The purpose of the proposed changes to Rule Chapter 12C-2, F.A.C. (Intangible Personal Property Tax), is to remove provisions regarding the administration of the annual intangible personal property tax repealed effective January 1, 2007, by Chapter ...

 

DEPARTMENT OF REVENUE
Corporate, Estate and Intangible Tax

RULE NO: RULE TITLE
12C-2.001: Definitions
12C-2.002: Property Subject to Tax - Annual and Nonrecurring
12C-2.003: Exemptions
12C-2.004: Levy of Tax - Annual and Nonrecurring
12C-2.005: Due Date - Payment of Tax - Discounts Allowed
12C-2.006: Taxable Situs - Reporting Requirements - Who Shall File a Return
12C-2.0061: Transfer of Intangible Personal Property to Certain Out-of-State Entities
12C-2.0062: Management or Control
12C-2.0063: Intangible Personal Property Held in Trusts
12C-2.007: Penalties and Interest
12C-2.008: Information Reports
12C-2.010: Valuations
12C-2.0105: Tax Credits
12C-2.011: Administration
12C-2.0115: Public Use Forms
12C-2.012: Refunds
PURPOSE AND EFFECT: The purpose of the proposed changes to Rule Chapter 12C-2, F.A.C. (Intangible Personal Property Tax), is to remove provisions regarding the administration of the annual intangible personal property tax repealed effective January 1, 2007, by Chapter 2006-312, L.O.F. These proposed changes: (1) remove provisions from the rule chapter that have been rendered obsolete with the repeal of the annual personal property tax; and (2) update, consolidate, and simplify provisions for the administration of the 1 mill tax imposed on the value of leases of government-owned property and the 2 mill nonrecurring tax imposed on the value of notes, bonds, and other obligations for payment of money that is secured by a mortgage, deed of trust, or other lien on Florida real property.
SUMMARY: The following rule sections have been rendered obsolete and are proposed to be repealed from Rule Chapter 12C-2, F.A.C. (Intangible Personal Property Tax):
12C-2.002 Property Subject to Tax – Annual and Nonrecurring
12C-2.003 Exemptions
12C-2.006 Taxable Situs – Reporting Requirements – Who Shall File a Return
12C-2.0061 Transfer of Intangible Personal Property to Certain Out-of-State Entities
12C-2.0062 Management or Control
12C-2.0063 Intangible Personal Property Held in Trust
12C-2.008 Information Reports
12C-2.0105 Tax Credits
The proposed amendments to the following rule sections in Rule Chapter 12C-2, F.A.C., provide for the continued administration of the one mill tax imposed on government leasehold estates and the nonrecurring two mill tax imposed on notes, bonds, and other obligations for payment of money secured by Florida real property:
12C-2.001 Definitions
12C-2.004 Property Subject to Tax – Government Leasehold Estates and Nonrecurring
12C-2.005 Reporting Requirements – Due Date – Payment of Tax – Discounts Allowed
12C-2.007 Penalties and Interest
12C-2.010 Valuations
12C-2.011 Administration
12C-2.0115 Public Use Forms
12C-2.012 Refunds
These rule sections: (1) retain the definitions for just value and other synonymous terms; (2) provide for the imposition of the one mill tax imposed on government leasehold estates and the two mill nonrecurring tax imposed on value of notes, bonds, and other obligations for payment of money that is secured by a mortgage, deed of trust, or other lien on Florida real property; (3) provide for the valuation of leases of governmental property subject to tax and for the valuation of property subject to the nonrecurring tax; (3) provide for the requirements for the administration of the taxes, including the due dates, discounts allowed, the methods of payment, and the imposition of penalties and interest; (4) provide for the administration of refunds for the overpayment of the tax; (5) remove obsolete forms no longer used by the Department and adopt revisions to forms that continue to be used for reporting the government leasehold tax; and (6) update information on how to obtain copies of forms from the Department.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: No Statement of Estimated Regulatory Cost was prepared.
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.
SPECIFIC AUTHORITY: 199.202(2), 213.06(1) FS.
LAW IMPLEMENTED: 196.199, 199.133, 199.135, 199.143, 199.145, 199.155, 199.183, 199.232, 199.292, 213.235, 213.255(2), (3), 215.26(2) FS.
A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
DATE AND TIME: November 13, 2007, 9:00 a.m.
PLACE: Room 118, Carlton Building, 501 S. Calhoun Street, 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: Larry Green 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 RULE IS: Joe Parramore, 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 RULE IS:

 

12C-2.001 Definitions.

The following terms and phrases when used in these regulations and in the interpretation thereof, shall have the meaning ascribed to them as follows:

(1) “Domicile and Residence” – For the purpose of these regulations the two terms are synonymous. The terms domicile and residence describe where a person has his true, fixed and permanent home and principal establishment, and to which when absent, he has the intention of returning. The following criteria will give rise to a presumption of Florida domicile unless refuted by competent evidence: qualifying for Homestead exemption or voting rights. Other factors which may be considered but which are not conclusive are: ownership of Florida residence, having Florida licenses, or declaration of Florida residency on Federal income tax returns. Any alien political refugee possessing a permanent visa meeting the criteria above will be considered domiciled in this state.

(2) “Foreign” – Belonging or attached to a political jurisdiction other than the State of Florida, its counties or municipalities.

(3) “Just Value, Just Valuation, Cash Value, Full Cash Value, Present Cash Value, Market Value, Actual Value and Value” These terms are synonymous. These terms mean the The price which the vendor’s interest would bring if offered for sale by one who desires to sell but is not compelled to sell, and bought by one willing to buy but not compelled to buy, with both seeking to maximize their gains and neither being in a position to take advantage of the other.

