209), Laws 2006). For instance, if the federal estate tax were repealed, the state death tax would effectively be repealed, and, thus, it would eliminate a huge base of tax from Florida’s treasury, the result of which may necessitate the revival of the FIT. Florida Department of Revenue. 203 (b) Amounts considered compensation include deferred compensation, value of board, rent, housing, lodging, and other benefits or services furnished to employees by the taxpayer in return for personal services provided that such amounts constitute income to the recipient under the Federal Internal Revenue Code. Florida has enacted legislation providing a deduction for global intangible low-taxed income (GILTI), retroactive to January 1, 2018. §199.052(5) and Fla. Admin. 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). 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. Accordingly, some believe that the period should be no shorter than a month. 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. Intangible tax is calculated on the loan amount shown in the note. Code r. 12C-2.0061. The fastest way to cancel a tax account is through the Florida Department of Revenue’s website. The legislation extends corporate income and bank franchise tax rate relief and refunds resulting when collections exceed forecasts. The other good news is that the tax is essentially voluntary, and can be avoided by using either the FLITE trust or an out-of-state limited partnership. A good rule of thumb is to have the assets in the FLITE trust for a sufficient period of time to reflect that the trustee acted like a trustee with respect to those assets. Chapter 199, Florida Statutes (F.S. If the beneficiary and the grantor are different, one merely reviews the trust provisions to determine if the beneficiary has a current right to income coupled with the §2041 power. Provided further, that no one who is a Florida resident actually owns, manages, or controls the partnership in Florida.18 Quite often, estate planners use family limited partnerships for estate planning purposes. 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. In no event will the tax be calculated on an amount greater than the fair market value of the collateralized Florida real property. 312 (H.B. Our partners are both CPAs/Accountants and Attorneys, so we understand both the accounting side of … That’s right, the current reach of the FIT is so narrow and easy to avoid, it can be called a voluntary tax. 7127) which amended Florida’s tax laws affecting the corporate income tax. It should be noted that many well-crafted trusts specifically prohibited the use of a Florida resident trustee. Share: On March 26, 2020, the Florida Department of Revenue issued Emergency Orders delaying sales tax and property tax payments for some businesses. Florida, like many other states, uses federal taxable income as a starting point to determine Florida income for the purposes of corporate income tax. The report also provides estimates of the fiscal impact of certain provisions of the TCJA. 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. 8 Fla. Stat. This is not evident by simply reading the statute. This now allows many trusts that have been traditionally subject to tax not to be subject to the tax in the future. An issue that muddies the water is what effect does what this author calls the “regulatory rule” have on this? Welcome to the Florida Revenue Law Library. 199.023(7)(1999); see supra note 6 and accompanying text. At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is Florida taxes, with a very heavy emphasis in Florida sales and use tax. Examples of this would include the qualified terminable interest property (QTIP) trust,20 the typical applicable credit trust (also sometimes still referred to as the credit sheltered trust, the $600,000 trust, or the family trust),21 GST-exempt dynasty type trusts, and charitable remainder trusts. Before the recent statutory change, these trusts were usually taxed under the trustee rule, since quite often the surviving spouse, who was a Florida resident or a Florida corporate fiduciary, would be the trustee. 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). ch. 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. As a result of recent changes to the Florida Intangibles Tax (FIT), the legislature has all but repealed the FIT. Read employee reviews and ratings on Glassdoor to decide if Florida Department of Revenue is right for you. Canceling Tax Accounts Using the Florida Department of Revenue’s Website. 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. 15 Fla. Admin. §199.052(1) (1999). After the rules were issued, many practitioners reduced the time periods to three months and lesser periods. However, there is no authority for this position and, as with all opinions, there are exceptions. Fla. Laws ch. Welcome to the Florida Sales and Use Tax, Prepaid Wireless E911 Fee, and Solid Waste Tax, Fees and Surcharge Website However, the trust by definition is irrevocable at the decedent spouse’s death. • 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. In 2006, the Florida legislature repealed most parts of the tax effective January 1, 2007 (Ch. The rate for these types of contracts is 35 cents per $100 of value. Examples: 1. View COVID response. The maximum reemployment tax rate for 2021 is fixed in statute and will remain at .0540 (5.4%). Nothing in Florida’s statutes or Administrative Code provides that the use of a FLITE trust is limited to individuals. Florida Intangible Personal Property Tax - A Summary Intangible Personal Property Tax -- Chapter 199, F.S. §199.185(1)(c) (1999). Code r. 12C-2.006(4) (1998). Every corporation or person who is a legal resident of Florida or who manages or controls intangible personal property having a taxable situs in this state, must file an Intangible Personal Property Tax Return (form DR-601I and DR-601C), available from local Department of Revenue … 1 Notable provisions of the new law include: Updating Florida’s federal tax conformity date to the Internal Revenue Code (IRC) as in effect on January 1, 2019, 74, No. Use a Florida Business Tax Application (Submit online or download form DR-1) for: a change in legal entity. 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 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 stamp tax of 70 cents per $100 of value is assessed on documents that transfer interest in Florida real estate, such as warranty deeds and quit claim deeds. Regardless of the name, they essentially serve one major purpose—legal avoidance of the FIT. For more information, see the Department of Revenue's Tax … Further, by definition, the trust could not give the surviving spouse a §2041 power, otherwise it would not qualify as a QTIP trust. 173, §1. Thus, a partnership could create and fund a FLITE trust to avoid any FIT that the partnership would otherwise be subject. • Funding of Revocable Trusts The new statutory change makes funding revocable trusts before death or the funding of revocable trusts immediately upon death more important. 173, §7. The two most common are to use either an out-of-state limited partnership or a special trust designed to avoid the tax. Moreover, some modest exemptions were provided (again depending upon the taxpayer s status). This writer understands that there may be a TAA, which will clarify this issue. 20.2041-1(b)(2). For help using this system, please call Taxpayer Services at 850-488-6800 and select the "Forms" option. Law is a shareholder at the firm of Myers, Krause & Stevens, Chartered, Naples. 96C-2140, 96(C)-2108R, 96(C)2-130. However, when the DOR promulgated new rules governing trusts that are designed to avoid the FIT,15 it added the regulatory provision that taxes grantors.16 Under the DOR’s rule, it appears that a grantor could not be a trustee of a FLITE trust, without subjecting the trust’s assets to taxation. 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. (b) Natural persons filing an individual or joint return are subject to the tax rate of $1.00 per thousand dollars (1 mill) of just value of intangible property in excess of $250,000.00 ($500,000.00 for a married couple filing a joint return). The reason for reducing the rate, as opposed to repealing the tax, is that it allows the tax regime to stay in place, in the event that there is a revival of the tax. Department of Economic Opportunity Reemployment Tax - formerly Unemployment Tax New Hire Reporting Center. Code r. 12C-2.006(4) (1998) 16 Id. The simple reason for this is that, upon death, the beneficiaries of the trust would have no “beneficial interest”; thus, trust assets would not be subject to the FIT. In calculating the intangible tax due, the just value of a lessee’s leasehold estate or possessory interest reported on the tax return is determined by the rent payments for the remaining term of the lease, at the Federal Reserve – Atlanta – discount rate on the last business day of the previous year, plus 1%. Under Tax Information, click on Reemployment (Unemployment Tax). Regs. The remaining unknowns are the answers to the unanswered questions. §199.133, Fla. Stat. §199.185 (1999); and Fla. Admin. 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. 2. It should also be noted that the senior generation members should use a FLITE trust for their other taxable assets. There have been some informal rumblings that the tax would be repealed sometime in the next year or two. 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