Were promissory notes and mortgages involving Agricultural Credit Associations exempt from Florida documentary stamp tax?

Plain-English summary

Florida found the Agricultural Credit Associations' short-term promissory notes and long-term notes and mortgages exempt from documentary stamp tax. The Associations were federally chartered cooperatives that lent money to Florida farmers.

The Department relied on Florida Administrative Code rule 12B-4.002(2)(c), which described mortgages and notes between nonexempt parties and federal agencies or instrumentalities—including Agricultural Credit Associations—as exempt by Congress. The ruling said the exemption turned on the Associations' status rather than the particular sample loan forms.

The same rule distinguished instruments that were only guaranteed or insured by a listed agency or instrumentality; those instruments remained taxable under the quoted language.

What this means for you

The ruling did not create a broad farm-loan exemption. The deciding fact was that the lender was an Agricultural Credit Association within the cited federal-instrumentality rule.

Common questions

Q: Did the ruling cover both short- and long-term lending? Yes. It addressed short-term promissory notes and long-term promissory notes secured by Florida real-estate mortgages.

Q: Was the exemption based on specific wording in the sample documents? No. The request and determination treated the lender's status as controlling.

Q: Were all federally guaranteed or insured loans exempt? No. The quoted rule said an instrument merely guaranteed or insured by a listed agency or instrumentality was subject to tax.

Citations and references

• Fla. Stat. §§ 201.01 and 201.08 — listed documentary stamp tax provisions
• Fla. Admin. Code r. 12B-4.002(2)(c) — federal agency and instrumentality exemption
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00B4-002

Original ruling text

SUMMARY

Question: Are short-term promissory notes and mortgages
issued by Agricultural Credit Associations exempt from the
documentary stamp tax?

Answer - BASED ON FACTS BELOW: Mortgages and notes between
non-exempt parties and the Agricultural Credit Associations
are not subject to the documentary stamp tax, since they
are exempt by Congress.

Mar 07, 2000

Re: Technical Assistance Advisement No. 00(B)4-002
Documentary Stamp Tax; Short Term Promissory Notes and
Mortgages to Agricultural Credit Associations
Sections 201.01 and 201.08, F.S.
Rule 12B-4.002(2)(c), F.A.C.
XXX (Hereinafter "the Taxpayers")

Dear :

This is in response to your request for a Technical
Assistance Advisement on behalf of the Taxpayers. Your letter
requests guidance concerning the taxability of the Short-term
Promissory Notes and Mortgages enclosed with your
correspondence.

Facts Presented by the Practitioner

The Taxpayers, Agricultural Credit Associations, are
federally chartered cooperatives which lend money to farmers in
Florida. Taxpayers' short-term loans are evidenced by, among
other documents, a promissory note (collectively all of these
loan documents are referred to as the "Short Term Promissory
Notes"). Taxpayers' long-term loans are evidenced by, among
other documents, a promissory note and a real estate mortgage
(collectively all of these loan documents are referred to as the

"Mortgages"). The Taxpayers seek guidance concerning the
taxability of the Short-term Promissory Notes and Mortgages.
The Short-term Promissory Notes and the Mortgages are not
guaranteed or insured by the Taxpayers. Samples of the types of
documents utilized by the Taxpayers were enclosed with your
request. Nevertheless, because the exemption on which guidance
is sought (Rule 12B-4.002, F.A.C.) is based on the status of the
Taxpayers (not the terms of the documents), it is requested that
the technical assistance advisement not be limited to the
enclosed documents.

Requested Advisement

Your letter requests a ruling on whether the Short-term
Promissory Notes and Mortgages are exempt from the documentary
stamp tax imposed under s. 201.08, F.S.

Law and Analysis

Section 201.08(1), F.S., imposes the documentary stamp tax
at the rate of $.35 per $100 on promissory notes, nonnegotiable
notes, and written obligations to pay money which are executed
or delivered in Florida. A similar tax is imposed on mortgages
which are recorded in Florida.

Rule 12B-4.002(2)(c), F.A.C., states:

Mortgages and notes between non-exempt parties and agencies
or instrumentalities of the federal government, including,
but not limited to, the following agencies are exempt by
Congress and therefore not taxable: (However, an instrument
which is guaranteed or insured by one of the following
agencies or instrumentalities is subject to tax.)

(1) Agricultural Credit Association...

Determination

Mortgages and notes between non-exempt parties and agencies
or instrumentalities of the federal government are exempted
under Rule 12B-4.002(2)(c), F.A.C. Since the taxpayers are

Agricultural Credit Associations, their Short-term Promissory
Notes and Mortgages are exempt from the documentary stamp tax
imposed under s. 201.02(1), F.S.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice, as specified in s. 213.22. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment from that
which is expressed in this response.

You are further advised that this response, your request
and related backup are public records under Chapter 119, F.S.,
and are subject to disclosure to the public under the conditions
of s. 213.22, F.S. Confidential information must be deleted
before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter

Sincerely,

Joy B. Eldred, C.P.A.
Tax Law Specialist
Technical Assistance and Dispute Resolution
Office of the General Counsel

JBE/mh