Did secured and unsecured revolving credit agreements owe documentary stamp or nonrecurring intangible tax at execution?

Plain-English summary

The Florida Department of Revenue concluded that the lender's secured and unsecured revolving line-of-credit agreements owed neither documentary stamp tax nor nonrecurring intangible tax when executed.

The credit limit did not create a fixed and absolute debt at signing, and a separate fee statement was not incorporated into the agreements. The documents therefore lacked a determinable sum certain within their four corners for documentary stamp tax.

The secured version used personal-property collateral and no mortgage or lien on Florida real property, so nonrecurring intangible tax did not apply. The Department cautioned that filing or recording a security agreement or other lien in Florida against personal property could produce documentary stamp tax under a different paragraph.

What this means for you

Lenders

Review the executed agreement and every document it expressly incorporates. A credit ceiling is not necessarily a fixed obligation, but later collateral filings can create a separate issue.

Borrowers and closing teams

Nonrecurring intangible tax requires Florida real-property security; personal-property collateral alone did not trigger it here.

Common questions

Q: Did the credit limit count as a fixed debt at execution?
A: No.

Q: Was the secured agreement backed by Florida real property?
A: No.

Citations and references

• Fla. Stat. §§ 201.08(1)(a), (1)(b), and (6), 199.133(1), and 213.22
• Fla. Admin. Code r. 12B-4.054(4)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 13B4-004

Original ruling text

Executive Director
Marshall Stranburg

QUESTION: Is documentary stamp tax or nonrecurring intangible tax due on the Secured or Unsecured
Agreement (revolving line of credit products) presented for review.
ANSWER: Documentary stamp tax is imposed under s. 201.08(1)(a), F.S., on a document that contains
an unconditional written obligation to pay a sum certain in money, signed by the borrower in Florida or
delivered to the lender in Florida. Section 201.08(6), F.S, provides that the taxability of a document under
s. 201.08(1)(a), F.S., is to be determined solely from the four corners of that document and any other
document expressly incorporated therein. Rule 12B-4.054(4), F.A.C., provides that a document that does
not contain an obligation that is fixed and absolute at the time of its execution is not subject to tax
imposed under s. 201.08(1)(a), F.S.
Section 199.133(1), F.S., imposes nonrecurring intangible tax on notes and other written obligations to
pay money to the extent the obligation is secured by a mortgage on Florida real property.
No documentary stamp tax is due on either agreement, since neither contains an unconditional obligation
to pay a fixed and absolute amount at the time of their executions and since neither is incorporated with
another document that, when considered together, contain an unconditional obligation to pay a fixed and
absolute amount.
No nonrecurring intangible tax is due on either agreement, since neither is secured by a mortgage on
Florida real property.
July 10, 2013

XXX
XXX
XXX
Re: Technical Assistance Advisement No. 13B4-004
Documentary Stamp Tax and Nonrecurring Intangible Tax – Line of Credit Agreement
Sections 199.133 and 201.08, F.S.
Rule 12B-4.054(4), F.A.C.
XXX (hereinafter referred to as “Taxpayer”)
Dear XXX:
This is in response to your request postmarked XXX, for a Technical Assistance Advisement (TAA)
pursuant to section 213.22, F.S., and Rule 12-11, F.A.C., regarding the imposition of documentary stamp
Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – James McAdams, Director  Information Services – Tony Powell, Director

