When were Florida equipment finance leases, purchase-to-own contracts, and assumption agreements subject to documentary stamp tax?

Plain-English summary

Florida found that the reviewed equipment finance documents and assumption agreements were subject to documentary stamp tax.

A written obligation was taxable when the document itself—or documents expressly incorporated into it—contained three elements: an unconditional promise to pay, a sum certain in money, and the borrower's signature. The document also had to be executed, signed, or delivered in Florida for the tax under Fla. Stat. Sec. 201.08(1)(a).

The reviewed “finance lease” and another finance agreement were not true leases because they included nominal $1 purchase options. The purchase-to-own contract was also financing rather than a true lease. Each contained the required payment obligation and signature, so tax applied to the amounts identified by the TAA.

The two assumption agreements were taxable based on the outstanding balance because the new lessees were not original obligors. They were not exempt renewals under Sec. 201.09. The ruling distinguished true leases in which the goods are returned at the end of the term; those generally are not taxable as written obligations under the cited case.

What this means for you

Equipment finance companies

Substance and document language mattered more than the “lease” label. A nominal purchase option and a signed obligation to pay can make a finance lease taxable.

Businesses assuming existing leases

Adding a new obligor through an assumption can create a taxable renewal based on the outstanding amount.

Common questions

Were the reviewed finance documents taxable? Yes.

Are all equipment leases taxable? No. The TAA distinguished true leases that return the property at the end of the term.

Were the assumption agreements exempt renewals? No. They added obligors who were not parties to the original leases.

Citations and references

• Fla. Stat. Sec. 201.08(1)(a)-(b) and (5)
• Fla. Stat. Sec. 201.09
• Fla. Admin. Code R. 12B-4.052(6)(b)
• Fla. Admin. Code R. 12B-4.053
• Florida Department of Revenue v. Winn-Dixie Stores, Inc., 884 So. 2d 1110 (Fla. 5th DCA 2004)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 22B4-002

Original ruling text

QUESTION: Is documentary stamp due on leases executed in Florida that are: 1. an unconditional
obligation to pay a sum certain in money executed in Florida and or delivered to in Florida. 2. Not
expressly incorporated by other documents nor are they expressly incorporated in other documents,
such that, when the expressly incorporated documents are read together, contain an unconditional
obligation to pay a sum certain in money executed in Florida and or delivered in Florida.
ANSWER: Documentary stamp tax is due on leases that meet the above conditions.

QUESTION: Is documentary stamp due on contracts executed in Florida that meet the above
conditions.
ANSWER: Documentary stamp tax is due on leases that meet the above conditions.

QUESTION: Is documentary stamp due on assumption agreements executed in Florida in which
a different lessee assumes a lease
ANSWER: Documentary stamp tax is due on assumption agreements because it is not an exempt
renewal under s. 201.09, F.S.

February 18, 2022
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
Re:

Technical Assistance Advisement No. 22B4-002
Documentary Stamp Tax
201.08(1)(a), and (5) Florida Statutes (F.S.)
Rule 4.052(6)(b), 12B-4.053(1) and (19) Florida Administrative Code (F.A.C.)
XXXXX (XXXXX)
XXXXX (XXXXX)

Dear XXXXX:
This is in response to your request dated October 18, 2021, 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 application of Florida’s documentary stamp tax, as imposed under
sections 201.08(1)(a), F.S., on leases and assumption agreements. 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

ISSUE
The issue is whether certain contracts are subject to documentary stamp tax.
FACTS AS PRESENTED BY PRACTITIONER
The documents presented for examination are as follows:

