Did Florida beneficiaries or out-of-state trustees owe Florida intangible personal property tax on discretionary irrevocable trusts without Florida situs?

Plain-English summary

The trusts were not subject to Florida intangible personal property tax, and neither the trustees nor the beneficiaries had to file a Florida return for them.

The beneficiaries lived in Florida, but the trustees lived outside Florida, had no Florida office, and held full discretion over distributions of trust income and principal. The ruling found no taxable trust situs or taxable beneficial interest on those facts.

What this means for you

A beneficiary's Florida residence alone did not make these discretionary trusts taxable. The ruling focused on trust situs, trustee location, and the beneficiary's enforceable rights.

Common questions

Q: Did the out-of-state trustees owe Florida intangible tax?
A: No, so long as they remained nonresidents and the assets had no Florida situs.

Q: Did the Florida beneficiaries owe the tax?
A: No.

Q: Did anyone have to file a Florida intangible-tax return for the trusts?
A: No.

Citations and references

• Fla. Stat. § 199.023 — beneficial interests in trusts
• Fla. Admin. Code r. 12C-2.002(1) — trust situs and taxable beneficial interests
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95C2-008

Original ruling text

Feb 08, 1995

Re: Technical Assistance Advisement No. 95(C)2-008
Intangible Personal Property Tax - Irrevocable Trust
Agreements
XXX (Trusts)
XXX (Beneficiaries)
XXX (Trustees)

Dear :

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

Facts

The Beneficiaries of the Trusts, are residents of the State
of Florida. The Trustees of the Trusts are out-of-state
residents with no office in Florida. Full discretion for
distributions of income and principal of the Trusts has been
granted to the Trustees.

Requested Advisement

1. The Trustees of the Trusts will have no liability for
   the Florida intangible personal property tax so long
   as the Trustees are not Florida residents and the
   assets of the Trusts have no Florida situs; and
2. The Beneficiaries of the Trusts will have no liability
   for the Florida intangible personal property tax with
   respect to intangible assets owned by the Trusts.

Discussion and Law

Rule 12C-2.002(1)(ee), F.A.C., provides that a trust having
a taxable situs in Florida is primarily taxable to the trustee.
A beneficiary, having a taxable beneficial interest, where there
is no Florida trustee, is responsible for filing an intangible
tax return for the taxable trust assets.

A beneficial interest in a trust is defined in s. 199.023,
F.S., and Rule 12C-2.002(1), F.A.C., as one or more valuable
property rights in a trust. A taxable beneficial interest in a
trust is the current right to income coupled with: The right to
invade the corpus of the trust; or the right to revoke the
trust; or the right to appoint successor beneficiaries without
limitation.

Conclusion

Based upon statutory provisions and the information
furnished in your request, the Trusts would not be subject to
the intangible personal property tax in Florida. Therefore,
neither the Trustees nor the Beneficiaries would be required to
file a Florida intangible personal property tax return for the
Trusts.

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