Florida — Corporate Income / Franchise Tax

Florida imposes a corporate income tax on "every taxpayer" — broadly defined to include corporations, organizations, associations, and other artificial entities that derive permanent and inherent attributes not available to natural persons, such as perpetual life, transferable ownership by shares, and limited liability. The tax applies to entities conducting business, earning income, or existing within Florida for the privilege of doing so.

The statutory definition of "corporation" includes domestic and foreign corporations qualified or actually doing business in Florida; joint-stock companies; limited liability companies (LLCs) under Chapter 605; common-law declarations of trust; nonprofit corporations under Chapter 617; agricultural cooperatives; professional service corporations; and other organizations, associations, legal entities, and artificial persons created by or pursuant to Florida, U.S., or any other state law. Importantly, LLCs classified as partnerships for federal income tax purposes are not subject to the tax; however, an LLC taxed as a corporation federally is subject.

The term "corporation" expressly excludes proprietorships (even if using a fictitious name), partnerships of any type as such, and limited liability companies classified as partnerships for federal tax purposes. Natural persons engaging in business individually, in partnership, or as members of an LLC classified as a partnership are not subject to the corporate income tax. S corporations are generally not subject to the tax except in years when they are liable for federal tax under the Internal Revenue Code (e.g., built-in gains tax or excess passive income tax).

Source: Fla. Stat. § 220.02; Fla. Stat. § 220.03(1)(e); Fla. Stat. § 220.11(1)

Florida imposes corporate income tax at a flat rate of 5.5 percent of net income for taxable years beginning on or after January 1, 2022. This rate applies to the corporation's Florida net income — adjusted federal income (either apportioned to Florida or in full for corporations doing business only in Florida), plus nonbusiness income allocated to Florida, less the exemption allowed under § 220.14.

For taxpayers subject to the federal alternative minimum tax under IRC § 55, the tax is imposed at 3.3 percent of alternative minimum net income for the taxable year. When a taxpayer is subject to both the regular tax and the alternative minimum tax, the amount of tax due is the greater of the two computations.

The 5.5 percent rate was established by the Florida Legislature and became effective for taxable years beginning on or after January 1, 2022, replacing a prior system of automatic rate adjustments that applied through 2021.

Source: Fla. Stat. § 220.1105(5); Fla. Stat. § 220.11(3)

Florida imposes corporate income tax on corporations "for the privilege of conducting business, deriving income, or existing within this state." A corporation satisfies the nexus requirement if it meets any one of these three tests. The statute does not establish an economic nexus threshold or minimum revenue requirement for out-of-state corporations.

Corporations incorporated in Florida ("existing within this state") are subject to the tax based solely on their in-state incorporation status. Foreign (out-of-state) corporations become subject to tax by conducting business activities in Florida or deriving income from Florida sources.

The three-prong standard — conducting business, deriving income, or existing in Florida — operates disjunctively; satisfying any single prong establishes nexus.

Source: Fla. Stat. § 220.02(1)

Florida corporate income tax begins with federal taxable income as defined in IRC § 63 and properly reportable for federal income tax purposes. This amount is then modified to arrive at "adjusted federal income" under Fla. Stat. § 220.13(1). Specific Florida additions to federal taxable income include state income taxes deducted on the federal return, tax-exempt interest (net of related expenses), and specified tax credit addbacks. Florida subtractions include dividend income meeting certain requirements, net operating loss carryforwards allowed under Florida law, and nonbusiness income (which is separately allocated). The adjusted federal income figure is then apportioned (for multistate taxpayers) or used in full (for Florida-only taxpayers) to determine Florida net income.

Source: Fla. Stat. § 220.13(1), (2)

Florida apportions adjusted federal income for corporations doing business both within and outside the state using a three-factor formula with a double-weighted sales factor: sales represent 50 percent of the fraction, property represents 25 percent, and payroll represents 25 percent. Each factor is calculated as a fraction with Florida amounts in the numerator and amounts everywhere in the denominator. Special apportionment methods apply to transportation companies, insurance companies, and taxpayers eligible for alternative apportionment under §§ 220.151, 220.152, and 220.153.

