A Summary of the Florida Intangible Personal Property Tax

by Timothea Xi

    Though it had an illustrious history dating back to the 1930s, the so-called Florida intangible personal property tax was gradually diminished since 1999 until it was finally rescinded in 2007. Called a "wealth tax," because it mostly affected the well-to-do who held certain types of assets, the intangible tax was one of the ways that Florida, which does not tax personal income, raised revenues for state programs. While the tax, or its repeal, for that matter, did not affect most Florida residents, because they were never required to pay it, its legacy can still be felt in some quarters.

    The Law Governing Intangible Property Tax

    Ethereal though it may sound, intangible personal property, as deemed by Florida Statutes Chapter 199, refers to those assets that do not have physical attributes yet hold value. These include investments like stocks, bonds and mutual funds. They do not include certificates of deposit, cash or personal retirement funds. When the law was effective, businesses and individuals had to pay a certain percentage annually: For non-bank businesses, that meant paying $2,000 in intangible tax for every $1 million of taxable income; for individuals, the first $20,000 was exempt, and above that -- up to $100,000 -- $1 was incurred out of every $1,000 in assets. Above $100,000, $2 per $1,000 was collected.

    Repeal of the Law

    In 2007, Chapter Law 2006-312, Laws of Florida, called for the repeal of the intangible personal property tax in Florida. Aside from a few exceptions for which the law would remain in effect, single and joint filers, as well as corporate entities, were no longer required to submit these taxes from 2007 onward. According to the Florida Center for Fiscal and Economic Policy, the lowering of the tax rate culminating in the repeal of this tax resulted in a cumulative loss of $7.3 billion in tax revenue to the state.

    Remnants of the Law

    Despite the repeal, the intangible tax still rears its head in certain instances. Those who lend money via mortgages or liens on real estate property must pay the nonrecurring intangible tax on those notes or debt instruments. Likewise, renters must pay an annual governmental leasehold intangible tax if they lease from a government organization. With regard to tax assessments before the repeal, the state is allowed to collect tax within the statute of limitations for collections. It is not allowed to pursue intangible taxes still due from the estate of a deceased party after 2009.

    Implications for Florida Taxpayers

    Those affected by this particular tax used to structure their investments to avoid or abate the intangible tax. They might buy bonds issued by the state of Florida or the federal government. Or they would place their money in Florida intangible trusts. With the repeal of the law, they no longer need to do so and need not consider intangible taxation in their tax planning.

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    About the Author

    Timothea Xi is a business writer focusing on alternative investments and entrepreneurship. She has also served as a stockbroker, publicist and commodities specialist. Xi holds a bachelor's degree in the humanities.

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