Were the financing business's initial installment agreement and later unsigned conversion agreement subject to Florida documentary stamp tax?

Plain-English summary

Neither of the financing business's two installment-loan documents was subject to Florida documentary stamp tax.

The initial Loan Agreement let the borrower draw up to an approved maximum during a five-month period, but it did not contain a loan amount that was fixed and absolute when the borrower signed it. The later Conversion Loan stated the amount actually financed, but the borrower did not sign that document.

The Department explained that a taxable written obligation must contain a written promise to pay, a sum certain in money, and the borrower's signature within the document's four corners or in expressly incorporated documents. Each document here was missing a required element.

What this means for you

Florida documentary stamp tax turns on the face of the signed document and any documents it expressly incorporates. An agreement authorizing future draws up to a cap is not necessarily a fixed obligation at signing, while a later statement of the final balance does not complete the taxable instrument if the borrower never signs it.

Common questions

Was the initial Loan Agreement taxable? No. Its amount was not fixed and absolute when executed.

Was the Conversion Loan taxable? No. It contained the financed amount but was not signed by the borrower.

What elements did the Department identify for a taxable written obligation? A written promise to pay, a sum certain in money, and the borrower's signature.

Did the ruling involve a recorded mortgage or security agreement? No. The facts stated that no mortgages, security agreements, or other documents would be filed or recorded in Florida.

Citations and references

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

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 24B4-001

Original ruling text

QUESTION: Are certain installment loan agreements subject to documentary stamp tax?
ANSWER: No.
April 12, 2024

Re: Technical Assistance Advisement – TAA #: 24B4-001
. (the “Taxpayer”)
BP #:
Documentary Stamp Tax – Written Obligations to Pay Money
Sections 201.08(1)(a) and 201.08(6), Florida Statutes (F.S.)
Rule 12B-4.054(4), Florida Administrative Code (F.A.C.)
Dear

:

This is in response to your letter dated
requesting the Department of
Revenue’s issuance of a Technical Assistance Advisement (TAA) pursuant to Section 213.22,
F.S., and Rule Chapter 12-11, F.A.C, regarding the matter discussed below. Your request has
been carefully examined, and the Department finds it to be in compliance with the requisite
criteria set forth in Chapter 12-11, F.A.C. This response to your request constitutes a TAA and is
issued to you under the authority of s. 213.22, F.S.
REQUESTED ADVISEMENT
Whether certain installment loan agreements are subject to Florida’s documentary stamp tax.
FACTS
The Taxpayer facilitates financing between businesses and consumers in Florida. For example,
a
contractor may suggest that its customer (the “Borrower”) apply for a loan with the
Taxpayer to finance the repair of the customer’s
.

Technical Assistance Advisement
April 12, 2024
Page 2

Once approved, the Borrower will execute an Installment Loan Agreement (the “Loan
Agreement”), and the Taxpayer will pay the
contractor an amount to start the work,
and once the work is completed, the Taxpayer will pay the
contractor any remaining
balance due up to the total amount financed.
Section 1 of the Loan Agreement states that the Borrower is approved for a loan “up to the
Amount Financed.” Section 2 of the Loan Agreement provides that the Borrower may “make
purchases…up to the ‘Amount Financed’…”.
Section 3 of the Loan Agreement contains the Borrower’s, “Promise to pay…you agree to pay
us…so much of the Amount Financed.”
The Borrower may make draws on the loan for a total of five months. After five months, the
Taxpayer will issue to the Borrower a “conversion” Installment Loan Agreement (the
“Conversion Loan”) that contains the total amount that has been financed by the Borrower
along with the Borrower’s promise to pay that amount. However, the Conversion Loan is not
signed by the borrower.
No mortgages, security agreements, or other documents will be filed or recorded in Florida.
LAW AND DISCUSSION
Section 201.08(1)(a), F.S., imposes documentary stamp tax on all promissory notes and other
written obligations to pay money made, executed, delivered, sold, transferred, or assigned in
Florida, and for each renewal of the same. The tax is $0.35 on each $100.00 or fraction thereof
of the indebtedness or obligation evidenced thereby.
Section 201.08(6), F.S., provides that the taxability of a document is determined solely from the
face of the document and any separate document expressly incorporated into the document.
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), Florida Administrative Code (F.A.C.), provides that a written obligation to
   pay money that is not fixed and absolute at the time of execution is not taxable.

Technical Assistance Advisement
April 12, 2024
Page 3

The Loan Agreement does not contain a loan amount that is fixed and absolute when the
Borrower executes it. Therefore, the Loan Agreement is not subject to documentary stamp tax.
The Borrower does not sign the Conversion Loan, so it is not taxable.
CONCLUSION
Neither the Loan Agreement nor the Conversion Loan are subject to documentary stamp tax.
This response constitutes a TAA 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 TAA, the backup material, and this response, deleting names,
addresses and any other details which might lead to identification of the Taxpayer. Your
response should be received by the Department within ten (10) days of the date of this letter.
If you have any further questions regarding this matter and wish to discuss them, you may
contact me directly at (850) 717-6488.
Sincerely,
Roger L. Beasley
Roger L. Beasley
Tax Law Specialist
Technical Assistance and Dispute Resolution
Cc:

Record ID: 7001146456

Technical Assistance Advisement
April 12, 2024
Page 4

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Notification number:

7001146456

Respondent code:

44

Tax type:

Documentary Stamp Tax

Correspondence type: Technical Assistance
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[email protected].
Thank you.