1. Finance Lease (your Exhibit II)
2. Assumption Agreement (included in Exhibit II)
3. XXXXX Contract XXXXX (your Exhibit III)
4. XXXXX Agreement (your Exhibit IV)
5. XXXXX Assumption Agreement (included in Exhibit IV)
   In your request you explained that XXXXX provides finance solutions for purchases of
   equipment. XXXXX is currently registered with the Department and is submitting documentary
   stamp taxes. The documents upon which tax is being paid are associated with XXXXX
   Equipment Leasing Program, XXXXX Program, and XXXXX Financing Program. The XXXXX
   Financing Program includes the leasing of vehicles.
   The Equipment Leasing Program allows customers to lease equipment from XXXXX, via an
   equipment lease. The XXXXX Program allows customers to purchase equipment from an
   authorized seller via conditional sales contracts. The equipment lease and conditional sales
   contract may be subsequently assigned to XXXXX. A feature of the XXXXX Financing Program
   allows for the leasing of vehicles XXXXX.
   REQUESTED RULING
   You requested that the Department determine whether documentary stamp tax applies to the
   documents presented for review and to any assignment to XXXXX. You asserted that the
   Finance Lease and XXXXX Agreement are not taxable because they do not contain an
   unconditional promise to pay a sum certain in money. You also asserted that the XXXXX
   Contract XXXXX does not require documentary stamp tax as the contract allows for additional
   charges that are not known at the time of execution of the contract.
   On December 20, 2021, in a phone conversation, XXXXX, stated that a determination regarding
   assignments was not required.
   LAW AND DISCUSSION
   Section 201.08(1)(a), F.S., imposes documentary stamp tax on promissory notes, nonnegotiable
   notes, written obligations to pay money, or assignments of salaries, wages, or other
   compensation made, executed, delivered, sold, transferred, or assigned in the state, and for
   each renewal of the same. The tax rate is 35 cents on each $100 or fraction thereof of the
   indebtedness or obligation evidenced thereby. The tax on any document described in this

Technical Assistance Advisement
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paragraph may not exceed $2,450. A document executed, signed or delivered in Florida is
taxable if it contains an unconditional obligation to pay, or repay, a sum certain in money and
the signature of the obligor.
Documentary stamp tax applies to written obligations to pay money, and each renewal thereof,
made, executed, delivered, sold, transferred, or assigned in Florida. Additionally, documentary
stamp tax is due on mortgages, trust deeds, security agreements, or other evidences of
indebtedness filed or recorded in Florida, and each renewal of the same.
Rule 12B-4.053(2)(b), F.A.C., provides that a lease, of tangible personal property containing a
written unconditional obligation to pay money is subject to tax.
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 due under s. 201.08(1)(a), F.S., is on the
“Promise to Pay” and each renewal thereof, and to be taxable the “note or other obligation”
must be signed by the maker or obligor.
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, contain these
elements:

1. An unconditional 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

Technical Assistance Advisement
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documentary stamp tax shall be $.35 on each $100 or fraction thereof of the indebtedness or
obligation evidenced thereby.

Section 201.08(5), F.S., states in part, that 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. Modifications to documents which do not
modify the terms of the indebtedness evidenced such as those given or recorded to correct
error; modify covenants, conditions, or terms unrelated to the debt; sever a lien into separate
liens; provide for additional, substitute, or further security for the indebtedness; consolidate
indebtedness or collateral; add, change, or delete guarantors; or which substitute a new
mortgagee or payee are not renewals and are not subject to tax pursuant to this section.
Rule 12B-4.053(19), F.A.C., provides in part that a person assuming a mortgage (note or written
obligation to pay money) effectively renews or modifies the original note or mortgage, and
would not be exempt from tax under Section 201.09, F.S., because it includes a person other
than the original obligor. Therefore, an assumption of any note and mortgage, whether
incorporated in a conveyance which is accepted by the purchaser, or assumed in a separate
document, is a taxable renewal under Section 201.08(1), F.S., and not exempt under Sections
201.09(1) and (2), F.S.
DEPARTMENT’S POSITION
The tax levied by s. 201.08(1)(a), F.S., is an excise tax on documents that contain the promise to
pay and the terms and certainty of payment are not material. 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. The documentary stamp tax rate on written obligations to pay
money is $0.35 on each $100 or fraction thereof of the indebtedness or obligation evidenced
thereby. There is a maximum documentary stamp tax on such documents of $2,450.00.
However, there is no cap on a mortgage, lien or other indebtedness filed or recorded in Florida.
In Florida Department of Revenue v. Winn-Dixie Stores. Inc., 884 So.2d 1110, (Fla. App. 5th DCA
2004) the court determined that the case before them, a true lease, was not subject to
documentary stamp tax. As a result of the Winn-Dixie ruling, the Department holds that true
leases are not subject to tax. Winn-Dixie does not apply to the Finance Lease and XXXXX
Agreement as neither is a true lease and each contains an option to purchase the equipment at
the end of the lease for a nominal amount of $1.00. The XXXXX Contract XXXXX is a purchase to
own agreement and not a true lease.
A lease contract is not generally taxable if the goods are returned at the end of the term and
the lease is a true lease. However, an equipment finance agreement or “purchase to own”
finance contract whereby the purchaser is financing the purchase of equipment up front, even
with a nominal purchase option at the end of the lease, is not a true lease and would be subject