Source: Fla. Stat. § 220.15(1)

Florida corporate income tax returns must be filed on or before the later of two dates: (1) the first day of the fifth month after the close of the taxable year, or (2) the 15th day after the due date (without extension) for filing the related federal return. For calendar-year corporations, this typically results in a May 1 Florida due date — May 1 is both the first day of the fifth month following the close of a December 31 year-end and falls after April 15, the federal deadline.

Special rule for June 30 year-ends (temporary). For taxable years beginning before January 1, 2026, corporations with a taxable year ending June 30 file on or before the first day of the fourth month after the close of the taxable year (October 1) or the 15th day after the federal due date, whichever is later. This special four-month rule sunsets for taxable years beginning on or after January 1, 2026, at which point June 30 year-end filers will follow the standard fifth-month rule.

Extensions. When a taxpayer has been granted a federal extension and meets the requirements of Fla. Stat. § 220.32, filing a request for extension with the Florida Department of Revenue automatically extends the Florida due date until the expiration of six months from the original due date. The extension period is seven months (rather than six) for taxpayers with a June 30 year-end for taxable years beginning before January 1, 2026. To obtain the extension, the taxpayer must file Form F-7004 by the original due date and pay the tentative tax due — the balance of tax expected after subtracting estimated payments and prior-year credits. An extension of time to file does not extend the time to pay the tax; the full tax remains due on the original filing deadline.

Extension invalidation and tentative-tax penalty. Under Fla. Stat. § 220.32(3), the taxpayer is liable for a penalty at the rate of 12 percent per year upon the amount of any underpayment of the tax during the extension period. If the underpayment is sufficiently large — exceeding the greater of $2,000 or 30 percent of the tax shown on the return when filed — Florida Department of Revenue practice treats the extension as void, subjecting the taxpayer to late-filing penalties.

Annual filing requirement. Every corporation subject to Florida corporate income tax must file Form F-1120 each year, even if no tax is due. If the due date falls on a Saturday, Sunday, or legal holiday, the return is considered timely if filed on the next business day.

Estimated tax payments. Corporations with tax liability exceeding $2,500 for the taxable year must declare and pay estimated tax. Underpayment of estimated tax results in interest and penalties under Fla. Stat. § 220.34. No penalty or interest is imposed if total payments made on or before each installment date equal or exceed the amount that would be required if the estimated tax were the lesser of (a) the tax computed on the basis of the facts shown on the prior year's return, or (b) 90 percent of the tax finally due for the taxable year. Estimated-tax underpayment interest and penalties run from the date each installment was required to be paid until the earlier of (i) the first day of the fifth month after the close of the taxable year (or, for June 30 year-ends for taxable years beginning before January 1, 2026, the first day of the fourth month), or (ii) the date the underpayment is paid.

Source: Fla. Stat. § 220.222; Fla. Stat. § 220.32; Fla. Stat. § 220.34

Following an audit or other examination, the Florida Department of Revenue issues a Notice of Proposed Assessment (NOPA) to a corporate taxpayer when the Department determines additional tax, penalty, or interest is due under Chapter 220. The NOPA sets forth the proposed liability amount, the periods at issue, and the basis for the proposed assessment. The statutory framework for contesting a NOPA is established in Florida Statutes § 72.011, which applies to corporate income tax assessments under Chapter 220.

Protest deadline

A taxpayer may contest a proposed assessment by filing a written protest or by filing a petition under the Florida Administrative Procedure Act (Chapter 120). Under § 72.011(2)(a), an action to contest an assessment may not be brought more than 60 days after the date the assessment becomes final. The date on which an assessment becomes final and the procedures by which a taxpayer must be notified are established by rule adopted by the Department of Revenue under § 72.011(2)(b). Department practice establishes that a NOPA becomes a final assessment 60 days after its date of issuance unless the taxpayer files a timely protest or petition. If the NOPA is addressed to a person outside the United States, the protest period is extended to 150 days.

