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