Senate Bill 1450e1

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  1                      A bill to be entitled

  2         An act relating to intangible personal property

  3         taxes; amending s. 199.023, F.S.; defining the

  4         terms "ministerial function" and "processing

  5         activity" for purposes of ch. 199, F.S.;

  6         amending s. 199.052, F.S.; increasing the

  7         minimum amount of annual intangible personal

  8         property tax which a person may be required to

  9         pay; providing that personal property of a

10         trust will not have taxable situs in this state

11         under specified circumstances; repealing s.

12         199.052(11), F.S., relating to returns filed by

13         banking organizations, to conform; amending s.

14         199.175, F.S., relating to taxable situs;

15         amending s. 199.175, F.S.; providing for situs

16         of credit or charge card receivables owned,

17         managed, or controlled by a bank or savings

18         association; conforming provisions; amending s.

19         199.185, F.S.; revising the exemption from

20         intangible personal property taxes for certain

21         property held in trust; revising the exemption

22         for real estate mortgage investment conduits;

23         partially exempting accounts receivable arising

24         out of a trade or business from intangible

25         personal property taxes; providing legislative

26         intent to fully exempt such assets in

27         subsequent years; exempting stock options

28         granted to employees by an employer and stock

29         purchased by employees under certain conditions

30         from intangible personal property taxes;

31         providing a full, rather than partial,


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  1         exemption from the annual tax for banks and

  2         savings associations and providing for

  3         application of the exemption to organizations

  4         defined by s. 220.62(1), (2), (3), and (4),

  5         F.S.; exempting insurers from the annual tax;

  6         repealing s. 199.104, F.S., which provides a

  7         credit against the annual tax for banks and

  8         savings associations; repealing s. 220.68,

  9         F.S., which provides a credit against the

10         franchise tax imposed on banks and savings

11         associations based on intangible tax paid;

12         amending s. 199.282, F.S.; revising the penalty

13         for late filing of an annual intangible tax

14         return; providing a limitation on combined

15         delinquency and late filing penalties; revising

16         the penalty for omitting or undervaluing

17         property on an annual return; amending s.

18         199.292, F.S.; revising the distribution of

19         intangible tax revenues; amending s. 220.02,

20         F.S., relating to order of credits against the

21         corporate income tax or franchise tax, and s.

22         624.509, F.S., relating to the insurance

23         premium tax; conforming provisions; providing

24         application; providing effective dates.

25

26  Be It Enacted by the Legislature of the State of Florida:

27

28         Section 1.  Subsections (13) and (14) are added to

29  section 199.023, Florida Statutes, to read:

30         199.023  Definitions.--As used in this chapter:

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  1         (13)  "Ministerial function" means an act the

  2  performance of which does not involve the use of discretion or

  3  judgment.

  4         (14)  "Processing activity" means an activity

  5  undertaken to administer or service intangible personal

  6  property in accordance with such terms, guidelines, criteria,

  7  or directions as are provided solely by the owner of the

  8  property. Methods, systems, or techniques chosen by the

  9  processor to implement such terms, guidelines, criteria, or

10  directions are not considered the exercise of management or

11  control.

12         Section 2.  Subsection (2) of section 199.052, Florida

13  Statutes, is amended, and subsection (15) is added to that

14  section, to read:

15         199.052  Annual tax returns; payment of annual tax.--

16         (2)  No person shall be required to pay the annual tax

17  in any year when the aggregate annual tax upon the person's

18  intangible personal property, after exemptions, would be less

19  than $60 $5.  In such case, an annual return is not required

20  unless the taxpayer is a corporation, a banking organization

21  claiming the exemption provided in s. 199.185(1)(i), or an

22  agent or fiduciary of whom the department requires an

23  informational return. Agents and fiduciaries shall report for

24  each person for whom they hold intangible personal property if

25  the aggregate annual tax on such person is $60 or more than

26  $5.

27         (15)  If a bank or savings association, as defined in

28  s. 220.62, acts as a fiduciary or agent of a trust other than

29  as a trustee, intangible personal property of the trust shall

30  not have taxable situs in this state pursuant to s. 199.175

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  1  solely by virtue of the management or control of the bank or

  2  savings association.