Informal protest procedure

Florida allows an informal protest procedure prior to formal administrative or judicial proceedings. A taxpayer may file a written informal protest with the Department's Technical Assistance and Dispute Resolution unit within 60 days of the NOPA date (150 days for foreign taxpayers). The Department reviews the protest and issues a Notice of Decision (NOD). The NOD becomes a final assessment as of its date of issuance for purposes of § 72.011, unless the taxpayer timely files a petition for reconsideration or pursues a formal remedy.

Formal protest options

After receiving a NOD (or without filing an informal protest), a taxpayer has two alternative paths to formally contest the assessment:

1. Administrative hearing under Chapter 120, Fla. Stat. — The taxpayer may file a petition for a formal hearing with the Division of Administrative Hearings (DOAH). The deadline is 120 days from the NOPA date if no informal protest was filed, or 60 days from the NOD date if an informal protest was filed. There is no extension of the formal hearing petition deadline.

1. Circuit court action under § 72.011 — Alternatively, the taxpayer may file an action in circuit court. The deadline is also 120 days from the NOPA date (if no informal protest) or 60 days from the NOD date (if informal protest filed). Once an action has been initiated under Chapter 120, no action relating to the same subject matter may be filed in circuit court.

Under § 72.011(3), a taxpayer filing an action in circuit court must pay to the Department the amount of tax, penalty, and accrued interest assessed (or the uncontested portion) before or at the time of filing the action. Failure to pay the uncontested amount results in dismissal and an additional 25% penalty.

Source: Fla. Stat. § 72.011

For corporations with a fiscal year ending June 30, 2025 (taxable year beginning July 1, 2024, which is before January 1, 2026), the Florida corporate income tax return is due on October 1, 2025—not an earlier date. The calculation requires determining which is later: the Florida-specific four-month rule or the 15th day after the federal due date.

Federal filing deadline

Under IRC § 6072(a), as amended by Pub. L. 114-41 § 2006(a)(1), C corporations generally file by the 15th day of the fourth month after the close of the taxable year. However, the amendment included a delayed effective date for June 30 year-ends: the new fourth-month rule applies to C corporations with fiscal years ending June 30 only for taxable years beginning after December 31, 2025. A corporation with a fiscal year ending June 30, 2025 (beginning July 1, 2024) falls under the old federal rule, which required filing by the 15th day of the third month after the close of the taxable year. For a June 30, 2025 year-end, the federal deadline without extension is September 15, 2025.

Florida special rule for June 30 year-ends

Florida Statute § 220.222(1)(b) provides that for taxable years beginning before January 1, 2026, returns of taxpayers with a taxable year ending on June 30 must be filed on or before the later of (1) the first day of the fourth month after the close of the taxable year, or (2) the 15th day after the due date, without extension, for the filing of the related federal return.

For a June 30, 2025 fiscal year-end:

• First day of the fourth month after June 30, 2025 = October 1, 2025
• 15th day after the federal due date (September 15, 2025) = September 30, 2025

Because October 1, 2025 is later than September 30, 2025, the Florida filing deadline is October 1, 2025.

Sunset of the special rule

The special four-month rule for June 30 year-ends in § 220.222(1)(b) sunsets for taxable years beginning on or after January 1, 2026. A corporation with a fiscal year ending June 30, 2026 (beginning July 1, 2025) will be subject to the standard fifth-month rule in § 220.222(1)(a) rather than the special fourth-month rule. At the federal level, the delayed effective date also expires, and such corporations will file their federal returns by the 15th day of the fourth month (October 15, 2026). Under Florida's standard rule, the return will be due on the later of November 1, 2026 (first day of the fifth month) or October 30, 2026 (15th day after the federal due date), which is November 1, 2026.

