Did the bank's proposed checkline credit agreement trigger documentary stamp or intangible tax?

Subject

Checkline Credit Agreement

Plain-English summary

The proposed Checkline Credit Agreement and the contemplated credit draws were not subject to Florida documentary stamp tax, and the document was not subject to intangible personal property tax. The agreement did not contain a direct written promise to pay a stated sum.

The Department explained that a taxable promissory instrument under section 201.08 had to contain, within the document or incorporated documents, a promise to pay, a sum certain in money, and the borrower's signature. The submitted agreement lacked the required promise and stated sum.

What this means for you

The ruling turned on the actual written instrument, not merely on the existence of a credit facility or access by check, credit card, withdrawal slip, or wire instruction. A different agreement or a separately executed draw document could produce a different analysis.

Common questions

Was documentary stamp tax due on the agreement? No, because it lacked a direct written promise to pay a stated sum.

Were the contemplated credit-access transactions taxable under the ruling? No. The Department said documentary stamp tax was not required on those transactions as described.

Did the ruling also address intangible tax? Yes. It found that the bank was not subject to intangible personal property tax on this document.

Citations and references

• Fla. Stat. §§ 201.08 and 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94B4-015

Original ruling text

Sep 30, 1994

Re: Technical Assistance Advisement No. 94(B)4-015
Documentary Stamp Tax - Checkline Credit Agreement
XXX (Bank)

Dear :

Your request for a technical assistance advisement has been
received in this office.

Facts

The Bank has a proposed Checkline Credit Agreement
(Document) that they wish to use with their customers to operate
in a fashion similar to a "margin account" maintained by
securities brokerage firms. Customers would be extended credit
against the value of certain assets owned by the customer in the
control of the Bank. The customers would also have check-writing
privileges to access their credit.

Requested Advisement

That the use of the Document and the accessing of credit by
a customer through the use of checks (or credit cards,
withdrawal slips, or wire transfer instructions) would not
result in the imposition of any documentary stamp tax or
intangible tax for the Bank.

Discussion and Law

In order to be taxable under s. 201.08, F.S., a promissory
instrument must have three elements present within the four
corners of the document or must incorporate the terms of other
documents by reference containing these elements:

1. Promise to pay,
2. A sum certain in money, and be
3. Signed by the borrower.

Conclusion

Therefore, since the Document submitted in the request for
a technical assistance advisement does not have a direct written
promise to pay a stated sum, documentary stamp tax under s.
201.08, F.S., would not be required, nor would documentary stamp
tax be required upon the transactions contemplated by the
Document. Further, the Bank would not be subject to intangible
personal property tax on this Document.

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