Did Florida documentary stamp tax apply when a Florida financing office approved and prepared loan documents that borrowers executed and delivered outside the state?

Plain-English summary

Florida documentary stamp tax did not apply to the described out-of-state loan documents. A Florida office approved the applications and prepared checks whose endorsements contained the promises to pay, but the out-of-state borrowers signed and deposited them outside Florida.

An authorized out-of-state agent bank received, accepted, processed, and paid the documents for the financing companies. Returning the originals to Florida later for servicing and safekeeping did not make the transaction taxable. The companies still had to preserve proof of the out-of-state execution and delivery.

The holding did not cover notes executed by Florida borrowers or notes secured by Florida mortgages. The request stated that the loans had no Florida real-property mortgage and no filing other than a UCC-1 financing statement.

What this means for you

Florida loan approval or preparation alone did not control. Execution, delivery, acceptance, collateral, and documentation determined whether the state had a taxable promissory-note transaction.

Common questions

Q: Did Florida preparation of the documents create tax? No.

Q: Did later return of the originals to Florida create tax? No, when returned only for servicing and safekeeping.

Q: Was documentation required? Yes, proof of the out-of-state activity was necessary.

Q: Would a Florida-executed note or Florida mortgage be treated the same? No.

Citations and references

• Fla. Stat. §§ 201.01 and 201.08(1) — documentary stamp tax on written payment obligations
• Fla. Admin. Code r. 12B-4.053(33) — proof of out-of-state execution and delivery
• Fla. Att'y Gen. Op. 80-79 — out-of-state loan activity cited
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02B4-002

Original ruling text

SUMMARY

QUESTION: Is documentary stamp tax due on financing
documents which are executed outside of Florida and
delivered to locations of the financing company or its
agents located out of state, even if preparation of the
loan documents occurs in Florida?

ANSWER - Based on Facts Below: No. Since all of the
financing documents are being signed, executed, and
delivered to the location(s) outside Florida, no
documentary stamp tax is due. Approval of the loan
applications in Florida does not render the financing
transaction taxable. Proof to establish the out-of-state
activity is necessary for documentation purposes.

Feb 07, 2002

Re: Technical Assistance Advisement No. 02B4-002
Documentary Stamp Tax on Promissory Notes
Section 201.08, F.S.
XXX (Hereinafter "Financing Companies" as listed above)

Dear :

This is in response to your recent request for a technical
assistance advisement pertaining to the applicability of
documentary stamp tax on financing documents which are executed
outside of Florida and delivered to locations of the financing
company or its agents located outside of Florida.

FACTS PRESENTED BY THE PETITIONER

The financing companies with a Florida location receive
applications for financing from their various locations
throughout the U.S. and Florida. The Florida location approves
the financing, prepares the lending documents, which include a
written promise to pay contained on the reverse side of the
endorsed check that is made payable to the borrower. The

Florida location then forwards the checks to remote locations
(outside Florida) by mail. Only the non-Florida transactions
are the subject of this request. The checks are received in the
various remote locations for execution by the borrowing
customer, who then signs the back of the check. The endorsement
of the check constitutes the borrowing customer's acceptance of
the loan and the execution of the written promise to pay.

The out-of-state borrower deposits the check at a bank
outside Florida and the check is forwarded via the banking
system to the financing company's agent located outside Florida
for processing and payment. The agent of the financing
companies is a bank located outside Florida that is the paying
bank on the check.

Upon the receipt of the executed documents (the check) from
the borrowing customer at these non-Florida locations, the agent
bank accepts them for the financing company. The agent bank has
authority to accept the transaction and the documentation and
consummate the transaction, and the financing company has the
right to instruct the agent bank to not accept the check and not
make the loan. The agent bank handles all processing outside
Florida. The bank authorization will be evidenced by an Agency
Designation Agreement specifying that the out-of-state bank
named in the agreement has full right, title, and authority to
accept the documents on behalf of the financing company and
consummate the transaction. Once the documents have been
received, accepted and paid by the agent bank at the non-Florida
locations, the agent bank will forward the original of the
documents to the finance company's Florida location by mail.
Promissory notes and other documents evidencing the loan
transaction are not secured by a real property mortgage in
Florida, nor will they be secured by filings other than a UCC-1
Financing Statement with the Florida Secretary of State.

Requested Ruling

You request the issuance of a Technical Assistance
Advisement determining that no documentary stamp tax is due on
those financing documents which are executed outside of Florida
and delivered to locations of the financing company or its

agents located outside of Florida. Any promissory notes and
other written obligations to pay money containing a promise to
pay that are executed in Florida by Florida borrowers would,
however, be subject to Florida documentary stamp tax, as would
notes secured by Florida mortgages or filings other than a UCC-1
Financing Statement.

Discussion and Law

Section 201.01, F.S., imposes the documentary stamp tax on
taxable documents executed in Florida. Promissory notes and
other written obligations to pay money containing a promise to
pay a sum certain and signed by the maker are subject to the
documentary stamp tax imposed under s. 201.08(1), F.S., at the
rate of $.35 per $100 or fraction thereof. Mortgages executed
in or outside Florida are taxable upon recordation, based on the
maximum indebtedness secured. See s. 201.08, F.S.

There is no specific statute disallowing a financing
company located in Florida from approving a loan application
from an out-of-state borrower, and then forwarding the actual
documents electronically or by mail to an out-of-state location
or to an agent of the lender outside Florida. The documents may
be returned to the financing company for servicing of the loan
and safekeeping purposes, without incurring the documentary
stamp tax. See Attorney General Opinion 80-79, dealing with the
jurisdiction of Florida to impose a documentary stamp tax on
transactions arising in part from out-of-state activities.

Department Response

Since all of the documents are being signed, executed, and
delivered to the location(s) outside Florida, no documentary
stamp tax is due, based upon the cited statutes and rules. The
fact that the approval of the documents occurs in Florida does
not render the transaction taxable. Proof to establish the outof-state activity, as explained in Rule 12B-4.053(33), F.A.C.,
is necessary for documentation purposes.

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, F.S. 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

JE/mh