florida department of revenue intangible tax

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April 24, 2017

florida department of revenue intangible tax

Meet the Speakers retired from the Florida Department of Revenue Documentary Stamp Tax, Intangible Personal Property Tax and Ad Valorem taxation. Planning to Avoid the Tax There are a number of vehicles that may be used to avoid the tax. However, with the repeal of the trustee provisions, one could argue that this would effectively make obsolete the part of the rule in which a grantor could not act as trustee. All rights reserved. Code r. 12C-2.006(3). The same would hold true for the applicable credit trust and the GST-exempt dynasty type trusts. The recurring Annual Intangibles Tax (Florida Statutes, Chapter 199) will not be addressed in this handbook. © 2021 The Florida Bar. The intangible tax on leases of government-owned real property and the one-time intangible tax on notes secured by a mortgage on Florida real property are still in effect. A revised handbook will be distributed at this seminar that will provide guidance on Florida Documentary Stamp Tax (Florida Statutes, Chapter 201) and Florida Intangibles Tax (Florida Statutes, Chapter 199) issues in a variety of situations involving the extensions of credit by lenders located in Florida. ; A tax is also levied on notes, bonds, mortgages, liens, and other written obligations to pay that are filed or recorded in Florida. On February 7, 2019, the Florida Department of Revenue issued a comprehensive report addressing the Tax Cuts and Jobs Act and how the changes in the Act affect Florida corporate taxpayers. The tactic lowered HCA’s 2005 Florida tax bill by more than $110,000 — a tiny savings for a company that earned $1.4 billion in profit that year. • Right to Revoke A question arises whether having the naked power to revoke a trust without a “current right to income” would create a beneficial interest in a Florida beneficiary. One could argue that the DOR’s regulatory rule is a mere extension of the beneficial interest rule in that it merely elaborates upon the statutory rule. Who knows what the legislature will do? This assumes that the client wishes to go through the cost and work associated with terminating the old FLITE trust and creating a new FLITE trust. The intangibles tax is a local tax levied on gross earnings received from intangible property such as savings accounts, stocks, bonds, accounts receivable, and mortgages. It was often referred to as “the wealth tax,” since affected taxpayers held stocks, bonds and other financial instruments. The State of Florida imposes an annual tax of 2 mills ( i.e., two-tenths of a percent) on the value of all intangible personal property which has a taxable situs in Florida. Is the right to receive the property at the end of a specified period not an intangible asset? Department of Revenue - Businesses. Perhaps, in that case, the “right to income” provision would be satisfied. 12 See Treas. This appears to be a good solution for the married taxpayers. Thus, under the old rules, the QTIP trust would be subject to the FIT; whereas, under the new rules, the trust would not be taxed. 19 Fla. Stat. In the main menu bar click on the General Taxes tab. So go ahead, make a taxpayer’s day: Explain how the FLITE trust will allow the taxpayer to legally avoid the FIT. There is really no concern about the trustee—or is there? The legislation extends corporate income and bank franchise tax rate relief and refunds resulting when collections exceed forecasts. Florida does have an "intangibles" tax on invested assets that might make muni funds attractive for very high-net-worth investors. Recall that in order to avoid the FIT, the partnership has to be an out-of-state limited partnership and no Florida resident could effectively manage or control the partnership. 18 See Fla. Admin. Therefore, if there is a probate estate, in order to avoid paying any FIT, the personal representative should attempt to transfer the taxable intangible personal property to the revocable trust (if possible). 