Which LoanLiner open-end loan forms were subject to Florida documentary stamp tax?

Subject

Open-End Loan Forms

Plain-English summary

The signed LoanLiner II Advance Request Voucher and Security Agreement was taxable, and the Subsequent Action Form became taxable when its extension agreement was exercised. The advance form's tax base was the amount shown as total payment for all accounts. The extension form's base was the unpaid balance entered in the extension section.

The reviewed application and credit agreement, guaranty agreement, and cosigner notice did not meet all requirements for tax. A mortgage filed or recorded to secure any loan would still be taxable.

What this means for you

Different forms in the same open-end lending package received different treatment. Florida focused on the specific promise, stated balance, borrower signature, and whether the extension provision was actually used.

Common questions

Q: Was the advance request taxable? Yes, based on total payment for all accounts.

Q: Was the subsequent-action form always taxable? No, only when the extension agreement was exercised.

Q: Were the guaranty and cosigner notice taxable? No, under the submitted forms.

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 93B4-019

Original ruling text

Aug 02, 1993

Re: Technical Assistance Advisement No. 93(B)4-019
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 II Application and Credit Agreement Form No.
   TRC323 6826LL with attached LoanLiner II Addendum (no
   form number); and
2. LoanLiner II Advance Request Voucher and Security
   Agreement Form No. TRC623 6826LL; and
3. LoanLiner Guaranty Agreement Form No. GST012 6826LL;
   and
4. LoanLiner Subsequent Action Form No. MST053 6826LL;
   and
5. Notice to Cosigner Form No. MST022.

Background

LoanLiner II Application and Credit Agreement Form No.
TRC323 6826LL, which is signed by the borrower, provides
information to determine the member's creditworthiness and
ability to pay. This document also outlines the plan and states
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 II Request Voucher and Security Agreement Form
No. TRC623 6826LL, which is signed by the borrower, provides the
loan advance requested by the borrower, states the security for
the loan such as a motor vehicle, boat, etc. Under Section 4,
entitled "Payment Terms", there is shown the amount advanced
plus other existing loan balances which equals a "New Balance"
$XXX. Also shown is a new total payment for all accounts $XXX.
Under Section 5, entitled "Signatures", it states in part that:

"By signing below or under the endorsement on the advance
proceeds check you agree:... To make payments as disclosed
in section 4..."

LoanLiner Guaranty Agreement Form No. GST012 6826LL, is
signed by persons other than the borrower to induce Lender to
loan money to the borrower. The Guaranty Agreement provides
that signors will make payment on any loans upon which the
borrower has defaulted.

LoanLiner Subsequent Action Form No. MST053 6826LL, which
is signed by the borrower and in certain instances also has the
signature of Lender, provides for the release of a co-signerguarantor, the release of security, the subsequent election of a
service offered by Lender such as a credit card or ATM card, the
subsequent election for voluntary credit insurance, a credit
insurance waiver, and an "extension agreement" which reads as
follows:

By signing below you agree to amend the terms of your
original agreement and to repay the entire balance of $XX
plus interest at XX% by paying $XX every XXX (payment
frequency) beginning XX (date).

Notice to Cosigner Form No. MST022, which is signed by a
person who will co-sign with a borrower, is a written caveat
advising the co-signer the consequences should the borrower
default on loan payments.

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

LoanLiner II Advance Request Voucher and Security Agreement
Form No. TRC623 6826LL, meets all requirements for tax under s.
201.08(1), F.S. This form is subject to tax based upon the

amount shown as "total payment all accounts". Also, LoanLiner
Subsequent Action Form No. MST053-6826LL, is subject to tax if
the "Extension Agreement" is exercised. The tax would be based
upon the amount entered in the "unpaid balance" portion of the
form. The other forms submitted do not meet requirements for
taxing purposes. Any mortgages filed or recorded in the public
records as security for any loans made by Lender to a borrower
would be subject to tax as prescribed in 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