Franchise Tax Lien Information
Franchise tax liens arise when: a corporation or LLC fails to pay required state taxes, the entity fails to file required annual reports, or the entity is administratively dissolved for non-compliance. Impact on real property: the lien attaches to all property owned by the entity, must be cleared before the property can be sold with clear title, and may survive an entity dissolution.
Florida Legal Definition
Florida does not impose a traditional franchise tax but does impose: the corporate income tax (Chapter 220) and the annual report filing fee (§607.1622/§605.0213). Under §220.822, the Department of Revenue may file a tax warrant (which creates a lien on the entity's property). Under §607.1421, administrative dissolution for failure to file annual reports may create complications for the entity's title to real property.
How It's Used in Practice
In practice, attorneys identify and resolve tax liens in property transactions involving entity-owned properties. The attorney: searches for tax warrants and liens filed by the Department of Revenue, verifies the entity's good standing with the Division of Corporations, reinstates dissolved entities (if needed to convey clear title), and satisfies any outstanding tax obligations before closing.
Key Takeaways
- Tax warrants create liens on entity-owned property.
- Check: corporate income tax compliance and annual report filings.
- Administrative dissolution creates title complications.
- Reinstate dissolved entities before conveying property.
- Search DOR records for tax warrants during due diligence.
Disclaimer: The information and opinions provided are for general educational, informational or entertainment purposes only and should not be construed as legal advice or a substitute for consultation with a qualified attorney. Any information that you read does not create an attorney–client relationship with Barnes Walker, Goethe, Perron, Shea & Johnson, PLLC, or any of its attorneys. Because laws, regulations, and court interpretations may change over time, the definitions and explanations provided here may not reflect the most current legal standards. The application of law varies depending on your particular facts and jurisdiction. For advice regarding your specific situation, please contact one of our Florida attorneys for personalized guidance.
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