Specific Authority 199.202, 213.06(1) FS. Law Implemented 196.199(2)(b) 199.023 FS. History–New 4-17-72, Amended 9-27-76, Formerly 12C-2.01, Amended 11-21-91,________.

 

12C-2.002 Property Subject to Tax – Annual and Nonrecurring.

Specific Authority 199.202, 213.06(1) FS. Law Implemented 199.023, 199.032, 199.042, 199.052, 199.057, 199.062, 199.175, 199.103, 199.133, 199.135, 199.143, 199.145, 199.155, 199.175, 199.183, 199.185, 199.202 FS. History–New 4-17-72, Revised 12-20-73, Amended 11-17-74, Formerly 12C-2.02, Amended 11-21-91, 10-9-01, Repealed________.

 

12C-2.003 Exemptions.

Specific Authority 199.202, 213.06(1) FS. Law Implemented 199.183, 199.185, 213.12(2) FS. History–New 4-17-72, Revised 12-20-73, Amended 11-17-74, 4-21-75, Formerly 12C-2.03, Amended 11-21-91, 10-9-01, Repealed________.

 

12C-2.004 Property Subject to Levy of Tax – Government Leasehold Estates Annual and Nonrecurring.

(1) Annual Tax on Government Leasehold Estates – All leases of government-owned property are subject to tax if rental payments are due as consideration for the lease. (The tax is imposed every year.) An annual tax on the just value of intangible property having a taxable situs in Florida is levied as follows:

(a)1. All firms, partnerships, joint ventures, associations, corporations, estates, trusts, trustees, personal representatives, receivers, guardians, custodians and other fiduciaries are subject to the full tax rate of $1.00 per thousand dollars (1 mill ) of just value of intangible property having a taxable situs in Florida.

2. Example: Artificial entities and fiduciaries.

              Stocks              150,000.00

              Bonds              125,000.00

              Loans to Stockholders

              (outstanding balances)              50,000.00

              Taxable Assets              $325,000.00

              Exemption              250,000.00

              Tax Rate              x .001

              Tax Due              $75.00

(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).

Examples:

1. Individual having taxable assets valued at $300,000.00.

              Taxable Assets              $300,000.00

              Exemption              - 250,000.00

              Net Taxable Assets              $ 50,000.00

              Tax Rate              x .001

              Tax Due                            $50.00

              Total Tax Due              $0 (tax due is less than $60.00)

2. Individual having taxable assets valued at $430,000.

              Taxable Assets              $430,000.00

              Exemption              - 250,000.00

              Net Taxable Assets              $180,000.00

              Tax Rate              x .001

              Tax Due              $180.00

              Total Tax Due              $180.00

3. Married couple filing jointly having taxable assets valued at $555,000.

              Taxable Assets              $555,000.00

              Exemption              - 500,000.00

              Net Taxable Assets              $55,000.00

              Tax Rate              x .001

              Tax Due              $55.00

              Total Tax Due              $0 (tax due is less than $60.00)

4. Married couple filing jointly having taxable assets valued at $760,000.00

              Taxable Assets              $760,000.00

              Exemption              - 500,000.00

              Net Taxable Assets              $260,000.00

              Tax Rate              x .001

              Tax Due              $260.00

              Total Tax Due              $260.00

(2) Nonrecurring tax:

(2)(a)1. A There shall be levied a nonrecurring tax is imposed at the rate of $2.00 per thousand dollars (2 mills) of the just value of a note or other obligation for payment of money that which is secured by a mortgage, deed of trust, or other lien on Florida real property. Agreements and contracts for deeds and written agreements not to encumber or convey realty are subject to this levy.

(b) The following are examples of property subject to the nonrecurring tax:

1. Agreements or contracts for deed.

2. Agreements not to encumber real property if the agreement attaches as a lien on the real property.

3. Future Advances – to the extent secured by a lien on Florida real property.

4. Line of Credit – to the extent secured by a lien on Florida real property, as described in Section 199.143, F.S.

(c)2. Example: Note and mortgage given to secure loan with a principal amount of $1,000,000.

Tax computation:

              Principal              $1,000,000.00

              Tax rate              x.002

              Tax due              $2,000.00

              Tax due              $2,000.00

(3)(a)(b)1. Where a note, bond or other obligation for the payment of money is secured by realty located both inside and outside in and out of the state and by personal property located both inside and outside in and out of the state, the nonrecurring tax is required to shall be apportioned based on each type of property's relative percentage of the principal amount of debt at the time the obligation is created.

(b)2.a. Example: Note and mortgage given to secure a loan of $1,000,000. The mortgage includes real property realty located in and out of Florida as well as personal property personalty located in and out of Florida. The lender is a Florida Business.

Security              Value              Percentage              Tax

Value of Florida Real
Property Realty              $250,000.00              25%              $500.00(*)

Value of NonFlorida
Real Property Realty              250,000.00              25%              -0-

Total Value of All
Real Property Realty              500,000.00              50%              N/A

Value of Florida
Personal Property Personalty              250,000.00              25%              $375.00(**)

Value of NonFlorida
Personal Property Personalty              250,000.00              25%              $375.00(**)

Total Value of All
Personal Property Personalty              500,000.00              50%              $750.00(**)

Total Collateral              $1,000,000.00              100%

(*) Nonrecurring 2 mill tax

(**) There is no tax on personal property. Annual tax on outstanding balance January 1 of tax year.

b. Example:

Note and mortgage given to secure a loan of $1,000,000. The mortgage includes realty located in and out of Florida as well as personalty located in and out of Florida. Assume the lender does not have a taxable situs within Florida.

