Question: Is the transfer of a vehicle from an llc to an individual in Florida exempt from Florida sales tax?

DISCUSSION AND RESPONSE

Section 212.06(10), F.S., provides that all transfers of title to motor vehicles in the state of Florida are taxable, unless specifically exempt under Chapter 212, F.S. Rule 12A-1.007(25)(d), F.A.C., provides that when title to a motor vehicle of a class or type required to be registered in Florida is transferred from a corporation to an individual, it is presumed that a consideration flows from the transferee to the transferor. If no consideration is stated in the transaction, then it is presumed that the consideration equals the fair market value of the vehicle.

A transfer from a corporation to an individual is taxable, because the corporation exists independently from its members and directors and protects these individuals from liability. See, for example, s. 607.0831(1), F.S. Accordingly, the transfer of a vehicle from a corporation to a director of the corporation is a transfer of property between two distinct persons. See s. 212.02(12), F.S.

The taxpayer attempts to distinguish between a transfer made by a corporation and a similar transfer made by an LLC by arguing that a single-member LLC and its owner “are not two separate identities for tax purposes and as such should be the same within the State of Florida as it is within the Commonwealth of Pennsylvania.” The taxpayer states that “[t]ax filing for an LLC is done on one[‘]s own personal income tax form using a schedule C[,] and as such the Federal government recognizes any property owned by the LLC as property owned by myself personally.” However, the taxpayer’s belief is misplaced. A single-member limited liability company that is disregarded as an entity separate from its owner for federal income tax purposes is treated as a separate legal entity for all non-income-tax purposes under Florida law. See s. 608.471(3), F.S. Moreover, a member or manager of an LLC receives the same protections under Chapter 608, F.S., that are afforded to a director of a corporation under Chapter 607, F.S.

For example, s. 608.4227(1), F.S., provides that the members, managers, and managing members of an LLC are not liable, solely by reason of being a member or serving as a manager or managing member, under a judgment, decree, or order of a court, or in any other manner, for a debt, obligation, or liability of the LLC. Section 608.4228(1), F.S., provides that a manager or managing member of an LLC is not personally liable for monetary damages to the LLC, its members, or any other person for any statement, vote, decision, or failure to act regarding management or policy decisions by a manager or a managing member, unless the manager or managing member breaches or fails to perform his or her duties as a manager or managing member, and the manager’s or managing member’s breach of, or failure to perform, those duties constitutes one of the violations listed in s. 607.4228(1)(b), F.S. Section 608.4229(1), F.S., provides that an LLC has the power to indemnify and hold harmless any member or manager from and against any and all claims and demands whatsoever.

Florida law considers the taxpayer to be a separate person from the LLC that he owns and manages. Consequently, when the taxpayer transfers a vehicle, owned by his LLC, into his personal name, the taxpayer must pay Florida sales tax when the vehicle is registered in Florida. See Rule 12A-1.007(25)(d), F.A.C., and s. 212.06(10), F.S.

The transfer of a vehicle from an LLC to an individual in Florida is subject to Florida sales tax.

This response constitutes a Technical Assistance Advisement under s. 213.22, F.S., which is binding on the Department only under the facts and circumstances described in the request for this advice, as specified in s. 213.22, F.S. Our response is predicated on those facts and the specific situation summarized above. You are advised that subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules upon which this advice is based may subject similar future transactions to a different treatment than expressed in this response.

You are further advised that this response, your request and related backup documents are public records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions of s. 213.22, F.S. Confidential information must be deleted before public disclosure. In an effort to protect confidentiality, we request you provide the undersigned with an edited copy of your request for Technical Assistance Advisement, the backup material and this response, deleting names, addresses and any other details which might lead to identification of the taxpayer. Your response should be received by the Department within 15 days of the date of this letter.

If you have any further questions with regard to this matter and wish to discuss them, you may contact me directly at (850) 488-8565.

Sincerely,

Senior Tax Specialist