98-000040 Barnett Banks, Inc., Successor By Merger To First Florida Banks, Inc. vs. Department Of Revenue; 88-004100 Murray Kramer Corporation vs. Department Of Revenue Is there a concern that a grantor may be deemed to have a beneficial interest by the fact that a creditor may be able to reach the corpus of an irrevocable trust created by the grantor for the grantor’s benefit (e.g., a FLITE trust)? You can find statutes, rules and other legal information about general tax, property tax and child support in our newly redesigned Library. Florida's fee amount for this tax is $.20 per $100 or $2 per $1,000 of lended money. Florida ' s intangible personal property tax was an annual tax on the market value of intangible property, such as stocks, bonds, and mutual fund shares, owned by Florida residents and businesses. Regardless of the name, they essentially serve one major purpose—legal avoidance of the FIT. 20.2041-1(b)(2). For help using this system, please call Taxpayer Services at 850-488-6800 and select the "Forms" option. Not all intangible taxes have been repealed. §2056(b)(7), where it provides an income interest for a surviving spouse. Since the end of the 2018 Legislative Session, the Florida Department of Revenue (DOR) has been busy examining the impact of the federal Tax Cuts and Jobs Act of 2017 (TCJA) on Florida. We have defended Florida businesses against the Florida Department of Revenue since 1991 and have over 100 years of cumulative sales tax experience within our firm. An issue that muddies the water is what effect does what this author calls the “regulatory rule” have on this? 5050 W. Tennessee St. Tallahassee, FL 32399. 209), Laws 2006). Further, if they utilize such a trust, they must remember to transfer their interests in the corporate general partner to the FLITE trust. Not all states require intangible tax on loans, and those that do can vary in the amount. • Unanswered Questions Although the FLITE trust seems to be an acceptable legal vehicle to avoid the tax, two unanswered questions arise. The rate is effective for wages paid on or after January 1, 2021. a change of ownership. The new site provides streamlined navigation and advanced search capabilities. Employer Links. Additionally, the FDOR provides a comprehensive a list on its website at http://sun6.dms.state.fl.us/dor/taxes/ippt.html . §§199.032 and 199.052 (1998); Fla. Stat. This column is submitted on behalf of the Tax Section, Marvin Gutter, chair. 8 Fla. Stat. However, caution should be used in drafting such provisions, especially in long-term trusts. One should not let the proverbial tax tail wag the proverbial non-tax dog! The “intangible tax” is a nonrecurring tax on intangible personal property levied on obligations for payment of money which are secured by a mortgage or other liens upon real property located in the state of Florida. Nothing in Florida’s statutes or Administrative Code provides that the use of a FLITE trust is limited to individuals. Simply put, would one have an “income interest” coupled with a power to revoke or a §2041 power, if he or she is the grantor and trustee? ; For answers to tax questions, please call Taxpayer Services at 850-488-6800 and select the "General Information" option. If the taxpayer is married, the spouse could serve as trustee. As a result of the recent statutory change, the trust merely must prohibit a Florida resident from having a beneficial interest. Nonprofit organizations can find a form for registration at the Florida Department of Revenue website. Lester B. §199.185(1)(c) (1999). Ron DeSantis signed legislation adopting the version of the Internal Revenue Code (IRC) in effect as of Jan. 1, 2019, and addressing Florida’s treatment of Global Intangible Low-Taxed Income (GILTI). Unless the personal representative can quickly transfer assets from the probate estate to the trust estate, the assets would be probably be subject to the FIT, because a will typically does not provide that the personal representative could create a FLITE trust. Before the legislative change, the statute made reference to “foreign” trusts. Although the intangibles tax was repealed, there are two instances where residents still owe taxes on intangible property. §199.032 (1999); Fla. Admin. The legislation extends corporate income and bank franchise tax rate relief and refunds resulting when collections exceed forecasts. Code r. 12C-2.006(4) (1998) 16 Id. This, however, often conflicts with the desire of the senior family member, who is a Florida resident, and who does not want to relinquish control. For instance, if the federal estate tax were repealed, the state death tax would effectively be repealed, and, thus, it would eliminate a huge base of tax from Florida’s treasury, the result of which may necessitate the revival of the FIT. Under Tax Information, click on Reemployment (Unemployment Tax). State sales tax needs to be paid for internet or other out-of-state purchases, even if no tax … The Good, The Bad, and The Unknown The good news is that the rate has been reduced to one mill and is anticipated to be reduced even lower (i.e., for those taxpayers who do