Was a federally recognized private foundation exempt from Florida intangible tax?

Subject

Intangible-Tax Exemption for a Charitable Foundation

Plain-English summary

The foundation's intangible personal property was exempt from Florida's annual intangible tax while its federal section 501(c)(3) charitable designation remained effective. Florida's statute defined qualifying charitable institutions to include organizations recognized under that federal provision.

The foundation held its own property, was not claiming another institution's exemption, and irrevocably dedicated its assets to charitable purposes. On termination, principal and income had to pass to other section 501(c)(3) organizations.

What this means for you

The ruling tied the Florida exemption directly to the foundation's continuing federal charitable status and its own ownership of the assets.

Common questions

Q: Did Florida residence of trustees defeat the exemption? No. The foundation itself qualified as charitable.

Q: How long did the exemption last? As long as the federal section 501(c)(3) designation remained effective.

Citations and references

• Fla. Stat. § 199.183(2), (2)(c)2 — nonprofit charitable institution exemption
• Fla. Stat. §§ 199.032, 199.303(2) — annual intangible tax
• I.R.C. §§ 501(c)(3), 509(a) — federal charitable classification
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97C2-010

Original ruling text

Dec 03, 1997

Re: Technical Assistance Advisement No. 97(C)2-010 Intangible Tax - Charitable Institution Sections 199.032, 199.83, 199.303 F.S. XXX Trust

Dear :

Your letter requesting a Technical Assistance Advisement dated August 26, 1997, has been received by this office. The factual scenario for which the response is being written is presented below.

STATEMENT OF FACTS

The Foundation was formed under the laws of New York and is classified as a private foundation within the meaning of s. 509(a) of the Internal Revenue Code ("IRC"). In this regard, the Internal Revenue Service has issued a determination letter dated October 15, 1985, finding that the Foundation is exempt from federal income tax as a charitable organization under s. 501(c)(3) IRC.

The Foundation was established exclusively for charitable, religious, scientific, literary and education purposes within the meaning of s. 501(c)(3) IRC. Two of the three trustees of the Foundation reside in Florida. The Foundation also has an advisory committee that advises it on charitable distributions, most of the members of which also reside within Florida.

The trust agreement provides that the trustees must distribute all or any part of the trust corpus to organizations qualified as exempt under s. 501(c)(3) IRC. Furthermore, all of the property held by the Foundation is irrevocably dedicated to charitable purposes. Thus, in the event the trustees decide to terminate the Foundation, all of the trust principal and income must be distributed to organizations described under s. 501(c)(3).

REQUESTED ADVISEMENT

The Foundation requests a ruling that it is a "nonprofit charitable institution" for purposes of the exemption that is provided to such organizations under s. 199.183(2), F.S.

PROVISIONS OF LAW

ss. 199.032 and 199.303(2), F.S., collectively impose a tax on the just valuation of all intangible property that has a taxable situs in this state subject only to the exemptions and credits allowed by law. s. 199.183(2), F.S., provides that intangible personal property owned by any "nonprofit charitable institutions" shall be exempt from taxation. Under s. 199.183(2)(c)2, F.S., "charitable institutions" are defined to include those institutions qualified as charitable under s. 501(c)(3) IRC.

CONCLUSION

The Taxpayer has not transferred its intangible personal property to a trust of which it is a beneficiary. The Taxpayer is not relying on exemption of another institution. The Taxpayer has been designated as a charitable organization under s. 501(c)(3) IRC, and as such, it qualifies for the exemption provided to "nonprofit charitable institutions" under s. 199.183(2), F.S. Therefore, the Foundation's intangible personal property will not be subject to taxation as long as this federal designation remains in effect.

This response constitutes a Technical Assistance Advisement under section 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 section 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 section 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,

George D. Turner
Senior Tax Specialist
Technical Assistance & Dispute
Resolution
Office of The General Counsel