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• The stated holding belongs to the original, superseded response.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