Technical Assistance Advisement
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to documentary stamp tax if the agreement contains within itself, or within itself and any other
documents expressly incorporated, the three elements referenced on p. 3 of this TAA and is
either signed by the borrower in Florida or delivered to the lender in Florida. Express
incorporation does not exist when a document is only referred to in the body of another.
It is assumed that the documents submitted will be executed or delivered in Florida. Since the
Finance Lease and the XXXXX Agreement are not true leases the Department must look to the
rules and statutes referenced above to determine whether the documents are taxable. The
Department has made the following determinations as to the applicability of documentary
stamp tax to the documents submitted for review for the following reasons:
1) The Finance Lease contains a promise to pay a sum certain1 and the lessee’s
signature. Therefore, the Finance Lease is subject to documentary stamp tax based
the total of the payments on the XXXXX Addendum which is expressly incorporated
into the Finance Lease.
2) The assignees in the Assumption Agreement were not obligors (lessees) under the
original lease and therefore, the Assumption Agreement is not an exempt renewal
under s. 201.09, F.S., and is subject to documentary stamp tax based on the
outstanding amount due at the time of the execution of the Assumption Agreement.
3) The XXXXX Contract XXXXX when completed would contain a promise to pay a sum
certain2 and the debtor’s signature. Therefore, the XXXXX Contract XXXXX is subject
to documentary stamp tax based on the amount financed.
4) The XXXXX Agreement contains a promise to pay a sum certain3 and the signature of
the lessee. Therefore, the XXXXX Agreement is subject to documentary stamp tax
based on the amount financed.
5) The assignees in the XXXXX Assumption Agreement were not obligors (lessees)
under the original lease and therefore, the XXXXX Assumption Agreement is not an
exempt renewal under s. 201.09, F.S., and is subject to documentary stamp tax
based on the outstanding amount due at the time of the execution of the XXXXX
Assumption Agreement.
If a mortgage, security agreement, lien, or other evidence of indebtedness is filed or recorded
in Florida, documentary stamp tax will be due on the recorded document as imposed under
201.08(1)(b), F.S., even if the document that is secured by the recorded document is not
taxable under 201.08(1)(a), 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
1

In the Finance Lease XXXXX, the following statement appears: “you promise to pay us the payments indicated on
the first page of this Lease or on any schedule.”
2
In the XXXXX Contract XXXXX, the following is stated in part: “You agree to pay seller or Seller’s assignee the
Amount Financed…” Tax will not be based on finance or additional charges since they are conditional obligations.
3
In the XXXXX Agreement XXXXX, the following is stated: “Lessee shall pay Lessor or Lessor’s designee the total
rent for the term of this lease which shall be the total amount of rent payments stated in the above Schedule…”

Technical Assistance Advisement
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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 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
Henry Small
Tax Law Specialist
Technical Assistance and Dispute Resolution

Record ID: 615067
Cc: XXXXX
XXXXX
XXXXX