Were a lender's open-end advance request and security agreement subject to Florida documentary stamp tax?

Subject

Open-End Loan Form

Plain-English summary

The advance-request voucher and security agreement were not subject to documentary stamp tax because they contained no written promise to pay. A taxable obligation required a promise, a sum certain, and the borrower's signature.

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

What this means for you

A signed form that states a loan amount and collateral is not necessarily a taxable written obligation if the promise-to-pay element is missing.

Common questions

Did the forms state the amount and bear the borrower's signature? Yes.

What was missing? A written promise to pay.

Could a later recorded mortgage 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 94B4-004

Original ruling text

Jun 02, 1994

Re: Technical Assistance Advisement No. 94(B)4-004
Documentary Stamp Tax; Open-End Loan Form
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 form used by Lender in making loans
to its members is subject to documentary stamp tax under s.
201.08(1), F.S.

You have enclosed the following form for our determination:

LOANLINER Advance Request Voucher and Security
Agreement No. VFL064 6826LL:

Background

LOANLINER Advance Request Voucher and Security Agreement
No. VFL064 6826LL, which is signed by the borrower, shows the
amount of loan requested and describes in detail the security
offered by the borrower to secure the loan. In addition, it
details the security offered for the loan and contains certain
promises. These promises are that the property is owned by the
borrower, will maintain the property and keep the property
insured. In addition, the agreement sets out what constitutes
default and what happens in case of default. The agreement does
not contain a promise to pay.

Discussion and Law

The tax levied by s. 201.08(1), F.S., is an excise tax on

documents that, (a) contain a written promise to pay (b) a sum
certain in money (c) which is signed by the borrower. Also see
Florida Administrative Code Rule 12B-4.052(6).

Department's Position

As neither the Advance Request and Security Agreement nor
the Security Agreement contain all the essential requirements
for taxing purposes, the documentary stamp tax is not due on
either document. 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/mh