Florida Administrative Code
12 - DEPARTMENT OF REVENUE
12C - Corporate, Estate and Intangible Tax
Chapter 12C-1 - CORPORATE INCOME TAX
Section 12C-1.011 - Tax Imposed
Universal Citation: FL Admin Code R 12C-1.011
Current through Reg. 50, No. 187; September 24, 2024
(1) The following activities, notwithstanding others within the meaning of taxable privileges described in section 220.02, F.S., will be construed as conducting business, earning or receiving income in Florida, or constitute those activities of a resident or citizen of Florida for purposes of this tax, and corporations participating therein are subject to taxation unless exempted by the constitution or the laws of the United States or of Florida.
(a) Incorporation in Florida. A Florida
corporation is required to file a Florida corporate income/franchise tax return
even though it has no physical existence or activity that takes place in
Florida and it does business exclusively in other states or
countries.
(b) Maintaining an
office or other place of business in Florida. If a salesman holds out his home
as an office, the corporation will be deemed to maintain an office in Florida
whether or not the salesman is reimbursed for "office space."
(c)
1.
Owning or leasing real or tangible personal property in this state.
2. Out-of-state leasing companies will become
subject to the tax if tangible personal property that is leased to individuals
or corporations, residing or existing outside the state, is transferred to a
Florida location. A lessee company that routinely brings property into Florida
will create a presumption that the leasing company's property was brought into
Florida. Unless the leasing company can show the property did not enter this
state the leasing company will be subject to tax. Thus, leasing aircraft to
commercial airlines that routinely fly aircraft into Florida will subject the
leasing company to the tax. If the leasing company cannot determine whether the
specific aircraft leased is flying into Florida, there will be a presumption
that the aircraft has flown into the state if the airline that leased the
aircraft routinely flies into Florida. However, if the leasing corporation can
demonstrate that its aircraft are not flown into the state, the leasing
companies will not be subject to Florida tax. Similarly, leasing railroad cars
to shippers who, in turn, engage the services of railroad companies to haul the
cars, which travel through Florida, will also subject the leasing company to
tax within this state.
3. If a
lease is treated as a conditional sales contract for federal tax purposes, the
lessor shall not become subject to the Florida corporate income/franchise tax
solely because of this paragraph. The making of a safe harbor election for
federal tax purposes will not affect the determination for Florida tax purposes
of whether the substance of the lease is a conditional sales
contract.
(d) Maintaining
within Florida a research facility for the exclusive use of a
company.
(e) Maintaining in Florida
an inventory or merchandise or material for sale, distribution, or manufacture,
whether in public, owned, or rented warehouses.
(f) Maintaining in Florida an inventory of
tangible personal property on consignment to dealers or agents for sale or
display.
(g) Displaying the
corporation's merchandise in leased space on a prolonged or recurring
basis.
(h) Assembling, installing,
servicing, or repairing the taxpayer's products in Florida by its agents or
employees.
(i) Accepting orders in
Florida by its employees.
(j)
Selling goods through mobile stores (such as trucks with driver
sales-persons).
(k) Making sales
that are approved in the state by "independent contractors" who do not hold
themselves out as engaged in selling, or soliciting orders for the sale of more
than one principal; or making sales through the use of representatives in this
state, when activities engaged in exceed those protected by P.L. 86-272
(15 U.S.C. ss.
381-384), which is incorporated by
reference in rule 12C-1.0511, F.A.C.
(l) Having employees that are present in
Florida and that perform functions other than the solicitation of sales within
Florida.
(m) Performing any service
within Florida.
(n) Having
corporate officers who have permanent or extended temporary residency (3 months
in the aggregate of a 12 month period) within Florida who make management
decisions while residing in Florida. If the only officer of the corporation or
a key officer of the corporation is residing within Florida, management of the
corporation is presumed to be occurring within Florida.
(o) Selling, managing, or providing
consulting services in Florida for intangible assets. (Example, investment
companies, trusts, brokers.) This does not include out-of-state corporations
whose only activity is to manage out-of-state assets for Florida residents. For
example, a New York investment company that continues to manage investments for
a person who is now a Florida resident will not be subject to the tax for this
limited connection with Florida.
(p)
1.
Selling or licensing the use of intangible property in Florida for taxable
years beginning on or after January 1, 1994. For example, licensing the use of
a trade name or trademark or patent to a business entity located in Florida
will subject a corporation to the corporate income tax.
2. Corporations that during tax years
beginning before January 1, 1994, not only licensed the use of a trade name or
trademark to a business entity located in Florida, but also provided management
services within Florida (including directing the purchases of supplies, on-site
inspections, and training seminars within Florida) were subject to the Florida
corporate income tax for all years these services were
performed.
(q) Conducting
seminars in Florida.
(r)
1. Conducting management training courses for
franchisees or affiliated corporations in Florida.
2. Regularly or systematically visiting
franchisees or affiliated corporations in Florida in order to advise on
business matters.
(s)
Earning or receiving interest by a financial organization, as described in
section 220.15(6),
F.S., from loans secured by real or tangible property located in Florida
irrespective of place of receipt.
(t) Operating professional sports teams which
engage in professional sports activities in Florida. There are a number of
factors which are indicative of whether out-of-state corporations which engage
in professional sports activities in Florida are conducting business or
deriving income within the meaning and intent of section
220.11(1), F.S.