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

Technical Assistance Advisement 13B4-004
Page 2

tax and nonrecurring intangible tax on a revolving line of credit agreement provided by the Taxpayer to its
customers. An examination of your letter has established that you have complied with the statutory and
regulatory requirements for issuance of a TAA. Therefore, the Department is hereby granting your request
for a TAA.
FACTS AS PRESENTED
Pursuant to its normal course of business, the Taxpayer offers secured and unsecured versions of a
revolving line of credit product to certain business customers (“Borrower”). The documentation used by
the Taxpayer to offer the two versions of the Line of Credit Agreement (revised XXX) attached to this
request are as follows:
Secured Line of Credit Agreement - (the “Secured Agreement”)
Unsecured Line of Credit Agreement - (the “Unsecured Agreement”)
The first page of the Secured Agreement and Unsecured Agreement (collectively, the “Agreement”)
references a “Credit Limit.” Section 1.1(a) of the Agreement confirms the amount of the line of credit
extended by the Taxpayer, and Section 1.1(b) indicates that the Agreement reflects a revolving line of
credit and specifies that the Borrower may repay principal amounts and reborrow them during the
availability period stated. Section 1.3 sets forth the Borrower’s obligation to repay amounts borrowed
under the Agreement. The Agreement is a self-contained document required to be signed by the Borrower,
and the only document executed by the Taxpayer and the Borrower with respect to the amounts borrowed.
The express terms of the Agreement entered into between the Borrower and the Taxpayer provide “This
Agreement supersedes the promissory note, loan agreement or other credit documents which documented
the line of credit which is being paid off by the proceeds of this Agreement[.]”
Under the Secured Agreement, the only collateral acting as security relates to personal property of the
Borrower; but there will be no security agreement recorded or filed in Florida.
In conjunction with the Agreement, the Borrower is provided with a “Disbursement and Fee Statement,”
which outlines the loan fees and other charges required to be paid by the Borrower immediately upon
execution of the Agreement. The Disbursement and Fee Statement is not incorporated by reference into
the Agreement.
REQUESTED RULING
Is the Secured or Unsecured Agreement not subject to documentary stamp tax or nonrecurring intangible
tax for the following reasons?
a) Documentary stamp tax – Neither the Secured nor the Unsecured Agreement reflects a promise to
pay a sum certain;
b) Nonrecurring intangible tax – Neither the Secured nor the Unsecured Agreement is secured by
Florida real property.

Technical Assistance Advisement 13B4-004
Page 3

LAW and DISCUSSION
Section 201.08(1)(a), F.S., provides that on a written obligation to pay money which 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 s. 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 into such document.
In order to be taxable under s. 201.08(1)(a), F.S., a written obligation to pay money must have the
following three elements within the four corners of the document or must expressly incorporate other
documents such that, when the documents are read together, they contain these elements:

1. A written promise to pay;
2. A sum certain in money; and
3. The signature of the borrower.
   Rule 12B-4.054(4), F.A.C., provides that a written obligation to pay money which is not fixed and
   absolute at the time of execution is not subject to tax.
   Subsection 199.133(1), F.S., imposes nonrecurring intangible tax on notes and other written obligations to
   pay money to the extent secured by a mortgage on Florida real property.
   DEPARTMENT’S POSITION
   The Credit Limit amount evidenced by the face of the Agreement is not fixed and absolute at the time the
   Agreement is executed. The Disbursement and Fee Statement is not incorporated into the Agreement.
   The Agreement does not contain a determinable amount due at the time of execution and is not subject to
   documentary stamp tax.
   Since the Agreement will not be secured by a mortgage or other lien on Florida real property the
   nonrecurring intangible tax is inapplicable. S. 199.133, F.S.
   If a security agreement or other lien is filed or recorded in Florida to encumber the personal property of
   the Borrower, tax could be due pursuant to s. 201.08(1)(b), F.S.
   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 documents are public records under
   Chapter 119, F.S., which are subject to disclosure to the public under the conditions of s. 213.22, F.S.

Technical Assistance Advisement 13B4-004
Page 4

Your name, address, and any other details, which might lead to identification of the taxpayer, must be
deleted before disclosure. In an effort to protect the confidentiality of such information, we request you
provide the undersigned with an edited copy of your request for Technical Assistance Advisement, backup
material and response within fifteen days of the date of this advisement.

Sincerely,

Joy. B. Eldred, CPA
Tax Law Specialist
Technical Assistance and Dispute Resolution

Record ID: 138129