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