Did coverage by Florida's Sunshine Law exempt the association from intangible property tax?

Subject

Exempt Taxpayers

Plain-English summary

Coverage by Florida's Government in the Sunshine Law did not exempt the association from annual intangible personal property tax. The redacted association was organized under IRC section 501(c)(9), established through collective bargaining with a city, funded by the city and participants, and governed by five trustees.

The Department found that Sunshine Law coverage used a different test from tax-exempt status. The association was not a governmental entity, political subdivision, municipality, or one of the nonprofit institutions specifically exempted by Chapter 199.

What this means for you

Open-government obligations did not automatically convert a private organization into a tax-exempt public body. The ruling strictly applied the exemption categories written into the intangible-tax statute.

Common questions

Q: Did Sunshine Law coverage create a tax exemption? No.

Q: Did section 501(c)(9) status qualify as the charitable exemption described in the ruling? No. The cited charitable category used section 501(c)(3), not section 501(c)(9).

Q: Was the association subject to the annual intangible tax? Yes, under the law applied in this 2000 ruling.

Citations and references

• Fla. Stat. § 199.023(3) — definition of person
• Fla. Stat. § 199.052(1), (5) — annual intangible-tax returns
• Fla. Stat. § 199.183 — exempt intangible property
• IRC § 501(c)(9) — voluntary employees' beneficiary association
• Regal Kitchens, Inc. v. Florida Department of Revenue, 641 So. 2d 158 (Fla. 1st DCA 1994) — strict construction of exemptions
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00C2-004

Original ruling text

SUMMARY

QUESTION: Are taxpayers exempt from Intangible Personal
Property Tax because they are subject to the Government in
the Sunshine Law?

ANSWER - BASED ON FACTS BELOW: No, Chapter 199, F.S., does
not provide an exemption from the tax merely because the
taxpayer is subject to the Government in the Sunshine Law.

Apr 26, 2000

Re: Technical Assistance Advisement 00C2-004
Intangible Personal Property Tax - Exempt Taxpayers
Section 199.183, F.S.
XXX, hereinafter referred to as "A"
XXX, hereinafter referred to as "City"

Dear:

Your letter, on behalf of the Board of Trustees of "A", dated
XX, requests a Technical Assistance Advisement concerning
whether or not "A" is exempt from the annual intangible personal
property tax imposed under Chapter 199, F.S. This response to
your request constitutes a Technical Assistance Advisement under
Chapter 12-11, Florida Administrative Code, and is issued to you
under the authority of s. 213.22, Florida Statutes.

FACTS

"A" is a XXX, organized as a 501(C)(9), I.R.C., association.
"A" was established through a collective bargaining agreement
between the City and the XXX. Contributions to "A" are made by
the City and the participants. "A" is governed by a board of
five trustees.

In XXX, after receiving an intangible personal property tax
return, "A" determined that it was liable for the tax. On XXX,

after reviewing Attorney General Opinion 98-01, "A" requested a
determination from the Attorney General that it was not subject
to the Government in the Sunshine Law. On XXX, the Attorney
General responded that the conclusion reached in Attorney
General Opinion 98-01 appears to be applicable to "A" ("A" would
be subject to the Government in the Sunshine Law).

QUESTION

Since "A" is subject to the Government in the Sunshine Law, is
it exempt from the Intangible Personal Property Tax?

DISCUSSION AND ANALYSIS OF LAW

Section 199.052, F.S., states in part:...

(1) An annual intangible tax return must be filed with the
department by every corporation authorized to do business
in this state or doing business in this state and by every
person, regardless of domicile, who on January 1 owns,
controls, or manages intangible personal property which has
a taxable situs in this state. For purposes of this
chapter, "control" or "manage" does not include any
ministerial function or any processing activity. The
return shall be due on June 30 of each year. It shall list
separately the character, description, and just valuation
of all such property. (emphasis supplied)

(5) The trustee of a Florida-situs trust is primarily
responsible for returning the trust's intangible personal
property and paying the annual tax on it....

Section 199.023, F.S., states in part:...