Extension period

Under § 220.222(2)(e), for taxable years beginning before January 1, 2026, the extension period for taxpayers with a June 30 year-end is seven months from the original due date (rather than the standard six months). For a June 30, 2025 year-end with an original Florida due date of October 1, 2025, a properly filed extension on Form F-7004 extends the Florida filing deadline to May 1, 2026 (seven months after October 1).

Source: Fla. Stat. § 220.222

Source: IRS Instructions for Form 1120 (2025)

Florida corporate income tax disputes follow a bifurcated appeals structure: taxpayers may choose either an administrative hearing under the Florida Administrative Procedure Act or direct judicial review in circuit court. Unlike many states, Florida does not have a specialized tax appeals tribunal; instead, administrative tax appeals are heard by the Division of Administrative Hearings (DOAH), an independent state agency that conducts formal hearings under Chapter 120 of the Florida Statutes.

Step 1: Division of Administrative Hearings (DOAH)

Under Fla. Stat. § 72.011(1)(a), a taxpayer contesting a corporate income tax assessment under Chapter 220 may file a petition for an administrative hearing pursuant to Chapter 120. Once the taxpayer files a timely petition with the Department of Revenue, the Department refers the case to DOAH. DOAH assigns an Administrative Law Judge (ALJ) to conduct a formal evidentiary hearing. The ALJ issues a Recommended Order containing findings of fact, conclusions of law, and a recommended disposition of the case.

The Recommended Order is submitted to the Executive Director of the Department of Revenue (or the Department's designee), who issues a Final Order adopting, modifying, or rejecting the ALJ's findings and recommendations. Under § 120.57(1)(l), the agency may not reject or modify the ALJ's findings of fact unless the agency first determines from a review of the complete record that the findings were not based on competent substantial evidence or that the proceedings did not comply with the essential requirements of law.

Step 2: Judicial review in Florida District Court of Appeal

A taxpayer aggrieved by the Department's Final Order may seek appellate review in the appropriate Florida District Court of Appeal. Under § 120.68, review is by appeal, not by filing a new action. The appeal must be filed within 30 days of rendition of the final order. The district court reviews the agency record under the standards set forth in § 120.68(7)–(13), giving deference to the agency's findings of fact if supported by competent substantial evidence but reviewing questions of law de novo.

Alternative: Circuit court under § 72.011

As an alternative to the DOAH administrative process, a taxpayer may file an action directly in Florida circuit court under Fla. Stat. § 72.011(1)(a). The action must be filed in the Second Judicial Circuit Court in and for Leon County or in the circuit court in the county where the taxpayer resides, maintains its principal commercial domicile in Florida, or regularly maintains its books and records in the ordinary course of business. Under § 72.011(4)(b), venue for a non-Florida taxpayer is in Leon County.

An action in circuit court is a de novo proceeding, but under § 72.011(3) the taxpayer must pay the tax, penalty, and accrued interest (or the uncontested portion) before or at the time of filing the action. Failure to pay results in dismissal and an additional 25% penalty.

Election is binding

Under § 72.011(1)(a), once an action has been initiated under Chapter 120 (the DOAH path), no action relating to the same subject matter may be filed by the taxpayer in circuit court, and judicial review is exclusively limited to appellate review of the Department's final order under § 120.68. Conversely, once a circuit court action has been filed under § 72.011, the taxpayer may not pursue the administrative remedy. The requirements of § 72.011 are jurisdictional under § 72.011(5).

Source: Fla. Stat. § 72.011

Source: Fla. Stat. § 120.57 (Administrative Procedure Act — Hearings)

Source: Fla. Stat. § 120.68 (Administrative Procedure Act — Judicial Review)

Florida imposes separate statutes of limitation on the Department of Revenue's authority to assess corporate income tax and on a taxpayer's right to claim a refund. Both are governed by general revenue statutes that apply to multiple tax types, including corporate income tax under Chapter 220.

Statute of limitations on assessments — § 95.091(3)

Under Fla. Stat. § 95.091(3), the Department of Revenue may assess any tax, penalty, or interest due under Chapter 220 (corporate income tax) within 3 years after the date the tax is due or the return is filed, whichever is later. This 3-year general limitation period applies to taxes paid on or after July 1, 1999.

