Did a Florida corporation's intangible assets have Florida tax situs if it had no local office or employees?

Subject

Florida Situs of a Corporation's Intangible Assets

Plain-English summary

All of the Florida corporation's intangible assets had Florida tax situs because the company was incorporated and therefore domiciled in Florida. Its lack of a local office or employees did not change that result; it operated through an attorney serving as resident agent.

The Department identified the company's accounts receivable and short-term loan as subject to the annual intangible tax. A money-market deposit account with a bank was exempt. A money-market fund could be taxable depending on the fund and the assets it held.

The company had to file an intangible tax return listing the January 1 balance of each taxable intangible asset and pay the tax with the return.

What this means for you

Under this historical tax, formal Florida incorporation established domicile and situs even where the corporation's physical business presence was minimal.

Product labels were not enough for cash-management assets. A bank deposit and an investment fund called “money market” could receive different treatment because their legal form and underlying assets differed.

Common questions

Q: Did having no Florida office avoid the tax? No. Florida incorporation made the company domiciled in the state.

Q: Were accounts receivable taxable? Yes, under the ruling's review of the submitted balance sheet.

Q: Was the short-term loan taxable? Yes.

Q: How was a money-market account treated? A bank deposit account was exempt; a money-market fund depended on the nature of the fund and its assets.

Q: What date controlled the reported balances? January 1 of the tax year.

Citations and references

• Fla. Stat. § 199.032 — annual tax on intangible property with Florida situs
• Fla. Stat. § 199.175(1) — situs based on domicile, ownership, management, or control
• Fla. Stat. §§ 199.052, 199.042 — return and payment requirements
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98C2-001

Original ruling text

Jan 06, 1998

Re: Technical Assistance Advisement 98(C)2-001 Intangible Tax -Taxable Situs Sections 199.052 and 199.175, F.S. XXX (Taxpayer)

Dear :

Your letters requesting a Technical Assistance Advisement have been received by this office. The request deals with the taxation of intangible assets owned by a Florida corporation having no office and no employee but represented by a resident agent in Florida.

FACTS

According to your letter of December 18, 1996, in which you responded to my request for additional information, Taxpayer is a Florida corporation that purchases rental property for income purposes. That letter further states that Taxpayer has no local office and no employees, and that the company is represented by an attorney, as a resident agent.

You have also provided for our review, Taxpayer's balance sheet for the tax year ended August 31, 1996, and a letter describing the nature of each asset listed on the balance sheet.

DISCUSSION OF LAW

Section 199.032, F.S., imposes tax on all intangible personal property that has a taxable situs in this state.

Section 199.175(1), F.S., states that 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. This section goes on to state that a person domiciled in this state includes any corporation organized or created under the laws of this state.

Section 199.052, F.S., requires that every resident of this state that owns intangible property shall file a return and list all taxable intangible property owned by the resident. The payment of tax must accompany the return when filed. (See s. 199.042, F.S.)

CONCLUSION

Because the Taxpayer is incorporated in Florida, the Taxpayer is domiciled in Florida; hence, all its intangible assets are subject to Florida's annual intangible tax.

Based on the information you submitted, of items listed on the balance sheet, the accounts receivable and the short-term loan are subject to the annual intangible tax. It the "money market" item is a money market deposit account with a bank, then it is exempt. If the item is a money market fund, then it may represent intangible personal property subject to tax, depending on the nature of the fund and nature of the assets in the fund. Taxpayer is required to file an intangible tax return listing the January 1 balance of each of the taxable intangible assets.

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 confidential information, we request you notify the undersigned in writing

within 15 days of any deletions you wish made to the request or this response.

Sincerely,

Moses O. Daramola
Senior Tax Specialist
Technical Assistance & Dispute Resolution Office of the General Counsel

MOD/md