As used in this chapter:
(3) "Person" means any individual, firm, partnership, joint
adventure, syndicate, or other group or combination acting
as a unit, association, corporation, estate, trust,
business trust, trustee, personal representative, receiver,
or other fiduciary and includes the plural as well as the
singular.

Section 199.183, F.S., states in part:...

(1) Intangible personal property owned by this state or any
of its political subdivisions or municipalities shall be
exempt from taxation under this chapter. This exemption
does not apply to:

(a) Any leasehold or other interest that is described in s.
199.023(1)(d).

(b) Property related to the provision of two-way
telecommunications services to the public for hire by the
use of a telecommunications facility, as defined in s.
364.02(13), and for which a certificate is required under
chapter 364, when such service is provided by any county,
municipality, or other political subdivision of the state.
Any immunity of any political subdivision of the state or
other entity of local government from taxation of the
property used to provide telecommunication services that is
taxed as a result of this paragraph is hereby waived.
However, intangible personal property related to the
provision of such telecommunications services provided by
the operator of a public-use airport, as defined in s.
332.004, for the operator's provision of telecommunications
services for the airport or its tenants, concessionaires,
or licensees, and intangible personal property related to
the provision of such telecommunications services provided
by a public hospital, are exempt from taxation under this
chapter.

(2) Intangible personal property owned by nonprofit
religious, nonprofit educational, or nonprofit charitable
institutions shall be exempt from taxation under this
chapter. This exemption shall be strictly defined,
limited, and applied in each category as follows:

(a) "Religious institutions" means churches and
ecclesiastical or denominational organizations having
established physical places for worship in this state at
which nonprofit religious services and activities are

regularly conducted, as well as church cemeteries.

(b) "Educational institutions" means only:

1. Public or nonprofit private schools, colleges, or
   universities conducting regular classes and courses of
   study required for accreditation by, or membership in, the
   Southern Association of Colleges and Schools, Department of
   Education, or the Florida Council of Independent Schools;
   or

2. Nonprofit libraries, art galleries, and museums open to
   the public.

(c) "Charitable institutions" means only:

1. Nonprofit corporations operating physical facilities in
   this state at which are provided charitable services, a
   reasonable percentage of which shall be without cost to
   those unable to pay; or

2. Those institutions qualified as charitable under s.
   501(c)(3) of the United States Internal Revenue Code of
   1954.

Intangible personal property shall not be deemed to be
owned by such exempt institutions if it is held in a trust
of any kind under which the institution has no present
interest in the trust principal except the right to compel
the performance of the trust agreement.... (emphasis
supplied)

Subparagraph 501(C)(9), I.R.C., identifies:

Voluntary employees' beneficiary association providing for
the payment of life, sick, accident, or other benefits to
the members of such association or their dependents or
designated beneficiaries, if no part of the net earnings of
such association inures (other than through such payments)
to the benefit of any private shareholder or individual.

"A" is registered with the Internal Revenue Service as a
501(C)(9) association, and is not considered a government

entity. There are no provisions in Chapter 199, F.S., to exempt
such an organization from the intangible personal property tax.
A tax exemption must be strictly construed against the party
claiming the exemption. See Regal Kitchens, Inc. v. Florida
Department of Revenue, 641 So.2d 158, 164 (Fla. 1st DCA 1994)
and Asphalt Pavers, Inc. v. Department of Revenue, 584 So.2d 55,
57 (Fla. 1st DCA 1991).

Qualifications for an organization to operate under the
Government in the Sunshine Law are quite different from the
qualifications necessary to be considered a political
subdivision or municipality. The Attorney General's letter dated
XX, noted that recent decisions in the courts have broadened the
test used to determine whether the open government laws apply to
a private entity, focussing on whether the private entity is
merely providing services to the public agency or is standing in
the shoes of the public agency. This test is substantially
different from the strict requirements to be exempt from Chapter
199, F.S.

CONCLUSION

"A" is not an exempt entity under Chapter 199, F.S. Therefore
"A" is subject to the intangible personal property tax.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
based on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect

confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Robert DuCasse
Technical Assistance and Dispute Resolution

RCD/
Control No.: 40396