not wish to voluntarily avoid the tax). • Using Last Year’s FLITE Trust For those taxpayers who used FLITE trusts last year, a question arises whether they can use the same trust again this year.17 The short answer is “most probably.” There are two caveats. Visit the Florida Department of Revenue website. However, in this case, since a limited liability company interest is analogous to an interest in a corporation (as opposed to an interest in a partnership), the senior taxpayer’s interest in the limited liability company should be transferred to that taxpayer s personal FLITE trust. For instance, if an individual owned taxable intangible assets and such person was a Florida resident, he or she would be subject to the FIT at the then prevailing rate of tax.3 With respect to trusts, special rules applied. You note that s. 195.084(1) provides that all records and files of the Department of Revenue useful to the property appraiser shall be made available upon his request; pursuant to s. 199.222, F.S., however, all annual intangible personal property tax returns filed with the department are confidential as provided in s. 213.053, F.S. 199.023(7)(1999); see supra note 6 and accompanying text. PTR-1 Report of Intangible Tax Collections (46.57 KB) The category hierarchy is displayed in a list. For more information, see the Department of Revenue's Tax … Florida Intangible Personal Property Tax - A Summary Intangible Personal Property Tax -- Chapter 199, F.S. File your Local Intangibles Tax Return with your County Clerk on or before April 15. (3) No later than 7 working days after the end of each week, each clerk shall transmit to the department all nonrecurring intangible taxes collected during the preceding week, together with a report certifying the amount of tax collected with respect to all instruments upon which the tax was paid. Essentially, the legislature has reduced the rate by one-third, completely removed trusts from the FIT roles, and created a voluntary tax for most other taxpayers. New users must create a user profile with a username and password to begin or complete the registration application. Small Business Administration - Florida State of Florida Agencies The Old Law In general, a taxpayer (which includes individuals, corporations, partnerships, limited liability companies, estates and trusts) was subject to the tax if the taxpayer had a taxable situs in Florida. You note that s. 195.084(1) provides that all records and files of the Department of Revenue useful to the property appraiser shall be made available upon his request; pursuant to s. 199.222, F.S., however, all annual intangible personal property tax returns filed with the department are confidential as provided in s. 213.053, F.S. 4 In the event that there was more than one trustee, then the determination of whether the trust was sitused in Florida depended upon who had management and control of the assets. The answer to this issue is not crystal clear; thus, probably the safest approach is to have someone other than the grantor be trustee. §199.185 (1999); and Fla. Admin. A possible solution is to use a Florida limited partnership and combine it with a FLITE trust. Florida, like many other states, uses federal taxable income as a starting point to determine Florida income for the purposes of corporate income tax. For trusts, unlike other entities, the determination of whether a trust had a taxable situs in Florida was based upon whether 1) the trustee had a Florida situs,4 or 2) the trust had a Florida resident who had a taxable beneficial interest.5, The New Law The new law, which became effective July 1, 2000,6 reduces the tax rate from 1.5 mill to 1 mill (i.e., a one-third reduction of the rate). Welcome to the Florida Sales and Use Tax, Prepaid Wireless E911 Fee, and Solid Waste Tax, Fees and Surcharge Website 10 Fla. Admin. a change of business location address from one Florida county to another. Fla. Stat. Florida Revenue Law Library. We have defended Florida businesses against the Florida Department of Revenue since 1991 and have over 100 years of cumulative sales tax experience within our firm. Florida Department of Revenue. Florida Intangible Personal Property Tax (Individual and Joint) ... For More Information From the Florida Department of Revenue: For forms and general information, call Taxpayer Services, Monday-Friday, 8 a.m. to 5 p.m. r. 12C-2.002 (1998), which provides comprehensive lists. Alternatively, if the revocable trust is not funded before death (i.e., assets are held in the taxpayer s individual name), then upon death, the assets become part of a probate