Security              Value              Percentage              Tax

Value of Florida Realty              $250,000.00              25%              $500.00

Value of NonFlorida Realty              250,000.00               25%              0

Total Value of All Realty              500,000.00              50%              N/A

Value of Florida Personalty              -250,000.00              25%              0

Value of NonFlorida Personalty              250,000.00               25%               0

Total Value of All Personalty              500,000.00              50%              N/A

Total Collateral              $1,000,000.00              100%

(c)1.a. Notes and mortgages securing future advances or lines of credit are taxable at the time each advance is made whether or not a note is recorded and tax is due only on the amount of the advance.

b. Example: A mortgage on Florida real estate provides for future advances up to a total of $1,000,000. A future advance is made for $500,000. Nonrecurring tax in the amount of $1,000 ($500,000 x .002 = $1,000) is due.

2.a. A line of credit secured by the equity in a borrower's home is subject to nonrecurring tax on the maximum amount of the line. Subsequent borrowings under the line are not subject to nonrecurring tax.

b. Example: A borrower establishes a $50,000 line of credit with a bank and secures the line with a mortgage on the equity in his home. The borrower initially draws the full line of $50,000 and pays nonrecurring tax on this maximum amount. The borrower later repays $30,000 of the initial amount borrowed and then draws another $15,000. The $15,000 draw of funds under the line is not subject to nonrecurring tax, since the nonrecurring tax was already paid on $50,000, the maximum credit limit under the line.

(3)(a)(d)1. Where the value of real property estate pledged to secure an obligation is less than the balance of the obligation, then the annual tax is applicable to that amount of the obligation exceeding the value of the real estate if the lender has a taxable situs in the state. The amount of the obligation secured by the value of Florida real property estate is subject to the nonrecurring tax.

(b)2. Example:

              Principal Amount of Loan              $1,000,000.00

              Less Value of Florida Real Property Estate              -500,000.00

              Amount (subject to nonrecurring tax)              $500,000.00

              Amount Not Secured by Real Estate

              (subject to annual tax)              $500,000.00

Specific Authority 199.202, 213.06(1) FS. Law Implemented 196.199(2)(b), 199.032, 199.133, 199.135, 199.143, 199.145, 199.155, 199.183 199.185 FS., s. 1, Ch. 2001-885, L.O.F. 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,_______.

 

12C-2.005 Reporting Requirements – Due Date – Payment of Tax – Discounts Allowed.

(1)(a)1. Governmental Leasehold Annual Tax –

(a)1.a. Every person, regardless of domicile, who leases property from a governmental entity in this state, is required to file a return with the Department. All intangible personal property subject to tax is required to shall be assessed at its just value as of January 1 of each year. The tax is to be reported on a Governmental Leasehold Intangible Personal Property Tax Return (Form DR-601G, incorporated by reference in Rule 12C-2.0115, F.A.C.). The return and the tax are shall be due June 30 and shall be paid on or before June 30 of each the year it is due to be paid.

2.b. A No return, accompanied with tax due, for the current tax year, that is postmarked or delivered to received by the Department on or before department shall be considered delinquent if it bears a postmark date of June 30 of the tax year will be considered timely filed or earlier. A return that bears a postmark, or is delivered to the Department, after June 30 of the tax year is delinquent.

c. When June 30 falls on a Saturday, Sunday, or legal state or federal holiday, returns postmarked or delivered to the Department department on the next succeeding workday will be deemed to have been filed timely. For purposes of this rule, a legal holiday means a holiday that is observed by federal or state agencies as a legal holiday as this term is defined in Chapter 683, F.S., and s. 7503 of the Internal Revenue Code of 1986, as amended. A “legal holiday’ pursuant to s. 7503 of the Internal Revenue Code of 1986, as amended, means a legal holiday in the District of Columbia or a statewide legal holiday at a location outside the District of Columbia but within an internal revenue district.

d. The full amount of the tax shown on a return must accompany the return at the time it is filed.

2.e. The following discounts may be claimed Annual taxes paid during the following periods shall be entitled to a discount for early payment when the return and payment are postmarked or delivered to the Department on or before the last day of the month of the following periods:

a.(I) 4% during January and February;

b.(II) 3% during March;

c.(III) 2% during April;

d.(IV) 1% during May;

e.(V) No discount during for taxes paid in June.

3.2. The postmark date will determine the date of payment for payments mailed to the department. If no postmark is available, then the date indicated by the taxpayer on the return signature line or the date of delivery to the Department department will be the date of payment.

(b)1. When the tax due, before discount is less than $60, no return is required to be filed and no tax is due. Taxpayers who receive a Government Leasehold Intangible Personal Property Tax Return from the Department for which no tax is due may file the return, without payment, to inform the Department that no tax is due. Filing this informational return will eliminate additional inquiries from the Department regarding the filing of the return. Taxpayers who are under audit, examination, or investigation by the Department will be required to file a completed return, even the amount of tax due with the return is less than sixty dollars ($60). No person subject to the annual tax shall be required to file a return or pay a tax if the tax due, before discount, is less than sixty dollars ($60.00).

2. The annual return filing requirement will be satisfied by a corporation filing an annual report with the Department of State which indicates whether the corporation has a liability for the intangible tax. Corporations not required to file an annual report with the Department of State must file an intangible tax return even though no tax is due.

