Did Florida's historical intangible tax apply to foreign-situs trusts or their Florida-resident ten-year income beneficiaries?

Subject

Taxation of Trusts

Plain-English summary

Florida concluded that the foreign-situs trusts were not subject to the historical intangible tax. The taxpayers had become Florida residents and held ten-year income interests, with the trust assets reverting to their respective estates if either died during that period, but the Department found no filing liability for the taxpayers or the nonresident trustee.

The cited statute treated a Florida resident as having a taxable beneficial interest only when a vested interest included at least a current income right and either a power to revoke the trust or a qualifying general power of appointment.

What this means for you

For this historical tax, Florida residence and a current trust-income interest were not the only statutory elements. The specific beneficiary powers and foreign situs mattered to the filing result.

Common questions

Did becoming a Florida resident automatically create tax liability? No, not under the trust interests described.

Was a current right to income the complete test? No. The statutory definition also required either revocation power or a qualifying general power of appointment.

Did the nonresident trustee have to file? No. The ruling concluded that neither the taxpayers nor the trustee was liable for a return.

Citations and references

• Fla. Stat. §§ 199.023(7), 199.052(6), and 213.22
• 26 U.S.C. § 2041(b)(1)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94C2-007

Original ruling text

Mar 30, 1994

Re: Technical Assistance Advisement No. 94(C)2-007
Florida Intangible Personal Property Tax; Taxation of
Trusts
XXX (Taxpayers)
XXX (Trusts)
XXX (Trustee)

Dear :

This is in response to your recent request for a technical
assistance advisement.

Facts

The Taxpayers were nonresidents of this state at the time
of the creation of the Trusts, but subsequently became residents
during 1990 and are income beneficiaries for 10 years. If
either dies before that time expires, the assets of the trusts
revert to their respective estate. The Trustee is not a
resident of Florida.

Requested Advisement

Are the Trusts or the Taxpayers subject to the Florida
intangible tax on the assets of the Trusts?

Discussion and Law

Section 199.052(6), F.S., provides that each Florida
resident with a beneficial interest in a foreign-situs trust is
primarily responsible for returning the resident's equitable
share of the trust's intangible personal property and paying the
annual tax on it. Section 199.023(7), F.S., says that a
resident has a "beneficial interest" in a foreign trust if the
resident has a vested interest, even if subject to divestment,
which includes at least a current right to income and either a
power to revoke the trust or a general power of appointment, as

defined in 26 U.S.C. s. 2041(b)(1).

Conclusion

Based upon the statutory provisions and the information in
your letter, the Trusts are not subject to intangible tax in
Florida. Therefore, neither the Taxpayers nor the Trustee would
be liable for filing an intangible tax return.

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
Tax Audit Specialist III
Technical Assistance

NCP/mh