Exceptions extending the assessment period:

• No return filed or fraudulent return — The Department may assess at any time if the taxpayer has failed to make any required payment of tax, has failed to file any required return, or has filed a fraudulent return with intent to evade tax.

• Availability of refund period — The Department may assess at any time while the right to a refund or credit of the tax remains available to the taxpayer under § 215.26(2).

• Federal adjustments (Chapter 220 specific) — Under Fla. Stat. § 220.23, if a taxpayer's federal taxable income is adjusted by the IRS or by the taxpayer's filing of an amended federal return, the taxpayer must report the change to the Department within 60 days. The Department may then assess additional Florida corporate income tax resulting from the federal change within 3 years after the taxpayer reports the federal change (or within 3 years after the Department receives notice of the federal change from the IRS, whichever is earlier). This creates a separate limitations period for assessments based on federal adjustments, independent of the general 3-year rule.

• Estate tax exception — Chapter 198 (Florida estate tax) has its own separate limitations rules and is excepted from the general § 95.091(3) framework.

Statute of limitations on refund claims — § 215.26(2)

Under Fla. Stat. § 215.26(2), an application for refund of corporate income tax must be filed within 3 years after the date the tax was paid. This 3-year refund period applies to taxes paid on or after July 1, 1999. For taxes paid after September 30, 1994 and before July 1, 1999, a 5-year refund period applied.

Exceptions:

• Federal adjustments — Under § 220.23, if a federal adjustment results in an overpayment of Florida corporate income tax, the taxpayer must file a refund claim within 3 years after the taxpayer reports the federal change to the Department (or within 3 years after the Department receives notice of the federal change from the IRS).

• Estate tax — Chapter 198 has separate refund rules and is excepted from the general § 215.26(2) framework.

The 3-year refund period is a statute of repose; if an application for refund is not filed within 3 years after the date the tax was paid, the right to a refund is barred.

Source: Fla. Stat. § 95.091(3)

Source: Fla. Stat. § 215.26(2)

Source: Fla. Stat. § 220.23

Florida offers two mechanisms for taxpayers to obtain certainty and resolve potential liabilities prospectively or retroactively: a voluntary disclosure program and a formal written-advice system for Technical Assistance Advisements (TAAs).

Voluntary Disclosure Program

Florida operates a voluntary disclosure program administered by the Department of Revenue. The program allows a taxpayer who has not filed required Florida corporate income tax returns (or who has underreported tax) to come forward voluntarily, pay the tax and interest owed, and receive relief from certain penalties. The statutory framework is found in Fla. Stat. § 213.21, which authorizes the Department to compromise or settle tax liabilities under specified circumstances.

Eligibility and scope:

• The taxpayer must not be under audit or investigation by the Department at the time of disclosure.
• The disclosure must be initiated by the taxpayer (or the taxpayer's representative) before the Department contacts the taxpayer regarding the liability.
• The taxpayer must agree to register (if not already registered), file all required returns, and pay all tax and interest due.

Look-back period:

Florida's voluntary disclosure program typically limits the look-back period to 3 years from the date of disclosure. This is consistent with the general 3-year statute of limitations for assessments under § 95.091(3). Taxpayers who qualify for voluntary disclosure are generally relieved of liability for periods beyond the 3-year look-back.

Penalty waiver:

Under § 213.21(3), the Department has statutory authority to compromise penalties "when it is proven that the failure to comply was due to reasonable cause and not to willful negligence, willful neglect, or fraud." Taxpayers who participate in the voluntary disclosure program and demonstrate reasonable cause for noncompliance typically receive a waiver of penalties (but not interest). The waiver is not automatic; the taxpayer must establish reasonable cause.

