Were the separate documents for six bank loan and credit products subject to Florida documentary stamp tax when no document or expressly incorporated set contained every required element?

Plain-English summary

Florida reviewed documents used for six business-card, equipment-finance, term-loan, and line-of-credit products and found them outside documentary stamp tax under the represented unrecorded-document facts.

A taxable written obligation needed three elements within its four corners or in documents expressly incorporated into it: an unconditional written promise to pay, a sum certain in money, and the borrower's signature. None of the reviewed documents satisfied that test.

The signed applications were contingent on bank approval and did not contain an unconditional promise to pay a sum certain. Customer agreements lacked borrower signatures and the other required elements. Approval letters could show a credit limit but lacked a signed promise. The equipment-product guide and confirmation letter also lacked the required promise and signature. No document expressly incorporated another, and endorsement of an advance check did not combine the separate documents.

The Department added an important recording caveat: a reviewed document that purports to establish a lien would be taxable under the separate recorded-document rule if filed or recorded in Florida.

What this means for you

Loan-document taxability turns on exact drafting, incorporation language, signatures, and recording. A set of papers can collectively contain all relevant information without becoming one taxable obligation if the documents do not expressly incorporate one another.

Common questions

What three elements did Florida require? An unconditional written promise, a sum certain, and the borrower's signature.

Did ordinary references between documents combine them? No. The ruling required express incorporation.

Could recording change the result? Yes. A document establishing a lien could be taxable if filed or recorded in Florida.

Citations and references

• Fla. Stat. § 201.08(1) and (6), and Fla. Admin. Code rr. 12B-4.052(6) and 12B-4.054(4), as quoted and discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 10B4-003

Original ruling text

TAX: Documentary Stamp Tax
TAA NUMBER: 10B4-003
ISSUE: Loan and Credit Products
STATUTE CITE(S): Section 201.08(1), F.S.
RULE CITE(S): Rule 12B-4.052(6), 12B-4.054(4), F.A.C.
QUESTION: With respect to six different loan and credit products offered by a bank to its customers
where the documents and issues involved are substantially similar, if the documents do no not contain an
unconditional written obligation to pay; a sum certain in money; the signature of the borrower within the
four corners of each document and do note expressly incorporate the other documents that contain these
items, are such documents subject to documentary stamp tax?
ANSWER: In order to be taxable under s. 201.08, F.S., a document must contain an unconditional
written promise to pay; a sum certain in money; and the signature of the borrower; or must expressly
incorporate other documents by reference that contain these items. Loan documents not meeting these
criteria are not subject to documentary stamp tax unless they purport to establish a lien and are filed or
recorded in Florida.

June 10, 2010
XXX
XXX
XXX
Re:

Technical Assistance Advisement No. 10B4-003
Documentary Stamp Tax
Loan and Credit Card Products
Section 201.08(1), F.S., Rules 12B-4.052(6), 12B-4.054(4), F.A.C.
XXX (the “Bank”)

Dear XXX:
This is in response to your letter dated XXX, as modified by your letter dated XXX, requesting a
determination regarding the imposition of documentary stamp tax related to six different loan
and credit card products provided by the Bank to its customers. This response constitutes a
Technical Assistance Advisement under Chapter 12-11, Florida Administrative Code (F.A.C.),
and is issued to you under the authority of Section 213.22, Florida Statutes (F.S.).
FACTS AS PRESENTED BY PRACTIONER
The Bank transacts and conducts banking business both within and outside Florida, through
separate locations, and offers various loan and credit products to its customers. Although the
products offered are separate and distinct, the documents and issues involved are substantially
similar; therefore, the Bank has enclosed all six requests in a single filing for ease in processing.
The documents designed for use in each loan program (“Exhibits”) are attached to the request.
In an effort to facilitate and evidence the loan products offered, the Bank has streamlined and
standardized the documentation process and minimized required documentation on behalf of its
customers.

Technical Assistance Advisement 10B4-003
Page 2

The loan products are listed and described as follows:
Loan Product # 1 – XXX Business Card Program

1. Exhibit “A” - XXX (the “Application and Guaranty”)
2. Exhibit “B” - XXX (the “Customer Agreement”)
3. Exhibit “C” - XXX (the “XXX Letter”)
   Loan Product #1 is designed for a customer (“Borrower”) needing a XXX business card. The
   Borrower first completes and signs an Application and Guaranty. In the event the Application
   and Guaranty is approved by the Bank, the Borrower will receive a copy of the Customer
   Agreement from the Bank, along with a XXX credit card and the XXX Letter. As described in
   the Customer Agreement, the Borrower will use the platinum credit card to obtain funds, which
   will create a debt obligation from the Borrower to the Bank.
   Loan Product #2 – Bank Equipment Express Loan Program
   1.
   2.
   3.
   4.
   5.

