Was a true equipment lease subject to Florida documentary stamp tax when its delivery-and-acceptance certificate was not expressly incorporated?

Plain-English summary

Florida ruled that the reviewed equipment lease was not subject to documentary stamp tax.

The lessee ordered equipment, accepted delivery through a Delivery and Acceptance Certificate, and leased it from a finance company that purchased and owned the equipment. The finance company would sell the equipment to a third party at the end of the lease.

The master lease expressly incorporated its supplements, but not the Delivery and Acceptance Certificate. Without that certificate, the incorporated documents did not establish that delivery and acceptance had occurred so that payment became enforceable. Merely referring to a separate document was not express incorporation.

Florida also treated the arrangement as a true lease. Under the authority discussed in the TAA, its promise to pay was not unconditional, so it did not satisfy the written-obligation test.

What this means for you

Documentary stamp tax depends on both transaction substance and the face of the incorporated document set. Express incorporation can determine whether separate delivery, acceptance, payment, and amount terms are read together.

Common questions

Were the lease supplements incorporated? Yes.

Was the delivery-and-acceptance certificate incorporated? No.

Why else was the lease untaxed? It was a true lease whose promise to pay was not unconditional.

Citations and references

• Fla. Stat. § 201.08(1)(a) and Fla. Admin. Code r. 12B-4.052(6), as quoted and discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 10B4-002

Original ruling text

TAX: Documentary Stamp Tax
TAA NUMBER: 10B4-002
ISSUE: Equipment Lease
STATUTE CITE(S) 201.08(1), F.S.
RULE CITE(S):
12B-4.052(6), F.A.C.
QUESTION: Whether the lease of equipment which constitutes a true lease is subject to
documentary stamp tax.
ANSWER: The lease does not contain necessary components to be subject to tax.
May 10, 2010
XXX
XXX
XXX
XXX
Re:

Technical Assistance Advisement No. 10B4-002
Documentary Stamp Tax-Equipment Lease
Section 201.08(1)(a), F.S.
Rules 12B-4.052(6), F.A.C.
XXX (hereinafter Taxpayer)

Dear XXX:
Your letter dated XXX, requests a Technical Assistance Advisement concerning documentary stamp
tax on leased equipment. This response to your request constitutes a Technical Assistance
Advisement under Chapter 12-11, Florida Administrative Codes, and is issued to your under the
authority of section 213.22, Florida Statutes.
Facts as Presented by Petitioner
The taxpayer, (lessee) has entered into a Master Lease Agreement and into additional
supplements to the Master Lease with the Finance company. In connection with the lease, the
taxpayer orders the equipment from a vendor. The commencement date of the lease is based on
the date the taxpayer accepts delivery of the equipment as evidenced by the Delivery and
Acceptance Certificate. The finance company then purchases the equipment from the vendor
becoming the owner as well as leaser of the equipment. At the end of the lease, the finance
company will sell the equipment to a third party.
Request for Advisement
You request an advisement from the Department whether documentary stamp tax will be due on
the lease.

Technical Assistance Advisement 10B4-002
Page 2

Provisions of Law and Discussion
Section 201.08(1)(a), F.S., imposes documentary stamp tax on written obligations to pay money
that are executed, signed or delivered in Florida at a rate of $.35 per $100 or portion thereof of
the amount to be paid or repaid.
Rule 12B-4.052(6), F.A.C., provides that 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. Express incorporation occurs when words in a document provides that
another document or documents are incorporated into therein. Some examples of express
incorporation include:
•
•
•
•
•
•
•

[document] is incorporated herein;
[document] the terms of which are incorporated herein;
[document] is made a part hereof;
[document] is a part of this document;
The agreement consists of this [document] and separate [document] the
same as if it were fully set forth herein;
[document] shall become a part of document; and
[document] and document constitute a single document.

Florida's documentary stamp tax, as imposed under Section 201.08(1)(a), F.S., is due on a master
lease agreement if the master lease agreement is executed, signed, or delivered in Florida and if
the master lease agreement contains within itself, or within itself and all other documents
expressly incorporated within, an unconditional promise to pay a sum certain in money. Express
incorporation does not exist when a document is only referred to in the body of another.
In Florida Department of Revenue v. Winn-Dixie Stores, Inc., 884 So.2d 1110, (Fla. App. 5th
DCA 2004) ruled that the promise to pay made under a true lease is not unconditional and, as
such, is not subject to tax.
Position of the Department
Although there is express incorporation of the supplements to the Master Lease, the Delivery and
Acceptance Certificate is not expressly incorporated into the Master or other supplements to the
lease. The lease must show by express incorporation that the equipment has been accepted and
delivered before the promise to pay can become enforceable. Based on a review of the
documents submitted with this request, the lease does not contain the necessary components to
be subject to tax. Furthermore, the promise to pay is determined to have been made under a true
lease and in such case is not unconditional and not subject to tax.

Technical Assistance Advisement 10B4-002
Page 3

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,

Celestine Grantham Turner
Tax Law Specialist
Technical Assistance and Dispute Resolution

CG/tlg
Record ID#: 81826