Did notarized acknowledgments and delivery affidavits adequately prove that promissory notes payable to Florida lenders were executed and delivered outside Florida?

Plain-English summary

The promissory notes were not subject to Florida documentary stamp tax because the forms adequately proved out-of-state execution and delivery.

The borrower signed each note outside Florida before an out-of-state notary, and a lender officer or agent accepted delivery outside Florida and signed a notarized affidavit. Those records satisfied the proof described in the newly adopted rule. Later returning the notes to Florida for safekeeping did not change the result.

This revised advisement states that it supersedes TAA 94B4-022.

What this means for you

The result turned on where the note was made, executed, and delivered—and on contemporaneous evidence of those events. Florida preparation of other loan documents, Florida disbursements and payments, and a later return of the note were not enough to tax these notes.

Common questions

Q: What evidence did the Department accept? A: A notarized acknowledgment showing out-of-state execution plus a notarized affidavit showing delivery to the lender or its agent outside Florida.

Q: Did returning the completed notes to Florida create tax? A: No.

Q: Was the Florida UCC-1 filing itself taxable? A: Not unless the note, security agreement, or another obligatory document was included for filing or recording; the ruling also required the financing statement to note that tax was paid or not due.

Citations and references

• Fla. Stat. § 201.08(1) — documentary stamp tax on written obligations
• Fla. Admin. Code r. 12B-4.053(35) — proof of out-of-state execution and delivery
• Fla. Stat. § 201.22 and Fla. Admin. Code r. 12B-4.054(30) — UCC financing statements
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94B4-022R

Original ruling text

Status: Supercedes TAA 94B4-022 issued December 15, 1994

Mar 22, 1995

Re: Technical Assistance Advisement No. 94(B)4-022R (Revised) Documentary Stamp Tax; Out of State Loans XXX (hereinafter Parent); XXX (hereinafter, collectively referred to as Subsidiaries and Individually as Lender)

Dear :

You have petitioned for a Technical Assistance Advisement pursuant to Section 213.22, Florida Statutes, and Chapter 12-11, Florida Administrative Code.

Issue

Whether the Lender's form acknowledgment which is incorporated within promissory notes and form affidavits of delivery which were approved by Technical Assistance Advisement Numbers 93(B)4-024, 93(B)4-024 Revised and 93(B)4-024 RevisedRevised still constitute sufficient evidence of out-of-state delivery to render a transaction exempt from Florida documentary stamp tax pursuant to newly adopted Rule 12B-4.053(35), Florida Administrative Code.

Statement of Facts

Parent is a bank holding company that owns all of the issued and outstanding stock of Subsidiaries. Some of the business of Subsidiaries is the making of commercial loans which are either unsecured or secured by personalty located within or without the State of Florida. These loans may be term loans, revolving lines of credit or a combination of a term loan and a revolving line of credit.

Application for a loan is made by the borrower in the State of Florida. The loan documents consist of one or more

promissory notes, a loan agreement, a security agreement (or similar document evidencing the security interest, if any, granted to Lender) and any other documents evidencing the Loan and the borrower's relationship with Lender (collectively, the "Loan Documents"). A UCC-1 financing statement will be filed (in the case of secured Loans) with the Secretary of State of Florida. All Loan Documents are prepared in the State of Florida and, except in the case of the promissory notes, will be executed and delivered by the borrower to Lender in the State of Florida. No Loan Document other than the promissory note contains a promise to repay money. The promissory note will be executed outside the State of Florida in the presence of a notary public. The promissory note which contains a written promise to pay a sum certain in money and is signed by the borrower also has an attached acknowledgment that is properly notarized by an out of state notary which reads in part that:

STATE OF
COUNTY OF

On the ___ day of _ personally appeared , as the
_ of , a Florida corporation, and before me executed the attached _ Promissory Note, dated as of , in the principal amount of ___ (), payable by to Lender, XX Banking Association.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal, in the state and county aforesaid.

Signature of Notary Public, State of__

(Print, Type or Stamp Commissioned Name of Notary Public) Personally known___; or Produced identification

(Notary Seal)

Ordinarily, when the promissory notes are executed out of state they are executed in XXX. When the borrower is not accompanied by a loan officer of Lender, an officer of an

affiliate in XXX (an entity affiliated with Lender through common ownership) will serve as an agent of Lender. Lender's loan officer or the agent of Lender will accept delivery of the promissory note outside the State of Florida. Upon accepting delivery of an executed promissory note, such loan officer or agent will execute an affidavit stating that he or she accepted delivery of the executed note on behalf of the Lender outside the State of Florida.

The affidavit executed by Lender's loan officer which is properly notarized by an out of state notary provides that:

)
) ss
COUNTY OF XXX )

AFFIDAVIT OF OUT-OF-STATE DELIVERY
I,___, being first duly sworn upon my oath, depose and say.

1. That I am a _ of(the "Payee").
2. That on the day ___ of ___ 199__, I witnessed the
   execution of that certain Note, dated , 199_, in the maximum principal amount of ___ Dollars ($_) payable by ___ as Maker, to the Payee.
3. That the execution of the Note took place in the City of
   XXX in the State of XX.
4. That, I accepted delivery of the Note on behalf of the
   Payee in XXX.
   Name: _
   Title: __

Subscribed and sworn before
me this_ day of ____ 199__.

