Was Florida documentary stamp tax due when a new Florida holding company's stock was authorized in Florida but physically issued by an out-of-state transfer agent?

Plain-English summary

The holding company's stock issuance was not subject to Florida documentary stamp tax because the shares were issued outside Florida.

The new holding company was organized in Florida and its board authorized the issuance there. But an out-of-state bank served as transfer agent, the physical issuance and handling occurred outside Florida, and the secretary was to execute a notarized out-of-state certification of those facts.

What this means for you

The ruling treated section 201.05 as the specific controlling statute and focused on where the stock was actually issued, not merely where directors authorized it.

Common questions

Q: Did Florida board authorization make the stock taxable?
A: No.

Q: What location controlled?
A: The place where the transfer agent physically issued the original shares.

Q: What evidence supported the out-of-state issuance?
A: A notarized certification by the secretary that the original and later issuances occurred outside Florida.

Citations and references

• Fla. Stat. § 201.05(1) — tax on original stock issued in Florida
• Fla. Stat. § 201.01 — general documentary-stamp provisions
• State ex. rel. Florida Power and Light Co. v. Green, 166 So.2d 146 (1964 Fla.)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95B4-005

Original ruling text

Mar 02, 1995

Re: Technical Assistance Advisement No. 95(B)4-005
Documentary Stamp Tax; Stock Issued Out of State
XXX (hereinafter Parent)
XXX (hereinafter Company)
XXX (hereinafter Holding Company)
XXX (hereinafter Bank)

Dear :

This is in response to your letter of February 16, 1995, in
which you have petitioned for a Technical Assistance Advisement
pursuant to s. 213.22, F.S., and Florida Administrative Code
Rule 12-11.003.

Issue

Are documentary stamps due under s. 201.05, F.S., pursuant
to a stock issue occurring out-of-state through a transfer agent
out-of-state where the issue was authorized in Florida by the
officers and directors in Florida?

Background

Parent is Delaware public company traded on the New York
Stock Exchange and presently owns Company, a Florida company.
Company is a wholly-owned subsidiary of the Parent and owns and
operates different restaurants. On or before June 1, 1995,
Parent will organize a new Florida holding company, Holding
Company, as a wholly-owned subsidiary. After organizing the
Holding Company, Parent will transfer to the Holding Company all
of the stock of the Company. Then on or about June 1, 1995,
Parent will distribute on a one-for-one basis stock of Holding
Company to the Parent's stockholders. Therefore, after the
transaction, generically known as a spin-off, there will be two
public companies, the Parent and the Holding Company.
Contemporaneous with this transaction, the Holding Company will
be registered on a stock exchange.

The stock transfer agent for both the Parent and Holding
Company is or will be an out of state bank, Bank, and therefore,
physical issuance and handling of the stock of the Holding
Company will be out of state, notwithstanding the fact that
authorization for such issuance will be from the Board of
Directors of the Holding Company in Florida.

The secretary will carry out all the authorized duties in
another state and will execute in that state a notarized
certification that the original and subsequent issuances of
stock by the transfer agent took place in a state other than
Florida.

Discussion and Law

Section 201.01, F.S., provides that documents subject to
documentary stamps are those which are written or printed by any
person who makes, signs, executes, issues, sells, removes,
consigns, signs, records, or ships the same, or for whose
benefit are used, the same are made, signed, executed, issued,
sold, removed, consigned, assigned, recorded, or shipped into
the state.

Section 201.05(1), F.S., authorizes a tax on "each original
issue, whether organization or reorganization, of certificates
of stock or shares, however designated, issued in the state...".

Where there are special statutes and general statutes,
special statutes control.

Consequently, under the above principle of statutory
construction, the terms of s. 201.05, F.S., control over other
provisions of s. 201.01, F.S. The tax can only apply to stock
that is "issued in Florida".

Department's Position

To require tax as authorized by s. 201.05(1), F.S., the
stock must be "issued in the state" (meaning in Florida). Since
the tax applies to original issues of stock when they are issued

in Florida, and as the original issues are issued out of
Florida, documentary stamp tax will not be due on the issues of
stock by the New Florida Holding Company. (Also see State ex.
rel. Florida Power and Light Co. v. Green (1964 Fla.), 166 So.2d
146; Fla. Admin. 3 (6)).

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 confidential
information, we request you notify the undersigned in writing
within 15 days of any deletions you wish made to the request or
this response.

Sincerely,

James E. Silvey
Tax Law Specialist
Technical Assistance

JES/jes