Could Florida assess 2001 intangible tax more than three years after it was due when the taxpayer had filed a telephonic zero-liability return?

Plain-English summary

The Florida Department of Revenue concluded that it could not assess additional 2001 intangible tax because the taxpayer had filed a return and the three-year assessment period had expired. The only stated exception was if fraud could be proven.

The taxpayer filed the 2001 intangible-tax return by telephone, reported stock holdings, and showed zero tax. An attorney had advised using the stock's par value, but the taxpayer later learned that fair market value was the proper method and used that method on later returns.

The 2001 tax was due June 30, 2001. The Department's initial audit letter came three years and four months after the due date and three years and nine months after the filing described in the ruling.

A documented zero return was still a filed return

The taxpayer produced a list of the stocks included with the filing and a confirmation number. A Department employee verified the confirmation, and the Department's database showed that a zero-tax return had been filed telephonically.

That evidence distinguished the case from one in which a taxpayer failed to file a required return. The fact that the return understated tax did not by itself mean no return existed.

The three-year period had expired

For taxes due on or after July 1, 1999, section 95.091(3)(a)1.a. allowed assessment within three years after the tax was due, the return was due, or the return was filed, whichever was later. Here, the filing occurred before the June 30 due date, and the audit did not begin within three years after that due date.

The 2001 individual intangible-tax form also stated that the audit period for a filed return had been reduced to three years.

Fraud remained an exception

Section 95.091 allowed assessment at any time when a required return was not filed or a fraudulent return was filed, subject to the qualifications quoted in the ruling. Because a return was documented, the Department concluded the year was closed unless it could prove fraud.

What this means for you

Taxpayers with electronic or telephone filings

Keep the confirmation number, submission details, schedules, and Department acknowledgments. Proof that a return was filed can determine whether an assessment period has expired.

Taxpayers who later discover a valuation mistake

An incorrect position does not necessarily erase the filing for limitations purposes. But the fraud exception and any disclosure rules must be evaluated on the actual facts.

Audit and controversy professionals

Identify the tax-due date, return-due date, actual filing date, first audit action, and any fraud or nonfiling allegation. The latest statutory trigger controls the ordinary assessment deadline.

Common questions

Q: Did the taxpayer file a paper return?
A: No. The ruling describes a telephonic filing documented by a confirmation number and the Department's database.

Q: Why did the return report no tax?
A: The taxpayer had been advised to value stock at par value and later learned that fair market value should have been used.

Q: When was the 2001 tax due?
A: June 30, 2001.

Q: How late was the Department's initial audit letter?
A: The ruling says it came three years and four months after the tax was due.

Q: Could the Department still assess if the return was fraudulent?
A: Yes. The Department expressly preserved the fraud exception.

Citations and references

• Fla. Stat. § 95.091(3)(a)1.a. — three-year assessment period for taxes due on or after July 1, 1999
• Fla. Stat. § 95.091(3)(a)5. — nonfiling and fraudulent-return provisions quoted in the ruling
• Fla. Stat. § 72.011 — tax categories referenced by section 95.091
• Fla. Admin. Code r. 12C-2.0115 — incorporation of Form DR-601I, Florida Intangible Personal Property Tax Return for Individual and Joint Filers

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 05C2-005

Original ruling text

SUMMARY
QUESTION: In the case where a taxpayer files an intangible tax return telephonically indicating zero tax liability and it
is subsequently discovered by the Department that tax was actually due but the tax year is outside of the normal three
year statute of limitations, can the Department still issue an audit assessment?
ANSWER - Based on Facts Below: When documentation exists that an intangible tax return was filed for a tax year,
s. 95.091(3), F.S., only allows the Department to assess taxes within three years after the tax was due, except in
cases of fraud.

June 29, 2005

Re: Technical Assistance Advisement No. 05C2-005
Intangible Personal Property Taxes - Statute of Limitations
Section 95.091(3)(a), F.S.
XXX ("Taxpayer")
Dear:
This is in response to the request for a Technical Assistance Advisement dated January 27, 2005. Taxpayer
requests clarification and a determination whether the intangible personal property tax return filed for tax year 2001 is
within the statute of limitations for audit purposes.
Facts Presented by the Petitioner
Taxpayer's correspondence explains Taxpayer telephonically filed an Intangible Tax Return for 2001 on January
XX, 2001, listing intangible assets as $XX. When Taxpayer moved to Florida, an attorney was consulted who advised
the par value of a stock could be used to calculate intangible taxes. Taxpayer later learned that this was not the
proper valuation method, and filed future returns using the fair market value of the stock. The 2001 intangible tax was
due on June 30, 2001. The Department of Revenue's initial letter advising it was conducting an audit was dated XX, a
period of three years and nine months from the date of filing and three years and four months from the date the tax
was due.
Requested Ruling
Taxpayer requests a ruling that the audit of Taxpayer's 2001 intangible tax return and the resulting assessment is
out of the three-year statute of limitations prescribed in s. 95.091(3) (a), F.S.
Law and Discussion

Section 95.091(3)(a), F.S., allows the Department (with exception of taxes levied under Chapter 198, F.S., and tax
adjustments made pursuant to s. 220.23, F.S.) to determine and assess the amount of any tax, penalty, or interest
due under any tax enumerated in s. 72.011, F.S., which it has authority to administer. The following time periods
relating to the statute of limitation to audit are provided in s. 95.091(3), F.S.
Section 95.091(3)(a)1.a., F.S., states:
For taxes due before July 1, 1999, within 5 years after the date the tax is due, any return with respect to the tax is due,
or such return is filed, whichever occurs later; and for taxes due on or after July 1, 1999, within 3 years after the
date the tax is due, any return with respect to the tax is due, or such return is filed, whichever occurs later;
(E.S.)
Section 95.091(3)(a)5., F.S., states:
At any time after the taxpayer has failed to make any required payment of the tax, has failed to file a required return
, or has filed a fraudulent return, except that for taxes due on or after July 1, 1999, the limitation provided in
subparagraph 1. applies if the taxpayer has disclosed in writing the tax liability to the department before the
department has contacted the taxpayer; (E.S.)
Rule 12C-2.0115, titled "Public Use Forms," incorporates by reference Form DR-601I, Florida Intangible Personal
Property Tax Return for Individual and Joint Filers. On the 2001 Form, under Law Changes, the Form states "the
period that a filed return may be audited is reduced to three (3) years." (E.S.)
Department's Position
Taxpayer provided documentation that the 2001 intangible tax return was filed electronically, provided a list of the
stocks included with the filing, and received Confirmation Number XXX. This Confirmation Number was verified by a
Department employee, who provided documentation that a zero tax return was filed telephonically. The Department's
Intangible Tax data base indicated that Taxpayer's 2001 return was filed on January XX, 2001.
The audit for tax year 2001 did not commence within the three-year statute of limitations. Unless fraud can be
proven, Taxpayer's 2001 intangible tax return is out of the statute of limitations, and no assessment can be made
against Taxpayer for tax year 2001.
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,
Joy. B. Eldred, CPA
Tax Law Specialist
Technical Assistance and Dispute Resolution