Did a Nevada corporation and partnership acquire Florida intangible-tax situs because Florida residents owned interests and performed some ministerial functions?

Plain-English summary

Florida found no intangible-tax situs and no return requirement for the Nevada corporation or partnership.

A Florida resident was the corporation's sole shareholder and president, and Florida residents were the partnership's initial limited partners. But both entities kept their offices, primary records, bank accounts, and a paid employee in Nevada. Their formal meetings and business activities occurred outside Florida.

Some ministerial work could occur in Florida, copies of partnership mail could be sent to the corporate president there, and the Florida residents held ownership interests. The entities nevertheless had no Florida office or employee and did not regularly finance, lease, sell, or service customers in Florida.

Because the entities neither transacted Florida business nor held intangibles with Florida business situs, the Department concluded that neither owed intangible tax or had to file a return.

What this means for you

• Florida-resident ownership alone did not create entity-level situs.
• Primary offices, records, bank accounts, employees, meetings, and operations outside Florida supported the result.
• Ministerial activity in Florida was not treated as regular business with Florida customers on these facts.

Common questions

Q: Did the entities owe Florida intangible tax?
A: No.

Q: Did they have to file intangible-tax returns?
A: No.

Q: Did Florida-resident owners change the conclusion?
A: No, given the entities' separate out-of-state operations and lack of Florida business activity.

Citations and references

• Fla. Stat. § 199.052 — intangible-tax return requirement
• Fla. Stat. § 199.175(2) — business situs of intangible property owned by out-of-state entities
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96C2-072

Original ruling text

Jul 30, 1996

Re: Technical Assistance Advisement No. 96(C)2-072
Intangible Tax - Taxable Situs
Sections 199.052 & 199.175, F.S.
XXX (Hereinafter "Corporation")
XXX (Hereinafter "Partnership")

Dear :

The letter dated March 18, 1996, requesting a Technical
Assistance Advisement and the requested supporting information
in the letter dated April 29, 1996, have been received by this
office. The request deals with the taxation of a foreign
corporation and partnership.

ISSUE

For purposes of Florida's intangible personal property tax:

1) Are Corporation or Partnership subject to this tax?
2) Is an intangible tax return due the State by either
Corporation or Partnership?

STATEMENT OF FACTS

The facts that you have provided to the Department are as
follows:

A Florida resident established a Nevada Corporation, and
the Corporation and other individuals created a Nevada
Partnership. The Florida resident incorporating Corporation is
the sole shareholder and president of Corporation.

Corporation maintains its only office in Nevada where it
leases space and maintains its books and records and bank
account. It employs an employee resident in Nevada to assist it
in running the affairs of Corporation and Partnership.
Corporation does not have an office in Florida. Decisions

affecting Corporation will be made by its officers or directors.
All formal officer and director meetings will be held outside of
Florida; however, certain ministerial functions may occur in
Florida. Finally, Corporation will not conduct financing,
leasing, selling or servicing activities with customers in
Florida.

Partnership is registered with the Nevada Secretary of
State. The Partnership interests are not required to register
pursuant to the Securities Act of 1933. Corporation is the sole
general partner of Partnership. The initial limited partners of
Partnership are Florida residents.

Partnership leases office space in Nevada where it receives
mail and maintains its books and records. Although copies of
Partnership's mail may be sent to the President of the corporate
general partner in Florida, all Partnership's primary books and
records will be kept at its Nevada office. Further, Partnership
utilizes services of an employee resident in Nevada as well as
maintaining its bank account with a Nevada bank. The
Partnership does not maintain an office in Florida. All formal
officer and director meetings will be held outside of Florida.
No formal Partnership meetings will occur in Florida, although
certain ministerial functions concerning the Partnership may be
performed here.

DISCUSSION OF LAW

Section 199.052, Florida Statutes (1995), requires a return
to be filed by every corporation authorized to do business in
this State or doing business in this State and by every
resident, regardless of domicile, who on January 1 owns,
controls, or manages intangible personal property which has a
taxable situs in this State.

Since neither the Corporation nor Partnership are domiciled
in Florida, the critical question in this request is whether the
intangible assets of Corporation or Partnership have a taxable
situs in Florida. Subsection 199.175(2), Florida Statutes
(1995), provides for a two part test to determine the taxable
situs of intangible personal property of corporations and

partnerships domiciled outside of Florida. Specifically, the
intangible personal property will have a taxable situs in this
state when it (1) is deemed to have a business situs in this
state and (2) is owned, managed, or controlled by a corporation
or partnership transacting business in this state.

Paragraph 199.175(2)(a), Florida Statutes (1995), provides:

Intangibles shall be deemed to have a Florida business
situs 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 the business
transacted in this state with a customer in this state.
For purposes of this paragraph:

1. Business is transacted in this state when any
   occupation, profession, or commercial activity, including
   financing, leasing, selling, or servicing activities, is
   regularly conducted with customers in this state from an
   office, plant, home, or any other business location in this
   state.
2. Business is transacted in this state when any
   occupation, profession, or commercial activity, including
   financing, leasing, selling, or servicing activities, is
   regularly conducted with customers in this state by or
   through agents, employees, or representatives of any kind
   in this state, whether or not such persons are vested with
   discretionary authority.

CONCLUSION

Since the Corporation and Partnership are domiciled
outside of Florida, have no offices or employees in Florida,
conduct their business activities outside the State and do not
otherwise transact business in Florida, the intangible assets of
Corporation and Partnership do not have a taxable situs in
Florida. Therefore, Corporation and Partnership are not subject
to the Florida's intangible tax and are not required to file an
intangible tax return.

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,

Paul J. Munyon
Tax Law Specialist