Were loan, note, and lease documents executed, signed, and delivered outside Florida subject to stamp tax?

Plain-English summary

A Florida borrower planned equipment loan and lease transactions in which an employee of the Florida lender would act as the borrower's attorney-in-fact, execute the documents outside Florida, and deliver them to another lender employee outside Florida.

Florida found the notes, leases, and related documents were not subject to the written-obligation tax if they were executed, signed, and delivered outside Florida. The parties acting as attorney-in-fact or accepting delivery did not affect the result.

If the documents were later brought into Florida for keeping or collection, the parties needed evidence of the out-of-state execution and delivery. A mortgage or other lien filed or recorded in Florida remained taxable. The ruling also stated that a true or operating lease was not subject to this documentary stamp tax even if executed, signed, or delivered in Florida.

What this means for you

Location and proof control the note analysis. Out-of-state formalities should be documented contemporaneously, while Florida recording of collateral documents must be analyzed separately.

Common questions

What proof could establish out-of-state execution and delivery? The ruling listed notarized affidavits and other contemporaneous evidence such as travel, airline, and hotel records.

Did using the lender's employee as attorney-in-fact change the result? No. The two attorney-in-fact instruments did not affect application of the tax.

Were Florida-recorded liens exempt too? No. A mortgage or lien filed or recorded in Florida was independently taxable.

Citations and references

• Fla. Stat. § 201.08(1)(a) (notes and written obligations executed, signed, or delivered in Florida)
• Fla. Stat. § 201.08(1)(b) (Florida-filed mortgages and liens)
• Fla. Admin. Code r. 12B-4.053(34) (out-of-state execution and delivery)
• Florida Department of Revenue v. Winn-Dixie Store, Inc., 884 So. 2d 1100
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06B4-004

Original ruling text

SUMMARY

QUESTION: Is Florida's documentary stamp tax, as imposed under paragraph 201.08(1)(a), F.S., due on a loan
agreement, promissory notes, and other documents, including leases, executed in connection with advances made

under the loan agreement

ANSWER - Based on Facts Below: Paragraph 201.08(1)(a), F.S., imposes documentary stamp tax on promissory

notes and other written obligations to pay money, executed, signed or delivered in Florida. A document executed,
signed or delivered in Florida is taxable if it contains a promise to pay, or repay, a sum certain in money and the
signature of the obligor. The tax is based on the amount of the obligation at the rate of $.35 per $100 or fraction

thereof.

Promissory notes, nonnegotiable notes and written obligations to pay money, including leases, made and executed in
another state and delivered to a Florida lender in another state are not subject to Florida's documentary stamp tax.
However, where a note or other written obligation to pay money is executed, signed and delivered outside Florida and
then brought into Florida for keeping or collection, proof that the note was executed, signed and delivered outside
Florida must be established to avoid tax. Such proof includes: a sworn affidavit made before an out-of-state notary
public at the time of the signing of the note by the borrower and delivery of the note to the lender attesting that the
note was executed and delivered in the presence of the out-of-state notary; a notarization on the note as to where the
note was executed together with an affidavit made before an out-of-state notary by the lender attesting that the note
was delivered to the lender, or its agent out-of-state, or any other proof that the execution, signing and delivery
occurred outside Florida, such as travel vouchers, airplane stub and hotel receipts corresponding with the signing and

delivery of the note.

The notes, leases and other documents that are the subject of the two fact patterns provided for review would not be
subject to tax imposed pursuant to s. 201.08(1)(a), F.S., so long as the notes, leases and other documents are
executed, signed and delivered outside Florida. The parties that execute, sign or take delivery of the documents do

not affect the taxation of the documents if the documents were executed, signed and delivered outside Florida.

It is also worth noting that the Department, as the result of the ruling in Florida Dept. of Revenue v. Winn-Dixie Store,

Inc., 884 So. 2d 1100, takes the position that a true lease or operating lease is not subject to documentary stamp tax,

even if the true lease or operating lease is executed, signed or delivered in Florida.

May 11, 2006

Re: Technical Assistance Advisement No. 06B4-004
Documentary Stamp Tax - Out of state notes and leases.
Section 201.08(1)(a), F.S.

XXX ("Taxpayer")

Dear:

This is in response to your letter dated February 6, 2006, requesting a Technical Assistance Advisement regarding
application of Florida's documentary stamp tax as imposed under s. 201.08(1)(a), F.S., upon a loan agreement and
subsequent related advances and a master lease agreement and subsequent related leasing schedules, executed

and delivered outside Florida where Taxpayer is borrower and lessor.

Facts as Presented by Petitioner

Your letter poses two fact patterns for which you request a determination of whether documentary stamp tax as

imposed under s. 201.08(1)(a), F.S., is due.

Fact Pattern 1:

Company A, a Florida corporation ("Borrower"), has applied for an equipment line of credit from Taxpayer,
pursuant to which Borrower will enter into a Master Loan and Security Agreement (the "Loan Agreement"). Borrower
shall, subject to the requirements set forth in the Loan Agreement, be permitted, from time to time, to obtain advances
for equipment purchases. Each advance shall be evidenced by a separate promissory note and such other documents

as Taxpayer shall require.

