Senate Bill 0060c1

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    Florida Senate - 2000                             CS for SB 60

    By the Committee on Fiscal Resource and Senator Lee





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  1                      A bill to be entitled

  2         An act relating to the tax on intangible

  3         personal property; amending s. 199.032, F.S.;

  4         reducing the rate of such tax; amending s.

  5         199.033, F.S.; reducing the rates of the tax on

  6         securities in a Florida Futures Investment Fund

  7         to conform; amending s. 199.185, F.S.;

  8         exempting accounts receivable from the tax as

  9         of a specified date; deleting an exemption from

10         the tax to conform; amending s. 199.023, F.S.;

11         amending the definition of the term "beneficial

12         interest"; amending s. 199.052, F.S.; relieving

13         trustees of specified obligations; deleting a

14         distinction between Florida-situs trusts and

15         foreign-situs trusts; amending the obligations

16         of Florida residents who have a beneficial

17         interest in a trust; imposing obligations on

18         certain agents other than trustees; exempting

19         certain banks and savings associations from

20         specified responsibilities; providing that a

21         bank's or savings association's management or

22         control of certain intangible personal property

23         may not be used as the basis for imposing the

24         tax; relieving Florida investment advisors of

25         specified obligations; amending s. 199.175,

26         F.S.; amending, for purposes of determining

27         taxable situs, the definition of the term "any

28         person domiciled in this state"; amending s.

29         199.183, F.S.; exempting from the tax certain

30         intangible personal property that is owned,

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    Florida Senate - 2000                             CS for SB 60
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  1         managed, or controlled by a trustee of a trust;

  2         providing an effective date.

  3

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

  5

  6         Section 1.  Section 199.032, Florida Statutes, is

  7  amended to read:

  8         199.032  Levy of annual tax.--An annual tax of 1 mill

  9  1.5 mills is imposed on each dollar of the just valuation of

10  all intangible personal property that has a taxable situs in

11  this state, except for notes and other obligations for the

12  payment of money, other than bonds, which are secured by

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

14  situated in the state. This tax shall be assessed and

15  collected as provided in this chapter.

16         Section 2.  Section 199.033, Florida Statutes, is

17  amended to read:

18         199.033  Securities in a Florida's Future Investment

19  Fund; tax rate.--

20         (1)  Notwithstanding the provisions of this chapter,

21  the tax imposed under s. 199.032 on securities in a Florida's

22  Future Investment Fund shall apply at the rate of 0.85 mill

23  1.35 mills when the average daily balance in such funds

24  exceeds $2 billion and at the rate of 0.70 mill 1.20 mills

25  when the average daily balance in such funds exceeds $5

26  billion.

27         (2)  This section shall not apply in any year in which

28  the revenues of the foundation in the previous calendar year

29  are less than the tax savings allowed by this section.  "Tax

30  savings" means the difference between the tax that would be

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    Florida Senate - 2000                             CS for SB 60
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  1  imposed pursuant to s. 199.032 and the tax rate specified in

  2  subsection (1).

  3         Section 3.  Paragraph (l) of subsection (1) and

  4  subsection (2) of section 199.185, Florida Statutes, are

  5  amended to read:

  6         199.185  Property exempted from annual and nonrecurring

  7  taxes.--

  8         (1)  The following intangible personal property shall

  9  be exempt from the annual and nonrecurring taxes imposed by

10  this chapter:

11         (l)  Two-thirds of The accounts receivable arising or

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

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

14  2001 2000, and thereafter. It is the intent of the Legislature

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

16  such accounts receivable exempt from taxation be increased to

17  all such accounts receivable on January 1, 2001, and

18  thereafter. This exemption does not apply to accounts

19  receivable that arise outside the taxpayer's ordinary course

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

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

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

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

24  negotiable instruments. Accounts receivable include, but are

25  not limited to, credit card receivables, charge card

26  receivables, credit receivables, margin receivables, inventory

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

28  conditional sales contracts, retail installment sales

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

30  debtor usually arising from sales or services rendered and

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

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    Florida Senate - 2000                             CS for SB 60
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  1  specified in this paragraph shall be deemed not to be

  2  supported by negotiable instruments. The term "negotiable

  3  instrument" means a written document that is legally capable

  4  of being transferred by indorsement or delivery. The term

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

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

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

  8  whereby the property is assigned and transferred to another.

  9         (2)(a)  With respect to the first mill of the annual

10  tax, Every natural person is entitled each year to an

11  exemption of the first $20,000 of the value of property

12  otherwise subject to said tax.  A husband and wife filing

13  jointly shall have an exemption of $40,000.

14         (b)  With respect to the last 0.5 mill of the annual

15  tax, every natural person is entitled each year to an

16  exemption of the first $100,000 of the value of property

17  otherwise subject to said tax. A husband and wife filing

18  jointly shall have an exemption of $200,000. Agents and

19  fiduciaries, other than guardians and custodians under a

20  gifts-to-minors act, filing as such may not claim this

21  exemption on behalf of their principals or beneficiaries;

22  however, if the principal or beneficiary returns the property

23  held by the agent or fiduciary and is a natural person, the

24  principal or beneficiary may claim the exemption.  No taxpayer

25  shall be entitled to more than one exemption under this

26  subsection paragraph (a) and one exemption under paragraph

27  (b).  This exemption shall not apply to that intangible

28  personal property described in s. 199.023(1)(d).

