Were patents, copyrights, trademarks, trade secrets, trade names, and service marks managed by a Florida subsidiary subject to Florida intangible tax?

Plain-English summary

The listed intellectual-property rights were not subject to Florida intangible tax.

The Florida subsidiary owned and managed patents, copyrights, trade secrets, manufacturing processes, and related rights. The Department viewed patents, copyrights, trademarks, trade secrets, trade names, and service marks as government-granted privileges so closely related to franchises that they fell outside the tax under the cited franchise exemption analysis.

What this means for you

The holding addressed the intellectual-property rights themselves. Although the requester also asked about royalties and license fees, the published response did not separately decide those items.

Common questions

Q: Were the listed intellectual-property rights taxable?
A: No.

Q: Did Florida compare them to franchises?
A: Yes.

Q: Did the ruling expressly exempt royalties and license fees?
A: No separate answer appears in the published text.

Citations and references

• Fla. Stat. § 199.185(1)(b) — franchise exemption
• Fla. Stat. ch. 199 — intangible personal property tax
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95C2-003

Original ruling text

Jan 19, 1995

Re: Technical Assistance Advisement No. 95(C)2-003
Intangible Tax - Exemption - Intellectual Property
Section 199.185(1)(b), F.S.
XXX (Parent)
XXX (Technologies)

Dear :

Your letter requesting a Technical Assistance Advisement
has been referred to this office for response. Your specific
request asked that it be determined that neither the
intellectual property nor the royalties or license fees be held
subject to the intangible tax.

Technologies owns and manages Parent's patents, copyrights
and associated intellectual property including such items as
trade secrets and manufacturing processes (the intellectual
property). Technologies will be domiciled in Florida. From this
location Technologies will license the use of the intellectual
property to Parent and affiliates as well as unrelated third
parties.

Section 199.185(1)(b), F.S., grants an exemption from tax
to franchises. A franchise is defined in Black's Law Dictionary
as "A privilege conferred by government on individual or
corporation, and which does not belong to citizens of the
country generally of common right.... A privilege granted or
sold, such as to use a name or to sell products or services.
The right given by a manufacturer or supplier to a retailer to
use his product and name on terms and conditions mutually agreed
upon.

"In its simplest terms, a franchise is a license from owner
of a patent, copyright, trademark, trade secret or trade name
permitting another to sell a product or service under that name
or mark."

Franchises, patents, copyrights, trademarks, trade secrets,
trade names, and service marks are special privileges granted by
the government to an individual or corporation. Each represents
a special right reserved to an individual or business by the
government. These rights and privileges granted by the
Government to the holders of patents, copyrights, trademarks,
trade secrets, trade names and service marks are so closely
related to franchises they are almost indistinguishable. As a
result, these items have not been subjected to the intangible
tax in the past and are not subject to the intangible tax under
the current provisions of Ch. 199, F.S.

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