Who had to report consignment-auction accounts receivable for Florida's annual intangible tax?

Subject

Accounts Receivable

Plain-English summary

Each consignor was primarily responsible for reporting the outstanding January 1 accounts receivable, and the auction company could become liable if a consignor failed to report and pay the annual intangible tax. The Department reached that result for Florida-domiciled and out-of-state consignors alike under the described agency arrangement.

The auction company approved credit, made sales, collected all purchaser payments, and maintained separate consignor accounts. Those facts gave it management and control of the receivables in Florida and created the taxable situs described in the ruling.

What this means for you

This is historical guidance tied to the intangible-tax provisions quoted in 1994. Its practical point is that an agent's control over receivables could create both a Florida reporting connection for the principal and secondary payment responsibility for the agent.

Common questions

Who had the first duty to report the receivables? The consignor, as principal.

Did the rule cover consignors outside Florida? Yes, where the Florida auction company managed the outstanding receivables for them under the described contract.

When could the auction company owe the tax? If a consignor failed to report and pay the tax on receivables the company held or managed as agent.

Citations and references

• Fla. Stat. §§ 199.052, 199.175, and 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94C2-016

Original ruling text

Aug 08, 1994

Re: Technical Assistance Advisement No. 94(C)2-016
Intangible Tax - Accounts Receivable
XXX (Sales Company)

Dear :

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

Statement of Facts

Sales Company is engaged in the business of auctioning
goods delivered to it on consignment. The consignor appoints
Sales Company as its agent for the purpose of selling the goods
delivered for sale. Sales Company established a separate
account for each consignor. By agreement each consignor allows
the deduction of all monies owed to Sales Company from the
consignor's account with Sales Company. All monies owed for the
purchase of goods sold by Sales Company are to be paid only to
Sales Company. Payments made to any other person, including
consignor, will not be in satisfaction of the debt owed to Sales
Company by the purchaser of the consigned goods. Sales Company
is also authorized to extend credit to purchasers approved for
credit prior to an auction sale.

Provisions of Law

Section 199.052, F.S., states that every person, regardless
of domicile, who owns, manages or controls intangible property
that has a taxable situs in this state must file an intangible
tax return. Subsection (9) of this section states that where an
agent has management or control of intangible property in this
state the principal is primarily responsible for returning the
property for taxation and paying the tax. If a principal fails
to pay the tax on the intangible property controlled or managed
by the agent, the agent must pay the annual intangible tax due
on the property.

Section 199.175, F.S., provides that taxable situs for
intangible property is in Florida when the property is owned by
a legal resident of this state, a corporation that is
commercially domiciled in this state or a person having
employees, agents or representatives of any kind in this state.

Discussion of Law

This office has examined the "Consignor's Contract"
provided with the request for technical advice. Based upon the
conditions of the "Consignors' Contract" Sales Company is
appointed as agent for the consignor for the purpose of selling
the goods delivered for auction. Sales Company acting as agent
for the consignor approves credit, makes sales and receives all
payments of monies owed, thereby making the accounts receivable
outstanding on January 1 of each tax year subject to the
intangible tax.

All consignors that are domiciled in Florida must include
their accounts receivable on their Florida intangible tax
returns. Consignors that are not domiciled in Florida must also
file an intangible tax return reporting the outstanding balance
of accounts receivable held for them by Sales Company on January
1 of each tax year. Further, should it be determined that any
consignor fails or has failed to report and pay the intangible
tax on any outstanding account receivable held in its name by
Sales Company, as agent for the consignor, is liable for the
payment of the intangible tax due on the outstanding balance of
the accounts receivable.

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