Did Florida documentary stamp tax apply when a lender signed a credit confirmation in Florida but the borrower signed and delivered it outside Florida?

Plain-English summary

The bank signed a revolving-credit confirmation letter in Florida, but that signature committed the bank to lend rather than committing the borrower to repay. The borrower signed and delivered the payment obligation to the bank outside Florida.

Florida ruled that the confirmation letter was not subject to documentary stamp tax because no borrower-signed unconditional promise to pay was made, executed, or delivered in Florida. The bank had obtained affidavits supporting the out-of-state execution and delivery.

An unsigned extension notice changed the maturity date and therefore functioned as a renewal, but it was also nontaxable. It was not signed in Florida and was not expressly incorporated with another document that together created a Florida-signed obligation. Issuing it did not retroactively make the confirmation letter taxable.

What this means for you

Documentary stamp tax follows the face of the signed payment obligation, its execution or delivery location, and express incorporation. A lender's signature to fund a loan is not the same as the borrower's taxable promise to repay.

Common questions

Did the lender's Florida signature trigger tax? No.

Was the maturity extension a renewal? Yes, but the unsigned extension notice was not taxable.

Did the extension make the original confirmation taxable? No.

Citations and references

• Fla. Stat. § 201.08(1), (5), and (6) and Fla. Admin. Code rr. 12B-4.053(1) and 12B-4.054(7), as quoted and applied in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 11B4-003

Original ruling text

Executive Director
Lisa Vickers

TAX: Documentary Stamp Tax
TAA NUMBER: 11B4-003
ISSUE: Loan and Credit Products
STATUTE CITE(S): Sections 201.08(1)(b), (5), (6), F.S.
RULE CITE(S): Rules 12B-4.053(1), 12B-4.054(7), F.A.C.
QUESTION: With respect to a revolving line of credit loan made by a bank to its customers, will documentary
stamp tax be due on a document containing a borrower’s promise to pay which is initially signed by a lender in
Florida, and subsequently signed and executed by the borrower and delivered to the lender outside of Florida? If the
terms of the document are modified by the use of a letter sent by the lender to the borrower for the purpose of
extending the maturity date of the loan and the document is not signed by either the lender or the borrower, is the
document taxable as a renewal?
ANSWER: Documentary stamp tax as imposed under paragraph 201.08(1)(a), F.S., is due on any instrument
executed, signed, or delivered in Florida that contains an unconditional written obligation to pay money. The
taxability of a document is determined solely from the face of the document and any separate document expressly
incorporated into the document. Since no document will be signed in Florida that unconditionally obligates the
borrower or the lender to the payment or repayment of money, and none of the documents incorporate any other
documents, no documentary stamp tax is due.

January 28, 2011
XXX
XXX
XXX
Re: Technical Assistance Advisement No. 11B4-003
Documentary Stamp Tax
Promissory Note, Confirmation Letter, and Extension Notice
Section 201.08(1), (5), (6), F.S., Rules 12B-4.053(1), 12B-4.054(7), F.A.C.
XXX (the “Taxpayer”)
Dear XXX:
This is in response to your letter dated XXX, requesting a determination regarding the imposition of
documentary stamp tax on revolving lines of credit provided by the Taxpayer 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 PRACTITIONER
The Taxpayer transacts and conducts banking business both within and outside Florida, through separate
locations. Among the many business activities conducted by the Taxpayer, the Taxpayer makes revolving
line of credit loans to its customers that may be unsecured or secured by a security interest in personal
property. The following documents attached to this request used in connection with the loans are
described as follows:
Child Support Enforcement – Ann Coffin, Director z General Tax Administration – Jim Evers, Director
Property Tax Oversight – James McAdams, Director z Information Services – Tony Powell, Director

www.myflorida.com/dor
Tallahassee, Florida 32399-0100

Technical Assistance Advisement 11B4-003
Page 2

Exhibit “A” - XXX (the “Disclosure”)
Exhibit “B” - XXX (the “Confirmation Letter”)
Exhibit “C” - XXX (the “Extension Notice”)
As set forth, for purposes of the request, the following facts are presumed:

