Were separate closed-end truth-in-lending and loan/security documents subject to Florida documentary stamp tax?

Plain-English summary

The Florida Department of Revenue concluded that the submitted truth-in-lending statement and closed-end loan and security agreement were not subject to documentary stamp tax while unrecorded.

Florida's face-of-the-document test required a written promise to pay, a sum certain in money, and the borrower's signature within one document or documents expressly incorporated together. The truth-in-lending statement had the amount financed but lacked an unconditional promise and borrower signature. The loan agreement had a promise and signature requirement but no sum certain. Its reference to the truth-in-lending statement was not express incorporation.

The result changed if either security document was filed or recorded in Florida. The Department said tax would then apply under section 201.08(1)(b).

What this means for you

Lenders and loan-document providers

A cross-reference is not automatically express incorporation. Review the exact words used and whether the combined documents contain all three taxable-obligation elements.

Closing and recording teams

Do not carry the unrecorded-document result into a filing decision. Recording a document that grants a security interest can independently trigger documentary stamp tax.

Common questions

Q: Were the two submitted forms taxable merely because they related to the same loan?
A: No. Neither form contained every required element, and neither expressly incorporated the other.

Q: What if either form was filed or recorded in Florida?
A: The Department said documentary stamp tax would apply because each granted a security interest.

Citations and references

• Fla. Stat. §§ 201.08(1)(a), (1)(b), and (6), and 213.22
• Fla. Admin. Code rr. 12B-4.052(6)(b), 12B-4.053(1), and 12B-4.054(29)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 14B4-005

Original ruling text

Executive
Director
Marshall Stranburg

QUESTION: IS DOCUMENTARY STAMP TAX DUE ON A CLOSED–END LOAN TRUTH-INLENDING STATEMENT AND A CLOSED-END LOAN AGREEMENT AND SECURITY
AGREEMENT?
ANSWER: THE TRUTH-IN-LENDING STATEMENT CONTAINS THE AMOUNT FINANCED;
HOWEVER, IT DOES NOT CONTAIN AN UNCONDITIONAL PROMISE TO PAY A SUM
CERTAIN IN MONEY OR THE SIGNATURE OF THE BORROWER. IT ALSO DOES NOT
EXPRESSLY INCORPORATE ANY OTHER DOCUMENT. THE LOAN AGREEMENT DOES
CONTAIN A PROMISE TO PAY AND REQUIRES THE SIGNATURE OF A BORROWER;
HOWEVER, IT DOES NOT CONTAIN A SUM CERTAIN IN MONEY. THOUGH THE LOAN
AGREEMENT MAKES REFERENCE TO THE TRUTH-IN-LENDING STATEMENT, IT DOES NOT
EXPRESSLY INCORPORATE THE TRUTH-IN-LENDING STATEMENT OR ANY OTHER
DOCUMENT. THEREFORE, THE DOCUMENTS ARE NOT SUBJECT TO DOCUMENTARY
STAMP TAX. HOWEVER, TAX APPLIES IF EITHER DOCUMENT IS FILED OR RECORDED IN
FLORIDA.
August 11, 2014
Re:

Technical Assistance Advisement No. 14B4-005
Documentary Stamp Tax - – Closed–End Loan Truth-In-Lending Statement and a Closed-End Loan
Agreement and Security Agreement
Section 201.08(1)(a), (b), Florida Statutes (F.S.)
Rules 12B-4.052(6)(b), 12B-4.053(1), 12B-4.054(29), Florida Administrative Code (F.A.C.)
XXXXX (Requestor)

Dear XXXXX:
This is in response to your request dated XXXXX, for a Technical Assistance Advisement (TAA)
pursuant to s. 213.22, F.S., and Rule 12-11, F.A.C., concerning the application of documentary stamp tax
on documents provided by the Requestor to XXXXX operating in Florida. 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.

Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – James McAdams, Director  Information Services – Damu Kuttikrishnan, Director

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

Technical Assistance Advisement
Page 2

FACTS AS PRESENTED BY PRACTITIONER
You provided for review a Closed–End Loan Truth-In-Lending Statement (TIL) and a Closed-End Loan
Agreement and Security Agreement (Loan Agreement), typically provided by the Requestor to XXXXX
located in Florida. You asserted that while the TIL contains a specific amount of money financed, it does
not contain a promise to pay money or the signature of the borrower. You further asserted that the Loan
Agreement contains a promise to pay money and is signed by the borrower, but it does not contain a sum
certain in money. You stated that neither document “expressly incorporates” the other document.
REQUESTED RULING
You requested the Department determine if documentary stamp tax is due on the TIL and Loan
Agreement provided for review.
LAW AND DISCUSSION
Section 201.08(1)(a), F.S., imposes documentary stamp tax on written obligations to pay money, and each
renewal thereof, made, executed, delivered, sold, transferred, or assigned in Florida. The tax rate is $.35 for
each $100 or fraction thereof of the indebtedness or obligation evidenced thereby. Section 201.08(6), F.S.,
states the taxability of a document is to be determined solely from the face of the document and any separate
document expressly incorporated into the document.
Rule 12B-4.052(6)(b), F.A.C., dealing with documentary stamp tax, 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 provide that another document or documents
are incorporated 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.
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 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, it contains these elements:

Technical Assistance Advisement
Page 3

1. A written promise to pay;
2. A sum certain in money; and
3. The signature of the borrower.
   Section 201.08(1)(b), F.S., provides that for mortgages, trust deeds, security agreements, or other evidences of
   indebtedness filed or recorded in this state, and for each renewal of the same, the documentary stamp tax shall
   be $.35 on each $100 or fraction thereof of the indebtedness or obligation evidenced thereby.
   Rule 12B-4.054(29), F.A.C., provides that the filing or recording in Florida of a UCC Financing Statement is
   not taxable under Section 201.08(1), F.S., unless the note, security agreement or other obligatory document is
   also filed or recorded. However, a notation relative to stamp tax is required on the UCC Financing Statement
   whether tax is due or not. The notation shall state that proper stamp taxes under Chapter 201, F.S., have been
   placed on the promissory instruments and will be placed on any additional promissory instrument, or that tax is
   not required.

DEPARTMENT’S POSITION
The documents submitted for review are not subject to documentary stamp tax (so long as there are no
other documents that expressly incorporate either of the documents reviewed) for the following reasons:
1) The TIL contains the amount financed; however, it does not contain an unconditional promise
to pay a sum certain in money or the signature of the borrower. Additionally, the TIL does not
expressly incorporate any other document.
2) The Loan Agreement does contain a promise to pay and requires the signature of a borrower;
however, it does not contain a sum certain in money. Though the Loan Agreement makes
reference to the TIL, it does not expressly incorporate the TIL or any other document.
Since the Loan Agreement provides for a security interest in property, documentary stamp tax imposed
under s. 201.08(1)(b), F.S., would be due if the Loan Agreement is filed or recorded in Florida.
Documentary stamp tax is due on the TIL if it is filed or recorded in Florida since it grants a security
interest in property.
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.
Your name, address, and any other details, which might lead to identification of the taxpayer, must be

Technical Assistance Advisement
Page 4

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,

Henry Small
Tax Law Specialist
Technical Assistance and Dispute Resolution
HJS
Record ID: 173077