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