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