Did two out-of-state partnerships and their corporate general partner have Florida intangible-tax situs when their Florida-resident owner made investment decisions?

Plain-English summary

The two out-of-state partnerships and their corporate general partner had no taxable situs in Florida under the facts presented.

Although a Florida-resident individual made investment decisions as an officer of the corporation, the corporation and partnerships carried out those decisions and their other operations at their offices outside Florida.

The resident individual still had to file an intangible-tax return and report his stock in the corporation. The individuals' limited-partnership interests were exempt because the partnerships were not registered with the Securities and Exchange Commission.

What this means for you

The ruling distinguished the entities' own situs from the Florida resident's separately owned property. Where entity operations occurred determined the entities' result, while Florida residence required the individual to report taxable intangible property such as corporate stock.

Common questions

Q: Did making investment decisions from Florida create Florida situs for the entities? A: No, because the corporation and partnerships carried out those decisions and all other operations at their out-of-state offices.

Q: Did the Florida resident have a filing obligation? A: Yes. Individual A had to report his stock in the corporation.

Q: Were the limited-partnership interests taxable? A: No. The ruling said limited interests in partnerships not registered with the SEC were exempt.

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 95C2-022

Original ruling text

Jul 25, 1995

Re: Technical Assistance Advisement 95(C)2-022 Intangible Tax; Taxable Situs XXX (Individual A) XXX (Individual B) XXX (Partnership A) XXX (Partnership B) XXX (Corporation)

Dear :

Your letter requesting technical advice on the taxability of non-Florida partnerships, 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 is the sole shareholder of Corporation. Individual A and several trusts, for the benefit of Individual A's family members, established Partnership A in a state other than Florida. Individual A, Individual B and Corporation formed Partnership B in a state other than Florida. Corporation is the sole general partner of Partnership A and B. Corporation was incorporated in a state other than Florida. Individuals A & B and the trusts are limited partners. The individual limited partners are both residents of Florida. Partnerships A and B maintain office space in the state of their creation where they receive mail and maintain their books and records. Copies of their mail may be sent to Individual A. Individual A, as an officer of Corporation, will make decisions for Partnership. These decisions will be effected by agents of the Partnerships outside of Florida. All other operations of Corporation and the Partnerships will be accomplished at each entity's office outside Florida.

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

1.) Neither Partnership A or B nor Corporation is commercially domiciled on Florida, and, therefore neither Partnership A or B 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 interests in the Partnerships owned by Individual A, Individual B and the trust are exempt from Intangible Personal Property Tax.

Based upon the information provided, Corporation and the Partnerships 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 Partnerships, 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 the Individuals' interest in the Partnerships 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 the 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

JVP/mh