Were deeds transferring utility property to counties or a public authority under threat of condemnation exempt from Florida documentary stamp tax?

Plain-English summary

Florida exempted deeds conveying a company's utility-system real property under a documented threat of condemnation.

Each county had publicly decided in writing to acquire the assets for public use. The property owner was informed that eminent-domain proceedings would follow if a voluntary transaction could not be arranged. Those facts met the TAA's threat-of-condemnation standard.

The exemption applied whether the company conveyed the property to the counties or directly to the separate government authority. The immediate recipient did not itself need eminent-domain power because the overall acquisition was by a government entity under the counties' condemnation threat.

What this means for you

Property owners and public entities

Keep the government's written acquisition decision and the written notice that condemnation will follow if negotiations fail. The exemption depended on that documented threat, not merely on a sale to a public body.

Closing professionals

Trace the governmental acquisition structure. This TAA accepted a direct deed to an authority even though the counties were the condemning bodies.

Common questions

Were the deeds taxable? No. The Department found the transfers were made under threat of condemnation.

Did the property have to be deeded first to a county? No. Direct conveyance to the authority also qualified on these facts.

What established the condemnation threat? Written government decisions to acquire the property and notice that eminent-domain proceedings would be instituted if a voluntary sale was not arranged.

Citations and references

• Fla. Stat. § 201.02(1)
• Fla. Admin. Code R. 12B-4.013(4)
• Fla. Admin. Code R. 12B-4.014(14)
• Fla. Stat. § 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99B4-006

Original ruling text

SUMMARY

Question: Is the conveyance of the real properties of the
Company and its subsidiaries to the Authority or the
Counties made under threat of condemnation exempt from
Florida documentary stamp taxes?

Answer - Based on Facts Below: The conveyance of the real
properties of the Company made under threat of
condemnation, regardless of whether the real properties are
conveyed to the Counties or directly to the Authority, and
the deeds conveying the real properties are exempt from
Florida documentary stamp taxes.

May 27, 1999

Re: Technical Assistance Advisement No. 99(B)4-006
Florida Documentary Stamp Tax; Threat of Condemnation
Section 201.02(1), F.S.;
Rules 12B-4.013(4) and 12B-4.014(14), F.A.C.
XXX (Collectively, the "Company")
XXX (the "Counties")
XXX (the "Authority")

Dear :

Your letter dated April 8, 1999, requests a Technical
Assistance Advisement regarding the applicability of Florida
documentary stamp tax pursuant to s. 201.02(1), F.S., under the
facts and documents set forth herein. This request is made
pursuant to Chapter 12-11, F.A.C., and is issued to you under
the authority of s. 213.22, F.S.

STATEMENT OF FACTS PRESENTED BY PETITIONER

The Company owns and operates certain private and
wastewater utility systems located in each of six different
Florida counties. These utility system assets include Florida

real property. The county commissioners of each of the Counties
has approved or authorized the creation of a separate government
entity to provide public water and wastewater utility services
for the six Counties, the Authority, pursuant to an Interlocal
Agreement under the authority of Chapter 163 of the Florida
Statutes and the Florida Interlocal Cooperation Act of 1969.
The county commissioners of each of the Counties have determined
that it would be in the public interest to acquire the Company's
private utility assets for the Authority.

The Counties have approached the Company regarding the
acquisition of its utility systems, but the Company has refused
to sell these assets voluntarily unless the Counties acquire
them under threat of condemnation. The Authority does not
possess the power to condemn private property for public use,
but the Counties do. The county commissioners of each County
have adopted a written resolution finding that the County's
acquisition of the Company's utility assets is being undertaken
in lieu of eminent domain proceedings and that the utility
assets are acquired under a threat of condemnation. To the
extent that the utility assets consist of real property, they
will be conveyed by a deed from the Company or its respective
subsidiary either to the Authority or to a County.

REQUESTED RULING

The taxpayers respectfully request the Department's ruling
that the conveyance of the utility assets of the Company and its
subsidiaries to the Authority or to the Counties is made under
threat of condemnation and is therefore exempt from Florida
documentary stamp taxes.

PROVISIONS OF LAW

Section 201.02(1), F.S., imposes an excise tax on any
instrument that conveys an interest in Florida real property.

Rules 12B-4.013(4) and 12B-4.014(14), F.A.C., provide that
conveyances of realty made to a governmental entity under threat
of condemnation or as part of an out-of-court settlement of
condemnation proceedings are not subject to documentary stamp

tax. Threat of condemnation exists when a property owner is
informed in writing by a representative of a government body or
public official authorized to acquire property for public use,
that such body or official has decided to acquire the property,
and the property owner has reasonable grounds to believe that
the necessary steps to condemn the property will be instituted
if a voluntary sale is not arranged.

DEPARTMENT'S POSITION

Based on the facts given, each County has publicly
determined in writing to acquire the utility assets under threat
of condemnation. The condemning authority informed the property
owner of the authority's intention to acquire the property for
public use, including through eminent domain proceedings if a
voluntary sale cannot be arranged. The property will be
conveyed to a government entity, although not necessarily an
entity that itself possesses eminent domain powers. The
conveyance of the utility assets of the Company is made under
threat of condemnation, regardless of whether the assets are
conveyed to the Counties or directly to the Authority, and the
deeds conveying the assets are exempt from Florida documentary
stamp taxes imposed by s. 201.02(1), F.S.

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, your request
and related backup documents are public records under Chapter
119, F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an

edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Baldan E. Sulker
Senior Tax Specialist
Technical Assistance and Dispute Resolution
Office of General Counsel

BES/mh