Was a note exempt from Florida documentary stamp tax when the borrower executed and delivered it aboard a vessel outside Florida territorial waters and later returned it to Florida?

Plain-English summary

The promissory note was not subject to Florida documentary stamp tax because the borrower executed and delivered it aboard a vessel outside Florida territorial waters.

The application, loan documents, advances, payments, and later safekeeping occurred in Florida, and a UCC-1 could be filed here for personal-property collateral. But no related document other than the note contained a promise to repay money. The taxable note itself was completed and delivered outside Florida.

The captain witnessed the closing and signed a statement, while the borrower and lender also signed statements identifying the vessel's location and the execution and delivery. The Department accepted those documents as proof under the cited rule.

What this means for you

The ruling focused on where the promissory note itself was executed and delivered and on contemporaneous proof. Florida activity surrounding the loan did not replace that document-specific analysis on the facts described.

Common questions

Q: Did returning the note to Florida for safekeeping create tax? A: No. The note had already been executed and delivered outside Florida.

Q: Did a Florida UCC filing on personal-property collateral create tax on the note? A: No under the stated arrangement.

Q: What proof did the Department accept? A: The captain's, borrower's, and lender's signed statements documenting the vessel closing outside Florida territorial waters.

Q: What if another Florida loan document contained a repayment promise? A: The ruling's answer depended on the stated fact that no other loan document contained such a promise.

Citations and references

• Fla. Stat. § 201.08(1) — documentary stamp tax on written obligations
• Fla. Admin. Code rr. 12B-4.051(1), 12B-4.053(35) — out-of-state notes and proof
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95B4-012

Original ruling text

Sep 07, 1995

Re: Technical Assistance Advisement No. 95(B)4-012 Documentary Stamp Tax; Promissory Notes Executed and Delivered on Vessels Located Outside the Territorial Limits of the State of Florida XXX (hereinafter, Lender)

Dear :

You have petitioned for a Technical Assistance Advisement pursuant to s. 213.22, F.S., and Ch. 12-11, F.A.C.

Issue

Whether a promissory note that is executed and delivered on a vessel located outside the territorial limits of the State of Florida, which is either unsecured or secured by personal property, (the security interest would be perfected by the filing of a UCC-l Financing Statement in the State of Florida), is exempt from the documentary stamp tax levied by s. 201.08(1), F.S.?

Background

Lender, among other things, is in the business of making loans which are either unsecured or secured by personal property 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 revolving line of credit. The forms of promissory notes will vary depending on the loan.

Application for a loan is made by a borrower in the State of Florida. The loan documents would consist of a promissory note and may consist of a Loan Agreement, a Security Agreement 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 the State of Florida. The Security Agreement will not be filed with the Secretary of the State of Florida. All Loan

Documents will be prepared in the State of Florida and, except in the case of the promissory note, will be executed by the borrower and delivered to the 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 by the borrower and delivered to Lender on a vessel located outside the territorial limits of the State of Florida. The promissory note will contain a written promise to pay a sum certain in money. At the time the promissory note is executed, Captain's, Borrower and Lender Statements will be properly completed and executed.

The Captain's Statement reads that the Captain of the vessel witnessed the execution and delivery of the promissory note on the vessel and that the vessel was located outside the territorial limits of the State of Florida at the time of such actions. The Borrower and Lender Statements read that the promissory note was executed and delivered on the vessel and that the vessel was located outside the territorial limits of the State of Florida at the time of such actions. The Borrower and Lender Statements also contain a provision to be signed by the Captain at the bottom thereof which reads that the Captain witnessed the execution of those Statements.

In all cases the execution and delivery of the promissory note and the execution of the Captain's, Lender and Borrower Statements will take place on a vessel located outside the territorial limits of the State of Florida. The promissory note will be returned by Lender to the State of Florida for safe-keeping. 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.

Discussion and Law

Section 201.08(1), F.S., imposes a documentary stamp tax on promissory notes or other written obligations to pay money that are executed, delivered, sold, transferred or assigned in Florida. (Please also see Fla. Admin. Code Rule 12B-4.051(1) (a) and (b). Rule 12B-4.053(35), F.A.C., provides that promissory notes, nonnegotiable notes, and written obligations to pay money

(hereinafter, called notes) made, executed, and delivered to a Florida lender in another state are not subject to Florida's documentary stamp tax. If the notes then are brought into Florida for collection after they have been made, executed, and delivered to the Florida lender, or its agent, in another state, no tax is due. However, if a note is made and executed in another state and delivered to the lender in Florida, the note would be subject to tax. 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 includes:

(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, together with 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. Execution and delivery need not occur in the same jurisdiction, provided that both execution and delivery occurred outside of Florida, or (c) Any other proof that the borrower made, executed, and delivered the note in another state to a Florida lender. Travel vouchers, airplane stubs, and hotel receipts corresponding with the signing and delivery of the note would be acceptable proof.

Department's Position

The promissory note in the transactions described in your letter is not subject to documentary stamp tax because it is executed and delivered outside of the territorial waters of Florida.

Also, after carefully reviewing the affidavits, we conclude that these affidavits meet the criteria outlined by Rule 12B-

3.053(35), F.A.C., as to execution and delivery. The Department will accept the affidavit signed by the Captain instead of a Florida notary evidencing the fact that execution and delivery occurred outside of Florida.

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
Senior Tax Specialist
Technical Assistance

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