Were a bank's loan agreement and unconditional guaranty subject to Florida documentary stamp tax when executed or delivered in Florida?

Plain-English summary

A bank asked whether its standardized loan agreement and unconditional guaranty would owe Florida documentary stamp tax if executed or delivered in Florida. For this request, the parties assumed the obligations were not secured by a recorded Florida real-property mortgage or by a Florida personal-property security interest.

Florida found the submitted documents were not independently taxable. Neither contained an unconditional promise to pay or repay a sum certain in money together with the borrower's signature, and neither expressly incorporated another reviewed document. The documents therefore could not be combined into a single taxable instrument merely by implication or reference.

The answer was limited to the documents submitted. The Department stated that other documents used during the loan process could produce a different determination.

What this means for you

Florida documentary stamp tax turns on the face of the document and any document it expressly incorporates. A transaction label such as "loan agreement" or "guaranty" does not by itself decide the result, and additional documents can change the analysis.

Common questions

Were the loan agreement and guaranty taxable merely because they were executed in Florida? No, not under the submitted documents and assumptions.

What elements were missing? The Department identified an unconditional promise to pay or repay a sum certain in money and the borrower's signature.

Could the documents be combined with other loan papers? Not on the materials reviewed, because neither expressly incorporated another document.

Would the result necessarily apply if other documents were used or collateral documents were recorded? No. The ruling expressly limited its determination to the submitted documents and stated that additional documents could change the result.

Citations and references

• Fla. Stat. § 201.08(1) (promissory notes and written obligations to pay money)
• Fla. Stat. § 201.08(6) (facial and express-incorporation analysis)
• Fla. Admin. Code r. 12B-4.052(6) (incorporation is not created by implication or mere reference)
• Fla. Admin. Code rr. 12B-4.053(1) and 12B-4.054(4), (7) (fixed and absolute promise requirements)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 08B4-001

Original ruling text

SUMMARY
QUESTION: Is the Loan Agreement or Guaranty subject to documentary stamp tax if either or
both are executed in Florida.
ANSWER: The Loan Agreement and Unconditional Guaranty will not be subject to tax since
neither document contains an unconditional promise to pay a sum certain, nor do they
incorporate any other document.
January 18, 2008
Re:

Technical Assistance Advisement No. 08B4-001
Documentary Stamp Tax-Loan Agreement
Section 201.08(1) and (6), F.S
Rule 12B-4.053(1) and 12B-4.054(4), (7) and (11), F.A.C
XXX(hereinafter Bank)

Dear XXX:
Your letter requesting a Technical Assistance Advisement has been referred to this office for
response. The specific scenario for which advice has been requested is summarized below.
Facts as Presented by Petitioner
The Bank conducts business in Florida and in multiple states through separate business
locations in those states. One of the many business activities conducted by the Bank is the making
of loans to customers. The Bank has created an XXX (“Loan Agreement”) and Unconditional
Guaranty (“Guaranty”) in efforts to streamline, standardize and minimize the documentation process
required to evidence a loan. The Loan Agreement and Guaranty have also been designed to be used
in multiple jurisdictions. It is anticipated that a customer (a “Borrower”) needing a loan will
complete a verbal application. Upon the Bank approving and authorizing the loan, the Borrower
would be notified of the approval. Then the Borrower will sign the Loan Agreement and provide a
Guaranty from a guarantor, if required. Neither the Loan Agreement nor Guaranty will be recorded
in the Florida County’s public records. In some situations, the guarantor will secure its obligations
under the Guaranty by a pledge of Florida real property. In some cases, the guarantor will secure its
obligation under the Guaranty by granting a security interest in personal property located in Florida.
However, the security agreement will not be recorded in Florida County’s public records. For
purposes of this request for Technical Assistance Advisement, it is to be assumed that neither the
Borrower nor the Guarantor secures its obligations under the Loan Agreement and Guaranty,
respectively, with a mortgage on real property recorded in Florida or security interest in personal
property located in Florida.
As described in the Loan Agreement, the borrower will obtain the funds from the loan
through one or more of the following methods:

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The use of an XXX furnished to the borrower for that purpose;
The use of a debit card;
The use of an internet request; or
From a teller at the branch office of the Bank

Copies of the Loan Agreement, Unconditional Guaranty and Access Check have been
furnished for review.
Request for Advisement
A Technical Assistance Advisement is being requested to address whether the Loan
Agreement or Guaranty are subject to Florida documentary stamp tax if either one or both are
executed or delivered by a Borrower or Guarantor, in the State of Florida.
Provisions of Law and Discussion
Section 201.08(1), F.S., imposes documentary stamp tax on promissory notes and written
obligations to pay money executed or delivered in the State of Florida. The tax rate is $.35 per
$100 or fraction thereof of the obligation evidenced thereby.
Pursuant to s. 201.08(6), F.S., the taxability of the document is determined solely from
the face of the document and from any other documents expressly incorporated into the
document.
Rule 12B-4.052(6), F.A.C., provides that a document does not expressly incorporate
another document by implication or by mere reference and description of the other document.
Rules 12B-4.053(1) and 12B-4.054(4) and (7), F.A.C., provide that a promise to pay
must be signed, fixed and absolute to be subject to tax.
Position of the Department
The Loan Agreement and Unconditional Guaranty provided for review are not subject to
tax under paragraph 201.08(1)(a), F.S., as independent documents, since neither document
contains an unconditional promise to pay or repay a sum certain in money and a signature of the
borrower. It is also determined that neither document contains language that expressly
incorporates it with any other documents reviewed. In such case, no two or more documents can
be considered a single instrument for documentary stamp tax purposes.
This determination is based on review of only those documents that were submitted. If
other documents are used during the loan process, a different determination might result.
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
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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,

Celestine Grantham Turner
Tax Law Specialist
Technical Assistance and Dispute Resolution
CG/mh
Record ID: 36989