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