Was a revolving credit agreement with a fixed limit subject to Florida documentary stamp tax before the borrower took an advance?

Plain-English summary

Florida found that a revolving credit agreement and its related documents were not subject to documentary stamp tax on the reviewed facts.

Although the credit line had a fixed limit, the borrower promised to repay only amounts that might later be advanced. The agreement and related documents therefore did not contain an unconditional promise to pay a sum certain. No other document was expressly incorporated in a way that supplied the missing elements.

The lender also represented that no mortgage or security agreement was filed or recorded in Florida. The Department cautioned that a later-filed or recorded mortgage, lien, security agreement, or other evidence of indebtedness securing these documents might be taxable.

What this means for you

Lenders using revolving facilities

For section 201.08(1)(a), the Department looked within the document and documents expressly incorporated into it for an unconditional promise, a sum certain, and the borrower's signature.

Closing and recording teams

The conclusion depended in part on no mortgage or security agreement being recorded in Florida. Recording a security document can change the result.

Common questions

Did the fixed credit limit make the agreement taxable? No. Repayment remained contingent on the borrower taking advances.

Did the related documents supply a taxable obligation? No. They did not contain the required unconditional promise to pay a sum certain and were not incorporated in a way that changed the result.

Could a later security filing be taxable? Yes. The ruling expressly cautions that a filed or recorded security document may be subject to tax.

Citations and references

• Fla. Stat. Sec. 201.08(1)(a)
• Fla. Stat. Sec. 201.08(1)(b)
• Fla. Stat. Sec. 201.08(6)
• Fla. Admin. Code R. 12B-4.054(4)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 21B4-002

Original ruling text

QUESTION: Is a certain revolving credit agreement (the “Agreement”) and related documents
subject to Florida’s documentary stamp tax pursuant to s. 201.08, F.S.?
ANSWER: Neither the Agreement, nor any of the related documents, contain an unconditional
promise to pay a sum certain. The “promise to pay” found within the Agreement is contingent
upon the borrower taking advances under the credit agreement. In addition, no other
documents are expressly incorporated that would make the Agreement or the related
documents taxable.
Since no mortgages or security agreements are being recorded in Florida, no tax is due under s.
201.08(1)(b), F.S.

February 17, 2021

XXX
XXX
XXX
XXX
Re:

Technical Assistance Advisement No. 21B4-002
Documentary Stamp Tax
Chapter 201, Florida Statutes (F.S.)

Dear XXX:
This is in response to your request dated September 23, 2020, for a Technical Assistance
Advisement (TAA) pursuant to s. 213.22, F.S., and Rule Chapter 12-11, Florida Administrative
Code (F.A.C.), concerning the imposition of documentary stamp tax on a revolving credit
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.

Technical Assistance Advisement
Page 2

Facts as Presented by Petitioner
XXX (the “Taxpayer”) offers revolving credit facilities to Florida borrowers. Borrowers establish
a line of credit with the Taxpayer by executing a Demand Revolving Credit Agreement and
Disclosure (the “Agreement”), which was provided to the Department for review. The line of
credit has a fixed credit limit, and it is generally secured by a pledge of investment accounts.
No promissory note is executed, and no mortgage or security agreement is filed or recorded in
Florida.
The Agreement contains the borrower’s promise to repay any and all amounts that may be
advanced to the borrower.
Other documents are also executed by the borrower and the Taxpayer when establishing the
line of credit. These include a Consumer Pledge Agreement; Pledge Asset Agreement for
Collateral Loans; Form W-9 Request for Taxpayer Identification Number and Certification; USA
Patriot Act; What Does (Taxpayer) Do with your Personal Information; State of Purpose for an
Extension of Credit by Creditors – FR T-4; Errors and Omissions Agreement; Disbursement
Request and Authorization; and Securities Account Control Agreement (collectively, the “Other
Loan Documents”).
All of the relevant documents have been provided to the Department for review.
Request for Advisement
You request the Department’s opinion as to whether the Agreement or the Other Loan
Documents are subject to Florida’s documentary stamp tax pursuant to s. 201.08, F.S.
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 $0.35 cents on each $100.00 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.
Section 201.08(1)(b), F.S., provides, in part, that on mortgages, trust deeds, security
agreements, or other evidences of indebtedness filed or recorded 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.

Technical Assistance Advisement
Page 3

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.
In order to be taxable under s. 201.08(1)(a), F.S., a written obligation to pay money, that is
executed or delivered in Florida, 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. An unconditional written promise to pay;
2. A sum certain in money; and
3. The signature of the borrower.
   Position of the Department
   Neither the Agreement, nor any of the Other Documents, contain an unconditional promise to
   pay a sum certain. The “promise to pay” found within the Agreement is contingent upon the
   borrower taking advances under the credit agreement. In addition, no other documents are
   expressly incorporated that would make the Agreement or Other Documents taxable.
   Since no mortgages or security agreements are being recorded in Florida, no tax is due under s.
   201.08(1)(b), F.S.
   Please be aware that any mortgage, lien, security agreement or other evidence of indebtedness
   filed or recorded in Florida and given to secure the reviewed documents may be subject to
   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

Technical Assistance Advisement
Page 4

the taxpayer. Your response should be received by the Department within 15 days of the date
of this letter.
Sincerely,
Roger L. Beasley
Roger L. Beasley
Tax Law Specialist
Technical Assistance and Dispute Resolution
Record ID: XXX