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

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 in Georgia. 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. This February 1994 revised ruling expressly superseded TAA 93B4-024 from December 1993.

What this means for you

The result turned on where execution and acceptance of delivery actually occurred and on what was filed in Florida. The ruling described notarized acknowledgments and affidavits documenting the Georgia events.

Common questions

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

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

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 93B4-024R

Original ruling text

Status: Supersedes TAA 93B4-024, December 8, 1993

Feb 22, 1994

Re: Technical Assistance Advisement No. 93(B)4-024R (Revised)
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 Atlanta, Georgia. When the borrower
is not accompanied by a loan officer of Lender, an officer of an
affiliate in Atlanta, Georgia (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 that:

STATE OF GEORGIA

SS
COUNTY OF FULTON

AFFIDAVIT OF OUT-OF-STATE DELIVERY

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
   Atlanta, State of Goergia.
4. That, I accepted delivery of the Note on behalf of the
   Payee in Atlanta, Georgia.

Name:___
Title:________

STATE OF GEORGIA

SS
COUNTY OF FULTON

Subscribed and sworn before me this ___ day of ___, 199__.

Signature of Notary Public-State of Georgia

Notary Public, State of Georgia
Personally Known ____
Produced Identification __
Type of Identification: ____

The affidavit executed by Lender's agent reads that:

STATE OF GEORGIA

SS
COUNTY OF FULTON

AFFIDAVIT OF OUT-OF-STATE DELIVERY

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

say.

1. That I am a ____ of Trust Company Bank.
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 , as Payee.
3. That the execution of the Note took place in the City of
   Atlanta the State of Georgia.
4. That, I accepted delivery of the Note on behalf of the
   Payee in Atlanta, Georgia.

Name:____
Title:___

STATE OF GEORGIA

SS
COUNTY OF FULTON

Subscribed and sworn before me this ___ day of ____,

Signature of Notary Public-State of Georgia

Notary Public, State of Georgia
Personally Known ____
Produced Identification __
Type of Identification: ____

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 which
states:

STATE OF GEORGIA

SS
COUNTY OF FULTON

AFFIDAVIT OF OUT-OF-STATE DELIVERY

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

1. That I am a ___ of Trust Company Bank.
2. That on the ___ day of , 199_, I received, via
   certified mail, that certain Note, dated _, 199__, in the
   maximum principal amount of ___ Dollars ($__) payable by , as
   Maker to , as Payee.
3. That I accepted delivery of the Note on behalf of the
   Payee in Atlanta, Georgia.

Name:___
Title:________

STATE OF GEORGIA

SS
COUNTY OF FULTON

Subscribed and sworn before me this ___ day of ___,
199__.

Signature of Notary Public-State of Georgia

Notary Public, State of Georgia
Personally Known ____
Produced Identification __
Type of Identification: ____

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 Georgia and delivered to Lender's loan officer or
its agent in Georgia 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

WEW/mh