  3         Section 3.  Effective July 1, 2000, subsection (11) of

  4  section 199.052, Florida Statutes, is repealed, and subsection

  5  (2) of that section, as amended by this act, is amended to

  6  read:

  7         199.052  Annual tax returns; payment of annual tax.--

  8         (2)  No person shall be required to pay the annual tax

  9  in any year when the aggregate annual tax upon the person's

10  intangible personal property, after exemptions, would be less

11  than $60.  In such case, an annual return is not required

12  unless the taxpayer is a corporation, a banking organization

13  claiming the exemption provided in s. 199.185(1)(i), or an

14  agent or fiduciary of whom the department requires an

15  informational return. Agents and fiduciaries shall report for

16  each person for whom they hold intangible personal property if

17  the aggregate annual tax on such person is $60 or more.

18         Section 4.  Paragraph (c) is added to subsection (1) of

19  section 199.175, Florida Statutes, to read:

20         199.175  Taxable situs.--For purposes of the annual tax

21  imposed under this chapter:

22         (1)  Intangible personal property shall have a taxable

23  situs in this state when it is owned, managed, or controlled

24  by any person domiciled in this state on January 1 of the tax

25  year.  Such intangibles shall be subject to annual taxation

26  under this chapter, unless the person who owns, manages, or

27  controls them is specifically exempt or unless the property is

28  specifically exempt. This provision shall apply regardless of

29  where the evidence of the intangible property is kept; where

30  the intangible is created, approved, or paid; or where

31  business may be conducted from which the intangible arises.


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  1  The fact that a Florida corporation owns the stock of an

  2  out-of-state corporation and manages and controls such

  3  corporation from a location in this state shall not operate to

  4  give a taxable situs in this state to the intangibles owned by

  5  the out-of-state corporation, which intangibles arise out of

  6  business transacted outside this state.

  7         (c)  Notwithstanding the provisions of this subsection,

  8  intangibles that are credit card receivables or charge card

  9  receivables or related lines of credit or loans that would

10  otherwise be deemed to have taxable situs in this state solely

11  because they are owned, managed, or controlled by a bank or

12  savings association as defined in s. 220.62, or an affiliate

13  or subsidiary thereof, which is domiciled in this state shall

14  be treated as having a taxable situs in this state only when

15  the debt represented by the intangible is owed by a customer

16  who is domiciled in this state. As used in this paragraph, the

17  terms "credit card receivables" and "charge card receivables"

18  do not include trade or service receivables as defined in s.

19  864 of the Internal Revenue Code of 1986, as amended.

20         Section 5.  Effective July 1, 2000, paragraph (a) of

21  subsection (1) and paragraph (b) of subsection (2) of section

22  199.175, Florida Statutes, are amended to read:

23         199.175  Taxable situs.--For purposes of the annual tax

24  imposed under this chapter:

25         (1)  Intangible personal property shall have a taxable

26  situs in this state when it is owned, managed, or controlled

27  by any person domiciled in this state on January 1 of the tax

28  year.  Such intangibles shall be subject to annual taxation

29  under this chapter, unless the person who owns, manages, or

30  controls them is specifically exempt or unless the property is

31  specifically exempt. This provision shall apply regardless of


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  1  where the evidence of the intangible property is kept; where

  2  the intangible is created, approved, or paid; or where

  3  business may be conducted from which the intangible arises.

  4  The fact that a Florida corporation owns the stock of an

  5  out-of-state corporation and manages and controls such

  6  corporation from a location in this state shall not operate to

  7  give a taxable situs in this state to the intangibles owned by

  8  the out-of-state corporation, which intangibles arise out of

  9  business transacted outside this state.

10         (a)  For the purposes of this chapter, "any person

11  domiciled in this state" means:

12         1.  Any natural person who is a legal resident of this

13  state;

14         2.  Any bank or financial institution, business,

15  business trust as described in chapter 609, company,

16  corporation, insurance company, partnership, or other

17  artificial entity organized or created under the law of this

18  state, except a trust; or

19         3.  Any person, including a trust, who has established

20  a commercial domicile in this state.

21         (2)  Intangible personal property shall have a taxable

22  situs in this state when it is deemed to have a business situs

23  in this state and it is owned, managed, or controlled by a

24  person transacting business in this state, even though the

25  owner may claim a domicile elsewhere.  This provision shall

26  apply regardless of where the evidence of the intangible is

27  kept or where the intangible is created, approved, or paid.

28         (b)  Notwithstanding the provisions of this subsection:

29         1.a.  Intangibles that are credit card or charge card

30  receivables or related lines of credit or loans shall be

31  deemed to have business situs in this state only when the debt


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  1  represented by such intangibles is owed by a customer who is

  2  domiciled in this state.

