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Keywords

jurisdictionstatutecorporationappellee
statuteappealtrialpleacorporationappellee

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Department of Revenue v. Amrep Corp., 358 So.2d 1343

Facts

The appellees, Amrep Corporation and its nine wholly-owned subsidiaries, contested intangible personal property tax assessments totaling $422,512.58 imposed by the Florida Department of Revenue for the years 1972, 1973, and 1974. They argued that the statute defining 'affiliated groups' for tax exemption purposes violated their right to equal protection because it only exempted groups whose parent corporation was incorporated or had its principal place of business in Florida. The appellees met the definition of an 'affiliated group' except for the residency requirement, as their parent corporation was based in Oklahoma.

The appellees in this cause are Amrep Corporation, an Oklahoma corporation having its principal place of business in New York, and nine wholly-owned subsidiaries of Amrep which are incorporated in or actually doing business in Florida.

Issue

Whether the statute exempting intercompany accounts receivable from intangible personal property tax for domiciliary corporate 'affiliated groups' violates the Equal Protection Clause of the United States Constitution.

Three issues are presented for resolution by this appeal. They are: (i) Whether appellee taxpayers have a right of action in the circuit courts of this State to challenge on constitutional grounds an intangible personal property tax assessment and obtain a declaration of their rights in view of the provisions of Chapter 120, Florida Statutes (1975); (ii) Whether Section 199.023(7), Florida Statutes (1975), defining 'affiliated groups' in such a way as to require that the common parent be incorporated in the State of Florida or have its principal place of business in this State violates the Equal Protection Clause of the Federal Constitution by denying an exemption for intercompany receivables to an affiliated group of corporations, otherwise qualified, whose parent is not domiciled in the State of Florida; and (iii) Whether the circuit court erred in declining to award appellees their costs.

Rule

The court applied the Equal Protection Clause, which prohibits states from denying any person within its jurisdiction the equal protection of the laws, and assessed whether the classification created by the statute was discriminatory.

We hold, therefore, that this action was properly cognizable before the circuit court.

Analysis

The court found that the statute created a discriminatory classification by exempting only those affiliated groups whose parent corporation was incorporated or had its principal place of business in Florida. This classification was deemed invidious as it treated identical economic transactions differently based solely on the residency of the parent corporation, without regard to the actual contacts or the origin of the receivables.

Applying this analysis to the instant case, we determine that the ad valorem tax at issue must fail because within the rationale of Wheeling the unequal treatment of identical receivables is based solely on the residence of the parent and is not differentiated in any way on the basis of where the receivable arose or its actual contacts with the State of Florida.

Conclusion

The Supreme Court of Florida affirmed the lower court's judgment, declaring the statute unconstitutional and canceling the tax assessments against Amrep's intercompany accounts receivable.

For the reasons stated above, the final judgment on the pleadings entered by the trial court is affirmed.

Who won?

Amrep Corporation and its subsidiaries prevailed in the case because the court found that the tax statute violated the Equal Protection Clause by treating them unequally based on the residency of their parent corporation.

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