Can an equipment lessor rely on TAA 04B4-006's express-incorporation analysis to avoid documentary stamp tax?

Plain-English summary

Do not rely on the original no-tax conclusion in this TAA. The Florida Department of Revenue placed an express notice at the beginning of the official PDF: “Obsolete: See Crescent Miami Center, LLC v. Department of Revenue, 903 So.2d 913 (Fla. 2005).”

The rest of the document preserves the Department's superseded 2004 analysis of an equipment lease agreement, equipment schedule, and delivery-and-acceptance certificate.

What the 2004 ruling originally said

The signed lease stated each payment amount, number of payments, advance payment, noncancelable term, and an absolute and unconditional payment obligation. It expressly made Equipment Schedule A part of the agreement.

But rent did not become payable until the equipment described in the schedule had been delivered and accepted. A separate certificate established delivery, inspection, installation, working condition, and acceptance.

The lease did not expressly incorporate that delivery certificate, and the certificate did not expressly incorporate the lease.

The original analysis treated acceptance as a missing condition

Section 201.08(6), as quoted in the TAA, required taxability to be determined solely from a document's face and separate documents expressly incorporated into it. Mere reference, implication, or participation in the same transaction did not count.

The TAA originally reasoned that the lease's sum-certain promise was not enforceable until delivery and acceptance, yet the document proving that condition could not be read with the lease because it was not expressly incorporated. On that basis, Florida originally found no documentary stamp tax.

The obsolete notice controls the page today

The Department's notice identifies Crescent Miami Center but does not rewrite the lease analysis or state a replacement rule in the PDF. Current treatment must be determined from later authority and current law, not from the preserved original conclusion.

What this means for you

Equipment lessors and finance companies

Do not structure current lease documents around this TAA's historical incorporation analysis. The Department itself marks the holding obsolete.

Equipment lessees

Review the complete document set—including schedules, acceptance certificates, guarantees, and conditions to payment—with current Florida documentary-stamp guidance.

Researchers

The TAA remains useful as a record of the Department's former approach to conditional payment promises, but any quotation of its conclusion should include the obsolete warning.

Common questions

Q: What did the TAA originally conclude?
A: It found no tax because the delivery-and-acceptance certificate was not expressly incorporated into the signed lease containing the payment terms.

Q: Is that answer current?
A: No. The official PDF labels the TAA obsolete.

Q: Which later authority does Florida identify?
A: Crescent Miami Center, LLC v. Department of Revenue, 903 So. 2d 913 (Fla. 2005).

Q: Does the warning provide a new equipment-lease test?
A: No. It identifies the later case but does not rewrite the TAA.

Citations and references

• Fla. Stat. § 201.08(6) — document-face and express-incorporation rule quoted in the historical analysis
• Fla. Admin. Code r. 12B-4.052(6)(b) — written-obligation and express-incorporation test quoted in the TAA
• Crescent Miami Center, LLC v. Department of Revenue, 903 So. 2d 913 (Fla. 2005) — later authority identified by the Department's obsolete notice

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04B4-006

Original ruling text

Obsolete: See Crescent Miami Center, LLC v. Department of Revenue,

903 So.2d 913 (Fla. 2005)

SUMMARY

QUESTION: Is the Equipment Lease Agreement subject to

documentary stamp tax?

ANSWER - Based on Facts Below: Because the Equipment Lease

Agreement does not expressly incorporate the Delivery and
Acceptance Certificate, the Equipment Lease Agreement is
not subject to documentary stamp tax as a promise to pay a

sum certain signed by the Lessee.

May 13, 2004

Re: Technical Assistance Advisement No. 04B4-006
Documentary Stamp Tax - Equipment Lease Agreement
Section 201.08(6), F.S.

Rule 12B-4.052(6)(b), F.A.C.
XXX (hereinafter, Lessor)

Dear :

This is in response to your request for a technical
assistance advisement asking for an opinion on whether the
Equipment Lease Agreement and related documents would be subject

to documentary stamp tax.