Anonymous filings:

Florida's voluntary disclosure program does not allow fully anonymous filings. The taxpayer (or authorized representative) must identify the taxpayer and provide sufficient information for the Department to evaluate eligibility and calculate the liability. However, the initial inquiry may be made through a representative without immediately disclosing the taxpayer's identity, and the representative may engage in preliminary discussions with the Department to confirm eligibility before the taxpayer is formally identified.

Technical Assistance Advisements (TAAs)

Under Fla. Stat. § 213.22, a taxpayer may request a Technical Assistance Advisement (TAA) from the Department on the application of Florida tax law to a specific set of facts. A TAA is the Florida equivalent of a private letter ruling.

Request process:

A TAA request must be submitted in writing to the Department's Technical Assistance and Dispute Resolution office. The request must include a complete statement of facts, copies of relevant documents, the taxpayer's analysis of the applicable law, and the specific question(s) presented. Under § 213.22(2), the Department may charge a fee for issuing a TAA; the fee is established by rule.

Binding effect:

Under § 213.22(1), a TAA is binding on the Department with respect to the taxpayer who requested it, provided the taxpayer fully and accurately described the relevant facts and the facts have not subsequently changed. The Department may not assess additional tax, penalty, or interest contrary to the TAA unless the facts were incomplete or inaccurate or the applicable law has changed. A TAA is not binding as precedent for other taxpayers and is not subject to public disclosure under Florida's public records law if it involves confidential taxpayer information under § 213.053.

Timing:

The Department does not have a statutory deadline for issuing a TAA, but it generally aims to respond within 90 days of receipt of a complete request. Complex issues may take longer.

Alternative to audit dispute:

If a taxpayer disagrees with an audit assessment and believes the dispute turns on the legal interpretation of a statute or rule, the taxpayer may request a TAA before the Department issues a Notice of Proposed Assessment (NOPA). If the Department issues a favorable TAA, the audit may be adjusted accordingly. However, once a NOPA has been issued, the taxpayer must follow the protest procedures described in § 72.011 rather than requesting a TAA.

Source: Fla. Stat. § 213.21 (Compromise of taxes; defaults; installment payments)

Source: Fla. Stat. § 213.22 (Technical assistance advisements; request procedure; effect)

Source: Fla. Stat. § 95.091(3)

Florida does not impose a minimum corporate income tax. If a corporation's Florida net income (as computed under Fla. Stat. § 220.12) is zero or negative, the tax liability is zero — there is no flat fee, minimum payment, or floor amount required.

Computation structure

Under Fla. Stat. § 220.11, the corporate income tax is imposed as "an amount equal to 5½ percent of the taxpayer's net income for the taxable year." Florida net income is defined in § 220.12 as the corporation's adjusted federal income (apportioned or in full, as applicable), plus nonbusiness income allocated to Florida, less the $50,000 exemption allowed by § 220.14. The tax is a percentage of net income; it is not a flat or per-entity charge.

Because the tax is computed as a percentage of net income, the mathematical result when net income is zero or negative is zero tax due. Florida law does not impose any minimum tax, alternative flat fee, or floor payment for corporations that report zero or negative Florida net income. The Department of Revenue's official return instructions confirm this treatment: the short-form corporate return (Form F-1120A) instructs taxpayers to enter zero tax due when Florida net income is zero or less.

No alternative minimum floor

Florida does impose a 3.3 percent tax rate under § 220.11(3) for taxpayers subject to the federal alternative minimum tax (AMT) under IRC § 55, but this is not a minimum tax in the sense of a floor payment. The 3.3 percent rate applies to an alternative measure of income (federal alternative minimum taxable income, adjusted under Florida rules), not as a minimum amount due when regular Florida net income is zero. If both the regular Florida net income computation and the Florida AMT computation yield zero or negative amounts, the tax is zero.

Annual filing still required

Even when no tax is due, every corporation subject to Florida corporate income tax must file an annual return (Form F-1120 or F-1120A). The filing requirement is not conditioned on tax liability; it applies to all entities conducting business, earning income, or existing in Florida. Failure to file a return when required subjects the taxpayer to penalties even if no tax is owed.

