Did an out-of-state partnership and corporate general partner have to file Florida intangible-tax returns when a Florida resident made their investment decisions?

Plain-English summary

The out-of-state partnership and corporate general partner did not have to file Florida intangible-tax returns under the facts presented.

Although one Florida resident made investment decisions as an officer of the corporate general partner, agents carried out those decisions outside Florida and all entity operations occurred at the entities' out-of-state offices. The Department found no Florida taxable situs for the partnership or corporation.

The Florida resident still had to file and report his stock in the corporation. The two residents' limited-partnership interests were exempt because the partnership was not registered with the SEC.

What this means for you

The ruling separated entity situs from the resident owner's own filing obligation. Out-of-state entity operations supported the entities' result, but Florida residence still required reporting taxable property owned personally.

Common questions

Q: Did the Florida-based investment decisions create entity situs? A: No, because the decisions and other operations were carried out at the entities' out-of-state offices.

Q: Did the resident shareholder have to file? A: Yes. Individual A had to report his stock in the corporation.

Q: Were the limited-partnership interests taxable? A: No. The partnership was not registered with the SEC.

Citations and references

• Fla. Stat. § 199.052 — resident intangible-property return
• Fla. Stat. § 199.042 — payment with return
• Fla. Stat. § 199.185(1)(c) — limited-partnership-interest exemption
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95C2-020

Original ruling text

Jul 12, 1995

Re: Technical Assistance Advisement 95(C)2-020 Intangible Tax; Filing Florida Intangible Personal Property Tax Returns XXX (Individual A) XXX (Individual B) XXX (Partnership) XXX (Corporation)

Dear :

Your letter requesting technical advice on the taxability of a non-Florida partnership, having its principal place of business in the state of its creation, has been received and examined by this office.

The information presented for consideration is restated as follows:

Individual A established Corporation. Individual A, Individual B and Corporation formed Partnership in a state other than Florida. Corporation is the sole general partner of Partnership. Corporation was incorporated in a state other than Florida. Individuals A & B are limited partners. The limited partners are both residents of Florida. Partnership maintains an office in the state of its creation where it receives mail and maintains its books and records. Partnership will send copies of its mail to Individual A, including brokerage account information. Individual A, as an officer of Corporation, will make investment decisions for Partnership. These investment decisions will be effected by agents of Partnership outside of Florida. All other operations of Corporation and Partnership will be accomplished at each entity's office outside Florida.

Based upon the information above the three rulings have been requested:

1.) Neither Partnership nor Corporation is commercially domiciled in Florida, and, therefore neither Partnership nor Corporation will be required to file a Florida Intangible Personal Property Tax Return. 2.) Individual A will be required to report the value of his stock in Corporation on his Intangible Personal Property Tax Return. 3.) The partnership interest in Partnership owned by Individual A and Individual B are exempt from Intangible Personal Property Tax.

Based upon the information provided Corporation and Partnership have no taxable situs in Florida. Even though Individual A makes decisions about investments as the officer of Corporation, which in turn makes investments as the general partner of Partnership, the action of Corporation and Partnership is carried out at the principal place of business for these entities.

Section 199.052, F.S., requires that every resident of this state that owns intangible property shall file a return and list all taxable intangible property owned by the resident. The payment of tax must accompany the return when filed. (See s. 199.042, F.S.) Individual A, a resident of Florida, must file an intangible tax return and list all taxable intangible property owned by him, including the stock of Corporation.

As for Individual A's interest in Partnership, there is no intangible tax due on this interest. Only an interest as a limited partner in a limited partnership, registered with the Securities and Exchange Commission (SEC), is subject to tax. Limited partnership interests in limited partnerships not registered with the SEC are exempt from the intangible tax. (See s. 199.185(1)(c), F.S.)

In summary, Corporation and Partnership are not subject to the intangible tax. Individual A will be required to report the stock he owns of Corporation. His investment, as well as Individuals B's interest in Partnership is not subject to the intangible tax.

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

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