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