Signature of Notary Public-State of XX

Notary Public, State of XX
Personally Known _
Produced Identification _
Type of Identification: ____

The affidavit executed by Lender's agent reads that:

STATE OF XX )
) ss
COUNTY OF XX)

AFFIDAVIT OF OUT-OF-STATE DELIVERY

I, ____, being first duly sworn upon my oath, depose and say.

1. That I am a ____ of XXX Bank.
2. That on the ___ of 199__, I witnessed the execution of
   that certain Note, dated , 199_, in the maximum principal amount of Dollars ($) payable by _ as Maker, to as Payee.
3. That the execution of the Note took place in the City of
   XX in the State of XX.
4. That, I accepted delivery of the Note on behalf of the
   Payee in XX.

Name:___
Title:____

Subscribed and sworn before
me this_ day of_,199.

Signature of Notary Public-State of XX

Notary Public, State of XX
Personally Known __
Produced Identification _
Type of Identification: ___

Occasionally, a duly authorized representative of the borrower, in connection with unrelated travel, will take the promissory note outside the State of Florida, execute the promissory note in the presence of a notary public and send the promissory note to Lender's representative outside the State who, on behalf of Lender, will accept delivery of the promissory

note. In such instances, the agent will execute an affidavit that is also properly notarized by an out of State notary which states:

STATE OF XX )
) ss
COUNTY OF XX)

AFFIDAVIT OF OUT-OF-STATE DELIVERY

I, ____ being first duly sworn upon my oath, depose and say.

1. That I am a ___ of XXX Bank.
2. That on the ___ day of , 199, I received, via
   certified mail, that certain Note, dated _ 199__, in the maximum principal amount of ___ Dollars ($__) payable by _ as Maker, to , as Payee.
3. That I accepted delivery of the Note on behalf of the
   Payee in XXX.

Name:____
Title: ________

Subscribed and sworn before
me this_ day of_, 199__.

Signature of Notary Public-State of XX

Notary Public, State of XX
Personally Known ___
Produced Identification_
Type of Identification:_____

In all instances the promissory note will be returned to Lender in the state of Florida for safekeeping. All amounts advanced under the Loan will be disbursed in the State of Florida and all payments made in respect of the Loans will be made in the State of Florida.

Law and Analysis

Section 201.08(1), Florida Statutes, "imposes a documentary stamp tax on promissory notes, nonnegotiable notes, written obligations to pay money, or assignments of salaries, wages, or other compensation made, executed, delivered, sold, transferred, or assigned in the state..." Newly adopted Rule 12B-4.053(35), Florida Administrative Code, provides that the Department will presume that if a note is made payable to a Florida lender and the note is held by the Florida lender in Florida, then tax will be due unless the lender can establish that the note was made, executed, and delivered to the lender outside the state. Proof sufficient to establish that a note is not subject to tax may include:

(a) A sworn affidavit made before an out of state notary public at the time of the signing of the note by the borrower(s) and delivery of the note to the lender attesting that the signing and delivery of the note occurred in the presence of the out of state notary; or (b) The note itself could bear a notarization and acknowledgment as to where the note was executed. Then this could be supplemented by an affidavit made before an out of state notary by the lender attesting that the note was delivered to the lender, or its agent out of state; or (c) Any other proof that the borrower made, executed, and delivered the note in another state to a Florida lender.

The Lender's acknowledgment which is incorporated within the promissory note will be notarized by a notary public of the state in which the promissory note will be executed by or on behalf of the borrower. This demonstrates that execution of the promissory note has not occurred within the State of Florida. Further, the Lender's affidavits of delivery executed by the loan officer or agent of the Lender incorporate an acknowledgment which will be notarized by a notary public of the state in which delivery of the promissory note is accepted on behalf of the Lender. This demonstrates that delivery has not occurred within the State of Florida. Since Lender is able to provide sufficient evidence that the promissory note is neither executed nor delivered in the State of Florida, no documentary stamp tax should be imposed with respect to the promissory note

pursuant to Rule 12B-4.053(35), Florida Administrative Code.

A Department regulation provides that the filing or recording of a UCC Financing Statement in Florida is not subject to documentary stamp tax under Section 201.08, Florida Statutes, unless the promissory note, security agreement or other obligatory document is included for filing or recording (Florida Administrative Code Rule 12B-4.054(30)). The financing statement must include a notation that the documentary stamp tax has been paid or that it is not due (Section 201.22, Florida Statutes; Florida Administrative Code Rule 12B-4.054(30)).

Department's Position

The Lender's form acknowledgment which is incorporated within promissory notes and form affidavits of delivery constitute sufficient evidence of out-of-state delivery to render a transaction exempt from Florida documentary stamp tax pursuant to newly adopted Rule 12B-4.053(35), Florida Administrative Code. The promissory notes in the transactions described are not subject to documentary stamp tax as they are signed by the borrower out of Florida and delivered to Lender's loan officer or its agent out of Florida although the notes are subsequently returned to Florida.

This response constitutes a Technical Assistance Advisement under Section 213.22, Florida Statutes, which is binding on the Department only under the facts and circumstances described in the request for this advice as specified in Section 213.22, Florida Statutes. 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, Florida Statutes, which are subject to disclosure to the public under the conditions of Section 213.22, Florida Statutes. 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

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