United States: Exempt Now And Forever More? Not So, Taxpayer

Last Updated: November 13 2018
Article by Mark Lansing

Like many states, Florida has enacted a renewable energy device exemption legislation that is intended to incentivize construction of residential, building and utility size solar and wind farms. After all, it is the Sunshine State! Incentives include an eighty percent exemption from property taxation, but can the developer rely upon that exemption for the full term of the statute (presently, 2037)? Not necessarily. 1

Tangible Personal Property Tax

Under Florida law, all property is taxable; unless, it is specifically exempted. 2 Whether a property is subject to tax valuation, tax levy, or exemption, each year's assessment constitutes an annual determination, and thereby, "independent" of the prior year. 3 Thus, Florida, like most states, generally, requires a taxpayer to annually file an exemption or exemption renewal application. 4 For any exemption application, the burden of showing that the property is exempt lies with the taxpayer. 5

Florida taxes both real and tangible business personal property. Tangible personal property includes anything other than real estate that is used in a business or rental property. Every new business owning tangible personal property on January 1 must file an initial tax return. 6 Property owners, who lease, lend, or rent property must also file. Thereafter, annually by April 1, owners of tangible personal property having value in excess of $25,000 are required to file Form DR-405, Tangible Property Tax Return ("Form DR-405") in the county where the property is located. The owner of tangible personal property must file a separate return for each site in the county where he or she transacts business. 7

The taxable value of tangible personal property tax is the just value (fair market value) of the property adjusted for exclusions, differentials, or exemptions allowed by the Constitution and Florida Statutes. The Constitution strictly limits the Legislature's authority to provide exemptions or adjustments to fair market value. 8 The tax rate for tangible personal property is the same millage rate levied by counties, cities, school districts, and special districts on real property.

By the 2017 Florida Senate Bill No. 90, tangible personal property that constituted renewable energy source devices were given an eighty (80%) percent exemption from ad valorem taxation. 9

Exemption Application

  1. Generally

To obtain an exemption, the application process commences upon the filing of an application with the appropriate county on the form prescribed by the Florida Department of Revenue. 10 Following the receipt of the exemption application (or renewal application), the county appraiser determines if the property is or remains exempt. 11 12 As part of this review, the county appraiser may seek additional information from the taxpayer. Thus, and provided it is filed prior to March 1, the filing of an exemption application merely commences the administrative review process. Only upon the granting of the exemption and the assessment rolls being made final (July 1) are the exemption rights "vested". 13

  1. Renewable Energy Source Devices Application

Being a State defined partial exemption, the application for an exemption must be made on the form prescribed by the Florida Department of Revenue. For renewable energy source devices, in 2016, the DOR repealed Form DR-455, which had served as the renewable energy device exemption application. 14 In its proposed rules and forms arising from the 2017 legislation, the DOR had not proposed an exemption application form specific to the renewable energy source devices. Instead, it amended Form DR-405 to include a new line "24" to report costs specific for the renewable energy source devices. 15 As the purpose of Form DR-405 is to obtain cost information for the County Appraiser to compute a personal property value, it is not, per se, an exemption application. As such, its filing date is April 1, as opposed to March 1 (for exemption applications). However, to the extent that Form DR-405 must be filed as the application for exemption, its filing must be on or before March 1 of every year that an exemption is sought. 16 A taxpayer might also consider filing the general exemption application form (DR-504), with the DR-405 (again, on or before March 1).

At the time the taxpayer files the exemption application, the renewable energy source devices must exist and have been "installed" on or before January 1 of the year that the exemption application is being filed. 17 Upon receipt of the application, the County Appraiser determines whether the installed tangible personal property is exempt pursuant to FS §196.182. This statute requires the property to be a "renewable energy source device" as defined in FS §193.624, which include solar devices, provided such devices are installed on or after January 1, 2018. To be exempt in any given year, and using 2018 as an example, the renewable energy source devices would have had to been both existing and installed on or before January 1, 2018. 18 The Florida Supreme Court has held that "the actual use of the property as of the assessment date, rather than its intended future use, ... controls the determination of whether the property qualifies for an exemption from ad valorem taxes." 19 In Cedars, the Supreme Court stated, '[I]t is immaterial that the corporation intended to use the property for an exempt purpose subsequent to January 1; the controlling factor was that, as of the assessment date, it was not actually in use for such purpose.' 20

For determining the meaning of "installed", "[o]ne of the most fundamental tenets of statutory construction requires that we give statutory language its plain and ordinary meaning, unless the words are defined in the statute or by the clear intent of the Legislature. If necessary, the plain and ordinary meaning of the word can be ascertained by reference to a dictionary." 21 After consulting various dictionaries, a multitude of courts have defined "install" as follows:

Install: to place or fix (equipment or machinery) in position ready for use.

