The Florida Second Judicial Circuit granted summary judgment in favor of Checkfree Services Corporation, finding that Florida’s corporate income tax cost of performance apportionment rule required the sourcing of receipts from Checkfree’s online bill pay services based on Checkfree’s own transactions and activities.
Checkfree acted as an agent for financial institution clients and facilitated online bill pay transactions requested by its clients’ customers, some of whom were located in Florida. Checkfree conducted the vast majority of its business activities outside of Florida, as evidenced by the fact that Checkfree had no payroll and virtually no property in Florida. Nevertheless, the Department argued that Checkfree’s receipts must be sourced to Florida on the basis that its income producing activities took place at the location of its customers, or alternatively, on the basis of a special apportionment rule applicable to providing direct access to a database.
The Court rejected the Department’s argument as inconsistent with Florida’s COP rule, which required sourcing based on the transactions and activities of the taxpayer, not its customer. The Court determined that Checkfree was paid for moving money on behalf of its customers, rejecting the Department’s alternative argument that the special sourcing rule for receipts from providing direct access to a database applied.