Exhibit “A” - XXX (the “Application and Guaranty”)
Exhibit “B”- XXX (the “Customer Agreement”)
Exhibit “C” - XXX (the “XXX”)
Exhibit “D” – XXX (the “Customer Guide”)
Exhibit “E” – XXX (the “Confirmation Letter”)

The revised Confirmation Letter submitted XXX is intended to take the place of the original
Confirmation Letter submitted for review pursuant to the original request dated XXX.
Loan Product #2 is designed for a Borrower who wishes to finance the acquisition of business
equipment. In order to participate in this program, a Borrower completes and signs an
Application and Guaranty. In the event the Application and Guaranty is approved by the Bank,
the Borrower will receive a copy of the Customer Agreement from the Bank, an XXX Letter, and
a Customer Guide. A Borrower wishing to access funds under Loan Product #2 will contact the
Bank in order to access available funds, and, assuming the request meets the requirements of the
Customer Agreement, the Bank will advance the requested funds and issue a Confirmation Letter
to the Borrower.
Loan Product #3 – Bank XXX Card Program

1. Exhibit “A” - XXX (the “Customer Agreement”)
2. Exhibit “B” -XXX (the “Application”)
3. Exhibit “C” - XXX (the “XXX Letter”)
   Loan Product #3 is designed for the issuance of corporate credit cards to the Bank’s corporate
   customers. In order to evidence such credit cards and the terms of their use, the Bank has
   created the Customer Agreement and the Application. When a corporate customer, or Borrower,
   needs a credit card(s) for the business use of its officers and employees, the Borrower will

Technical Assistance Advisement 10B4-003
Page 3

complete the Application. Upon approval and authorization of the issuance of the credit card,
the Bank will notify the Borrower of its approval by sending the XXX Letter and include
therewith a copy of the Customer Agreement. As described in the Customer Agreement, the
Borrower will obtain funds and thereby create a debt obligation to the Bank through the use of
the credit card issued by the Bank to the Borrower’s card holders.
Loan Product # 4 – Bank XXX Program
1.
2.
3.
4.

Exhibit “A” - XXX (the “Application and Guaranty”)
Exhibit “B” - XXX (the “Customer Agreement”)
Exhibit “C” - XXX (the “XXX Letter”)
Exhibit “D” – XXX (the “Acceptance Certificate”)

Loan Product #4 is designed for a Borrower needing a business line of credit loan. A Borrower
desiring this type of loan will complete and sign the Application and Guaranty. In the event the
Application and Guaranty is approved by the Bank, the Borrower will receive a copy of the
Customer Agreement from the Bank, and an XXX Letter. At the time of approval, the Borrower
will be asked to sign an Acceptance Certificate. When the Borrower wants to access funds made
available under the loan, the Borrower may do so by use of a check or credit card (provided by
the Bank) or through a telephonic request for advance.
Loan Product # 5 – Bank XXX Term Loan Program

1. Exhibit “A” - XXX (the “Application and Guaranty”)
2. Exhibit “B” - XXX (the “Customer Agreement”)
   Loan Product #5 is designed for a Borrower needing a business term loan. A Borrower desiring
   this type of loan will complete and sign the Application and Guaranty. In the event the
   Application and Guaranty is approved by the Bank, the Borrower will receive a copy of the
   Customer Agreement from the Bank, and the Bank will issue a check made payable to the
   Borrower in an amount equal to the net loan proceeds or directly deposit the net loan proceeds
   into the Borrower’s bank account.
   Loan Product # 6 – Bank XXX Line of Credit Program
3. Exhibit “A” - XXX (the “Application and Guaranty”)
4. Exhibit “B” - XXX (the “Customer Agreement”)
5. Exhibit “C” - XXX (the “XXX Letter”)
   Loan Product #6 is designed for a Borrower needing a small business line of credit loan. This
   type of loan is made in accordance with the XXX program of the XXX. A Borrower desiring
   this type of loan will complete and sign the Application and Guaranty. In the event the
   Application and Guaranty is approved by the Bank, the Borrower will receive a copy of the
   Customer Agreement from the Bank and an XXX Letter. When the Borrower wants to access