(2) Nonrecurring Tax –

(a) The nonrecurring 2 mill tax on notes, bonds and other obligations for the payment of money which are secured by mortgage, deed of trust or other lien on Florida real property is shall be due and payable at the time the instrument is presented for recordation.

(b) If there is no written instrument, or if the written instrument is not presented for recordation, the nonrecurring tax of 2 mills is shall be due and payable within 30 days following the creation of the obligation.

(c) If a mortgage, deed of trust, or other instrument evidencing a lien subject to the nonrecurring tax secures a revolving line of credit, a line of credit, or future advances, the tax is due, shall be paid as provided in paragraphs (a) and (b) of this subsection on the initial debt or obligation, excluding future advances. Thereafter, each time a future advance is made under a future advance mortgage additional nonrecurring tax is due shall be paid.

(3) Extension of Time time for Filing filing Government Leasehold Tax Return annual tax –

(a)1. The Department will department shall grant an extension of time of 3 months for filing a return or reporting report and paying the tax when it is determined there is reasonable cause for granting the extension. Reasonable cause for the purpose of administering these provisions shall be deemed to be one of the following:

a. Having been granted an extension of time to file federal income taxes. A copy of the extension from the Internal Revenue Service IRS must accompany the request for extension of time; or

b. A tax payment of 100% of last year’s intangible tax or 90% of the current year's tax accompanies the request for extension; or

c. The records necessary to complete the return are not available due to fire, illness or death of the person having the knowledge to complete the return; or

d. Reasonable cause is established under the provisions of Rule 12-13.007, F.A.C.

2. All requests for extensions of time, for filing returns or reporting reports and paying the tax, must be filed with the Department on a Governmental Leasehold Intangible Personal Property Tax Application for Extension of Time to File Return (Form DR-602G, incorporated by reference in rule 12C-2.0115, F.A.C.) made in writing and must be received by the Department on or before June 30 of the tax year department prior to the due date. Request for extension of time to file an intangible tax return is to be made on form DR-602 (Intangible Tax Application for Extension of Time to File Return, incorporated by reference in Rule 12C-2.0115, F.A.C.). The Department will notify inform taxpayers only if the request is of requests that are denied.

2.3. The extension of time covers the period July 1 through September 30. No penalty will be assessed if the return is filed and the tax due is paid on or before September 30 of the tax year. All taxes paid after June 30 of the tax year with an extension of time are subject to interest as, provided prescribed in Rule 12C-2.007, F.A.C. Interest will be assessed on tax paid after June 30, including those taxes for which an extension of time to file and pay has been granted.

(b) Examples:

1. A taxpayer requested and was granted an extension of time to file a an intangible tax return and paid the tax due with the return. The extension was granted through September 30 of the tax year. On September 30 of the tax year, intangible tax in the amount of $100 is paid. No penalties are due because of the approved extension of time to file. However, interest in the amount of $3.00 is due. (See Rule 12C-2.007, F.A.C.)

Tax Due With Return              $100

Penalties                   0

Interest                   3

Total Due With Return              $103

Interest                   3

Total Due With Return              $103

2. A taxpayer is granted an extension of time to file a an intangible tax return and pay the tax due with the return. The extension was granted through September 30 of the tax year. On October 1 of the tax year a return is filed and the intangible tax is paid. On October 1, this date the extension of time to file is void. The taxpayer is liable for all penalties and interest from June 30 of the tax year date until the date paid. (See Rule 12C-2.007, F.A.C.)

              Tax Due With Return              $100

              Penalties: Delinquency (40%)

              Late Filing (40%)

              [Maximum delinquency and late filing Penalty (40%)]                  40

              Interest                            3

              Total Due With Return              $143

              Interest                                  3

              Total Due With Return              $143

Specific Authority 199.202, 213.06(1) FS. Law Implemented 196.199(2)(b), 199.042, 199.052, 199.135, 199.202, 607.1622 FS. History–New 4-17-72, Revised 12-20-73, Amended 11-17-74, Formerly 12C-2.05, Amended 11-21-91, 10-9-01, 5-4-03,________.

 

12C-2.006 Taxable Situs – Reporting Requirements – Who Shall File a Return.

Specific Authority 199.202, 213.06(1) FS. Law Implemented 199.052, 199.057, 199.062, 199.175, 199.202 FS. History–New 4-17-72, Revised 12-20-73, Amended 11-17-74, 9-27-76, 9-6-77, Formerly 12C-2.06, Amended 11-21-91, 1-5-94, 6-2-98, 10-9-01, 5-4-03, Repealed________.

 

12C-2.0061 Transfer of Intangible Personal Property to Certain Out-of-State Entities.

Specific Authority 199.202, 213.06(1) FS. Law Implemented 199.052, 199.175 FS. History–New 6-2-98, Repealed________.

 

12C-2.0062 Management or Control.

Specific Authority 199.202, 213.06(1) FS. Law Implemented 199.052, 199.175 FS. History–New 6-2-98, Repealed________.

 

12C-2.0063 Intangible Personal Property Held in Trusts.

Specific Authority 199.202, 213.06(1) FS. Law Implemented 199.052, 199.175 FS. History–New 6-2-98, Amended 10-9-01, Repealed________.

 

12C-2.007 Penalties and Interest.

(1) Delinquent Penalty.

(a) A Any annual or nonrecurring tax which is not paid by the due date shall accrue a delinquent penalty of 10 percent of the tax due, per month or portion of a month, will accrue on the governmental leasehold estates intangible tax and the nonrecurring intangible tax that is not paid on or before the due date. The delinquent penalty will not to exceed a maximum of 50 percent of the tax due.

