What did Florida's original, later-revised response say about receivables sold among non-Florida subsidiaries before January 1?

Plain-English summary

This original response found no tax on the receivables and allowed consolidated-return elimination of the notes, but the source expressly marks the response as revised and nonbinding.

Two subsidiaries sold receivables before January 1 to another subsidiary with no Florida commercial domicile. The sellers retained only ministerial duties and later repurchased the receivables by canceling the notes.

The writer said the sellers did not own the receivables on January 1, the buyer had no liability if it lacked Florida commercial domicile, and the affiliate notes could be eliminated on a consolidated return. The document's closing, however, says it is not an official Department opinion, and its status line directs readers to revised TAA 96C2-052R.

What this means for you

• The stated holding belongs to the original, superseded response.
• The document itself disclaims binding Department status.
• Do not rely on it without reviewing the revision and current law.

Common questions

Q: What did the original response conclude? A: No receivables tax for the sellers or qualifying out-of-state buyer, and note elimination on a consolidated return.

Q: Was this response binding?
A: No, according to its own closing.

Citations and references

• Fla. Stat. § 199.032 — annual intangible tax
• Fla. Stat. § 199.052(10) — intercompany-account elimination
• Fla. Stat. § 199.175 — taxable situs

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96C2-052

Original ruling text

Status: See TAA 96(C)2-052R (Revised) Dated May 3, 1996

Apr 25, 1996

Re: Technical Assistance Advisement No. 96(C)2-052 Intangible Personal Property Tax Sales of Accounts Receivable to Foreign Subsidiary XXX (Taxpayer) XXX (Subsidiary 1) XXX (Subsidiary 2) XXX (Subsidiary 3)

Dear :

This is in response to your request for a Technical Assistance Advisement regarding the sale of accounts receivables between interrelated corporations.

Statement of Facts

The Taxpayer is a holding company and has subsidiaries, two of which have locations in Florida. Neither subsidiary is commercially domiciled in this State.

Prior to January 1, 1996, the two subsidiaries sold their receivables to a third subsidiary, which also has no commercial domicile in this State. Promissory notes were executed and delivered outside the State in exchange for the receivables. The two subsidiaries performed only ministerial duties with regard to these receivables but retained no control or management over the intangibles. After January 2, 1996, the subsidiaries repurchased the receivables in consideration for the cancellation of the promissory notes.

Provision of the Law

Section 199.032, F.S., imposes intangible tax on intangible personal property which has a taxable situs in this State on January 1 of each year. Section 199.175, F.S., provides that

intangible personal property has a taxable situs in this State when it is owned, managed, or controlled by any person domiciled in this State. A business entity having its principal office and executive operations in this State is considered to have commercial domicile in Florida.

Regarding the taxability of the notes, s. 199.052 (10), F.S., provides that intercompany accounts, including notes between affiliates, are not subject to tax when the affiliated group of corporations elects to file a consolidated intangible tax return.

Conclusion

The two subsidiaries which sold their receivables would not be liable for the intangible tax, because they did not own the receivables on January 1 of the tax year. The subsidiary which purchased the receivables prior to January 1, would also not be subject to tax provided it had no commercial domicile in this State. Finally, regarding the taxability of the notes, if the group of corporation elects to file a consolidated intangible tax return, the notes between the affiliates would not be subject to tax and would be eliminated as an intercompany account.

This response is based upon the facts and circumstances of your specific situation as presented and is not an official statement or opinion of this Department but, instead, represents the opinion of the writer. If you wish an official binding statement on these issues, you may file a written request for a Technical Assistance Advisement by following the provisions of the Department's Rule 12-11, F.A.C., a copy of which is enclosed. The request for Technical Assistance Advisement should be sent to the Office of General Counsel, Tax Policy and Dispute Resolution, Department of Revenue, P.O. Box 7443, Tallahassee, Florida 32314-7443.

If you have further questions with regard to this matter and wish to discuss them, you may contact Tax Policy and Dispute Resolution, (904) 487-1283. If you have specific questions and would like a written response, the request should be addressed

to the Office of General Counsel, Tax Policy and Dispute Resolution, Department of Revenue, P.O. Box 7443, Tallahassee, Florida 32314-7443.

Sincerely,

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

CG/mh