Did trusts become subject to Florida intangible tax after their corporate trustee merged into a successor with other Florida activities?

Subject

Filing a Return - Trustee

Plain-English summary

The trusts did not become subject to Florida intangible personal property tax after the corporate merger because their administration and management remained outside Florida. The predecessor trustee served trusts with no Florida-resident beneficiaries, and its trust officers and decision-making committee operated outside the state.

After the merger, a successor division would be named trustee. Its out-of-state trust officers would continue day-to-day administration, and its out-of-state trust committee would make fiduciary decisions such as accepting appointments, closing accounts, making discretionary distributions, reviewing investments, and buying or selling trust assets.

Florida tied taxable situs to who owned, managed, or controlled the intangible property and where that person resided or maintained a principal or usual place of business. Because the named trustee officers were domiciled outside Florida and the trust committee's principal location was outside Florida, the existing and similarly administered new trusts were not taxable under the ruling.

What this means for you

A corporate trustee's merger into a company with other operations does not by itself decide trust-property situs. The location of the named trustees and the people or committee exercising real fiduciary management and control mattered.

The result depends on actual administration matching the described structure. Moving officers, committee authority, or decision-making into Florida could present different facts.

Common questions

Q: Did the merger itself create Florida taxable situs? No. The relevant trust officers and committee remained outside Florida.

Q: What decisions did the out-of-state committee make? It handled fiduciary appointments, account closings, discretionary distributions, investment reviews, and asset purchases and sales.

Q: Did the result cover new trusts? Yes, if the successor division was named trustee and the trusts were administered and managed as described.

Q: Why did trustee location matter? The historical statute and rule looked to residence, principal place of business, and where intangible property was owned, managed, or controlled.

Citations and references

• Fla. Stat. § 199.052(5) — filing by persons owning, managing, or controlling intangible property with Florida situs
• Fla. Stat. § 199.175 — taxable situs of intangible personal property
• Fla. Admin. Code r. 12C-2.006(3) — trustee place-of-business rule for non-Florida trusts
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98C2-006

Original ruling text

Apr 28, 1998

Re: Technical Assistance Advisement No. 98(C)2-006 Intangible Tax - Filing a Return - Trustee s. 199.052(5), F.S., and Rule 12C-2.006(3), F.A.C. XXX (Corp 1) XXX (Corp 2) XXX (Corp 3) XXX (Corp 5 Division) XXX (Corp 4) XXX (Corp 5) (Collectively all are referred to as Taxpayers)

Dear :

Your letter requesting a Technical Assistance Advisement has been received and examined by this office. Below is a synopsis of the information submitted for consideration and our response to your request.

Statement of Facts

Corp 2 was formed in XXX. Corp 3 was formed in XXX. Corp 2 and Corp 3 are wholly-owned subsidiary of Corp 1. Corp 4 was formed in XXX. Corp 4 offers deposit, checking and home loan products.

The Taxpayers intend to consummate the following transaction:

(1) Corp 4 will obtain trust powers;
(2) Corp 2 and Corp 3 will merge into Corp 4 to form Corp 5.

Corp 3 is not domiciled in Florida. It serves as trustee of existing trusts that do not have Florida residents as beneficiaries. Corp 3 trusts are administered, on a day-to-day basis, by Corp 3 Trust Officers located out-of-state. Decisions concerning the Corp 3 trusts are made by a trust committee. The

Corp 3 Trust Committee is appointed by and ultimately reports to the Board of Directors of Corp 3. The decisions made by the Trust Committee include the following:

(1) the acceptance of a new fiduciary appointment; (2) the closing of an account; (3) discretionary distribution of principal or income; (4) investment reviews; and (5) purchases and sales of assets inside trust accounts.

Simultaneous with the merger, Corp 5 will establish Corp 5 Division Trust Committee to administer and manage trusts. The Corp 5 Division Trust Committee will function in the same manner as the current Corp 3 Committee. Corp 5 Division will be named trustee under all trusts generated by the out-of-state office. The Corp 5 Division trusts will be administered and managed by Corp 5 Division Trust Officers located out-of-state.

Requested Ruling

Based upon the above information, rulings have been requested that:

(1) existing trusts or estates for which Corp 3 is the trustee will remain exempt from the Florida intangible personal property tax following the merger; and (2) any new trust accepted by Corp 5 Division will be exempt from the Florida intangible personal property tax, provided the trusts name Corp 5 Division as the trustee and the trusts are administered as described above.

Provisions of Statute

Section 199.052, F.S., requires that every person that owns manages or controls intangible personal property having a taxable situs in Florida file an intangible personal property tax return. Under s. 199.175, F.S., intangible personal property has a taxable situs in this States when it is owned, managed, or controlled by a person having their residence or principal place of business in this state. This includes trustees of non-

Florida trusts that have a usual place of business in this state. (See Rule 12C-2.006(3), F.A.C.)

Conclusion

Based upon the information submitted and the provisions of the statutes, it is the opinion of this office that the trusts administered and managed by Corp 5 Division Trust Officers are not subject to the Florida intangible personal property tax. This conclusion is based upon the statements that Corp 5 Division Trust Officers (the named trustees) will be domiciled in a state other than Florida and the Corp 5 Division Trust Committee's principal location is the out-of-state location of Corp 5.

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,

J.V. Parramore, Jr.
Tax Law Specialist
Technical Assistance and Dispute Resolution

Office of General Counsel

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