Sections 1 and 2, Chapter 2012-32, L.O.F., expanded the public purpose exemption from ad valorem taxes to the governmental leasehold intangible tax. The exemption applies retroactively to all governmental leaseholds in existence on January 1, 2011. ...

DEPARTMENT OF REVENUE
Corporate, Estate and Intangible Tax

RULE NO.: RULE TITLE:
12C-2.004: Property Subject to Tax - Government Leasehold Estates and Nonrecurring.
12C-2.010: Valuations
12C-2.0115: Public Use Forms

PURPOSE AND EFFECT: Sections 1 and 2, Chapter 2012-32, L.O.F., expanded the public purpose exemption from ad valorem taxes to the governmental leasehold intangible tax. The exemption applies retroactively to all governmental leaseholds in existence on January 1, 2011. The purpose of the proposed amendments to Rule Chapter 12C-2, F.A.C. (Intangible Personal Property Tax), is to include the provisions of Sections 1 and 2, Chapter 2012-32, L.O.F., and to adopt, by reference, changes to the tax return used to report the annual tax on governmental leasehold estates.

SUMMARY: The proposed amendments to Rule 12C-2.004, F.A.C. (Property Subject to Tax – Governmental Leasehold Estates and Nonrecurring), Rule 12C-2.010, F.A.C. (Valuations), and to Rule 12C-2.0115, F.A.C. (Public Use Forms): (1) include the provisions of Sections 1 and 2, Chapter 2012-32, L.O.F.; (2) provide that the Valuation Factor Tables used to calculate the annual tax on governmental leasehold estates will be published annually in Taxpayer Information Publications and posted to the Department’s Internet site; and (3) adopt, by reference, updates to the tax return used to report the annual tax on governmental leasehold estates that reflect law changes and remove provisions that limit the tax return to a single tax year.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: 1) no requirement for the Statement of Economic Regulatory Costs (SERC) was triggered under Section 120.541(1), F.S.; and 2) based on past experiences with activities with the administration of the governmental leasehold estates, and rules of this nature, the adverse impact or regulatory cost, if any, do not exceed nor would exceed any one of the economic analysis criteria in a SERC, as set forth in Section 120.541(2)(a), F.S.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 199.202, 213.06(1) FS.
LAW IMPLEMENTED: 119.071(5), 196.199(2), 199.032 (2005), 199.042 (2005), 199.103(7), 199.133, 199.135 (2005), 199.143, 199.145, 199.155, 199.183, 199.202, 199.232, 199.282 (2005), 199.292, 213.24(3), 215.26 FS.

A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:

DATE AND TIME: October 24, 2012, 10:00 a.m.

PLACE: 2450 Shumard Oak Boulevard, Building One, Room 1820, Tallahassee, Florida

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Tammy Miller at [phone]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULES IS: Robert DuCasse, Revenue Program Administrator I, Technical Assistance and Dispute Resolution, Department of Revenue, P. O. Box 7443, Tallahassee, Florida 32314-7443, telephone [phone]

 

THE FULL TEXT OF THE PROPOSED RULES IS:

12C-2.004 Property Subject to Tax – Governmental Leasehold Estates and Nonrecurring.

(1) Tax on Governmental Leasehold Estates – All leases of government-owned property are subject to an annual tax if rental payments are due as consideration for the lease, unless the lessee serves or performs a governmental, municipal, or public purpose or function as defined in Section 196.012, F.S. (The tax is imposed every year.)

(2) through (4) No change.

Rulemaking Authority 199.202, 213.06(1) FS. Law Implemented 196.199(2)(a), (b), 199.133, 199.135 (2005), 199.143, 199.145, 199.155, 199.183 FS. History–New 4-17-72, Revised 12-20-73, Amended 5-8-79, Formerly 12C-2.04, Amended 11-21-91, 5-18-93, 10-9-01, 1-28-08,________.

 

12C-2.010 Valuations.

(1) Leases of Governmental Property.

