Were five open-end loan forms taxable written obligations under Florida's documentary stamp tax?

Subject

Open-End Loan Forms

Plain-English summary

None of the five submitted open-end loan forms was subject to Florida documentary stamp tax. The Department said a taxable document had to contain a written promise to pay, a sum certain in money, and the borrower's signature.

All submitted forms except the addendum were signed, but none contained a promise to pay a sum certain. The unsigned addendum stated rates and payment calculations but did not cure that missing combination.

What this means for you

The Department analyzed the face of each document rather than the loan relationship in the abstract. A signed credit agreement promising repayment was still outside the tax when it did not state a sum certain.

Common questions

Q: Did the borrower's signature alone make a form taxable? No. The document also needed a written promise and a sum certain.

Q: Did an advance voucher stating the requested loan amount qualify? No. The ruling found the submitted forms still lacked the complete required combination.

Q: Was the rate addendum taxable? No. It was unsigned and only outlined rates and minimum-payment calculations.

Citations and references

• Fla. Stat. § 201.08(1) — written obligations to pay money
• Fla. Admin. Code r. 12B-4.052(6) — taxable-document requirements
• Fla. Stat. § 213.22 and Fla. Admin. Code r. 12-11.003 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93B4-007

Original ruling text

Apr 01, 1993

Re: Technical Assistance Advisement No. 93(B)4-007
Documentary Stamp Tax; Open-End Loan Forms
XXX (hereinafter Lender)

Dear :

You have petitioned for a Technical Assistance Advisement
pursuant to s. 213.22, F.S., and Florida Administrative Code
Rule 12-11.003.

Issue

Whether open-end loan forms used by Lender in making loans
to its members are subject to documentary stamp tax under
s. 201.08(1), F.S.

You have enclosed the following forms for our
determination:

1. LoanLiner Application and Credit Agreement form No.
   BFL224 6826LL; and
2. LoanLiner Credit Agreement and Insurance Certificate,
   form No. BFL224 6826LL; and
3. LoanLiner Advance Request Voucher and Security
   Agreement, form No. VFL062 6826LL; and
4. LoanLiner Advance Request Voucher and Security
   Agreement, form No. VFL182 LL676; and
5. LoanLiner Addendum, form No. MST102 LL676.

Background

LoanLiner Application and Credit Agreement No. BFL224
6826LL, which is signed by the borrower, outlines the plan and
provides that the borrower promises to pay to Lender all money
borrowed under the plan and applicable charges described in the
Addendum, together with interest on what is owed until the total
amount borrowed has been paid.

LoanLiner Credit Agreement and Insurance Certificate No.
BFL224 6826LL, signed by the borrower, also outlines the plan
and provides for credit life/credit disability insurance as a
voluntary option rather than a requirement for credit.

LoanLiner Advance Request Voucher and Security Agreement
No. VFL062 6826LL, signed by the borrower, provides the amount
of any loan advance requested by borrower, states the security
for the loan such as a motor vehicle, boat, etc., and requests
borrower to provide proof of insurance on that particular
security.

LoanLiner Advance Request Voucher and Security Agreement
No. VFL182 LL676, signed by borrower, is essentially the same as
the preceding form No. VFL062 6826LL, except no provision is
incorporated for borrower to provide proof of insurance coverage
on the security pledged.

LoanLiner Addendum No. MST102 LL676, which is not signed by
borrower, outlines the daily periodic rates and annual
percentage rates based upon the type of security pledged for a
particular loan. Also, the minimum amount of each monthly
payment based upon any outstanding monthly balance.

Discussion and Law

The tax levied by s. 201.08(1), F.S., is an excise tax on
documents that, (a) contain a written promise to pay (b) a sum
certain in money (c) which is signed by the borrower. Also, see
Florida Administrative Code Rule 12B-4.052(6).

Department's Position

Although each of the forms, except the LoanLiner Addendum,
are signed by the borrower, none contain a written promise to
pay a sum certain in money. Consequently, the forms submitted
by Lender for determination are not subject to tax under s.
201.08(1), 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
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 and your request
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 by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

W.E. Webb
Technical Assistant
Technical Assistance

WEW/mh