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

Subject

Open-End Loan Forms

Plain-English summary

Only two submitted forms were taxable. The HomeEquity Mortgage was taxable on the initial advance and each future advance. The Guarantor's Agreement was taxable when signed by a co-maker, based on the principal shown.

The other nine forms did not contain or incorporate all three required elements: a written promise to pay, a sum certain, and the borrower's signature.

What this means for you

Open-end lending packages must be reviewed document by document. A mortgage or co-maker obligation can be taxable even when related applications, disclosures, receipts, or change forms are not.

Common questions

Was the HomeEquity Mortgage taxable? Yes, on initial and future advances.

When was the Guarantor's Agreement taxable? When signed by a co-maker.

Were the other nine forms taxable? No, on the submitted language.

Citations and references

• Fla. Stat. §§ 201.08(1) and 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94B4-005

Original ruling text

Jun 02, 1994

Re: Technical Assistance Advisement No. 94(B)4-005
Documentary Stamp Tax; Open-End Loan Forms
XXX (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 certain 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. Xpress Credit Application (Copyright 1985);
2. Xpress Permanent Loan Agreement and Initial Disclosure
   Statement with Addendum to Xpress Permanent Loan Agreement
   Table of Loan Types Authorized Effective 1-25-93;
3. Xpress Loan Advance Application (Copyright 1982);
4. Xpress Security Agreement (Copyright 1982);
5. Xpress Repayment Plan/Lien Receipt (Copyright 1984);
6. Xpress Guarantor's Agreement (Copyright 1985);
7. Xpress Insurance Statement (Copyright 1985);
8. Xpress Termination of Joint Borrower (Copyright 1985);
9. Xpress Loan Change Agreement (Copyright 1986);
10. Xpress Home Equity Loan Agreement (Copyright 1989); and
11. Xpress Home Equity Mortgage (Copyright 1989).

Discussion and Law

Relevant to your petition, s. 201.08(1), F.S., provides that
for a written obligation to pay money that is made, executed,
delivered, sold, transferred, or assigned in the 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. 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.

In order to be taxable under s. 201.08, F.S., a written
obligation to pay money must have the following three elements
within the four corners of the document or must reference other
documents containing these elements:

1. A written promise to pay;
2. A sum certain in money; and
3. The signature of the borrower.

Open-end and future advance mortgages are taxable when filed or
recorded in the state based upon the maximum indebtedness secured,
exclusive of any amount that may be covered in a future advance
clause. Each future advance made under a future advance clause is
taxable when such future advance is made. The mortgage shall not be
enforceable in any court in this state, as to any such advance,
until the tax due on each advance has been paid.

Department's Position

The Xpress HomeEquity Mortgage form meets all requirements for
tax under s. 201.08(1), F.S. This form is subject to tax based upon
the initial advance and on any future advances made. Also, the
Guarantor's Agreement form is subject to tax when signed by a comaker. The tax would be based upon the principal amount as shown on
the agreement. The other forms submitted do not meet requirements
under s. 201.08(1), F.S., for taxing purposes.

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,

Nadine C. Posey
Tax Audit Specialist III
Technical Assistance

NCP/mh