Was additional documentary stamp tax due on notes issued under a wholesale mortgage warehouse agreement?

Subject

Wholesale Mortgage Agreement

Plain-English summary

No additional documentary stamp tax was due on promissory notes issued under the wholesale mortgage warehouse agreement, provided Chapter 201 documentary stamp tax had already been paid on the pledged collateral obligations.

The exemption applied only up to the amount of those taxed collateral obligations. If the primary promissory notes under the warehouse agreement exceeded their total, the excess remained taxable under section 201.08.

What this means for you

Warehouse lenders and borrowers needed records tying the primary borrowing to collateral notes and mortgages on which the proper tax had already been paid. The exemption prevented duplicative tax only within that supported amount.

Common questions

Were the warehouse notes automatically exempt? No. The exemption depended on tax having been paid on the pledged collateral obligations.

What if the warehouse borrowing exceeded the taxed collateral? The excess was subject to documentary stamp tax.

Citations and references

• Fla. Stat. §§ 201.21, 201.08, and 213.22
• Fla. Admin. Code r. 12B-4.054(4)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94B4-020

Original ruling text

Dec 01, 1994

Re: Technical Assistance Advisement No. 94(B)4-020
Documentary Stamp Tax; Wholesale Mortgage Agreement
XXX (Borrower)
XXX (Lender)

Dear :

This is in response to your recent request for a technical
assistance advisement pursuant to s. 213.22, F.S., and Florida
Administrative Code Rule 12-11.003.

FACTS

The Borrower has entered into a Loan Warehousing and
Security Agreement with the Lender, which Agreement provides for
up to a certain specified amount in line of credit, secured by
assignments of notes, mortgages and personal guarantees by
certain individuals and corporations, and payable on demand but
if no demand is made then on a certain specified date.

REQUESTED ADVISEMENT

Whether or not promissory notes accompanied by a Wholesale
Mortgage Warehousing Agreement are subject to Florida
Documentary Stamp tax under s. 201.21, F.S. and Fla.
Administrative Code Rule 12B-4.054(4).

DISCUSSION AND LAW

The exemption from tax under Rule 12B-4.054(4), F.A.C. and
s. 201.21, F.S. on promissory notes, nonnegotiable notes, and
other written obligations to pay money (principal obligations),
when the maker thereof shall pledge or deposit with the payee or
holder thereof pursuant to any agreement commonly known as a
wholesale warehouse mortgage agreement, applies only if
documentary stamp taxes imposed by Chapter 201, F.S., have
already been paid on the collateral obligations.

If the promissory notes given as primary obligations
pursuant to a wholesale warehouse mortgage agreement exceed the
sum of collateral obligations on which proper documentary stamp
taxes have been paid, the excess is subject to tax under s.
201.08, F.S.

DEPARTMENT'S POSITION

Based upon statutory provisions and the documentation
provided with your letter, no additional documentary stamp tax
imposed under s. 201.08 will be due on promissory notes
accompanied by a wholesale mortgage warehouse agreement,
provided proper documentary stamp taxes imposed by Chapter 201,
F.S., in respect to such collateral obligations have been paid
pursuant to s. 201.21, 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,

Baldan E. Sulker

Tax Audit Specialist III
Technical Assistance

BES/mh