Under Florida's 1996 intangible tax, did an out-of-state corporation or partnership acquire Florida situs because their Florida owners made investment decisions?

Plain-English summary

Florida found that the out-of-state corporation and limited partnership had no Florida taxable situs under the 1996 intangible-tax rules.

Two Florida residents were limited partners and officers of the corporation that served as general partner. They made some investment decisions, but partnership employees or agents outside Florida carried them out. The entities' day-to-day activities, offices, mail, books, records, and other operations were outside Florida.

The entities therefore had no Florida filing liability on the stated facts. The residents' interests in the non-SEC-registered limited partnership were exempt, but the residents still had to file and report their taxable property, including their stock in the corporation.

What this means for you

• The Department distinguished high-level investment decisions from where day-to-day operations occurred.
• The foreign entities' operational location prevented Florida taxable situs on these facts.
• The partnership-interest exemption did not exempt the residents' corporation stock.

Common questions

Q: Did the corporation or partnership have to file a Florida intangible-tax return?
A: No.

Q: Were the residents' limited-partnership interests taxable?
A: No, because the partnership was not registered with the SEC.

Q: Did the residents still have a filing duty?
A: Yes. They had to report taxable property including their corporation stock.

Citations and references

• Fla. Stat. § 199.052 — return filing for taxable intangible property
• Fla. Stat. § 199.042 — payment with return
• 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 96C2-031

Original ruling text

Mar 29, 1996

Re: Technical Assistance Advisement 96(C)2-031
Intangible Tax; Taxable Situs
XXX (Individual A)
XXX (Individual B)
XXX (Partnership)
XXX (Corporation)

Dear :

Your letter of January 25, 1996, requesting a Technical
Assistance Advisement 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 scenario presented for consideration is summarized below:

FACTS

Individuals A and B established Corporation. Individual A,
Individual B and Corporation formed Partnership in a state other
than Florida. Corporation is the sole general partner of
Partnership. Individuals A & B are the limited partners. The
limited partners are both residents of Florida. Corporation was
incorporated in a state other than 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 Individuals A and B.

Individuals A and B do not conduct the day-to-day
activities of the Partnership. However, Individuals A and B, as
officers of Corporation (the general partner of the
Partnership), will make certain investment decisions for the
Partnership. These decisions will be effected by agents or
employees of the Partnership located outside the State of
Florida. All other operations of Corporation and Partnership
will be accomplished at each entity's office outside Florida.

REQUESTED ADVISEMENT

Based upon the information above, you have requested
technical advice on the following statements:

1.) Neither the Corporation nor the Partnership is
commercially domiciled in Florida, and, accordingly, neither the
Corporation nor the Partnership shall be required to file a
Florida annual intangible tax return.
2.) The partnership interests in the Partnership owned by
Individual A and Individual B are exempt from Florida intangible
personal property tax.

LAW & CONCLUSION

Based upon the information provided, Corporation and the
Partnership have no taxable situs in Florida. Though Individual
A and Individual B make certain investment decisions as the
officers of Corporation, which in turn makes investments as the
general partner of Partnership, the day-to-day activities of the
Corporation and the Partnership are conducted at their principal
places of business located outside Florida.

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 and Individual B, both residents of
Florida, must file an intangible tax return and list all taxable
intangible property owned by them, including the stock of
Corporation.

As for Individual A's and Individual B's interest in the
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 and Individual B are required

to report the stock they own of Corporation. Individual A's and
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,

Moses O. Daramola
Senior Tax Specialist
Tax Policy & Dispute Resolution
Office of General Counsel

MOD/md