Did a single-member LLC and its Florida member both have intangible-tax filing duties?

Subject

Limited Liability Companies and Limited Liability Company Interest

Plain-English summary

Both the single-member LLC and its Florida member had intangible-tax reporting duties under the Chapter 199 provisions applied in 2000. The LLC was a separate "person" for this tax and had to report nonexempt intangible property it owned, managed, or controlled with Florida taxable situs.

The member also had to report the ownership interest in the LLC. The Department found no Chapter 199 exemption for an LLC interest, even though the LLC would be disregarded as a separate entity for federal income-tax purposes.

What this means for you

Federal disregarded-entity treatment did not determine the historical Florida intangible-tax result. The ruling treated the LLC's assets and the member's LLC interest as separate reportable property.

Common questions

Q: Did the LLC itself have to file? Yes, for nonexempt intangible property with Florida situs.

Q: Did the member also have to file? Yes, to report the LLC interest.

Q: Was the LLC interest exempt under section 199.185? No.

Citations and references

• Fla. Stat. § 199.023 — intangible personal property and person
• Fla. Stat. § 199.032 — annual intangible personal property tax
• Fla. Stat. § 199.052(1) — return filing requirement
• Fla. Stat. § 199.175(1) — Florida taxable situs
• Fla. Stat. § 199.185 — exemptions
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00C2-007

Original ruling text

SUMMARY

QUESTION: Is an LLC required to file and pay intangible
personal property taxes, and if so, would the interest held
by the single member of the LLC be exempted under s.
199.185, F.S.?

ANSWER - BASED ON FACTS BELOW: An LLC is required to file
and pay intangible tax on property which has a taxable
situs in this State. The member of an LLC must also file a
return to report the member's interest in the LLC.

Dec 06, 2000

Re: Technical Assistance Advisement No. 00C2-007
Intangible Tax - Applicability of Tax on Limited Liability
Companies and Limited Liability Company Interest
Sections 199.023(1)(a), 199.052(1), and 199.175(1), F.S.
XXX (hereinafter Taxpayer)

Dear :

Your letter requesting a Technical Assistance Advisement
has been referred to this office for response. The specific
scenario for which advice has been requested is summarized
below.

Facts as Presented by Petitioner

The taxpayer is a Florida resident, and contemplates
forming a single-member limited liability company under the
provisions of Chapter 608 of the Florida Statutes (the "LLC").
It is contemplated that the LLC will hold title to a variety of
asset classes having a taxable situs in Florida, including
investment securities which are not exempt from the Florida
intangible personal property tax. For federal income tax
purposes, the LLC will be disregarded as a separate entity and
all revenue, expenses and other reportable items will be

incorporated into the taxpayer's personal income tax return as
if the business and investment activities of the LLC were
carried on by the taxpayer as a sole proprietorship.

Request for Advisement

A Technical Assistance Advisement is requested addressing
the following issues:

Is the LLC required to file an annual intangible tax return
with the department and pay intangible personal property
taxes on all non-exempted intangible personal property held
by the LLC, or should the LLC be disregarded for purposes
of Chapter 199 and all non-exempted intangible personal
property be included in the single-member's intangible tax
return?

If the department determines that the LLC is required to
file an annual intangible tax return, would the LLC
interest held by the [single member of the limited
liability company] be exempted under s. 199.185, F.S.?

Provisions of Law

Section 199.032, F.S., imposes an annual tax on each dollar
of the just valuation of all intangible personal property that
has a taxable situs in this state.

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

(1) "Intangible personal property" means all personal
property which is not in itself intrinsically valuable, but
which derives its chief value from that which it
represents, including, but not limited to, the following:

(a) All stocks or shares of incorporated or unincorporated
companies, business trusts, and mutual funds....

(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.

Pursuant to s. 199.052(1), F.S., an intangible tax return
is to be filed by a taxpayer who on January 1 owns, manages, or
controls any intangible personal property which has a taxable
situs in Florida. Section 199.175(1), F.S., provides that
intangible personal property has a taxable situs in Florida when
it is owned, managed, or controlled by any person domiciled in
this state on January 1 of the tax year. The member of an LLC
must report the interest in the LLC on the member's return. The
LLC must include all non-exempt intangible personal property
that it owns, manages, or controls, on its return.

Position of the Department

An LLC is a person subject to the intangible tax under ss.
199.023, 199.032, and 199.052, F.S. Exemptions are narrowly
construed, and there is no provision in Chapter 199, F.S., that
exempts an interest in an LLC. Therefore, any interest held by
a member in an LLC is subject to the intangible 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
predicated 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,

Celestine Grantham
Senior Tax Specialist
Technical Assistance and Dispute Resolution
Office of General Counsel

CG/mh