29         Section 4.  Subsection (7) of section 199.023, Florida

30  Statutes, is amended to read:

31         199.023  Definitions.--As used in this chapter:

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    Florida Senate - 2000                             CS for SB 60
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  1         (7)  A resident has a "beneficial interest" in a

  2  foreign trust if the resident has a vested interest, even if

  3  subject to divestment, which includes at least a current right

  4  to income and either a power to revoke the trust or a general

  5  power of appointment, as defined in 26 U.S.C. s. 2041(b)(1).

  6         Section 5.  Subsections (5), (6), (9), and (15) of

  7  section 199.052, Florida Statutes, are amended to read:

  8         199.052  Annual tax returns; payment of annual tax.--

  9         (5)  The trustee of a Florida-situs trust is not

10  primarily responsible for returning the trust's intangible

11  personal property and is not required to pay any paying the

12  annual tax on it,.

13         (a)  A trust has a Florida situs when:

14         1.  All trustees are residents of the state;

15         2.  There are three or more trustees sharing equally in

16  the ownership, management, or control of the trust's

17  intangible property, and the majority of the trustees are

18  residents of this state; or

19         3.  Trustees consist of both residents and nonresidents

20  and management or control of the trust is with a resident

21  trustee.

22         (b)  When trustees consist of both residents and

23  nonresidents and management or control is with a nonresident

24  trustee, the trust does not have Florida situs and no return

25  is necessary by any resident trustee.

26         (c)  A portion of the trust has Florida situs when

27  there are two trustees, one a resident of this state and one a

28  nonresident, and they share equally in the ownership,

29  management, or control of the trust's intangible property. The

30  tax on such property shall be based on the value apportioned

31  between them.

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    Florida Senate - 2000                             CS for SB 60
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  1         (d)  If there is more than one trustee in the state,

  2  only one tax return for the trust must be filed.

  3         (e)  The trust's beneficiaries, however, may

  4  individually return their equitable shares of the trust's

  5  intangible personal property and pay the tax on such shares,

  6  in which case the trustee need not return such property or pay

  7  such tax, although the department may require the trustee to

  8  file an informational return.

  9         (6)  Each Florida resident with a beneficial interest,

10  as defined in s. 199.023(7), in a foreign-situs trust, that

11  is, a trust with situs outside of this state, is primarily

12  responsible for returning the resident's equitable share of

13  the trust's intangible personal property and paying the annual

14  tax on it.  The trustee of a foreign trust may return and pay

15  the tax on the equitable shares of all Florida residents

16  having beneficial interests, in which case the residents need

17  not return such property or pay such tax.

18         (9)  Where an agent other than a trustee has control or

19  management of intangible personal property, the principal is

20  primarily responsible for returning such property and paying

21  the annual tax on it, but the agent shall return such property

22  on behalf of the principal and pay the annual tax on it if the

23  principal fails to do so.  The department may in any case

24  require the agent to file an informational return.

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

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

27  as a trustee, the bank or savings association is not

28  responsible for returning the trust's intangible personal

29  property and is not required to pay any annual tax on it, and

30  intangible personal property of the trust shall not have

31  taxable situs in this state pursuant to s. 199.175 solely by

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    Florida Senate - 2000                             CS for SB 60
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  1  virtue of the management or control of the bank or savings

  2  association may not be used as the basis for imposing any

  3  annual tax on any person or any assets of the trust. If a

  4  person acts as a fiduciary or agent for purposes of managing

  5  intangible assets owned by another person, such intangible

  6  assets shall not have a taxable situs in this state pursuant

  7  to s. 199.175 solely by virtue of the management or control of

  8  such assets by the person who is not the owner of the assets.

  9         Section 6.  Paragraph (a) of subsection (1) of section

10  199.175, Florida Statutes, is amended to read:

11         199.175  Taxable situs.--For purposes of the annual tax

12  imposed under this chapter:

13         (1)  Intangible personal property shall have a taxable

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

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

16  year.  Such intangibles shall be subject to annual taxation

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

18  controls them is specifically exempt or unless the property is

19  specifically exempt. This provision shall apply regardless of

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

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

22  business may be conducted from which the intangible arises.

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

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

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

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

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

28  business transacted outside this state.

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

30  domiciled in this state" means:

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    Florida Senate - 2000                             CS for SB 60
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  1         1.  Any natural person who is a legal resident of this

  2  state;

  3         2.  Any business, business trust as described in

  4  chapter 609, company, corporation, partnership, or other

  5  artificial entity organized or created under the law of this

  6  state, except a trust; or

  7         3.  Any person, including a business trust, who has

  8  established a commercial domicile in this state.

  9         Section 7.  Subsection (4) is added to section 199.183,

10  Florida Statutes, to read:

11         199.183  Taxpayers exempt from annual and nonrecurring

12  taxes.--

13         (4)  Intangible personal property that is owned,

14  managed, or controlled by a trustee of a trust is exempt from

15  annual tax under this chapter. This exemption does not exempt

16  from annual tax a resident of this state who has a taxable

17  beneficial interest, as defined in s. 199.023, in a trust.

18         Section 8.  This act shall take effect July 1, 2000,

19  and apply to tax years beginning after December 31, 2000.

20

21          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
22                              SB 60

23

24  The committee substitute amends various sections of chapter
    199 to provide that intangible personal property tax will not
25  be imposed upon intangible personal property owned by a
    non-resident simply because the property is managed or
26  controlled by a person domiciled in Florida. It relieves
    Florida trustees of trusts and investment advisors of the
27  responsibility of returning and paying intangibles tax on
    assets they control.
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