Were four LoanLiner open-end credit and advance forms subject to Florida documentary stamp tax?

Subject

Open-End Loan Forms

Plain-English summary

None of the four submitted LoanLiner forms was subject to documentary stamp tax. One had a promise and signature but no sum certain; others had amounts or signatures but lacked a promise, or placed the signature only on insurance rather than the payment obligation.

Any mortgage later filed or recorded to secure a loan remained taxable.

What this means for you

The ruling applied the three-element test to each document's face. Features spread across separate forms did not automatically make an individual form taxable.

Common questions

What three elements were required? Promise to pay, sum certain, and borrower signature.

Did any submitted form contain all three? No.

Could a recorded mortgage still be taxed? Yes.

Citations and references

• Fla. Stat. §§ 201.08(1) and 213.22
• Fla. Admin. Code r. 12B-4.052(6)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94B4-003

Original ruling text

May 06, 1994

Re: Technical Assistance Advisement No. 94(B)4-003
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 Advance Request Voucher and Security
   Agreement Form No. VFL064 6826LL; and
3. LoanLiner Application Form No. AST023 6826LL; and
4. LoanLiner Credit Agreement and Insurance Certificate
   Form No. BFL224 6826LL.

Background

LoanLiner Application and Credit Agreement Form No. BFL224
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, together with interest on
what is owed until the total amount borrowed has been paid.

LoanLiner Advance Request Voucher and Security Agreement
Form No. VFL064 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 3, entitled "Payment Terms," there is shown the amount
advanced plus other existing loan balances which equals a "New
Balance" $. Also shown is a new total payment for all
accounts $. However, this form does not contain a specific
promise to pay.

LoanLiner Application Form No. AST 023 6826LL, signed by
the borrower, is used to establish the creditworthiness of the
borrower, contains an amount requested, purpose and repayment
method but does not contain a specific promise to pay.

LoanLiner Credit Agreement and Insurance Certificate Form
No. BFL224 6826LL is used as the insurance contract and contains
the credit agreement terms. It contains a promise to pay but
does not contain a debtor amount of money. The only signature
is for the credit life insurance and is not signed as to the
promise to pay contained in the credit agreement.

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

The 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,

James E. Silvey
Tax Law Specialist
Technical Assistance

JES/jes