  3         b.  The performance of ministerial functions relating

  4  to, or the processing of, credit card or charge card

  5  receivables in this state for the owner of such receivables is

  6  not sufficient to support a finding that the owner is

  7  transacting business in this state.

  8         c.  The term "credit card or charge card receivables"

  9  does not include trade or service receivables as defined in s.

10  864 of the Internal Revenue Code of 1986, as amended.

11         2.  An intangible owned by a real estate mortgage

12  investment conduit, a real estate investment trust, or a

13  regulated investment company, as those terms are defined in

14  the United States Internal Revenue Code of 1986, as amended,

15  shall not be deemed to have a taxable situs in this state

16  unless such entity has its legal or commercial domicile in

17  this state.

18         3.  The ownership of any interest in a participation or

19  syndication loan or pool of loans, notes, or receivables shall

20  not be sufficient to support a finding that the owner of such

21  interest is transacting business in this state.  For the

22  purposes of this subparagraph, a participation or syndication

23  loan is a loan in which more than one lender is a creditor to

24  a common borrower, and a participation or syndication interest

25  in a pool of loans, notes, or receivables is an interest

26  acquired from the originator or initial creditor with respect

27  to the loans, notes, or receivables constituting the pool.

28         4.  Assets owned by a foreign insurance company, as

29  defined in s. 624.06, shall not be deemed to have a business

30  situs in this state if they are managed and controlled outside

31  this state.


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  1         Section 6.  Subsections (1) and (5) of section 199.185,

  2  Florida Statutes, are amended, and subsection (8) is added to

  3  that section, to read:

  4         199.185  Property exempted from annual and nonrecurring

  5  taxes.--

  6         (1)  The following intangible personal property shall

  7  be exempt from the annual and nonrecurring taxes imposed by

  8  this chapter:

  9         (a)  Money.

10         (b)  Franchises.

11         (c)  Any interest as a partner in a partnership, either

12  general or limited, other than any interest as a limited

13  partner in a limited partnership registered with the

14  Securities and Exchange Commission pursuant to the Securities

15  Act of 1933, as amended.

16         (d)  Notes, bonds, and other obligations issued by the

17  State of Florida or its municipalities, counties, and other

18  taxing districts, or by the United States Government and its

19  agencies.

20         (e)  Intangible personal property held in trust

21  pursuant to any stock bonus, pension, or profit-sharing plan

22  or any individual retirement account which is qualified under

23  s. 530, s. 401, or s. 408, or s. 408A of the United States

24  Internal Revenue Code, 26 U.S.C. ss. 530, 401, and 408, and

25  408A, as amended.

26         (f)  Intangible personal property held under a

27  retirement plan of a Florida-based corporation exempt from

28  federal income tax under s. 501(c)(6) of the United States

29  Internal Revenue Code, 26 U.S.C., if the primary purpose of

30  the corporation is to support the promotion of professional

31  sports and the retirement plan is either a qualified plan


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  1  under s. 457 of the United States Internal Revenue Code or the

  2  contributions to the plan, pursuant to a ruling by the United

  3  States Internal Revenue Service, are not taxable to plan

  4  participants until actual receipt or withdrawal by the

  5  participant.

  6         (g)  Notes and other obligations, except bonds, to the

  7  extent that such notes and obligations are secured by

  8  mortgage, deed of trust, or other lien upon real property

  9  situated outside the state.

10         (h)  The assets of a corporation registered under the

11  Investment Company Act of 1940, 15 U.S.C. s. 80a-1-52, as

12  amended.

13         (i)  All intangible personal property issued in or

14  arising out of any international banking transaction and owned

15  by a banking organization.

16         (j)  Units of a unit investment trust organized under

17  an agreement or declaration of trust and registered under the

18  Investment Company Act of 1940, as amended, whose portfolio of

19  assets consists solely of assets exempt under this section.

20         (k)  Interests in real estate securitizations,

21  including, but not limited to, real estate mortgage investment

22  conduits (REMIC) and financial asset securitization trusts

23  (FASITS), which that are directly or indirectly secured by or

24  payable from notes and obligations that are in turn secured

25  solely by a mortgage, deed of trust, or other lien upon real

26  property situated in or outside of the state, including, but

27  not limited to, mortgage pools, participations, and

28  derivatives and are held as investments by banks or savings

29  associations in compliance with regulatory agency guidelines.

