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

BES/mh