

Employee maintains an office in his Florida home. The
office is adequately equipped with a copy machine, fax machine,
files, etc. Employee does not charge Corp. rent for office
space. All equipment is owned and maintained by the Corp. The
furniture/ equipment is the property factor used in apportioning
income to Florida.

Corp. does not maintain inventory in Florida. Sales are
shipped to Florida customers from the Wisconsin operation.
Employee is involved in visiting Florida customers with the
respective sales representative for this area. The sales to

Florida customers is the sales factor used in apportioning
income to Florida.

Corp. is not currently under audit by this Department or
the Internal Revenue Service.

Corporate Income Tax

Based on the information that you have provided us., Corp.
is subject to Florida Corporate Income Tax. Rule 12C-1.003(5),
F.A.C, defines "doing business" as actively engaging in any
transaction for the purpose of financial gain. A taxpayer will
be considered doing business within and without the state if it
has income from business activity which is taxable both within
and without Florida. Income derived from or attributable to
sources within Florida includes income from tangible or
intangible property located or having a situs in Florida and
income from any activities carried on in Florida, regardless of
whether carried on in intrastate, interstate, or foreign
commerce.

Taxpayer has both property and payroll in Florida so that
sales to Florida customers are properly includible in the
numerator of the sales factor. Based on the facts presented, we
have determined that the physical presence of the office
equipment, owned by Corp. and used by Employee in Florida, in
conjunction with the fact that Employee controls Corp. from this
state are sufficient activities to create nexus for Corp. in
this state, and Corp., therefore, is required to file returns
during the years when Employee was in control of Corp. while a
resident of this state.

Intangible Tax

Section 199.175(2), F.S., provides that intangible personal
property shall have taxable situs in this state when it is
deemed to have business situs in this state. Intangibles shall
be deemed to have a Florida business situs when business is
transacted in this state, with customers in this state, from an
office, plant, home, or any other business location or by
agents, employees, or representatives of any kind in this state.

Based upon the statutory provisions and the information
presented, Corp. is subject to the annual intangible tax on all
receivables arising out of the business transacted in Florida
with Florida customers.

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.

Pursuant to your Statement Regarding Deletion of Private or
Confidential Information, the names, addresses, and taxpayer
identifying numbers will be deleted from the public records.

Sincerely,

Lynwood Taylor
Tax Audit Specialist III
Technical Assistance Section B

Nadine C. Posey
Tax Audit Specialist III
Technical Assistance Section C

LT/NCP/tb