30         (l)  One-third of the accounts receivable arising or

31  acquired in the ordinary course of a trade or business which


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  1  are owned, controlled, or managed by a taxpayer on January 1,

  2  1999, and thereafter. It is the intent of the Legislature

  3  that, pursuant to future legislative action, the portion of

  4  such accounts receivable exempt from taxation be increased to

  5  two-thirds for taxes levied on January 1, 2000, and further

  6  increased to all such accounts receivable on January 1, 2001,

  7  and thereafter. This exemption does not apply to accounts

  8  receivable which arise outside the taxpayer's ordinary course

  9  of trade or business. For the purposes of this chapter, the

10  term "accounts receivable" means a business debt that is owed

11  by another to the taxpayer or the taxpayer's assignee in the

12  ordinary course of trade or business and is not supported by

13  negotiable instruments. Accounts receivable include, but are

14  not limited to, credit card receivables, charge card

15  receivables, credit receivables, margin receivables, inventory

16  or other floor plan financing, lease payments past due,

17  conditional sales contracts, retail installment sales

18  agreements, financing lease contracts, and a claim against a

19  debtor usually arising from sales or services rendered and

20  which is not necessarily due or past due. The examples

21  specified in this paragraph shall be deemed not to be

22  supported by negotiable instruments. The term "negotiable

23  instrument" means a written document that is legally capable

24  of being transferred by indorsement or delivery. The term

25  "indorsement" means the act of a payee or holder in writing

26  his or her name on the back of an instrument without further

27  qualifying words other than "pay to the order of" or "pay to"

28  whereby the property is assigned and transferred to another.

29         (m)  Stock options granted to employees by their

30  employer pursuant to an incentive plan, if the employees

31  cannot transfer, sell, or mortgage the options. Stock


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  1  purchased by an employee from an employer pursuant to an

  2  incentive plan shall be treated as a nontaxable stock option

  3  if part of the purchase price of the stock is nonrecourse debt

  4  secured by the stock and the stock cannot be sold,

  5  transferred, or assigned by the employee until the nonrecourse

  6  debt is discharged. Such stock becomes taxable stock when it

  7  can be sold, transferred, or assigned by the employee.

  8         (5)  Those organizations Every bank and savings

  9  association, as defined in s. 220.62(1), (2), (3), or (4) are,

10  is exempt from .5 mill of the tax imposed by s. 199.032.

11         (8)  Every insurer, as defined in s. 624.03, whether

12  the insurer is authorized or unauthorized as defined in s.

13  624.09, is exempt from the tax imposed by s. 199.032.

14         Section 7.  The amendment to subsection (5) and the

15  creation of subsection (8) of section 199.185, Florida

16  Statutes, by this section shall apply to taxes due on or after

17  July 1, 1999.

18         Section 8.  Effective for tax years beginning after

19  December 31, 1999, sections 199.104 and 220.68, Florida

20  Statutes, are repealed.

21         Section 9.  Subsections (3) and (4) of section 199.282,

22  Florida Statutes, are amended to read:

23         199.282  Penalties for violation of this chapter.--

24         (3)(a)  If any annual or nonrecurring tax is not paid

25  by the due date, a delinquency penalty shall be charged.  The

26  delinquency penalty shall be 10 percent of the delinquent tax

27  for each calendar month or portion thereof from the due date

28  until paid, up to a limit of 50 percent of the total tax not

29  timely paid.

30         (b)  If any annual tax return required by this chapter

31  is not filed by the due date, a penalty of 10 30 percent of


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  1  the tax due with the return shall be charged for each calendar

  2  month or portion thereof during which the return remains

  3  unfiled, up to a limit of 50 percent of the total tax due for

  4  each year or portion of the year during which the return

  5  remains unfiled.

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  7  For any penalty assessed under this subsection, the combined

  8  total for all penalties assessed under paragraphs (a) and (b)

  9  shall not exceed 10 percent per calendar month, up to a limit

10  of 50 percent of the total tax due.

11         (4)  If an annual tax return is filed and property is

12  either omitted from it or undervalued, then a specific penalty

13  shall be charged.  The specific penalty shall be 10 30 percent

14  of the tax attributable to each omitted item or to each

15  undervaluation. No delinquency or late filing penalty shall be

16  charged with respect to any undervaluation.