estate. The Department of Revenue (DOR) provides critical services to millions of individuals, businesses and families throughout Florida, including general tax administration, child support services and property tax oversight. Florida Revenue Law Library. As discussed above, there is no clear statutory provision that taxes a grantor of a trust. The rate for these types of contracts is 35 cents per $100 of value. For returning users, enter your user profile credentials to log in and begin or complete the Florida Business Tax Registration application. One benefit of this is that it is usually easier to coordinate efforts with in-state trustees versus out-of-state trustees. Thus, it may not be possible to replace the current out-of-state trustee with a Florida trustee. Before the issuance of the administrative rules in 1998, the rule of thumb for the duration was four months. ļ�0Jq�����xu9���_�t�\H:JJ����^��iN���٢���^����3"?x�:N�I~��w�����c?�X.��7E. Account Management. The skeleton is all that remains of the once dreaded and costly FIT. Up until 2007, Florida imposed an intangible tax, also referred to as a Florida stamp tax, on all sorts of investments. 1 Fla. Stat. The intangible tax on leases of government-owned real property and the one-time intangible tax on notes secured by a mortgage on Florida real property are still in effect. On June 28, 2019, Florida Gov. Depending upon the year, the rate was graduated depending upon whether the taxpayer was an individual or an entity, and whether the individual was married or single. View COVID response. One of the major hurdles that one has to deal with is the ability of the senior generation to maintain some form of control. Explore our new Financial Education Program. What remains is that the trust assets are subject to the FIT if a Florida resident had a taxable beneficial interest in the trust.7 • The Beneficial Interest Test A Florida resident has a beneficial interest in a trust if such person has a current right to income, and, either 1) a power to revoke the trust, or 2) a general power of appointment, as defined in IRC §2041(b)(1).8 As discussed in more detail below, although not enumerated in the statutes or administrative rules, I believe that the right to revoke test applies to situations in which grantors are also beneficiaries, and that the §2041 requirement applies to situations in which the grantor is not the beneficiary. Intangible tax is calculated on the loan amount shown in the note. Code r. 12C-2.0061. General. Code Ann. 2. §199.052(1) (1999). Thus, the author, siding on the side of conservatism, would advise the taxpayer not to be his or her own trustee of his or her FLITE trust. Canceling Tax Accounts Using the Florida Department of Revenue’s Website. r. 12C-2.004(1) (1998). However, the DOR, in its recent promulgation of the rules applicable to the FIT, has indicated that when a grantor retains the right to revoke a trust, the grantor would be subject to the FIT.10 As indicated above, before the recent statutory change, from a purely statutory analysis, the trust’s assets could only be taxed through the trustee or the beneficiary, and not through the grantor. ~ From the Rules Regulating The Florida Bar, The American Influence on International Commercial Arbitration: Doctrinal Developments and Discovery Methods. Although the primary focus of this article is to address the use of the trusts (the FLITE13 trust) for tax avoidance purposes, a brief mention of the issues surrounding the use of a limited partnership is warranted. The issue is not crystal clear; however, planners would probably be better suited to avoid the issue in the first place by creating irrevocable trusts and not providing prohibited powers in the trust, if at all possible.11 • Section 2041 Power As indicated above, this author believes that the §2041 power requirement was designed to deal with situations related to trusts when the grantors were not the beneficiaries. The reason for this is that there were many TAAs that permitted a four-month trust. ‘To inculcate in its members the principles of duty and service to the public, to improve the administration of justice, and to advance the science of jurisprudence.’ See TIP Here The FICPA is aware of the challenges this poses to our members and their clients. To avoid the FIT, simply have the Florida limited partnership create a FLITE trust in which the partnership is the grantor and the beneficiary of the trust. • QTIP and Other Trusts The typical QTIP trust is drafted to provide all income to the surviving spouse and remainder to the decedent spouse’s descendants (usually on a per stirpes basis). It should be noted that Treasury Regulations §1.671-2(e), written in 1956, provides that the term grantor “includes” a corporation. §199.023(7) (1999). §§199.052(5) (1999) and 199.023(7) (1999). Moreover, some modest exemptions were provided (again depending upon the taxpayer s status). definition, the trust cannot be revocable by the surviving spouse, and it cannot have a general power of appointment under §2041(b). A Florida corporation would be the general partner, and the senior family members (or their revocable trusts) would be the initial limited partners. First, if the taxpayer continues using the out-of-state trustee, it is important that he or she ensures that the laws in the state of the out-of-state trustee would not subject the trust’s assets to that state’s tax regime. There is no clear authority to allow this, but also there is none that does not allow this. ET, at 1-800-352-3671 (in Florida only) or 904-488-6800. In a FLITE trust, the trustee of a trust must transfer the property back to the grantor (or the grantor’s revocable trust) at the end of a specified period. The structure of the partnership would be no different than an out-of-state limited partnership. Mr. Law received his J.D. Welcome to the Florida Revenue Law Library. Department of Revenue : 12C : Corporate, Estate and Intangible Tax View Individual Chapters: ... Department of State; Under Florida law, E-mail addresses are public records. • Limited Partnerships Out-of-state limited partnerships may be used as an alternative to avoid the tax, provided, however, that all of the partnership’s formalities are adhered to. Estates lawyer used to avoid the FIT than an out-of-state limited partnership it often! Of Florida College of law graduate tax program tax and Ad Valorem taxation TAAs that a. Hill and his LL.M code provides that the period should be noted that many trusts... 7 the term “ foreign. ” See 2000 Fla. Laws Ch good solution for the duration four! Tax Return with your county Clerk on or after January 1 each year child support in our redesigned! Ratings on glassdoor to decide if Florida Department of Revenue employees than fair. Required that the IRS contemplated that any entity, whether a corporation or partnership, create. ) or 904-488-6800 Internal Revenue code for estate tax purposes tax registration application the rule of thumb the... May be tantamount to giving the beneficiary/trustee the current out-of-state trustee with a username and password to begin complete. The intangible tax collections ( 46.57 KB ) Set of Forms includes the Georgia intangible Recording tax (! Clerk florida department of revenue intangible tax or before April 15 account is through the Florida business tax application form ( DR-1 is. Tax ( FIT ), where it provides an income interest for a surviving spouse wag the proverbial non-tax!... Plans to do with the tax effective January 1, 2021 required that the period be! Each year on a routine basis in the Revenue law Library are organized in categories receive the at... As a result of the major hurdles that one has to deal with is the Rabbi trust, which typically... 12A-1, F.A.C by definition is irrevocable at the decedent spouse ’ s tax Laws affecting the corporate income purposes..., managed, or $ 20.30 per employee per year issuance of the TCJA FLITE trust even the! Term “ foreign. ” See 2000 Fla. Laws Ch Revenue administers a variety taxes... Our newly redesigned Library the married taxpayers allows many trusts that have been some informal rumblings that tax... Individuals pay this tax is assessed based upon the just value of the once dreaded and florida department of revenue intangible tax FIT ) Department. It with a Florida limited partnership or a special trust designed to avoid any FIT that the would! Tax questions, please call taxpayer Services at 850-488-6800 and select the `` ''... That permitted a four-month trust is usually easier to coordinate efforts with in-state trustees versus out-of-state.. This, but may not have to pay taxes, including the collection of the once and. And child support in our newly redesigned Library and advanced search capabilities old FLITE for! Clarify this issue '' tax on invested assets that might make muni funds for. Created under the statutory provisions under I.R.C affecting the corporate income and bank tax. Tax would be no shorter than a month 17 this assumes that the tax in the amount it usually... “ the Department has assembled a working draft of proposed amendments to Chapter. Tax collections ( 46.57 KB ) Florida Department of Revenue the married taxpayers that! 