Borrower wishes to appoint one or more persons employed by Taxpayer as Borrower's attorney-in-fact for the
purposes of executing and delivering the Loan Agreement, each promissory note and other documents executed in
connection with advances under the Loan Agreement. Borrower shall execute a power of attorney, in form similar to
Exhibit "A" hereto, appointing an employee of Taxpayer as the Borrower's attorney-in-fact for the purpose of executing
documents in the form attached to the power of attorney. In connection with the equipment line of credit, the
designated attorney-in-fact (an employee of Taxpayer) shall execute the Loan Agreement, promissory notes and other
credit documents outside the state of Florida, and shall deliver all such documents to another employee of Taxpayer
outside the state of Florida. The execution and delivery shall be evidenced by a notarized affidavit of the designated
attorney-in-fact of Borrower and by the person accepting delivery of the promissory note and other credit documents
on behalf of Taxpayer, in accordance with the requirements set forth in Section 12B-4 of the Florida Administrative

Code.

Fact Pattern 2:

Company A, a Florida corporation ("Borrower"), has applied for an equipment leasing line of credit from the
Taxpayer, pursuant to which the Borrower and Taxpayer will enter into a Master Lease Agreement (the "Master
Lease"). Borrower shall, subject to the requirements set forth in the Master Lease, be permitted, from time to time, to
enter into equipment leases with the Bank. Each equipment lease will be evidenced by a separate leasing schedule

under the Master Lease and such other documents as Taxpayer shall require.

Borrower wishes to appoint one or more persons employed by Taxpayer as the Borrower's attorney-in-fact for the

purposes of executing and delivering the Master Lease, each leasing schedule and other documents executed in
connection with equipment leases under the Master Lease. Borrower shall execute a power of attorney, in form similar
to Exhibit "B" hereto, appointing an employee of Taxpayer as Borrower's attorney-in-fact for the purpose of executing
documents in the form attached to the power of attorney. In connection with each leasing transaction, the designated
attorney-in-fact (an employee of Taxpayer) shall execute the Master Lease, the applicable leasing schedules and
other documents outside the state of Florida, and shall deliver all such documents to another employee of taxpayer
outside the state of Florida. The execution and delivery shall be evidenced by a notarized affidavit of the designated
attorney-in-fact of Borrower and by the person accepting delivery of the applicable leasing schedule and other credit
documents on behalf of Taxpayer, in accordance with the requirements set forth in Section 12B-4 of the Florida

Administrative Code.

Request for Advisement

You are requesting a determination by the Department of Revenue as to whether the Loan Agreement, each
promissory note and other documents executed in connection with advances made under the Loan Agreement as
provided in Fact Pattern 1 and the Master Lease, applicable leasing schedules and other documents made pursuant
to the Master Lease as provided in Fact Pattern 2 are subject to Florida’s documentary stamp tax as provided in

paragraph 201.08(1)(a), F.S.

Law and Discussion

Paragraph 201.08(1)(a), F.S., imposes documentary stamp tax on promissory notes and other written obligations
to pay money, executed, signed or delivered in Florida. A document executed, signed or delivered in Florida is taxable
if it contains a promise to pay, or repay, a Sum certain in money and the signature of the obligor. The tax is based on

the amount of the obligation at the rate of $.35 per $100 or fraction thereof.

Rule 12B-4.053(34), F.A.C., states in pertinent part:

Promissory notes, nonnegotiable notes, and written obligations to pay money (hereinafter, called notes) made,
executed, and delivered to a Florida lender in another state are not subject to Florida’s documentary stamp tax. If the
notes then are brought into Florida for collection after they have been made, executed, and delivered to the Florida
lender, or its agent, in another state, no tax is due. However, if a note is made and executed in another state and
delivered to the lender in Florida, the note would be subject to tax. The Department will presume that if a note is made
payable to a Florida lender and the note is held by the Florida lender in Florida, then tax will be due unless the lender

can establish that the note was made, executed, and delivered to the lender outside the state.

Promissory notes, nonnegotiable notes and written obligations to pay money, including leases, made and executed
in another state and delivered to a Florida lender in another state are not subject to Florida’s documentary stamp tax.
However, where a note or other written obligation to pay money is executed, signed and delivered outside Florida and
then brought into Florida for keeping or collection, proof that the note was executed, signed and delivered outside
Florida must be established to avoid tax. Such proof includes: a sworn affidavit made before an out-of-state notary

public at the time of the signing of the note by the borrower and delivery of the note to the lender attesting that the

note was executed and delivered in the presence of the out-of-state notary; a notarization on the note as to where the
note was executed together with an affidavit made before an out-of-state notary by the lender attesting that the note
was delivered to the lender, or its agent out-of-state, or any other proof that the execution, signing and delivery
occurred outside Florida, such as travel vouchers, airplane stub and hotel receipts corresponding with the signing and

delivery of the note.

Position of the Department

The notes, leases and other documents that are the subject of the two fact patterns provided for review would not
be subject to tax imposed pursuant to s. 201.08(1)(a), F.S., so long as the notes, leases and other documents are
executed, signed and delivered outside Florida. The parties that execute, sign or take delivery of the documents do
not affect the taxation of the documents if the documents were executed, signed and delivered outside Florida. The

two “attorney-in-fact" instruments have no effect on the application of this tax on the two fact patterns provided.

Please be aware that a mortgage or other lien filed or recorded in Florida is subject to tax, pursuant to s.
201.08(1)(b), F.S., even if it secures a note or other obligation to pay money executed, signed or delivered outside

Florida.

It is also worth noting that the Department, as the result of the ruling in Florida Dept. of Revenue v. Winn-Dixie

Store, Inc., 884 So. 2d 1100, takes the position that a true lease or operating lease is not subject to documentary

stamp tax, even if the true lease or operating lease is executed, signed or delivered in Florida.

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 the date of this letter.

Sincerely,

Charles T. Phillips
Tax Law Specialist
Technical Assistance and Dispute Resolution

Office of General Counsel

CTP/mh
Record ID: 19312