(b) Example:

1. Tax Return and payment postmarked July 5th of current tax year

2. Tax due $100

3. Calculation of Penalty:

              Tax Due              $100.00

1 month late (1 .10 = .10)x10

Penalty$  10.00

(2) Late Filing Penalty. A late filing penalty of 10 percent of the tax due, per month or portion of a month, will accrue on governmental leasehold estates intangible tax returns not filed on or before the due date. The late filing penalty will not exceed 50 percent of the tax due.

(a) Any annual tax return not filed by the due date shall be charged a specific late filing penalty for each year or portion of a year the return remains unfiled. The late filing penalty accrues at the rate of 30 percent of the tax due with the return for each year or portion of a year until paid. This penalty is in addition to any other penalty which may be due.

(b) Example:

1. Tax return and payment postmarked July 5th of current tax year.

2. Tax due $100

3. Calculation of Penalty:

              Tax due              $100

              Delinquency penalty              $10

              Late filing penalty              $30

              Tax and penalty due              $140

              Tax & penalty due              $140

(3) The combined penalties provided in subsections (1) and (2) will not exceed 10 percent of the tax due per month, or portion of a month, and is limited to 50 percent of the tax due. Beginning with tax year 1999 and thereafter, when a tax payment is delinquent and the tax return is filed after June 30 of the tax year, the maximum for the combined penalties shall be 10 percent per month, not to exceed a maximum of 50 percent of the tax due with the return.

(4) Omitted Property Penalty.

(a) Property which is omitted from a return shall be subject to a specific penalty of 30 percent of the tax due on the omitted property and is also subject to the delinquency penalty.

(b)1. Examples:

              Tax due on omitted property              $100

              Delinquent penalty for 1 month              $10

              Omitted property penalty (.30)              $30

              Tax & penalty due              $140

2. Same as Example 1. except omitted property was discovered during an audit 2 years after the tax was due.

              Tax due on omitted property              $100

              Delinquent penalty for 1 month              $50

              (50% Maximum)              $30

              Tax & penalty due              $180

(4)(5) Undervaluation Penalty.

(a) Governmental leasehold estate property Property which has been reported at an amount a value less than market just value is shall be subject only to a specific undervaluation penalty of 10 percent 30% of the tax due attributed to the undervaluation.

(b) Example: Property reported at a value of $100,000. Its just value is $200,000.

              Tax due on undervaluation              $100

              Undervaluation penalty (100 x .30)              30

              Total Tax plus penalty              $110

(6) Penalty for Late Filing of a Security Position Statement.

(a) Security dealer/investment advisors who fail to timely file their Florida customer position statements are subject to an initial penalty of $10 per customer position statement, plus the greater of 1% of the initial penalty or $50 per month until the position statements are filed. The minimum penalty charged for failure to provide the customer position statements is $100.

(b) Security dealer/investment advisors who do not hold securities on account for customers must notify the Department that they do not hold securities for customers. Failure to provide this notice on or before June 30 will subject the security dealer/investment advisor to a $100 penalty.

(c) Position statements which are submitted in a form which is not compatible with the Department’s data processing equipment or which are inaccurate are not consider filed.

(5)(7)(a) Interest accrues. All taxpayers shall pay interest at the following rate:

1.One Percent per month (prorated daily using the daily factor of .000328767) for payments due prior to January 1, 2000.

2. For payments due on or after January 1, 2000, the rate of interest established pursuant to Section 213.235, F.S., and Rule 12-3.0015, F.A.C. (prorated daily).

(b) Interest is due based on the amount of tax paid after June 30 of the tax year regardless of any extension of time granted by the Department for paying the tax or filing a return. Interest accrues on the unpaid tax beginning July 1 of the tax year and is calculated through and including the date of payment.

(8) Penalties for delinquency, late filing, undervaluation, or omission will be settled or compromised upon a showing by the taxpayer that the result was due to reasonable cause and not willful neglect as provided in Chapter 12-13, F.A.C. Interest cannot be waived unless there is doubt as to liability or collectability.

Specific Authority 199.202, 213.06(1), 213.21 FS. Law Implemented 196.199(2)(b), 199.052, 199.282, 213.235 FS. History–New 4-17-72, Revised 12-20-73, Amended 9-27-76, 4-2-78, Formerly 12C-2.07, Amended 11-21-91, 5-18-93, 4-2-00, 10-9-01, 5-4-03,________.

 

12C-2.008 Information Reports.

Specific Authority 199.202, 213.06(1) FS. Law Implemented 199.052, 199.057, 199.062, 199.185, 607.1622, 733.702 FS. History–New 4-17-72, Revised 12-20-73, Amended 4-21-75, Formerly 12C-2.08, Amended 7-31-90, 11-21-92, 1-5-94, 10-9-01, 5-4-03, Repealed________.

 

12C-2.010 Valuations.

(1) Annual Tax.

(a) Shares of stock of corporations regularly listed on any stock exchange or regularly traded over the counter shall be valued at their closing price on the last business day of the previous calendar year.

(b) Shares of stock of corporations which are subject to restrictions or are letter stock shall be valued based on the facts and circumstances of each case. Taxpayers owning shares of restricted stock, wishing to establish a discount prior to filing a return, may request a letter of technical advice or a technical assistance advisement.

