Did either party owe Florida intangible tax after receivables were sold before January 1 and repurchased after January 2?

Plain-English summary

Florida answered yes to both requested no-liability conclusions for the seller and purchaser.

The seller transferred receivables before January 1, performed only ministerial collection and recordkeeping, and repurchased the assets after January 2. It exercised no management or control while the purchaser owned them. The related note was eliminated as an intercompany receivable on the consolidated return.

What this means for you

• January 1 ownership controlled the seller's result.
• Ministerial servicing did not amount to management or control.
• The purchaser's conclusion depended on the submitted situs facts.

Common questions

Q: Did the seller owe tax on the receivables? A: No.

Q: Did the purchaser owe tax?
A: No, on the stated facts.

Citations and references

• Fla. Stat. § 199.032 — annual intangible tax
• Fla. Stat. § 199.175 — taxable situs
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96C2-053

Original ruling text

Apr 25, 1996

Re: TAA 96(C)2-053
Florida Intangible Tax - Taxable Situs XXX ("Seller") XXX ("Purchaser")

Dear :

Your letter of January 11, 1996, requested a Technical Assistance Advisement on the application of the intangible tax to the above referenced matter. This response to your request constitutes a Technical Assistance Advisement under Chapter 12-11, Florida Administrative Code, and is issued to you under the authority of s. 213.22, Florida Statutes.

Facts

On December 29, 1995, Seller sold its accounts receivable and other intangible property collectively referred to herein as receivables to Purchaser. During the time Purchaser owned the receivables, Seller merely performed ministerial duties with regard to the receivables. These duties included collecting the receivables, remitting the proceeds to Purchaser and maintaining the books and records of the receivables.

Seller did not exercise management or control over the receivables sold to Purchaser. After January 2, 1996 Seller repurchased the receivables from Purchaser in consideration for cancellation of the note receivable and a check for any account collections which were forwarded to Purchaser. Purchaser is included in Seller's consolidated Florida Intangible Tax return, and the promissory note between them will be eliminated from the taxable base as an intercompany receivable.

Requested Advisement

That Seller has no Florida intangible tax liability on the receivables which were sold to Purchaser.

That Purchaser has no Florida intangible tax liability on the receivables which were purchased from Seller.

Discussion and Law

For purposes of the annual tax imposed under s. 199.032, F.S., 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. 199.175, F.S. Further, intangible personal property has taxable situs in this state when it is deemed to have business situs in Florida and it is owned, managed, or controlled by a person transacting business in this state, even though the owner may claim domicile elsewhere. Intangibles shall be deemed to have business situs in Florida when they receive the benefit and protection of Florida laws and courts and they are derived from, arise out of, or are issued in connection with business transacted in this state with a customer in this state.

Conclusion

Based upon statutory provisions and the information provided in your request, the requested advisement is 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 based 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,

Val Poliuto
Senior Tax Specialist
Tax Policy and Dispute Resolution

Control #24463
VJP/kk
Enclosures