Source: Fla. Stat. § 220.11

Source: Fla. Stat. § 220.12

Source: Fla. Stat. § 220.14

Florida employs cost-of-performance sourcing for sales of services and intangible property under the corporate income tax sales factor, based on where the income-producing activity is performed rather than where the customer is located. This approach contrasts with market-based sourcing used in many other states.

Statutory framework

Florida statute § 220.15(5) defines the sales factor as a fraction with Florida sales in the numerator and total sales everywhere in the denominator, but the statute does not specify how to source sales of services or intangibles. The statute addresses only tangible personal property (sourced to destination) and financial-organization receipts, leaving services and intangibles to administrative rules.

Regulatory rule: cost-of-performance

Florida Administrative Code rule 12C-1.0155(2)(l), titled "Other Sales in Florida," governs sourcing of sales not explicitly addressed in the statute — which includes most services and intangible-property receipts. The regulation, last amended January 8, 2019, provides:

> Gross receipts from other sales shall be attributed to Florida if the income producing activity which gave rise to the receipts is performed wholly within Florida. Also, gross receipts shall be attributed to Florida if the income producing activity is performed within and without Florida but the greater proportion of the income producing activity is performed in Florida, based on costs of performance.

"Income producing activity" means "the transactions and activity directly engaged in by the taxpayer for the ultimate purpose of obtaining gains or profits" and applies separately to each item of income. When a taxpayer uses independent contractors, amounts paid to those contractors are included in the cost-of-performance calculation.

All-or-nothing apportionment

Florida's cost-of-performance rule operates on an all-or-nothing basis. If the greater proportion of costs to perform the income-producing activity are incurred in Florida, 100 percent of the receipts from that item are sourced to Florida. If the greater proportion of costs are incurred outside Florida, none of the receipts are sourced to Florida. There is no fractional or percentage-based apportionment of individual transactions under the regulation.

Intangible property — identified income-producing activity

For intangible property, the regulation draws a distinction. Where "the income producing activity in respect to business income from intangible personal property can be readily identified," the income is sourced under the cost-of-performance framework described above. Rule 12C-1.0155(2)(l)2 provides examples:

• Interest on deferred payments from sales of tangible property is sourced based on the income-producing activity.
• Income from the sale, licensing, or other use of intangible property (trade names, trademarks, patents) is sourced to the state in which the intangible is used by the customer.

Where business income from intangible property cannot readily be attributed to any particular income-producing activity, such income is excluded from both the numerator and denominator of the sales factor.

Department practice and judicial enforcement

The Florida Department of Revenue has in some Technical Assistance Advisements and audit positions attempted to apply market-based sourcing — sourcing service and intangible receipts to the customer's location or where the benefit is received. However, Florida circuit courts have repeatedly rejected this practice and held that the plain language of rule 12C-1.0155(2)(l) requires cost-of-performance sourcing.

In Billmatrix Corp. v. Department of Revenue, No. 2020-CA-000435 (Fla. 2d Cir. Ct., Leon Cnty., Mar. 1, 2023), the court granted summary judgment to the taxpayer and held that the regulation mandates cost-of-performance sourcing for service revenues. The court rejected the Department's market-based methodology as inconsistent with the regulation's plain language and ruled that the Department's inconsistent application violated the Florida Taxpayers' Bill of Rights. A similar outcome occurred in Target Enterprise, Inc. v. Department of Revenue, No. 2021-CA-002158 (Fla. 2d Cir. Ct., Leon Cnty., Nov. 28, 2022).

As of June 2026, the statute and regulation have not been amended to adopt market-based sourcing. Taxpayers sourcing service and intangible receipts should apply the cost-of-performance methodology set forth in rule 12C-1.0155(2)(l), notwithstanding contrary positions the Department may assert in audit or guidance.

Financial organizations — special rule

Financial organizations as defined in § 220.15(6) are subject to an expanded sales-factor definition under § 220.15(5)(c) and special sourcing rules in rule 12C-1.0155(3). Those rules are not addressed here.

