Did a Florida bank trustee have to file an intangible-tax return for an irrevocable trust even though the grantor retained the residue and the trust paid no federal income tax?

Plain-English summary

The Florida-domiciled bank trustee had to file an intangible-tax return for all taxable intangible property held by the trust.

The trustee held legal title to the trust assets, making the trust a Florida-situs trust under the Department's analysis. The beneficiary received trust income during life, and the grantor retained a reversionary interest in the remaining corpus and accumulated income after the beneficiary's death.

The trust paid no federal income tax because of that reversionary interest, but the Department said federal income-tax treatment did not exempt the trustee from Florida intangible tax. An exemption belonging to the grantor likewise did not exempt the trust.

What this means for you

The ruling focused on the trustee's Florida domicile and legal title, not on whether the trust itself paid federal income tax or whether the grantor had an exemption.

Common questions

Q: Who had the filing responsibility?
A: The Florida-domiciled bank trustee.

Q: Why did the trust have Florida situs?
A: Its sole trustee was domiciled in Florida and held legal title to the assets.

Q: Did the grantor's reversionary interest eliminate Florida tax?
A: No.

Q: Did the absence of federal income tax exempt the trust?
A: No. The Department treated the federal and Florida tax questions separately.

Citations and references

• Fla. Stat. § 199.052(1), (5) — trustee filing responsibility
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95C2-029

Original ruling text

Nov 09, 1995

Re: Technical Assistance Advisement 95(C)2-029
Intangible Tax; Beneficial Interest In Trust
Section 199.052, F.S.
XXX (Beneficiary)
XXX (Trust)
XXX (Grantor)
XXX (Trustee or Bank)

Dear :

Your letter requesting a Technical Assistance Advisement
has been received by this office. The specific scenario for
which technical advice has been requested is as follows:

Grantor created an irrevocable trust for the benefit of
XXX. Grantor has no control over the Trust, but is to be
advised regarding certain matters relating to management of
the Trust. The income of the Trust is to be paid for the
benefit of the Beneficiary during XXX lifetime. At the
death of the Beneficiary all debts and taxes are to be paid
by the Trust. The Trust residue then reverts to Grantor.

Section 199.052(5), F.S., requires that a trustee of a
Florida situs trust file a return for the trust. The grantor
appointed Bank as the Trustee of Trust for the benefit of
Beneficiary. Trustee has taken legal title to the Trust's
assets. A trustee domiciled in Florida is required by s.
199.052(1), F.S., to pay intangible tax on all taxable
intangible property that it owns, manages, or controls.

Grantor has maintained a reversionary interest in the
Trust. Upon the death of Beneficiary, any remaining trust corpus
and any accumulated income will be distributed to the Grantor.
Based upon this reversionary interest no federal income tax is
paid by Trust. The fact that no federal income taxes are
required to be paid does not serve to exempt the Trustee from
Florida's intangible tax.

From the information available, the Trust is a Florida
situs trust. The sole trustee is domiciled in Florida. The
fact that the grantor of the Trust is exempt from intangible tax
does not exempt the Trust from Florida's intangible tax.
Therefore, it is the opinion of this office that Trustee should
file an intangible tax return for all taxable intangible
property held by Trust.

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
Tax Policy and Dispute Resolution
Office of General Counsel

JVP/mh