Were an open-end credit agreement, advance request, or lender-issued funds voucher subject to Florida documentary stamp tax?

Subject

Open-End Loan Forms

Plain-English summary

None of the three submitted open-end loan forms was subject to documentary stamp tax. The Department required one instrument to contain a written promise to pay, a sum certain in money, and the borrower's signature.

The signed credit agreement contained a promise but no stated sum. The signed advance request stated an amount and granted a security interest but contained no promise to pay. The lender-issued voucher stated the advance amount but likewise contained no promise to pay.

A mortgage on real or personal property filed or recorded as loan security would still be taxable.

What this means for you

Florida evaluated the face of each form rather than combining missing elements through outside facts. Recording a separate mortgage remained a distinct taxable event.

Common questions

Q: Was the signed credit agreement taxable? No, because it lacked a sum certain.

Q: Was the signed advance request taxable? No, because it lacked a promise to pay.

Q: Could recorded security still trigger tax? Yes, for a filed or recorded mortgage.

Citations and references

• Fla. Stat. § 201.08(1) — written obligations and recorded mortgages
• Fla. Admin. Code r. 12B-4.052(6) — taxable promises to pay
• Lee v. Kenan, 78 F.2d 425 (5th Cir. 1935)
• Maas Brothers, Inc. v. Dickinson, 195 So. 2d 193 (Fla. 1967)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93B4-018

Original ruling text

Aug 02, 1993

Re: Technical Assistance Advisement No. 93(B)4-018
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 the following open-end loan forms used by Lender in
making loans to its members are subject to tax under s.
201.08(1), F.S.:

1. Truth-In-Lending Disclosure Statement And Agreement
   For Open-End Credit Plan No. STD-FED-OB-11/92, with
   attached Interest Rate Addendum, (the Agreement); and
2. Request For Advance No. KAI 5002 Rev. 8/88 (the
   Request); and
3. Funds Advance Voucher/Check (the Voucher).

Background

The Agreement, which is signed by the member/borrower,
provides that the member/borrower promises to pay Lender all
sums advanced from time to time under the Agreement in
accordance with a schedule contained in the Agreement which is
based upon the minimum payment[s] due on any sub-account'[s]
loan[s]. The Agreement provides that the plan may have more
than one account (sub-account), in which case each sub-account
shall be treated differently, such as interest rates, minimum
payment, etc., as set forth in the attached Interest Rate
Addendum.

The Request, which is signed by the member/borrower,

provides the amount of loan requested by the member/borrower,
the financial statement update of the member/borrower, and a
description of any security offered for the loan. The
member/borrower signature provides Lender a security interest in
the collateral described. The signature also acknowledges the
advance of the funds and copies of all documents relative to the
transaction. However, the Request does not contain a promise to
pay.

The Voucher, signed and issued by Lender, states the amount
of the sub-account advance, but does not contain a promise to
pay.

Discussion and Law

Relevant to your petition, s. 201.08(1), F.S., provides
that:

On promissory notes, nonnegotiable notes, written
obligations to pay money... made executed, delivered, sold,
transferred, or assigned in the state, and for each renewal
of same, the tax shall be 35 cents on each $100 or fraction
thereof of the indebtedness or obligation evidenced
thereby. 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. [emphasis
added]

Certain requirements are necessary in order for a note or
other written obligation to be taxable, which are:

1. A written promise to pay; and
2. A sum certain in money; and
3. The signature of the borrower.

See Lee v. Kenan, 78 F. 2d 425 (5th Cir. 1935) (liability
of instrument to stamp duty, as well as amount of such duty, is
determined by form and face of instrument and cannot be affected
by proof of extrinsic facts). Maas Brothers Inc. v. Dickinson,

195 So.2d 193 (Fla. 1967) (neither a revolving charge account
credit agreement nor individual sales receipts were taxable,
since the credit agreement did not contain a stated sum and the
sales receipts, which contained a stated sum and a borrower's
signature, did not contain a promise to pay). Also see Fla.
Admin. Code Rule 12B-4.052(6).

Department's Position

Neither of the forms submitted for our determination
contain the essential requirements for tax under s. 201.08(1),
F.S. However, if a mortgage on real or personal property is
filed or recorded as security for any loan, such mortgage would
be subject to tax. See Department of Revenue v. Lincoln Pointe
Associates, 544 So.2d 291 (Fla. 1 DCA 1989); Barnett Bank v.
State Dept. of Revenue 571 So.2d 527 (Fla. App. 3 Dist. 1990);
In Re: The Matter of Nu-Med Lake, Inc., and Nu-Med Pembroke,
Inc., v. Department of Revenue, 12 Fla. Admin. L. Rev. 1095
(January 4, 1990) Affirmed 580 So.2d 282 (Fla. 1 DCA 1991).

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