Under Florida's 1996 intangible tax, did an out-of-state corporation or partnership file when Florida owners made investment decisions?

Plain-English summary

Florida required no intangible-tax return from the out-of-state corporation or limited partnership when their operations were carried out at their non-Florida office.

Two Florida residents formed the entities for estate planning. One resident served as president and sole shareholder of the corporate general partner, but corporate and partnership decisions were implemented outside Florida, where the entities kept offices, mail, books, records, and bank accounts.

The residents' partnership interests were exempt because the limited partnership was not registered under the Securities Act of 1933. The resident shareholder still had to report the value of his stock in the corporate general partner.

What this means for you

• Entity operations and decision implementation outside Florida prevented taxable situs.
• The partnership-interest exemption did not extend to corporation stock.
• The ruling treated general and limited partnership interests as exempt on these facts.

Common questions

Q: Did the corporation or partnership file a Florida return? A: No.

Q: Were the residents' partnership interests taxable? A: No.

Q: Was the resident's corporation stock taxable? A: Yes.

Citations and references

• Fla. Stat. § 199.175(1) — Florida taxable situs
• Fla. Stat. § 199.185(1)(c) — partnership-interest exemption
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96C2-009

Original ruling text

Feb 05, 1996

Re: Technical Assistance Advisement No. 96(C)2-009 Intangible Personal Property Tax; Filing Requirements XXX (Individual A and Individual B) XXX (Corporation) XXX (Partnership)

Dear :

This is in response to your request for a technical assistance advisement regarding the taxability of Individual A and Individual B, Partnership and Corporation.

Facts

For estate planning purposes, Individual A and Individual B, both Florida residents, will establish Corporation, and it and Individual A and Individual B will establish Partnership. Both Corporation and Partnership will be established outside of Florida. Corporation will be the sole general partner of Partnership. Individual A will be the sole shareholder and President of Corporation. Partnership interest will not be required to be registered pursuant to the Securities Act of 1933.

Corporation will control Partnership as its sole general partner. The limited partners of Partnership will be Individual A and Individual B. The assets of Partnership will include, but not be limited to, stocks and bonds issued by various publiclytraded corporations, as well as bonds issued by various state and local governments. The Partnership will own approximately sixty percent of all outstanding stock in a publicly-traded corporation, which is at the present owned by Individual A and Individual B.

Partnership and Corporation will lease office space in a state other than Florida where they will receive mail and maintain their books and records and bank accounts. Decisions

affecting the Partnership and Corporation will be made by the officers or directors of Corporation outside of Florida.

Rulings Requested

1. Neither Partnership nor Corporation will be
   commercially domiciled in Florida or transacting business 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 the Corporation that serves as the general partner on his Florida intangible personal property tax return. The partnership interests in Partnership are exempt from tax.

Discussion and Law

Neither Partnership nor Corporation has 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 actions of Corporation and Partnership are carried out at the principal place of business for these entities.

Section 199.175(1), F.S., provides that intangible personal property shall have a taxable situs in this state when it is owned, managed, or controlled by any person domiciled in this state on January 1 of the tax year. As provided in s. 199.185(1)(c), F.S., any interest as a partner in a partnership, either general or limited, other than any interest as a limited partner in a limited partnership registered with the Securities and Exchange Commission pursuant to the Securities Act of 1933, is exempt from intangible tax in Florida.

Conclusion

Based upon statutory provisions and the information provided in your letter, the rulings requested are answered in the affirmative.

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
Senior Tax Specialist
Tax Policy and Dispute Resolution
Office of General Counsel

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