TAX 6845 – Tax Planning & Consulting (November 16)
Topic: Multi-jurisdictional tax issues
updated: November 6, 2010
Multi-jurisdictional tax issues:
From formation, businesses must deal with state income
taxes and local taxes (e.g., property, sales and use), but as they grow they are faced
with taxes in other jurisdictions.
Often that is multiple taxes in other states and then
taxes in other countries.
For example, there are over 7,600 state, local, and city taxing
jurisdictions in the United States alone (see Streamlined Sales and Use Tax handout to
look at what is being done to “simplify” this problem).
This is a look at some of those
I. Taxes in the state of Florida:
A. Individual income tax – none.
Florida is 1 of 7 states – Alaska, Nevada, South
Dakota, Texas, Washington, and Wyoming – without an individual income tax
(while New Hampshire only taxes portfolio income).
B. Corporate income tax – the state taxes corporations at 5.5% with a $5,000
exemption (and a 3.3% AMT).
Florida and 46 other states have a corporate
income tax (the 4 states that don’t include Nevada, South Dakota, Washington,
The state honors a valid federal S election.
The return (see F-
1120 on the web page) is due the first day of the fourth month following year end.
The state tax year is the same as the federal tax year.
The Florida state
corporate income tax essentially “piggybacks” the Federal return.
income = Federal taxable income (line xxx) +/– state adjustments.
C. Gift tax – none.
D. Estate tax – Florida statutes specify that the Florida estate tax is equal to the
amount of the federal credit for state death taxes.
As the credit was replaced by
a deduction after 2004, the Florida estate tax has effectively been repealed.
Effective July 1, 2007, Florida law no longer requires the estate of a decedent
who died after December 31, 2004, to file a Florida estate tax return (Form F-
706) if a state death tax credit or a generation-skipping transfer credit is not
allowed by the Internal Revenue Code.
E. Sales and use tax – 6% state-wide tax plus a discretionary local tax in some
areas (up to a maximum of +1.5%). For example Seminole County has an
additional one-cent sales tax, while Orange County has an additional ½-cent
Sales tax originate in Florida; while use tax is due on purchases made
out of state and brought into Florida within 6 months of the purchase date.
tax is added to the price of the taxable goods or service and collected from the
purchaser at the time of sale.
Each sale, admission charge, storage, or rental is
taxable unless the transaction is exempt.
Most food, medicine, real estate,
services, and items purchased for resale are exempt from sales tax.
Mail order &
internet transactions may be taxable and short-term rentals (less than six