(a) The value of a lease of governmental property described in subsection 12D-3.003(3), F.A.C., is determined by valuing the lease payments for the remaining term of the lease on January 1 of the tax year, subject to the following provisions:

1. The lease payments to be valued do not include any amount for taxes, interest, insurance, repairs, maintenance, exclusive franchise or concession fees, costs of utilities, or similar charges required to be paid the lessor, and include only the amount paid by the lessee for the use of real or tangible property provided or owned by the governmental lessor, whether designated as a fixed sum, a percentage, or a variable amount.

2. If lease payments are nominal amounts, such as $1 or $10 per year, or the payments are significantly less than a fair market rental for the property, the annual fair market rent which would be paid by the lessee in the open market for comparable property under similar terms and circumstances will be the lease payment to be valued.

3. If payments required by the lease are based on some factor other than the passage of time, such as a percentage of sales or profits, the lease payment to be valued will be based on the average annual rent actually paid by the lessee in prior years, providing the amount so determined is not nominal or significantly less than the fair market rental for the property. The average annual rental used will be determined from the amounts paid by the lessee for a period not to exceed the previous five years. If the average so determined is nominal or is significantly less than fair market value for the property, the lease payment to be discounted will be the annual fair market rental for the property.

4. Otherwise, the annualized analyzed lease payment required under the lease is the amount to be valued. The valuation factors to be used are shall be based on the Federal Reserve discount rate – Atlanta – on the last business day of the preceding year, plus one percent. Valuation Factor Tables determined by the Department based on that discount rate, plus one percent, are annually published in a Taxpayer Information Publication and posted to the Department’s Revenue Law Library at www.myflorida.com/dor.

5. The period for which the lease payments are to be valued is shall be the number of years remaining under the lease, exclusive of renewal options, as of January 1 of the tax year. The year in which the lease will expire is to shall be considered a full year for the purpose of this rule.

6. If the final period for which the lease payment is to be valued is less than a year, the lease payment is to shall be valued using the 1 year value factor and the tax apportioned based on the number of months during the year that the lease is in effect.

(b) through (c) No change.

(2) No change.

Rulemaking Specific Authority 199.202, 213.06(1) FS. Law Implemented 196.199(2)(b), 199.155 FS. History–New 4-17-72, Revised 12-20-73, Amended 9-27-76, 8-8-78, 12-31-80, Formerly 12C-2.10, Amended 11-21-91, 5-18-93, 10-9-01, 1-28-08,________.

 

12C-2.0115 Public Use Forms.

(1)(a) The following public use forms and instructions are employed by the Department in its dealings with the public related to administration of the intangible tax. These forms are hereby incorporated and made a part of this rule by reference.

(b) No change.

Form NumberTitleEffective Date

(2) DR-601GGovernmental Leasehold Intangible Personal Property Tax Return

for 2012 Tax Year (R. 01/13 01/12) ___ 01/12

(http://www.flrules.org/Gateway/reference.asp?No=Ref-___ 00947)

(3) through (5) No change.

Rulemaking Authority 199.202(2), 213.06(1) FS. Law Implemented 119.071(5), 196.199(2), 199.032 (2005), 199.042 (2005), 199.052 (2005), 199.103(7)(2005), 199.135 (2005), 199.202, 199.232, 199.282 (2005), 199.292, 213.24(3), 215.26 FS. History-New 11-21-91, Amended 1-5-94, 10-9-01, 5-4-03, 9-28-04, 6-28-05, 10-30-06, 1-28-08, 1-27-09, 1-31-10, 2-7-11, 1-29-12,________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Robert DuCasse, Revenue Program Administrator I, Technical Assistance and Dispute Resolution, Department of Revenue, P.O. Box 7443, Tallahassee, Florida 32314-7443, telephone [phone].

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Governor and Cabinet

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: September 18, 2012

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: A Notice of Proposed Rule Development was published in the Florida Administrative Weekly on July 20, 2012 (Vol. 38, No. 29, pp. 2911-2912), to advise the public of the proposed changes to Rule Chapter 12C-2, F.A.C. (Intangible Personal Property Tax), and to provide that, if requested in writing, a rule development workshop would be held on August 8, 2012. No request was received by the Department. No written comments were received by the Department.