If a revocable trust is funded before death, and, if the trust creates further trusts that would otherwise avoid the tax (e.g., applicable exemption trust and QTIP trust), then it would be very important to have the revocable trust funded before death (assuming that the decedent did not use a FLITE trust). Not all states require intangible tax on loans, and those that do can vary in the amount. The unknown is what the legislature plans to do with the tax. §199.175 (1999); Fla. Stat. Every corporation or person who is a legal resident of Florida or who manages or controls intangible personal property having a taxable situs in this state, must file an Intangible Personal Property Tax Return (form DR-601I and DR-601C), available from local Department of Revenue … Therefore, if there is a probate estate, in order to avoid paying any FIT, the personal representative should attempt to transfer the taxable intangible personal property to the revocable trust (if possible). In the main menu bar click on the General Taxes tab. Florida does have an "intangibles" tax on invested assets that might make muni funds attractive for very high-net-worth investors. The rate for these types of contracts is 35 cents per $100 of value. • FLITE Trust Duration A point not specifically discussed in the DOR’s rules or the statutes is the length of time that the assets transferred into the FLITE trust must remain. However, creating the new FLITE trust requires the opening of new accounts for the new trust and all of the formalities that are associated with creating and funding a new irrevocable trust. If either is missing, then there is no “beneficial interest.”. 15 Fla. Admin. The other bad news is that for taxpayers who have properly drafted FLITE trusts in existence, which properly prohibited Florida trustees, the taxpayers will have to consider whether they wish to have new trusts drafted, or whether they wish to keep the old FLITE trusts. At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is Florida taxes, with a very heavy emphasis in Florida sales and use tax. The legislation extends corporate income and bank franchise tax rate relief and refunds resulting when collections exceed forecasts. This assumes that the client wishes to go through the cost and work associated with terminating the old FLITE trust and creating a new FLITE trust. Florida's fee amount for this tax is $.20 per $100 or $2 per $1,000 of lended money. 17 This assumes that the trusts were properly crafted and that the trusts last for more than one year. Department of Revenue : 12C : Corporate, Estate and Intangible Tax View Individual Chapters: ... Department of State; Under Florida law, E-mail addresses are public records. The legislation extends corporate income and bank franchise tax rate relief and refunds resulting when collections exceed forecasts. definition, the trust cannot be revocable by the surviving spouse, and it cannot have a general power of appointment under §2041(b). Second, if the taxpayer wishes to use the trust but change the out-of-state trustee by selecting a Florida trustee, one should carefully review the trust to see if this is permissible. For taxpayers that do not currently have a FLITE trust, a new one may be warranted. 203 (b) Amounts considered compensation include deferred compensation, value of board, rent, housing, lodging, and other benefits or services furnished to employees by the taxpayer in return for personal services provided that such amounts constitute income to the recipient under the Federal Internal Revenue Code. • Right to Revoke A question arises whether having the naked power to revoke a trust without a “current right to income” would create a beneficial interest in a Florida beneficiary. 1 Fla. Stat. 199.023(7)(1999); see supra note 6 and accompanying text. Employer Links. Before the legislative change, the statute made reference to “foreign” trusts. 173, §7. This, however, often conflicts with the desire of the senior family member, who is a Florida resident, and who does not want to relinquish control. Welcome to the Florida Revenue Law Library. 74, No. Documents in the Revenue Law Library are organized in categories. Accordingly, some believe that the period should be no shorter than a month. §199.185(1)(c) (1999). Welcome to the Florida Revenue Law Library. File your Local Intangibles Tax Return with your County Clerk on or before April 15. Further, if they utilize such a trust, they must remember to transfer their interests in the corporate general partner to the FLITE trust. This now allows many trusts that have been traditionally subject to tax not to be subject to the tax in the future. You note that s. 195.084(1) provides that all records and files of the Department of Revenue useful to the property appraiser shall be made available upon his request; pursuant to s. 199.222, F.S., however, all annual intangible personal property tax returns filed with the department are confidential as provided in s. 213.053, F.S. 12 See Treas. Nonprofit organizations can find a form for registration at the Florida Department of Revenue website. The skeleton is all that remains of the once dreaded and costly FIT. 13 The FLITE Trust s name was simply derived from the Florida Intangible Tax Exempt Trust. The intangibles tax is a local tax levied on gross earnings received from intangible property such as savings accounts, stocks, bonds, accounts receivable, and mortgages. The tactic lowered HCA’s 2005 Florida tax bill by more than $110,000 — a tiny savings for a company that earned $1.4 billion in profit that year. Florida's intangible personal property tax is an annual tax based on the current market value, as of January 1, of intangible personal property owned, managed, or controlled by Florida residents or persons doing business in Florida. See TIP Here The FICPA is aware of the challenges this poses to our members and their clients. Unless the personal representative can quickly transfer assets from the probate estate to the trust estate, the assets would be probably be subject to the FIT, because a will typically does not provide that the personal representative could create a FLITE trust. We have defended Florida businesses against the Florida Department of Revenue since 1991 and have over 100 years of cumulative sales tax experience within our firm. If you do not want your E-mail address released in response to a public records request, do not send electronic mail to this entity. Florida Revenue Law Library. 96C-2140, 96(C)-2108R, 96(C)2-130. Nothing in Florida’s statutes or Administrative Code provides that the use of a FLITE trust is limited to individuals. Thus, it may not be possible to replace the current out-of-state trustee with a Florida trustee. ; For answers to tax questions, please call Taxpayer Services at 850-488-6800 and select the "General Information" option. However, the DOR, in its recent promulgation of the rules applicable to the FIT, has indicated that when a grantor retains the right to revoke a trust, the grantor would be subject to the FIT.10 As indicated above, before the recent statutory change, from a purely statutory analysis, the trust’s assets could only be taxed through the trustee or the beneficiary, and not through the grantor. New users must create a user profile with a username and password to begin or complete the registration application. Intangible tax is calculated on the loan amount shown in the note. from the University of Florida College of Law graduate tax program. The same would hold true for the applicable credit trust and the GST-exempt dynasty type trusts. A stamp tax of 70 cents per $100 of value is assessed on documents that transfer interest in Florida real estate, such as warranty deeds and quit claim deeds. The website provides information for any other forms that will need to be filed based on the type of business being registered. Explore our new Financial Education Program. On June 28, 2019, Florida Governor Ron DeSantis signed House Bill 7127 (H.B. The remaining unknowns are the answers to the unanswered questions. View COVID response. Perhaps, in that case, the “right to income” provision would be satisfied. Mr. Law received his J.D. Thus, the author, siding on the side of conservatism, would advise the taxpayer not to be his or her own trustee of his or her FLITE trust. ~ From the Rules Regulating The Florida Bar, The American Influence on International Commercial Arbitration: Doctrinal Developments and Discovery Methods. A good rule of thumb is to have the assets in the FLITE trust for a sufficient period of time to reflect that the trustee acted like a trustee with respect to those assets. Care, however, should be taken with those trusts that may not be GST exempt, or those trusts that give the beneficiary a general power of appointment. General. Florida Intangible Personal Property Tax - A Summary Intangible Personal Property Tax -- Chapter 199, F.S. The rate is imposed on annual wages of up to $7,000 per employee. • Unanswered Questions Although the FLITE trust seems to be an acceptable legal vehicle to avoid the tax, two unanswered questions arise. As a result of recent changes to the Florida Intangibles Tax (FIT), the legislature has all but repealed the FIT. You note that s. 195.084(1) provides that all records and files of the Department of Revenue useful to the property appraiser shall be made available upon his request; pursuant to s. 199.222, F.S., however, all annual intangible personal property tax returns filed with the department are confidential as provided in s. 213.053, F.S. As a result of the recent statutory change, the trust merely must prohibit a Florida resident from having a beneficial interest. 7 The term “beneficial interest” is defined in Fla. Stat. In a FLITE trust, the trustee of a trust must transfer the property back to the grantor (or the grantor’s revocable trust) at the end of a specified period. from the University of North Carolina at Chapel Hill and his LL.M. The answer to this issue is not crystal clear; thus, probably the safest approach is to have someone other than the grantor be trustee. An example of this is the Rabbi trust, which is typically created by corporations. The simple reason for this is that, upon death, the beneficiaries of the trust would have no “beneficial interest”; thus, trust assets would not be subject to the FIT. The purpose of the article is not to enumerate the lists of intangible personal property. (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). Florida Department of Revenue Refund Sub-Process PO BOX 6470 Tallahassee, FL 32314-6470 Fax: 850-410-2526 For further information regarding the DR-26, the documentation required to process the refund, or to check on an application after it has been submitted, call us at 850-617-8585. Some modest exemptions were provided ( again depending upon the taxpayer s status ) having non-Florida persons the! Section, Marvin Gutter, chair by Florida Department of Revenue website to! What this author calls the “ regulatory rule ” have on this property at end! Should not let the proverbial non-tax dog evident by simply reading the statute one of... The University of North Carolina at Chapel Hill and his LL.M the married taxpayers tax - formerly tax... 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