(c) Shares of stock in corporations which are closely held and are not regularly traded over the counter, having no actual sales within a reasonable period of time, shall be valued using generally accepted valuation methods applied to the following valuation approaches:

1. Capitalization of earnings or dividends;

2. Weighted average of factors;

3. Adjusted book value;

4. In addition, consideration shall be given to the influence of the following factors on the marketability of the shares being valued:

a. The nature of the business;

b. The history of the enterprise;

c. The economic outlook in general;

d. The economic condition and outlook for the industry;

e. The book value of the stock;

f. The adjusted book value of the stock;

g. The financial condition of the business;

h. The earning capacity of the business;

i. The dividend paying capacity –– whether or not the company has paid a dividend;

j. The company's value of goodwill or other intangible value;

k. The sales of the stock;

l. The size of the block to be valued; and

m. The market price of stocks of corporations in the same or similar line of business.

(d) Shares of stock of corporations subject to restrictive agreements - Where shares of stock were acquired subject to an option reserved by the issuing corporation to repurchase at a certain price, the option may represent the fair market value. If the option or buy and sell agreement, is the result of voluntary action by the stockholder and is binding during his life as well as at death, such an agreement may or may not fix the value, depending on the facts and circumstances of each case. Where the stockholder is free to dispose of his shares during his life and the option is to become effective only upon death, the fair market value is not limited to the option price.

(e) Shares of stock have no taxable value until issued.

(f) Treasury stock acquired by the corporation for a specific purpose is valued based upon the purpose for which it was acquired.

(g)1. The interest of a limited partner in a limited partnership registered with the Securities and Exchange Commission is to be valued at its traded market value when traded on an exchange or over-the-counter.

2. Those limited partnership interests having no current traded market value are to be valued at their acquisition cost.

3. A taxpayer who believes his limited partnership interest has a value less than the acquisition cost may submit evidence with his return to establish a lesser value.

4. The interest of a limited partner in a partnership which is organized as an investment fund is valued for tax purposes based only on the assets in the portfolio which are subject to tax under Chapter 199, F.S. For example: The fund holds in its portfolio of assets U.S. Government Debt obligations (50%), State of Florida bonds (25%), Corporate bonds (15%), and other securities (10%). The taxable value of an interest in this limited partnership (fund) would be 25% of the value of the limited partnership interest (net asset value).

(h) Accounts receivable shall be valued at their outstanding balance as of the close of business on the last day of the previous calendar year, less a deduction of a reasonable amount for uncollectible accounts. Such deduction shall be established by actual amounts or shown by the history of uncollectible accounts. This provision shall apply even if the business is on a cash basis accounting system. Cross Reference – subsection 12C-2.003(9), F.A.C.

(i) Notes not secured by realty – The fair market value of a note will be presumed to be the unpaid balance on January 1 of each year, unless it can be shown to the satisfaction of the department that the note has a value less than the unpaid balance on January 1.

(j) Business Trust – A money market or mutual fund which is organized under an agreement or indenture of trust shall be valued based upon the following guidelines to determine what portion, if any, of the net asset value of the trust will be exempt from taxation:

1. The portion of the net asset value of the trust that is attributable to direct obligations of the United States Government is exempt from taxation.

2. If the remaining portion of the net asset value of the trust, after removing the portion representing United States Government obligations, represents assets which are themselves exempt from Florida's intangible tax, then this portion of the net asset value of the trust's portfolio is also exempt from tax.

3. If the remaining portion of the net asset value of the trust, after removing the portion attributable to United States Government obligations, represents any asset which is taxable under Florida law, then the remaining portion of the net assets value of the trust is subject to tax.

(k) Bonds regularly traded on an exchange or over-the-counter are to be valued at their traded price. Bonds for which no traded value can be established can be valued at their face value.

(l) Taxpayers who feel that a security does not have a value equal to the published traded value at years end or whose security has no traded value may present evidence with their intangible tax return to establish a lesser value. Any value established by the taxpayer is subject to audit by the Department.

(1)(m) Leases of Governmental Property Leasehold estates and possessory interest in governmental property.

(a)1. The just value of a lease of lessee’s leasehold estate or possessory interest in governmental property described in subsection 12D-3.003(3), F.A.C., is shall be determined by valuing the lease rental payments for the remaining term of the lease on January 1 of the tax year, subject to the following provisions:

1.a. The lease rental payments to be valued do shall 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 shall 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.b. If lease rental 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 shall be the lease rental payment to be valued.

3.c. If the lease rental 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 rental payment to be valued will shall 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 shall 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 rental payment to be discounted will shall be the annual fair market rental for the property.

4.d. Otherwise, the analyzed lease rental payment required under the lease is shall be the amount to be valued. The valuation factors to be used shall be based on the Federal Reserve discount rate – Atlanta – on the last business day of the preceding year, plus one percent.

5.e. The period for which the lease rental payments are to be valued 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 shall be considered a full year for the purpose of this rule.

6.f. If the final period for which the lease rental payment is to be valued is less than a year, the lease rental payment 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)2. Nothing in this paragraph exempts tangible personal property, buildings, or real property improvements owned by the lessee from ad valorem taxation. Such items are not includable in the just value of the lessee’s interest in leased governmental property classified as intangible property. Cross Reference – Chapter 12D-3, F.A.C.

(c)3. The following examples illustrate the provisions of this paragraph:

1.a. Lessee makes $4,000.00 annual payments to lessor that which includes $1,000.00 tax on a lease with 10 years remaining and the Federal Reserve discount rate – Atlanta – is 11%. The value of the lessee’s interest is would be determined by discounting the net annual rent of $3,000.00 for 10 years at 12%. This results in a taxable value of $16,950.60.