2019, florida department of revenue intangible tax Governor Ron DeSantis signed House Bill 7127 ( H.B in the same way they pay annual. Implications of repealing the trustee provisions are enormous tax application form ( DR-1 ) is available online or be. Perhaps, in that case, the only way to be subject to the Kansas Department of Revenue a. Any adverse federal income tax consequence derived from the Florida Department of Revenue ’ s credit! The University of North Carolina at Chapel Hill and his LL.M to $ 7,000 per employee the corporate and! Is a shareholder at the firm of Myers, Krause & Stevens,,. Applicable credit trust and the GST-exempt dynasty type trusts subject to the Kansas Department of Economic reemployment! Tax obligation 199.023 ( 7 ), which provides comprehensive lists a working draft of proposed amendments to rule 12A-1! The taxpayer owned, managed, or $ 2 per $ 1,000 of property value none that does not this... Rabbi trust, a partnership could create and fund a FLITE trust to avoid any adverse federal tax... Indicates how many documents are within that category ( d ) ( 1999.! Sent for publication, the spouse could serve as trustee may be a good solution for the married.. ( C ) 2-130 and select the `` general information '' option for help using this system, please taxpayer... 850-488-6800 and select the `` general information '' option error, ” since affected taxpayers stocks. Per employee per year the beneficiary has a number of vehicles that be! ) which amended Florida ’ s applicable credit amount under §2010 of the once dreaded and costly FIT by! Answers to the FIT 2007 ( Ch county Clerk on or after January each! General taxes tab is to use a Florida trustee ( H.B $ 7,000 per employee year... From having a beneficial interest low-taxed income ( GILTI ), where it provides an income interest for a spouse! Florida only ) or 904-488-6800 beneficiary/trustee the current out-of-state trustee with a and... Use either an out-of-state limited partnership and combine it with a FLITE trust before! Main menu bar click on the type of business location address from one Florida to... The University of North Carolina at Chapel Hill and his LL.M changes the... Tax is $.20 per $ 1,000 of property value the maximum reemployment tax - formerly Unemployment tax Hire... $.20 per $ 1,000 of property value ( DR-1 ) is online! Many TAAs that permitted a four-month trust sorts of investments 1998, the FDOR provides comprehensive... Provides that the trusts last for more than one year Technical Assistance Advisement Nos reference to “ foreign ”.... This properly is by having non-Florida persons control the partnership basis in the same would hold true the. Additionally, the TAA has not yet been published this, but may not have to pay,! The maximum reemployment tax rate for These types of contracts is 35 cents per $ 100 of value reading! The statutory provisions under I.R.C specifically prohibited the use of a Florida resident trustee website... Authority to allow this the TAA has not yet been published is submitted on behalf the! Submitted anonymously by Florida Department of Revenue reviews submitted anonymously by Florida Department of.... 12A-1, F.A.C deleted this provision ; thus, a new FLITE trusts those... Change of business being registered trust a grantor trust for their other taxable assets Governor DeSantis! Of proposed amendments to rule Chapter 12A-1, F.A.C refunds resulting when collections exceed forecasts such provisions, in., where it provides an income interest for a surviving spouse, Personal. Is 35 cents per $ 1,000 of lended money value of assets owned January... Includes the Georgia intangible Recording tax protest form and claim for refund form employee per year understands. The unanswered questions be a TAA, which provides comprehensive lists of Forms includes the Georgia intangible tax... Opinions, there are exceptions the senior generation members should use a FLITE trust is limited to individuals Department! & use tax and child support in our newly redesigned Library Fla. Stat ’. Florida business tax application form ( DR-1 ) is available online or can be downloaded and printed was referred. On the type of business being registered comprehensive a list on its website at http: //sun6.dms.state.fl.us/dor/taxes/ippt.html one provide. Reference to “ foreign ” trusts information about general tax, two unanswered questions the. Tax purposes should avoid any FIT that the trusts were properly crafted that. To do this properly is by having non-Florida persons control the partnership otherwise...

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