1. The Taxpayer makes a revolving line of credit loan to a customer (the “Borrower”) for $XXX. In
   connection with the making of the loan, the Taxpayer provides the Borrower with the Disclosure.
   The Disclosure is not signed by the Borrower or the Taxpayer. In addition, the Taxpayer, acting
   through a duly authorized representative located in Florida, signs a Confirmation Letter (which
   contains the Borrower’s promise to pay the amount of the loan) and provides it to the Borrower,
   who then takes the Confirmation Letter to a location outside Florida. Once outside Florida, the
   Borrower signs the Confirmation Letter and sends it to a facility owned by the Taxpayer, also
   located outside Florida, where a duly authorized representative of the Taxpayer accepts delivery of
   the Confirmation Letter. Appropriate affidavits of out-of-state execution and delivery meeting the
   requirements of Rule 12B-4.054(34)(a), F.A.C., are obtained in connection with the signing of the
   Confirmation Letter. The Borrower’s obligations under the Confirmation Letter are:
   (a) Not secured by a mortgage on Florida real property;
   (b) Secured by a security interest in the Borrower’s accounts maintained at the location of
   the Taxpayer; or
   (c) May also be secured by a lien on other personal property of the Borrower, to be
   described in the Confirmation Letter.
   In no instance will a security agreement be recorded in Florida evidencing any of the Borrower’s
   liens; however, a UCC-1 Financing Statement may be filed with the Department of State noting
   the Taxpayer’s security interest in certain personal property of the Borrower.
2. Shortly before the Borrower’s loan reaches its maturity date as dictated in the Confirmation Letter,
   the Taxpayer decides to extend such maturity date, which it has the option to do pursuant to the
   provisions of the Confirmation Letter. (XXX). In connection with this extension, the Taxpayer
   mails to the Borrower located in Florida an Extension Notice, which is not signed by either the
   Taxpayer or the Borrower.
   REQUESTED ADVISEMENT
   Taxpayer requests a ruling whether documentary stamp taxes are due and payable upon the Confirmation
   Letter at the time of its execution and delivery to the Taxpayer. Taxpayer also requests a ruling whether
   the Confirmation Letter or the Extension Letter would incur any documentary stamp tax by reason of the
   issuance of the Extension Notice by the Taxpayer to the Borrower.

Technical Assistance Advisement 11B4-003
Page 3

LAW AND DISCUSSION
Section 201.08, F.S., provides in pertinent part:
(1)(a) On promissory notes, nonnegotiable notes, and other written obligations to pay
money … made, executed, delivered, sold, transferred or assigned in this state, and for
each renewal of the same, the tax shall be 35 cents on each $100 or fraction thereof of the
indebtedness or obligation evidenced thereby. The tax on any obligation described in this
paragraph may not exceed $2,450.

(5) For purposes of this section, a renewal shall only include modifications of an original
document which change the terms of the indebtedness evidenced by the original
document by adding one or more obligors, increasing the principal balance, or changing
the interest rate, maturity date, or payment terms….
Rule 12B-4.053(1), F.A.C., provides that the tax is on the “Promise to Pay” and each renewal thereof, and
to be a “note or other obligation” it must be signed by the maker or obligor to be taxable. A note or written
obligation to pay money that is not signed by the maker or obligor is not taxable pursuant to the provisions
of Rule 12B-4.054(7), F.A.C.
POSITION OF THE DEPARTMENT
In the transaction presented, the Confirmation Letter evidencing the Borrower’s promise to pay is initially
signed by the Taxpayer in Florida. However, the signature of the Taxpayer only commits it to the lending
of money and not to the payment or repayment of money. Because the Confirmation Letter will be signed
and executed by the Borrower and delivered to the Taxpayer outside Florida, it is not subject to the Florida
documentary stamp tax (all appropriate affidavits were obtained at that time). The Extension Notice is a
renewal, since it effectively modifies the terms of the Confirmation Letter by extending the maturity date
of the loan made by the Taxpayer to the Borrower. However, the Extension Notice does not meet the
parameters set forth in Rule 12B-4.053(1) or Rule 12B-4.054(7), F.A.C., since it is not signed in Florida.
The Extension Notice is also not expressly incorporated into or with another document that, when
considered together, would result in an unconditional obligation to pay a sum certain in money signed in
Florida (see s. 201.08(6), F.S.). Therefore, the Extension Notice itself is not subject to the Florida
documentary stamp tax. Additionally, the issuance of the Extension Notice by the Taxpayer to the
Borrower does not render the Confirmation Letter subject to documentary stamp tax, since neither the
Extension Notice nor the Confirmation Letter is signed by the Borrower 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

Technical Assistance Advisement 11B4-003
Page 4

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,

Joy B. Eldred, C.P.A.
Tax Law Specialist
Technical Assistance and Dispute Resolution
JBE/tg
Record ID: 91748