See e.g., Meriam Webster Dictionary; Dictionary.com or Oxford English Dictionary. If the exemption application is granted for the renewable energy source devices, the eighty percent partial exemption is applied to the derived just value for the year that the application or renewal is filed.

Term of Exemption - Revocable

It is axiomatic that statutes defining an exemption can be amended or repealed by subsequent legislative actions. 22 Any future legislation that amends or repeals the renewable energy source device exemption prior to July 1 of a given year may not constitute a violation of a taxpayer's due process rights. 23 However, such legislation should not be able to reach back into prior years where the final assessment rolls had been finalized and the exemption's application already enjoyed by the taxpayer. The United States Supreme Court has repeatedly concluded that the retroactive application of tax laws is permissible when the period of retroactivity is limited. 24

Although Florida has presently committed to an 80% exemption for renewable energy source devices until 2037, the Florida Legislature may enact future legislation that either amends or repeals such exemption. That is, just as the Legislature may enact statutes authorizing the grant of tax exemptions, "it lies within the legislature’s prerogative to repeal tax exemptions and impose taxes on lands previously exempt." 25

Footnotes

1 Unlike twenty-nine other states, Florida has not adopted a Renewable Portfolio Standard ("RPS"). An RPS is a regulation that requires the increased production of energy from renewable energy sources, such as wind, solar, biomass, and geothermal by a certain date. In addition, Florida lacks an RPS Renewable Carve Out.

2 FS §196.001.

3 Id.

4 FS §196.011 and 196.193.

5 Sowell v. Panama Commons, L.P., 192 So.3d 27 (2016).

6 FS §193.062.

7 FS §196.183(1).

8 FL. CONST. art. VII, s. 4.

9 FS §196.182. It should be noted that purchasers of solar energy systems used in place of conventional energy systems have been exempt from paying Florida's sales and use tax since July 1, 1997. The term “solar energy system” includes the equipment and requisite hardware that provide and are used for collecting, transferring, converting, storing or using incidental solar energy for water heating, space heating and cooling, or other applications that would otherwise require the use of a conventional source of energy such as petroleum products, natural gas, manufactured gas or electricity. The exemption covers all components used in the system. Sellers of solar energy systems are required to document sales to get the exemption.

10 FS §196.011 and 196.193.

11 FS §196.011 and 196.193.

12 Although some properties do not require an annual renewal application, Renewable Energy Source Devices have not been specifically identified as being one of those types of properties or exemption. Id. Thus, an annual renewal application should be made.

13 Prior to being finalized, the assessment rolls are technically subject to change, either by the County Appraiser or the Value Adjustment Board. FS §194.011(3) (d). Sowell v. Panama Commons, L.P., 192 So.3d 27 (2016).

14 2016 FL REG Text 427019 (NS).

15 Proposed Changes to Rule 12D-16.002 (Vol. 43, No. 203, pp. 4566-4568).

16 FS §196.011.

17 FS §196.011.

18 FS §196.011(1) (a), §196.182 and §193.624.

19 Dade County Taxing Auths. v. Cedars of Lebanon Hosp. Corp., 355 So.2d 1202, 1204 (Fla.1978); Metropolitan Dade County v. Miami-Dade County Community College Foundation, Inc., 545 So.2d 324 (Fla. 3d DCA 1989) (reversed tax exemption granted to property that was being remodeled for an exempt use).

20 Cedars, supra, 355 So.2d at 1204.

21 Green v. State, 604 So. 2d 471, 473 (Fla. 1992); Holly v. Auld, 450 So. 2d 217, 219 (Fla. 1984).

22 Sowell v. Panama Commons, L.P., 192 So.3d 27 (2016).

23 Sowell, supra.

24 United States v. Carlton, 512 U.S. 26, 30-32.

25 Straughn v. Camp, 293 So.2d 689, 695 (Fla.1974); see also Daytona Beach Racing & Recreational Facilities Dist. v. Volusia Cnty., 372 So.2d 419, 420 (Fla.1979) ("[A] subsequent legislature has the unquestioned authority to repeal prior tax exemption statutes.").

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Mark Lansing
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions