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On money

By HELEN HUNTLEY, Times Staff Writer

© St. Petersburg Times, published June 2, 2002

Tax on investments may seem new, but guess again

Tax on investments may seem new, but guess again

Q. When did this Florida intangibles tax thing get passed? All of a sudden I get a notice from my online broker telling me I have to pay Florida a percentage of what my investments are worth. This is the first I have heard of this. I have spoken to many fellow investors who are in the dark about this. It's almost as if Tallahassee was trying to keep everything quiet so penalties and interest could accumulate before they started lowering the boom on everyone.

A. The intangibles tax may have snuck up on you, but it isn't new. The tax was permitted by an amendment to the state Constitution in 1921 and enacted by the Legislature in 1931. It predates the sales tax.

Efforts to reduce or abolish the tax have been in the news recently. Like you, many investors are upset that they are expected to pay a tax based on the value of their stocks, bonds and mutual funds. A reduction in the tax passed the Legislature last year, but implementation was delayed because of a shortfall in the state budget.

The Department of Revenue is pretty quiet about the tax, but it has stepped up enforcement as computerized record keeping has made it easier for the state to target investors with substantial holdings.

The tax currently is $1 per $1,000 of value for assets above $20,000 ($40,000 for a married couple.) Bank accounts, annuities, retirement accounts, U.S. government bonds and Florida municipal bonds are among the investments exempt from the tax. You don't have to pay unless you owe at least $60. The annual filing deadline is June 30. If you have questions, call the Department of Revenue toll-free at 1-800-352-3671 weekdays between 8 a.m. and 7 p.m.

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Q. Recently I read about decorated turtles being auctioned off in Clearwater to raise money for charity. Many communities have done the same, from fish in Erie, Pa., to cows in Chicago to steers in Sonoma, Calif. What companies make these things? Could this be a good investment?

A. Congratulations on thinking like an investor as you look at what is going on in the community and the world around you.

Unfortunately, it probably will be difficult to profit from your observations in this instance. While growing, the market you are talking about is small and spread across the United States. The prime candidates to get into this business are companies that make fiberglass displays used in theme parks, retail stores and moviemaking.

Clearwater's fiberglass turtles, which cost $1,400 apiece before the decorating, were made by the Resource Factory, a private company in Sarasota. I cannot provide a list of other companies in the industry, but this is something you could research on the Internet.

Many successful money managers say they have found good stocks by paying attention to companies doing business in their own back yards. Starting with a trend is the more difficult way to go about this. The process is easier if you start with a public company that has impressed you with its products or services.

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Q. We are in our 80s and would like advice on our financial condition, particularly with regard to safeguarding our savings for ourselves, our children and grandchildren without losing most of it to taxes upon our demise. Are there financial consultants who would perform such a service without trying to sell us something?

A. Sure. Financial advisers usually are compensated by a commission based on sales, by an hourly fee or by an annual fee, often based on a percentage of assets under management. Some use a combination of these methods. If you want only advice, look for someone who will provide that for an hourly fee.

You can get referrals to planners who charge hourly fees by calling the National Association of Personal Financial Advisors toll-free at 1-888-333-6659 (http://napfa.org) or the American Institute of CPAs toll-free at 1-888-999-9256 (www.cpapfs.org).

Most likely you also will need to see a lawyer to be sure that your estate plan is in order.

Online Money Map

Want to know more about the intangible personal property tax and other state taxes? Check out the Florida Department of Revenue Web site (www.myflorida.com/dor/taxes/).

-- Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.

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