1. Prior to the regular playing season the
team may provide training for its athletes (players) including coaches, staff,
etc., at facilities located in Florida. In the regular course of training, the
teams will engage in practice or exhibition games in Florida.
2. During the regular playing season the team
will play Florida-based teams in Florida.
3. After the close of the regular playing
season the team may participate in playoff or championship games in
Florida.
4. The corporation may
have owned or rented real and tangible property in Florida for the conduct of
training or other activities.
5.
The corporation shares in gate receipts from games its teams play in
Florida.
6. The corporation shares
in radio and television receipts from local stations and from networks pursuant
to the league contract, some portion of which is attributable to games played
in Florida.
(u)
Transportation companies traveling in Florida. All corporate transportation
companies are subject to the Florida corporate income tax and are required to
file Florida corporate income tax returns whenever they have revenue miles in
Florida, as the term "revenue miles" is defined in section
220.151, F.S. Transportation
companies that deliver or pick up goods in Florida, as well as corporations
that do not have a point of origin or termination within Florida, are subject
to the Florida Income Tax Code whenever they have revenue miles in
Florida.
(v) Foreign (out-of-state)
corporations not otherwise subject to the law but who are partners or members
of Florida partnerships or joint ventures are subject to the law by virtue of
their membership in such partnerships or joint ventures. Florida partnerships
are partnerships doing business, deriving income, or existing in Florida. A
partnership will be considered to be existing within Florida if an active
partner who participates in management decisions has permanent or extended
temporary residency (for 3 months in the aggregate of a 12 month period) within
Florida. If an active partner is residing within Florida, management of the
partnership is presumed to be occurring within Florida.
(w) Insurers.
1. The issuing of policies of insurance or
contracts of annuity under a certificate of authority issued by the Florida
Office of Insurance Regulation where the policies or contracts are to be
performed in Florida or where the policies insure or cover persons, property,
subjects or risks located or resident in Florida.
2. The collecting of premiums on policies of
insurance or contracts of annuity on such persons, property, subjects, or risks
as described in subparagraph 1. above, when such policies were initially issued
by an insurer possessing a certificate of authority issued by the Florida
Office of Insurance Regulation.
3.
The issuing of policies of insurance or contracts of annuity or the collecting
of premiums without possessing a certificate of authority issued by the Florida
Office of Insurance Regulation, when the issuing or collecting insurer would
have been required to obtain a certificate of authority to engage in those
activities.
4. The entering into
contracts of reinsurance when such contracts of reinsurance are placed with an
approved reinsurer by a ceding insurer domiciled or commercially domiciled in
Florida as defined in chapter 624, F.S., or by either an artificial entity
domiciled or resident in Florida or a political subdivision of Florida where
either the artificial entity or the political subdivision is engaged in self
insurance.
5. Surplus lines
insurers with an office or employees located in
Florida.
(2) The following activities will not, in themselves, subject a foreign (non-Florida) corporation to the income/franchise tax. However, these exempted activities will not relieve a corporation from taxation if the corporation is otherwise subject to taxation.
(a)
Maintaining an account in a Florida bank or savings association.
(b) Holding stock in a Florida corporation or
a corporation that is subject to the Florida corporate income/franchise
tax.
(c) Having an independent
Florida accountant, attorney, or bookkeeper maintain accounting records, audit,
or do tax preparation.
(d) Salesmen
of the corporation soliciting sales of tangible personal property within
Florida, provided none of the activities itemized in subsection (1), or any
other activities which will subject the corporation to tax, are performed. The
fact that the salesmen reside within Florida will not subject the corporation
to the tax.
(e) Salesmen
maintaining samples to demonstrate the product or give free samples to a
customer. The samples may not be sold.
(f) Providing company cars to
salesmen.
(3) Cross reference: rule 12C-1.022, F.A.C.
(4) A taxpayer's regular tax liability is equal to 5 1/2 percent of the taxpayer's net income for the taxable year. However, Florida imposes a corporate alternative minimum tax (AMT). Corporations which pay federal AMT are required to compute Florida AMT. These corporations must compute both regular tax liability and AMT liability. The Florida tax due is the greater of these two amounts. Taxpayers use federal alternative minimum taxable income after the federal exemption allowed under s. 55(d)(2), I.R.C., which is incorporated by reference in rule 12C-1.0511, F.A.C., as the starting point in computing Florida AMT. The Florida additions, subtractions and $5, 000 exemption are generally the same regardless of the starting point. However, the amounts for some additions or subtractions may differ. For example, there is an adjustment to the addition of interest that is exempt for federal tax purposes or the addback of the federal net operating loss. The Florida AMT rate is 3.3 percent of Florida AMT net income.
Cross reference: subsection 12C-1.013(18), F.A.C.
Rulemaking Authority 213.06(1), 220.51 FS. Law Implemented 220.11, 220.12, 220.15, 220.151, 220.22 FS.
New 1-19-73, Amended 10-20-73, 8-23-76, 12-18-83, Formerly 12C-1.11, Amended 12-21-88, 1-30-90, 4-8-92, 5-17-94, 3-18-96, 3-13-00.
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