Did Florida documentary stamp tax apply to a promissory note signed and delivered outside Florida or to an unsigned extension notice sent into Florida?

Plain-English summary

The borrower signed and executed a revolving-credit promissory note and delivered it to the lender outside Florida. The lender later mailed an unsigned notice to the borrower in Florida extending the note's maturity date.

Florida ruled that the note was not subject to documentary stamp tax because its signing, execution, and delivery occurred outside the state. The lender had obtained affidavits supporting those facts.

The extension notice changed the maturity date and therefore renewed the note, but it was also nontaxable because neither the lender nor borrower signed it.

What this means for you

Mailing a loan notice into Florida does not by itself create documentary stamp tax. The location and signature of the actual promise to pay or renewal document remain critical.

Common questions

Was the original promissory note taxable? No, under the out-of-state execution and delivery facts.

Did the extension renew the note? Yes.

Why was the extension notice still nontaxable? It was unsigned by both parties.

Citations and references

• Fla. Stat. § 201.08(1) and (5) 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 11B4-004

Original ruling text

Executive Director
Lisa Vickers

TAX: Documentary Stamp Tax
TAA NUMBER: 11B4-004
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 promissory note that is signed and executed by and the borrower and delivered to the lender
outside of Florida? If the terms of the promissory note are modified by the use of an extension notice sent by the
lender to the borrower in Florida 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?
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. In this case, none of the documents are expressly incorporated with any other
documents. The promissory note will be signed, executed, and delivered to the lender outside of Florida, and is not
subject to documentary stamp tax. The extension notice sent to the borrower which modifies the terms of the
promissory date by extending the maturity date effectively renews the note, but is also not subject to documentary
stamp tax since it is not signed by the borrower or lender.

January 28, 2011
XXX
XXX
XXX
Re: Technical Assistance Advisement No. 11B4-004
Documentary Stamp Tax
Promissory Note and Extension Notice
Section 201.08(1), (5), 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
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 11B4-004
Page 2

property. The following documents attached to this request used in connection with the loans are
described as follows:
Exhibit “A” - XXX (the “Promissory Note”)
Exhibit “B” – 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 Borrower signs a Promissory Note outside of Florida
   and delivers it to the Taxpayer outside of Florida. 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 Promissory Note. The Borrower’s obligations under the
   Promissory Note 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 Taxpayer;
   or
   (c) May also be secured by a lien on other personal property of the Borrower.
   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 interest in certain property of the Borrower. Based on these reasons, the Taxpayer
   determined the Promissory Note was not subject to Florida documentary stamp tax.
2. Shortly before the maturity date of the Promissory Note, the Taxpayer decides to extend the
   maturity date, which it has the option to do pursuant to the provisions of the Promissory Note.
   (XXX). In connection with this extension, the Taxpayer mails to the Borrower located in Florida
   the Extension Notice, which is not signed by either the Taxpayer or the Borrower.
   REQUESTED ADVISEMENT
   Taxpayer requests a ruling as to whether documentary stamp taxes are due and payable on either the
   Promissory Note or the Extension Notice as a result of the issuance of the Extension Notice to the
   Borrower.
   LAW AND DISCUSSION
   Section 201.08, F.S., provides in pertinent part:
   (1)(a) On promissory notes, non-negotiable 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

Technical Assistance Advisement 11B4-004
Page 3

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 Promissory Note is not subject to the Florida documentary stamp tax
because it was signed, executed, and delivered to the Taxpayer outside of Florida. (all appropriate
affidavits were obtained at that time). The Extension Notice effectively modifies the Promissory Note by
extending its maturity date. 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. Therefore, the Extension
Notice is also not subject to the Florida documentary stamp tax.
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,

Joy B. Eldred, C.P.A.

Technical Assistance Advisement 11B4-004
Page 4

Tax Law Specialist
Technical Assistance and Dispute Resolution
JBE/tg
Record ID: 91750