FACTS AS PRESENTED BY PETITIONER

Lessor is in the business of financing various equipment
leases. The documents presented consist of the Equipment Lease
Agreement, Delivery and Acceptance Certificate, and an Equipment

Schedule.

The Equipment Lease Agreement gives the amount of each
payment, the number of payments, and the amount (if any) paid in
advance. The Agreement states that the equipment described in
the Equipment Schedule must be delivered and accepted by the

Lessee prior to any obligation for the payment of rent.

The Equipment Lease Agreement states that the Lessee's
obligation under the lease "is absolute and unconditional and
not subject to abatement, reduction, or set-off for any reason
whatsoever...." The Agreement states that it cannot be
cancelled for the full term of the Agreement. The Agreement

states that the Equipment Schedule A is "made a part hereof".

The Delivery and Acceptance Certificate gives the date the

Lessee accepts delivery of the equipment from the supplier.

REQUESTED RULING

You request the Department's determination that the
documents involved in this request are not subject to

documentary stamp tax under s. 201.08, F.S.

LAW AND DISCUSSION

Three documents comprise the lease arrangements submitted
for review, the Equipment Lease Agreement, the Equipment

Schedule "A", and the Delivery and Acceptance Certificate.

Section 201.08(6), F.S., states:

(6) Taxability of a document pursuant to this section shall

be determined solely from the face of the document and any
separate document expressly incorporated into the document.
Taxability of a document pursuant to this section shall not

be determined by reference to any separate document
referenced or forming part of the same contract or

obligation unless the separate document is expressly

incorporated into the document...

Under Rule 12B-4.052(6)(b), F.A.C., the taxability of a

written obligation to pay money is determined from the form and
face of the document. Whether a document is taxable is
determined by reference to that document and any other document
or documents expressly incorporated therein. Mere reference or
implication or description of the other document is not express
incorporation. Express incorporation occurs when words in a
document under examination provide that another document or

documents are incorporated into that document under examination.

The Equipment Lease Agreement displays the amount of each
monthly payment, the number of payments, and any down payment.
This is the "promise to pay" required under s. 201.08, F.S.
However, it states that the obligation to pay is subject to
delivery of the capital equipment described in the Equipment
Schedule, and that it is also subject to execution of the
Delivery and Acceptance Certificate. The Equipment Lease
Agreement expressly incorporates the Equipment Schedule "A".
The Lease Agreement states that once the Lessee signs the
Agreement and the Lessor accepts it, the Agreement cannot be
cancelled for the full term of the agreement. It is a non-
cancelable lease agreement. The Equipment Lease Agreement also
includes an unconditional guaranty of payment and performance of

all obligations of the Agreement.

According to information supplied by telephone, the
Equipment Schedule is prepared by the Lessor, listing the
specific equipment to be leased. It is dated by the Lessee when
Lessee approves the types and number of equipment listed

therein.

The Delivery and Acceptance Certificate states that the
equipment has been delivered, inspected, installed, is in good
working condition, and is accepted when the Lessee signs and
dates the Certificate. The Delivery and Acceptance Certificate
is not expressly incorporated into the Equipment Lease Agreement

or the Equipment Schedule.

DETERMINATION

The "promise to pay" a sum certain in money is clearly

delineated in the Equipment Lease Agreement and bears the

signature of the Lessee. Even though the Equipment Schedule is
expressly incorporated into the Equipment Lease Agreement, the
Delivery and Acceptance Certificate is not expressly

incorporated into the Equipment Lease Agreement. Neither is the
Equipment Lease Agreement expressly incorporated into the
Delivery and Acceptance Certificate. The Equipment Lease
Agreement must show by express incorporation that the equipment
has been delivered and accepted by the borrower before any
promise to pay a sum certain becomes enforceable. Therefore,
the documents submitted are not subject to documentary stamp tax
under s. 201.08, 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, 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 than

expressed in this response.

You are further advised that this response, your request
and related backup documents 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 this letter.

Sincerely,

M.E. Clemens, C.P.A.
Senior Tax Specialist
Technical Assistance and Dispute Resolution

Office of General Counsel

MEC/mh