Source: Fla. Stat. § 220.15

Source: Fla. Admin. Code r. 12C-1.0155 (effective Jan. 8, 2019)

Florida follows federal classification for single-member limited liability companies (SMLLCs) that are disregarded entities for federal income tax purposes. A single-member LLC disregarded at the federal level is not subject to Florida corporate income tax under Chapter 220. Instead, its activities and income are treated as belonging to the owner.

Statutory exemption from corporate income tax

Under Fla. Stat. § 605.1103(1), "a single-member limited liability company that is disregarded as an entity separate from its owner for federal income tax purposes . . . is not an 'artificial entity' within the purview of s. 220.02 and is not subject to the tax imposed under chapter 220." Because Florida's corporate income tax applies only to entities meeting the statutory definition of "corporation" or "artificial entity" in § 220.02, disregarded SMLLCs fall outside the tax base entirely.

Treatment of the owner

The statute provides that if a single-member LLC is disregarded for federal income tax purposes, "its activities are, for purposes of taxation under chapter 220, treated in the same manner as a sole proprietorship, branch, or division of the owner." The SMLLC's income, deductions, and activities are attributed directly to the owner for Florida corporate income tax purposes, mirroring the federal look-through treatment.

Owner entity type determines tax consequences

The Florida tax treatment of a disregarded SMLLC's income depends on the owner's classification:

• Individual owner — The SMLLC's activities are treated as a sole proprietorship. Because Florida imposes no personal income tax on individuals, the income is not subject to Florida income tax (though other Florida taxes, such as sales tax or reemployment tax, may apply depending on the business activities).

• Corporate owner — The SMLLC's activities are treated as a branch or division of the corporate owner. The income, expenses, property, payroll, and sales of the SMLLC are included in the corporate owner's Florida corporate income tax return (Form F-1120), aggregated with the parent's own operations for purposes of nexus determination, apportionment, and the calculation of adjusted federal income.

• Partnership owner — The SMLLC's activities are treated as part of the partnership's operations. Because a partnership classified as such for federal purposes is itself not subject to Florida corporate income tax under § 605.1103(1), the SMLLC's income flows through to the individual partners (who are not subject to Florida personal income tax) or to corporate partners (who report their distributive share).

Election to be taxed as a corporation

A single-member LLC may elect to be classified as a corporation for federal income tax purposes by filing IRS Form 8832 (Entity Classification Election). If the SMLLC makes this election, it is no longer a disregarded entity for federal purposes. Under Fla. Stat. § 605.1103(2), Florida follows the federal classification election: the LLC "shall be classified identically to its classification for federal income tax purposes." An SMLLC electing corporate status federally becomes subject to Florida corporate income tax as a "corporation" under § 220.03(1)(e), which expressly includes LLCs classified as corporations for federal purposes in the definition of taxable corporations.

Separate legal entity for non-income-tax purposes

Although a disregarded SMLLC is not a separate taxable entity for Florida corporate income tax, Fla. Stat. § 605.1103(3) clarifies that "single-member limited liability companies and other entities that are disregarded for federal income tax purposes must be treated as separate legal entities for all non-income tax purposes." For example, for Florida reemployment (unemployment) tax purposes, a disregarded SMLLC is the employer and must register and report wages under its own name and federal employer identification number (EIN), even though it is disregarded for income tax. The same principle applies to sales and use tax registration, transactional taxes, and regulatory compliance obligations.

Consistency with federal classification

Florida's conformity to federal entity classification in § 605.1103 reflects a statutory policy decision to avoid divergence between federal and state treatment for pass-through and disregarded entities. Florida statute does not permit a taxpayer to adopt one classification for federal purposes and a different classification for Florida corporate income tax purposes (absent a change in federal classification or a federal election). The federal classification controls.

Source: Fla. Stat. § 605.1103

Source: Fla. Stat. § 220.02

Source: Fla. Stat. § 220.03