2.b. A lessee has 10 years remaining on a percentage lease with an original term of 13 years and the Federal discount rate – Atlanta – is 11%. The lessee has paid $5,000.00 in the first previous year, $6,000.00 in the second previous year and $4,000.00 in the third previous year. The value of the lessee’s interest would be determined by averaging the prior payments of $5,000.00, $6,000.00, and $4,000.00. The lessee’s interest of $5,000.00 would be discounted for 10 years at 12% or $28,251.00.

(2) Nonrecurring Tax.

(a) All obligations for the payment of money, evidenced by note, bond, or deed of trust secured by a written specific lien on real property located in this state are valued at an amount shall have a value equal to the principal amount of indebtedness at the time of execution.

(b) Agreements for deed constitute intangible property within the classification subject to the nonrecurring tax as a lien in equity on real property. The agreements for deed or contracts for deed are shall be taxable at the principal amount of indebtedness at the time the agreement is executed.

(3) All other forms of intangible property not specifically covered by the preceding subsections of this section shall be valued in accordance with generally accepted valuation principles.

Specific Authority 199.202, 213.06(1) FS. Law Implemented 196.199(2)(b), 199.023, 199.052, 199.103, 199.155 FS. History–New 4-7-72, Revised 12-0-73, Amended 9-27-76, 8-8-78, 12-31-80, Formerly 12C-2.10, Amended 11-21-91, 5-18-93, 10-9-01,________.

 

12C-2.0105 Tax Credits.

Specific Authority 199.202(2), 213.06(1) FS. Law Implemented 199.104, 199.106 FS. History–New 5-18-93, Amended 10-9-01, Repealed________.

 

12C-2.011 Administration.

(1) Nonrecurring Tax – Payments made directly to Department.

(1) Only nonrecurring tax due on obligations or advances made under instruments which have been previously recorded or which are not normally recorded or which are not normally taxed at the time of recording may be paid directly to the Department. This will include, but will not be limited to, tax payments due on an advance made under a future advance clause of a recorded mortgage on real property, advances made under a revolving line of credit secured by a recorded mortgage on real property, or the obligation created under an agreement or contract for deed.

(2) Persons paying the nonrecurring tax directly to the Department are required to file a report using department shall use the format described below to report and pay the tax:

(a)1. Include Such report shall include the taxpayer’s name, mailing address, city and state, and the taxpayer’s identification number.

2. Identify To identify the obligation for which tax is being paid, including the following the report shall also contain:

a. The name of the obligor;

b. The county in which the real property is located;

c. The the official record book and page number of the recording, if any;

d. The parcel number assigned by the county property appraiser or legal description;

e. The amount on which tax is being paid;

f. The date on which obligation or advance was made; and

g. The amount of tax.

(b) Taxpayers must mail these tax Tax payments to shall be mailed to Florida Department of Revenue, 5050 West Tennessee Street, Tallahassee, Florida 32399-0100 or may be presented to a local office of the Department of Revenue.

(3) Taxpayers may apply to the Department department to pay the nonrecurring tax by attaching a list attached to the a report.

(a) This No person shall use this procedure may not be used without prior approval of the Department department.

(b) Persons wishing to apply for approval should send a written request to report by list shall make requests to the Florida Department of Revenue, Central Registration, P. O. Box 6480, Tallahassee, Florida 32314-6480.

(c) All persons desiring or using this procedure are shall be subject to audit and are required to shall make their records available for inspection by the Department department.

(d) All persons approved to use this procedure are required to shall keep a journal, account book or other record of original entry, showing a listing of all obligations or advances which have been made or executed. The journal must include shall show a daily listing, or a listing as required by the Department, department and shall show the county of recording, the official record book and page number of the recording, if any, the amount of each obligation or advance, the date the obligation was created or advance was made and the amount of tax paid, and the date on which the tax payment was made.

(e) The list must shall contain the same information as required by paragraph (2)(a).

(4)(a) The authority to use this procedure shall not be unreasonably withheld by the department.

(4)(a)(b) Any However, any person having a history of delinquent tax payments for any tax or of returned checks will shall be denied the use of this procedure.

(b)(c) The authority to use this procedure will may be canceled by the Department department when any person knowingly files a false report, fails or refuses, or neglects to file the proper report or fails to maintain proper records.

Specific Authority 199.202(2), 213.06(1) FS. Law Implemented 199.103, 199.133, 199.135, 199.222, 199.232, 199.292 FS. History–New 4-17-72, Amended 9-26-77, 10-16-80, Formerly 12C-2.11, Amended 11-21-91,________.

 

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) Copies of these forms are available, without cost, by one or more of the following methods: 1) downloading the form from the Department's Internet site at www.myflorida. com/dor/forms; or, 2) faxing a forms request to the Distribution Center at [phone]; or, 3) calling the Department at [phone], Monday through Friday, 8:00 a.m. to 7:00 p.m., Eastern Time Distribution Center at [phone]; or, 3) visiting any local Department of Revenue Service Center; or, 4) writing the Florida Department of Revenue, Distribution Center, 168A Blountstown Highway, Tallahassee, Florida 32304; or, 5) visiting any local Department of Revenue Service Center to personally obtain a copy. Persons with hearing or speech impairments may call the Department's TDD at [phone] or [phone].