Technical Assistance Advisement 10B4-003
Page 4

funds made available under the loan, the Borrower may do so by use of a check or credit card
(provided by the Bank) or through a telephonic request for advance.
REQUEST FOR ADVISEMENT – LOAN PRODUCT #1
Whether the Customer Agreement, the Application and Guaranty, or the XXX
Letter is subject to documentary stamp tax if any or all of the documents are
executed or delivered by the parties in Florida.
REQUEST FOR ADVISEMENT – LOAN PRODUCT #2
Whether the Customer Agreement, the Application and Guaranty, the XXX
Letter, the Customer Guide, or the Confirmation Letter is subject to documentary
stamp tax if any or all of the documents are executed or delivered by the parties
in Florida.
REQUEST FOR ADVISEMENT – LOAN PRODUCT #3
Whether the Customer Agreement, the Application, or the XXX Letter is subject
to documentary stamp tax if any or all of the documents are executed or delivered
by the parties in Florida.
REQUEST FOR ADVISEMENT – LOAN PRODUCT #4
Whether the Customer Agreement, the Application and Guaranty, the XXX
Letter, or the Acceptance Certificate is subject to documentary stamp tax if any or
all of the documents are executed or delivered by the parties in Florida.
REQUEST FOR ADVISEMENT – LOAN PRODUCT #5
Whether the Customer Agreement or the Application and Guaranty is subject to
documentary stamp tax if any or all of the documents are executed or delivered
by the parties in Florida.
REQUEST FOR ADVISEMENT – LOAN PRODUCT #6
Whether the Customer Agreement, the Application and Guaranty, or the XXX
Letter is subject to documentary stamp tax if any or all of the documents are
executed or delivered by the parties in Florida.
With respect to any of the loans obtained under the Loan Products, no mortgage, security
agreement, or other document securing the Borrower’s or any of the guarantor’s obligations,
when applicable, will be recorded in the public records of any county in Florida. Additionally,
none of the documents making up the Loan Products are expressly incorporated by reference into
any of the other documents.

Technical Assistance Advisement 10B4-003
Page 5

LAW AND DISCUSSION
Section 201.08(1)(a), F.S., provides that for a written obligation to pay money that is made,
executed, delivered, sold, transferred, or assigned in the State, and for each renewal of the same,
the documentary stamp tax shall be 35 cents on each $100 or fraction thereof of the indebtedness
or obligation evidenced thereby. Under section 201.08(6), F.S., the taxability of a document is to
be determined solely from the four corners of that document and any other document expressly
incorporated by reference into such document.
In order to be taxable under Section 201.08, F.S., a written obligation to pay money must have
the following three elements within the four corners of the document or must incorporate other
documents containing these elements:

1. An unconditional written promise to pay;
2. A sum certain in money; and
3. The signature of the borrower.
   See Rules 12B-4.052(6) and 12B-4.054(4), F.A.C.
   Loan documents signed by a borrower that contain a written promise to pay without specifying a
   sum certain the borrower promises to repay are not subject to documentary stamp tax, as they do
   not meet the parameters of element #2 listed above. Likewise, loan documents that specify a sum
   certain but do not contain an unconditional promise to pay are not taxable, as element #1 listed
   above is not met.
   DEPARTMENT’S POSITION
   The documents submitted for examination, which are contained in each of the six Loan Products,
   are similar in nature. As listed below, the following documents are not subject to documentary
   stamp tax for the reasons stated:
4. The Application and Guaranty agreement is signed by the Borrower when
   requesting a credit limit amount; however, it does not contain an unconditional
   promise to pay a sum certain in money, as the Application and Guaranty is
   contingent upon the Bank’s approval and establishment of a credit limit on behalf
   of the Borrower. In addition, the Application and Guaranty does not contain
   language that expressly incorporates any of the other documents contained in the
   Loan Products;
5. The Customer Agreement is not signed by the Borrowers, does not contain an
   unconditional promise to pay a sum certain in money, and does not contain
   language that expressly incorporates any of the other documents contained in the
   Loan Products;

Technical Assistance Advisement 10B4-003
Page 6

3. The XXX Letter (not used for Loan Product #5) contains the dollar amount of the
   Borrower’s maximum credit limit; however, it does not contain an unconditional
   promise to pay and is not signed by the Borrower. Nor does it expressly
   incorporate any of the other documents contained in the Loan Products;
4. Neither of the two additional documents used for Loan Product #2, the Customer
   Guide and the Confirmation Letter, are signed by the Borrower; nor does either
   document contain an unconditional promise to pay a sum certain in money or
   expressly incorporate any of the documents contained in Loan Product #2. The
   Confirmation Letter contains a dollar amount advanced as evidenced by the check
   issued to the Borrower, however there is no language on the check which
   references any of the other documents used in Loan Product #2., consequently the
   Borrower’s endorsement of the check does not make any of the subject documents
   taxable.
   The documents reviewed and determined to not be subject to documentary stamp tax as imposed
   under Section 201.08(1)(a), F.S., would be subject to the tax imposed under Section
   201.08(1)(b), F.S., if they purport to establish a lien and are filed or recorded in Florida.
   This response constitutes a Technical Assistance Advisement under Section 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 Section 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 Section 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 & Dispute Resolution
   Record ID: 77813