Were Florida commercial-loan notes taxable when borrowers signed them and delivered them to the lender or its agent outside Florida?

Subject

Out of State Loans

Plain-English summary

The promissory notes were not subject to documentary stamp tax because borrowers signed them and delivered them to the lender's loan officer or agent outside Florida. Their later return to Florida for safekeeping did not change that conclusion.

The Florida UCC-1 filing also required no additional tax because neither the promissory note nor another obligation document was filed or recorded with it. The official text marks this December 1993 ruling as superseded by revised TAA 93B4-024R dated February 22, 1994.

What this means for you

The original result turned on where execution and acceptance of delivery actually occurred and on what was filed in Florida. Because the Department later superseded this ruling, the revised TAA and current law should control any analysis.

Common questions

Q: Did Florida loan applications, document preparation, disbursements, and repayments make the notes taxable? No, not where the notes themselves were signed and delivered outside Florida as described.

Q: Did returning the notes to Florida for safekeeping trigger tax? No.

Q: Was the UCC-1 filing enough by itself? No, provided no promissory note, security agreement, or other obligatory document was included for filing or recording.

Citations and references

• Fla. Stat. §§ 201.08(1), 201.22, and 213.22
• Fla. Admin. Code rr. 12B-4.051(1)(a)-(b) and 12B-4.054(30)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93B4-024

Original ruling text

Status: Superseded by TAA 93B4-024R, February 22, 1994

Dec 08, 1993

Re: Technical Assistance Advisement No. 93(B)4-024
Documentary Stamp Tax; Out of State Loans
XXX (hereinafter, Parent)
XXX (hereinafter, Collectively as Subsidiaries and
Individually as Lender)

Dear :

You have petitioned for a Technical Assistance Advisement
pursuant to Section 213.22, Florida Statutes, and Chapter 12-11,
Florida Administrative Code.

Issue

Whether promissory notes that are signed and delivered
outside Florida, which are unsecured or secured only with the
filing of a UCC-1 financing statement are exempt from
documentary stamp tax levied by Section 201.08(1), Florida
Statutes.

Background

Parent is a bank holding company that owns all of the
issued and outstanding stock of Subsidiaries. Some of the
business of Subsidiaries is the making of commercial loans which
are either unsecured or secured by personalty located within or
without the state of Florida. These loans may be term loans,
revolving lines of credit or a combination of a term loan and a
revolving line of credit.

Application for a loan is made by the borrower in the State
of Florida. The loan documents consist of one or more
promissory notes, a loan agreement, a security agreement (or
similar document evidencing the security interest, if any,
granted to Lender) and any other documents evidencing the Loan

and the borrower's relationship with Lender (collectively, the
"Loan Documents"). A UCC-1 financing statement will be filed
(in the case of secured Loans) with the Secretary of State of
Florida. All Loan Documents are prepared in the State of
Florida and, except in the case of the promissory notes, will be
executed and delivered by the borrower to Lender in the State of
Florida. No Loan Document other than the promissory note
contains a promise to repay money. The promissory note will be
executed outside the State of Florida in the presence of a
notary public. The promissory note which contains a written
promise to pay a sum certain in money and is signed by the
borrower also has an attached acknowledgment that is properly
notarized by an out of state notary which reads in part that:

I HEREBY CERTIFY that on this day before me, an officer
duly authorized in the State aforesaid and in the County
aforesaid to take acknowledgements, personally appeared _,
of _, to me known to be the person who executed the
attached promissory note, dated , 199__ in the maximum
principal amount of ___ Dollars ($__), on behalf of ____ and
acknowledged before me that he executed the same.

Ordinarily, when the promissory notes are executed out of
state they are executed in XXX. When the borrower is not
accompanied by a loan officer of Lender, an officer of a trust
company in XXX (an entity affiliated with Lender through common
ownership) will serve as an agent of Lender. Lender's loan
officer or the agent of Lender will accept delivery of the
promissory note outside the State of Florida. Upon accepting
delivery of an executed promissory note, such loan officer or
agent will execute an affidavit stating that he or she accepted
delivery of the executed note on behalf of the Lender outside
the State of Florida.

The affidavit executed by Lender's loan officer which is
properly notarized by an out of state notary provides in part
that:

I, ___, being first duly sworn upon my oath, depose and
say.

1. That I am a _ of _ (the "Payee").

2. That on the _ day of _, 199__, I witnessed the
execution of that certain Note, dated _, 199_, in the
maximum principal amount of ___ Dollars ($) payable by ____,
as Maker, to the Payee.

3. That the execution of the Note took place in the City of
   XXX the State of XXX.
4. That, I accepted delivery of the Note on behalf of the
   Payee in XXX, XXX.

The affidavit executed by Lender's agent is identical to
the affidavit executed by Lender's loan officer except for item
Number 1 which reads:

1. That I am a ____ of [Trustee].

Occasionally, a duly authorized representative of the
borrower, in connection with unrelated travel, will take the
promissory note outside the State of Florida, execute the
promissory note in the presence of a notary public and send the
promissory note to Lender's representative outside the State
who, on behalf of Lender, will accept delivery of the promissory
note. In such instances, the agent will execute an affidavit
that is also properly notarized by an out of state notary
stating in part that:

I, ___, being first duly sworn upon my oath, depose and
say.

1. That I am a ____ of Trust Company.
2. That on the ___ day of , 199_, I received, via
   certified mail, that certain Note, dated Dollars ($)
   payable by the Payee in XXX.

In all instances the promissory note will be returned to
Lender in the state of Florida for safekeeping. All amounts
advanced under the Loan will be disbursed in the State of
Florida and all payments made in respect of the Loans will be
made in the State of Florida.

Discussion And Law

Section 201.08(1), Florida Statutes, imposes a documentary

stamp tax on promissory notes or other written obligations to
pay money that are signed, delivered, sold, or assigned in
Florida. The rate of tax is 35 cents on each $100 or fraction
thereof of the indebtedness or obligation evidenced thereby.
Mortgages or other evidences of indebtedness recorded in Florida
are also subject to this same tax and rate except where there is
both a promissory note and a mortgage the tax is to be paid upon
recording the mortgage and a notation made on the note that the
proper tax has been paid on the mortgage. (Also see Fla. Admin.
Code Rule 12B-4.051(1)(a) and (b)).

A Department regulation provides that the filing or
recording of a UCC Financing Statement in Florida is not subject
to documentary stamp tax under Section 201.08, F.S., unless the
promissory note, security agreement or other obligatory document
is included for filing or recording (Fla. Admin. Code Rule 12B4.054(30)). The financing statement must include a notation
that the documentary stamp tax has been paid or that it is not
due (Section 201.22, F.S.; Fla. Admin. Code Rule 12B-4.054(30)).

Department's Position

The promissory Notes in the transactions described are not
subject to documentary stamp tax because they are signed by the
borrower in XXX and delivered to Lender's loan officer or its
agent in XXX and not in Florida, which is required for taxing
purposes under Section 201.08(1), F.S., although the notes are
subsequently returned to Florida. Additionally, since the
promissory notes or other evidences of indebtedness will not be
filed or recorded in connection with these loans, no additional
tax is required upon filing the UCC Financing Statement in
Florida.

This response constitutes a Technical Assistance Advisement
under Section 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 Section 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 Section 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

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