 

Form Number                            Title                                                                                    Effective Date

(2) DR-601-C                            2006 Florida Intangible
                                                                      Personal Property Tax
                                                                      Return for Corporation,
                                                                      Partnership, and Fiduciary
                                                                      Filers as of January 1, 2006

                                                                      (R. 01/06)                                                                                                  10/06

(3) DR-601CN                            2006 Instructions for Filing

                                                                      Form DR-601C Intangible

                                                                      Personal Property Tax

                                                                      Return for Corporation,

                                                                      Partnership and Fiduciary

                                                                      Filers (R. 01/06)                                                                                    10/06

(4) DR-601CS                            2006 Schedules B, C, D,

                                                                      and E for use with DR-601C

                                                                      (R. 01/06)                                                                                                  10/06

(2)(5) DR-601-G                            Government Leasehold Intangible

                                                                      Personal Property Tax Return

                                                                      for 2008 2006 Tax Year

                                                                      (R. 01/08 01/06)              ___                                                                       10/06

(6) DR-601-I                             2006 Florida Intangible

                                                                      Personal Property Tax

                                                                      Return for Individual and

                                                                      Joint Filers as of January 1, 2006

                                                                      (R. 01/06)                                                                                                  10/06

(7) DR-601IN                            2006 Instructions for Filing

                                                                      Form DR-601I Intangible

                                                                      Personal Property Tax

                                                                      Return for Individual and

                                                                      Joint Filers

                                                                      (R. 01/06)                                                                                                  10/06

(8) DR-601IS                            2006 Schedules B, C, D, and

                                                                      E for use with DR-601I

                                                                      (R. 01/06)                                                                                                  10/06

(3)(9) DR-602G                            Governmental Leasehold

                                                                      Intangible Personal Property

                                                                      Tax Application for Extension

                                                                      of Time to File Return

                                                                      (R. 01/07 01/05)              ___                                                                      06/05

(4)(10) DR-350111              Intangible Tax Self-Audit

                                                                      Worksheet (R 06/07

                                                                      07/06)                            ___                                                                                    10/06

(5)(11) DR-350112              Taxpayer Affidavit

                                                                      (R. 06/01)                                                                                                  05/03

(12) DR-350617                            Application for Exclusion
                                                                      from Filing Stockbroker
                                                                      Position Statement (R. 01/05)                                          06/05

(13) DR-350618                            Stockbroker Instructions and

                                                                      Specifications for Reporting
                                                                      Information or Magnetic

                                                                      Media (R. 01/06)                                                                                    10/06

(14) DR-350619                            Stockbroker Filing Magnetic

                                                                      Media Transmittal (R. 01/05)                                          06/05

(15) DR-350620                            Stockbroker Information Report

                                                                      (R. 01/05)                                                                                                  06/05

Specific Authority 199.202(2), 213.06(1) FS. Law Implemented 196.199(2), 199.023, 199.032, 199.042, 199.052, 199.062, 199.103, 199.1055, 199.135, 199.232, 199.292 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, ________.

 

12C-2.012 Refunds.

(1)(a) Any person entitled to a refund of intangible personal property taxes may seek a refund by filing an Application for Refund-Intangible Personal Property Tax (Form form DR-26I, incorporated by reference in Rule 12-26.008, F.A.C.) with the Department. Form DR-26I must be in accordance with the timing provisions of Section 215.26(2), F.S., and must meet the requirements of Section 213.255(2) and (3), F.S., and Rule 12-26.003, F.A.C.

(b)1. Form DR-26I, Application for Refund-Intangible Personal Property Tax, must be filed with the Department for tax paid on or after October 1, 1994, and prior to July 1, 1999, within 5 years after the date the tax was paid.

(b)2. Form DR-26I, Application for Refund-Intangible Personal Property Tax, must be filed with the Department for tax paid on or after July 1, 1999, within three (3) years after the date the tax was paid.

(2)(a) An automatic refund of the amount of overpayment of tax will be granted by the Department when the Department determines upon examination that an overpayment of the tax with the return has occurred, that no additional information is required to determine the correct amount of tax due, and that the overpayment of tax is in accordance with the timing provisions of Section 215.26(2), F.S.

(b) For example, an automatic refund will be granted by the Department when an examination of the return reveals that:

1. The discount pursuant to Section 199.042(2), F.S. (2005), has been understated.

2. The exemption provided in Section 199.185(2), F.S., has been understated.

2.3. The payment made with a Governmental Leasehold Intangible Personal Property Tax an Application for Extension of Time to File Return (Form form DR-602, incorporated by reference in Rule 12C- 2.0115, F.A.C.) exceeds the amount of tax due when the return is filed; or

3.4. A mathematical error on the return, such as the use of an incorrect tax rate or other calculation error, results in an overpayment.

Specific Authority 199.202, 213.06(1) FS. Law Implemented 196.199(2)(b), 199.042(2), 199.185(2), 199.232, 199.252, 213.255(2), (3), 215.26(2) FS. History–New 4-17-72, Formerly 12C-2.12, Amended 11-21-91, 5-4-03, 9-28-04,________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Joe Parramore, Revenue Program Administrator I, Technical Assistance and Dispute Resolution, Department of Revenue, P.O. Box 7443, Tallahassee, Florida 32314-7443, telephone [phone]
NAME OF SUPERVISOR OR PERSON WHO APPROVED THE PROPOSED RULE: Buzz McKown, Revenue Program Administrator II, Technical Assistance and Dispute Resolution, P.O. Box 7443, Tallahassee, Florida 32314-7443; telephone number [phone]
DATE PROPOSED RULE APPROVED BY AGENCY HEAD: October 9, 2007
DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: The proposed amendments to Rule Chapter 12C-2, F.A.C. (Intangible Personal Property Tax), were noticed in the Florida Administrative Weekly on August 10, 2007 (Vol. 33, No. 32, pp. 3559-3576). A rule development workshop was held on August 27, 2007. No one appeared to provide comment regarding these proposed rule changes. No written comments have been received by the Department