Did a proposed mortgage-loan master repurchase agreement owe Florida documentary stamp or nonrecurring intangible tax?

Plain-English summary

The Florida Department of Revenue concluded that the proposed master repurchase agreement was not subject to documentary stamp tax at signing because it contained only contingent obligations, not an unconditional promise to pay a sum certain in money.

The answer was limited to the agreement itself; many referenced documents were not submitted. Another document could change the result if it expressly incorporated the agreement and, read together, supplied a signed written promise to pay a sum certain.

Recording also mattered. Because the agreement pledged collateral, filing or recording it in Florida would trigger documentary stamp tax on the secured amount even if the obligation remained conditional. Nonrecurring intangible tax would not apply merely from recording because the agreement lacked an unconditional obligation to pay a sum certain, unless such an obligation existed when signed.

What this means for you

Mortgage warehouse and repurchase lenders

Review the agreement at execution for unconditional payment obligations and examine every incorporated document, not just the master form.

Recording and collateral teams

An agreement can avoid tax as an unrecorded written obligation yet incur documentary stamp tax when filed or recorded as a lien. The nonrecurring intangible-tax test is different.

Common questions

Q: Was documentary stamp tax due when the agreement was signed?
A: No, on the submitted form, because its payment obligations were contingent rather than unconditional sums certain.

Q: What if the collateral agreement was recorded in Florida?
A: Documentary stamp tax would apply to the amount secured, even if conditional; nonrecurring intangible tax still required an unconditional obligation.

Citations and references

• Fla. Stat. §§ 201.08(1)(a), (1)(b), and (6), 199.133(1), and 213.22
• Fla. Admin. Code rr. 12B-4.052(6)(b) and 12B-4.053(1)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 14B4-006

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 PROVIDED TO CREDIT UNIONS IN FLORIDA?
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.
September 4, 2014
Re:

Technical Assistance Advisement No. 14B4-006
Documentary Stamp Tax and Nonrecurring Intangible Tax – Master Repurchase Agreement
Sections 201.08(1)(a), (b) and199.133(1), Florida Statutes (F.S.)
Rules 12B-4.052(6)(b), 12B-4.053(1), Florida Administrative Code (F.A.C.)
XXXXX (Taxpayer)

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., regarding whether the Taxpayer would be liable for
the payment of documentary stamp tax or nonrecurring intangible tax on transactions executed pursuant to
a proposed repurchase agreement. 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 BY PRACTITIONER
In your letter you state that the Taxpayer’s customers are residential mortgage bankers and that the
Taxpayer and its customers will enter into repurchase agreements. A repurchase agreement is structured
so that the Taxpayer will fund its customer’s mortgage loans that are eligible under the agreement in
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

exchange for the sale of the customer’s mortgage loans to the Taxpayer. The customer also will agree to
repurchase the eligible loans from the Taxpayer or alternatively the loans will be purchased by a third
party. You state that any required documentary stamp tax and nonrecurring intangible tax due in
connection with the customer’s mortgage loans would be paid as required by statute. The customer’s
mortgage loan documents would then be delivered to the Taxpayer in Florida until such time as the
customer repurchases the loans or a third party purchases the loans.
You have provided for review a copy of a Master Repurchase Agreement and its certain exhibits,
schedules, and annexes (in the aggregate, “Agreement”).
REQUESTED RULING
You requested the Department confirm that there would be no documentary stamp tax or nonrecurring
intangible tax due on the Agreement and the transactions initiated by the Agreement, even though the
Agreement is prepared, executed, possessed or recorded in Florida.
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 therein.
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:

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., imposes documentary stamp tax on mortgages and other liens, filed or recorded in
   Florida. The tax is imposed on the amount of any obligation secured by the recorded mortgage or lien, even if
   that amount is contingent.
   Section 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. The tax rate is 2 mills (total
   obligation secured multiplied by .002).

DEPARTMENT’S POSITION
Pursuant to our phone conversations and your request, the Department’s response is limited to the
Agreement alone (there were many documents referred to in the Agreement and not provided for review)
and its treatment as a sales and repurchase agreement.
The Agreement contains promises to pay and requires the signatures of the buyer and seller, but the
promises to pay are not unconditional promises to pay sum certains in money. The Agreement presently
contains only contingent obligations to pay money. As such, the Agreement will not be subject to
documentary stamp tax unless, at the time of its signing, an obligation to pay a sum certain is present.
However, documentary stamp tax may be due, as noted on page 2 of this advisement, if there is another
document that expressly incorporates the Agreement, and when read together, the documents contain a
written promise to pay a sum certain in money and the signature of the borrower.
Since the Agreement pledges collateral, the documentary stamp tax imposed under s. 201.08(1)(b), F.S.,
would be due if the Agreement is filed or recorded in Florida. The tax would be due on the amount
secured thereby, even if that amount is conditional.
Nonrecurring intangible tax is imposed on unconditional obligations to pay money to the extent secured
by a mortgage on Florida real property. The Agreement does not contain an unconditional obligation to
pay a sum certain in money. No nonrecurring intangible tax is due even if the Agreement or other
mortgage or lien is filed or recorded to secure the obligations evidenced by the Agreement unless, at the
time of signing, an unconditional obligation to pay a sum certain is present.
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.

Technical Assistance Advisement
Page 4

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
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/tlf
Record ID: 166623