17         Section 10.  Subsection (3) of section 199.292, Florida

18  Statutes, is amended to read:

19         199.292  Disposition of intangible personal property

20  taxes.--All intangible personal property taxes collected

21  pursuant to this chapter shall be placed in a special fund

22  designated as the "Intangible Tax Trust Fund." The fund shall

23  be disbursed as follows:

24         (3)  An amount equal to 33.5 percent Of the remaining

25  intangible personal property taxes collected, an amount equal

26  to 35.3 percent in state fiscal year 1998-1999 and an amount

27  equal to 37.7 percent in each year thereafter, shall be

28  transferred to the Revenue Sharing Trust Fund for Counties. An

29  amount equal to 66.5 percent Of the remaining taxes collected,

30  an amount equal to 64.7 percent in state fiscal year 1998-1999

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  1  and an amount equal to 62.3 percent in each year thereafter,

  2  shall be transferred to the General Revenue Fund of the state.

  3         Section 11.  Effective July 1, 2000, subsection (10) of

  4  section 220.02, Florida Statutes, is amended to read:

  5         220.02  Legislative intent.--

  6         (10)  It is the intent of the Legislature that credits

  7  against either the corporate income tax or the franchise tax

  8  be applied in the following order: those enumerated in s.

  9  220.68, those enumerated in s. 631.719(1), those enumerated in

10  s. 631.705, those enumerated in s. 220.18, those enumerated in

11  s. 631.828, those enumerated in s. 220.181, those enumerated

12  in s. 220.183, those enumerated in s. 220.182, those

13  enumerated in s. 220.1895, those enumerated in s. 221.02,

14  those enumerated in s. 220.184, those enumerated in s.

15  220.186, and those enumerated in s. 220.188.

16         Section 12.  Effective July 1, 2000, subsections (4),

17  (7), and (8) of section 624.509, Florida Statutes, are amended

18  to read:

19         624.509  Premium tax; rate and computation.--

20         (4)  The intangible tax imposed under chapter 199, The

21  income tax imposed under chapter 220, and the emergency excise

22  tax imposed under chapter 221 which are paid by any insurer

23  shall be credited against, and to the extent thereof shall

24  discharge, the liability for tax imposed by this section for

25  the annual period in which such tax payments are made.  As to

26  any insurer issuing policies insuring against loss or damage

27  from the risks of fire, tornado, and certain casualty lines,

28  the tax imposed by this section, as intended and contemplated

29  by this subsection, shall be construed to mean the net amount

30  of such tax remaining after there has been credited thereon

31  such gross premium receipts tax as may be payable by such


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  1  insurer in pursuance of the imposition of such tax by any

  2  incorporated cities or towns in the state for firefighters'

  3  relief and pension funds and police officers' retirement funds

  4  maintained in such cities or towns, as provided in and by

  5  relevant provisions of the Florida Statutes.  For purposes of

  6  this subsection, payments of estimated income tax under

  7  chapter 220 and of estimated emergency excise tax under

  8  chapter 221 shall be deemed paid either at the time the

  9  insurer actually files its annual returns under chapter 220 or

10  at the time such returns are required to be filed, whichever

11  first occurs, and not at such earlier time as such payments of

12  estimated tax are actually made.

13         (7)  Credits and deductions against the tax imposed by

14  this section shall be taken in the following order: deductions

15  for assessments made pursuant to s. 440.51; credits for taxes

16  paid under ss. 175.101 and 185.08; credits for income taxes

17  paid under chapter 220, the emergency excise tax paid under

18  chapter 221 and the credit allowed under subsection (5), as

19  these credits are limited by subsection (6); credits for

20  intangible taxes paid under chapter 199; all other available

21  credits and deductions.

22         (8)  From and after July 1, 1980, the premium tax

23  authorized by this section shall not be imposed upon receipts

24  of annuity premiums or considerations paid by holders in this

25  state and from and after July 1, 1991, the intangible tax

26  imposed by chapter 199 shall not be imposed on assets equal to

27  the statutory legal reserves of annuity products maintained by

28  insurance companies on behalf of their holders if the tax

29  savings derived are credited to the annuity holders.  Upon

30  request by the Department of Revenue, any insurer availing

31  itself of this provision shall submit to the department


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  1  evidence which establishes that the tax savings derived have

  2  been credited to annuity holders.  As used in this subsection,

  3  the term "holders" shall be deemed to include employers

  4  contributing to an employee's pension, annuity, or

  5  profit-sharing plan.

  6         Section 13.  For tax years beginning after December 31,

  7  1999, no credit under section 624.509(4), Florida Statutes,

  8  for intangible tax imposed under chapter 199, Florida

  9  Statutes, shall be available.

10         Section 14.  Except as otherwise expressly provided in

11  this act, this act shall take effect July 1, 1998.

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